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STOCKHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2011
STOCKHOLDERS' EQUITY  
STOCKHOLDERS' EQUITY

11.    STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

The Company is authorized to issue 5,000,000 shares of Preferred Stock Class A with a par value of One Dollar ($1.00) per share; 5,000,000 shares of Preferred Stock Class B with a par value of One Dollar ($1.00) per share; and 5,000,000 shares of Preferred Stock Class C with a par value of One Dollar ($1.00) per share.

 

The Company has one class of Preferred Stock outstanding: Class B Convertible Preferred Stock (“Class B Stock”).  The Class B Stock has five series: Series I, Series II, Series III, Series IV, and Series V.

 

The Class B Stock has been allocated among Series I, II, III, IV, and V in the amounts of 103,500; 178,700; 130,245; 542,500; and 46,607 shares, respectively as of December 31, 2011.  The remaining 3,998,448 authorized shares have not been assigned a series.

 

Series I Class B Stock

 

There were 103,500 and 144,000 shares of $1 par value Series I Class B Stock outstanding at December 31, 2011 and 2010, respectively.  The Company exchanged Common Stock and cash for 27,500 shares of Series I Class B Stock in 2011 pursuant to its Tender Offer Statement on Schedule TO filed on September 12, 2011 (the “2011 Exchange Offer”) and also engaged in a private sale to purchase 13,000 shares of Series I Class B Stock in 2011.  Holders of Series I Class B Stock are entitled to receive a cumulative annual dividend of $0.50 per share, payable quarterly if declared by the Board of Directors.  In 2010, the Company paid $216,000 in dividends.  In 2011, the Company paid $90,000 in dividends.  At December 31, 2011 and 2010, approximately $13,000 and $36,000, respectively, of dividends which had not been declared were in arrears.

 

Series I Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $7.50 per share, plus all unpaid dividends.  Each share of Series I Class B Stock may, at the option of the stockholder, be converted to one share of Common Stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933.  Pursuant to these terms, no shares of Series I Class B Stock were converted into Common Stock in 2011 or 2010.  In the event of voluntary or involuntary dissolution, liquidation, or winding up of the Company, holders of Series I Class B Stock then outstanding are entitled to $6.25 per share, plus all unpaid dividends prior to any distributions to holders of Series II Class B Stock, Series III Class B Stock, Series IV Class B Stock, Series V Class B Stock, or Common Stock.

 

Series II Class B Stock

 

There were 178,700 and 219,700 shares of $1 par value Series II Class B Stock outstanding at December 31, 2011 and 2010, respectively.  The Company exchanged Common Stock and cash for 41,000 shares of Series II Class B Stock in 2011 pursuant to its 2011 Exchange Offer.  Holders of Series II Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the Board of Directors.  Holders of Series II Class B Stock generally have no voting rights until dividends are in arrears and unpaid for twelve consecutive quarters.  In such case, the holders of Series II Class B Stock have the right to elect one-third of the Board of Directors of the Company.  In 2010, the Company paid $660,566 in dividends.  In 2011, the Company paid $274,625 in dividends.  At December 31, 2011 and 2010, approximately $45,000 and $110,000, respectively, of dividends which had not been declared were in arrears.

 

Series II Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $15.00 per share plus all unpaid dividends.  Each share of Series II Class B Stock may, at the option of the stockholder, be converted to one share of Common Stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933.  Pursuant to these terms, no shares of Series II Class B Stock were converted into Common Stock in 2011 or 2010.  In the event of voluntary or involuntary dissolution, liquidation, or winding up of the Company, holders of Series II Class B Stock then outstanding are entitled to $12.50 per share, plus all unpaid dividends, after distribution obligations to holders of Series I Class B Stock have been satisfied and prior to any distributions to holders of Series III Class B Stock, Series IV Class B Stock, Series V Class B Stock, or Common Stock.

 

Series III Class B Stock

 

There were 130,245 shares of $1 par value Series III Class B Stock outstanding at December 31, 2011 and 2010.  Holders of Series III Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the Board of Directors.  At December 31, 2011 and 2010, approximately $3,366,000 and $3,236,000, respectively, of dividends which have not been declared were in arrears.

 

Series III Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $15.00 per share, plus all unpaid dividends.  Each share of Series III Class B Stock may, at the option of the stockholder, be converted to one share of Common Stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933.  Pursuant to these terms, no shares of Series III Class B Stock were converted into Common Stock in 2011 or 2010.  In the event of voluntary or involuntary dissolution, liquidation, or winding up of the Company, holders of Series III Class B Stock then outstanding are entitled to $12.50 per share, plus all unpaid dividends, after distribution obligations to Series I Class B Stock and Series II Class B Stock have been satisfied and prior to any distributions to holders of Series IV Class B Stock, Series V Class B Stock, or Common Stock.

 

Series IV Class B Stock

 

There were 542,500 and 552,500 shares of $1 par value Series IV Class B Stock outstanding at December 31, 2011 and 2010, respectively.  The Company exchanged Common Stock and cash for 5,000 shares of Series IV Class B Stock in 2011 pursuant to its 2011 Exchange Offer and also engaged in a private sale to purchase 5,000 shares of Series IV Class B Stock in 2011.  Holders of Series IV Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly, if declared by the Board of Directors.  At December 31, 2011 and 2010, approximately $6,338,000 and $5,903,000, respectively, of dividends which have not been declared were in arrears.

 

Series IV Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $11.00 per share plus all unpaid dividends.  Each share of Series IV Class B Stock may, at the option of the stockholder any time subsequent to three years from date of issuance, be converted into one share of Common Stock, or in the event the Company files an initial registration statement under the Securities Act of 1933.  Pursuant to these terms, no shares of Series IV Class B Stock were converted into Common Stock in 2011 or 2010.  In the event of voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Series IV Class B Stock then outstanding are entitled to receive liquidating distributions of $11.00 per share, unpaid dividends after distribution obligations to Series I Class B Stock, Series II Class B Stock, and Series III Class B Stock have been satisfied and prior to any distribution to holders of Series V Class B Stock or Common Stock.

 

Series V Class B Stock

 

There were 46,607 and 1,232,571 shares of $1 par value Series V Class B Stock outstanding at December 31, 2011 and 2010, respectively.  The Company exchanged Common Stock and cash for 1,173,464 shares of Series V Class B Stock in 2011 pursuant to its 2011 Exchange Offer and also engaged in a private sale to purchase 12,500 shares of Series V Class B Stock in 2011.  Holders of Series V Class B Stock are entitled to receive a cumulative annual dividend of $0.32 per share, payable quarterly, if declared by the Board of Directors.  At December 31, 2011 and 2010, approximately $914,000 and $4,093,000, respectively, of dividends which have not been declared were in arrears.

 

Series V Class B Stock is redeemable after two years from the date of issuance at the option of the Company at a price of $4.40 per share plus all unpaid dividends.  Each share of Series V Class B Stock may, at the option of the stockholder any time subsequent to the date of issuance, be converted into Common Stock.  Pursuant to these terms, 6,250 shares of Series V Class B Stock were converted into Common Stock in 2010 and none were converted in 2011.  In the event of voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Series V Class B Stock then outstanding are entitled to receive liquidating distributions of $4.40 per share, plus unpaid dividends after distribution obligations to Series I Class B Stock, Series II Class B Stock, Series III Class B Stock, and Series IV Class B Stock have been satisfied and prior to any distribution to the holders of the Common Stock.

 

Common stock

 

The Company is authorized to issue 100,000,000 shares of no par value Common Stock, of which 25,318,700 and 23,974,114 shares were issued and outstanding at December 31, 2011 and 2010, respectively.