SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 13D
(RULE 13D-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
Coastal Physician Group, Inc.
----------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
-----------------------------------------------------------------------
(Title of Class of Securities)
19049510
------------------------------------------------------------------------
(CUSIP Number)
Steven M. Scott, M.D.
3711 Stoneybrook Drive
Durham, North Carolina 27705
-----------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
With a copy to:
Daniel E. Stoller, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
-------------------------------------------------------------------------
June 30, 1998
- --------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box. ( )
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are sent.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
CUSIP NO. 19049510 13D
- -------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Steven M. Scott, M.D.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 17,640,136 Common Shares*
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 654,909 Common Shares
WITH
9 SOLE DISPOSITIVE POWER
17,640,136 Common Shares*
10 SHARED DISPOSITIVE POWER
654,909 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,295,045 Common Shares*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (X)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.6%
14 TYPE OF REPORTING PERSON
IN
- ------------------
* Rows 7, 9 and 11 in the above chart do not include 4,449,740
shares of common stock issuable upon conversion of Series D
Convertible Preferred Stock. See Item 3 and Item 5.
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Scott Medical Partners, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Tennessee
7 SOLE VOTING POWER
NUMBER OF
SHARES 7,138,311 Common Shares
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0 Common Shares
PERSON
WITH 9 SOLE DISPOSITIVE POWER
7,138,311 Common Shares
10 SHARED DISPOSITIVE POWER
0 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,138,311 Common Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.0%
14 TYPE OF REPORTING PERSON
CO
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Signal Fund, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Tennessee
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 815,000 Common Shares
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0 Common Shares
WITH
9 SOLE DISPOSITIVE POWER
815,000 Common Shares
10 SHARED DISPOSITIVE POWER
0 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
815,000 Common Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.2%
14 TYPE OF REPORTING PERSON
PN
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Steven M. Scott Family Limited Partnership
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Tennessee
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 535,766 Common Shares
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0 Common Shares
WITH
9 SOLE DISPOSITIVE POWER
535,766 Common Shares
10 SHARED DISPOSITIVE POWER
0 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
535,766 Common Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
14 TYPE OF REPORTING PERSON
PN
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Doctors Health Plan, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,500,000 Common Shares
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0 Common Shares
WITH
9 SOLE DISPOSITIVE POWER
1,500,000 Common Shares
10 SHARED DISPOSITIVE POWER
0 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,500,000 Common Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.0%
14 TYPE OF REPORTING PERSON
CO
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Scott Family Foundation, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Florida
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 39,110 Common Shares
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0 Common Shares
WITH
9 SOLE DISPOSITIVE POWER
39,110 Common Shares
10 SHARED DISPOSITIVE POWER
0 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,110 Common Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
14 TYPE OF REPORTING PERSON
CO
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
S&WLP
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS ( )
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Tennessee
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 119,143 Common Shares
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0 Common Shares
WITH
9 SOLE DISPOSITIVE POWER
119,143 Common Shares
10 SHARED DISPOSITIVE POWER
0 Common Shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
119,143 Common Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
14 TYPE OF REPORTING PERSON
PN
This statement amends and supplements the Schedule 13D relating to
the beneficial ownership of Common Stock, par value $.01 per share (the
"Common Stock") of Coastal Physician Group, Inc., a Delaware corporation
(the "Issuer"), filed jointly with the Securities and Exchange Commission
by and on behalf of Steven M. Scott, M.D. ("Dr. Scott") and various
entities which may be deemed to be controlled by Dr. Scott. A Joint Filing
Agreement is attached hereto as Exhibit 1 with respect to the filing
parties. Except as disclosed herein there has been no change in the
information previously reported on Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration.
Dr. Scott currently may be deemed to be the beneficial owner of
18,295,045 shares, or 48.6%, of the Issuer's Common Stock.
On June 30, 1998, Dr. Scott converted the Issuer's $2,000,000 10%
Convertible Debenture due July 1, 1998 (the "Convertible Debenture"), plus
accrued interest thereon of $64,958.90, into 444,974 shares of the Issuer's
Series D Convertible Preferred Stock, par value $.01 per share (the "Series
D Stock"). On June 29, 1998, the Convertible Debenture was amended to
provide that it would be convertible only into Series D Stock, and that no
portion of the Convertible Debenture would be converted into shares of the
Issuer's Common Stock. Each share of Series D Stock generally is entitled
to ten votes per share and, subject to the approval of the Issuer's
shareholders, is convertible into ten shares of the Issuer's Common Stock.
Accordingly, the 444,974 shares of Series D Stock are convertible into
4,449,740 shares of Common Stock. Dr. Scott has no present intention of
seeking approval of the Issuer's stockholders for the conversion of the
shares of Series D Stock and, accordingly, such shares of Common Stock are
not deemed to be beneficially owned by Dr. Scott and are not included in
this Schedule 13D as shares of Common Stock beneficially owned by him. The
Certificate of Designations, Preferences and Rights of the Series D Stock
is attached hereto as Exhibit 2.
The Convertible Debenture provided that the conversion price for
each share of Common Stock was the lower of (i) the average closing price
for shares of Common Stock on the New York Stock Exchange for the ten
trading days immediately prior to March 3, 1998 or (ii) the average closing
price for shares of Common Stock on the New York Stock Exchange for the ten
trading days immediately prior to July 1, 1998, and that the conversion
price for each share of Series D Stock was ten times the conversion price
of the Common Stock. The applicable period for determining the conversion
price was the ten trading days prior to July 1, 1998 (June 17, 1998 through
June 30, 1998), and during such period the average closing price was
$.4640625 per share.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As discussed above in Item 3, Dr. Scott currently may be deemed
to be the beneficial owner of 18,295,045 shares, or 48.6%, of the Issuer's
Common Stock. Such shares are the aggregate number of shares included in
the Schedule 13D, and are held as set forth below:
Percent of
Name of Person/Entity Shares Owned Outstanding
- ---------------------------- --------------------- --------------
Dr. Scott 8,147,715(1) 21.7%
Scott Medical Partners, LLC 7,138,311 19.0%
DHP 1,500,000 4.0%
The Signal Fund, L.P. 815,000 2.2%
The Steven M. Scott
Family Limited Partnership 535,766 1.4%
The Scott Family Foundation, Inc 39,110 0.1%
S&WLP 119,143 0.3%
___________________
1 Includes 2,392 shares of Common Stock subject to an option exercisable
within 60 days. Does not include 4,449,740 shares of Common Stock
issuable upon conversion of the Series D Stock. See Item 3 above. Dr.
Scott expressly disclaims any beneficial ownership of the shares of
Common Stock issuable upon conversion of the Series D Stock.
Of the 18,295,045 shares of Common Stock beneficially owned by Dr.
Scott, Dr. Scott (i) has sole voting power over 17,640,136 shares, (ii)
shares voting power over 654,909 shares with Dr. Walls, (iii) has sole
dispositive power over 17,640,136 shares, and (iv) shares dispositive power
over 654,909 shares with Dr. Walls.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
None of the Issuer's Common Shares beneficially owned by Dr. Scott
are pledged to secure borrowings.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Joint Filing Agreement of Steven M. Scott, M.D., Scott
Medical Partners, LLC, The Signal Fund, L.P., The
Steven M. Scott Family Limited Partnership, DHP, The
Scott Family Foundation, Inc. and S&WLP, pursuant to
Rule 13d-1(f).
Exhibit 2: Certificate of Designations, Preferences and Rights of
Series D Convertible Preferred Stock of Coastal Physician
Group, Inc.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
July 8, 1998
/s/ Steven M. Scott, M.D.
_______________________________
Steven M. Scott, M.D.
SCOTT MEDICAL PARTNERS, LLC
By: /s/ Bertram E. Walls, M.D.
_____________________________
Name: Bertram E. Walls, M.D.
Title: Manager
THE SIGNAL FUND, L.P.
By: /s/ Bertram E. Walls, M.D.
_____________________________
Name: Bertram E. Walls, M.D.
Title: General Partner
THE STEVEN M. SCOTT FAMILY LIMITED
PARTNERSHIP
By: /s/ Steven M. Scott, M.D.
______________________________
Name: Steven M. Scott, M.D.
Title: General Partner
DOCTORS HEALTH PLAN, INC.
By: /s/ Bertram E. Walls, M.D.
_____________________________
Name: Bertram E. Walls, M.D.
Title: President
THE SCOTT FAMILY FOUNDATION, INC.
By: /s/ Steven M. Scott, M.D.
_____________________________
Name: Steven M. Scott, M.D.
Title: President
S&WLP
By: /s/ Bertram E. Walls, M.D.
______________________________
Name: Bertram E. Walls, M.D.
Title: General Partner
Exhibit 1
Joint Filing Agreement
In accordance with Rule 13d-1(f) under the Securities
Exchange Act of 1934, as amended, the persons named below agree to the
joint filing on behalf of each of them of Amendment No. 3 to Schedule 13D
(including any amendments thereto) with respect to the common stock, par
value $.01 per share, of Coastal Physician Group, Inc., a Delaware
corporation, and further agree that this Joint Filing Agreement be included
as an exhibit to such joint filings. In evidence thereof, the undersigned
parties, each being duly authorized, hereby execute this Agreement on the
8th day of July, 1998.
/s/ Steven M. Scott, M.D.
______________________________
Steven M. Scott, M.D.
SCOTT MEDICAL PARTNERS, LLC
By: /s/ Bertram E. Walls, M.D.
____________________________
Name: Bertram E. Walls, M.D.
Title: Manager
THE SIGNAL FUND, L.P.
By: /s/ Bertram E. Walls, M.D.
___________________________
Name: Bertram E. Walls, M.D.
Title: General Partner
THE STEVEN M. SCOTT FAMILY LIMITED
PARTNERSHIP
By: /s/ Steven M. Scott, M.D.
_____________________________
Name: Steven M. Scott, M.D.
Title: General Partner
DOCTORS HEALTH PLAN, INC.
By: /s/ Bertram E. Walls, M.D.
_____________________________
Name: Bertram E. Walls, M.D.
Title: President
THE SCOTT FAMILY FOUNDATION, INC.
By: /s/ Steven M. Scott, M.D.
___________________________
Name: Steven M. Scott, M.D.
Title: President
S&WLP
By: /s/ Bertram E. Walls, M.D.
____________________________
Name: Bertram E. Walls, M.D.
Title: General Partner
EXHIBIT 2
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES D CONVERTIBLE PREFERRED STOCK
OF
COASTAL PHYSICIAN GROUP, INC.
COASTAL PHYSICIAN GROUP, INC., a corporation organized under and
existing under the General Corporation Law of the State of Delaware (the
"Company"),
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the Company,
and pursuant to the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the Board of Directors, acting at a meeting
held on June 29, 1998, adopted a resolution providing for the designation,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, of the Series D
Convertible Preferred Stock, which resolution is as follows:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company in accordance with the provisions of
the Amended and Restated Certificate of Incorporation, the Board of
Directors hereby creates a series of convertible preferred stock, with a
par value of $0.01 per share, of the Company and hereby states the
designation and number of shares, and fixes the relative rights,
preferences and limitation thereof (in addition to the provisions in the
Amended and Restated Certificate of Incorporation that are applicable to
the preferred stock of all series) as follows:
Series D Convertible Preferred Stock
Section 1. Designation and Amount. The shares of such series shall
be designated as Series D Convertible Preferred Stock, with a par value of
$0.01 per share (the "Series D Convertible Preferred Stock"), and the
number of shares constituting such series shall be one million two
hundred thousand (1,200,000).
Section 2. Dividends. The holders of shares of Series D Convertible
Preferred Stock shall be entitled to receive dividends, when, as and if
declared by the Board of Directors or a duly authorized committee thereof,
out of funds legally available for the payment of dividends. The amount of
dividends payable in respect of each share of Series D Convertible
Preferred Stock shall be equal to the result obtained by multiplying (a)
the number of shares (including fractions) of the Company's Common Stock,
$0.01 par value per share (the "Common Stock"), into which such share of
Series D Convertible Preferred Stock is then convertible in accordance with
Section 4 hereof (whether or not the Trigger Date (as defined in Section 4K
hereof) has yet occurred) by (b) the amount of dividends declared and paid
on each share of the Common Stock. No dividend shall be paid or declared on
any share of the Common Stock, unless a dividend, payable in the same
consideration and manner, is simultaneously paid or declared, as the case
may be, on each share of Series D Convertible Preferred Stock in an amount
determined as set forth above nor shall any dividend be paid or declared on
any share of Series D Convertible Preferred Stock unless a dividend,
payable in the same consideration and manner, is simultaneously paid or
declared, as the case may be, on each share of the Common Stock, in each
case without preference or priority of any kind. For purposes of this
Section 2, the term "dividends" shall include any pro rata distribution by
the Company of cash, property, securities (including but not limited to,
rights, warrants or options) or other property or assets to the holders of
the Common Stock, whether or not paid out of capital, surplus or earnings.
Section 3. Liquidation Preferences. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made to
the holders of shares of stock ranking junior to the Series D Convertible
Preferred Stock unless, prior thereto, the holders of shares of Series D
Convertible Preferred Stock shall have received an amount per share equal
to ten times the lesser of (i) the average closing price for shares of
Common Stock on the New York Stock Exchange for the ten (10) trading days
ending March 2, 1998 or (ii) the average closing price for shares of Common
Stock on the New York Stock Exchange for the ten (10) trading days ending
June 30, 1998. Following the payment of the full amount of such liquidation
preference, no additional distributions shall be made to the holders of
Series D Convertible Preferred Stock. If, upon any liquidation, dissolution
or winding up of the Company, the assets of the Company, or proceeds
thereof, distributable among the holders of shares of Series D Convertible
Preferred Stock or any capital stock ranking on a par with the Series D
Convertible Preferred Stock upon liquidation, dissolution or winding up of
the Company, shall be insufficient to pay in full the preferential amounts
to which such stock would be entitled, then such assets, or the proceeds
thereof, shall be distributable among such holders ratably in accordance
with the respective amounts which would be payable on such shares if all
amounts payable thereof were payable in full.
Section 4. Conversion Rights, Antidilution Provisions.
A. Following the Trigger Date (as defined in subparagraph K of this
Section 4), shares of the Series D Convertible Preferred Stock shall be
convertible, in whole or in part, at the option of either the holder or the
Company, into Common Stock, at any time or from time to time, subject to
the following terms and conditions. The Series D Convertible Preferred
Stock shall not be convertible into any shares of Common Stock unless and
until the Trigger Date has occurred.
B. Following the Trigger Date, the shares of the Series D
Convertible Preferred Stock shall be convertible at the principal executive
offices of the Company, and at such other office or offices, if any, as the
Board of Directors may designate, into fully paid and nonassessable shares
of Common Stock of the Company, at an initial conversion rate of ten (10)
shares of Common Stock for each share of Series D Convertible Preferred
Stock, subject to adjustment as described in this Section 4.
C. In order to convert shares of the Series D Convertible Preferred
Stock into Common Stock, the holder thereof shall surrender, after the
Trigger Date, at any office hereinabove mentioned the certificate or
certificates therefor, duly endorsed or assigned to the Company or in
blank, and give written notice to the Company at such office that such
holder elects to convert such shares. Shares of the Series D Convertible
Preferred Stock shall be deemed to have been converted immediately prior to
the close of business on the day of the surrender of such shares for
conversion in accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock upon such conversion shall be
treated for all purposes as the record holder or holders of such Common
Stock at such time. As promptly as practicable on or after the conversion
date, the Company shall issue and shall deliver at such office a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with payment in lieu of any
fraction of a share, as hereinabove provided, to the person or persons
entitled to receive the same.
D. At any time after the Trigger Date the Company, by written
notice to any or all holders of the Series D Convertible Preferred Stock,
may require such holder or holders to convert, in whole or in part, the
Series D Convertible Preferred Stock into Common Stock. Within thirty days
after the receipt of such written notice, the holder or holders thereof
shall cause that number of shares of Series D Convertible Preferred Stock
as specified in such written notice to be converted into Common Stock in
the manner described in, and subject to the provisions of, subparagraph C
of this Section 4.
E. If at any time the Company shall subdivide or combine its
outstanding shares of Common Stock into a different number of shares of
Common Stock, each share of Series D Convertible Preferred Stock shall
thereafter be convertible into the same number of shares of Common Stock to
which the holder of such shares of Series D Convertible Preferred Stock
Preferred Stock would thereafter have been entitled had such shares of
Series D Convertible Preferred Stock been converted into Common Stock
immediately prior to the effective date of such subdivision or combination.
F. If there occurs any capital reorganization or any
reclassification of the capital stock of the Company or consolidation or
merger of the Company with or into another corporation or entity, each
share of Series D Convertible Preferred Stock shall thereafter be
convertible into, in lieu of Common Stock, the same kind and amounts of
securities or other assets, or both, which were issuable or distributable
to the holders of shares of outstanding Common Stock of the Company upon
such reorganization, reclassification, consolidation or merger in respect
of that number of shares of Common Stock into which such share of Series D
Convertible Preferred Stock would have been converted had such share of
Series D Convertible Preferred Stock been converted into Common Stock
immediately prior to such reorganization, reclassification, consolidation
or merger.
G. Upon any event described in subparagraphs E and F of this
Section 4, the Company shall promptly mail to each holder of Series D
Convertible Preferred Stock a notice which shall describe such event and
the change in the number of shares or other assets or securities issuable
upon the conversion of Series D Convertible Preferred Stock, setting forth
in reasonable detail the method of calculation and the facts upon which
such calculation is based.
H. The Company shall at all times reserve and keep available, free
from pre-emptive rights, out of its authorized but unissued Common Stock,
for the purpose of effecting the conversion of the Series D Convertible
Preferred Stock, the full number of shares of Common Stock then issuable
upon the conversion of all shares of Series D Convertible Preferred Stock
then outstanding and shall take all such action and obtain all such permits
or orders as may be necessary to enable the Company lawfully to issue such
Common Stock upon such conversion.
I. No fractional shares of Common Stock shall be issued upon
conversion, but, instead of any fraction of a share which would otherwise
be issuable, the Company shall pay a cash
adjustment in respect of such fraction.
J. The Company will pay any and all taxes (excluding federal, state
and local income taxes) that may be payable in respect of the issue or
delivery of shares of Common Stock upon conversion of the Series D
Convertible Preferred Stock pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a
name other than that in which the shares of Series D Convertible Preferred
Stock so converted were registered, and no such issue or delivery shall be
made unless and until the person requiring such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction
of the Company that such tax has been paid.
K. As used herein, the term "Trigger Date" means the date of the
certification of the vote of stockholders of the Company held at any annual
or special meeting of stockholders of the Company at which a quorum is
present and at which the issuance of Common Stock upon conversion of the
Series D Convertible Preferred Stock is approved by the holders of a
majority of the shares of Common Stock voted at such meeting, provided that
the total vote cast on the proposal represents over 50% in interest of all
securities entitled to vote on the proposal.
Section 5. No Redemption. The Series D Convertible Preferred Stock
shall not be redeemable.
Section 6. Voting Rights. The holders of the Series D Convertible
Preferred Stock shall be entitled to that number of votes per share of
Series D Convertible Preferred Stock equal to the number of shares of
Common Stock into which such share of Series D Convertible Preferred Stock
is then convertible in accordance with Section 4 hereof (whether or not the
Trigger Date has yet occurred) at all meetings of stockholders of the
Company; provided that shares of the Series D Convertible Preferred Stock
shall not be entitled to vote on the approval of the issuance of Common
Stock upon conversion of the Series D Convertible Preferred Stock referred
to in subparagraph K of Section 4.
Section 7. Exchange. Certificates representing shares of the Series
D Convertible Preferred Stock and, if converted in accordance with the
terms and conditions hereof, after conversion thereof into Common Stock,
certificates representing such shares, shall be exchangeable, at the option
of the holder, for a new certificate or certificates of the same or
different denominations representing in the aggregate the same number of
shares of Series D Convertible Preferred Stock or shares of Common Stock,
as the case may be.
Section 8. Shares To Be Retired. All shares of Series D Convertible
Preferred Stock which are converted into Common Stock revert to the status
of authorized but unissued shares of preferred stock of the Company but
shall not thereafter be reissued as shares of Series D Convertible
Preferred Stock.
