___________________________________
Securities and Exchange Commission
Washington, DC 20549
___________________________
FORM 10-K/A No. 1
___________________________
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to
__________________
Commission file number 1-10669
_____________________________
XCL Ltd.
(Exact name of registrant as specified in its charter)
_____________________________
Delaware 51-0305643
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 Rue Jean Lafitte, 2nd Floor
Lafayette, Louisiana 70508
(Address of principal executive offices) (Zip Code)
_____________________________
(Registrant's telephone number, including area code) 318-237-0325
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 par value American Stock Exchange
Title of each class Name on each exchange
on which registered
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the common stock held by
nonaffiliates of the registrant on April 13, 1998, was approximately
$92.8 million.
22,341,636 shares Common Stock, $.01 par value were outstanding on
April 13, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
None
_______________________________________________________________________
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K are hereby deleted in their entirety and
replaced with the following, and Exhibits 3.1, 4.37, 4.38, 4.39
and 27.2 are filed herewith:
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) The following documents are filed as a part of this report.
Financial Statements
- --------------------
The following documents are included in Part II, Item 8 of
this report:
Page
XCL Ltd. and Subsidiaries:
- -------------------------
Report of Independent Accountants................................ 31
Consolidated Balance Sheet as of December 31, 1997 and
December 31, 1996.............................................. 32
Consolidated Statement of Operations for each of the three years
in the period ended December 31, 1997.......................... 33
Consolidated Statement of Shareholders' Equity for each of the
three years in the period ended December 31, 1997.............. 34
Consolidated Statement of Cash Flows for each of the three years
in the period ended December 31, 1997.......................... 35
Notes to Consolidated Financial Statements....................... 36
XCL-China Ltd. (wholly-owned):
- -----------------------------
Report of Independent Accountants................................ 57
Balance Sheet as of December 31, 1997 and December 31, 1996...... 58
Statement of Operations for each of the three years in the period
ended December 31, 1997........................................ 59
Statement of Shareholders' Deficit for each of the three years in
the period ended December 31, 1997............................. 60
Statement of Cash Flows for each of the three years in
the period ended December 31, 1997............................. 61
Notes to Financial Statements.................................... 62
Financial Statement Schedules
- -----------------------------
Certain financial statement schedules are omitted because of
the absence of the conditions under which they are required.
XCL Ltd. and Subsidiaries:
- -------------------------
Schedule II-Valuation and Qualifying Accounts..................... 105
Executive Compensation Plans and Arrangements
- ---------------------------------------------
Form of Long Term Stock Incentive Plan as Amended and Restated
Effective as of June 1, 1997 - See Appendix C to Proxy Statement
dated November 20, 1997.
Form of Appreciation Grant Agreement between the Company and Mr.
M.W. Miller, Jr. - See Appendix D to Proxy Statement dated
November 20, 1997.
Form of Services Agreement dated August 1, 1997, between the
Company and Mr. Benjamin B. Blanchet, an officer of the Company.
- - See Exhibit 10.46 hereto.
Form of Promissory Note dated August 1, 1997, in a principal
amount of $100,000, made in favor of the Company by Mr. Benjamin
B. Blanchet, an officer of the Company. See Exhibit 10.47
hereto.
Form of Indemnification Agreement by and between the Company and
various officers and directors - See Appendix II to Proxy
Statement dated November 13, 1987.
Stock Option Agreement by and between the Company and Marsden W.
Miller, Jr. dated July 11, 1987 - See Appendix VIII to Proxy
Statement dated November 13, 1987.
Amended and Restated 1987 Incentive Stock Option and Stock Option
Plans - See Exhibit 4 to Current Report on Form 8-K filed
February 10, 1989.
Long Term Stock Incentive Plan between the Company and certain
employees - See Exhibit A to Proxy Statement dated May 11, 1992.
Consulting Agreement by and between the Company and Mr. R. Thomas
Fetters, Jr. dated June 1, 1997. - See Exhibit 10.44 hereto.
Consulting Agreement by and between the Company and Sir Michael
Palliser dated May 1, 1994. - See Exhibit 10.4 hereto.
Consulting Agreement by and between the Company and Mr. Arthur W.
Hummel. Jr. dated May l, 1994. - See Exhibit 10.5 hereto.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated October 3, 1997, was
filed to report (i) the test results of the Company's C-4 well on
the Zhao Dong Block, (ii) the release of funds held in escrow
from the May 20, 1997 Note Offering, and (iii) the sale of 24,000
shares of Common Stock through the exercise of stock purchase
warrants, pursuant to Regulation S under the Securities Act.
A Current Report on Form 8-K dated October 21, 1997, was
filed to report the sale of 100,000 shares of Common Stock
through the exercise of stock purchase warrants and the issuance
of an aggregate of 53,333 shares of Common Stock as compensation
to a resident of Taiwan, all pursuant to Regulation S under the
Securities Act.
(c) Exhibits required by Item 601 of Regulation S-K
2.0 Not applicable
3(i) Articles of incorporation
3.1 Amended and Restated Certificate of Incorporation of the
Company dated December 17, 1998. +
3(ii) Amended and Restated Bylaws of the Company as currently
in effect. (A)(i)
4.0 Instruments defining rights of security holders,
including indentures:
4.1 Forms of Common Stock Certificates. *
4.2 Form of Warrant dated January 31, 1994 to purchase
2,500,000 shares of Common Stock at an exercise price of
$1.00 per share, subject to adjustment, issued to INCC.
(D)(i)
4.3 Form of Registrar and Stock Transfer Agency Agreement,
effective March 18, 1991, entered into between the Company
and Manufacturers Hanover Trust Company (predecessor to
Chemical Bank), whereby Chemical Bank (now known as
ChaseMellon Shareholder Services) serves as the Company's
Registrar and U.S. Transfer Agent. (E)
4.4 Copy of Warrant Agreement and Stock Purchase Warrant
dated March 1, 1994 to purchase 500,000 shares of Common
Stock at an exercise price of $1.00 per share, subject to
adjustment, issued to EnCap Investments, L.C. (D)(ii)
4.5 Copy of Warrant Agreement and form of Stock Purchase
Warrant dated March 1, 1994 to purchase an aggregate 600,000
shares of Common Stock at an exercise price of $1.00 per
share, subject to adjustment, issued to principals of San
Jacinto Securities, Inc. in connection with its financial
consulting agreement with the Company. (D)(iii)
4.6 Form of Warrant Agreement and Stock Purchase Warrant
dated April 1, 1994, to purchase an aggregate 6,440,000
shares of Common Stock at an exercise price of $1.25 per
share, subject to adjustment, issued to executives of the
Company surrendering all of their rights under their
employment contracts with the Company. (C)(i)
4.7 Form of Warrant Agreement and Stock Purchase Warrant
dated April 1, 1994, to purchase an aggregate 878,900 shares
of Common Stock at an exercise price of $1.25 per share,
subject to adjustment, issued to executives of the Company
in consideration for salary reductions sustained under their
employment contracts with the Company. (C)(ii)
4.8 Form of Warrant Agreement and Stock Purchase Warrant
dated April 1, 1994, to purchase 200,000 shares of Common
Stock at an exercise price of $1.25 per share, subject to
adjustment, issued to Thomas H. Hudson. (C)(iii)
4.9 Form of Warrant Agreement and Stock Purchase Warrant
dated May 25, 1994, to purchase an aggregate 100,000 shares
of Common Stock at an exercise price of $1.25 per share,
subject to adjustment, issued to the holders of Purchase
Notes B, in consideration of amendment to payment terms of
such Notes. (C)(iv)
4.10 Form of Warrant Agreement and Stock Purchase Warrant
dated May 25, 1994, to purchase an aggregate 100,000 shares
of Common Stock at an exercise price of $1.25 per share,
subject to adjustment, issued to the holders of Purchase
Notes B, in consideration for the granting of an option to
further extend payment terms of such Notes. (C)(v)
4.11 Form of Purchase Agreement between the Company and each
of the Purchasers of Units in the Regulation S Unit Offering
conducted by Rauscher Pierce & Clark with closings as
follows:
December 22, 1995 116 Units
March 8, 1996 34 Units
April 23, 1996 30 Units (J)(i)
4.12 Form of Warrant Agreement between the Company and each
of the Purchasers of Units in the Regulation S Unit Offering
conducted by Rauscher Pierce & Clark, as follows:
Closing Date Warrants
Exercise Price
December 22, 1995 6,960,000 $.50
March 8, 1996 2,040,000
$.35
April 23, 1996 1,800,000
$.35 (J)(ii)
4.13 Form of Warrant Agreement between the Company and
Rauscher Pierce & Clark in consideration for acting as
placement agent in the Regulation S Units Offering, as
follows:
Closing Date Warrants Exercise Price
---------------- ----------- ----------------
December 22, 1995 696,000 $.50
March 8, 1996 204,000 $.35
April 23, 1996 180,000 $.35 (J)(iii)
4.14 Form of a series of Stock Purchase Warrants issued to
Janz Financial Corp. Ltd. dated August 14, 1996, entitling
the holders thereof to purchase up to 3,080,000 shares of
Common Stock at $0.25 per share on or before August 13,
2001. (M)(i)
4.15 Stock Purchase Agreement between the Company and
Provincial Securities Ltd. dated August 16, 1996, whereby
Provincial purchased 1,500,000 shares of Common Stock in a
Regulation S transaction. (M)(ii)
4.16 Stock Purchase Warrant issued to Terrenex Acquisitions
Corp. dated August 16, 1996, entitling the holder thereof to
purchase up to 3,000,000 shares of Common Stock at $0.25 per
share on or before December 31, 1998. (M)(iii)
4.17 Form of a series of Stock Purchase Warrants dated
November 26, 1996, entitling the following holders thereto
to purchase up to 2,666,666 shares of Common Stock at $0.125
per share on or before December 31, 1999:
Warrant Holder Warrants
-------------- --------
Opportunity Associates, L.P. 133,333
Kayne Anderson Non-Traditional Investments, L.P. 666,666
Arbco Associates, L.P. 800,000
Offense Group Associates, L.P. 333,333
Foremost Insurance Company 266,667
Nobel Insurance Company 133,333
Evanston Insurance Company 133,333
Topa Insurance Company 200,000 (N)(i)
4.18 Form of a series of Stock Purchase Warrants dated
December 31, 1996 (2,128,000 warrants) and January 8, 1997
(2,040,000 warrants) to purchase up to an aggregate of
4,168,000 shares of Common Stock at $0.125 per share on or
before August 13, 2001. (N)(ii)
4.19 Form of Stock Purchase Warrants dated February 6, 1997,
entitling the following holders to purchase an aggregate of
1,874,467 shares of Common Stock at $0.25 per share on or
before December 31, 1999:
Warrant Holder Warrants
-------------- --------
Donald A. and Joanne R. Westerberg 241,660
T. Jerald Hanchey 1,632,807 (N)(iii)
4.20 Form of a series of Stock Purchase Warrants dated April
10, 1997, issued as a part of a unit offered with Unsecured
Notes of XCL-China Ltd., exercisable at $0.01 per share on
or before April 9, 2002, entitling the following holders to
purchase up to an aggregate of 10,092,980 shares of Common
Stock:
Warrant Holder Warrants
--------------- --------
Kayne Anderson Offshore L.P. 651,160
Offense Group Associates, L.P. 1,627,900
Kayne Anderson Non-Traditional Investments, L.P. 1,627,900
Opportunity Associates, L.P. 1,302,320
Arbco Associates, L.P. 1,627,900
J. Edgar Monroe Foundation 325,580
Estate of J. Edgar Monroe 976,740
Boland Machine & Mfg. Co., Inc. 325,580
Construction Specialists, Inc. d/b/a
Con-Spec, Inc. 1,627,900 (N)(iv)
4.21 Form of Purchase Agreement dated May 13, 1997, between
the Company and Jefferies & Company, Inc. (the "Initial
Purchaser") with respect to 75,000 Units each consisting of
$1,000 principal amount of 13.5% Senior Secured Notes due
May 1, 2004, Series A and one warrant to purchase 1,280
shares of the Company's Common Stock with an exercise price
of $0.2063 per share ("Note Warrants"). (O)(i)
4.22 Form of Purchase Agreement dated May 13, 1997, between
the Company and Jefferies & Company, Inc. (the "Initial
Purchaser") with respect to 294,118 Units each consisting of
one share of Amended Series A, Cumulative Convertible
Preferred Stock ("Amended Series A Preferred Stock") and one
warrant to purchase 327 shares of the Company's Common Stock
with an exercise price of $0.2063 per share ("Equity
Warrants"). (O)(ii)
4.23 Form of Warrant Agreement and Warrant Certificate dated
May 20, 1997, between the Company and Jefferies & Company,
Inc., as the Initial Purchaser, with respect to the Note
Warrants. (O)(iii)
4.24 Form of Warrant Agreement and Warrant Certificate dated
May 20, 1997, between the Company and Jefferies & Company,
Inc., as the Initial Purchaser, with respect to the Equity
Warrants. (O)(iv)
4.25 Form of Designation of Amended Series A Preferred Stock
dated May 19, 1997. (O)(v)
4.26 Form of Amended Series A Preferred Stock certificate.
(O)(vi)
4.27 Form of Global Unit Certificate for 75,000 Units
consisting of 13.5% Senior Secured Notes due May 1, 2004 and
Warrants to Purchase Shares of Common Stock. (O)(vii)
4.28 Form of Global Unit Certificate for 293,765 Units
consisting of Amended Series A Preferred Stock and Warrants
to Purchase Shares of Common Stock. (O)(viii)
4.29 Form of Warrant Certificate dated May 20, 1997, issued
to Jefferies & Company, Inc., with respect to 12,755
warrants to purchase shares of Common Stock of the Company
at an exercise price of $0.2063 per share. (O)(ix)
4.30 Form of Stock Purchase Agreement dated effective as of
October 1, 1997, between the Company and William Wang,
whereby the Company issued 800,000 shares of Common Stock to
Mr. Wang, as partial compensation pursuant to a Consulting
Agreement. (Q)(i)
4.31 Form of Stock Purchase Warrants dated effective as of
February 20, 1997, issued to Mr. Patrick B. Collins with
respect to 200,000 warrants to purchase shares of Common
Stock of the Company at an exercise price of $0.25 per
share, issued as partial compensation pursuant to a
Consulting Agreement. (Q)(ii)
4.32 Certificate of Amendment to the Certificate of
Designation of Series F, Cumulative Convertible Preferred
Stock dated January 6, 1998. *
4.33 Form of Stock Purchase Warrants dated January 16, 1998,
issued to Arthur Rosenbloom (6,389), Abby Leigh (12,600) and
Mitch Leigh (134,343) to purchase shares of Common Stock of
the Company at an exercise price of $0.15 per share, on or
before December 31, 2001. *
4.34 Certificate of Designation of Amended Series B,
Cumulative Convertible Preferred Stock dated March 4, 1998. *
4.35 Correction to Certificate of Designation of Amended
Series B, Cumulative Convertible Preferred Stock dated
March 5, 1998. *
4.36 Second Correction to Certificate of Designation of
Amended Series B Preferred Stock dated March 19, 1998. *
4.37 Form of Stock certificate representing shares of Amended
Series B Preferred Stock. +
4.38 Form of Agreement dated March 3, 1998 between the
Company and Arbco Associates, L.P., Kayne Anderson Non-
Traditional Investments, L.P., Offense Group Associates,
L.P. and Opportunity Associates, L.P. for the exchange of
Series B Preferred Stock and associated warrants into
Amended Series B Preferred Stock and warrants. +
4.39 Form of Stock Purchase Warrants dated March 3, 1998
between the Company and the following entities:
Holder Warrants
------ --------
Arbco Associates, L.P. 85,107
Kayne Anderson Non-Traditional Investments, L.P. 79,787
Offense Group Associates, L.P. 61,170
Opportunity Associates, L.P. 23,936 +
10.0 - Material Contracts
10.1 Contract for Petroleum Exploration, Development and
Production on Zhao Dong Block in Bohai Bay Shallow Water Sea
Area of The People's Republic of China between China
National Oil and Gas Exploration and Development Corporation
and XCL - China, Ltd., dated February 10, 1993. (B)
10.2 Form of Net Revenue Interest Assignment dated February
23, 1994, between the Company and the purchasers of the
Company's Series D, Cumulative Convertible Preferred Stock.
(D)(iv)
10.3 Modification Agreement for Petroleum Contract on Zhao
Dong Block in Bohai Bay Shallow Water Sea Area of The
People's Republic of China dated March 11, 1994, between the
Company, China National Oil and Gas Exploration and
Development corporation and Apache China Corporation LDC.
(D)(v)
10.4 Consulting agreement between the Company and Sir Michael
Palliser dated April 1, 1994. (F)(i)
10.5 Consulting agreement between the Company and Mr. Arthur
W. Hummel, Jr. dated April 1, 1994. (F)(ii)
10.6 Letter of Intent between the Company and CNPC United
Lube Oil Corporation for a joint venture for the manufacture
and sale of lubricating oil dated January 14, 1995. (G)(i)
10.7 Farmout Agreement dated May 10, 1995, between XCL China
Ltd., a wholly owned subsidiary of the Company and Apache
Corporation whereby Apache will acquire an additional
interest in the Zhao Dong Block, Offshore People's Republic
of China. (G)(ii)
10.8 Modification Agreement of Non-Negotiable Promissory
Note and Waiver Agreement between Lutcher & Moore
Cypress Lumber Company and L.M. Holding Associates, L.P.
dated June 15, 1995. (H)(i)
10.9 Third Amendment to Credit Agreement between Lutcher-
Moore Development Corp., Lutcher & Moore Cypress Lumber
Company, The First National Bank of Lake Charles, Mary
Elizabeth Mecom, The Estate of John W. Mecom, The Mary
Elizabeth Mecom Irrevocable Trust, Matilda Gray Stream, The
Opal Gray Trust, Harold H. Stream III, The
Succession of Edward M. Carmouche, Virginia Martin
Carmouche and L.M. Holding Associates, L.P. dated June 15,
1995. (H)(ii)
10.10 Second Amendment to Appointment of Agent for
Collection and Agreement to Application of Funds between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, L.M. Holding Associates, L.P. and The
First National Bank of Lake Charles, dated June 15,
1995. (H)(iii)
10.11 Contract of Chinese Foreign Joint Venture dated July
17, 1995, between United Lube Oil Corporation and XCL
China Ltd. for the manufacturing and selling of
lubricating oil and related products. (H)(iv)
10.12 Letter of Intent dated July 17, 1995 between CNPC
United Lube Oil Corporation and XCL Ltd. for discussion of
further projects. (H)(v)
10.13 Copy of Letter Agreement dated March 31, 1995, between
the Company and China National Administration of Coal
Geology for the exploration and development of coal bed
methane in Liao Ling Tiefa and Shanxi Hanchang Mining
Areas. (I)(i)
10.14 Memorandum of Understanding dated December 14, 1995,
between XCL Ltd. and China National Administration of Coal
Geology. (J)(iv)
10.15 Form of Fourth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles,
Mary Elizabeth Mecom, The Estate of John W. Mecom, The
Mary Elizabeth Mecom Irrevocable Trust, Matilda Gray
Stream, The Opal Gray Trust, Harold H. Stream III, The
Succession of Edward M. Carmouche, Virginia Martin
Carmouche and L.M. Holding Associates, L.P. dated January
16, 1996. (J)(v)
10.16 Form of Third Amendment to Appointment of Agent for
Collection and Agreement to application of Funds between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, L.M. Holding Associates, L.P. and The
First National Bank of Lake Charles, dated January 16,
1996. (J)(vi)
10.17 Copy of Purchase and Sale Agreement dated March 8,
1996, between XCL-Texas, Inc. and Tesoro E&P Company, L.P.
for the sale of the Gonzales Gas Unit located in south
Texas. (J)(vii)
10.18 Copy of Limited Waiver between the Company and
Internationale Nederlanden (U.S.) Capital Corporation
dated April 3, 1996. (J)(viii)
10.19 Copy of Purchase and Sale Agreement dated April 22,
1996, between XCL-Texas, Inc. and Dan A. Hughes Company
for the sale of the Lopez Gas Units located in south Texas.
(K)
10.20 Form of Sale of Mineral Servitude dated June 18, 1996,
whereby the Company sold its 75 percent mineral interest in
the Phoenix Lake Tract to the Stream Family Limited Partners
and Virginia Martin Carmouche Gayle. (L)(i)
10.21 Form of Fifth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles,
Mary Elizabeth Mecom, The Estate of John W. Mecom, The
Mary Elizabeth Mecom Irrevocable Trust, Matilda Gray
Stream, The Opal Gray Trust, Harold H. Stream III, The
Succession of Edward M. Carmouche, Virginia Martin
Carmouche and L.M. Holding Associates, L.P. dated August
8, 1996. (N)(v)
10.22 Form of Assignment and Sale between XCL Acquisitions,
Inc. and purchasers of an interest in certain promissory
notes held by XCL Acquisitions, Inc. as follows:
Principal Purchase
Date Purchaser Amount Price
---- -------- ------ -----
November 19, 1996 Opportunity Associates, L.P. $15,627.39 $12,499.98
November 19, 1996 Kayne Anderson Non-Traditional
Investments, L.P. $78,126.36 $62,499.98
November 19, 1996 Offense Group Associates, L.P. $39,063.18 $31,249.99
November 19, 1996 Arbco Associates, L.P. $93,743.14 $75,000.04
November 19, 1996 Nobel Insurance Company $15,627.39 $12,499.98
November 19, 1996 Evanston Insurance Company $15,627.39 $12,499.98
November 19, 1996 Topa Insurance Company $23,435.79 $18,750.01
November 19, 1996 Foremost Insurance Company $31,249.48 $25,000.04
February 10, 1997 Donald A. and Joanne R.
Westerberg $25,000.00 $28,100.00
February 10, 1997 T. Jerald Hanchey $168,915.74 $189,861.29
(N)(vi)
10.23 Form of Sixth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles, The
Estate of Mary Elizabeth Mecom, The Estate of John W.
Mecom, The Mary Elizabeth Mecom Irrevocable Trust,
Matilda Gray Stream, The Opal Gray Trust, Harold H.
Stream III, The Succession of Edward M. Carmouche,
Virginia Martin Carmouche and L.M. Holding Associates,
L.P. dated January 28, 1997. (N)(vii)
10.24 Form of Act of Sale between the Company and The
Schumacher Group of Louisiana, Inc. dated March 31, 1997,
where in the Company sold its office building. (N)(viii)
10.25 Amendment No. 1 to the May 1, 1995 Agreement with
Apache Corp. dated April 3, 1997, effective December 13,
1996. (N)(ix)
10.26 Form of Guaranty dated April 9, 1997 by XCL-China Ltd.
in favor of ING (U.S.) Capital Corporation executed in
connection with the sale of certain Unsecured Notes issued
by XCL-China Ltd. (N)(x)
10.27 Form of First Amendment to Stock Pledge Agreement dated
April 9, 1997, between the Company and ING (U.S.) Capital
Corporation adding XCL Land Ltd. to the Stock Pledge
Agreement dated as of January 31, 1994. (N)(xi)
10.28 Form of Agreement dated April 9, 1997, between ING
(U.S.) Capital Corporation, XCL-China and holders of the
Senior Unsecured Notes, subordinating the Guaranty granted
by XCL-China in favor of ING to the Unsecured Notes.
(N)(xii)
10.29 Form of Forbearance Agreement dated April 9, 1997
between the Company and ING (U.S.) Capital Corporation.
(N)(xiii)
10.30 Form of a series of Unsecured Notes dated April 10,
1997, between the Company and the following entities:
Note Holder Principal Amount
----------- -----------------
Kayne Anderson Offshore, L.P. $200,000
Offense Group Associates, L.P. $500,000
Kayne Anderson Non-Traditional Investments, L.P. $500,000
Opportunity Associates, L.P. $400,000
Arbco Associates, L.P. $500,000
J. Edgar Monroe Foundation $100,000
Estate of J. Edgar Monroe $300,000
Boland Machine & Mfg. Co., Inc. $100,000
Construction Specialists, Inc. d/b/a Con-Spec, Inc. $500,000 (N)(xiv)
10.31 Form of Subscription Agreement dated April 10, 1997, by
and between XCL-China, Ltd., the Company and the subscribers
of Units, each unit comprised of $100,000 in Unsecured Notes
and 325,580 warrants. (N)(xv)
10.32 Form of Intercompany Subordination Agreement dated
April 10, 1997, between the Company, XCL-Texas, Ltd., XCL
Land Ltd., The Exploration Company of Louisiana, Inc., XCL-
Acquisitions, Inc., XCL-China Coal Methane Ltd., XCL-China
LubeOil Ltd., XCL-China Ltd., and holders of the Unsecured
Notes. (N)(xvi)
10.33 Form of Indenture dated as of May 20, 1997, between the
Company, as Issuer and Fleet National Bank, as Trustee
("Indenture"). (O)(x)
10.34 Form of 13.5% Senior Secured Note due May 1, 2004,
Series A issued May 20, 1997 to Jefferies & Company, Inc. as
the Initial Purchaser (Exhibit A to the Indenture). (O)(xi)
10.35 Form of Pledge Agreement dated as of May 20, 1997,
between the Company and Fleet National Bank, as Trustee
(Exhibit C to the Indenture). (O)(xii)
10.36 Form of Cash Collateral and Disbursement Agreement
dated as of May 20, 1997, between the Company and Fleet
National Bank, as Trustee and Disbursement Agent, and Herman
J. Schellstede & Associates, Inc., as Representative
(Exhibit F to the Indenture). (O)(xiii)
10.37 Form of Intercreditor Agreement dated as of May 20,
1997, between the Company, ING (U.S.) Capital Corporation,
the holders of the Secured Subordinated Notes due April 5,
2000 and Fleet National Bank, as trustee for the holders of
the 13.5% Senior Secured Notes due May 1, 2004 (Exhibit G to
the Indenture). (O)(xiv)
10.38 Registration Rights Agreement dated as of May 20, 1997,
by and between the Company and Jefferies & Company, Inc.
with respect to the 13.5% Senior Secured Notes due May 1,
2004 and 75,000 Common Stock Purchase Warrants (Exhibit H to
the Indenture). (O)(xv)
10.39 Form of Security Agreement, Pledge and Financing
Statement and Perfection Certificate dated as of May 20,
1997, by the Company in favor of Fleet National Bank, as
Trustee (Exhibit I to the Indenture). (O)(xvi)
10.40 Registration Rights Agreement dated as of May 20, 1997,
by and between the Company and Jefferies & Company, Inc.
with respect to the 9.5% Amended Series A Preferred Stock
and Common Stock Purchase Warrants. (O)(xvii)
10.41 Form of Restated Forbearance Agreement dated effective
as of May 20, 1997, between the Company, XCL-Texas, Inc. and
ING (U.S.) Capital Corporation. (O)(xviii)
10.42 Form of Seventh Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles, The
Estate of Mary Elizabeth Mecom, The Estate of John W.
Mecom, The Mary Elizabeth Mecom Irrevocable Trust,
Matilda Gray Stream, The Opal Gray Trust, Harold H.
Stream III, The Succession of Edward M. Carmouche,
Virginia Martin Carmouche and L.M. Holding Associates,
L.P. dated May 8, 1997. (P)(i)
10.43 Form of Eighth Amendment to Credit Agreement between
Lutcher-Moore Development Corp., Lutcher & Moore Cypress
Lumber Company, The First National Bank of Lake Charles, The
Estate of Mary Elizabeth Mecom, The Estate of John W.
Mecom, The Mary Elizabeth Mecom Irrevocable Trust,
Matilda Gray Stream, The Opal Gray Trust, Harold H.
Stream III, The Succession of Edward M. Carmouche,
Virginia Martin Carmouche and L.M. Holding Associates,
L.P. dated July 29, 1997. (P)(ii)
10.44 Form of Consulting Agreement dated February 20, 1997,
between the Company and Mr. Patrick B. Collins, whereby Mr.
Collins performs certain accounting advisory services.
(Q)(ii)
10.45 Form of Consulting Agreement dated effective as of June
1, 1997, between the Company and Mr. R. Thomas Fetters, Jr.,
a director of the Company, whereby Mr. Fetters performs
certain geological consulting services. (Q)(iii)
10.46 Form of Agreement dated October 1, 1997, between the
Company and Mr. William Wang, whereby Mr. Wang performs
certain consulting services with respect to its investments
in China. (Q)(iv)
10.47 Form of Services Agreement dated August 1, 1997,
between the Company and Mr. Benjamin B. Blanchet, an officer
of the Company. (Q)(v)
10.48 Form of Promissory Note dated August 1, 1997, in a
principal amount of $100,000, made by Mr. Benjamin B.
Blanchet in favor of the Company. (Q)(vi)
11. Not applicable.
12. Not applicable.
13. Not applicable
16. Not applicable.
18. Not applicable.
19. Not applicable.
21. Subsidiaries of the Registrant
XCL-China Ltd.
XCL-China LubeOil Ltd.
XCL-China Coal Methane Ltd.
XCL-Texas, Inc.
XCL-Acquisitions, Inc.
The Exploration Company of Louisiana, Inc.
XCL Land Ltd.
22. Not applicable.
23 Consents of Experts and Counsel:
23.1 Coopers & Lybrand *
23.2 H.J. Gruy & Associates, Inc. *
24. Not applicable.
27.1 Financial Data Schedule for year ended December 31, 1997 *
27.2 Restated Financial Data Schedule for the year ended
December 31, 1996 and the three, six and nine month periods
ended March 31, June 30 and September 30, 1997 +
99.1 Reserve Report dated January 1, 1998 prepared by H.J.
Gruy & Associates, Inc. *
99.2 Glossary of Terms *
- ------------
* Filed with Form 10-K.
+ Filed with this Amendment No. 1.
(A) Incorporated by reference to the Registration Statement
on Form 8-B filed on July 28, 1988, where it appears as
Exhibits 3(c).
(B) Incorporated by reference to a Registration Statement on
Form S-3 (File No. 33-68552) where it appears as Exhibit
10.1.
(C) Incorporated by reference to Post-Effective Amendment No.
2 to Registration Statement on Form S-3 (File No. 33-68552)
where it appears as: (i) Exhibit 4.29; (ii) Exhibit 4.30;
and (iii) through (v) Exhibits 4.34 through 4.36,
respectively.
(D) Incorporated by reference to Amendment No. 1 to Annual
Report on Form 10-K filed April 15, 1994, where it appears
as: (i) Exhibit 4.32; (ii) Exhibit 4.36; (iii) Exhibit
4.37; (iv) through (v) Exhibit 10.41 through Exhibit 10.47,
respectively; and (v) Exhibit 10.49.
(E) Incorporated by reference to an Annual Report on Form 10K
for the fiscal year ended December 31, 1990, filed April 1,
1991, where it appears as Exhibit 10.27.
(F) Incorporated by reference to Amendment No. 1 to an Annual
Report on Form 10-K/A No. 1 for the fiscal year ended
December 31, 1994, filed April 17, 1995, where it appears
as: (i) through (ii) Exhibits 10.22 through 10.23,
respectively.
(G) Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, filed May
15, 1995, where it appears as: (i) Exhibit 10.26; and (ii)
Exhibit 10.28.
(H) Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended June 30, 1995, filed August 14,
1995, where it appears as: (i) through (v) Exhibits 10.29
through 10.33, respectively.
(I) Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, filed
November 13, 1995, where it appears as Exhibit 10.35.
(J) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1995, filed April 15, 1996,
where it appears as: (i) through (iii) Exhibits 4.28
through 4.30, respectively; and (iv) Exhibit 10.31 and
(v) through (vii) Exhibits 10.33 through 10.36,
respectively.
(K) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended March 31, 1996, filed May 15, 1996,
where it appears as Exhibit 10.37.
(L) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended June 30, 1996, filed August 14,
1996, where it appears as Exhibit 10.38.
(M) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996, filed November
14, 1996, where it appears as (i) through (iii) Exhibits
4.32 through 4.34.
(N) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1996, filed April 15, 1997,
where it appears as (i) through (iii) Exhibits 4.35 through
4.38; (iv) Exhibit 4.40; and (v) through (xvi) Exhibits
10.39 through 10.50.
(O) Incorporated by reference to Current Report on Form 8-K
dated May 20, 1997, filed June 3, 1997, where it appears as
(i) through (ix) Exhibits 4.1 through 4.9 and (x) through
(xviii) Exhibits 10.51 through 10.59.
(P) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended June 30, 1997, filed August 14,
1997, where it appears as (i) and (ii) Exhibits 10.60 and
10.61.
(Q) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended September 30, 1997, filed November
14, 1997, where it appears as (i) Exhibit 4.52; and (ii)
through (vi) Exhibits 10.61 through 10.66.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
XCL LTD.
/s/ Lisha C. Falk
April 22, 1998 By:_________________________________
Lisha C. Falk
Corporate Secretary
State of Delaware
Office of the Secretary of State
_________________________________________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE RESTATED CERTIFICATE OF "XCL LTD.", FILED IN THIS
OFFICE ON THE SEVENTEENTH DAY OF DECEMBER, A.D. 1997, AT 4:30
O'CLOCK P.M.
[GREAT SEAL OF THE STATE OF DELAWARE]
[SEAL OF SECRETARY OF STATE]
/s/ Edward J. Freel
____________________________
Edward J. Freel, Secretary of State
2147839 8100
AUTHENTICATION: 8821894 971435924
DATE: 12/18/97
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
XCL LTD.
1. The name of the corporation (which is hereinafter referred
to as the "Corporation") is XCL LTD.
2. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on December 30, 1987,
under the name The Exploration Company of Louisiana, inc. (the
"Original Certificate").
3. This Amended and Restated Certificate of Incorporation has
been duly proposed by resolutions adopted and declared advisable
by the Board of Directors of the Corporation, duly adopted by the
stockholders of the Corporation at a meeting duly called and
held, and duly executed and acknowledged by the officers of the
Corporation in accordance with the provisions of Sections 103,
242 and 245 of the General Corporation Law of the State of
Delaware and, restates, integrates and further amends the
provisions of the Original Certificate and, upon filing with the
Secretary of State in accordance with Section 103, shall
thenceforth supersede the Original Certificate as amended by all
amendments filed subsequent thereto prior to the date hereof and
shall, as it may thereafter be amended in accordance with its
terms and applicable law, be the Amended and Restated Certificate
of Incorporation of the Corporation.
4. The text of the Original Certificate, as amended, is hereby
amended and restated to read in its entirety as follows:
FIRST: The name of this corporation (the
"Corporation") is XCL Ltd.
SECOND: The address of the Corporation's registered
office in the State of Delaware is 1105 North Market Street,
Suite 1300, in the City of Wilmington, County of New Castle.
THIRD: The nature of the business and the purposes to be
conducted, promoted and carried on are:
To engage in any lawful act or activity for which
corporations may be organized under the Delaware
General Corporation Law, either for its own account, or
for the account of others as agent, and either as agent
or principal, to enter upon or engage in any kind of
business of any nature whatsoever, which corporations
organized under the Delaware General Corporation Law
may engage; to the extent not prohibited thereby, to
enter upon and engage in any kind of business of any
nature whatsoever and to acquire real property and
personal property in any other state of the United
States of America, any foreign nation, and any
territory of any country to the extent permitted by the
laws of such other state, nation or territory.
FOURTH: A. The total number of shares and the par
value, if any, of each class of stock which the Corporation is
authorized to issue shall be 2,400,000 shares of "Preferred
Stock," par value $1.00 per share, and 500,000,000 shares of
"Common Stock," par value of $0.01 per share. Simultaneously with
the effective date of this Restated Certificate of Incorporation
(the "Effective Date"), each share of Common Stock, par value
$.01 per share, issued and outstanding immediately prior to the
Effective Date (the "Old Common Stock") shall automatically and
without any action on the part of the holder thereof be
reclassified as and changed into one-fifteenth (1/15) of a share
of the Corporation's Common Stock, par value $.01 per share (the
"New Common Stock"), subject to the treatment of fractional share
interests as described below. Each holder of a certificate or
certificates which immediately prior to the Effective Date
represented outstanding shares of Old Common Stock (the "Old
Certificates", whether one or more) shall be entitled to receive
upon surrender of such Old Certificates to the Corporation's
Transfer Agent, or an Exchange Agent appointed by the
Corporation, for cancellation, a certificate or certificates (the
"New Certificates", whether one or more) representing the number
of whole shares of the New Common Stock into which and for which
the shares of the Old Common Stock formerly represented by such
Old Certificates so surrendered, are reclassified under the terms
hereof. From and after the Effective Date, Old Certificates shall
represent only the right to receive New Certificates (and, where
applicable, cash in lieu of fractional shares, as provided below)
pursuant to the provisions hereof. No certificates or scrip
representing fractional share interests in New Common Stock will
be issued, and no such fractional share interest will entitle the
holder thereof to vote, or to any rights of a shareholder of the
Corporation. A holder of Old Certificates shall receive, in lieu
of any fraction of a share of New Common Stock to which the
holder would otherwise be entitled, a cash payment therefor on
the basis of the closing price of the Old Common Stock on the
American Stock Exchange, Inc. on the Effective Date, as reported
on the composite tape of the American Stock Exchange, Inc. (or in
the event the Corporation's Common Stock is not so traded on the
Effective Date, such closing price on the next preceding day on
which such stock was traded on the American Stock Exchange,
Inc.). The Corporation may retain a third party to collect and
pool fractional share interests, sell the same, and return
payment to the holders of the interests. If more than one Old
Certificate shall be surrendered at one time for the account of
the same stockholder, the number of full shares of New Common
Stock for which New Certificates shall be issued shall be
computed on the basis of the aggregate number of shares
represented by the Old Certificates so surrendered. In the event
that the Corporation's Transfer Agent or Exchange Agent
determines that a holder of Old Certificates has not tendered all
his certificates for exchange, the Transfer Agent or Exchange
Agent shall carry forward any fractional share until all
certificates of that holder have been presented for exchange such
that payment for fractional shares to any one person shall not
exceed the value of one share. If any New Certificate is to be
issued in a name other than that in which the Old Certificates
surrendered for exchange are issued, the Old Certificates so
surrendered shall be properly endorsed and otherwise in proper
form for transfer, and the person or persons requesting such
exchange shall affix any requisite stock transfer tax stamps to
the Old Certificates surrendered, to provide funds for their
purchase, or establish to the satisfaction of the Transfer Agent
or the Exchange Agent that such taxes are not payable. The Board
of Directors be and hereby is authorized to issue all or any part
of the unissued shares of Preferred Stock and Common Stock thus
authorized without further action by the stockholders, unless
such action is required by law or by the rules of any stock
exchange on which the Corporation's securities are then listed.
The number of shares of the Preferred Stock initially authorized
to be issued as Amended Series A, Cumulative Convertible
Preferred Stock, Series B, Cumulative Preferred Stock and Series
F, Cumulative Convertible Preferred Stock and the relative rights
and preferences of such shares are set forth in Paragraphs B, C
and D, of this Article FOURTH. Authority is hereby expressly
vested in the board of directors to increase the number of
authorized shares of such series of Preferred Stock and to divide
the Preferred Stock into additional series and, within the
limitations imposed by applicable law, to fix and determine the
relative rights and preferences of the shares of any series so
established by resolution of the board of directors and to
provide for the issuance thereof. Each series shall be so
designated as to distinguish the shares thereof from the shares
of all other series and classes. All shares of Preferred Stock
shall be identical except as to the following relative rights and
preferences, as to which there may be variations between
different series:
(1) the rate of dividend;
(2) the price at and the terms and conditions on which
shares may be redeemed or otherwise purchased;
(3) the amount payable upon shares in the event of
dissolution of the Corporation;
(4) sinking fund provisions for the redemption or
purchase of shares;
(5) the terms and conditions on which the shares may be
converted, if the shares of a series are issued with the
privilege of conversion;
(6) voting rights; and
(7) such other preferences and relative, participating,
optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue of such stock
adopted by the Board of Directors.
B. The Corporation shall have the authority to issue up
to 2,085,000 shares of Preferred Stock, which shall be designated
Amended Series A, Cumulative Convertible Preferred Stock (the
"Amended Series A Preferred Stock"), each share of Amended Series
A Preferred Stock being identical with each other share of
Amended Series A Preferred Stock and all shares of Amended Series
A Preferred Stock having the following characteristics, rights
and preferences:
Section 1. Designation; Number of Shares. The shares of
the series authorized by this resolution shall be designated as
Amended Series A, Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock" or "Amended Series A Preferred
Stock"). The number of shares initially constituting such series
shall be limited to Two Million Eighty Five Thousand (2,085,000).
Such number of shares may be decreased, at any time and from time
to time, by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of
Convertible Preferred Stock to a number less than the number of
shares then outstanding. The liquidation value of the
Convertible Preferred Stock shall be $85.00.
Section 2. Dividends.
(a) Amount. The holders of Convertible Preferred Stock
shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the
payment of dividends, dividends at the rate of $8.075 per share
per annum, and no more, payable semi-annually, on May 1, and
November 1 in each year, commencing November 1, 1997, except that
if such date is not a business day then such dividend shall be
payable on the next succeeding business day (the "Dividend
Payment Date" or "Dividend Payment Dates") (as used herein, the
term "business day" shall mean any day except a Saturday, Sunday
or day on which banking institutions are authorized or required
by law to close in New York City or in the City of Lafayette,
Louisiana). Such dividends shall be cumulative (whether or not
declared) and shall accrue, without interest, from the first day
in which such dividend may be payable as provided herein, except
that with respect to the first semi-annual dividend, such
dividend shall accrue from the date of issuance of such shares of
Convertible Preferred Stock (the "Issue Date"). Dividends shall
be payable to holders of record as they appear on the share
transfer records of the Corporation on such record dates as may
be fixed by the Board of Directors, not more than sixty (60) days
nor less than ten (10) days preceding such Dividend Payment Date.
Dividends in arrears may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to
holders of record on such date, not more than sixty (60) days
preceding the payment date thereof, as may be fixed by the Board
of Directors of the Corporation. The amount of dividends payable
on shares of Convertible Preferred Stock for each full semi-
annual dividend period (the "Semi-Annual Dividend"), shall be
computed by dividing by two the annual rate per share set forth
in this subsection (a). During the period commencing on the
Issue Date to and including the Dividend Payment Date on
November 1, 2000, dividends shall be paid in additional fully
paid and nonassessable shares of Convertible Preferred Stock (the
"Preferred Dividend Stock"), and, thereafter, dividends shall be
paid in cash, or, at the sole election of the Corporation, in
shares of Preferred Dividend Stock. The amount of Preferred
Dividend Stock payable on the Convertible Preferred Stock for
each semi-annual dividend period shall be computed by dividing
the amount of the full Semi-Annual Dividend by eighty-five (85).
No fractional shares of Preferred Dividend Stock shall be issued
by the Corporation. Instead of any fractional share of Preferred
Dividend Stock that would otherwise be issuable to a holder by
way of a dividend on the Convertible Preferred Stock, the
Corporation shall either (i) pay a cash adjustment in respect of
such fractional share in an amount equal to the same fraction of
$85.00 computed to the nearest whole cent or (ii) aggregate all
such fractional shares into a whole number of shares and sell
such aggregated fractional shares on behalf of the holders
entitled thereto in a public or private sale and distribute the
net cash proceeds from the sale thereof to such holders pro rata.
If the Corporation shall elect so to aggregate and sell such
fractional shares, it shall endeavor to use its best efforts to
secure the best available sales price for such shares but shall
not be obligated to secure the highest price obtainable for such
shares. The amount of Preferred Dividend Stock issuable to a
holder by way of a dividend shall be computed on the basis of the
aggregate number of shares of Convertible Preferred Stock
registered in such holder's name on the record date fixed for the
payment of such dividend. Dividends payable on the Convertible
Preferred Stock for any period less than a full semi-annual
period shall be computed on the basis of a 360-day year of twelve
30-day months.
(b) Priority. If dividends upon any shares of
Convertible Preferred Stock, or any other outstanding class or
series of Stock of the Corporation ranking on a parity with the
Convertible Preferred Stock as to dividends, are in arrears, all
dividends or other distributions declared upon each class or
series of such Stock (other than dividends paid in Stock of the
Corporation ranking junior to the Convertible Preferred Stock as
to dividends and upon liquidation, dissolution or winding up) may
only be declared pro rata so that in all cases the amount of
dividends or other distributions declared per share on the
Convertible Preferred Stock and such class or series bear to each
other the same ratio that the accrued and unpaid dividends per
share on the shares of the Convertible Preferred Stock and such
class or series bear to each other. Except as set forth above,
if dividends upon any shares of Convertible Preferred Stock are
in arrears: (i) no dividends (in cash, Stock or other property)
may be paid, declared or set aside for payment or any other
distribution made on any Stock of the Corporation ranking junior
to the Convertible Preferred Stock as to dividends (other than
dividends or distributions in Stock of the Corporation ranking
junior to the Convertible Preferred Stock as to dividends and
upon liquidation, dissolution or winding up) and upon
liquidation, dissolution or winding up; and (ii) no Stock of the
Corporation ranking junior to or on a parity with the Convertible
Preferred Stock as to dividends may be redeemed, purchased or
otherwise acquired by the Corporation, except by conversion of
such Stock into, or exchange of such Stock for, Stock of the
Corporation ranking junior to the Convertible Preferred Stock as
to dividends and upon liquidation, dissolution or winding up.
(c) No Interest. No interest, sum of money in lieu of
interest, or other property or securities shall be payable in
respect of any dividend payment or payments which are accrued but
unpaid. Dividends paid on shares of Convertible Preferred Stock
in an amount less than the total amount of such dividends at the
time accumulated and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the
time outstanding.
Section 3. Conversion Privilege.
(a) Right of Conversion. At any time on or after
May 20, 1998 (the "Conversion Date"), each share of Convertible
Preferred Stock shall be convertible at the option of the holder
thereof into fully paid and nonassessable shares of Common Stock
("Conversion Stock"), at a conversion rate per full share of
Convertible Preferred Stock determined by dividing $85.00 by the
conversion price per share of Common Stock in effect on the date
such share is surrendered for conversion, or into such additional
or other securities, cash or property and at such other rates as
required in accordance with the provisions of this Section 3,
except that if shares have been called for redemption, the
conversion right will terminate as to the shares called for
redemption at 5:00 p.m. New York City time, on the business day
prior to the date fixed for such redemption. For purposes of
this resolution, the "conversion price" per share of Convertible
Preferred Stock shall initially be $0.50 and shall be adjusted
from time to time in accordance with the provisions of this
Section 3. For purposes of this resolution, the "conversion
rate" per share of Convertible Preferred Stock shall initially be
170 shares of Conversion Stock and shall be adjusted from time to
time in accordance with the provisions of this Section 3. Each
share of Convertible Preferred Stock may be converted in whole or
in part.
(b) Conversion Procedures. Any holder of shares of
Convertible Preferred Stock desiring to convert such shares into
Common Stock shall surrender the certificate or certificates
evidencing such shares of Convertible Preferred Stock at the
office of the transfer agent for the Convertible 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 to the Corporation that the holder elects to convert such
shares of Convertible 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 Section 3(i) or in this
paragraph, no payments or adjustments in respect of dividends on
shares of Convertible Preferred Stock surrendered for conversion,
whether paid or unpaid and whether or not in arrears, or on
account of any dividend on the Conversion Stock issued upon
conversion shall be made by the Corporation upon the conversion
of any shares of Convertible Preferred Stock at the option of the
holder, including, without limitation, the special conversion
rights provided in Section 4. The holder of record of shares of
Convertible 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 notwithstanding the conversion of such shares;
provided, however, that unless such shares, prior to such
surrender, had been called for redemption on a redemption date
during the period between such dividend record date and the
Dividend Payment Date, such shares must be accompanied, upon
surrender for conversion, by payment from the holder to the
Corporation of an amount equal to the dividend payable on such
shares on that Dividend Payment Date.
The Corporation shall, as soon as practicable after such
surrender of certificates evidencing shares of Convertible
Preferred Stock accompanied by the written notice and compliance
with any other conditions herein contained, delivered at such
office of such transfer agent to the person for whose account
such shares of Convertible Preferred Stock were so surrendered,
or to the nominee or nominees 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 Preferred Stock to be converted, and the person or
persons entitled to receive the Common Stock deliverable upon
conversion of such Convertible 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 and Conversion Rate.
The conversion price at which a share of Convertible Preferred
Stock is convertible into Common Stock, and the conversion rate
at which shares of Conversion Stock are issuable upon conversion
of Convertible Preferred Stock, shall be subject to adjustment in
certain events including, without duplication, the following:
(i) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock
exclusively in Common Stock to all holders of its Common
Stock, the conversion price in effect at the opening of
business on the business 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, 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
paragraph (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
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 to all
holders of its Common Stock, rights or warrants entitling
the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the Market Price
per share (determined as provided in paragraph (vi) of this
Section 3(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 or
purchase would purchase at such 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 or warrants referred to in this paragraph
(ii) in respect of which an adjustment shall have been made
shall expire unexercised, 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 paragraph
(iv), in case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, shares of any class or series
of capital stock, cash or assets (including securities, but
excluding any rights or warrants referred to in
paragraph (ii) of this Section 3(c), any dividend or
distribution paid exclusively in cash and any dividend or
distribution referred to in paragraph (i) of this
Section 3(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 Market Price per share (determined as provided
in paragraph (vi) of this Section 3(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
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 paragraph (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 Market Price per share of
Common Stock pursuant to paragraph (vi) of this
Section 3(c). For purposes of this paragraph (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 (A) 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 paragraph (iv)) immediately
followed by (B) a dividend or distribution of such shares of
Common Stock or such rights or warrants (making any further
conversion price reduction required by paragraph (i) or (ii)
of this Section 3(c)), except (1) the Reference Date of such
dividend or distribution as defined in this paragraph (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 paragraphs (i) and (ii)
of this Section 3(c) and (2) 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
paragraph (i) of this Section 3(c).
(v) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock in cash
(excluding (A) cash that is part of a distribution referred
to in paragraph (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 preceding quarterly cash dividend on the Common Stock
(as adjusted to appropriately reflect any of the events
referred to in paragraphs (i), (ii), (iii), (iv) and (v) of
this Section 3(c)), or all of such quarterly cash dividend
if the amount thereof per share of Common Stock multiplied
by four does not exceed 15% of the Market Price per share
(determined as provided in paragraph (vi) of this
Section 3(c)) of the Common Stock as of the trading day 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 for such distribution shall be reduced by
multiplying such conversion price by a fraction of which the
numerator shall be the Market Price per share (determined as
provided in paragraph (vi) of this Section 3(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 of which shall be such 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.
(vi) For the purpose of any computation under
paragraph (ii), (iii), (iv) or (v) of this Section 3(c) or
Section 3(d), the Market Price per share of Common Stock on
any date shall be deemed to be the average of the Market
Prices for the five consecutive trading days ending with and
including the date in question; provided, however, that
(A) 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 paragraph (i), (ii), (iii), (iv) or (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 Market Price for each trading day
prior to the "ex" date for such Other Event shall be
adjusted by multiplying such Market Price by the same
fraction by which the conversion price is so required to be
adjusted as a result of such Other Event, (B) 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
Market Price for each trading day on and after the "ex" date
for such Other Event shall be adjusted by multiplying such
Market 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, (C) 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 (A) and
(B) of this proviso to have an "ex" date occurring prior to
the "ex" date for the other event, and (D) 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 (B) of this proviso, the Market 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 this Section 3(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, (1) when used with respect to any issuance
or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchanges or in the
relevant market from which the Market Price was obtained
without the right to receive such issuance or distribution
and (2) 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. As used in
this Section 3(c) or in Section 3(d), the term "Market
Price" of the Common Stock for any day means the last
reported sale price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in
either case reported on the American Stock Exchange ("AMEX")
Consolidated Transaction Tape, or, if the Common Stock is
not listed or admitted to trading on the AMEX on such day,
on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, if the Common
Stock is listed on a national securities exchange, or the
National Market Tier of The Nasdaq Stock Market ("Nasdaq
NMS") or, if not listed or admitted to trading on such
quotation system, on the principal quotation system on which
the Common Stock may be 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 similar generally accepted reporting service, or, if not
so available in such manner, as furnished by any AMEX member
firm selected from time to time by the Board of Directors of
the Corporation for that purpose or, if not so available in
such manner, as otherwise determined in good faith by the
Board of Directors of the Corporation.
(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 paragraph (vii) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment.
(viii) Whenever the conversion price is adjusted as
herein provided:
(A) the Corporation shall make an appropriate
corresponding proportional adjustment to the conversion
rate which shall become effective when the adjustment
to the conversion price becomes effective;
(B) the Corporation shall compute the adjusted
conversion price and conversion rate and shall prepare
a certificate signed by a Vice President or the
Treasurer of the Corporation setting forth the adjusted
conversion price and conversion rate and showing in
reasonable detail the facts upon which such adjustments
are based, and such certificate shall forthwith be
filed with the transfer agent for the Convertible
Preferred Stock; and
(C) as soon as practicable after the
adjustments, the Corporation shall mail to all record
holders of Convertible Preferred Stock at their last
addresses as they shall appear in stock transfer books
of the Corporation a notice stating that the conversion
price and conversion rate have been adjusted and
setting forth the adjusted conversion price and
conversion rate.
(ix) The Corporation from time to time may reduce
the conversion price or increase the conversion rate by any
amount for any period of time if the period is at least
twenty (20) days and the Board of Directors has made a
determination that such reduction (or increase) would be in
the best interest of the Corporation, which determination
shall be conclusive. Whenever the conversion price is
reduced (or the conversion rate increased) pursuant to the
preceding sentence, the Corporation shall mail to the record
holders of Convertible Preferred Stock a notice of the
reduction (or increase) at least fifteen (15) days prior to
the date the reduced conversion price (or increased
conversion rate) takes effect, and such notice shall state
the reduced conversion price (or increased conversion rate)
and the period it will be in effect.
(d) No Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion of the Convertible
Preferred Stock. If more than one certificate evidencing shares
of Convertible 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 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 Preferred Stock, the Corporation shall
either (i) pay a cash adjustment in respect of such fractional
share in an amount equal to the same fraction of the Market Price
for the shares of Common Stock as of the day of such conversion
or (ii) aggregate all such fractional shares into a whole number
of shares and sell such aggregated fractional shares on behalf of
the holders entitled thereto in a public or private sale and
distribute the net cash proceeds from the sale thereof to such
holders pro rata. If the Corporation should so elect so to
aggregate and sell such fractional shares, it shall endeavor to
use its best efforts to secure the best available sales price for
such shares but shall not be obligated to secure the highest
price obtainable for such shares.
(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 recapitalization 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 subdivision or combination of the
Common Stock), any consolidation of the Corporation with, or
merger of the Corporation into, any other person, any merger or
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 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 might have
been converted immediately prior to such transaction provided,
however, that if the holders of Common Stock were entitled by the
terms of the transaction to make an election to receive
securities, cash or property, or any combination of the
foregoing, lawful provision shall be made as part of the terms of
such transaction whereby the holder of each share of Convertible
Preferred Stock then outstanding shall have the right thereafter
to convert such share only into the kind and amount of
securities, cash or other property receivable upon such
transaction by a holder of the number of shares of Common Stock
who made one of the elections provided for in such transaction
(as determined by the Board of Directors, whose determination
shall be conclusive) into which such share 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. Such certificate
or articles of incorporation or other constituting document shall
provide for adjustments which, for events subsequent to the
effective date of such certificate or articles of incorporation
or other constituting document, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this
Section 3. 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 Common Stock and/or
Common Stock held in treasury, solely for the purpose of
effecting the conversion of the Convertible 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 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 (or combine or repurchase its
outstanding shares of Common Stock) if at any time the number of
shares of authorized and unissued Common Stock and/or Common
Stock held in treasury, shall not be sufficient to permit the
conversion of all the then outstanding shares of Convertible
Preferred Stock.
If any shares of Common Stock required to be reserved for
the purposes of conversion of the Convertible 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 Preferred Stock, for so long as the
Common Stock continues to be so listed.
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (A) declare any
dividend (or any other distribution) on its Common
Stock, other than (1) a dividend payable in shares of
Common Stock or (2) a dividend payable in cash out of
its retained earnings other than any special or
nonrecurring or other extraordinary dividend or
(B) declare or authorize a redemption or repurchase of
in excess of 10% of the then outstanding shares of
Common Stock; or
(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; or
(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 party and for which approval of any
stockholders of the Corporation shall be required, or
of the sale or transfer of all or substantially all of
the assets of the Corporation or of any share exchange
whereby the Corporation is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Convertible Preferred Stock, and shall cause to be
mailed to all holders of record of the Convertible Preferred
Stock at their last addresses as they shall appear upon the stock
transfer books of the Corporation, at least fifteen (15) 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 or winding up 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
or winding up (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of
the corporate action required to be specified in such notice).
(h) Certain Additional Rights. In case the Corporation
shall, by dividend or otherwise, declare or make a distribution
on its Common Stock referred to in Section 3(c)(iv) or 3(c)(v)
(including, without limitation, dividends or distribution
referred to in the last sentence of Section 3(c)(iv)), the holder
of each share of Convertible Preferred Stock upon the conversion
thereof subsequent to the close of business on the date fixed for
the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the conversion
price adjustment in respect of such distribution, shall be
entitled to receive for each share of Common Stock into which
such share of Convertible Preferred Stock is converted, the
portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and
assets as distributed applicable to one share of Common Stock;
provided, however, that at the election of the Corporation (whose
election shall be evidenced by a resolution of the Board of
Directors) with respect to all holders so converting, the
Corporation may, in lieu of distributing to such holder any
portion of such distribution not consisting of cash or securities
of the Corporation, pay such holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the
Board of Directors, which determination shall be conclusive). If
any conversion of a share of Convertible Preferred Stock
described in the immediately preceding sentence occurs prior to
the payment date for a distribution to holders of Common Stock
which the holder of the share of Convertible Preferred Stock so
converted is entitled to receive in accordance with the
immediately preceding sentence, the Corporation may elect (such
election to be evidenced by a resolution of the Board of
Directors) to distribute to such holder a due bill for the shares
of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets to which such holder is
so entitled, provided that such due bill (a) meets any applicable
requirements of the principal national securities exchange or
other market on which the Common Stock is then traded and
(b) requires payment or delivery of such shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or
delivery thereof to holders of shares of Common Stock receiving
such distribution.
(i) Mandatory Conversion Right.
(i) At any time after November 20, 1997, and
provided that the Corporation is current in the payment of
dividends on the Convertible Preferred Stock to the
Mandatory Conversion Date, the Corporation may, at its
option, require the conversion of all the outstanding shares
of Convertible Preferred Stock. The Corporation may
exercise this option only if for twenty (20) trading days
within any period of thirty (30) consecutive trading days,
including the last trading day of such period, the Current
Market Price (as defined in subparagraph (iii) below) of the
Common Stock equals or exceeds 150% of the current
conversion price of the Convertible Preferred Stock, such
conversion price to be subject to adjustments in the same
manner and for the same events as the conversion price in
Section 3. In order to exercise its mandatory conversion
option, the Corporation must issue a press release for
publication on the Dow Jones News Service, Reuters,
Bloomberg, or other widely disseminated publicly available
financial news service, announcing the effective date of the
mandatory conversion of the Convertible Preferred Stock (the
"Mandatory Conversion Date") prior to the opening of
business on the second trading day after any period in which
the condition in the preceding sentence has been met, but in
no event prior to November 20, 1997. The press release
shall announce the Mandatory Conversion Date and provide the
current conversion price, current conversion rate and
Current Market Price of the Common Stock, in each case as of
the close of business on the trading day next preceding the
date of the press release. Effective on the Mandatory
Conversion Date, all of the issued and outstanding shares of
Convertible Preferred Stock shall be converted into fully
paid and non-assessable shares of Common Stock at such
current conversion price and current conversion rate set
forth in such press release in the manner provided in this
Section 3. Effective as of the close of business on the
Mandatory Conversion Date, the shares of Convertible
Preferred Stock shall no longer be deemed to be issued and
outstanding and certificates evidencing such Stock shall
solely evidence the right to receive the shares of Common
Stock issuable in such conversion.
(ii) Notice of the exercise of the Mandatory
Conversion Right will be given by first-class mail to the
record holders of the Convertible Preferred Stock not more
than four (4) business days after the Corporation issues the
press release. The Mandatory Conversion Date will be a date
selected by the Corporation not less than thirty (30) nor
more than sixty (60) days after the date on which the
Corporation issues the press release announcing its
intention to exercise its Mandatory Conversion Right.
(iii) The term "Current Market Price' of the Common
Stock for any day means the reported closing bid price,
regular way, on such day, as reported on the AMEX, or, if
the Common Stock is not listed or admitted to trading on the
AMEX on such day, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading, if the Common Stock is listed on a national
securities exchange, or the Nasdaq NMS or, if the Common
Stock is not quoted or admitted to trading on such
quotations system, on the principal quotation system in
which the Common Stock may be 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 similar generally accepted reporting service, or, if not
so available in such manner, as furnished by any AMEX member
firm selected from time to time by the Board of Directors of
the Corporation for that purpose or, if not so available in
such manner, as otherwise determined in good faith by the
Board of Directors of the Corporation, which determination
shall be conclusive.
Section 4. Special Conversion Rights.
(a) Change of Control. Upon the occurrence of a Change
of Control (as defined in Section 4(e)) with respect to the
Corporation, each holder of Convertible Preferred Stock shall
have the right, at the holder's option, for a period of thirty
(30) days after the mailing of a notice by the Corporation that a
Change of Control has occurred, to convert all, but not less than
all, of such holder's Convertible Preferred Stock into Common
Stock of the Corporation at an adjusted conversion price per
share equal to the Special Conversion Price (as defined in
Section 4(e)). The Corporation may, at its option, in lieu of
providing Common Stock upon any such special conversion, provide
the holder with cash equal to the Market Value (as defined in
Section 4(e)) of the Common Stock multiplied by the number of
shares of Common Stock into which such Convertible Preferred
Stock would have been convertible immediately prior to such
Change of Control at an adjusted conversion price equal to the
Special Conversion Price. The special conversion right arising
upon a Change of Control shall only be applicable with respect to
the first Change of Control that occurs after the first date of
issuance of any Convertible Preferred Stock. Convertible
Preferred Stock which becomes convertible pursuant to a special
conversion right shall, unless so converted, remain convertible
pursuant to Section 3 at the conversion price and conversion rate
in effect immediately before the effective date of the Change of
Control, subject to subsequent adjustment as provided in
Section 3(c).
(b) Fundamental Change. Upon the occurrence of a
Fundamental Change (as defined in Section 4(e)) with respect to
the Corporation, each holder of Convertible Preferred Stock shall
have a special conversion right, at the holder's option, for a
period of thirty (30) days after the mailing of a notice by the
Corporation that a Fundamental Change has occurred, to convert
all, but not less than all, of such holder's Convertible
Preferred Stock into the kind and amount of cash, securities,
property or other assets receivable upon such Fundamental Change
by a holder of the number of shares of Common Stock into which
such Convertible Preferred Stock would have been convertible
immediately prior to such Fundamental Change at an adjusted
conversion price equal to the Special Conversion Price. The
Corporation or a successor corporation, as the case may be, may,
at its option and in lieu of providing the consideration as
required above upon such conversion, provide the holder with cash
equal to the Market Value of the Common Stock multiplied by the
number of shares of Common Stock into which such Convertible
Preferred Stock would have been convertible immediately prior to
such Fundamental Change at an adjusted conversion price equal to
the Special Conversion Price.
(c) Notice. Upon the occurrence of a Change of Control
or a Fundamental Change with respect to the Corporation, within
thirty (30) days after such occurrence, the Corporation shall
mail to each holder of Convertible Preferred Stock a notice of
such occurrence (the "Special Conversion Notice") setting forth
the following:
(i) the event constituting the Change of Control or
Fundamental Change;
(ii) the date upon which the applicable special
conversion right will terminate;
(iii) the Special Conversion Price;
(iv) the conversion price and conversion rate then
in effect under Section 3 and the continuing conversion
rights, if any, under Section 3;
(v) the name and address of the paying agent and
conversion agent;
(vi) that holders who want to convert Convertible
Preferred Stock must satisfy the requirements of
Section 4(d) and must exercise such conversion right within
the thirty (30)-day period after the mailing of such notice
by the Corporation;
(vii) that exercise of such conversion right shall
be irrevocable and no dividends on the Convertible Preferred
Stock (or portions thereof) tendered for conversion shall
accrue from and after the conversion date; and
(viii) that the Corporation (or a successor
corporation, if applicable) may, at its option, elect to pay
cash (specifying the amount thereof per share) for all
Convertible Preferred Stock tendered for conversion.
(d) Exercise Procedures. A holder of Convertible
Preferred Stock must exercise the special conversion right within
the thirty (30)-day period after the mailing of the Special
Conversion Notice or such special conversion right shall expire.
Such right must be exercised in accordance with Section 3(b) to
the extent the procedures in Section 3(b) are consistent with the
special provisions of this Section 4. Exercise of such
conversion right shall be irrevocable and no payments or
adjustments in respect of dividends on shares of Convertible
Preferred Stock surrendered for conversion, whether paid or
unpaid and whether or not in arrears shall be made by the
Corporation upon exercise of such conversion right. The
conversion date with respect to the exercise of a special
conversion right arising upon a Change of Control or Fundamental
Change shall be the thirtieth (30th) day after the mailing of the
Special Conversion Notice.
Convertible Preferred Stock which becomes convertible
pursuant to a special conversion right shall, unless converted,
remain convertible pursuant to Section 3 into the kind and amount
of cash, securities, property or other assets that the holders of
the Convertible Preferred Stock would have owned immediately
after the Fundamental Change if the holders had converted the
Convertible Preferred Stock immediately before the effective date
of the Fundamental Change, subject to subsequent adjustment under
the provisions contemplated by Section 3(c), if applicable.
(e) Definitions. The following definitions shall apply
to terms used in this Section 4:
(i) A "Change of Control" with respect to the
Corporation shall be deemed to have occurred at the first
time after the Issue Date that any person (within the
meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange
Act)), including a group (within the meaning of Rule 13d-5
under the Exchange Act), together with any of its Affiliates
or Associates (as defined below), files or becomes obligated
to file a report (or any amendment or supplement thereto) on
Schedule 13D or 14D-1 pursuant to the Exchange Act,
disclosing that such person has become the beneficial owner
of either (A) 50% or more of the shares of Common Stock of
the Corporation then outstanding or (B) securities
representing 50% or more of the combined voting power of the
Voting Stock (as defined below) of the Corporation then
outstanding; provided a Change of Control shall not be
deemed to have occurred with respect to any transaction that
constitutes a Fundamental Change. As used herein, a person
shall be deemed to have "beneficial ownership" with respect
to, and shall be deemed to "beneficially own," any
securities of the Corporation in accordance with Section 13
of the Exchange Act and the rules and regulations (including
Rule 13d-3, Rule 13d-5 and any successor rules) promulgated
by the Securities and Exchange Commission thereunder;
provided that a person shall be deemed to have beneficial
ownership of all securities that any such person has a right
to acquire whether such right is exercisable immediately or
only after the passage of time and without regard to the
sixty (60)-day limitation referred to in Rule 13d-3 and,
provided further, that a beneficial owner of Convertible
Preferred Stock shall not be deemed to beneficially own the
Common Stock into which such Convertible Preferred Stock is
convertible solely by reason of ownership of the Convertible
Preferred Stock. An "Affiliate" of a specified person is a
person that directly or indirectly controls, or is
controlled by or is under common control with, the person
specified. An "Associate" of a person means (i) any
corporation or organization, other than the Corporation or
any subsidiary of the Corporation, of which the person is an
officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity
securities; (ii) any trust or estate in which the person has
a substantial beneficial interest or as to which the person
serves as trustee or in a similar fiduciary capacity; and
(iii) any relative or spouse of the person or any relative
of the spouse, who has the same home as the person or who is
a director or officer of the person or any of its parents or
subsidiaries.
(ii) "Exchange Act" means the Securities Exchange
Act of 1934, as amended, and as in effect on the date
hereof.
(iii) A "Fundamental Change" with respect to the
Corporation means (A) the occurrence of any transaction or
event in connection with which all or substantially all of
the Common Stock of the Corporation shall be exchanged for,
converted into, acquired for or constitute solely the right
to receive cash, securities, property or other assets
(whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) or (B) the conveyance, sale,
lease, assignment, transfer or other disposal of all or
substantially all of the Corporation's property, business or
assets; provided, however, that a Fundamental Change shall
not be deemed to have occurred with respect to either of the
following transactions or events: (1) any transaction or
event in which more than 50% (by value as determined in good
faith by the Board of Directors) of the consideration
received by holders of Common Stock consists of Marketable
Stock (as defined below); or (2) any consolidation or merger
of the Corporation immediately prior to such transaction
own, directly or indirectly, (x) 50% or more of the common
stock of the surviving corporation (or of the ultimate
parent of such surviving corporation) outstanding at the
time immediately after such consolidation or merger and (y)
securities representing 50% or more of the combined voting
power of the surviving corporation's Voting Stock (or for
the Voting Stock of the ultimate parent of such surviving
corporation) outstanding at such time. The phrase "all or
substantially all" as used in this definition in reference
to the Common Stock shall mean 66% or more of the aggregate
outstanding amount of Common Stock.
(iv) "Voting Stock" means, with respect to any
person, capital stock of such person having general voting
power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of
such person (irrespective of whether or not at the time
capital stock of any other class or classes shall have or
might have voting power by reason of the happening of any
contingency).
(v) The "Special Conversion Price" shall mean the
lesser of the Market Value of the Common Stock and the
prevailing conversion price.
(vi) The "Market Value" of the Common Stock or any
other Marketable Stock shall be the average of the last
reported sales prices of the Common Stock or such other
Marketable Stock, as the case may be, for the five business
days ending on the last business day preceding the date of
the Change of Control or Fundamental Change; provided,
however, that if the Marketable Stock is not traded on any
national securities exchange or similar quotation system as
described in the definition of "Marketable Stock" during
such period, then the Market Value of such Marketable Stock
shall be the average of the last reported sales prices per
share of such Marketable Stock during the first five
business days commencing with the first day after the date
on which such Marketable Stock was first distributed to the
general public and traded on the New York Stock Exchange
("NYSE"), the AMEX, the Nasdaq NMS or any similar system of
automated dissemination of quotations of securities prices
in the United States.
(vii) "Marketable Stock" shall mean Common Stock or
common stock of any corporation that is the successor to all
or substantially all of the business or assets of the
corporation as a result of a Fundamental Change (or of the
ultimate parent of such successor), which is (or will, upon
distribution thereof, be) listed or quoted on the NYSE, the
AMEX, the Nasdaq NMS or any similar system of automated
dissemination of quotations of securities prices in the
United States.
Section 5. General Class and Series Voting Rights. The
Convertible Preferred Stock shall have the following voting
rights in addition to (i) any special voting rights specifically
required by the laws of the State of Delaware,(ii) as are
provided in Section 6 and (iii) as provided by the provisions of
this Restated Certificate of Incorporation of the Corporation:
(a) So long as any shares of Convertible Preferred Stock
remain outstanding, the holders of Convertible Preferred Stock
will be entitled to receive notice of any meeting of, and
solicitation of any consent from the holders of Common Stock and
to vote with the holders of Common Stock on, and to consent to
all matters on which the holders of Common Stock are entitled to
vote or consent to, respectively. Each share of Convertible
Preferred Stock shall be entitled to cast the same number of
votes as the full number of shares of Common Stock that are then
issuable upon conversion thereof.
(b) So long as any shares of Convertible Preferred Stock
remain outstanding, the vote or consent of the holders of at
least two-thirds of the shares of Convertible Preferred Stock
outstanding at the time (voting separately as a class) given in
person or by proxy, either in writing or at any special or annual
meeting called for the purpose, shall be necessary to permit,
effect or validate any one or more of the following:
(i) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or
series of stock (including any class or series of preferred
stock) ranking prior (as that term is hereinafter defined in
this Section 5) to the Convertible Preferred Stock; or
(ii) The amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the
provisions of this Restated Certificate of Incorporation or
of these resolutions which would alter, change or repeal the
powers, preferences, or special rights of the shares of the
Convertible Preferred Stock so as to affect them adversely.
(c) The foregoing voting provisions shall not apply if,
at or prior to the time when the act with respect to which such
vote would otherwise be required shall be effected, all
outstanding shares of Convertible Preferred Stock shall have been
redeemed or sufficient funds and/or shares of Common Stock shall
have been deposited in trust to effect such redemption.
(d) For purposes of this resolution, any class or series
of stock of the Corporation shall be deemed to rank:
(i) prior to the Convertible Preferred Stock as to
dividends or as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or
series shall be entitled to the receipt of dividends or
amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of Convertible Preferred Stock;
(ii) on a parity with the Convertible Preferred
Stock as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up, whether or not the
dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof shall be different from
those of the Convertible Preferred Stock, if the holders of
such class or series of stock and the Convertible Preferred
Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without
preference or priority one over the other as of the date of
adoption of this resolution. The Series Band Series F
Preferred Stock are on a parity with the Convertible
Preferred Stock as to dividends and as to distribution of
assets upon liquidation, dissolution or winding up; and
(iii) junior to the Convertible Preferred Stock as
to dividends or as to distribution of assets upon
liquidation, dissolution or winding up, if such class or
series shall be Common Stock or if the holders of the
Convertible Preferred Stock shall be entitled to the receipt
of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference
or priority to the holders of shares of such class or
series.
Section 6. Default Voting Rights.
(a) Election of Directors. Whenever, at any time or
times, dividends payable on the shares of Convertible Preferred
Stock shall be in arrears in an amount equal to at least three
semi-annual dividends (whether or not consecutive and whether
payable in cash or shares of Convertible Preferred Stock), the
holders of the outstanding shares of Convertible Preferred Stock
shall have the exclusive right (voting separately as a class) to
elect two directors of the Corporation.
(b) Vote Per Share. At elections for such directors,
each holder of Convertible Preferred Stock shall be entitled to
one vote for each share of Convertible Preferred Stock held.
Upon the vesting of such right with the holders of Convertible
Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by two, which
shall be of the class or classes selected by the Corporation's
Board of Directors which has the least number of director
positions then currently filled, and the two vacancies so created
shall be filled by vote of the holders of the outstanding shares
of Convertible Preferred Stock as hereinafter set forth. The
right of the holders of Convertible Preferred Stock, voting
separately as a class to elect members of the Board of Directors
of the Corporation shall continue until such time as all
dividends accrued and unpaid on the Convertible Preferred Stock
shall have been paid or declared and funds set aside to provide
for payment in full, at which time such right shall terminate,
except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of
the character above mentioned, and the term of office of all
directors so elected shall terminate also.
(c) Meetings. Whenever the voting right described in
subsection (a) above shall have vested in the holders of the
Convertible Preferred Stock, the right may be exercised initially
either at a special meeting of the holders of the Convertible
Preferred Stock called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing
directors, and thereafter at each successive annual meeting.
(d) Call of Meeting. At any time when the voting right
described in subsection (a) above shall have vested in the
holders of the Convertible Preferred Stock, and if the right
shall not already have been initially exercised, a proper officer
of the Corporation shall, upon the written request of the holders
of record of 10% in number of the shares of the Convertible
Preferred Stock then outstanding, addressed to the Secretary of
the Corporation, call a special meeting of the holders of the
Convertible Preferred Stock for the purpose of electing
directors. Such meeting shall be held at the earliest
practicable date upon the notice required for annual meetings of
stockholders at the place for holding of annual meetings of
stockholders of the Corporation, or, if none, at a place
designated by the Secretary of the Corporation. If the meeting
shall not be called by the proper officers of the Corporation
within thirty (30) days after the personal service of such
written request upon the Secretary of the Corporation, or within
thirty (30) days after mailing it within the United States of
America, by registered mail, addressed to the Secretary of the
Corporation at its principal office (such mailing to be evidenced
by the registry receipt issued by the postal authorities), then
the holders of record of 10% in number of the shares of the
Convertible Preferred Stock then outstanding may designate in
writing one of their members to call such meeting at the expense
of the Corporation, and such meeting may be called by such person
so designated upon the notice required for annual meetings of
stockholders and shall be held at the same place as is elsewhere
provided for in this subsection (d). Any holder of the
Convertible Preferred Stock shall have access to the share
transfer books of the Corporation as permitted under the Delaware
General Corporation Law for the purpose of causing a meeting of
the stockholders to be called pursuant to the provisions of this
subsection (d). Notwithstanding the provisions of this
subsection (d), however, no such special meeting shall be held
during a period within sixty (60) days immediately preceding the
date fixed for the next annual meeting of stockholders.
(e) Quorum. At any meeting held for the purpose of
electing directors at which the holders of the Convertible
Preferred Stock shall have the right to elect directors as
provided herein, the presence in person or by proxy of the
holders of 50% of the then outstanding shares of the Convertible
Preferred Stock shall be required and be sufficient to constitute
a quorum of the holders of the Convertible Preferred Stock for
the election of directors. At any such meeting or adjournment
thereof (i) the absence of a quorum of the holders of the
Convertible Preferred Stock shall not prevent the election of
directors other than those to be elected by the holders of the
Convertible Preferred Stock and the absence of a quorum or
quorums of the holders of other classes or series of capital
stock entitled to elect such other directors shall not prevent
the election of directors to be elected by the holders of the
Convertible Preferred Stock and (ii) in the absence of a quorum
of the holders of the Convertible Preferred Stock, a majority of
the holders present in person or by proxy of the Convertible
Preferred Stock shall have the power to adjourn the meeting, or
appropriate portion thereof for the election of directors which
the holders of the Convertible Preferred Stock are entitled to
elect, from time to time, without notice other than announcement
at the meeting, until a quorum shall be present. The Chairman of
the Board or the President of the Corporation shall preside at
any such meeting.
(f) Term. Each director elected by the holders of
shares of Convertible Preferred Stock shall continue to serve as
a director until such time as all dividends accrued and unpaid on
the Convertible Preferred Stock shall have been paid or declared
and funds set aside to provide for payment in full, at which time
the term of office of all persons elected as directors by the
holders of shares of Convertible Preferred Stock shall forthwith
terminate and the number of members of the Board of Directors of
the Corporation shall be reduced accordingly. Whenever the term
of office of the directors elected by the holders of Convertible
Preferred Stock voting as a class shall end and the special
voting powers vested in the holders of Convertible Preferred
Stock as provided in this Section 6 shall have expired, the
number of directors shall be such number as may be provided for
in the By-Laws irrespective of any increase made pursuant to the
provisions of this Section 6.
Section 7. Redemption Rights.
(a) Optional Redemption. The Corporation may at its
option, at any time on or after May 1, 2002, in the years
indicated below, redeem (an "Optional Redemption") all, or any
number less than all, of the outstanding shares of Convertible
Preferred Stock, provided, that the Convertible Preferred Stock
may not be redeemed, in whole or in part, prior to May 1, 2002.
All optional redemptions of shares of Convertible Preferred Stock
shall be effected during the twelve (12) month period beginning
on May 1 of the year indicated at the applicable redemption
prices set forth below:
Year Redemption Price Per Share
2002
2003 $ 90.00
2004
2005 88.33
86.67
85.00
and thereafter at $85.00 per share, plus, in each case, an amount
equal to all dividends (whether or not declared) accrued and
unpaid on such share of Convertible Preferred Stock to the date
fixed for redemption (the price from time to time to redeem the
Convertible Preferred Stock excluding any dividends (whether or
not declared) accrued and unpaid, is referred to herein as the
"Redemption Price").
(b) Mandatory Redemption. Each issued and outstanding
share of Convertible Preferred Stock shall be redeemed on May 1,
2007, or the next succeeding business day (the "Mandatory
Redemption") at a Redemption Price of $85.00 per share, plus all
dividends (whether or not declared) accrued and unpaid on such
share of Convertible Preferred Stock to the date fixed for
redemption, payable in cash or, at the election of the
Corporation, in shares of Common Stock ("Redemption Stock").
(c) Accrued Dividends. The Corporation may not
purchase, redeem or otherwise acquire for value any shares of
Convertible Preferred Stock or shares of any other series of
Preferred Stock then outstanding ranking on a parity with or
junior to the Convertible Preferred Stock unless all accrued
dividends on all shares of Convertible Preferred Stock then
outstanding shall have been paid or declared and a sum of cash
(or shares of Preferred Dividend Stock) sufficient for the
payment thereof set apart. No sinking fund shall be established
for the Convertible Preferred Stock.
(d) Mandatory Redemption Price Paid in Common Stock.
The Corporation may pay the Redemption Price for Convertible
Preferred Stock called for Mandatory Redemption pursuant to
Section 7(b) by issuing, for each full share of Convertible
Preferred Stock being redeemed, to the holder thereof, such
number of shares of Redemption Stock equal to the value of the
Market Price averaged over the twenty (20) trading days preceding
the date of notice of redemption provided for in Section 7(e).
All such shares of Redemption Stock shall be duly authorized,
validly issued, fully paid and non-assessable. The Corporation
will not issue any fractional shares or script representing
fractional shares of Common Stock upon such redemption of the
Convertible Preferred Stock and, in lieu thereof, will either (i)
pay a cash adjustment based on the Market Price of the Common
Stock as of the last trading day prior to the Redemption Date (as
hereinafter defined) or (ii) aggregate and sell all such
fractional shares and distribute the proceeds to holders as
provided in Section 3(d).
For purpose of this Section 7(d), "Common Stock" shall mean
the Common Stock of the Corporation or any other cash, securities
or property that the holder of Convertible Preferred Stock is
entitled to receive upon conversion of the Convertible Preferred
Stock pursuant to Section 3(c).
(e) Notice of Redemption. Notice of any proposed
Optional or Mandatory Redemption of shares of Convertible
Preferred Stock shall be mailed to each record holder of the
shares of Convertible Preferred Stock to be redeemed at least
thirty (30) but not more than sixty (60) days prior to the date
fixed for such redemption (herein referred to as the "Redemption
Date"). Each such notice shall set forth the following:
(i) the Redemption Date;
(ii) the Redemption Price per share;
(iii) the place for payment and for delivering the
stock certificate(s) and transfer instrument(s) in order to
receive the Redemption Price;
(iv) the shares of Convertible Preferred Stock to
be redeemed;
(v) the then effective conversion price and
conversion rate;
(vi) the Market Price of the Common Stock on the
last trading day prior to the date of the notice;
(vii) whether the Corporation will pay the
Redemption Price of the Convertible Preferred Stock to be
redeemed by issuing shares of Common Stock as provided in
subsection (d) above and, if so, the average of the Market
Prices over the twenty (20) trading days preceding the date
of the notice; and
(viii) that the right of holders of shares of
Convertible Preferred Stock being redeemed to exercise their
conversion right shall terminate as to such shares at the
close of business on the date fixed for redemption (provided
that no default by the Corporation in the payment of the
applicable Redemption Price (including any accrued and
unpaid dividends) shall have occurred and be continuing).
Any notice mailed in such manner shall be conclusively
deemed to have been duly given regardless of whether such notice
is in fact received. If less than all the outstanding shares of
Convertible Preferred Stock are to be redeemed, the Corporation
will select those to be redeemed ratably or by lot in a manner
determined by the Board of Directors. In order to facilitate the
redemption of the Convertible Preferred Stock, the Board of
Directors may fix a record date for determination of holders of
Convertible Preferred Stock to be redeemed, which shall not be
more than thirty (30) days prior to the Redemption Date with
respect thereto.
The holder of any shares of Convertible Preferred Stock
redeemed pursuant to this Section 7 upon any exercise of the
Corporation's redemption right shall not be entitled to receive
payment of the Redemption Price for such shares until such holder
shall cause to be delivered to the place specified in the notice
given with respect to such redemption (i) the certificate(s)
representing such share of Convertible Preferred Stock and
(ii) transfer instrument(s) sufficient to transfer such shares of
Convertible Preferred Stock to the Corporation free of any
adverse interest. No interest shall accrue on the Redemption
Price of any share of Convertible Preferred Stock after the
Redemption Date.
At the close of business on the Redemption Date for any
share of Convertible Preferred Stock, such share shall (provided
the Redemption Price (including any accrued and unpaid dividends
to the Redemption Date) of such shares has been paid or properly
provided for) be deemed to cease to be outstanding and all rights
of any person other than the Corporation in such share shall be
extinguished on the Redemption Date for such share (including all
rights to receive future dividends with respect to such share)
except for the right to receive the Redemption Price (including
any accrued and unpaid dividends to the Redemption Date), without
interest, for such share in accordance with the provisions of
this Section 7, subject to applicable escheat laws.
In the event that any shares of Convertible Preferred Stock
shall be converted into Common Stock prior to the Redemption Date
pursuant to Section 3 or 4, then (i) the Corporation shall not
have the right to redeem such shares and (ii) any funds,
securities or other property which shall have been deposited for
the payment of the Redemption Price for such shares shall be
returned to the Corporation immediately after such conversion
(subject to declared dividends payable to holders of shares of
Convertible Preferred Stock on the record date for such dividends
being so payable, to the extent set forth in Section 3 hereof;
regardless of whether such shares are converted subsequent to
such record date and prior to the related Dividend Payment Date)
and any shares of Common Stock reserved for issuance upon
redemption of such converted shares need no longer be so
reserved.
Notwithstanding the foregoing provisions of this Section 7,
and subject to the provisions of Section 2 hereof; if a dividend
upon any shares of Convertible Preferred Stock is past due,
(i) no share of the Convertible Preferred Stock may be redeemed,
except by means of a redemption pursuant to which all outstanding
shares of the Convertible Preferred Stock are simultaneously
redeemed and all accrued dividends paid and (ii) the Corporation
shall not purchase or otherwise acquire any shares of the
Convertible Preferred Stock, except pursuant to a purchase or
exchange offer made on the same terms to all holders of the
Convertible Preferred Stock.
Section 8. Rank; Liquidation. Upon any voluntary or
involuntary dissolution, liquidation or winding up of the
Corporation (for the purposes of this Section 8, a
"Liquidation"), after payment or provision for payment of the
debts and other liabilities of the Corporation, the holders of
Convertible Preferred Stock shall be entitled to be paid out of
the assets of the Corporation available for distribution to its
stockholders, an amount equal to $85.00 per share of Convertible
Preferred Stock then held by such stockholder, plus all dividends
(whether or not declared or due) accrued and unpaid on such share
to the date fixed for the distribution of assets of the
Corporation to the holders of Convertible Preferred Stock. The
shares of Convertible Preferred Stock shall rank prior to the
shares of Common Stock and any other class or series of stock of
the Corporation ranking junior to the Convertible Preferred
Stock, so that the holders of the Convertible Preferred Stock
shall receive the full amount to which they shall be entitled
before any distribution of assets shall be made to the holders of
the Common Stock or the holders of any other stock that ranks
junior to the Convertible Preferred Stock in respect of
distributions upon the Liquidation of the Corporation.
If upon any Liquidation of the Corporation, the assets
available for distribution to the holders of Convertible
Preferred Stock and any other stock of the Corporation ranking on
a parity with the Convertible Preferred Stock upon Liquidation
which shall then be outstanding (hereinafter in this paragraph
called the "Total Amount Available") shall be insufficient to pay
the holders of all outstanding shares of Convertible Preferred
Stock and all other such parity stock the full amounts (including
all dividends accrued and unpaid) to which they shall be entitled
by reason of such Liquidation of the Corporation, then there
shall be paid to the holders of the Convertible Preferred Stock
in connection with such Liquidation of the Corporation, an amount
equal to the product derived by multiplying the Total Amount
Available times a fraction, the numerator of which shall be the
full amount to which the holders of the Convertible Preferred
Stock shall be entitled under the terms of the preceding
paragraph by reason of such Liquidation of the Corporation and
the denominator of which shall be the total amount which would
have been distributed by reason of such Liquidation of the
Corporation with respect to the Convertible Preferred Stock and
all other stock ranking on a parity with the Convertible
Preferred Stock upon Liquidation then outstanding had the
Corporation possessed sufficient assets to pay the maximum amount
which the holders of all such stock would be entitled to receive
in connection with such Liquidation of the Corporation.
The voluntary sale, conveyance, lease, exchange or transfer
of all or substantially all of the property or assets of the
Corporation, or the merger or consolidation of the Corporation
into or with any other corporation, or the merger of any other
corporation into the Corporation, or any purchase or redemption
of some or all of the shares of any class or series of stock of
the Corporation, shall not be deemed to be a Liquidation of the
Corporation for the purposes of this Section 8 (unless in
connection therewith the Liquidation of the Corporation is
specifically approved).
The holder of any shares of Convertible Preferred Stock
shall not be entitled to receive any payment owed for such shares
under this Section 8 until such holder shall cause to be
delivered to the Corporation (i) the certificate(s) representing
such shares of Convertible Preferred Stock and (ii) transfer
instrument(s) satisfactory to the Corporation and sufficient to
transfer such shares of Convertible Preferred Stock to the
Corporation free of any adverse interest. No interest shall
accrue on any payment upon Liquidation after the due date
thereof.
After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of
the Convertible Preferred Stock will not be entitled to any
further participation in any distribution of assets by the
Corporation.
Section 9. Payments. The Corporation may provide funds
for any payment of the Redemption Price for any shares of
Convertible Preferred Stock or any amount distributable with
respect to any Convertible Preferred Stock under Sections 7 and 8
hereof by depositing such funds with a bank or trust company
selected by the Corporation having a net worth of at least
$50,000,000, in trust for the benefit of the holders of such
shares of Convertible Preferred Stock under arrangements
providing irrevocably for payment upon satisfaction of any
conditions to such payments by the holders of such shares of
Convertible Preferred Stock which shall reasonably be required by
the Corporation. The Corporation shall be entitled to make any
deposit of funds contemplated by this Section 9 under
arrangements designed to permit such funds to generate interest
or other income for the Corporation, and the Corporation shall be
entitled to receive all interest and other income earned by any
funds while they shall be deposited as contemplated by this
Section 9, provided that the Corporation shall maintain on
deposit funds sufficient to satisfy all payments which the
deposit arrangement shall require to be paid by the Corporation.
Any payment which may be owed for the payment of the
Redemption Price for any shares of Convertible Preferred Stock
pursuant to Section 7 or the payment of any amount distributable
with respect to any shares of Convertible Preferred Stock under
Section 8 shall be deemed to have been "paid or properly provided
for" upon the earlier to occur of: (i) the date upon which such
funds sufficient to make such payment shall be deposited in a
manner contemplated by the preceding paragraph or (ii) the date
upon which a check payable to the person entitled to receive such
payment shall be delivered to such person or mailed to such
person at either the address of such person then appearing on the
books of the Corporation or such other address as the Corporation
shall deem reasonable or (iii) in the case of a Mandatory
Redemption the Corporation shall have deposited a sufficient
amount of shares of Common Stock to pay the Redemption Price as
provided in Section 7(e).
Subject to applicable escheat laws, if the conditions
precedent to the disbursement of any funds deposited by the
Corporation pursuant to this Section 9 shall not have been
satisfied within six (6) months after the establishment of the
trust for such funds (or shares), then (i) such funds (or shares)
shall be returned to the Corporation upon its request; (ii) after
such return, such funds (or shares) shall be free of any trust
which shall have been impressed upon them; (iii) the person
entitled to this payment for which such funds (or shares) shall
have been originally intended shall have the right to look only
to the Corporation for such payment, subject to applicable
escheat laws; and (iv) the trustee which shall have held such
funds (or shares) shall be relieved of any responsibility for
such funds (or shares) upon the return of such funds (or shares)
to the Corporation.
Section 10. Status of Reacquired Shares. Shares of
Convertible Preferred Stock issued and reacquired by the
Corporation (including, without limitation, shares of Convertible
Preferred Stock which have been redeemed pursuant to the terms of
Section 7 hereof and shares of Convertible Preferred Stock which
have been converted into shares of Common Stock) shall have the
status of authorized and unissued shares of preferred stock,
undesignated as to series, subject to later issuance.
Section 11. Preemptive Rights. The Convertible
Preferred Stock is not entitled to any preemptive or subscription
rights in respect of any securities of the Corporation.
Section 12. 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 original issuance and delivery of
shares of Convertible Preferred Stock or shares of Common Stock
or Preferred Dividend Stock or Redemption Stock or other
securities issued on account of Convertible 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 Preferred Stock or Common Stock or other securities
in a name other than that in which the shares of Convertible
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 Preferred Stock
shall not by written notice designate the name in which shares of
Common Stock to be issued upon conversion or Preferred Dividend
Stock to be issued as a dividend or Redemption Stock to be issued
upon redemption of such shares, should be registered or to whom
payment upon redemption of shares of Convertible 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 make such payment in the name of the holder of such
Convertible Preferred Stock as shown on the 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.
(c) Registrar and Transfer Agent. The Corporation may
appoint, and from time to time discharge and change, the
registrar and transfer agent for the Convertible Preferred Stock.
The initial registrar and transfer agent for the Convertible
Preferred Stock shall be the Corporation.
(d) Severability. Whenever possible, each provision
hereof shall be interpreted in such 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.
C. The Corporation shall have the authority to issue up
to 50,000 shares of Preferred Stock designated Series B,
Cumulative Preferred Stock (the "Series B Preferred Stock"), each
share of Series B Preferred Stock being identical with each other
share of Series B Preferred Stock and all shares of Series B
Preferred Stock having the following characteristics, rights and
preferences:
Paragraph 1. Designation and Amount.
The shares of this series of Preferred Stock shall be
designated as Series B, Cumulative Preferred Stock, par
value of $1.00 per share ("Series B Preferred Stock"), and
the number of shares constituting such series shall be
50,000.
Paragraph 2. Definitions.
The following terms, not defined elsewhere herein,
shall have the following meanings:
"The American Stock Exchange" means the American Stock
Exchange, Inc.
"Board of Directors" means the Board of Directors of
the Company as may be constituted from time to time.
"Business Day" means any day (other than a Saturday,
Sunday or public holiday in the Borough of Manhattan, City
of New York, New York) on which banking institutions in New
York City are not authorized or obligated by law or
executive order to close.
"Common Stock" means the shares of common stock, par
value $.01 per share, of the Company.
"Company" or "XCL" means The Exploration Company of
Louisiana, Inc., a Delaware corporation.
"Convertible Loan Notes" means the 8% Subordinated
Convertible Notes of the Company.
"Directors" means the directors of the Company.
"Dividend Stock" means the shares of Common Stock paid
to holders of Series B Preferred Stock in lieu of a cash
dividend as provided in Section 3(b) hereof.
"$" means Dollars.
"Dollars" means the freely transferable currency of the
USA.
"Redemption Stock" means the shares of Common Stock
that may be issuable by the Company upon redemption of the
Series B Preferred Stock as hereinafter provided.
"Shareholders" means the holders of the Common Stock.
"Stock Option Plans" means the Incentive and (non-
qualified) Stock Option Plans adopted by the Company for
employees and certain other individuals rendering services
to the Company.
"The London Stock Exchange" means The International
Stock Exchange of the United Kingdom and the Republic Of
Ireland Limited.
"The New York Stock Exchange" means The New York Stock
Exchange. Inc.
"Transfer Agent" means the transfer agent for the
Series B Preferred Stock from time to time obtaining.
"UK" and" "United Kingdom" means the United Kingdom of
Great Britain and Northern Ireland.
"USA" and "US" means the United States of America.
Paragraph 3. Dividends and Distributions.
(a) Each share of Series B Preferred Stock shall
entitle the record holder to receive, out of funds legally
available therefor, when, as and if declared by the Board of
Directors, dividends in cash at the annual rate of $10.00
per share, which shall be payable in arrears in equal semi-
annual installments on June 30th and December 31st, or in
the event any such date is a Saturday, Sunday or public
holiday in the Borough of Manhattan, the City of New York,
New York, on the first Business Day following such date
(hereinafter a "Dividend Payment Date") in each year,
provided, however, that the dividend payable on the first
such Dividend Payment Date occurring after December 31, 1990
shall be equal to the product obtained by multiplying $5.00
by a fraction, the denominator of which shall be 182 and the
numerator of which shall be the number of days expired in
the period between the date of issuance of the first share
of Series B Preferred Stock (the "Issuance Date") and such
first Dividend Payment Date (inclusive of both such dates);
provided, however, that if as of the tenth Business Day
prior to any such Dividend Payment date the Board of
Directors has neither (i) declared a cash dividend of $10.00
per share nor (ii) delivered written notice of the Company's
election to pay a dividend hereunder in kind in shares of
Common Stock, the Company shall, to the extent legally and
contractually permitted, declare a dividend and use its best
efforts to pay such dividend in shares of Common Stock as
set forth in sub-paragraph 3(b).
(b) The Company may, at its option exercised by
written notice to the holders of the Series B Preferred
Stock given at least ten (10) Business Days prior to the
Dividend Payment Date, elect to pay any dividend due and
payable hereunder, and the Company shall to the extent
required by sub-paragraph 3(a), in kind in shares of Common
Stock in-lieu of a dividend payment in cash. The amount of
shares of Dividend Stock issuable to each holder of Series B
Preferred Stock pursuant to this sub-paragraph 3(b) on each
such Dividend Payment Date shall equal $6.00 divided by the
lowest average Closing Price per share of the Common Stock
as calculated for the last 5, 10 and 30 Trading Days (the
"Trading Periods") preceding such Dividend Payment Date
multiplied by the total number of shares of Series B
Preferred Stock registered in the name of each such holder
of the Series B Preferred Stock on the record date for the
payment of the dividend. As used herein, the term "Closing
Price" of a security on any day shall mean the last sales
price, regular way, per share of such security on such day
as reported in the principal consolidated reporting system
with respect to such security listed on The American Stock
Exchange or The New York Stock Exchange or, if the shares of
such security are not listed or admitted to trading on The
American Stock Exchange or The New York Stock Exchange, the
middle market quotations for the shares of such security
(derived from The London Stock Exchange Daily Official List)
listed or admitted to trading on The London Stock Exchange,
or if the shares of such security are not listed or admitted
to trading on The London Stock Exchange, the last sales
price as reported in the National Market System ("NMS") of
the National Association of Securities Dealers, Inc.'s
Automated Quotation System ("NASDAQ"), or if the shares of
such security are not listed or admitted to trading in NMS,
the average of the high bid and low asked prices in the over-
the-counter market as reported by NASDAQ, or if the bid and
asked prices on each such day shall not have been reported
through NASDAQ, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member
firm regularly making a market in such security selected for
such purpose by the Board of Directors or a committee
thereof on each Trading Day during such Trading Periods.
The term "Trading Day" shall mean a day on which the market
used for calculating the Closing Price is open for the
transaction of business or, if the shares of such security
are not so listed or admitted to trading, a Business Day.
In any of such alternate cases when such security is not
traded in prices expressed in Dollars, such Closing Price
shall be converted into Dollars at the spot market exchange
rate of pounds sterling (UK) into Dollars as quoted by
Manufacturers Hanover Trust Company on the date of
determination. Fractions of Common Stock arising in respect
of the payment of any dividend in shares of Dividend Stock
shall not be issued to the holders of Series B Preferred
Stock; instead they shall be aggregated and sold in the
market on behalf of such holders at the best price
reasonably obtainable and the net proceeds of sale shall be
distributed pro rata among such holders unless in respect of
any holding of the relevant shares the amount to be
distributed would be less than $2.00 in which case such
amount shall not be distributed but shall be retained for
the benefit of the Company. For the purpose of implementing
the provision in the immediately preceding sentence the
Board of Directors may appoint a person to execute transfers
on behalf of persons otherwise entitled to any such
fractions and generally may make all arrangements which
appear to them necessary or appropriate for the settlement
and disposal of fractional entitlements. Within fifteen
(15) Business Days after each Dividend Payment Date on which
the Company has elected. by written notice to each holder of
shares of Series B Preferred Stock, to pay the dividend due
thereon in shares of Dividend Stock, each holder of Series B
Preferred Stock shall have the right to notify the Company
of its election to have the Company sell its shares of
Dividend Stock on behalf of such holder. As soon as
practicable after receipt of such holder's written election
so to sell such shares the Company shall use its best
efforts to sell such Dividend Shares in the market or in one
or more private transactions, without commission or any
other remuneration payable to the Company, at the best price
reasonably obtainable for shares of Common Stock, either
directly or through one or more brokers or other agents
selected by the Company. The Company may, but shall not be
required to purchase such shares of Dividend Stock at such
price. While the Company shall seek to obtain the best
price for such shares it shall not be required to obtain the
highest possible price; provided, however, in the event the
amount of the net proceeds of sales paid to such holder from
the sale of the Dividend Stock (after payment of all sales
commissions or fees but before payment of any transfer,
stamp, documentary or income taxes) is less than $5.50 per
share of Series B Preferred Stock, the Company shall pay
such holder the difference in cash. Within ten (10)
Business Days after receipt of such holder's written
election to sell its shares of Dividend Stock, the Company
will sell such stock and pay the holders of the Preferred
Stock the net proceeds of such sale and any amount payable
under the preceding sentence.
(c) Dividends shall be cumulative, whether or not
earned and whether or not surplus shall be available
therefor and shall commence to accrue and accumulate from
day to day from the Issuance Date. Such accumulation shall
include, if not paid, the dividend payable on such Dividend
Payment Date. Accrued but unpaid dividends shall not bear
interest. Such dividends shall be declared and set apart or
paid before any dividends (other than dividends payable in
Common Stock) shall be paid on the Common Stock. No
dividend shall be paid upon or set apart for shares of any
other class of stock of XCL (other than shares of preference
stock ranking pari passu with the Series B Preferred Stock)
until all dividend arrears on the Series B Preferred Stock
shall be fully paid. The shares of Series B Preferred Stock
shall rank pari passu with the shares of the U.K. Preferred
Stock with respect to the payment of dividends.
(d) Dividends paid on the shares of Series B Preferred
Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares
shall be allocated pro-rata on a share-by-share basis among
all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of
holders of Series B Preferred Stock entitled to receive
payment of a dividend declared thereon, which record date
shall be no more than sixty days prior to the date fixed for
the payment thereof.
Paragraph 4. Dissolution, Liquidation or Winding Up.
In the event of any dissolution, liquidation or winding
up of the affairs of XCL, after payment or provision for
payment of the debts and other liabilities of XCL, the
registered holders of Series B Preferred Stock shall be
entitled to share on a pro rata basis with the shares of
U.K. Preferred Stock and all other series of XCL's
preference stock ranking on a parity with the Series B
Preferred Stock in respect of distributions upon
dissolution, liquidation or winding up of the Company and to
receive, out of the net assets of XCL, $100.00 per share,
plus an amount equal to all the dividend arrears on each
such share up to the date fixed for distribution and no
more, before distribution shall be made to the holders of
the Common Stock or any other shares ranking junior to the
Series B Preferred Stock in respect of distributions upon
dissolution, liquidation or winding up of the Company.
Neither the merger or consolidation of XCL, nor the sale,
lease or conveyance of all or a part of its assets, shall be
deemed to be a dissolution, liquidation or winding up of the
affairs of XCL within the meaning of this Paragraph 4.
Paragraph 5. Redemption.
The Series B Preferred Stock shall be redeemable at the
redemption price specified below and on the following terms
and conditions:
(a) Series B Preferred Stock is redeemable at the
option of the holder at any time after May 13, 1994
("Optional Redemption"), at $100.00 per share plus an amount
equal to the accrued and unpaid dividends thereon to the
Redemption Date (as hereinafter defined), whether or not
earned and whether or not surplus is available therefor,
payable out of funds legally available therefor. In order
to exercise an Optional Redemption, such holder must give
written notice of such redemption to the Company ninety (90)
calendar days prior to the redemption date ("Redemption
Date"). In the event funds are legally available to redeem
only a portion of the Series B Preferred Stock outstanding,
such funds shall be applied to redemption to the extent
available and the shares to be redeemed shall be selected by
lot as determined by the Board of Directors and the
remainder of the shares to be redeemed shall be promptly
redeemed as funds become legally available. Each holder so
electing to have the Company redeem its shares of Series B
Preferred Stock shall elect such redemption with respect to
at least 5,000 such shares registered in its name on the
Redemption Date; provided, however, that a holder of less
than 16,667 shares of Series B Preferred Stock so electing
to have the Company redeem any of its shares of Series B
Preferred Stock shall elect such redemption with respect to
all such shares registered in its name on the Redemption
Date.
(b) In the event of an Optional Redemption, the
Company may elect, at its option, to pay the redemption
price by issuing shares of Redemption Stock to those holders
of Series B Preferred Stock who have elected to redeem their
shares of Series B Preferred Stock, provided the Company's
Common Stock is then listed on The American Stock Exchange.
The New York Stock Exchange or The London Stock Exchange or
is admitted to trading in NASDAQ National Market. In the
event the Company elects to pay the redemption price in
shares of Redemption Stock, the Company shall advise the
holders by written notice within thirty (30) calendar days
after receipt of written notice of such holders' election to
redeem shares of Series B Preferred Stock. The number of
shares of Redemption Stock so to be issued to such holders
shall equal the product of the number of shares of Series B
Preferred Stock registered in the name of each such holder,
multiplied by the quotient obtained by dividing the sum of
$100.00 plus an amount equal to the accrued and unpaid
dividends on each share of Series B Preferred Stock to the
Redemption Date by the lowest average Closing Price per
share of the Common Stock as calculated for the last 5, 10
and 30 Trading Days preceding the Redemption Date. Issuance
and delivery of the Redemption Stock to such holders shall
be effected by the Company or the Redemption Agent (as
hereinafter defined) in the same manner and to the same
effect as the payment of the redemption price in cash in
accordance with the procedures set forth in sub-paragraph
5(d) below. In the event the Company has notified a
redeeming holder of its election to pay the redemption price
in Redemption Stock, within fifteen (15) Business Days after
receipt of such notice, such holder of Series B Preferred
Stock shall have the right to notify the Company of its
election to have the Company sell its shares of Redemption
Stock on behalf of such holder. As soon as practicable
after receipt of such holder's written election so to sell
such shares the Company shall use its best efforts to sell
such Redemption Stock in the market or in one or more
private transactions, without commission or any other
remuneration payable to the Company, at the best price
reasonably obtainable for shares of Common Stock, either
directly or through one or more brokers or other agents
selected by the Company. The Company may, but shall not be
required to purchase such shares of Redemption Stock at such
price. While the Company shall seek to obtain the best
price for such shares it shall not be required to obtain the
highest possible price; provided, however, in the event the
amount of the net proceeds of sales paid to such holder from
the sale of the Redemption Stock (after payment of all sales
commissions or fees but before payment of any transfer,
stamp, documentary or income taxes) is less than $100.00 per
share of Series B Preferred Stock (the difference being
herein referred to as the "Deficit Amount"), the Company
shall issue to such holder additional shares of Common Stock
(the "Additional Stock") in an amount equal in value to the
Deficit Amount computed, to the nearest whole share of
Common Stock, by dividing the Deficit Amount by the last
sales price per share at which the Redemption Stock was sold
as hereinabove provided. Within ten (10) Business Days
after receipt of such holders' written election to sell its
shares of Redemption Stock, the Company will sell such
shares, pay such holder the net proceeds of such sale and
issue to such holder the amount of shares of Additional
Stock, if any, required to be issued under the preceding
sentence. Within fifteen (15) Business Days after the
issuance of shares of Additional Stock to such holder, such
holder shall have the right to notify the Company of its
election to have the Company sell its shares of Additional
Stock on behalf of such holder. Within ten (10) Business
Days after receipt of such holders' written election to sell
its shares of Additional Stock, the Company will sell such
shares and pay such holder the net proceeds of such sale.
If the net proceeds of such sale of Additional Stock are
less than the Deficit Amount (the difference being herein
referred to as the "New Deficit Amount"), the Company shall
issue to such holder additional shares of Common Stock (the
"New Additional Stock") in an amount equal in value to the
New Deficit Amount computed to the nearest whole share of
Common Stock, by dividing the New Deficit Amount by the last
sales price per share at which the Additional Stock was sold
as hereinabove provided. Within ten (10) Business Days
after the issuance to such holder of the amount of shares of
New Additional Stock, if any, required to be issued under
the preceding sentence, the Company will sell such shares
and pay such holder the net proceeds of such sale. The
Company shall continue to issue to such holder additional
shares of Common Stock, sell such shares on such holder's
behalf and pay such holder the net proceeds of such sale or
sales on the same terms as hereinabove provided with respect
to the New Additional Stock until such holder has received
from the Company aggregate net proceeds of not less than
$100.00 per share of Series B Preferred Stock. The Company
shall use its best efforts to sell all such Additional
Stock, New Additional Stock and such other additional shares
of Common Stock on behalf of the Holder in the same manner
contemplated for sales of the Redemption Stock, as
hereinabove provided.
(c) Shares of Series B Preferred Stock shall be
automatically redeemed upon the exercise, in full or in
part, in accordance with the Warrant Agreement dated as of
March 27, 1991, between the Company and China Investment &
Development Co., Ltd. ("CIDC-ROC"), of the Class B Warrants
(the "Class B Warrants") issued pursuant to the Securities
Purchase Agreement, dated as of March 27, 1991 between the
Company, China Investment and Development Corporation and
CIDC-ROC, to the extent that the Class B Warrants are
exercised ("Automatic Redemption"). The number of shares of
Series B Preferred Stock which shall be automatically
redeemed upon partial exercise of the Class B Warrants shall
be calculated by dividing the product of the number of Class
B Warrants exercised and the Class B Exercise Price (as
defined in the Warrant Agreement) by $100.00, to the nearest
whole share of Series B Preferred Stock. The particular
shares of Series B Preferred Stock which shall be
automatically redeemed upon any partial exercise of the
Class B Warrants shall be selected by the Board of Directors
of the Company by lottery. The redemption price payable
upon Automatic Redemption of the Series B Preferred Stock
shall not be payable by issuing shares of Redemption Stock
but shall be paid in cash in accordance with the provisions
of sub-paragraph 5(d); provided, however, in no event shall
such redemption price exceed the amount actually collected
by the Company upon exercise of the Class B Warrants.
(d) If a holder of record submits to the Company, on
or prior to a Redemption Date, the certificate or
certificates for the Series B Preferred Stock to be
redeemed, with the redemption notice thereon appropriately
completed, the redemption price shall be payable as soon as
practicable thereafter, but in any event no later than the
earlier of (i) ten (10) Business Days after receipt of such
certificate or certificates or (ii) in the event of an
Automatic Redemption the date of the receipt and collection
of the Class B Exercise Price of the Class B Warrants being
exercised. The Company may deposit the aggregate redemption
price in trust with a bank or trust company (in good
standing, organized under the laws of the United States of
America or of the State of New York, doing business in the
Borough of Manhattan, City of New York, New York, and having
capital surplus and undivided profits aggregating at least
$25,000,000) as the "Redemption Agent", for payment to the
holders so the shares so to be redeemed, upon surrender (and
endorsement, if required by the Board of Directors) of the
certificates for such shares. Upon a Redemption Date
(unless the Company shall fail to make payment or deposit of
the redemption price as above set forth), each holder of the
shares of Series B Preferred Stock so to be redeemed shall
cease to be a shareholder with respect to such shares and
shall have no interest in, or claim against, the Company and
shall have no voting or other rights with respect to such
shares, except the right to receive the moneys payable upon
such redemption from such bank or trust company, or from the
Company, without interest thereon, upon surrender (and
endorsement if required by the Board of Directors) of the
certificates; and the shares represented thereby shall no
longer be deemed to be outstanding. In the event the holder
of any shares of Series B Preferred Stock shall not, within
six years after such deposit claim the amount deposited as
above stated for the redemption thereof, the depositary
shall, upon demand, pay over to the Company such unclaimed
amount so deposited, and the depositary shall thereupon be
relieved of all responsibility therefor to such holder.
(e) In the event of an Automatic Redemption, the
dividend on the Series B Preferred Stock as redeemed shall
accrue up to the fixed Dividend Payment Date last preceding
the relevant redemption date but shall cease to accrue
thereafter in respect of shares of Series B Preferred Stock
being redeemed.
(f) Any dividend arrears on the Series B Preferred
Stock tendered to the Company upon exercise of the Class B
Warrants as therein provided shall be payable in full to the
respective last holders of record of the shares of Series B
Preferred Stock so tendered to the Company (notwithstanding
any subsequent transfer of the shares of Common Stock issued
upon exercise of the Class B Warrants), pro rata with
payment of corresponding dividend arrears on the Series B
Preferred Stock remaining outstanding.
Paragraph 6. Voting Rights.
Except as may be otherwise provided herein or in this
Restated Certificate of Incorporation of XCL, as amended
from time to time with the consent of the holders of Series
B Preferred Stock, provided such consent is required to be
obtained hereunder, or as required by applicable law:
(a) The Series B Preferred Stock shall vote together
with the Common Stock of the Company as a single class on
all actions to be taken by the stockholders of the Company.
Each share of Series B Preferred Stock shall entitle the
holder thereof to cast 50 votes on all matters on which the
Series B Preferred Stock shall vote with the Common Stock.
No adjustment shall be made in the voting rights per share
of the Series B Preferred Stock on any matters (including,
without limitation, the voting rights set forth in this
Section 6 and in Sections 7 and 8 hereof) upon any increase
or decrease in the number of shares outstanding of any class
of stock which is also entitled to vote on such matters;
(b) The Series B Preferred Stock shall vote as a
separate class on any resolution proposed for adoption by
the stockholders of the Company which seeks to amend, alter
or repeal, the provisions of XCL's Restated Certificate of
Incorporation or of the resolutions contained in the
Certificate of Designation of the Series B Preferred Stock
designating the Series B Preferred Stock and the preferences
and privileges, relative, participating, optional or other
special rights and qualifications, limitations and
restrictions thereof, so as to adversely affect any right,
preference, privilege or voting power of the Series B
Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the issued Series B
Preferred Stock or the creation and issue of other series of
preference stock (whether or not denominated in Dollars), or
any increase in the amount of authorized shares of Series B
Preferred Stock, in each case either being Parity Stock (as
defined below) or junior to the Series B Preferred Stock
with respect to the payment of dividends and the
distribution of assets upon dissolution, liquidation or
winding up and with or without similar voting rights will
not be deemed to affect adversely such rights, preferences,
privileges or voting powers of the Series B Preferred Stock;
(c) Except in the event that arrangements are or have
been offered to the holders of the Series B Preferred Stock
which ensure that the rights of such holders would not be
prejudiced, XCL will ensure that no plan of compromise or
arrangement affecting the Common Stock shall become
effective unless the holders of the Series B Preferred Stock
shall be parties to the plan and unless the plan shall be
approved by the holders of at least two thirds of the then
issued and outstanding shares of Series B Preferred Stock,
voting as a class together with all other series of
preference stock ranking on a parity with the Series B
Preferred Stock as to the right to receive any dividends and
any payment or distribution of assets upon dissolution,
liquidation or winding up (herein referred to as "Parity
Stock"). The U.K. Preferred Stock shall be deemed Parity
Stock for all purposes herein;
(d) In the case of a vote on a resolution regarding
(i) the capital reorganization, dissolution or liquidation
of XCL; or (ii) any matter for which the consent of the
holders of Series B Preferred Stock is sought in accordance
with the provisions of sub-paragraphs 6(b) or 6(c) or
Paragraphs 7 or 8 hereof; every record holder of Series B
Preferred Stock who is present at that meeting in person or
by proxy shall be entitled to cast one (1) vote for each
share of Series B Preferred Stock registered in its name
(voting (A) as a separate class with respect to the matters
set forth in sub-paragraph 6(b) and (B) together with all
other Parity, Stock with respect to the matters set forth in
sub-paragraphs 6(c) and 6(d)(i) and Paragraphs 7 and 8) and
the decision of at least two thirds of the votes cast at the
meeting by such holders (as to any matters set forth in
clause (A) above) and such, holders and the holders of any
Parity Stock (as to any matters set forth in clause (B)
above) shall be determinative of the matter so long as a
quorum (as defined in sub-paragraph 6(e) below) is present;
provided that in the case of sub-paragraph 6(d)(ii) above
such consent may be sought without a meeting and shall be
deemed to be granted upon the receipt of the written consent
of at least two thirds of the then issued and outstanding
shares of stock entitled to vote on such matter as a class.
(e) At each meeting of stockholders at which the
holders of the Series B Preferred Stock shall have the right
to vote as a separate class or together with any other class
of stock, the presence in person or by proxy of the holders
of record of a majority of the total number of shares of
stock entitled to vote as a single class then outstanding
shall be necessary and sufficient to constitute a quorum of
such class for the transaction of business by such
stockholders as a class. At any such meeting or adjournment
thereof:
(i) the absence of a quorum of the holders of the
Series B Preferred Stock shall not prevent the election
of Directors or the transaction of business other than
the transaction of business with respect to which the
holders of the Series B Preferred Stock are entitled to
vote as a separate class and the absence of a quorum of
the holders of any other class of stock for the election
of Directors or the conduct of such other business shall
not prevent the conduct of business on which the Series B
Preferred Stock is entitled to vote as a separate class,
and
(ii) in the absence of any such quorum, the holders
present in person or by proxy of the class or classes
which lack a quorum shall have the power to adjourn (for
a period of up to 30 days) the meeting for the election
of Directors which they are entitled to elect from time
to time, or for the conduct of such business, without
notice other than announcement at the meeting until a
quorum shall be present.
Paragraph 7. Further Issues: Par Value.
So long as any shares of Series B Preferred Stock
remain outstanding, XCL will not without the affirmative
vote or consent of the holders of the Series B Preferred
Stock and any Parity Stock, in each case outstanding at the
time, given in person or by proxy, either in writing or at a
meeting, (i) authorize, create or issue, or increase the
authorized or issued amount, of any class or series of stock
ranking senior to the Series B Preferred Stock with respect
to payment of dividends or distribution of assets on
dissolution, liquidation or winding up or which may be
convertible into any class of shares ranking as regards
participation in dividends or the distribution of assets on
dissolution, liquidation or winding up senior to the Series
B Preferred Stock; or (ii) increase or decrease the par
value of the Common Stock.
Paragraph 8. Other Matters.
So long as any Series B Preferred Stock remains issued
and outstanding then:
(a) except as authorized by the adoption of an
appropriate resolution by the affirmative vote or consent of
the holders of the Series B Preferred Stock and any Parity
Stock in accordance with sub-paragraph 6(d):
(i) XCL will cause the Group (as defined below) not
to directly engage or become materially interested in any
business, other than in oil and gas exploration,
development and production, including the operation of
processing plants and gas gathering systems and
pipelines, but excluding any downstream activities such
as petroleum refining or retailing of refined products
unless such retailing is incidental to a permitted
activity;
(ii) XCL will not purchase any of its own
outstanding shares of Common Stock otherwise than (A) in
accordance with XCL's Stock Option Plans to the extent
Common Stock is used to satisfy the exercise stock
options granted thereunder; or (B) pursuant to a
resolution of the Shareholders adopted at an
Extraordinary General Meeting held on December 4, 1987;
and
(iii) XCL shall cause the Group not to incur
Indebtedness which shall exceed in aggregate principal
amount an amount equal to 200 percent of the amount of
Shareholders' Equity of the Group as reported in XCL's
Latest Consolidated Balance Sheet.
For the purposes of sub-paragraph (iii) above:
(A) "Indebtedness" means all borrowed moneys and
shall be deemed to include to the extent not otherwise
taken into account:
(1) the principal amount raised in respect of
loans or acceptances by any bank or accepting house
under any loan facility or acceptance credit opened on
behalf of and in favor of XCL and any corporation a
majority of whose shares of voting securities are owned
by XCL (a "Subsidiary");
(2) the principal amount of any debentures
(secured or unsecured) of XCL or any Subsidiary; and
(3) the principal amount for which XCL is
liable as a guarantor of, or surety for the obligations
of a third party;
But shall not include, as determined in accordance with
generally accepted U.S. accounting principles:
(1) intra-Group debt;
(2) the amount of all consolidated current
liabilities of XCL and its Subsidiaries incurred in the
ordinary course of business, other than for current
maturities of long term debt and other than short term
borrowings;
(3) deferred revenues; and
(4) deferred U.S. taxes.,
(B) "Shareholders' Equity" means the aggregate
amount appearing as shareholders' equity in the
applicable Latest Consolidated Balance Sheet as
determined in accordance with generally accepted US
accounting principles;
(C) "Latest Consolidated Balance Sheet" means at
any date the then latest published consolidated balance
sheet of the Group prepared in accordance with generally
accepted US accounting principles and which has been
audited and has been reported on by XCL's auditors for
the time being.
(D) "the Group" means XCL and its Subsidiaries
from time to time.
(b) XCL shall concurrently send a copy of every
report and financial statement sent to its Shareholders to
every holder of Series B Preferred Stock.
Paragraph 9. Reacquired Shares.
Any shares of the Series B Preferred Stock redeemed or
purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Series
B Preferred Stock, par value $1.00, and may be reissued as
Series B Preferred Stock or part of a new series of
preference stock to be created by resolution or resolutions
of the Board of Directors, subject to the conditions or
restrictions on issuance set forth herein.
Paragraph 10. Miscellaneous.
(a) All notices referred to herein shall be in
writing, and all notices hereunder shall be deemed to have
been given upon the earlier of receipt thereof or three (3)
Business Days after the mailing thereof if sent by
registered or certified mail (unless first-class mail shall
be specifically permitted for such notice under the terms
hereof) with postage prepaid, addressed: (i) if to the
Company, to its office as specified in its most recent
Annual Report on Form 10-K (or any successor report or form)
or to the Transfer Agent or other agent of the Company
designated as permitted thereby or (ii) if to any holder of
the Series B Preferred Stock or Common Stock, as the case
may be, to such holder at the address of such holder as
listed in the stock record books of the Company (which may
include the records of any Transfer Agent for the Series B
Preferred Stock or Common Stock, as the case may be) or
(iii) to such other address as the Company or any such
holder, as the case may be, shall have designated by notice
similarly given.
(b) A copy of any notice given hereunder to any holder
of Series B Preferred Stock shall be provided to Shearman &
Sterling, 555 California Street, San Francisco, CA 94104,
Attention: William M. Kelly, Esq. unless otherwise
requested in writing by any such holder.
(c) The Company shall pay any and all stock transfer
and documentary stamp taxes that may be payable in respect
of any original issuance or delivery of shares of Series B
Preferred Stock or shares of Common Stock or other
securities issued on account of Series B Preferred Stock
pursuant hereto or certificates representing such shares or
securities. The Company 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
Series B Preferred Stock or Common Stock or other securities
in a name other than that in which the shares of Series B
Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered
(including, without limitation, any sales or transfers of
Dividend and Redemption Stock arranged by the Company on
behalf of a holder of Series B Preferred Stock), 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 made arrangements satisfactory to the Transfer
Agent for the payment to the Company of the amount of any
such tax or has established, to the satisfaction of the
Company, that such tax has been paid or is not payable.
Until after the third anniversary of the Issuance Date
neither the Company nor the Transfer Agent shall be required
to recognize or record on the books and records of the
Company or the Transfer Agent any transfer of any shares of
Series B Preferred Stock to a person who is not a citizen or
resident of the United States of America without the prior
written consent of the Company to such transfer, which
consent shall not be unreasonably withheld, and the Company
shall be entitled to request and receive reasonable proof of
the citizenship or residency of any such proposed transferee
before authorizing the transfer of such shares of Series B
Preferred Stock.
(d) In the event that a holder of shares of Series B
Preferred Stock shall not by written notice designate to
whom payment upon redemption of shares of Series B Preferred
Stock should be made or the address to which the such
payment, should be sent, the Company shall be entitled to
make such payment, in the name of the holder of such Series
B Preferred Stock as shown on the records of the Company and
to send such payment, to the address of such holder shown on
the records of the Company.
(e) Unless otherwise provided in this Restated
Certificate of Incorporation of the Company, all payments in
the form of dividends, distributions on voluntary or
involuntary dissolution, liquidation or winding-up or
otherwise made Upon the shares of Series B Preferred Stock
and any other stock ranking on a parity with the Series B
Preferred Stock with respect to such dividend or
distribution shall be made pro rata, so that amounts paid
per share on the Series B Preferred Stock and such other
stock shall in all cases bear to each other the same ratio
that the required dividend distributions or payments, as the
case may be, then payable per share on the shares of the
Series B Preferred Stock and such other stock bear to each
other.
(f) The Company may appoint, and from time to time
discharge and change, the Transfer Agent for the Series B
Preferred Stock. Upon any such appointment or discharge of
a Transfer Agent, the Company shall send notice thereof by
first-class mail, postage prepaid, to each holder of record
of Series B Preferred, Stock. The initial Transfer Agent
for the Series B Preferred Stock shall be the Company.
D. The Corporation shall have the authority to issue up
to 50,000 shares of Preferred Stock, which shall be designated
Series F, Cumulative Convertible Preferred Stock (the "Series F
Preferred Stock"), each share of Series F Preferred Stock being
identical with each other share of Series F Preferred Stock and
all shares of Series F Preferred Stock having the following
characteristics, rights and preferences:
Paragraph 1. Designation and Amount. The shares of
this series of Preferred Stock, par value $1.00 per share
("Preferred Stock"), shall be designated as Series F, Cumulative
Convertible Preferred Stock, par value of $1.00 per share
("Series F Preferred Stock"), and the number of shares
constituting such series shall be 50,000.
Paragraph 2. Definitions and Rules of Construction.
(a) The following terms, not defined elsewhere herein,
shall have the following meanings:
"The American Stock Exchange" means the American Stock
Exchange, Inc.
"Amended Series A Preferred Stock" means the shares of
the Company's Amended Series A, Cumulative Convertible Preferred
Stock, par value $1.00 per share.
"Board of Directors" means the Board of Directors of
the Company as may be constituted from time to time.
"Business Day" means any day (other than a Saturday,
Sunday or public holiday in the Borough of Manhattan, City of New
York, New York) on which banking institutions in New York City
are not authorized or obligated by law or executive order to
close.
"Closing Price" of a security on any day means the last
sales price, regular way, per share of such security on such day
as reported in the principal consolidated reporting system with
respect to such security listed on the principal US stock
exchange on which such security was listed for trading or, if the
shares of such security are not listed or admitted to trading on
a US stock exchange, the middle market quotations for the shares
of such security (derived from The London Stock Exchange Daily
Official List) listed or admitted to trading on The London Stock
Exchange Limited, or if the shares of such security are not
listed or admitted to trading on The London Stock Exchange, the
last sales price as reported, in the National Market System
("NMS") of the National Association of Securities Dealers Inc.
Automated Quotation System ("NASDAQ"), or if the shares of such
security are not listed or admitted to trading in NMS, the
average of the high bid and low asked prices in the over-the-
counter market as reported by NASDAQ, or if the bid and asked
prices on each such day shall not have been reported through
NASDAQ, the average of the bid and asked prices for such day as
furnished by any American Stock Exchange member firm regularly
making a market in such security selected for such purpose by the
Board of Directors or a committee thereof on each Trading Day. In
any of such alternate cases when such security is not traded in
prices expressed in Dollars, such Closing Price shall be
converted into Dollars at the then spot market exchange rate of
pounds sterling (UK) into Dollars as quoted by Chase Manhattan
Bank, N.A. on the date of determination.
"Common Stock" means the shares of common stock, par
value $.01 per share, of the Company.
"Company" means XCL Ltd., a Delaware corporation.
"Conversion Commencement Date" means six months after
the initial Issuance Date.
"Conversion Stock" means the shares of Common Stock
issuable upon conversion of the Series F Preferred Stock in
accordance with Paragraph 6.
"Directors" means the directors of the Company.
"Dividend Stock" means the shares of Series F
Preferred Stock paid to holders of Series F Preferred Stock in
lieu of a cash dividend.
"$" means Dollars.
"Dollars" means the freely transferable currency of
the USA.
"Forced Conversion Date" means that date on which the
shares of Common Stock have traded at or in excess of $0.50 per
share for 30 consecutive Trading Days.
"Parity Stock" means all other series of preference
stock ranking on a parity with the Series F Preferred Stock as to
the right to receive any dividends and any payment or
distribution of assets upon dissolution, liquidation or winding
up of the Company. The Amended Series A and Series B Preferred
Stock shall be deemed Parity Stock for all purposes herein.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series B Preferred Stock" means the shares of the
Company's Series B, Cumulative Preferred Stock, par value $1.00
per share.
"Shareholders" means the holders of the Common Stock.
"Stock Option Plans" means the employee stock option
plans adopted by the Company and approved by Shareholders, in
effect from time to time, for employees and certain other
individuals rendering services to the Company.
"The London Stock Exchange" means The London Stock
Exchange Limited.
"Trading Day" shall mean a day on which the market
used for calculating the Closing Price is open for the
transaction of business or, if the shares of such security are
not so listed or admitted to trading, a Business Day.
"Transfer Agent" means the transfer agent for the
Series F Preferred Stock from time to time obtaining.
"UK" and "United Kingdom" mean the United Kingdom of
Great Britain and Northern Ireland.
"USA" and "US" means the United States of America.
"Warrants" means an aggregate of 45,491,863 issued and
outstanding and to be issued warrants to purchase Common Stock.
(b) References herein to Paragraphs and
subparagraphs are to paragraphs and subparagraphs of this
Designation of the Series F Preferred Stock ("Designation")
unless otherwise indicated. The words "hereof", "herein",
"hereunder" and comparable terms refer to the entirety of this
Designation and not to any particular Paragraph or other
subdivision hereof. Words in the singular include the plural and
in the plural include the singular. Words in the neuter gender
shall include the masculine and feminine and vice versa. The word
"or" is not exclusive. The word "including" shall be deemed to
mean "including, without limitation." The Paragraph headings
contained in this Designation are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Designation.
Paragraph 3. Dividends and Distributions.
(a) Each share of Series F Preferred Stock shall
entitle the record holder to receive, out of funds legally
available therefor, when, as and if declared by the Board of
Directors, dividends in cash at the annual rate of $12.00 per
share, which shall be payable in arrears in equal semi-annual
installments on June 30th and December 31st, or in the event any
such date is a Saturday, Sunday or public holiday in the Borough
of Manhattan, in the City of New York, New York, on the first
Business Day following such date (hereinafter a "Dividend Payment
Date") in each year, provided, however, that the dividend payable
on the first such Dividend Payment Date shall be equal to the
product obtained by multiplying $6.00 by a fraction, the
denominator of which shall be 182 and the numerator of which
shall be the number of days expired in the period between the
date of issuance of the share of Series F Preferred Stock (the
"Issuance Date") and such first Dividend Payment Date (inclusive
of both such dates).
(b) The Company may, at its option exercised by
written notice to the holders of the Series F Preferred Stock
given at least ten (10) Business Days prior to the Dividend
Payment Date, elect to pay any dividend due and payable
hereunder, in kind in additional shares of Series F Preferred
Stock in lieu of a dividend payment in cash. The amount of shares
of Dividend Stock issuable to each holder of Series F Preferred
Stock pursuant to this subparagraph 3(b) on each such Dividend
Payment Date shall equal .06 share of Series F Preferred Stock
for each share of Series F Preferred Stock registered in the name
of each such holder of the Series F Preferred Stock on the record
date for the payment of the dividend. Fractional shares of Series
F Preferred Stock arising in respect of the payment of any
dividend in shares of Dividend Stock shall not be issued to the
holders of Series F Preferred Stock.
(c) Dividends shall be cumulative, whether or not
earned and whether or not surplus shall be available therefor and
shall commence to accrue and accumulate from day to day from the
Issuance Date. Such accumulation shall include, if not paid, the
dividend payable on each Dividend Payment. Accrued but unpaid
dividends shall not bear interest. Such dividends shall be
declared and set apart or paid before any dividends (other than
dividends payable in Common Stock or any other series or class of
the Company's stock hereafter issued which ranks junior as to
dividends and as to distributions upon the dissolution,
liquidation or winding up of the Company to the Series F
Preferred Stock, such junior securities being hereinafter
referred to as "Junior Securities") shall be paid on the Common
Stock or such other series or class of Junior Securities. No cash
dividend shall be paid upon or set apart for shares of any other
class of stock of the Company (other than shares of preference
stock ranking pari passu with the Series F Preferred Stock in
respect of the payment of dividends) until all dividend arrears
on the Series F Preferred Stock shall be fully paid. The shares
of Series F Preferred Stock shall rank pari passu with the shares
of the Amended Series A Preferred Stock and Series B Preferred
Stock with respect to the payment of dividends.
(d) Dividends paid on the shares of Series F
Preferred stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro-rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of Series F
Preferred Stock entitled to receive payment of a dividend
declared thereon, which record date shall be no more than sixty
days prior to the date fixed for payment thereof.
(e) In the event the Company fails to declare and
pay any dividend on a Dividend Payment Date (the "Defaulted
Date"), the dividend rate on the outstanding shares of Series F
Preferred Stock in effect on the Defaulted Date shall be
increased effective such Date so that the aggregate dividend
payable on the next succeeding Dividend Payment Date shall equal
the dividend that would have been paid on all then outstanding
shares of Series F Preferred Stock had the Company declared and
paid the dividend on the Defaulted Date in Dividend Stock. Upon
payment of all such dividend arrearages in cash or with shares of
Dividend Stock (or some combination of both), the dividend rate
shall revert to the dividend rate in effect on the initial
Defaulted Date. The Company shall notify all holders of Series
F Preferred Stock in writing at least fifteen (15) days prior to
the payment by the Company of any dividend arrearages in cash, in
which case such holders may elect to receive such dividend
arrearage payment in shares of Dividend Stock (computed based
upon the annual cash dividend rate then applicable divided by
100) in lieu of such cash payment by notice in writing delivered
to the Company within five (5) days after receipt of the
Company's dividend payment notice, provided that such notice is
received by the Company from the holders of at least a majority
of the outstanding shares of Series F Preferred Stock.
Paragraph 4. Dissolution. Liquidation or Winding Up.
In the event of any dissolution, liquidation or
winding up of the affairs of the Company, after payment or
provision for payment of the debts and other liabilities of the
Company, the registered holders of Series F Preferred Stock shall
be entitled to share on a pro rata basis with the holders of
shares of Amended Series A Preferred Stock and Series B Preferred
Stock and all other series of the Company's preference stock
ranking on a parity with the Series F Preferred Stock in respect
of distributions upon dissolution, liquidation or winding up of
the Company and to receive, out of the net assets of the Company,
$100.00 per share, plus an amount equal to all the dividend
arrears on each such share up to the date fixed for distribution
and no more, before distribution shall be made to the holders of
the Common Stock or any Junior Securities. Neither the merger or
consolidation of the Company, nor the sale, lease or conveyance
of all or a part of its assets, shall be deemed to be a
dissolution, liquidation or winding up of the affairs of the
Company within the meaning of this Paragraph 4.
Paragraph 5. Redemption.
(a) The Series F Preferred Stock shall be
redeemable at the election of the Company, in whole or in part at
any time and from time to time, at a redemption price
("Redemption Price") of $100.00 per share, in each case plus all
accrued and unpaid dividends to and including the redemption
date. The Company shall notify each holder of record of shares
of Series F Preferred Stock in writing (the "Redemption Notice")
mailed by first class mail, postage prepaid, at least twenty (20)
days and not more than sixty (60) days prior to the date fixed by
the Company for redemption, mailed to his address as the same
shall appear on the books of the Company. The Redemption Notice
shall state the redemption date, the Redemption Price and the
place and manner of payment thereof. If less than all of the
outstanding shares of Series F Preferred Stock are to be
redeemed, the Company shall select those shares to be redeemed
pro rata or by lot or in such other manner as the Board of
Directors may determine.
(b) The Company may deposit the aggregate
Redemption Price in trust with a bank or trust company (in good
standing, organized under the laws of the United States of
America or of the State of New York, doing business in the
Borough of Manhattan, in the City of New York, New York, and
having capital surplus and undivided profits aggregating at least
$25,000,000) as "Redemption Agent", for payment to the holders of
the shares so to be redeemed, upon surrender (and endorsement, if
required by the Board of Directors) of the certificates for such
shares. At the close of business on a redemption date (unless the
Company shall fail to make payment or deposit of the Redemption
Price as above set forth), dividends shall cease to accrue on the
shares of Series F Preferred Stock called for redemption (except
on any such shares of Series F Preferred Stock in respect of
which, upon due presentation of the certificate(s) relating
thereto, payment of the money due at such redemption shall be
refused in which case the dividend shall be deemed to have
continued and shall continue to accrue from the relevant date of
redemption to the date of payment); each holder of the shares of
Series F Preferred Stock so to be redeemed shall cease to be a
shareholder with respect to such shares and shall have no
interest in, or claim against, the Company and shall have no
voting or other rights with respect to such shares, except the
right to receive the moneys payable upon such redemption from
such bank or trust company, or from the Company, without interest
thereon, upon surrender (and endorsement if required by the Board
of Directors) of the certificates; and the shares represented
thereby shall no longer be deemed to be outstanding. In the case
of a call for redemption by the Company pursuant to subparagraph
5(a) above, the right of conversion shall cease and terminate as
to the shares designated for redemption on the close of business
on the third Business Day preceding the redemption date unless
default shall be made in the payment of the Redemption Price. In
the event the holder of any shares of Series F Preferred Stock
shall not, within six years after such deposit, claim the amount
deposited as above stated for the redemption thereof, the
depositary shall, upon demand, pay over to the Company such
unclaimed amount so deposited, and the depositary shall thereupon
be relieved of all responsibility therefor to such holder.
(c) So long as any shares of Series F Preferred
Stock are outstanding, the Company shall not redeem, purchase or
otherwise acquire, or permit any subsidiary to purchase or
otherwise acquire, any shares of Common Stock or any Junior
Securities if at the time of making such redemption, purchase or
acquisition the Company shall be in default with respect to any
dividend payable on, or any obligation to purchase shares of,
Series F Preferred Stock; provided, however, that,
notwithstanding the foregoing the Company may at any time redeem,
purchase or otherwise acquire shares of Common Stock or any
Junior Securities in exchange for, or out of the net cash
proceeds from the sale of, Common Stock or other shares of Junior
Securities. If in any case the amounts payable with respect to
the Company's obligation to retire shares of Preferred Stock are
not paid in full in the case of all series with respect to which
such obligations exist, the number of shares of the various
series to be retired shall be in proportion to the respective
amounts which would be payable on account of such obligations if
all amounts payable were discharged in full. Any dividend arrears
on the Series F Preferred Stock tendered to the Company shall be
payable in full to the respective last holders of record of the
shares of Series F Preferred Stock so tendered to the Company pro
rata with payment of corresponding dividend arrears on the Series
F Preferred Stock remaining outstanding.
Paragraph 6. Conversion.
(a) Subject as hereinafter provided. at any time
after the Conversion Commencement Date at the option of the
record holder of the Series F Preferred Stock, the Series F
Preferred Stock shall be convertible, in whole or in part, at the
office of the Transfer Agent into fully paid and nonassessable
shares of Common Stock at a rate (the "Conversion Rate") per
share of Series F Preferred Stock equal to that number of shares
of Common Stock as shall equal the quotient of $100 divided by
$.25 (the "Conversion Price") (subject in any case to adjustment
as hereinafter provided in Paragraph 7), provided that if a
Conversion Notice (as hereinafter defined in subparagraph 6(c)
below) is given in respect of only a part of a holding of Series
F Preferred Stock so that there would remain following conversion
three or fewer such shares in that holding, all the Series F
Preferred Stock in the holding shall be converted notwithstanding
the figure inserted in the Conversion Notice.
(b) For the purposes of the provisions hereof, a
"Conversion Date" shall be the date falling 90 days after the
date of the Conversion Notice (or such sooner date as the Company
may notify the converting holder of Series F Preferred Stock in
writing) and provided always that if any Conversion Date would
otherwise fall on a day which is not a Business Day such
Conversion Date shall be the first Business Day following such
date.
(c) The right to convert shall be exercisable at any
time and from time to time after the Conversion Commencement Date
by completing the notice of conversion endorsed on the share
certificate relating to the Series F Preferred Stock to be
converted or a notice in such other form as may from time to time
be prescribed by the Board of Directors in lieu thereof (any such
notice being herein called a "Conversion Notice") and delivering
the same to the Transfer Agent together with such other evidence
(if any) as the Board of Directors may reasonably require to
prove title of the person exercising such right to convert. The
Conversion Notice shall be deemed dated as of the date of receipt
thereof by the Transfer Agent. A Conversion Notice once given may
not be withdrawn without the consent in writing of the Company.
(d) On conversion the dividend on the Series F
Preferred Stock so converted shall cease to accrue with effect
from the close of business on the date preceding the Conversion
Date. The Common Stock issued on such conversion shall entitle
the holder to all dividends and other distributions payable on
the Common Stock by reference to a record date after the
applicable Conversion Date.
(e) Any dividend arrears on the Series F Preferred
Stock surrendered for conversion shall be payable in full to the
respective last holders of record of the shares of Series F
Preferred Stock surrendered for conversion (notwithstanding any
subsequent transfer of the shares of Common Stock into which such
shares have been converted), pro rata with payment of
corresponding dividend arrears on the Series F Preferred Stock
remaining outstanding.
(f) Conversion shall be deemed to have been
effected on the Conversion Date, and the holder shall as of the
close of business on such date have the full rights of the Common
Stock resulting from such conversion.
(g) On the Conversion Date all shares of Series F
Preferred Stock in respect of which a Conversion Notice has been
delivered ("relevant shares") shall be converted into shares of
Common Stock at the Conversion Rate. Upon issuance of the Common
Stock, the relevant shares shall be retired and cancelled. Within
30 days after the Conversion Date, the Company shall, or shall
cause, the forwarding to each holder of the relevant shares, at
his own risk, free of charge, a definitive certificate for the
appropriate number of fully paid shares of Common Stock and a new
certificate for any unconverted Series F Preferred Stock
comprised in the certificate(s) surrendered by him.
(h) Fractions of Common Stock arising on
conversion shall not be issued to the holders of the relevant
shares otherwise entitled thereto but (if arrangements can be so
made) such fractions shall be aggregated and sold in the market
on behalf of such holders at the best price reasonably obtainable
and the net proceeds of sale shall be distributed pro rata among
such holders unless in respect of any holding of the relevant
shares the amount to be distributed would be less than $2.00 in
which case such amount shall not be distributed but shall be
retained for the benefit of the Company. For the purpose of
implementing the provisions of this subparagraph (h), the Board
of Directors may appoint a person to execute transfers on behalf
of persons otherwise entitled to any such fractions and generally
may make all arrangements which appear to the Board necessary or
appropriate for the settlement and disposal of fractional
entitlements.
(i) In case of the voluntary dissolution,
liquidation or winding up of the Company, all conversion rights
relating to the Series F Preferred Stock shall terminate 45 days
after the mailing of a notice of such action to all record
holders of Series F Preferred Stock; provided that such date of
termination of conversion rights shall be not more than sixty
(60) days nor less than twenty (20) days prior to the date on
which such dissolution is to become effective or such liquidation
or winding up is to commence. Any such notice shall call
attention to the date of such termination of the conversion
rights, the per share amount payable on the Common Stock, the per
share amount payable on the Series F Preferred Stock held by such
holder in connection with such action (in each case, if then
known, or a reasonable estimate if such amount is not known with
any reasonable degree of certainty), and the then current
Conversion Rate of the Series F Preferred Stock held by such
holder of record.
(j) At any time after the Forced Conversion Date,
or any time after at least seventy five percent (75%) of the
aggregate number of shares of Series F Preferred Stock originally
issued on the Issuance Date have been purchased or redeemed by
the Company or converted into Common Stock by the holders
thereof, the Company may, at its option, cause the conversion of
all the remaining issued and outstanding shares of the Series F
Preferred Stock at the Conversion Rate upon at least 45 days
written notice to all holders of record.
(k) The Company shall use its best efforts to
ensure that the shares of Conversion Stock are listed on all the
principal stock exchanges on which the Company's Common Stock is
listed for trading.
Paragraph 7. Adjustments of Conversion Rate.
The Conversion Rate for the Series F Preferred Stock
shall be subject to adjustment from time to time as follows:
(a) If the Company shall at any time or from time to
time pay a dividend or other distribution on its outstanding
shares of Common Stock in shares of Common Stock, subdivide its
outstanding shares of Common Stock into a larger number of shares
or combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Rate in effect immediately prior
to the record date for such dividend or the effective date for
such subdivision or combination shall be adjusted so that each
share of Series F Preferred Stock shall thereafter be convertible
into the number of shares of Common Stock which the holder of a
share of Series F Preferred Stock would have been entitled to
receive after the happening of any of the events described above
had such share been converted immediately prior to the happening
of such event. An adjustment made pursuant to this subparagraph
(a) shall become effective immediately after the close of
business on such a record date in the case of a dividend and
shall become effective on the close of business on the day
immediately prior to the effective date in the case of a
subdivision or combination.
(b) If the Company shall issue rights or warrants
to all holders of Common Stock (expiring within 45 days after the
record date for determining stockholders entitled to receive
them) for the purpose of entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than
the average of the Closing Prices per share for the 30
consecutive Trading Days ending on the record date for the
determination of the stockholders entitled to receive such rights
or warrants, then at the discretion of the Board of Directors,
either (i) the Company shall make a like issue at the same time
to each holder of the Series F Preferred Stock as if his
conversion rights had been exercisable in full on the record date
for such issue on the basis of the Conversion Rate; or (ii) the
number of shares of Common Stock into which each share of the
Series F Preferred Stock shall thereafter be convertible shall be
adjusted by multiplying the number of shares of Common Stock into
which each share of Series F Preferred Stock was convertible on
the day immediately preceding such record date by a fraction the
numerator of which shall be the sum of the number of shares of
Common Stock outstanding on such record date and the number of
additional shares of Common Stock so offered for subscription or
purchase, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding on such record date
and the number of shares of Common Stock which the aggregate
offering price of the total number of shares so offered would
purchase at such average of the Closing Prices for such 30
Trading Days. Such adjustment shall become effective immediately
after the close of business on such record date. Notwithstanding
anything in the foregoing to the contrary, no such issue or
adjustment shall be made in respect of the shares of Common Stock
issuable upon exercise of the Warrants, any stock options granted
pursuant to the Company's Stock Option Plans approved by
Shareholders (provided that option exercise price shall not be
less than the market value of the Common Stock on the date of
grant of the options), the Amended Series A Preferred Stock and
the shares of Amended Series A Preferred Stock issuable as
dividends on, or the shares of Common Stock issuable upon
conversion of the Amended Series A Preferred Stock, and the
Series B Preferred Stock and the shares of Common Stock issuable
as dividends on or upon redemption of the Series B Preferred
Stock.
(c) If any offer or invitation by way of rights or
otherwise (not being an offer or invitation to which the
provisions of subparagraph 7(b) apply) is made to all the
Shareholders by the Company, the Company shall make or, so far as
it is able, cause that there be made a like offer at the same
time to each holder of Series F Preferred Stock as if his
conversion rights had been exercisable on and had been exercised
in full on the record date for such offer or invitation on the
basis of the Conversion Rate.
(d) If the Company shall distribute to all holders
of Common Stock any assets (other than any ordinary dividend
payable solely in cash in an amount not excessive in comparison
to its current earnings), any rights to subscribe for securities
(other than those referred to in sub-paragraph 7(b) above) or any
evidence of indebtedness or other securities (other than Common
Stock or Junior Securities), then in each such case the number of
shares of Common Stock into which each share of Series F
Preferred Stock shall thereafter be convertible shall be adjusted
by multiplying the number of shares of Common Stock into which
each share of Series F Preferred Stock was convertible on the
date immediately preceding the record date for the determination
of the stockholders entitled to receive such distribution by a
fraction the numerator of which shall be the average of the
Closing Prices per share of Common Stock for the thirty (30)
consecutive Trading Days ending on such record date and the
denominator of which shall be such average of the Closing Prices
per share less the then fair market value (as determined in a
resolution adopted by the Board and reviewed and approved by the
Company's auditors for the time being) of the portion of the
assets or evidences of indebtedness or securities so distributed
or of such subscription rights applicable to one share of Common
Stock. Such adjustment shall become effective immediately after
the close of business on such record date.
(e) Whenever the Conversion Rate is adjusted as
herein provided, the Company shall forthwith file with the
Transfer Agent a certificate stating the adjusted Conversion Rate
determined as provided in this Paragraph 7. Such certificate
shall show in detail the facts requiring such adjustment. The
calculation of such adjustment shall have been reviewed and
approved by the Company's auditors for the time being. Whenever
the Conversion Rate is adjusted, the Company will forthwith cause
a notice stating the adjustment and the resulting Conversion Rate
to be mailed to the respective holders of record of Series F
Preferred Stock.
(f) In case of any capital reorganization or any
reclassification of the capital stock of the Company or in case
of the consolidation or merger of the Company with another
corporation or in case of any sale or conveyance of all or
substantially all of the property of the Company, each share of
Series F Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property
receivable upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance, as the
case may be, by a holder of the number of shares of Common Stock
into which such share of Series F Preferred Stock was convertible
immediately prior to such capital reorganization,
reclassification of capital stock, consolidation, merger, sale or
conveyance; and, in any case, appropriate adjustment (as
determined by the Board of Directors and reviewed and approved by
the Company's auditors for the time being) shall be made in the
application of the provisions herein set forth with respect to
rights and interests thereafter of the holders of the Series F
Preferred Stock, to the end that provisions set forth herein
(including the specified changes in and other adjustment of the
Conversion Rate) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares of stock or other
securities or other property thereafter deliverable upon the
conversion of the Series F Preferred Stock.
(g) No adjustment shall be made hereunder unless
by reason of the happening of any one or more of the events
herein specified, the Conversion Rate then in effect would be
changed by 1 % or more, but any adjustment of less than 1% that
would otherwise be required to be made shall be carried forward
and shall be made at the time of and together with any subsequent
adjustment which, together with any adjustment or adjustments so
carried forward, amounts to 1 % or more, provided that such
adjustment shall be made in any case (regardless of whether or
not the amount thereof or the cumulative amount thereof amounts
to 1% or more) upon the happening of one or more of the events
specified in subparagraph (f) of this Paragraph 7.
Paragraph 8. Voting Rights.
Except as may be otherwise provided herein or in this
Restated Certificate of Incorporation of the Company, as amended
from time to time with the consent of the holders of Series F
Preferred Stock, provided such consent is required to be obtained
hereunder or as required by applicable law:
(a) the Series F Preferred Stock shares shall not
entitle the holders thereof to receive notice of or attend or
vote at any meeting of stockholders except in the following
circumstances:
(i) The Series F Preferred Stock shall vote as
a separate class on any resolution proposed for
adoption by the stockholders of the Company which seeks
to amend, alter or repeal, the provisions of the
Company's Restated Certificate of Incorporation or of
the resolutions contained in the Certificate of
Designation of the Series F Preferred Stock designating
the Series F Preferred Stock and the preferences and
privileges, relative, participating, optional or other
special rights and qualifications, limitations and
restrictions thereof, so as to adversely affect any
right, preference, privilege or voting power of the
Series F Preferred Stock or the holders thereof;
provided, however, that any increase in the amount of
the issued Series F Preferred Stock or the creation and
issue of any other series of preference stock (whether
or not denominated in Dollars, or any increase in the
amount of authorized shares of Series F Preferred
Stock, in each case either being Parity Stock or Junior
Securities and with or without similar voting rights)
will not be deemed to affect adversely such rights,
preferences, privileges or voting powers of the Series
F Preferred Stock;
(ii) Except in the event that arrangements are
or have been offered to the holders of the Series F
Preferred Stock which ensure that the rights of such
holders would not be prejudiced, the Company will
ensure that no plan of compromise or arrangement
affecting the Common Stock shall become effective
unless the holders of the Series F Preferred Stock
shall be parties to the plan and unless the plan shall
be approved by the holders of at least a majority of
the then issued and outstanding shares of Series F
Preferred Stock, voting as a class together with all
other Parity Stock;
(iii) In the case of a vote on a resolution
regarding (A) the capital reorganization, dissolution
or liquidation of the Company; or (B) any matter for
which the consent of the holders of Series F Preferred
Stock is sought in accordance with the provisions of
subparagraphs 8(a)(i) and 8(a)(ii) and Paragraphs 9 or
10; every record holder of Series F Stock who is
present at that meeting in person or by proxy shall be
entitled to cast one (1) vote for each share of Series
F Preferred Stock registered in his name (voting (1)
as a separate class with respect to the matters set
forth in subparagraph 8(a)(i) and (2) together with
all other Parity Stock with respect to the matters set
forth in subparagraphs 8(a)(ii) and 8(a)(iii)(1) and
Paragraphs 9 and 10) and the decision of at least two
thirds of the outstanding shares of Series F Preferred
Stock (as to any matters set forth in clause (A)
above) and a majority of the outstanding shares of
Series F Preferred Stock and any Parity Stock, voting
separately as a class (as to any matters set forth in
clause (B) above) shall be determinative of the matter
so long as a quorum (as defined in subparagraph 8(b)
below) is present; or
(iv) if at the date of the notice convening a
meeting of Shareholders the dividend on the Series F
Preferred Stock has not been paid in an aggregate
amount equal to at least two (2) consecutive semi-
annual dividends on such shares, the number of
Directors of the Company will be increased by two and a
majority of votes cast by the holders of the Series F
Preferred Stock together with the holders of Parity
Stock on which like voting rights have been conferred
and are exercisable, present in person or by proxy at
such meeting, will be entitled to elect such two
additional Directors to the Board of Directors, with
each holder being entitled to cast one vote for each
share of Series F Preferred Stock registered in his
name. The right to elect such Directors and the term of
office of all such Directors so elected shall terminate
when all such accrued and unpaid dividends are paid in
full or set apart for payment subject to such right
being reinstated in the case of fixture unpaid
dividends as hereinabove provided. In case any vacancy
shall occur among the Directors elected by the holders
of Series F Preferred Stock and Parity Stock as herein
provided, such vacancy may be filled for the unexpired
portion of the term by vote of the remaining Director
elected by such stockholders, or such Director's
successor in office or by the vote of such stockholders
given at a special meeting of such stockholders called
for such purpose.
(b) At each meeting of stockholders at which the
holders of the Series F Preferred Stock shall have the right to
vote as a separate class or together with any other class of
stock the presence in person or by proxy of the holders of record
of a majority of the total number of shares of stock entitled to
vote as a single class then outstanding shall be necessary and
sufficient to constitute a quorum of such class for the
transaction of business by such stockholders as a class. At any
such meeting or adjournment thereof,
(i) the absence of a quorum of the holders of the
Series F Preferred Stock shall not prevent the election
of Directors or the transaction of business other than
the transaction of business with respect to which the
holders of the Series F Preferred Stock are entitled to
vote as a separate class and the absence of a quorum of
the holders of any other class of stock for the
election of Directors or the conduct of such other
business shall not prevent the conduct of business on
which the Series F Preferred Stock is entitled to vote
as a separate class, and
(ii) in the absence of any such quorum, the
holders present in person or by proxy of the class or
classes which lack a quorum shall have the power to
adjourn (for a period of up to 30 days) the meeting for
the election of Directors which they are entitled to
elect from time to time, or for the conduct of such
business, without notice other than announcement at the
meeting, until a quorum shall be present.
(c) Any action required or permitted to be taken by
the holders of Series F Preferred Stock pursuant to this
Paragraph 8 or Paragraphs 9 or 10, voting either separately as a
class or together with all Parity Stock at any annual or special
meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by
the holders of such stock having not less than the minimum number
of votes that would be necessary to authorize such action to be
taken at a meeting at which all such shares entitled to vote
thereon were present and voted.
Paragraph 9. Further Issues; Par Value.
So long as any shares of Series F Preferred Stock
remain outstanding, the Company shall not without the affirmative
vote or consent of the holders of the Series F Preferred Stock
and any Parity Stock, in each case outstanding at the time, given
in person or by proxy, either in writing or at a meeting, (i)
authorize, create or issue, or increase the authorized or issued
amount, of any class or series of stock ranking senior to the
Series F Preferred Stock with respect to payment of dividends or
distribution of assets on dissolution, liquidation or winding up
or which may be convertible into any class of shares ranking as
regards participation in dividends or the distribution of assets
on dissolution, liquidation or winding up senior to the Series F
Preferred Stock; or (ii) increase or decrease the par value of
the Common Stock. The holders of Series F Preferred Stock shall
not be entitled to any preemptive rights with respect to any
further issuances of securities by the Company.
Paragraph 10. Other Matters.
So long as any Series F Preferred Stock remains issued
and outstanding then:
(a) except as authorized by the adoption of an
appropriate resolution by the affirmative vote or consent of the
holders of a majority of the outstanding shares of the Series F
Preferred Stock and any Parity Stock, voting or consenting
separately as a class, the Company shall not:
(i) sell, lease or convey all or substantially
all of the assets of the Company; or
(ii) approve any merger, consolidation or
compulsory share exchange to which the Company is a
party, unless (1) the terms of such merger,
consolidation or compulsory share exchange do not
provide for a change in the terms of the Series F
Preferred Stock and (2) the Series F Preferred Stock is
on a parity with or prior to (in respect of dividends
and upon liquidation, dissolution or winding up) any
other class or series of capital stock authorized by
the surviving corporation, other than any class or
series of stock of the Company ranking senior to the
Series F Preferred Stock either as to dividends or upon
liquidation, dissolution or winding up of the Company
and previously authorized with the consent of the
holders of the Series F Preferred Stock (or other than
any capital stock into which such prior stock is
converted as a result of such merger, consolidation or
compulsory share exchange).
(b) the Company shall concurrently send a copy of
every communication or other information, including annual
reports and proxy materials, sent to its Shareholders to every
holder of Series F Preferred Stock.
Paragraph 11. Reacquired Shares.
Any shares of the Series F Preferred Stock redeemed or
purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Series F
Preferred Stock, and may be reissued as Series F Preferred Stock
or part of a new series of preference stock to be created by
resolution or resolutions of the Board of Directors, subject to
the conditions or restrictions on issuance set forth herein.
Paragraph 12. Miscellaneous.
(a) All notices referred to herein shall be in writing,
and all notices hereunder shall be deemed to have been given upon
the earlier of receipt thereof or three (3) Business Days after
the mailing thereof if sent by registered or certified mail
(unless first-class mail shall be specifically permitted for such
notice under the terms hereof) with postage prepaid, addressed:
(i) if to the Company, to its office as specified in its most
recent Annual Report on Form 10-K (or any successor report or
form) or to the Transfer Agent or other agent of the Company
designated as permitted hereby or (ii) if to any holder of the
Series F Preferred Stock or Common Stock, as the case may be, to
such holder at the address of such holder as listed in the stock
record books of the Company (which may include the records of any
Transfer Agent for the Series F Preferred Stock or Common Stock,
as the case may be) or (iii) to such other address as the Company
or any such holder, as the case may be, shall have designated by
notice similarly given.
(b) The Company shall pay any and all stock
transfer and documentary stamp taxes that may be payable in
respect of any original issuance or delivery of shares of Series
F Preferred Stock or shares of Common Stock or other securities
issued on account of Series F Preferred Stock pursuant hereto or
certificates representing such shares or securities. The Company
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 Series F Preferred Stock or Common Stock or
other securities in a name other than that in which the shares of
Series F 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 made
arrangements satisfactory to the Transfer Agent for the payment
to the Company of the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been paid
or is not payable.
(d) In the event that a holder of shares of Series
F Preferred Stock shall not by written notice designate to whom
payment upon redemption of shares of Series F Preferred Stock
should be made or the address to which such payment should be
sent, the Company shall be entitled to make such payment, in the
name of the holder of such Series F Preferred Stock as shown on
the records of the Company, and to send such payment, to the
address of such holder shown on the records of the Company.
(e) Unless otherwise provided in this Restated
Certificate of Incorporation of the Company, all payments in the
form of dividends, distributions on voluntary or involuntary
dissolution, liquidation or winding-up or otherwise made upon the
shares of Series F Preferred Stock and any other stock ranking on
a parity with the Series F Preferred Stock with respect to such
dividend or distribution shall be made pro rata, so that amounts
paid per share on the Series F Preferred Stock and such other
stock shall in all cases bear to each other the same ratio that
the required dividends, distributions or payments, as the case
may be, then payable per share on the shares of the Series F
Preferred Stock and such other stock bear to each other.
(f) The Company may appoint, and from time to time
discharge and change, the Transfer Agent for the Series F
Preferred Stock. Upon any such appointment or discharge of a
Transfer Agent, the Company shall send notice thereof by first-
class mail, postage prepaid, to each holder of record of Series F
Preferred Stock. The initial Transfer Agent for the Series F
Preferred Stock shall be the Company.
(g) The Company covenants that it will at all
times on and after the Conversion Commencement Date reserve and
keep available out of its authorized Common Stock and/or shares
of its Common Stock then owned or held by or for the account of
the Company, solely for the purpose of delivery upon conversion
of the Series F Preferred Stock as herein provided, such number
of shares of Common Stock as shall then be deliverable upon
conversion of all shares of Series F Preferred Stock from time to
time outstanding.
FIFTH: A. Unless and until otherwise provided in the
Bylaws, all of the corporate powers of this Corporation shall be
vested in, and managed by, a board of not less than 3 nor more
than 15 directors, except that when all of the outstanding shares
are held of record by fewer than 3 stockholders, then there need
be only as many directors as there are stockholders, but this
shall not prevent a greater number of directors as
aforementioned.
B. The board of directors shall be and is divided into
three classes: Class I, Class II and Class III, which shall be
as nearly equal in number as possible. Each director shall serve
for a term ending on the date of the third annual meeting of
stockholders following the annual meeting at which the director
was elected. Notwithstanding the foregoing provisions in this
Article FIFTH, each director shall serve until his successor is
duly elected and qualified or until his death, resignation or
removal.
C. The number of directors may be increased or decreased
within the limits above provided by a majority vote of the
directors. In the event of any increase or decrease in the
authorized number of directors, the newly created or eliminated
directorships resulting from such increase or decrease shall be
apportioned by the board of directors among the three classes of
directors so as to maintain such classes as nearly equal as
possible. No decrease in the number of directors constituting
the board of directors shall shorten the term of any incumbent
director.
D. Newly created directorships resulting from any
increase in the number of directors and any vacancies on the
board of directors resulting from death, resignation,
disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in
office (and not by stockholders), even though less than a quorum
of the board of directors. Any director elected in accordance
with the preceding sentence shall hold office for the remainder
of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified.
E. No director may be removed from office without cause,
except upon the affirmative vote of the holders of not less than
sixty-seven percent (67%) of the outstanding shares of stock of
the Corporation then entitled to vote generally in the election
of directors, voting together as a single class. Any amendment,
change or repeal of this Article FIFTH, or any other amendment to
this Restated Certificate of Incorporation that will have the
effect of permitting circumvention of or modifying this Article
FIFTH, shall require the favorable vote, at a stockholders'
meeting, of the holders of at least sixty-seven percent (67%) of
the outstanding shares of stock of the Corporation then entitled
to vote generally in the election of directors, voting together
as a single class.
SIXTH: A. The board of directors shall have authority
to adopt, amend or repeal Bylaws, including the right to adopt,
amend or repeal Bylaws fixing their qualifications, or fixing or
increasing their compensation, subject to the ratification of the
action taken by the board so to adopt, amend or repeal any such
Bylaws by the stockholders at the next regularly scheduled annual
meeting of stockholders or at a special meeting of stockholders.
Pending such ratification by the stockholders, such action taken
by the board of directors shall be presumed to have been
authorized by the stockholders.
B. The board shall further have authority to exercise
all such powers and to do all such other lawful acts and things
which the Corporation or its stockholders might do, unless
prohibited from doing so by applicable laws, by this Restated
Certificate of Incorporation or by the Bylaws of the Corporation.
SEVENTH: A. For the purposes of this Article SEVENTH:
(1) A "person" shall mean any individual, firm,
corporation, partnership, trust or other entity.
(2) "Net Assets" shall mean the difference between
the aggregate amount of all assets and the aggregate amount
of all liabilities of the Corporation as they appear on the
Corporation's most recent audited financial statements.
(3) "Voting Stock" means then outstanding shares of
stock of all classes and series of the Corporation entitled
to vote in the election of directors.
(4) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on September 1, 1987.
(5) "Subsidiary" means any corporation of which
more than a majority of any class of equity security is
owned, directly or indirectly, by the Corporation; provided,
however, that for purposes of the definition of Interested
Stockholder set forth in Paragraph A(7) of this Article
EIGHTH, the term "Subsidiary" shall mean only a corporation
of which a majority of each class of equity security is
owned by the Corporation, by a Subsidiary, or by the
Corporation and one or more Subsidiaries.
(6) A person shall be a "Beneficial Owner" of any
Voting Stock:
(A) which such person or any of its Affiliates
or Associates beneficially owns, directly or indirectly;
or
(B) which such person or any of its Affiliates
or Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise Of conversion
rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote or to direct the
vote pursuant to any agreement, arrangement or
understanding; or
(C) which is beneficially owned, directly or
indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of
Voting Stock.
(7) "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary) who or which:
(A) is the Beneficial Owner, directly or
indirectly, of more than 20% of the combined voting power
of the then outstanding Voting Stock; or
(B) is an Affiliate of the Corporation and at
any time within the two-year period immediately prior to
the date in question was the Beneficial Owner, directly
or indirectly, of 20% or. more of the combined voting
power of the then outstanding Voting Stock; or
(C) is an assignee of or has otherwise succeeded
to any shares of Voting Stock which were at any time
within the two-year period immediately prior to the date
in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of
transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(8) "Disinterested Director" means any member of
the board of directors of the Corporation who is
unaffiliated with, and not a nominee of, the Interested
Stockholder and was a member of the board of directors prior
to the time that the Interested Stockholder became an
Interested Stockholder and any successor of a Disinterested
Director who is unaffiliated with, and not a nominee of, the
Interested Stockholder and who is recommended to succeed a
Disinterested Director by a majority of Disinterested
Directors then on the board of directors.
(9) "Fair Market Value" means:
(A) in the case of stock, the highest closing
sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock is not quoted on such Composite Tape,
on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States
securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or,
if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of
such stock during the 30-day period preceding the date in
question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system
then in use, or if no such quotations are available, the
fair market value on the date in question of a share of
such stock as determined by a majority of the
Disinterested Directors in good faith; and
(B) in the case of stock of any class of
securities not traded on any securities exchange or in
the over-the-counter-market or in the case of property
other than cash or stock, the fair market value of such
securities or property on the date in question as
determined by a majority of the Disinterested Directors
in good faith.
(10) "Business Combination" means any transaction
which is referred to in any one or more of Paragraphs B(1)
through (5) below.
(11) In the event of any Business Combination in
which the Corporation survives, the phrase "consideration to
be received as used in Paragraphs C(2)(A) and (B) shall
include the shares of Common Stock and/or the shares of any
other class of outstanding Voting Stock retained by the
holders of such shares.
(12) For the purposes of determining whether a
person is an Interested Stockholder pursuant to Paragraph
A(7), the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through
application of Paragraph A(6)(B)(i) but shall not include
any other shares of Voting Stock which may be issuable to
other persons pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
B. In addition to any affirmative vote required by law
or any other Article of this Restated Certificate of
Incorporation, and except as otherwise expressly provided in
Paragraph C of this Article SEVENTH:
(1) any merger or consolidation of the Corporation
or any Subsidiary with (i) any Interested Stockholder or
(ii) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or Associate of an
Interested Stockholder; or
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions) to or with any Interested
Stockholder or any Affiliate or Associate of any Interested
Stockholder of any assets of the Corporation, or of any
Subsidiary, having an aggregate Fair Market Value equal to
ten percent (10%) or more of the Net Assets of the
Corporation; or
(3) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder in exchange for
cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value equal to ten
percent (10%) or more of the Net Assets of the Corporation,
other than the issuance of securities by the Corporation or
any Subsidiary upon the conversion of convertible securities
of the Corporation or any Subsidiary which were not acquired
from the Corporation or any Subsidiary by any Interested
Stockholder or any Affiliate or Associate of any Interested
Stockholder; or
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder; or
(5) any reclassification of securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding stock of any class of equity or
convertible securities of the Corporation or any Subsidiary
directly or indirectly owned by any Interested Stockholder
or any Affiliate or Associate of any Interested Stockholder;
shall require the affirmative vote of the holders of at least (i)
67% of the then outstanding shares of Voting Stock, and (ii) a
majority of the then outstanding shares of Voting Stock held by
persons who are not Interested Stockholders or Affiliates or
Associates of Interested Stockholders; provided, however, that
the majority vote requirement of this clause (ii) shall not be
applicable if the Business Combination is approved by the
affirmative vote of the holders of not less than 80% of the then
outstanding shares of Voting Stock. The foregoing affirmative
vote requirements are hereinafter referred to as the "Special
Vote Requirement." The Special Vote Requirement shall be
applicable notwithstanding the fact that no vote may be required,
or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
C. The provisions of Paragraph B shall not be applicable
to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is
required by law and any other Article of this Restated
Certificate of Incorporation, if all of the conditions specified
in either of the following Paragraphs (1) and (2) are met:
(1) Approval by Disinterested Directors. The
Business Combination shall have been approved by a majority
of the Disinterested Directors.
(2) Price and Procedural Requirements. All of the
following conditions shall have been met:
(A) The aggregate amount of the cash and the
Fair Market Value, as of the date of the consummation of
the Business Combination, of consideration other than
cash to be received per share by holders of Common Stock
or any series of Preferred Stock of the Corporation in
such Business Combination shall be at-least equal to the
higher of (i) the highest price paid for any share
(including brokerage commissions, transfer taxes and
soliciting dealers' fees) of such class or series of
stock by any person who is an Interested Stockholder, or
by any of his Affiliates or Associates, within the two-
year period immediately prior to the time of the first
public announcement of the proposed Business Combination
(the "Announcement Date") or in the transaction in which
such person became an Interested Stockholder, whichever
price is the higher; or (ii) the Fair Market Value per
share of such class or series of stock on the
Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher; provided
however, that if the Interested Stockholder has not
previously paid for shares of series of Preferred Stock
or if the highest preferential amount per share of a
series of Preferred Stock to which the holders thereof
would be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
affairs of the Corporation (regardless of whether the
Business Combination to be consummated constitutes such
an event) is greater than such aggregate amount, holders
of such series of Preferred Stock shall receive an amount
for each such share at least equal to the highest
preferential amount applicable to such series of
Preferred Stock. The provisions of this Paragraph
C(2)(A) shall be required to be met with respect to every
class or series of Preferred Stock, whether or not the
Interested Stockholder has previously become the
Beneficial Owner of any shares of a particular class or
series of Preferred Stock prior to proposing the Business
Combination. The price paid for any share of any such
class or series of stock shall be the amount of cash plus
the Fair Market Value of any consideration to be received
therefor, determined at the time of payment thereof.
(B) The consideration to be received by holders of
a particular class of outstanding Voting Stock shall be
in cash or in the same form as the Interested Stockholder
has previously paid for shares of such class of Voting
Stock. If the Interested Stockholder has paid for shares
of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class
of Voting Stock shall be either cash or the form of
consideration used to acquire the largest number of
shares of such class of Voting Stock previously acquired
by it. The prices determined in accordance with
Paragraph C(2)(A) above shall be subject to an
appropriate adjustment in the event of any stock
dividend, stock split, subdivision, combination of shares
or similar event.
(C) After such Interested Stockholder has become an
Interested Stockholder and through to the date of
consummation of such Business Combination: (i) there
shall have been (1) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary
to reflect any subdivision of the Common Stock), except
as approved by a majority of the Disinterested Directors,
and (2) no failure to increase such annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the
effect of reducing the number of outstanding shares of
the Common Stock, unless the failure so to increase such
annual rate is approved by a majority of the
Disinterested Directors; and (ii) such Interested
Stockholder shall not have become the beneficial owner of
any additional shares of Voting Stock except as part of
the transaction which results in such Interested
Stockholder becoming an Interested Stockholder.
(D) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall
not have received the benefit, directly or indirectly
(except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or
otherwise.
(E) A proxy or information statement describing
the proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and
the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations)
shall be mailed to all stockholders of the Corporation at
least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act
or subsequent provisions).
D. The majority of the Disinterested Directors of
the Corporation shall have the power and duty to determine
for the purpose of this Article SEVENTH, on the basis of
information known to them after reasonable inquiry, all
facts necessary to determine the applicability of the
various provisions of this Article SEVENTH, including, (i)
whether a person is an Interested Stockholder, (ii) the
number of shares of Voting Stock of which any person is the
Beneficial Owner, (iii) whether a person is an Affiliate or
Associate of another, (iv) whether the requirements of
Paragraph B(2) have been met with respect to any Business
Combination, and (v) whether the assets which are the
subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any
Business Combination has, an aggregate Fair Market Value
equal to ten percent (10%) or more of the Net Assets of the
Corporation; and the good faith determination of a majority
of the Disinterested Directors shall be conclusive and
binding for all purposes of this Article SEVENTH.
E. Nothing contained in this Article SEVENTH shall
be construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
F. Notwithstanding any other-provisions of this
Restated Certificate of Incorporation or the Bylaws of the
Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), any
proposal to amend or repeal, or adopt any provisions
inconsistent with, this Article SEVENTH of this Restated
Certificate of Incorporation shall be approved by the
affirmative vote of at least (1) 67% of the then outstanding
shares of Voting Stock and (2) a majority of the then
outstanding shares of Voting Stock held by persons who are
not Interested Stockholders or Affiliates or Associates of
Interested Stockholders, provided that the majority vote
requirement of this clause (2) shall not be applicable if
the proposal is approved by the affirmative vote of not less
than 80% of the then outstanding shares of Voting Stock.
EIGHTH: A. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal
benefit.
B. (1) Each person who was or is made a party or is
threatened to be made a party to or involved in any action suit
or proceeding whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she is or was a director, officer or employee of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit
plan, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, employee or agent or
in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended (but in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys fees, judgments,
fines, including excise taxes with respect to an employee benefit
plan, or penalties and amounts paid in settlement) reasonably
incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to
the benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in paragraph (2)
hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part hereof)
initiated by such person only if such proceeding (or part
thereof) was authorized by the board of directors of the
Corporation. The right to indemnification conferred in this
paragraph (1) of Paragraph B shall include the right to be paid
by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided,
however, that if the Delaware General Corporation Law requires,
the payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director of officer is not
entitled to be indemnified under this Paragraph B or otherwise.
(2) If a claim under paragraph (1) of this Paragraph B is
not paid in full by the Corporation within thirty (30) days after
written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant
has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its board of
directors, independent legal counsel, or its stockholders) that
the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(3) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Paragraph B shall not be
exclusive of any right which any person may have or hereafter
acquire under any statute, provision of the Restated Certificate
of Incorporation, Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
(4) The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint
venture, trust or other enterprise, including an employee benefit
plan, against any such expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware
General Corporation Law.
(5) Upon resolution passed by the board of directors,
the Corporation may establish a trust or other designated
account, grant a security interest or use other means (including,
without limitation, a letter of credit) to ensure the payment of
certain of its obligations arising under this Article EIGHTH.
(6) If any part of this Article EIGHTH shall be found,
in any action, suit or proceeding or appeal therefrom or in any
other circumstances or as to any particular officer, director or
employee to be unenforceable, ineffective or invalid for any
reason, the enforceability, effect and validity of the remaining
parts or of such parts in other circumstances shall not be
affected, except as otherwise required by applicable law.
NINTH: A. The annual meeting of the stockholders for the
election of directors shall be held at the principal office of
the Corporation, unless and until otherwise provided in the
Bylaws.
B. Elections of directors need not be by ballot unless
the Bylaws of the Corporation shall so provide.
C. Unless authorized by a majority of the Disinterested
Directors (as defined in Article SEVENTH), no action required to
be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power of
stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied. In the event a
majority of the Disinterested Directors authorizes the
Corporation to take action upon such written consent, the consent
in writing to such action signed by stockholders holding at least
that proportion of the total voting power on the question which
is required by law or this Restated Certificate of Incorporation
shall be sufficient for the purpose, without the necessity for a
meeting of the stockholders. In order that the Corporation may
determine the stockholders entitled to consent to corporate
action in writing without a meeting, the board of directors may
fix a record date by majority vote, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which date shall not be
more than ten days after the date upon which the resolution
fixing the record date is adopted by the board of directors. Any
amendment, change or repeal of this Paragraph C of Article NINTH,
or any other amendment of this Restated Certificate of
Incorporation that will have the effect of permitting
circumvention of or modifying this Paragraph of Article NINTH,
shall require the favorable vote, at a stockholders' meeting, of
the holders of at least sixty-seven percent (67%) of the
outstanding shares of stock of the Corporation then entitled to
vote generally in the election of directors, voting together as a
single class.
TENTH: A. The Corporation may purchase or redeem its
own shares in the manner and on the conditions permitted and
provided in Section 160 of the Delaware General Corporation Law
or other applicable law, and as may be authorized by the board of
directors. Shares so purchased shall be considered treasury
shares, and may be reissued and disposed of as authorized by law,
or may be canceled and the capital stock reduced, as the board of
directors may, from time to time, determine in accordance with
law.
B. The Corporation may issue convertible securities and
rights to convert shares or obligations of the Corporation into
shares of any authorized class of stock, and the right or option
to purchase shares of any authorized class of stock, in the
manner and on the conditions permitted and provided in Sections
151 and 157 of the Delaware General Corporation Law or other
applicable law, and as may be authorized by the board of
directors.
C. The board of directors shall have such power and
authority with respect to capital, surplus and dividends,
including allocation, increase, reduction, utilization,
distribution and payment, as is permitted and provided in
Sections 154, 170 and 244 of the Delaware General Corporation Law
or other applicable law.
ELEVENTH: Except as otherwise expressly provided in this
Restated Certificate of Incorporation, amendments to this
Restated Certificate of Incorporation, including any change in
the right of holders of stock of any class and any increase or
reduction of capital stock, shall require the affirmative vote of
the holders of a majority of the outstanding stock entitled to
vote thereon and a majority of the outstanding shares of stock of
each class entitled to vote thereon as a class in accordance with
the provisions of Section 242 of the Delaware General Corporation
Law.
TWELFTH: Except as may be otherwise required by
applicable law, the sale and any other transfer of fully paid
stock in the Corporation shall be free from any restrictions or
all liens imposed by the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Amended
and Restated Certificate of Incorporation on this 17th day of
December, 1997, and affirms, under penalties of perjury, that this
instrument is the act and deed of the Corporation and that the
statements made herein ar true and correct.
XCL LTD.
/s/ Marsden W. Miller, Jr
_____________________
Marsden W. Miller, Jr.
Chairman and
Chief Executive Officer
FACE OF COMMON STOCK CERTIFICATE OF XCL LTD.
[GREEN BORDER]
NUMBER SHARES
XCL LTD.
Amended Series B, Cumulative Convertible
Preferred Stock, Par Value $1.00 Each
See Reverse Side for
Certain Definitions
The Corporation will furnish without charge to any sharheolder who so
requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limiations or restrictions of
such preferences and/or rights
THIS IS TO CERTIFY THAT----------------------------------------------------
- ---------------------------------------------------------------------------
IS THE OWNER OF----------------------------------------------------------
Fully Paid and Non-Assessable Shares of the Amended Series B Cumulative
Convertible Preferred Stock of
XCL Ltd.
transferable on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney, upon surrender of this
Certificate properly endorsed.
WITNESS, the seal of the Corporation and the signatures of its
duly authorized officers.
Dated:_____________________
__________________________ _______________________
Secretary/Treasurer President
[REVERSE OF CERTIFICATE]
XCL Ltd.
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
______ Custodian
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with right Act___________________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For Value Received, ___ hereby sell, assign and transfer unto
(Please insert Social Security or other Identifying Number of
Assignee) ______________________________________________________
_________________________________________________________________
(Please print or typewrite name and address, including postal zip code,
of assignee)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Shares represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named
Corporation, with full power of substitution in the premises.
Dated_________________________
_________________________
In presence of
_____________________________
AGREEMENT
This Agreement dated as of March 3, 1998, between
XCL Ltd., a Delaware corporation ("XCL"), and Arbco
Associates, L.P., Kayne Anderson Non-Traditional
Investments, L.P., Offense Group Associates, L.P.,
Opportunity Associates, L.P., each a California limited
partnership (collectively "Buyer").
W I T N E S S E T H:
WHEREAS, simultaneously herewith Buyer has entered
into a Stock Purchase Agreement (the "Purchase Agreement")
with China Investment and Development Corporation, a
Delaware corporation ("CIDC"), and China Investment &
Development Co. Ltd., a Republic of China corporation ("CIDC-
ROC," and together with CIDC, the "Sellers"), relating to
the sale by the Sellers to Buyer of all the outstanding
shares (the "Shares") of Series B, Cumulative Preferred
Stock, par value $1.00 per share (the "Series B Preferred
Stock") of XCL and warrants (the "Warrants") to purchase
221,666 shares of the common stock, par value $0.01 per
share (the "Common Stock"), of XCL; and
WHEREAS, the purchase of the Shares and the
Warrants as provided for in the Purchase Agreement is a
condition of the settlement and dismissal of certain
litigation by CIDC and CIDC-ROC against XCL and others; and
WHEREAS, in partial consideration for the services
of Buyer in effectuating the transactions provided for in
the Purchase Agreement in order to facilitate the settlement
and dismissal of such litigation and in order to induce
Buyer to take such actions to enable XCL to complete the
conditions to the settlement of the litigation, XCL has
agreed to create a class of Preferred Stock entitled Amended
Series B, Cumulative Convertible Preferred Stock ("Amended
Series B Preferred Stock") and to exchange the Shares of
Series B Preferred Stock purchased by Buyer for an
equivalent number of shares of Amended Series B Preferred
Stock and to issue to Buyer certain new warrants for the
purchase of Common Stock of XCL as provided for herein;
WHEREAS, the parties hereto wish to provide for
the exchange of the Shares, the issuance of certain new
warrants to Buyer and the cancellation of the Warrants on
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises
and mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confirmed, the parties hereto
hereby agree as follows:
1. Return of Warrants. In consideration of
XCL's covenants and agreements contained herein, on the
date hereof, Buyer hereby transfers to XCL all Buyer's
right, title and interest in and to the Warrants and
the warrant certificates (the "Warrant Certificates")
representing the Warrants and acknowledges that XCL
will cancel such Warrants, and from and after the date
hereof, the Warrants shall be deemed null and void and
of no further force and effect and no holder of any
Warrant Certificate shall be entitled to any rights
thereunder or with respect thereto and Buyer covenants
that if the Warrant Certificates ever come into Buyer's
possession or control, Buyer will promptly surrender
them to XCL for cancellation.
2. Redemption Notice. Buyer agrees that any
and all notices of redemption given with respect to the
Series B Preferred Stock prior to the date hereof shall
be deemed to have been revoked and withdrawn and that
no such notice of redemption shall be of any continuing
force and effect with respect to the Series B Preferred
Stock.
3. Issuance of New Warrants. As partial
consideration for the return of the Warrants for
cancellation and Buyer entering into the Purchase
Agreement, XCL shall issue warrants to purchase 250,000
shares of Common Stock, at an exercise price of $5.50
per share (the number of shares of Common Stock that
may be purchased pursuant to such warrants and the
exercise price to be subject to adjustment as provided
in the warrant certificate) and to be evidenced by a
warrant certificate substantially in the form of
Exhibit A hereto.
4. Exchange of the Series B Preferred Stock.
As partial consideration for the return of the Warrants
for cancellation and Buyer entering into the Purchase
Agreement, XCL shall take all corporate action
necessary to create the Amended Series B Preferred
Stock as set forth in Exhibit B hereto and shall
exchange for and in consideration of the 44,465 Shares
of Series B Preferred Stock purchased by Buyer from
Sellers 44,465 shares of Amended Series B Preferred
Stock and Buyer hereby consents to such exchange.
5. Accrued Dividends. XCL acknowledges that,
as of March 3, 1998, dividends in the aggregate amount
of $261,919.55 remain accrued and unpaid upon the
outstanding Series B Preferred Stock and that such
dividends shall be paid by XCL on the date hereof by
the issuance to Buyer of 2,620 shares of Amended Series
B Preferred Stock (which includes one additional share
of Amended Series B Preferred Stock to cover the
fractional shares represented by the dividend arrearage
and the purchase price of the Series B Preferred
Stock).
6. Issuance of Certificates. Upon return by
Buyer to XCL of the Series B Preferred Stock
Certificate(s) received by Buyer from Sellers pursuant
to the Purchase Agreement and the Warrants, XCL will
issue to each individual Buyer certificates
representing shares of Amended Series B Preferred Stock
issued in exchange therefor, shares of Amended Series B
Preferred Stock paid as dividend arrearages and warrant
certificates as listed on Exhibit C hereto.
7. Representations of Buyer. The
representations of each Buyer as to itself contained in
paragraph 5(a) of the Purchase Agreement shall be
deemed to be made to XCL herein as if they were
contained herein.
8. Survival. All covenants contained in this
Agreement shall survive the execution and delivery of
this Agreement.
9. Amendment and Modification. This Agreement
may be amended or modified at any time by the parties
hereto, pursuant to an instrument in writing signed by
both parties.
10. Entire Agreement; Assignment. This
Agreement (i) constitutes the entire agreement between
the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and
understandings, both written and oral, between the
parties hereto with respect to the subject matter
hereof and (ii) shall not be assigned, by operation of
law or otherwise by either party hereto, without the
prior written consent of the other party.
11. Validity. The invalidity or
unenforceability of any term or provision of this
Agreement in any situation or jurisdiction shall not
affect the validity or enforceability of the other
terms or provisions hereof or the validity or
enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
12. Notices. Unless otherwise provided
herein, all notices and other communications hereunder
shall be in writing and shall be deemed given upon
receipt by the other parties at the following addresses
or telecopy numbers:
(a) if to XCL, to
110 Rue Jean Lafitte
Lafayette, LA 70508
Telecopy No.: (318) 237-3316 or 261-0737
(b) if to Buyer, to
Kayne Anderson Investment Management, Inc.
1800 Avenue of the Stars, 2nd Floor
Los Angeles, CA 90067
13. Expenses. XCL shall reimburse Buyer the
fees of its in-house counsel for review of this
Agreement and the transaction described herein, such
fees not to exceed $5,000.
14. Governing Law. This Agreement shall be
governed by, enforced under and construed in accordance
with the laws of the State of New York, without giving
effect to any choice or conflict of law provision or
rule thereof.
15. Counterparts. This Agreement may be
executed in any number of counterparts, original or
facsimile, each of which shall be deemed an original,
but all of which together shall constitute one and the
same instrument.
16. Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each
party hereto and nothing in this Agreement, express or
implied, is intended by or shall confer upon any other
person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
17. No Waivers. Except as otherwise expressly
provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right,
power or remedy by any party, and no course of dealing
between the parties, shall constitute a waiver of any
such right, power or remedy. No waiver by either party
of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or
not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent
such occurrence. No waiver shall be valid unless in
writing and signed by the party against whom such
waiver is sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
XCL LTD.
By:___________________________
Name:_________________________
Please Print
Title:________________________
ARBCO ASSOCIATES, L.P., KAYNE
ANDERSON NON-TRADITIONAL INVESTMENTS, L.P.,
OFFENSE GROUP ASSOCIATES, L.P.
and
OPPORTUNITY ASSOCIATES, L.P.
By: KAIM Non-Traditional, L.P.
The General Partner of
each of the foregoing
By: Kayne Anderson Investment
Management, Inc.
Its General Partner
By:______________________________
Robert V. Sinnott
Vice-President
XCL LTD.
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY OTHER FEDERAL OR STATE SECURITIES OR
BLUE SKY LAWS OF ANY OTHER DOMESTIC OR FOREIGN JURISDICTION. NO
OFFER, SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION (COLLECTIVELY,
A "DISPOSAL") OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY
BE MADE UNLESS (i) REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKY LAWS OR (ii) XCL LTD. (THE "CO
MPANY") RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH
DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.
No. B-__
WARRANTS TO PURCHASE
COMMON STOCK OF XCL LTD.
Initial Issuance on March 3, 1998
Void after 5:00 p.m. Louisiana Time, March 2, 2002
THIS CERTIFIES THAT, for value received,
_____________________________, or registered assigns (the
"Holder") is the registered holder of warrants (the "Warrants")
to purchase from XCL Ltd., a Delaware corporation (the
"Company"), at any time or from time to time beginning on March
3, 1998 (the "Issue Date") and until 5:00 p.m., local time, on
March 2, 2002 (the "Expiration Date"), subject to the conditions
set forth herein, at the initial exercise price of $5.50 per
share (the "Initial Exercise Price"), subject to adjustment as
set forth herein (the "Exercise Price"), up to an aggregate of
_____________________________________(________) fully paid and
non-assessable common shares, par value $0.01 per share (the
"Common Stock"), subject to adjustment as set forth herein, of
the Company (the "Shares") upon surrender of this warrant
certificate (the "Certificate") and payment of the Exercise Price
multiplied by the number of Shares in respect of which Warrants
are then being exercised (the "Purchase Price") at the principal
office of the Company presently located at 110 Rue Jean Lafitte,
2nd Floor, Lafayette, LA 70508, United States of America.
1. Exercise of Warrants.
(a) The exercise of any Warrants represented by this
Certificate is subject to the conditions set forth
below in paragraph 4, "Compliance with U.S. Secur
ities Laws."
(b) Subject to compliance with all of the
conditions set forth herein, the Holder shall have
the right at any time and from time to time after
the Issue Date to purchase from the Company the
number of Shares which the Holder may at the time
be entitled to purchase pursuant hereto, upon
surrender of this Certificate to the Company at
its principal office, together with the form of
election to purchase attached hereto duly com
pleted and signed, and upon payment to the Company
of the Purchase Price.
(c) No Warrant may be exercised after 5:00 p.m.,
local time, on the Expiration Date, after which
time all Warrants evidenced hereby shall be void.
(d) Payment of the Purchase Price shall be made in
cash, by wire transfer of immediately available
funds or by certified check or banker's draft
payable to the order of the Company, or any
combination of the foregoing.
(e) The Warrants represented by this Certificate
are exercisable at the option of the Holder, in
whole or in part (but not as to fractional
Shares). Upon the exercise of less than all of
the Warrants evidenced by this Certificate, the
Company shall forthwith issue to the Holder a new
certificate of like tenor representing the number
of unexercised Warrants.
(f) Subject to compliance with all of the
conditions set forth herein, upon surrender of
this Certificate to the Company at its principal
office, together with the form of election to
purchase attached hereto duly completed and
signed, and upon payment of the Purchase Price,
the Company shall cause to be delivered promptly
to or upon the written order of the Holder and in
such name or names as the Holder may designate, a
share certificate or share certificates for the
number of whole Shares purchased upon the exercise
of the Warrants.
2. Elimination of Fractional Interests. The Company
shall not be required to issue certificates
representing fractions of Shares and shall not be
required to issue scrip in lieu of fractional
interests. Instead of any fractional Shares that would
otherwise be issuable to the Holder, the Company shall
pay to the Holder a cash adjustment in respect of such
fractional interest in an amount equal to such
fractional interest of the then-current Market Price
per share (as defined in Section 7(f) hereof).
3. Payment of Taxes. The Company will pay all documen
tary stamp taxes, if any, attributable to the issuance
and delivery of the Shares upon the exercise of the
Warrants; provided, however, that the Company shall not
be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or
delivery of any Warrant or any Shares in any name other
than that of the Holder, which transfer taxes shall be
paid by the Holder, and until payment of such transfer
taxes, if any, the Company shall not be required to
issue such Shares.
4. Compliance with U.S. Securities Laws. The Warrants
have not been, and will not be, registered under the
United States Securities Act of 1933, as amended (the
"Securities Act"), or any other federal or state
securities or blue sky laws. No offer, sale, transfer,
pledge or other disposition (collectively, a
"Disposal") of the Warrants represented by this
Certificate may be made unless (i) registered under the
Act and any applicable State securities or blue sky
laws or (ii) the Company receives a written opinion of
United States legal counsel in form and substance
satisfactory to it to the effect that such Disposal is
exempt from such registration requirements.
5. Transfer of Warrants.
(a) The Warrants shall be transferable only on the
books of the Company maintained at the Company's
principal office upon delivery of this Certificate
with the form of assignment attached hereto duly
completed and signed by the Holder or by its duly
authorized attorney or representative, accompanied
by proper evidence of succession, assignment or
authority to transfer. The Company may, in its
discretion, require, as a condition to any
transfer of Warrants, a signature guarantee, which
may be provided by a commercial bank or trust
company, by a broker or dealer which is a member
of the National Association of Securities Dealers,
Inc., or by a member of a United States national
securities exchange, The Securities and Futures
Authority Limited in the United Kingdom, or The
London Stock Exchange Limited in London, England.
Upon any registration of transfer, the Company
shall deliver a new warrant certificate or warrant
certificates of like tenor and evidencing in the
aggregate a like number of Warrants to the person
entitled thereto in exchange for this Certificate,
subject to the limitations provided herein,
without any charge except for any tax or other
governmental charge imposed in connection
therewith.
(b) Notwithstanding anything in this Certificate to
the contrary, neither any of the Warrants nor any
of the Shares issuable upon exercise of any of the
Warrants shall be transferable, except upon
compliance by the Holder with any applicable
provisions of the Securities Act and any
applicable state securities or blue sky laws.
6. Exchange and Replacement of Warrant Certificates;
Loss or Mutilation of Warrant Certificates.
(a) This Certificate is exchangeable without cost,
upon the surrender hereof by the Holder at the
principal office of the Company, for new warrant
certificates of like tenor and date representing
in the aggregate the right to purchase the same
number of Shares in such denominations as shall be
designated by the Holder at the time of such
surrender. Any transfer not made in such
compliance shall be null and void and shall be
given no effect hereunder.
(b) Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Certificate and,
in case of such loss, theft or destruction, of
indemnity and security reasonably satisfactory to
it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon
surrender and cancellation of this Certificate, if
mutilated, the Company will make and deliver a new
warrant certificate of like tenor, in lieu
thereof.
7. Initial Exercise Price; Adjustment of Exercise Price
and Number of Shares.
(a) The Warrants initially are exercisable at the
Initial Exercise Price per Share, subject to
adjustment from time to time as provided herein.
No adjustments will be made for cash dividends, if
any, paid to shareholders of record prior to the
date on which the Warrants are exercised.
(b) In case the Company shall at any time after the
date of this Certificate (i) declare a dividend on
the shares of Common Stock payable in shares of
Common Stock, or (ii) subdivide or split up the
outstanding shares of Common Stock, the amount of
Shares to be delivered upon exercise of any
Warrant will be appropriately increased so that
the Holder will be entitled to receive the amount
of Shares that such Holder would have owned
immediately following such actions had such
Warrant been exercised immediately prior thereto,
and the Exercise Price in effect immediately prior
to the record date for such dividend or the
effective date for such subdivision shall be
proportionately decreased, all effective
immediately after the record date for such
dividend or the effective date for such
subdivision or split up. Such adjustments shall
be made successively whenever any event listed
above shall occur.
(c) In case the Company shall at any time after the
date of this Certificate combine the outstanding
shares of Common Stock into a smaller number of
shares the amount of Shares to be delivered upon
exercise of any Warrant will be appropriately
decreased so that the Holder will be entitled to
receive the amount of Shares that such Holder
would have owned immediately following such action
had such Warrant been exercised immediately prior
thereto, and the Exercise Price in effect
immediately prior to the record date for such
combination shall be proportionately increased,
effective immediately after the record date for
such combination. Such adjustment shall be made
successively whenever any such combinations shall
occur.
(d) In the event that the Company shall at any time
after the date of this Certificate (i) issue or
sell any shares of Common Stock (other than the
Shares) or securities convertible or exchangeable
into Common Stock to all holders of Common Stock
without consideration or at a price per share (or
having a conversion price per share, if a security
convertible into Common Stock) less than the
Market Value per share of Common Stock (as defined
in Section 7(f) hereof), or (ii) issue or sell
options, rights or warrants to subscribe for or
purchase Common Stock to all holders of Common
Stock at a price per share less than the Market
Price per share of Common Stock (as defined in
Section 7(f) hereof), the Exercise Price to be in
effect after the date of such issuance shall be
determined by multiplying the Exercise Price in
effect on the day immediately preceding the
relevant issuance or record date, as the case may
be, used in determining such Market Value or
Market Price, by a fraction, the numerator of
which shall be the number of shares of Common
Stock outstanding on such issuance or record date
plus the number of shares of Common Stock which
the aggregate offering price of the total number
of shares of Common Stock so to be issued or to be
offered for subscription or purchase (or the
aggregate initial conversion price of the
convertible securities so to be offered) would
purchase at such Market Value or Market Price, as
the case may be, and the denominator of which
shall be the number of shares of Common Stock
outstanding on such issuance or record date plus
the number of additional shares of Common Stock to
be issued or to be offered for subscription or
purchase (or into which the convertible securities
so to be offered are initially convertible); such
adjustment shall become effective immediately
after the close of business on such issuance or
record date; provided, however, that no such
adjustment shall be made for the issuance of (s)
options to purchase shares of Common Stock granted
pursuant to the Company's employee stock option
plans approved by shareholders of the Company (and
the shares of Common Stock issuable upon exercise
of such options) (provided that option exercise
prices shall not be less than the Market Value of
the Common Stock (as defined in Section 7(f)
hereof) on the date of the grant of such options),
(t) the Company's warrants to purchase shares of
Common Stock (and the shares of Common Stock
issuable upon exercise of such warrants),
outstanding on the date hereof, (u) the Company's
shares of Amended Series A, Cumulative Convertible
Preferred Stock (and the shares of Common Stock
issuable upon conversion of such Preferred Stock),
outstanding on the date hereof, or (v) the
Company's shares of Series B, Cumulative Preferred
Stock (and the shares of Common Stock issuable
upon conversion of such Preferred Stock or in lieu
of dividend and redemption payments thereunder),
outstanding on the date hereof. In case such
subscription price may be paid in a consideration,
part or all of which shall be in a form other than
cash, the value of such consideration shall be as
determined reasonably and in good faith by the
Board of Directors of the Company. Shares of
Common Stock owned by or held for the account of
the Company or any wholly-owned subsidiary shall
not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made
successively whenever the date of such issuance is
fixed (which date of issuance shall be the record
date for such issuance if a record date therefor
is fixed); and, in the event that such shares or
options, rights or warrants are not so issued, the
Exercise Price shall again be adjusted to be the
Exercise Price which would then be in effect if
the date of such issuance had not been fixed.
(e) In case the Company shall make a distribution
to all holders of Common Stock (including any such
distribution made in connection with a
consolidation or merger in which the Company is
the continuing corporation) of evidences of its
indebtedness, securities other than Common Stock
or assets (other than cash dividends or cash
distributions payable out of consolidated earnings
or earned surplus or dividends payable in Common
Stock), the Exercise Price to be in effect after
such date of distribution shall be determined by
multiplying the Exercise Price in effect on the
date immediately preceding the record date for the
determination of the shareholders entitled to
receive such distribution by a fraction, the
numerator of which shall be the Market Price per
share of Common Stock (as defined in Section 7(f)
hereof) on such date, less the then-fair market
value (as determined reasonably and in good faith
by the Board of Directors of the Company of the
portion of the assets, securities or evidences of
indebtedness so to be distributed applicable to
one share of Common Stock and the denominator of
which shall be such Market Price per share of
Common Stock, such adjustment to be effective
immediately after the distribution resulting in
such adjustment. Such adjustment shall be made
successively whenever a date for such distribution
is fixed (which date of distribution shall be the
record date for such distribution if a record date
therefor is fixed); and, if such distribution is
not so made, the Exercise Price shall again be
adjusted to be the Exercise Price which would then
be in effect if such date of distribution had not
been fixed.
(f) For the purposes of any computation under this
Section 7, the "Market Price per share" of Common
Stock on any date shall be deemed to be the
average of the closing bid price for the 20
consecutive trading days ending on the record date
for the determination of the shareholders entitled
to receive any rights, dividends or distributions
described in this Section 7, and the "Market Value
per share" of Common Stock on any date shall be
deemed to be the closing bid price on the date of
the issuance of the securities for which such
computation is being made, as reported on the
principal United States securities exchange on
which the Common Stock is listed or admitted to
trading or if the Common Stock is not then listed
on any United States stock exchange, the average
of the closing sales price on each such day during
such 20 day period, in the case of the Market
Price computation, or on such date of issuance, in
the case of the Market Value computation, in the
over-the-counter market as reported by the Nasdaq
National Market, or, if not so reported, the
average of the closing bid and asked prices on
each such day during such 20 day period in the
case of the Market Price computation, or on such
date of issuance, in the case of the Market Value
computation, as reported in the "pink sheets"
published by the National Quotation Bureau, Inc.
or any successor thereof, or, if not so quoted,
the average of the middle market quotations for
such 20 day period in the case of the Market Price
computation, or on such date of issuance, in the
case of the Market Value computation, as reported
on the daily official list of the prices of stock
listed on The London Stock Exchange Limited ("The
Stock Exchange Daily Official List"). "Trading
day" means any day on which the Common Stock is
available for trading on the applicable securities
exchange or in the applicable securities market.
In the case of Market Price or Market Value
computations based on The Stock Exchange Daily
Official List, the Market Price or Market Value
shall be converted into United States dollars at
the then spot market exchange rate of pounds
sterling (UK) into United States dollars as quoted
by Chemical Bank or any successor bank thereto on
the date of determination. If a quotation of such
exchange rate is not so available, the exchange
rate shall be the exchange rate of pounds sterling
in United States dollars as quoted in The Wall
Street Journal on the date of determination.
(g) No adjustment in the Exercise Price shall be
required unless such adjustment would require an
increase or decrease of at least 1% in such price;
provided that any adjustments which by reason of
this Section 7(g) are not required to be made
shall be carried forward and taken into account in
any subsequent adjustment; provided, further that
such adjustment shall be made in all events
(regardless of whether or not the amount thereof
or the cumulative amount thereof amounts to 1% (or
more) upon the happening of one or more of the
events specified in Sections 7(b), (c) or (i).
All calculations under this Section 7 shall be
made to the nearest cent.
(h) If at any time, as a result of an adjustment
made pursuant to Section 7(b) or (c) hereof, the
Holder of any Warrant thereafter exercised shall
become entitled to receive any shares of the
Company other than shares of Common Stock,
thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a
manner and on terms as nearly equivalent as
practicable to the provisions with respect to the
Shares contained in this Section 7, and the
provisions of this Certificate with respect to the
Shares shall apply on like terms to such other
shares.
(i) In the case of (l) any capital reorganization
of the Company, or of (2) any reclassification of
the shares of Common Stock (other than a
subdivision or combination of outstanding shares
of Common Stock), or (3) any consolidation or
merger of the Company, or (4) the sale, lease or
other transfer of all or substantially all of the
properties and assets of the Company as, or
substantially as, an entirety to any other person
or entity, each Warrant shall after such capital
reorganization, reclassification of the shares of
Common Stock, consolidation, or sale be
exercisable, upon the terms and conditions
specified in this Certificate, for the number of
shares of stock or other securities or assets to
which a holder of the number of Shares purchasable
(immediately prior to the effectiveness of such
capital reorganization, reclassification of shares
of Common Stock, consolidation, or sale) upon
exercise of a Warrant would have been entitled
upon such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger
or sale; and in any such case, if necessary, the
provisions set forth in this Section 7 with
respect to the rights thereafter of the Holder
shall be appropriately adjusted (as determined
reasonably and in good faith by the Board of
Directors of the Company) so as to be applicable,
as nearly as may reasonably be, to any shares of
stock or other securities or assets thereafter
deliverable on the exercise of a Warrant. The
Company shall not effect any such consolidation or
sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation,
partnership or other entity (if other than the
Company) resulting from such consolidation or the
corporation, partnership or other entity
purchasing such assets or the appropriate entity
shall assume, by written instrument, the
obligation to deliver to the Holder of each
Warrant the shares of stock, securities or assets
to which, in accordance with the foregoing
provisions, such Holder may be entitled and all
other obligations of the Company under this
Certificate. For purposes of this Section 7(i) a
merger to which the Company is a party but in
which the Common Stock outstanding immediately
prior thereto is changed into securities of
another corporation shall be deemed a
consolidation with such other corporation being
the successor and resulting corporation.
(j) Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable
upon the exercise of the Warrant, Warrant
Certificates theretofore or thereafter issued may
continue to express the same Exercise Price per
share and number and kind of Shares as are stated
on the Warrant Certificates initially issuable
pursuant to this Warrant.
8. Notices to Warrant Holders. Nothing contained in
this Certificate shall be construed as conferring upon
the Holder the right to vote or to consent or to
receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors
or any other matter, or as having any rights whatsoever
as a stockholder of the Company. If, however, at any
time prior to the exercise or expiration of the
Warrants, any of the following events shall occur:
(a) the holders of shares of the Common Stock shall
be entitled to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend
or distribution payable otherwise than out of
current or retained earnings, as indicated by the
accounting treatment of such dividend or dis
tribution on the books of the Company; or
(b) the Company shall offer to all the holders of
its Common Stock any additional shares of capital
stock of the Company or securities convertible
into or exchangeable for shares of capital stock
of the Company, or any option, right or warrant to
subscribe therefor; or
(c) a dissolution, liquidation or winding-up of the
Company (other than in connection with a consoli
dation or merger) or a sale of all or sub
stantially all of its property, assets and
business as an entirety shall be approved by the
Company's Board of Directors; or
(d) there shall be any capital reorganization or
reclassification of the capital stock of the
Company (other than a change in the number of
outstanding shares of Common Stock or a change in
the par value of the Common Stock), or
consolidation or merger of the Company with
another entity;
then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to
the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled
to such dividend, distribution, convertible or exchangeable secur
ities or subscription rights, options or warrants, or entitled to
vote on such proposed dissolution, liquidation, winding-up or
sale. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be. Failure to give
such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment
of any such dividend or distribution, or the issuance of any
convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation,
winding-up or sale.
9. Reservation and Listing of Securities.
(a) The Company covenants and agrees that the
Company shall reserve and keep available, free
from preemptive rights, out of its authorized and
unissued shares of Common Stock or out of its
authorized and issued shares of Common Stock held
in its treasury, solely for the purpose of
issuance upon exercise of the Warrants, such
number of Shares as shall be issuable upon the
exercise of the Warrants.
(b) The Company covenants and agrees that, upon
exercise of the Warrants in accordance with their
terms and payment of the Purchase Price, all
Shares issued or sold upon such exercise shall not
be subject to the preemptive rights of any
stockholder and when issued and delivered in
accordance with the terms of the Warrants shall be
duly and validly issued, fully paid and non-
assessable, and the Holder shall receive good and
valid title to such Shares free and clear from any
adverse claim (as defined in the applicable
Uniform Commercial Code), except such as have been
created by the Holder.
(c) As long as the Warrants shall be outstanding,
the Company shall use its reasonable efforts to
cause all Shares issuable upon the exercise of the
Warrants to be quoted by or listed on any national
securities exchange or other securities listing
service on which the shares of Common Stock of the
Company are then listed.
10. Survival. All agreements, covenants, representa
tions and warranties herein shall survive the execution
and delivery of this Certificate and any investigation
at any time made by or on behalf of any party hereto
and the exercise, sale and purchase of the Warrants and
the Shares (and any other securities or properties)
issuable on exercise hereof.
11. Remedies. The Company agrees that the remedies at
law of the Holder, in the event of any default or
threatened default by the Company in the performance of
or compliance with any of the terms hereof, may not be
adequate and such terms may, in addition to and not in
lieu of any other remedy, be specifically enforced by a
decree of specific performance of any agreement
contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
12. Registered Holder. The Company may deem and treat
the registered Holder hereof as the absolute owner of
this Certificate and the Warrants represented hereby
(notwithstanding any notation of ownership or other
writing hereon made by anyone), for the purpose of any
exercise of the Warrants, of any notice, and of any
distribution to the Holder hereof, and for all other
purposes, and the Company shall not be affected by any
notice to the contrary.
13. Notices. All notices and other communications from
the Company to the Holder of the Warrants represented
by this Certificate shall be in writing and shall be
deemed to have been duly given if and when personally
delivered, two (2) business days after sent by
overnight courier or ten (10) days after mailed by
certified, registered or international recorded mail,
postage prepaid and return receipt requested, or when
transmitted by telefax, telex or telegraph and con
firmed by sending a similar mailed writing, if to the
Holder, to the last address of such Holder as it shall
appear on the books of the Company maintained at the
Company's principal office or to such other address as
the Holder may have specified to the Company in
writing.
14. Headings. The headings contained herein are for
convenience of reference only and are not part of this
Certificate.
15. Governing Law. This Certificate shall be deemed to
be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by, and
construed in accordance with, the laws of said state,
without regard to the conflict of laws provisions there
of.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed by its duly authorized officers
under its corporate seal.
Dated: March 3, 1998
XCL LTD.
By:___________________________________
Name:____________________________
Title:___________________________
Attest:
___________________________________
Secretary
Dated: March 3, 1998
XCL LTD.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered Holder
if such Holder desires to exercise Warrants)
The undersigned registered Holder hereby irrevocably
elects to exercise the right of purchase represented by this
Warrant Certificate for, and to purchase, Shares
hereunder, and herewith tenders in payment for such Shares cash,
a wire transfer, a certified check or a banker's draft payable to
the order of XCL Ltd. in the amount of ,
all in accordance with the terms hereof. The undersigned
requests that a share certificate for such Shares be registered
in the name of and delivered to:
_________________________________________________________________
(Please Print Name and Address
_________________________________________________________________
_________________________________________________________________
and, if said number of Shares shall not be all the Shares purchas
able hereunder, that a new Warrant Certificate for the balance
remaining of the Shares purchasable hereunder be registered in
the name of the undersigned Warrant Holder or his Assignee as
below indicated and delivered to the address stated below.
DATED:
Name of Warrant Holder:
(Please Print)
Address:
Signature:
Note: The above signature must correspond in all respects
with the name of the Holder as specified on the face of this
Warrant Certificate, without alteration or enlargement or any
change whatsoever, unless the Warrants represented by this
Warrant Certificate have been assigned.
XCL LTD.
FORM OF ASSIGNMENT
(To be executed by the registered Holder if such Holder
desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers to:
_________________________________________________________________
(Please Print Name and Address of Transferee)
_________________________________________________________________
_________________________________________________________________
Warrants to purchase up to Shares represented by this
Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
, Attorney, to transfer such Warrants on the books of the
Company, with full power of substitution in the premises. The
undersigned requests that if said number of Shares shall not be
all of the Shares purchasable under this Warrant Certificate that
a new Warrant Certificate for the balance remaining of the Shares
purchasable under this Warrant Certificate be registered in the
name of the undersigned Warrant Holder and delivered to the regis
tered address of said Warrant Holder.
DATED: _________________________________________________________
Signature of registered Holder: _________________________________
Note: The above signature must correspond in all respects
with the name of the Holder as specified on the face of this
Warrant Certificate, without alteration or enlargement or any
change whatsoever. The above signature of the registered Holder
must be guaranteed by a commercial bank or trust company, by a
broker or dealer which is a member of the National Association of
Securities Dealers, Inc. or by a member of a national securities
exchange, The Securities and Futures Authority Limited in the
United Kingdom or The London Stock Exchange Limited in London,
England. Notarized or witnessed signatures are not acceptable as
guaranteed signatures.
Signature Guaranteed:
___________________________________
Authorized Officer
___________________________________
Name of Institution
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Certain information for the periods shown on this Financial Data Schedule has
been restated to give effect to certain reclassifications made to those periods
to conform to current year presentation.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 113 278 79,707 77,345
<SECURITIES> 0 0 0 0
<RECEIVABLES> 124 148 40 163
<ALLOWANCES> 101 101 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 348 526 79,857 77,800
<PP&E> 34,809 36,245 40,611 51,322
<DEPRECIATION> 1,491 1,085 954 977
<TOTAL-ASSETS> 60,864 62,076 151,890 159,423
<CURRENT-LIABILITIES> 47,053 48,007 114,325 122,200
<BONDS> 0 0 0 0
0 0 0 0
669 756 1,062 1,066
<COMMON> 2,858 2,923 2,981 2,988
<OTHER-SE> 7,514 7,707 30,781 30,524
<TOTAL-LIABILITY-AND-EQUITY> 60,864 62,076 151,890 159,423
<SALES> 1,136 85 137 189
<TOTAL-REVENUES> 1,136 85 137 189
<CGS> 10,929 901 1,727 2,755
<TOTAL-COSTS> 10,929 901 1,727 2,755
<OTHER-EXPENSES> (134) (239) (810) (2,436)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 2,415 634 1,646 2,713
<INCOME-PRETAX> (12,074) (1,211) (2,426) (2,843)
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> (12,074) (1,211) (2,426) (2,843)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (12,074) (1,211) (2,426) (2,843)
<EPS-PRIMARY> (0.98) (0.15) (0.29) (0.40)
<EPS-DILUTED> (0.98) (0.15) (0.29) (0.40)
</TABLE>
