CERTIFICATE
OF DESIGNATION
OF
BANYAN
RAIL SERVICES INC.
Pursuant
to Section 151 of the General Corporation Law of the State of
Delaware
C.
Lawrence Rutstein, being the Vice President of Administration of Banyan Rail
Services Inc., a Delaware corporation (the “Corporation”), hereby certifies
that:
Pursuant
to the authority conferred on the Board of Directors of the Corporation by the
Certificate of Incorporation of the Corporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, as amended and restated from time to time, the Board of Directors duly
adopted the following resolution by unanimous written consent:
RESOLVED,
that pursuant to the authority expressly granted to and vested in the Board of
Directors in accordance with the provisions of the Certificate of Incorporation,
a series of redeemable preferred stock of the Corporation is hereby created, of
which the powers, designations, preferences and other rights, qualifications and
restrictions, shall be as follows:
1.
Designation and
Rank.
There shall be a series of convertible preferred stock
of the Corporation that is hereby designated as “Series A Preferred Stock,”
which
shall consist of 20,000 shares, having a par value of $0.01 per
share. The issuance price of the Series A Preferred Stock shall be
$100 per share (the “Issuance Price”). The Series A Preferred Stock
shall rank senior to the Common Stock and to any other capital stock of the
Corporation as to dividends and distribution of assets upon the liquidation,
dissolution or winding up of the Corporation. Any capitalized terms
used herein but not defined shall have the meanings assigned to them in the
Certificate of Incorporation.
2.
Dividends.
(a) The
holders of Series A Preferred Stock shall be entitled to receive, out of funds
legally available for that purpose, cumulative, non-compounded cash dividends on
each outstanding share of Series A Preferred Stock at the rate of 10.0% of the
Issuance Price per annum (“Series A Preferred Dividends”), which shall begin to
accrue on January 1, 2010. The Series A Preferred Dividends shall be payable
semiannually to the holders of Series A Preferred Stock, when and as declared by
the Board of Directors, on June 30 and December 31 of each year, that shares of
Series A Preferred Stock are outstanding (each, a “Payment Date”) beginning June
30, 2010; provided that due and unpaid Series A Preferred Dividends may be
declared and paid on any date declared by the Board of Directors.
(b) Any
Series A Preferred Dividends due and unpaid on any Payment Date, whether or not
declared by the Board of Directors, shall accrue with any other due and unpaid
Series A Preferred Dividends, regardless of whether there are profits, surplus
or other funds of the Corporation legally available for payment of
dividends. Unpaid Series A Preferred Dividends for any period less
than a full semiannual period shall accrue on a day-to-day basis and shall be
computed on the basis of a 365-day year.
(c) If,
on any Payment Date, Series A Preferred Dividends are not fully paid to the
holders of Series A Preferred Stock, and funds legally available are
insufficient to permit payment in full in cash to all such holders of the
preferential amounts to which they are then entitled, then the entire amount
legally available for payment of Series A Preferred Dividends shall be
distributed among the holders of Series A Preferred Stock ratably in proportion
to the full amount to which they would otherwise be respectively entitled, and
the remainder shall cumulate as provided in Section 2(b).
(d) For
as long as any shares of Series A Preferred Stock are outstanding, the Board of
Directors shall not declare or pay any dividend whatsoever on any Common Stock,
whether in cash, stock, property or otherwise, nor shall the Board of Directors
make any distribution on any Common Stock, unless all Series A Preferred
Dividends for all previous Payment Dates have been paid in full.
3.
Liquidation, Dissolution or Winding
Up.
(a) In
the event of any voluntary or involuntary liquidation, sale, merger,
consolidation, dissolution or winding up of the Corporation (each, a
“Liquidation Event”), before any distribution of assets shall be made to the
holders of Common Stock, each holder of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders (the “Available Assets”) an
amount equal to the Issuance Price plus all Series A Preferred Dividends,
accrued and unpaid on such shares up to the date of distribution of the
Available Assets (such amount being referred to as the “Liquidation
Preference”). The amount deemed distributed for purposes of
determining a Liquidation Preference shall be the cash or the fair market value
of the property, rights or securities distributed to the holders of Series A
Preferred Stock as determined in good faith by the Board of
Directors. If, upon a Liquidation Event, the Available Assets are
insufficient to pay a Liquidation Preference to the holders of Series A
Preferred Stock in full, then the Available Assets shall be distributed ratably
among the holders of Series A Preferred Stock in proportion to their respective
ownership of shares of Series A Preferred Stock.
(b) Upon
full payment of a Liquidation Preference, the remaining Available Assets shall
be distributed among all of the holders of Common Stock and Series A Preferred
Stock, pro rata, regardless of class, and in proportion to their respective
ownership of shares of capital stock in the Corporation assuming conversion in
full of the Series A Preferred Stock into shares of Common Stock.
(c) For
purposes of this Section 3, a Liquidation Event shall be deemed to occur
upon: (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
other than any of the stockholders of the Corporation as of the date hereof
(collectively, the “Initial Stockholders”), or persons controlling, controlled
by or under common control with any Initial Stockholder, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), of more than 50% of
the issued and outstanding capital stock of the Corporation, (ii) the sale of
all or substantially all of the assets of the Corporation, or (iii) the
consolidation or merger of the Corporation with or into another corporation or
corporations or other entity in which the Corporation is not the survivor
(except any such corporation or entity controlled, directly or indirectly, by
the Corporation) and the Initial Stockholders hold less than 50% of the issued
and outstanding capital stock of the survivor.
(d) The
Corporation shall give prior written notice of any impending Liquidation Event
to each holder of Series A Preferred Stock no later than five days after
approval of such Liquidation Event by the stockholders of the Corporation
entitled to vote on such matter (each, a “Liquidation
Notice”). Each
Liquidation Notice shall describe, in reasonable detail, the terms and
conditions of the impending Liquidation Event, and the Corporation shall
thereafter give the holders of Series A Preferred Stock prompt notice of any
changes thereto. A Liquidation Event shall not occur or close earlier
than five days after the Corporation has properly submitted a Liquidation Notice
or earlier than five days after the Corporation has given proper notice of any
changes thereto.
(e) In
the event the Corporation fails to comply with this Section 3, the Corporation
shall either cause the closing of the Liquidation Event to be postponed until
the requirements of this Section 3 are satisfied, or cancel such Liquidation
Event, in which event all of the rights, preferences and privileges of the
holders of Series A Preferred Stock shall be unaffected.
4.
Voting.
Except as otherwise
required by the General Corporation Law of the State of Delaware, the holders of
Series A Preferred Stock shall not have the right to vote on or consent to any
matters to be voted on by the stockholders of the Corporation; provided,
however, that neither the Board of Directors nor the Corporation shall, without
the prior written consent of the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock, or the affirmative vote of at
least a majority of the then outstanding shares of Series A Preferred Stock
present in person or by proxy at a meeting of stockholders, consenting or
voting, as the case may be, separately as a class:
(a) authorize
or issue any other class or series of capital stock on parity with or senior to
the Series A Preferred Stock;
(b) amend,
alter or repeal any provision of the Certificate of Incorporation, this
Certificate of Designation or the By-Laws of the Corporation that adversely
affects the rights, powers, preferences or privileges of, or increases the
authorized number of shares of, Series A Preferred Stock.
(a)
Discretionary
Conversion
.
(i) Shares
of Series A Preferred Stock, excluding accrued Series A Preferred Dividends,
which will be paid as described above, may, in the sole discretion of the Holder
of such shares of Series A Preferred Stock (a “Holder,” and collectively the
“Holders”) and by written notice to the Corporation, be converted into shares of
Common Stock, at the Conversion Price (as defined below) in whole or in part at
any time.
(ii) The
“
Conversion Price
” will
be $0.20 per share of Common Stock, subject to adjustments as set forth in
Section 5(c) below.
(b)
Other Conversion
Terms
.
(i) As
soon as practicable following any conversion of shares of Series A Preferred
Stock, the Corporation shall issue to Holder a certificate, issued in the name
of Holder, for the number of shares of Common Stock issuable upon such
conversion (the “Conversion Shares”);
provided
that
the Corporation may
withhold delivery of such stock certificate until such time as Holder delivers
the certificate(s) representing the shares of Series a Preferred Stock to be
converted for cancellation (or, in lieu thereof, an executed and notarized
affidavit of lost stock certificate in form and substance acceptable to the
Corporation). Upon receipt by the Corporation of the Series A
Preferred Stock certificate at its office, in proper form for conversion, Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such conversion, notwithstanding that the stock transfer books of
the Corporation shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to Holder. The
shares of Common Stock shall be “restricted securities” as defined in the
Securities Act of 1933, as amended (the “Securities Act”).
(ii) The
Corporation shall not, by amendment of its Certificate of Incorporation, or
through any sale, capital reorganization or reclassification of the Common
Stock, issuance or sale of securities, transfer of assets, dissolution or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of the Series A Preferred Stock, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Holder against impairment. Without limiting the generality of the
foregoing, the Corporation (A) shall take all such action as may be necessary or
appropriate in order that the Corporation may validly and legally issue shares
of Common Stock upon the conversion of the Series A Preferred Stock , and (B)
shall not take any action that results in any adjustment to the number of shares
of Common Stock issuable upon exercise of the Series A Preferred Stock such that
the number of shares of Common Stock issuable after the action upon conversion
of the Series A Preferred Stock would exceed the total number of shares of
Common Stock then authorized by the Corporation’s Certificate of Incorporation
and available for the purpose of issuance upon such conversion.
(iii) No
fractional shares shall be issued on the conversion of the Series A Preferred
Stock. As to any fraction of a share that a Holder would otherwise be
entitled to receive upon conversion, the Corporation shall at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round up to the
next whole share.
(c)
Certain
Adjustments
.
(i)
Stock Dividends and Stock
Splits
.
If the
Corporation, at any time while shares of the Series A Preferred Stock are
outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock; (B)
subdivides outstanding shares of Common Stock into a larger number of shares;
(C) combines (including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares; or (D) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of
the Corporation, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Corporation) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to this
Section shall become effectively immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
(ii)
Reorganizations
. If
any capital reorganization of the Corporation shall be affected in such a way
that the holders of the Common Stock shall be entitled to receive securities or
assets with respect to or in exchange for shares of Common Stock, adequate
provision shall be made, prior to and as a condition of such reorganization
whereby the Holders shall have the right to receive, upon the terms and
conditions specified herein and in lieu of the shares of Common Stock otherwise
receivable upon the conversion of the Series A Preferred Stock, such securities
or assets as may be issued or payable with respect to or in exchange for the
number of outstanding shares of Common Stock equal to the number of shares
otherwise receivable by the Holders had such reorganization not taken
place. In any such case, appropriate provision shall be made with
respect to the rights and interests of the Holders so that the provisions of the
Series A Preferred Stock shall be applicable with respect to any securities or
assets thereafter deliverable upon conversion of the Series A Preferred
Stock.
(iii)
Notice to
Holder
. Whenever the Conversion Price is adjusted pursuant to
this Section 5(c), the Corporation shall promptly deliver to each Holder a
notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
6.
Piggyback Registration
Rights
. The Corporation shall notify each Holder in writing at
least fifteen (15) days prior to the filing of any registration statement under
the Securities Act for purposes of a public offering of securities of the
Corporation (including, but not limited to, registration statements relating to
secondary offerings of securities of the Corporation, but excluding registration
statements relating to employee benefit plans or with respect to corporate
reorganizations or other transactions under Rule 145 of the Securities Act)
and will afford each Holder an opportunity to include in such registration
statement all or part of its Conversion Shares. If any Holder desires
to include in any such registration statement all or any part of the Conversion
Shares, it shall, within fifteen (15) days after the above-described notice from
the Corporation, so notify the Corporation in writing. Such notice shall state
the intended method of disposition of the Conversion Shares by
Holder. If a Holder decides not to include all of its Conversion
Shares in any registration statement thereafter filed by the Corporation, Holder
shall nevertheless continue to have the right to include any Conversion Shares
in any subsequent registration statement or registration statements as may be
filed by the Corporation with respect to offerings of its
securities. In the event any registration pursuant to this Section 6
shall be, in whole or in part, an underwritten public offering of the Common
Stock, the number of Conversion Shares to be included in such an underwriting
may be reduced by the managing underwriter if and to the extent that the
Corporation and the underwriter shall reasonably be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold by
the Corporation therein;
provided
,
however
, that the Corporation
shall notify each Holder in writing of any such reduction. Standard
mutual indemnification terms and conditions shall apply in respect of any such
registration statement. The Corporation shall bear the costs and
expenses of such registration and each Holder shall bear the costs and expenses,
including brokerage commissions and underwriter’s discounts in respect of the
resale of its Conversion Shares. Notwithstanding the foregoing
provision, the Corporation may withdraw or delay or suffer a delay of any
registration statement referred to herein without thereby incurring any
liability to any Holder.
IN
WITNESS WHEREOF, the undersigned officers of the Corporation have executed and
subscribed this Certificate of Designation and hereby affirm the foregoing as
true under the penalties of perjury to be signed in its name and on its behalf
by its Vice President of Administration on February 1, 2010.
BANYAN
RAIL SERVICES INC.
/s/ C. Lawrence Rutstein
|
By:
C. Lawrence Rutstein
|
Its:
Vice President of
Administration
|