EXHIBIT 3.3
FEDERAL IDENTIFICATION
NO.04-2997780
The Commonwealth of Massachusetts
Examiner William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A CLASS OR SERIES OF STOCK
(General Laws, Chapter 156B, Section 26)
We Stephen H. Moynihan Vice President
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and C. Michael Malm *Clerk
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of Clean Harbors, Inc. ,
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(Exact name of corporation)
located at: 1501 Washington Street, Braintree, MA 02185
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(Street Address of corporation in Massachusetts)
do hereby certify that it a meeting of the directors of the corporation
held on August 27, 2002 the following vote establishing and designating a
class or series of stock and determining the relative rights and
preferences thereof was duly adopted:
See continuation pages 1-34 attached hereto.
*Delete the inapplicable words.
Note, Votes for which the space provided above is not sufficient should be
provided on one side of separate 8 1/2 x 11 sheets of white paper,
P.C. numbered 2A, 2B, etc., with 4 left margin of at least 1 inch.
CLEAN HARBORS, INC.
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF A CLASS OF STOCK
VOTED: That the Corporation issue a series of convertible preferred stock
having the voting powers, designations, preferences and special or
relative participating, optional and other rights and privileges as
set forth in the "Description of Series C Convertible Preferred Stock"
presented to this meeting with such changes therein as shall be deemed
appropriate by the President (such approval to be conclusively
evidenced by the filing of the Certificate of Vote described below)
that such series of preferred stock shall be designated: "Series C
Convertible Preferred Stock"; that said Series C Convertible Preferred
Stock shall consist of twenty-five thousand (25,000) shares of
Preferred Stock of this Corporation; and that the Clerk of the
Corporation file a Certificate of Vote of Directors Establishing a
Series of a Class of Stock incorporating the Description of Series C
Convertible Preferred Stock with the Massachusetts Secretary of State.
DESCRIPTION OF SERIES C CONVERTIBLE PREFERRED STOCK
1. Designation and Amount. Through the filing with the Massachusetts
Secretary of State of this Certificate of Vote of Directors Establishing a
Series of a Class of Stock (the "Certificate of Vote"), a total of twenty-five
thousand (25,000) shares of Preferred Stock, $0.01 par value per share, of Clean
Harbors, Inc., a Massachusetts corporation (the "Corporation") is hereby
designated as the Series C Convertible Preferred Stock (the "Preferred Stock" or
the "Preferred Shares") and the initial stated value per share shall equal
$1,000 (the "Initial Stated Value").
2. Definitions. For purposes of this Certificate of Vote, the
following terms shall have the following meanings:
(a) "2004 Consolidated EBITDA Certificate" has the meaning
specified in Section 8(e)(iii) hereof.
(b) "Account Receivable" means, with respect to any Person, any
and all rights of such Person to payment for goods sold and/or services
rendered, including accounts, general intangibles and any and all such rights
evidenced by chattel paper, instruments or documents, whether due or to become
due and whether or not earned by performance, and whether now or hereafter
acquired or arising in the future, and any proceeds arising therefrom or
relating thereto.
(c) "Accrued Dividend Payment" has the meaning specified in
Section 4 hereof.
(d) "Acquiring Entity" has the meaning specified in Section 7(b)
hereof.
(e) "Additional Amount" means, on a per Preferred Share basis,
the product of (i) the result of the following formula: (Dividend Rate)(N/360)
and (ii) the then-applicable Stated Value.
(f) "Adjustment Measuring Period" means the period commencing on
and including December 1, 2003 and ending on and including December 31, 2003.
(g) "Adjustment Price" means, with respect to a share of Common
Stock on the Adjustment Date, $8.00 (as adjusted in accordance with Section 8(e)
in respect of any events occurring on or after the Issuance Date but on or prior
to the Adjustment Date which would result in an adjustment to the Conversion
Price thereunder).
(h) "Adjustment Date" means January 1, 2004.
(i) "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise. Notwithstanding anything herein to the contrary, in no event shall
any holder of Preferred Shares be considered an "Affiliate" of the Corporation
or any of its Subsidiaries under this Certificate of Vote.
(j) "Applicable Price" has the meaning specified in Section
8(e)(i) hereof.
(k) "Approved Stock Plan" means any employee benefit or stock
purchase plan which has been approved by the Board of Directors of the
Corporation, pursuant to which the Corporation's securities may be issued to any
employee, officer or director for services provided to the Corporation.
(l) "Bloomberg" means Bloomberg Financial Markets.
(m) "Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.
(n) "Calendar Quarter" means each of the following periods: the
period beginning on and including January 1 and ending on and including March
31; the period beginning on and including April 1 and ending on and including
June 30; the period beginning on and including July 1 and ending on and
including September 30; and the period beginning on and including October 1 and
ending on and including December 31.
(o) "Cap Allocation Amount" has the meaning specified in Section
11 hereof.
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(p) "Capital Expenditures" means, with respect to any Person for
any period, the sum of (i) the aggregate of all expenditures by such Person and
its Subsidiaries during such period that in accordance with GAAP are or should
be included in "property, plant and equipment" or in a similar fixed asset
account on its balance sheet, whether such expenditures are paid in cash or
financed and including all Capitalized Lease Obligations paid or payable during
such period, and (ii) to the extent not covered by clause (i) above, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period to acquire by purchase or otherwise the business or fixed assets of, or
the Capital Stock of, any other Person.
(q) "Capitalized Lease" means, with respect to any Person, any
lease of real or personal property by such Person as lessee which is (i)
required under GAAP to be capitalized on the balance sheet of such Person or
(ii) a transaction (other than an operating lease of Rolling Stock) of a type
commonly known as a "synthetic lease" (i.e. a lease transaction that is treated
as an operating lease for accounting purposes but with respect to which payments
of rent are intended to be treated as payments of principal and interest on a
loan for Federal income tax purposes).
(r) "Capitalized Lease Obligations" means, with respect to any
Person, obligations of such Person and its Subsidiaries under Capitalized
Leases, and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
(s) "Capital Stock" means (i) with respect to any Person that is
a corporation, any and all shares, interests, participations or other
equivalents (however designated and whether or not voting) of corporate stock,
and (ii) with respect to any Person that is not a corporation, any and all
partnership, membership or other equity interests of such Person.
(t) "Cash Dividend Payment" has the meaning specified in Section
4(a) hereof.
(u) "Certificate of Vote" has the meaning specified in Section 1
hereof.
(v) "Change of Control" means each occurrence of any of the
following:
(i) the acquisition, directly or indirectly, by any person
or group (within the meaning of Section 13(d)(3) of the Exchange Act) other than
a Permitted Holder, of beneficial ownership of more than 33% of the aggregate
outstanding voting power of the Capital Stock of the Corporation; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Corporation (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of at least a majority the directors of the
Corporation then still in office who were either directors at the beginning of
such period, or whose election or nomination for election was previously
approved) cease for
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any reason other than death or incompetence to constitute a majority of the
Board of Directors of the Corporation.
(w) "Change of Control Redemption Price" has the meaning
specified in Section 7(a) hereof.
(x) "Closing Sale Price" means, for any security as of any date,
the last closing trade price for such security on the Principal Market as
reported by Bloomberg, or if the Principal Market begins to operate on an
extended hours basis, and does not designate the closing trade price, then the
last trade price at 4:00 p.m., New York City Time, as reported by Bloomberg, or
if the foregoing do not apply, the last closing trade price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no last closing trade price is reported for
such security by Bloomberg, the last closing ask price of such security as
reported by Bloomberg, or, if no last closing ask price is reported for such
security by Bloomberg, the average of the highest bid price and the lowest ask
price of any market makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc. If the Closing Sale Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Sale Price of such security on such date shall be the fair market value
as mutually determined by the Corporation and the holders of no less than 51% of
the Preferred Shares then outstanding. If the Corporation and the holders of
Preferred Shares are unable to agree upon the fair market value of the Common
Stock, then such dispute shall be resolved pursuant to Section 8(c)(iii) below.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period.
(y) "Common Stock" has the meaning specified in Section 3
hereof.
(z) "Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
8(e)(i)(A) and 8(e)(i)(B) hereof that are "in the money" at the time of
determination, but in all events excluding any shares of Common Stock (i) owned
or held by or for the account of the Corporation, (ii) issuable upon conversion
of the Preferred Shares or (iii) issuable upon potential future exercise of
Options issued under any Approved Plan which are not vested at the time of
determination.
(aa) "Contingent Obligation" means, with respect to any Person,
any obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, (i) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement or (iii) any obligation of such
Person, whether or not contingent, (A) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (B) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net
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worth or solvency of the primary obligor, (3) to purchase property, assets,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (4) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term "Contingent Obligation" shall not include any product or service
warranties extended in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
(bb) "Conversion Amount" means, in respect of each Preferred
Share as of any date, the sum of (i) the Additional Amount and (ii) the Stated
Value.
(cc) "Conversion Date" has the meaning specified in Section
8(c)(i) hereof.
(dd) "Conversion Notice" has the meaning specified in Section
8(c)(i) hereof.
(ee) "Conversion Price" means, as of any Conversion Date or other
date of determination, $10.50, subject to adjustment as provided in Section
8(e).
(ff) "Conversion Rate" has the meaning specified in Section 8(b)
hereof.
(gg) "Convertible Securities" means any stock or securities
(other than Options) directly or indirectly convertible into or exchangeable or
exercisable for Common Stock.
(hh) "Corporation" has the meaning specified in Section 1 hereof.
(ii) "Covenant Default" has the meaning specified in Section 10
hereof.
(jj) "Current Market Price" shall mean, on any date of
determination, the arithmetic average of the Closing Sale Prices during the ten
(10) consecutive trading days immediately preceding such date, except that, if
on any such date the shares of Common Stock are not listed or admitted for
trading on any national securities exchange or quoted in the over-the-counter
market, the Current Market Price shall be the Closing Sale Price on such date.
(kk) "Dividend Date" has the meaning specified in Section 4(a)
hereof.
(ll) "Dividend Rate" has the meaning specified in Section 4(a)
hereof.
(mm) "Dividends" has the meaning specified in Section 4(a)
hereof.
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(nn) "DTC" has the meaning specified in Section 8(c)(ii) hereof.
(oo) "Effective Date" has the meaning specified in the Financing
Agreement.
(pp) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, and regulations
thereunder, in each case, as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
(qq) "ERISA Affiliate" means, with respect to any Person, any
trade or business (whether or not incorporated) which is a member of a group of
which such Person is a member and which would be deemed to be a "controlled
group" within the meaning of Sections 414(b), (c), (m) and (o) of the Internal
Revenue Code.
(rr) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(ss) "Facility" means each parcel of real property listed on
Schedule 1.01(B) to the Financing Agreement, including, without limitation, the
land on which such facility is located, all buildings and other improvements
thereon, all fixtures located at or used in connection with such facility, all
whether now or hereafter existing.
(tt) "Financing Agreement" shall mean the Financing Agreement,
dated as of September 6, 2002 among the Corporation and certain of its
Subsidiaries, as borrowers, certain of the Corporation's Subsidiaries, as
guarantors, the lenders from time to time party thereto, as lenders, and Ableco
Finance, LLC, as agent for the lenders, as in effect on the Issuance Date,
whether or not the Financing Agreement is in effect on the date of any
determination hereunder.
(uu) "Fiscal Year" means the fiscal year of the Corporation and
its Subsidiaries ending on December 31 of each year.
(vv) "GAAP" means generally accepted accounting principles in
effect from time to time in the United States, applied on a consistent basis.
(ww) "Hedging Agreement" means any interest rate, foreign
currency, commodity or equity swap, collar, cap, floor or forward rate
agreement, or other agreement or arrangement designed to protect against
fluctuations in interest rates or currency, commodity or equity values
(including, without limitation, any option with respect to any of the foregoing
and any combination of the foregoing agreements or arrangements), and any
confirmation executed in connection with any such agreement or arrangement.
(xx) "Initial Stated Value" has the meaning set forth in Section
1 hereof.
(yy) "Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables or other
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accounts payable incurred in the ordinary course of such Person's business and
not outstanding for more than 90 days after the date such payable was created);
(iii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments or upon which interest payments are customarily made;
(iv) all reimbursement, payment or other obligations and liabilities of such
Person created or arising under any conditional sales or other title retention
agreement with respect to property used and/or acquired by such Person, even
though the rights and remedies of the lessor, seller and/or lender thereunder
may be limited to repossession or sale of such property; (v) all Capitalized
Lease Obligations of such Person; (vi) all obligations and liabilities,
contingent or otherwise, of such Person, in respect of letters of credit,
acceptances and similar facilities; (vii) all obligations and liabilities of
such Person under Hedging Agreements; (viii) all Contingent Obligations; (ix)
liabilities incurred under Title IV of ERISA with respect to any plan (other
than a Multiemployer Plan) covered by Title IV of ERISA and maintained for
employees of such Person or any of its ERISA Affiliates; (x) withdrawal
liability incurred under ERISA by such Person or any of its ERISA Affiliates
with respect to any Multiemployer Plan; and (xi) all obligations referred to in
clauses (i) through (x) of this definition of another Person secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) a Lien upon property owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness. The Indebtedness of any Person shall include the Indebtedness of
any partnership of or joint venture in which such Person is a general partner or
a joint venturer.
(zz) "Inventory" means, with respect to any Person, all goods
and merchandise of such Person, including, without limitation, all raw
materials, work-in-process, packaging, supplies, materials and finished goods of
every nature used or usable in connection with the shipping, storing,
advertising or sale of such goods and merchandise, whether now owned or
hereafter acquired, and all such other property the sale or other disposition of
which would give rise to an Account Receivable or cash.
(aaa) "Investors Rights Agreement" means that certain investor
rights agreement between the Corporation and the initial holders of the
Preferred Shares relating to the filing of a registration statement covering the
resale of the shares of Common Stock issuable upon conversion of the Preferred
Shares and certain other matters, as such agreement may be amended from time to
time as provided in such agreement.
(bbb) "Issuance Date" means, with respect to each Preferred
Share, the date of issuance of the applicable Preferred Share.
(ccc) "Junior Securities" has the meaning specified in Section 3
hereof.
(ddd) "Lien" means any mortgage, deed of trust, pledge, lien
(statutory or otherwise), security interest, charge or other encumbrance or
security or preferential arrangement of any nature, including, without
limitation, any conditional sale or title retention arrangement, any Capitalized
Lease and any assignment, deposit arrangement or financing lease intended as, or
having the effect of, security.
(eee) "Liquidation Event" has the meaning specified in Section
5(a) hereof.
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(fff) "Liquidation Preference Payment" has the meaning specified
in Section 5(a) hereof.
(ggg) "Mandatory Redemption Date" has the meaning specified in
Section 6(a) hereof.
(hhh) "Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which any of the Corporation or any of
its ERISA Affiliates has contributed to, or has been obligated to contribute, at
any time during the preceding six (6) years.
(iii) "N" means the actual number of days from, but excluding,
the last Dividend Date with respect to which Dividends have been paid or
accrued, as the case may be, on the applicable Preferred Share, or the Issuance
Date if no Dividend Date has occurred, through and including the Conversion Date
or other date of determination for such Preferred Share, as the case may be, for
which such determination is being made.
(jjj) "Non-Redemption Event" has the meaning specified in Section
6(c) hereof.
(kkk) "Non-Tendering Holder" has the meaning specified in Section
7(b) hereof.
(lll) "Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.
(mmm) "Organic Change" shall mean any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Corporation's assets to another Person or other
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock.
(nnn) "Permitted Holder" means each of (i) Alan S. McKim and his
heirs, legal representatives and legatees, (ii) the trustees of a trust for the
benefit of Mr. McKim, which trust is revocable solely by Mr. McKim, (iii) Mr.
McKim's spouse or children, (iv) a trust created for the exclusive benefit of
Mr. McKim's spouse or children or for the exclusive benefit of Mr. McKim and
such persons and (v) any charitable trust or foundation qualified under Section
501(c)(3) of the Internal Revenue Code established by Mr. McKim and for which he
serves as a trustee or director.
(ooo) "Permitted Indebtedness" means:
(i) any Indebtedness owing under the Financing Agreement
and any other agreement or instrument entered into in connection therewith;
(ii) any other Indebtedness permitted by Section 7.02(b) of
the Financing Agreement, and the extension of maturity, refinancing or
modification of the terms thereof; provided, however, that (a) such extension,
refinancing or modification is pursuant to terms that are not less favorable to
the Corporation and its Subsidiaries and the lenders under the
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Financing Agreement than the terms of the Indebtedness being extended,
refinanced or modified and (b) after giving effect to such extension,
refinancing or modification, the amount of such Indebtedness is not greater than
the amount of Indebtedness outstanding immediately prior to such extension,
refinancing or modification;
(iii) Indebtedness evidenced by Capitalized Lease
Obligations entered into in order to finance Capital Expenditures made by the
Corporation or any of its Subsidiaries that is permitted in accordance with the
provisions of Section 7.02(g) of the Financing Agreement, which Indebtedness,
when aggregated with the principal amount of Indebtedness incurred under this
clause (iii) and clause (iv) of this definition, does not exceed $10,000,000 in
the aggregate for all such Indebtedness incurred after the Effective Date;
(iv) Indebtedness permitted by clause (v) of the
definition of "Permitted Lien";
(v) Indebtedness permitted under Section 7.02(e) of the
Financing Agreement;
(vi) Subordinated Indebtedness;
(vii) Revolving Credit Indebtedness to the extent it
constitutes "Revolving Credit Indebtedness" under paragraph (g) of the
definition of Permitted Indebtedness under the Financing Agreement;
(viii) Indebtedness of the Corporation or any of its
Subsidiaries incurred in connection with the issuance of litigation,
environmental, ERISA-related, surety, reclamation, or other performance bonds in
an aggregate principal amount at any one time outstanding for the Corporation
and all its Subsidiaries not to exceed $50,000,000; and
(ix) Indebtedness of the Corporation or any of its
Subsidiaries incurred in connection with the issuance of letters of credit on
behalf of the Corporation or any of its Subsidiaries in the ordinary course of
business (other than letters of credit issued under the Revolving Credit
Agreement the obligations for which constitute Revolving Credit Indebtedness
permitted under paragraph (vii) above), provided that the obligations of the
Corporation or any of its Subsidiaries in respect of each letter of credit are
fully secured in accordance with section (i) of the definition of Permitted
Indebtedness under the Financing Agreement, and provided further that (A) the
aggregate amount of such letters of credit shall not exceed at any time the
amount permitted by section (i) of the definition Permitted Indebtedness under
the Financing Agreement and (B) the obligations of the Corporation or any of its
Subsidiaries in respect of each letter of credit are fully secured in the manner
described in such section (i).
(ppp) "Permitted Investments" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case, maturing within six months from the date of
acquisition thereof; (ii) commercial paper, maturing not more than 270 days
after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's; (iii)
certificates of deposit maturing not more than 270 days after the date of issue,
issued by commercial banking institutions and money market or demand deposit
accounts maintained at
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commercial banking institutions, each of which is a member of the Federal
Reserve System and has a combined capital and surplus and undivided profits of
not less than $500,000,000; (iv) repurchase agreements having maturities of not
more than 90 days from the date of acquisition which are entered into with major
money center banks included in the commercial banking institutions described in
clause (iii) above and which are secured by readily marketable direct
obligations of the United States Government or any agency thereof, (v) money
market accounts maintained with mutual funds having assets in excess of
$2,500,000,000, (vi) tax exempt securities rated A or better by Moody's or A+ or
better by Standard & Poor's and having a stated maturity of not more than 270
days from issuance, and (vii) other investments in an aggregate amount at any
time outstanding not exceeding $2,000,000.
(qqq) "Permitted Liens" means:
(i) Liens securing all obligations under the Financing
Agreement and the agreements and instruments entered into in connection
therewith;
(ii) Liens for taxes, assessments and governmental charges
the payment of which is not required under Section 7.01(c) of the Financing
Agreement;
(iii) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and other similar Liens arising in the
ordinary course of business and securing obligations (other than Indebtedness
for borrowed money) that are not overdue by more than 30 days or are being
contested in good faith and by appropriate proceedings promptly initiated and
diligently conducted, and a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iv) Liens described on Schedule 7.02(a) to the Financing
Agreement, but not the extension of coverage thereof to other property or the
extension of maturity, refinancing or other modification of the terms thereof or
the increase of the Indebtedness secured thereby;
(v) (A) purchase money Liens on equipment acquired or
held by the Corporation or any of its Subsidiaries in the ordinary course of its
business to secure the purchase price of such equipment or Indebtedness incurred
solely for the purpose of financing the acquisition of such equipment or (B)
Liens existing on such equipment at the time of its acquisition; provided,
however, that (1) no such Lien shall extend to or cover any other property of
any of the Corporation or any of its Subsidiaries, (2) the principal amount of
the Indebtedness secured by any such Lien shall not exceed the lesser of 80% of
the fair market value or the cost of the property so held or acquired and (3)
the aggregate principal amount of Indebtedness secured by any or all such Liens
shall not exceed at any one time outstanding $10,000,000;
(vi) deposits and pledges of cash securing (A) obligations
incurred in respect of workers' compensation, unemployment insurance or other
forms of governmental insurance or benefits, (B) the performance of bids,
tenders, leases, contracts (other than for the payment of money) and statutory
obligations or (C) obligations on surety or appeal bonds, but only to the extent
such deposits or pledges are incurred or otherwise arise in the ordinary course
of business and secure obligations not past due;
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(vii) easements, zoning restrictions and similar
encumbrances on real property and minor irregularities in the title thereto that
do not (A) secure obligations for the payment of money or (B) materially impair
the value of such property or its use by the Corporation or any of its
Subsidiaries in the normal conduct of such Person's business;
(viii) Liens securing Indebtedness permitted by clause
(iii) of the definition of "Permitted Indebtedness";
(ix) Liens granted under the Revolving Credit Documents
(as in effect on the Issuance Date) to secure the Revolving Credit Indebtedness
permitted pursuant to clause (vii) of the definition of "Permitted
Indebtedness"; and
(x) Liens in favor of the issuers of the letters of credit
permitted by subsection (ix) of the definition of "Permitted Indebtedness".
(rrr) "Person" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(sss) "Preferred Stock" or "Preferred Shares" has the meaning
specified in Section 1 hereof.
(ttt) "Preferred Stock Certificates" has the meaning specified
in Section 8(c)(i) hereof.
(uuu) "Preferred Stock Delivery Date" has the meaning specified
in Section 8(c)(ii) hereof.
(vvv) "Principal Market" means The NASDAQ National Market, or if
the Common Stock is not listed on traded on The NASDAQ National Market, then the
principal securities exchange or trading market for the Common Stock.
(www) "Purchase Agreement" means that certain securities
purchase agreement between the Corporation and the initial holders of the
Preferred Shares, as such agreement may be amended from time to time as provided
in such agreement.
(xxx) "Purchasers" has the meaning specified in Section 11
hereof.
(yyy) "Redemption Date" has the meaning specified in Section 6
(a) hereof.
(zzz) "Redemption Notice" has the meaning specified in Section
6(c) hereof.
(aaaa) "Redemption Price" has the meaning specified in Section
6(c) hereof.
11
(bbbb) "Revolving Credit Agent" means Congress Financial
Corporation (New England).
(cccc) "Revolving Credit Agreement" means the Loan and Security
Agreement, dated as of September 6, 2002, by and among the Corporation and
certain of its Subsidiaries, the Revolving Loan Lenders and the Revolving Credit
Agent, as in effect on the Issuance Date.
(dddd) "Revolving Credit Documents" means, collectively, (i) the
Revolving Credit Agreement, and (ii) all other agreements, instruments, and
other documents executed and delivered pursuant to the foregoing.
(eeee) "Revolving Credit Indebtedness" means the Indebtedness of
the Corporation and certain of its Subsidiaries owing to the Revolving Credit
Agent and the Revolving Loan Lenders under the Revolving Credit Agreement.
(ffff) "Revolving Loan Lenders" means the lenders party to the
Revolving Credit Agreement.
(gggg) "Rolling Stock" means all trucks, trailers, tractors,
service vehicles, automobiles and other mobile equipment.
(hhhh) "Series C Board Designee" has the meaning specified in
Section 6(d) hereof.
(iiii) "Share Delivery Date" has the meaning specified in Section
8(c)(ii) hereof.
(jjjj) "Stated Value" means, as of any date, $1,000 plus the
aggregate amount of all Accrued Dividend Payments.
(kkkk) "Subordinated Indebtedness" means Indebtedness of the
Corporation or any of its Subsidiaries which would constitute "Subordinated
Indebtedness" under such definition in the Financing Agreement.
(llll) "Subsidiary" means, with respect to any Person at any
date, any corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity (i)
the accounts of which would be consolidated with those of such Person in such
Person's consolidated financial statements if such financial statements were
prepared in accordance with GAAP or (ii) of which more than 50% of (A) the
outstanding Capital Stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such Person, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (C) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
Person.
12
(mmmm) "Term Loan A" has the meaning specified in the Financing
Agreement.
(nnnn) "Transfer Agent" has the meaning specified in Section
8(c)(i) hereof.
(oooo) "Valuation Event" has the meaning specified in Section
8(e)(i)(D) hereof.
3. Ranking. The Preferred Shares shall rank, with respect to
dividend distributions and distributions upon a Liquidation Event (as defined in
Section 5(a) herein), senior to all classes of common stock of the Corporation
(including the common stock, $0.01 par value per share, of the Corporation (the
"Common Stock"), senior to any other class of Capital Stock or series of
preferred stock established by the Board after the Issuance Date and junior to
the Series B Convertible Preferred Stock, par value $0.01 per share, of the
Corporation issued and outstanding prior to the Issuance Date. All classes of
Common Stock of the Corporation and any other class of Capital Stock or series
of preferred stock established after the Issuance Date to which the Preferred
Shares is senior, are collectively referred to herein as "Junior Securities".
4. Dividend Provisions. The holders of the Preferred Shares shall be
entitled to receive, when and if declared, dividends ("Dividends"), prior and in
preference to the holders of Junior Securities, payable on the Stated Value of
such Preferred Share at a rate of 6.0% per annum (the "Dividend Rate"), which
shall be cumulative, accrue daily from the Issuance Date and calculated on the
basis of a 360-day year for actual days elapsed, whether or not such dividends
have been declared and whether or not there are profits, surplus or other funds
of the Corporation legally available for the payment of dividends, and be due
and payable quarterly on the first day of each Calendar Quarter (each, a
"Dividend Date"). If a Dividend Date is not a Business Day, then the Dividend
shall be due and payable on the Business Day immediately following such Dividend
Date. Each Dividend shall accrue and be payable by adding the Additional Amount
determined as of the applicable Dividend Date to the Stated Value (each such
addition to the Stated Value being referred to herein as an "Accrued Dividend
Payment") and subject to the following proviso, such addition shall be deemed to
be made as of each Dividend Date, without any further action on the part of the
Corporation; provided, that Dividends that accrue and are payable on or prior to
the first anniversary of the Issuance Date may be paid, at the option of the
Corporation, in cash (each such cash dividend being referred to herein as a
"Cash Dividend Payment"), if, and only, if the Corporation provides written
notice of such Cash Dividend Payment to each holder of Preferred Shares at least
ten (10) Business Days prior to the relevant Dividend Date. A notice of a Cash
Dividend Payment shall be irrevocable unless holders of at least 51% of the
outstanding Preferred Shares shall agree otherwise in writing.
5. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation (a "Liquidation Event"), whether voluntary or involuntary (in
bankruptcy or otherwise), the holders of Preferred Shares shall be entitled to
receive, prior and in preference to any payment or distribution of any of the
assets of the Corporation to the holders of any Junior
13
Securities, by reason of their ownership thereof, an amount per share equal to
the Conversion Amount, computed to the date payment thereof is made (together,
the "Liquidation Preference Payment"). If upon the occurrence of any Liquidation
Event, the assets and funds to be distributed among the holders of Preferred
Shares shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then the entire assets and funds of the
Corporation available for distribution shall be distributed pro rata among the
holders of Preferred Shares in proportion to the number of shares of such stock
owned by each such holder.
(b) For purposes of this Certificate of Vote, no Change of
Control or Organic Change shall be deemed a Liquidation Event.
6. Redemption.
(a) Mandatory Redemption. The Corporation shall redeem all
Preferred Shares on the seventh (7th) anniversary (the "Mandatory Redemption
Date") of the Issuance Date by paying for each share, in cash, an amount equal
to the Conversion Amount as of such Mandatory Redemption Date (the "Redemption
Price"). Such payment shall be made in full on the Redemption Date to the
holders entitled thereto.
(b) Optional Redemption. The Preferred Shares shall not be
subject to redemption at any time at the option of the Corporation or any of its
Subsidiaries or Affiliates.
(c) Mechanics of Redemption. At least 30 but not more than 60
days prior to the Mandatory Redemption Date (hereinafter, the "Redemption
Date"), written notice (the "Redemption Notice") shall be given by the
Corporation by mail, postage prepaid, or by facsimile transmission, to each
holder of record (at the close of business on the Business Day next preceding
the day on which the Redemption Notice is given) of Preferred Shares notifying
such holder of the redemption and specifying the Redemption Price, the Mandatory
Redemption Date and the place where said Redemption Price shall be payable. The
Redemption Notice shall be addressed to each holder at his address as shown by
the records of the Corporation in the preferred share register established
pursuant to Section 21. From and after the close of business on the Redemption
Date, unless there shall have been a default in the payment of the Redemption
Price, all rights of holders of such Preferred Shares subject to redemption
(except the right to receive the Redemption Price) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever. Any
Preferred Shares redeemed pursuant to this Section 6 or otherwise acquired by
the Corporation in any manner whatsoever shall be canceled and shall not under
any circumstances be reissued; and the Corporation may from time to time take
such appropriate corporate action as may be necessary to reduce accordingly the
number of authorized Preferred Shares.
(d) Failure to Redeem. If the Corporation fails for any reason
to redeem the total number of outstanding Preferred Shares to be redeemed on
such Redemption Date (each, a "Non-Redemption Event"), then, immediately upon
the occurrence of such Non-Redemption Event, (i) the Dividend Rate in effect on
the date of the Non-Redemption Event shall, until the date such Non-Redemption
Event is cured as to all Preferred Shares, automatically increase by six percent
(6%) for the period commencing on the date such Non-
14
Redemption Event occurs and ending on the ninetieth day thereafter, and shall
increase by an additional one percent (1%) per annum on the first day of each
consecutive ninety (90) day period (or portion thereof) thereafter until such
Non-Redemption Event is cured as to all Preferred Shares, (ii) the Conversion
Price shall automatically be adjusted (subject to further adjustment pursuant to
this Certificate of Vote subsequent to such adjustment) to equal 80% of the
Conversion Price in effect on the date of the initial occurrence of such
Non-Redemption Event and (iii) the holders of a majority of the then outstanding
Preferred Shares shall have the right by giving written notice to the Company to
designate a member of the Board of Directors of the Corporation (the "Series C
Board Designee") until such time as the Non-Redemption Event has been cured as
to all Preferred Shares. Upon the occurrence of a Non-Redemption Event, the
Corporation's Board of Directors shall immediately call a special meeting of all
holders of Preferred Shares for the purpose of electing the Series C Board
Designee and the holders of Preferred Shares shall have the right to vote, as a
single class, to elect by a vote of the holders of a majority of the Preferred
Shares represented at such meeting, the Series C Board Designee, although less
than a quorum. Upon the cure of the Non-Redemption Event as to all Preferred
Shares, the term of office of the Series C Board Designee elected by the holders
of Preferred Shares pursuant to such special voting right shall forthwith
terminate. So long as the Non-Redemption Event shall continue, any vacancy in
the office of the Series C Board Designee may be filled, and the Series C Board
Designee may be removed with or without cause, by written consent of the holders
of a majority of the then outstanding Preferred Shares. As long as the
Non-Redemption Event shall continue, holders of any of the outstanding capital
stock (other than the Preferred Shares) of the Corporation entitled to vote on
the election of directors shall not be entitled to vote on the election or
removal of the Series C Board Designee. The Corporation shall take such actions
(corporate or otherwise) as are necessary to effectuate this Section 6(d)(iii).
7. Change of Control/Organic Change.
(a) Offer to Purchase.
(i) No sooner than 60 days nor later than 30 days prior to
the consummation of any Organic Change and no later than 10 days after any
Change of Control, the Corporation shall deliver (or cause to be delivered) a
binding irrevocable written offer containing the information required by Section
7(c) hereof to purchase for cash each outstanding Preferred Share pursuant to
the terms described in Section 7(c) (the "Offer") at a purchase price per share
equal to 101% of the Conversion Amount calculated through and including the
Payment Date (the "Change of Control Redemption Price"), and shall purchase (or
cause the purchase of) any Preferred Shares tendered in the Offer pursuant to
the terms hereof.
(ii) Prior to the mailing of the Offer referred to in
Section 7(a), the Corporation shall (i) promptly determine if the purchase of
the Preferred Shares would violate or constitute a default under the
Indebtedness of the Corporation or the terms of any other series of the
Corporation's outstanding preferred stock and (ii) either shall repay or redeem
to the extent necessary all such indebtedness or preferred stock of the
Corporation that would prohibit the repurchase of the Preferred Shares pursuant
to a Offer prior to or concurrent with the consummation of the Change of Control
or obtain any requisite consents or approvals under instruments governing any
indebtedness or preferred stock of the Corporation to permit the
15
repurchase of the Preferred Shares for cash. The Corporation shall first comply
with this Section 7(a) before it shall repurchase any Preferred Shares pursuant
to this Section 7.
(iii) The Offer shall be delivered by the Corporation to
each holder of Preferred Shares, by first-class mail, postage prepaid, and shall
state:
(A) all instructions and materials necessary to enable
such holders to tender Preferred Shares pursuant to the Offer;
(B) that a Change of Control has occurred or an
Organic Change is scheduled to occur, as applicable, that an Offer is being made
pursuant to this Section 7 and that all Preferred Shares validly tendered and
not withdrawn will be accepted for payment;
(C) the Change of Control Redemption Price and the
purchase date (which shall be concurrent with, and subject to the consummation
of, the Organic Change, and not later than (20) days following consummation of a
Change of Control) (the "Payment Date");
(D) that any Preferred Shares not tendered will
continue to accrue Dividends;
(E) that, unless the Corporation defaults in making
payment therefor, any Preferred Shares accepted for payment pursuant to the
Offer shall cease to accrue Dividends after the Payment Date;
(F) that holders electing to have any Preferred Shares
purchased pursuant to the Offer will be required to surrender stock certificates
representing such Preferred Shares, properly endorsed for transfer, together
with such other customary documents as the Corporation may reasonably request at
the address specified in the Offer prior to the close of business on the
Business Day prior to the Payment Date;
(G) that holders will be entitled to withdraw their
election if the Corporation receives, not later than three (3) Business Days
prior to the Payment Date, a facsimile transmission or letter setting forth the
name of the holder, the number of Preferred Shares the holder delivered for
purchase and a statement that such holder is withdrawing its election to have
such Preferred Shares purchased;
(H) that holders who tender only a portion of the
Preferred Shares represented by a certificate delivered will, upon purchase of
the shares tendered, be issued a new certificate representing the unpurchased
Preferred Shares; and
(I) the circumstances and relevant facts regarding
such Change of Control or Organic Change (including information with respect to
pro forma historical income, cash flow and capitalization after giving effect to
such Change of Control or Organic Change).
(iv) The Corporation will comply with any tender offer
rules under the Exchange Act which then may be applicable in connection with any
offer made by the
16
Corporation to repurchase the Preferred Shares as a result of a Change of
Control or Organic Change. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this Certificate of Vote, the
Corporation shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligation under this Certificate of
Vote by virtue thereof.
(v) On the Payment Date, the Corporation shall (A) accept
for payment the Preferred Shares validly tendered pursuant to the Offer, (B) pay
to the holders of shares so accepted the purchase price therefor in immediately
available funds and (C) cancel each surrendered certificate and retire the
shares represented thereby and issue replacement certificates representing
Preferred Shares not tendered. Unless the Corporation defaults in the payment
for the Preferred Shares tendered pursuant to the Offer, Dividends will cease to
accrue with respect to the Preferred Shares tendered and all rights of holders
of such tendered shares will terminate, except for the right to receive payment
therefor on the Payment Date.
(vi) To accept the Offer, the holder of a Preferred Share
shall deliver, prior to the close of business on the Business Day prior to the
Payment Date, written notice to the Corporation (or an agent designated by the
Corporation for such purpose) of such holder's acceptance and the number of
Preferred Shares tendered for repurchase, together with certificates evidencing
the Preferred Shares with respect to which the Offer is being accepted, duly
endorsed for transfer.
(b) Other Rights of Holders on an Organic Change. Prior to the
consummation of any (i) sale of all or substantially all of the Corporation's
assets to an acquiring Person or (ii) other Organic Change following which the
Corporation is not a surviving entity, in which any holder of Preferred Shares
does not tender all of its Preferred Shares to the Corporation for repurchase
pursuant to Section 7(a) (each, a "Non-Tendering Holder") the Corporation will
secure from the Person purchasing such assets or the successor, or, if
applicable, the parent of the successor, resulting from such Organic Change (in
each case, the "Acquiring Entity") a written agreement (in form and substance
reasonably satisfactory to the Non-Tendering Holders holding at least 51% of the
then outstanding Preferred Shares held by all Non-Tendering Holders) to deliver
to each holder of Preferred Shares in exchange for such shares, a security of
the Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to the Preferred Shares, including, without limitation,
having a stated value and liquidation preference equal to the Stated Value and
the Liquidation Preference Payment of the Preferred Shares held by such holder
and having a rank senior to all Capital Stock of such Acquiring Entity (other
than the Series B Preferred Stock of the Corporation which may be senior to the
Preferred Shares to the same extent as they are senior to the Preferred Shares
as of the Issuance Date), and reasonably satisfactory to the holders of at least
51% of the then outstanding Preferred Shares held by all Non-Tendering Holders.
(c) Prior to the consummation of any Organic Change, the
Corporation shall make appropriate provision (in form and substance reasonably
satisfactory to the holders of at least 51% of the then outstanding Preferred
Shares held by all Non-Tendering Holders) to insure that each of the holders of
the Preferred Shares will thereafter have the right to acquire and receive in
lieu of or in addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Preferred
17
Shares such shares of stock, securities or assets that would have been issued or
payable in such Organic Change with respect to or in exchange for the number of
shares of Common Stock which would have been acquirable and receivable upon the
conversion of such holder's Preferred Shares as of the date of such Organic
Change (without taking into account any limitations or restrictions on the
convertibility of the Preferred Shares).
8. Conversion.
(a) Holder's Conversion Right. Subject to the provisions of
Section 11, at any time or times on or after the Issuance Date, any holder of
Preferred Shares shall be entitled to convert any whole or fractional number of
Preferred Shares into fully paid and nonassessable shares of Common Stock in
accordance with Section 8(c) at the Conversion Rate. The Corporation shall not
issue any fraction of a share of Common Stock upon any conversion. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one Preferred Share by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of a fraction of
a share of Common Stock. If, after the aforementioned aggregation, the issuance
would result in the issuance of a fraction of a share of Common Stock, the
Corporation shall round such fraction of a share of Common Stock up or down to
the nearest whole share with one half shares being rounded up.
(b) Conversion Rate. The number of shares of Common Stock
issuable upon conversion of each Preferred Share pursuant to Section 8(a) shall
be determined according to the following formula (the "Conversion Rate"):
Conversion Amount
Conversion Price
(c) Mechanics of Conversion. The conversion of Preferred Shares
shall be conducted in the following manner:
(i) Holder's Delivery Requirements. To convert Preferred
Shares into shares of Common Stock on any date (the "Conversion Date"), the
holder thereof shall (A) transmit by facsimile (or otherwise deliver) a copy of
a properly completed notice of conversion executed by the registered holder of
the Preferred Shares subject to such conversion in the form attached hereto as
Exhibit I (the "Conversion Notice") to the Corporation and the Corporation's
designated transfer agent for the Common Stock (the "Transfer Agent") and (B) if
required by Section 8(c)(vii), surrender to a common carrier for delivery to the
Corporation as soon as practicable following such date the original certificates
representing the Preferred Shares being converted (or compliance with the
procedures set forth in Section 12) (the "Preferred Stock Certificates").
(ii) Corporation's Response. Upon receipt by the
Corporation of copy of a Conversion Notice, the Corporation shall (A) as soon as
practicable, but in any event within two (2) Business Days, send, via facsimile,
a confirmation of receipt of such Conversion Notice to such holder and the
Transfer Agent, which confirmation shall constitute an instruction to the
Transfer Agent to process such Conversion Notice in accordance with the terms
herein and (B) on or before the second (2/nd/) Business Day following the date
of receipt by the
18
Corporation of such Conversion Notice (the "Share Delivery Date"), (1) issue and
deliver to the address as specified in the Conversion Notice, a certificate,
registered in the name of the holder or its designee, for the number of shares
of Common Stock to which the holder shall be entitled, or (2) provided the
Transfer Agent is participating in The Depository Trust Corporation ("DTC") Fast
Automated Securities Transfer Program, upon the request of the holder, credit
such aggregate number of shares of Common Stock to which the holder shall be
entitled to the holder's or its designee's balance account with DTC through its
Deposit Withdrawal Agent Commission system. If the number of Preferred Shares
represented by the Preferred Stock Certificate(s) submitted for conversion is
greater than the number of Preferred Shares being converted, then the
Corporation shall, as soon as practicable and in no event later than five
Business Days after receipt of the Preferred Stock Certificate(s) (the
"Preferred Stock Delivery Date") and at its own expense, issue and deliver to
the holder a new Preferred Stock Certificate representing the number of
Preferred Shares not converted.
(iii) Dispute Resolution. In the case of a dispute as to
the determination of the Conversion Price or the arithmetic calculation of the
Conversion Rate, the Corporation shall instruct the Transfer Agent to issue to
the holder the number of shares of Common Stock that is not disputed and shall
transmit an explanation of the disputed determinations or arithmetic
calculations to the holder via facsimile within five (5) Business Days of
receipt of such holder's Conversion Notice or other date of determination. If
such holder and the Corporation are unable to agree upon the determination of
the Conversion Price or arithmetic calculation of the Conversion Rate within
five (5) Business Days of such disputed determination or arithmetic calculation
being transmitted to the holder, then the Corporation shall within three (3)
Business Days submit via facsimile (a) the disputed determination of the
Conversion Price to an independent, reputable investment bank selected by the
Corporation and approved by the holders of at least 51% of the Preferred Shares
then outstanding or (b) the disputed arithmetic calculation of the Conversion
Rate to an independent, outside accountant approved by the holders of at least
51% of the Preferred Shares then outstanding. The Corporation shall cause the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Corporation and the holders of the
results no later than five (5) Business Days from the time it receives the
disputed determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent manifest error.
(iv) Record Holder. The Person or Persons entitled to
receive the shares of Common Stock issuable upon a conversion of Preferred
Shares shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.
(v) Pro Rata Conversion. In the event the Corporation
receives a Conversion Notice from more than one holder of Preferred Shares for
the same Conversion Date and the Corporation can convert some, but not all, of
such Preferred Shares by virtue of the limitations expressly set forth in
Section 11 hereof, the Corporation shall convert from each holder of Preferred
Shares electing to have Preferred Shares converted at such time a pro rata
amount of such holder's Preferred Shares submitted for conversion based on the
number of Preferred Shares submitted for conversion on such date by such holder
relative to the number of Preferred Shares submitted for conversion on such
date.
19
(vi) Book-Entry. Notwithstanding anything to the contrary
set forth herein, upon conversion of Preferred Shares in accordance with the
terms hereof, the holder thereof shall not be required to physically surrender
the certificate representing the Preferred Shares to the Corporation unless the
full or remaining number of Preferred Shares represented by the certificate are
being converted. The holder and the Corporation shall maintain records showing
the number of Preferred Shares so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the holder and the
Corporation, so as not to require physical surrender of the certificate
representing the Preferred Shares upon each such conversion. In the event of any
dispute or discrepancy, such records of the Corporation establishing the number
of Preferred Shares to which the record holder is entitled shall be controlling
and determinative in the absence of manifest error. Notwithstanding the
foregoing, if Preferred Shares represented by a certificate are converted as
aforesaid, the holder may not transfer the certificate representing the
Preferred Shares unless the holder first physically surrenders the certificate
representing the Preferred Shares to the Corporation, whereupon the Corporation
will forthwith issue and deliver upon the order of the holder a new certificate
of like tenor, registered as the holder may request, representing in the
aggregate the remaining number of Preferred Shares represented by such
certificate. The holder and any assignee, by acceptance of a certificate,
acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of any Preferred Shares, the number of Preferred Shares
represented by such certificate may be less than the number of Preferred Shares
stated on the face thereof. Each certificate for Preferred Shares shall bear the
following legend:
ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE
TERMS OF THE COMPANY'S CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A SERIES OF A CLASS OF STOCK RELATING TO THE
PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE, INCLUDING
SECTION 8(c)(vi) THEREOF. THE NUMBER OF PREFERRED SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF
PREFERRED SHARES STATED ON THE FACE HEREOF PURSUANT TO SECTION
8(c)(vi) OF THE CERTIFICATE OF VOTE RELATING TO THE PREFERRED
SHARES REPRESENTED BY THIS CERTIFICATE.
(d) Taxes. The Corporation shall pay any and all documentary,
stamp, transfer (but only in respect of the registered holder thereof) and other
similar taxes that may be payable with respect to the issuance and delivery of
Common Stock upon the conversion of Preferred Shares.
(e) Adjustments to Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as provided in this Section 8(e).
(i) Adjustment of Conversion Price upon Issuance of Common
Stock. If and whenever on or after the Issuance Date, the Corporation issues or
sells, or in accordance with this Section 8(e) is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of shares of Common
Stock owned or held by or for the account
20
of the Corporation, but excluding shares of Common Stock: (a) issued or deemed
to have been issued by the Corporation in connection with an Approved Stock Plan
(not to exceed 2,500,000 shares of Common Stock as constituted on the date
hereof and provided in each case that the exercise or purchase price for any
such share shall not be less than 85% of the fair market value (determined in
good faith by the Corporation's Board of Directors) of the Common Stock on the
date of the grant); (b) deemed to have been issued upon issuance of the
Preferred Shares or issued upon conversion of the Preferred Shares and (c)
issued upon exercise of Options or Convertible Securities which are outstanding
on the date immediately preceding the Issuance Date, provided that such issuance
of shares of Common Stock upon exercise of such Options or Convertible
Securities is made pursuant to the terms of such Options or Convertible
Securities in effect on the date immediately preceding the Issuance Date and
such Options or Convertible Securities are not amended after the date
immediately preceding the Issuance Date), for a consideration per share less
than a price (the "Applicable Price") equal to the higher of the Current Market
Price and the Conversion Price, each as in effect immediately prior to such
issuance, then immediately after such issue or sale, the Conversion Price then
in effect shall be reduced to an amount equal to the product of (1) the
Conversion Price in effect immediately prior to such issue or sale and (2) the
quotient of (A) the sum of (x) the product of the Applicable Price and the
number of shares of Common Stock Deemed Outstanding immediately prior to such
issue or sale and (y) the consideration, if any, received by the Corporation
upon such issue or sale, divided by (B) the product of (x) the Applicable Price
multiplied by (y) the number of shares of Common Stock Deemed Outstanding
immediately after such issue or sale. For purposes of determining the adjusted
Conversion Price under this Section 8(e)(i), the following provisions shall be
applicable:
(A) Issuance of Options. If the Corporation in any
manner grants or sells any Options and the lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or upon
conversion, exchange or exercise of any Convertible Securities issuable upon
exercise of such Option is less than the Applicable Price, then such share of
Common Stock shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such Option for such
price per share. For purposes of this Section 8(e)(i)(A), the "lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion, exchange or exercise of any Convertible
Securities issuable upon exercise of such Option" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock (disregarding, prior
to its occurrence, any potential adjustment thereto described in Section
8(e)(i)(C) unless and until the same shall occur) upon granting or sale of the
Option, upon exercise of the Option and upon conversion, exchange or exercise of
any Convertible Security issuable upon exercise of such Option. No further
adjustment of the Conversion Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon conversion,
exchange or exercise of such Convertible Securities.
(B) Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is issuable upon such
conversion, exchange or exercise thereof is less than the Applicable Price, then
such share of Common Stock shall be
21
deemed to be outstanding and to have been issued and sold by the Corporation at
the time of the issuance of sale of such Convertible Securities for such price
per share. For the purposes of this Section 8(e)(i)(B), the "lowest price per
share for which one share of Common Stock is issuable upon such conversion,
exchange or exercise" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Corporation with respect to
any one share of Common Stock (disregarding, prior to its occurrence, any
potential adjustment thereto described in Section 8(e)(i)(C) unless and until
the same shall occur) upon the issuance or sale of the Convertible Security and
upon the conversion, exchange or exercise of such Convertible Security. No
further adjustment of the Conversion Price shall be made upon the actual
issuance of such Common Stock upon conversion, exchange or exercise of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the
Conversion Price had been or are to be made pursuant to other provisions of this
Section 8(e)(i), no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.
(C) Change in Option Price or Rate of Conversion. If the purchase
or exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exchange or exercise of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable or exercisable for Common Stock changes at any time, the
Conversion Price in effect at the time of such change shall be adjusted to the
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 8(e)(i)(C), if
the terms of any Option or Convertible Security that was outstanding as of the
date of issuance of the Preferred Shares are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change.
Notwithstanding the foregoing, no adjustment shall be made if such adjustment
would result in an increase of the Conversion Price then in effect.
(D) Calculation of Consideration Received. In case any Option is
issued in connection with the issue or sale of other securities of the
Corporation, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a per Option or per unit, as applicable,
consideration of $0.01. If any Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the gross amount received
by the Corporation therefor. If any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation will be the fair
value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by the
Corporation will be the arithmetic average of the Closing Sale Prices of such
securities during the ten (10) consecutive trading days ending on the date of
receipt of such securities. The fair value of any consideration other than cash
or securities will be determined jointly by the Corporation and the holders of
at least 51% of the Preferred Shares then outstanding. If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event
22
requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five Business Days after the tenth
(10th) day following the Valuation Event by an independent, nationally
recognized investment banking firm selected by the Corporation and the holders
of at least 51% of the Preferred Shares then outstanding. The determination of
such appraiser shall be deemed binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the Corporation.
(E) Record Date. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (2) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date will be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Adjustment of Conversion Price upon Subdivision or
Combination of Common Stock. If the Corporation at any time subdivides (by any
stock split, stock dividend, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Conversion Price in
effect immediately prior to such subdivision will be proportionately reduced. If
the Corporation at any time combines (by combination, reverse stock split or
otherwise) its outstanding shares of Common Stock into a smaller number of
shares and the Conversion Price in effect immediately prior to such combination
will be proportionately increased.
(iii) Adjustment of Conversion Price on Adjustment Date. In
addition to any other adjustment to the Conversion Price provided for in this
Certificate of Vote, if (A) the Consolidated EBITDA of the Corporation (as such
term is defined in the Financing Agreement), for the Fiscal Year ending December
31, 2003 is not greater than $115 million, as certified in writing by the chief
financial officer of the Corporation to each holder of Preferred Shares as soon
as is available, but not later than March 30, 2004 (the "2004 Consolidated
EBITDA Certificate") and (B) the arithmetic average of the Closing Sale Prices
of the Common Stock during the Adjustment Measuring Period is less than $27.50
(appropriately adjusted to reflect any stock dividend, stock split, stock
combination or other similar transaction occurring from and after the Issuance
Date), then the Conversion Price for the Preferred Shares shall be reduced
effective as of the Adjustment Date to an amount equal to the Adjustment Price,
subject to further adjustment as provided in this Certificate of Vote. If any
holder of Preferred Shares disputes any calculation by the Corporation required
by this Section 8(e)(iii), (including, without limitation, the Corporation's
calculation of Consolidated EBITDA contained in the 2004 Consolidated EBITDA
Certificate), such holder shall deliver to the Corporation (and the Corporation
shall immediately thereafter deliver such notice to each other holder of
Preferred Shares) within ten (10) Business Days of such holder's receipt of the
2004 Consolidated EBITDA Certificate a written notice of such dispute describing
the basis for such dispute. If the Corporation and the disputing holder(s) of
Preferred Shares cannot arrive at a compromise to such dispute within five (5)
Business Days of the Corporation's receipt of written notice thereof from the
disputing holder(s), then such dispute shall be resolved in accordance with the
procedures set forth in Section 8(c)(iii) hereof.
23
(iv) If the Corporation, at any time while Preferred Shares are
outstanding, shall distribute to all holders of Common Stock (and not to the
holders of Preferred Shares) evidences of its indebtedness or assets or rights
or warrants to subscribe for or purchase any security, then in each such case
the Conversion Price at which each share of Preferred Stock shall thereafter be
convertible shall be determined by multiplying the Conversion Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the Closing Sale Price of a share of Common Stock determined as of the
record date mentioned above, and of which the numerator shall be such Closing
Sale Price on such record date less the then fair market value at such record
date of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of Common Stock as determined by the Board
in good faith. If any holder of Preferred Shares shall dispute the findings of
the Corporation's Board, then such fair market value shall be determined in
accordance by a nationally recognized investment banking firm selected by the
Corporation and approved by the holders of not less than 51% of the then
outstanding Preferred Shares in accordance with Section 8(c)(iii). In either
case the adjustments shall be described in a statement provided to each holder
of Preferred Shares of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(v) Other Events. If any event occurs of the type contemplated
by the provisions of this Section 8(e) but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of the Preferred
Shares; provided that no such adjustment will increase the Conversion Price as
otherwise determined pursuant to this Section 8(e).
(vi) Notices.
(A) Whenever the Conversion Price is required to be adjusted
as provided herein, the Corporation (1) shall immediately compute the Conversion
Price, (2) shall prepare a certificate signed by the Corporation's Treasurer
setting forth such Conversion Price and showing in detail the facts upon which
such adjustment is based, which certificate shall be certified by the
independent public accountants regularly employed by the Corporation (and
corrected, if such accountants determine that the Corporation's certification is
incorrect), and (3) shall mail a copy of such certificates to each holder of
record of then outstanding Preferred Shares. A copy of such certificate shall
also forthwith be filed with the Corporation's Transfer Agent. Until further
adjusted, the Conversion Price shall be as set forth in such certificate. In the
case of a dispute as to the determination of such adjustment between the
Corporation and any holder of Preferred Shares, then such dispute shall be
resolved in accordance with the procedures set forth in Section 8(c)(iii).
(B) The Corporation will give written notice to each holder
of Preferred Shares at least ten (10) Business Days prior to the date on which
the Corporation closes its books or takes a record (1) with respect to any
dividend or distribution
24
upon the Common Stock, (2) with respect to any pro rata subscription offer to
holders of Common Stock or (3) for determining rights to vote with respect to
any Organic Change.
(C) The Corporation will also give written notice to
each holder of Preferred Shares at least ten (10) Business Days prior to the
date on which any Organic Change, dissolution or liquidation will take place.
9. Voting Rights; Board Observation Rights.
(a) Voting Rights. Except as may be otherwise provided in this
Certificate of Vote or required by law, the Preferred Shares shall vote together
with all other classes and series of stock of the Corporation as a single class
on all actions to be taken by the stockholders of the Corporation. Each
Preferred Share shall have a number of votes, subject to reduction pursuant to
Section 11 hereof, equal to the quotient determined by dividing (a) the number
of shares of Common Stock into which all of the outstanding Preferred Shares are
then convertible in accordance with Section 8 (but subject to the limitation in
Section 11) divided by (b) the number of Preferred Shares then outstanding. Each
holder of Preferred Shares shall be entitled to notice of any stockholders'
meeting in accordance with the By-Laws of the Corporation.
(b) Board Observation Rights. For so long as Oak Hill Advisors,
Inc. ("Oak Hill") and its Affiliates and funds and accounts that Oak Hill and
its Affiliates control or advise own in the aggregate not less than 2,500
Preferred Shares (subject to adjustment for any stock split, subdivision,
combination or other similar transaction), Oak Hill shall be entitled to appoint
one (1) designee who shall be entitled to observe the meetings of the Board of
Director of the Corporation in a non-voting capacity. Such observer shall have
full rights to attend all meetings of the Board of Directors of the Corporation
and all meetings (whether such meetings are formal or informal, are convened in
person, telephonically, or via any other telecommunication means) of any
committee or subcommittee of the Board of Directors of the Corporation,
including, without limitation, any executive, compensation, governance,
nominating and audit committee. In connection with the rights set forth in this
Section 9(b), the Corporation shall (i) provide all materials distributed to the
members of the Board of Directors of the Company (and any committee or
subcommittee thereof) to each Person designated by Oak Hill hereunder at the
same time such materials are distributed to other Board, committee or
subcommittee members and (ii) pay all reasonable expenses of such Person to
attend the meetings of the Board of Directors (and any committee or subcommittee
thereof).
10. Protective Provisions. The Corporation shall not, directly or
indirectly, without the affirmative vote or written consent of the holders of
not less than 51% of the then outstanding Preferred Shares, voting or consenting
as a separate class:
(a) enter into, renew, extend or be a party to, or permit any of
its Subsidiaries to enter into, renew, extend or be a party to, any transaction
or series of related transactions (including, without limitation, the purchase,
sale, lease, transfer or exchange of property or assets of any kind or the
rendering of services of any kind) with any Affiliate, except (1) in the
ordinary course of business in a manner and to an extent consistent with past
practice and necessary or desirable for the prudent operation of its business,
for fair consideration and on
25
terms no less favorable to it or its Subsidiaries than would be obtainable in a
comparable arm's length transaction with a Person that is not an Affiliate
thereof, (2) transactions with another wholly-owned Subsidiary of the
Corporation or the Corporation and (3) transactions permitted by Section 10(f)
hereof;
(b) (1) declare or pay any dividend or other distribution, direct
or indirect, on account of any Capital Stock of the Corporation or any of its
Subsidiaries, now or hereafter outstanding, (2) make any repurchase, redemption,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Capital Stock of any of the
Corporation or any of its Subsidiaries, now or hereafter outstanding, (3) make
any payment to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights for the purchase or acquisition of shares of any class
of Capital Stock of any of the Corporation or any of its Subsidiaries, now or
hereafter outstanding, (4) return any Capital Stock to any shareholders or other
equity holders of any of the Corporation or any of its Subsidiaries, or make any
other distribution of property, assets, shares of Capital Stock, warrants,
rights, options, obligations or securities thereto as such or (5) pay any
management fees or any other fees or expenses (including the reimbursement
thereof by any of the Corporation or any of its Subsidiaries) pursuant to any
management, consulting or other services agreement to any of the shareholders or
other equity holders of any of the Corporation or any of its Subsidiaries or
other Affiliates, or to any other Subsidiaries or Affiliates of the Corporation;
provided, however, (A) any Subsidiary of the Corporation may pay dividends to
the Corporation or another Subsidiary of the Corporation (B) the Corporation may
pay dividends on its outstanding common Capital Stock in the form of common
Capital Stock, provided that an adjustment for such payment is provided for in
Section 8(e) hereof, (C) the Corporation may pay cash dividends in the annual
amount of $4.00 per share per twelve-month period upon each of the 112,000
shares of the Corporation's Series B Preferred Stock which are currently
outstanding, and (D) the Corporation may accrue Dividends and make Cash Dividend
Payments to the holders of Preferred Shares in the manner provided in Section 4
hereof provided that, in each case of clauses (A) through (D) above, no payment
shall be made if Section 7.02(h) of the Financing Agreement would prohibit such
payment;
(c) create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain liable with respect to, or permit any of its
Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise
become or remain liable with respect to, any Indebtedness other than Permitted
Indebtedness;
(d) create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Lien upon or with
respect to any of its properties, whether now owned or hereafter acquired; file
or suffer to exist under the Uniform Commercial Code or any similar law or
statute of any jurisdiction, a financing statement (or the equivalent thereof)
that names it or any of its Subsidiaries as debtor; sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof); sell any of its property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable) with
recourse to it or any of its Subsidiaries or assign or otherwise transfer, or
permit any of its Subsidiaries to assign or otherwise transfer, any account or
other right to receive income; other than, as to all of the above, Permitted
Liens;
26
(e) Wind-up, liquidate or dissolve, or merge, consolidate or
amalgamate with any Person, or convey, sell, lease or sublease, transfer or
otherwise dispose of, whether in one transaction or a series of related
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired (or agree to do any of the foregoing), or purchase
or otherwise acquire, whether in one transaction or a series of related
transactions, all or substantially all of the assets of any Person (or any
division thereof) (or agree to do any of the foregoing), or permit any of its
Subsidiaries to do any of the foregoing; provided, however, that
(i) any direct or indirect wholly-owned Subsidiary of the
Corporation may be merged into any other direct or indirect wholly-owned
Subsidiary of the Corporation, or may consolidate with another direct or
indirect wholly-owned Subsidiary of the Corporation, so long as no other
provision of this Certificate of Vote would be violated thereby; and
(ii) any of the Corporation and its Subsidiaries may (A)
sell Inventory in the ordinary course of business, (B) dispose of obsolete or
worn-out equipment in the ordinary course of business, (C) sell or otherwise
dispose of other property or assets (other than any Capital Stock, Rolling Stock
or any Facility of any of the Corporation or any of its Subsidiaries) for cash
in an aggregate amount not less than the fair market value of such property or
assets, and (D) sell or otherwise dispose of Rolling Stock for cash in an amount
not less than the fair market value of such Rolling Stock, provided that the net
cash proceeds of such dispositions in the case of clauses (B), (C) and (D)
above, do not exceed $500,000 in the aggregate in any twelve-month period and
the conditions of Section 7.02(c)(ii) of the Financing Agreement are satisfied.
(f) Make or commit or agree to make any loan, advance,
guarantee of obligations, other extension of credit or capital contributions to,
or hold or invest in or commit or agree to hold or invest in, or purchase or
otherwise acquire or commit or agree to purchase or otherwise acquire any shares
of the Capital Stock, bonds, notes, debentures or other securities of, or make
or commit or agree to make any other investment in, any other Person, or
purchase or own any futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or permit any of its Subsidiaries to do any of the foregoing,
except for: (i) investments existing on the Issuance Date, as set forth on
Schedule 7.02(e) to the Financing Agreement, but not any increase in the amount
thereof as set forth in such Schedule or any other modification of the terms
thereof, (ii) investments made by the Company or any Subsidiary of the Company
that is a Loan Party (as defined in the Financing Agreement) in or to its
respective wholly-owned Subsidiaries and by such Subsidiaries to it, made in the
ordinary course of business, provided that the aggregate principal amount of
such investments made in or to the Loan Parties' Subsidiaries organized outside
of the United States (exclusive of (A) investments in the Capital Stock of such
Subsidiaries resulting from the allocation of the consideration paid by the Loan
Parties for the CSD Acquisition Assets (as defined in the Financing Agreement)
and (B) Indebtedness incurred by a Loan Party on behalf of one or more of its
Subsidiaries which is permitted under clause (i) of the definition of "Permitted
Indebtedness") shall not exceed, in the case of such Subsidiaries organized
under the laws of a Canadian province, $5,000,000 or, in the case of any other
Subsidiary organized outside the
27
United States, $500,000, in each case at any one time outstanding, and (iii)
Permitted Investments;
(g) Make or commit or agree to make, or permit any of its
Subsidiaries to make or commit or agree to make, any Capital Expenditure (by
purchase or Capitalized Lease) that would cause the aggregate amount of all
Capital Expenditures made by the Corporation and their Subsidiaries to exceed
the amount permitted in any Fiscal Year under Section 7.02(g) of the Financing
Agreement;
(h) Create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any direct or indirect Subsidiary of the Corporation
(i) to pay dividends or to make any other distribution on any shares of Capital
Stock of such Subsidiary owned by directly or indirectly by the Corporation,
(ii) to pay or prepay or to subordinate any Indebtedness owed to any of the
Corporation or any of its Subsidiaries, (iii) to make loans or advances to any
of the Corporation or any of its Subsidiaries or (iv) to transfer any of its
property or assets to any of the Corporation or any of its Subsidiaries, or
permit any of its Subsidiaries to do any of the foregoing; provided, however,
that nothing in any of clauses (i) through (iv) of this Section 10(h) shall
prohibit or restrict compliance with:
(A) the Financing Agreement, the Revolving Credit
Agreement, or any other agreement or instrument entered into in connection
therewith;
(B) any agreements in effect on the Issuance Date and
described on Schedule 7.02(k) to the Financing Agreement;
(C) any applicable law, rule or regulation (including,
without limitation, applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in certain
circumstances);
(D) in the case of clause (iv) any agreement setting
forth customary restrictions on the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or contract of similar
property or assets; or
(E) in the case of clause (iv) any agreement,
instrument or other document evidencing a Permitted Lien from restricting on
customary terms the transfer of any property or assets subject thereto.
(i) assume, or accept any assignment of, directly or
indirectly, after the Issuance Date any contract, agreement or obligation of
Safety-Kleen Corp. or its Affiliates or Subsidiaries containing or otherwise
imposing on the Corporation or any of its Affiliates or Subsidiaries any
material indemnification or guarantee obligation, other than those contracts and
agreements listed in a schedule delivered prior to the Effective Date to each
holder of Preferred Shares as of the Effective Date;
(j) amend, alter, change, repeal or waive any provision of
its Articles of Organization (whether by way of a Certificate of Vote or
otherwise) or this Certificate of Vote
28
or its By-laws in any manner (whether by merger, consolidation or otherwise),
that would adversely affect the rights, preferences or privileges of the
Preferred Shares;
(k) create or authorize the creation of or issue (including,
without limitation, by way of recapitalization), or obligate itself or any
Subsidiary to authorize or issue any shares of any series of preferred stock of
the Corporation or any such Subsidiary, or any other security exercisable for or
convertible into any shares of any series of preferred stock of the Corporation
or any Subsidiary, whether any such creation or authorization shall be by means
of amendment of the Articles of Organization (whether by way of a Certificate of
Vote or otherwise) or of this Certificate of Vote or by merger, consolidation or
otherwise;
(l) issue or authorize the issuance of any Preferred Shares
after the Issuance Date;
(m) issue or authorize the issuance of any shares of Series
B Preferred Stock of the Corporation after the Issuance Date;
(n) modify or amend the terms of the Series B Preferred
Stock in a manner that could reasonably be expected to adversely affect the
rights of the holders of Preferred Shares; or
(o) enter into any contract, agreement, commitment or
understanding with respect to any of the foregoing.
If the Company shall have breached or defaulted with respect to
any of the covenants set forth in this Section 10, and such breach has not been
cured, if curable, within 30 days of written notice to the Company thereof
(each, a "Covenant Default"), then, immediately upon the occurrence of such
Covenant Default, (i) the Dividend Rate in effect on the date of the Covenant
Default shall increase by six percent (6%) until the later of (A) the six-month
anniversary of the date of the occurrence of the Covenant Default and (B) the
date on which such Covenant Default is cured and (ii) the Conversion Price shall
automatically be adjusted (subject to further adjustment pursuant to this
Certificate of Vote subsequent to such adjustment) to an amount equal to (A) the
Adjustment Price, in the event the Conversion Price in effect on the date of the
Covenant Default is greater than the Adjustment Price and (B) the product of (I)
0.9 and (II) the Conversion Price in effect on the date of the Covenant Default,
in the event the Conversion Price in effect on the date of the Covenant Default
is less than or equal to the Adjustment Price.
11. Limitation on Number of Conversion Shares. Notwithstanding
anything to the contrary contained herein, (a) the Corporation shall not be
obligated to issue any shares of Common Stock upon conversion of the Preferred
Shares if the issuance of such shares of Common Stock would exceed that number
of shares of Common Stock which the Corporation may issue upon conversion of the
Preferred Shares without breaching the Corporation's obligations under the rules
or regulations of the Principal Market, or the market or exchange where the
Common Stock is then traded (the "Exchange Cap") and (b) the holders of
Preferred Shares may not exercise voting power with respect to any Preferred
Shares in accordance with Section 9 hereof on any matter brought before all
holders of Capital Stock of the Corporation to
29
the extent that voting such Preferred Shares shall cause the Corporation to
breach its obligations under the Exchange Cap, except that such limitations
shall not apply in the event that the Corporation (i) obtains the approval of
its stockholders as required by the applicable rules of the Principal Market (or
any successor rule or regulation) for issuances of Common Stock in excess of
such amount, or (ii) obtains a written opinion from outside counsel to the
Corporation that such approval is not required, which opinion shall be
reasonably satisfactory to the holders of at least 51% of the Preferred Shares
then outstanding. Until such approval or written opinion is obtained, (A) no
purchaser of Preferred Shares pursuant to the Purchase Agreement (the
"Purchasers") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock and (B) no Purchaser shall have the right to exercise voting rights
on matters brought before all holders of Capital Stock in accordance with
Section 9 hereof in respect of Preferred Shares in an amount greater than the
product of (1) the Exchange Cap amount multiplied by (2) a fraction, the
numerator of which is the number of Preferred Shares issued to such Purchaser
pursuant to the Purchase Agreement and the denominator of which is the aggregate
amount of all the Preferred Shares issued to the Purchasers pursuant to the
Purchase Agreement (the "Cap Allocation Amount"). In the event that any
Purchaser shall sell or otherwise transfer any of such Purchaser's Preferred
Shares, the transferee shall be allocated a pro rata portion of such Purchaser's
Cap Allocation Amount. In the event that any holder of Preferred Shares shall
convert all of such holder's Preferred Shares into a number of shares of Common
Stock which, in the aggregate, is less than such holder's Cap Allocation Amount,
then the difference between such holder's Cap Allocation Amount and the number
of shares of Common Stock actually issued to such holder shall be allocated to
the respective Cap Allocation Amounts of the remaining holders of Preferred
Shares on a pro rata basis in proportion to the number of Preferred Shares then
held by each such holder. If at any time when a holder of Preferred Shares shall
deliver a Conversion Notice pursuant to Section 8(c) hereof the Corporation
shall be prohibited pursuant to the provisions of this Section 11 from issuing
all or any portion of the Conversion Shares issuable pursuant to such Conversion
Notice, then the Corporation shall pay in immediately available funds to the
holder within two (2) Business Days of the date of delivery of such Conversion
Notice, an amount in cash equal to the product of (x) the number of shares of
Common Stock which could not be issued by virtue of the limitations contained in
this Section 11 multiplied by (y) the average of the Closing Sale Prices of the
Common Stock on each of the five (5) trading days immediately preceding the date
of delivery of such Conversion Notice, and concurrent with, and subject to such
payment by the Corporation, the number of Preferred Shares held by such holder
shall be reduced on the books and records of the Corporation in accordance with
Section 8(c)(vi) by the number of Preferred Shares that were subject to the
Conversion Notice and could not be converted by virtue of the limitations of
this Section 11.
12. Lost or Stolen Certificates. Upon receipt by the Corporation
of evidence reasonably satisfactory to the Corporation of the loss, theft,
destruction or mutilation of any Preferred Stock Certificates representing the
Preferred Shares, and, in the case of loss, theft or destruction, of an
indemnification undertaking by the holder to the Corporation in customary form
and, in the case of mutilation, upon surrender and cancellation of the Preferred
Stock Certificate(s), the Corporation shall execute and deliver to the holder
new preferred stock certificate(s) of like tenor and date.
13. Reservation of Shares. The Corporation shall, so long as any
of the Preferred Shares are outstanding, take all action necessary to reserve
and keep available out of its
30
authorized and unissued Common Stock, solely for the purpose of effecting the
conversions of the Preferred Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all of the
Preferred Shares then outstanding (without regard to any limitations on
conversions) under the terms of this Certificate of Vote as then in effect. The
initial number of shares of Common Stock reserved for conversions of the
Preferred Shares and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Preferred Shares based on the number
of Preferred Shares held by each holder at the time of issuance of the Preferred
Shares or increase in the number of reserved shares, as the case may be. In the
event a holder shall sell or otherwise transfer any of such holder's Preferred
Shares, each transferee shall be allocated a pro rata portion of the number of
reserved shares of Common Stock reserved for such transferor. Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any
Preferred Shares shall be allocated to the remaining holders of Preferred
Shares, pro rata based on the number of Preferred Shares then held by such
holders.
14. No Impairment. The Corporation shall not, by amendment of its
Articles of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Preferred Shares set forth herein, but will at all times in
good faith assist in the carrying out of all terms and in the taking of all
action that may be necessary or appropriate in order to protect the rights of
the holders of then outstanding Preferred Shares against dilution or other
impairment. Without limiting the generality of the foregoing, the Corporation
(a) shall not increase the par value of any shares of stock receivable on the
conversion of Preferred Shares above the amount payable therefor on such
conversion and (b) shall take all action that may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of stock on the conversion of all Preferred Shares from
time to time outstanding.
15. Severability of Provisions. Whenever possible, each provision
of this Certificate of Vote shall be interpreted in 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.
16. Amendment, Waiver or Discharge. Except as otherwise expressly
provided herein, neither this Certificate of Vote nor any term hereof may be
amended, waived, modified, discharged or terminated without the written consent
or affirmative vote of the holders of not less than 51% of the Preferred Shares
then outstanding; provided, however, that no amendment, waiver or consent shall
(a) change or extend the Mandatory Redemption Date, the Redemption Price or the
Conversion Price applicable to any Preferred Shares, in each case without the
written consent of the holder of such Preferred Shares (b) amend, modify or
waive the conversion or redemption rights of any holder of Preferred Shares
without the written consent
31
of such holder or (c) amend, modify or waive this Section 16 without the written
consent of each holder of Preferred shares.
17. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Votes shall be
cumulative and in addition to all other remedies available under this
Certificate of Vote, at law or in equity (including a decree of specific
performance and/or other injunctive relief). No remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy.
Nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Corporation to comply with the terms of this Certificate of Vote.
The Corporation covenants to each holder of Preferred Shares that there shall be
no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Corporation (or the
performance thereof). The Corporation acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holders of the
Preferred Shares and that the remedy at law for any such breach may be
inadequate. The Corporation therefore agrees that, in the event of any such
breach or threatened breach, the holders of the Preferred Shares shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
18. Failure or Indulgence Not Waiver. No failure or delay on the
part of a holder of Preferred Shares in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
19. Notice. Whenever notice is required to be given under this
Certificate of Vote, unless otherwise provided herein, such notice shall be
given in accordance with Section 8 of the Purchase Agreement (provided that if
the Preferred Shares are not held by a Buyer (as defined in the Purchase
Agreement) then such notice shall be given to the holder of Preferred Shares at
the address set forth on the books and records of the Corporation.
20. Transfer of Preferred Shares. A holder of Preferred Shares
may assign some or all of the Preferred Shares and the accompanying rights
hereunder held by such holder without the consent of the Corporation; provided
that such assignment is in compliance with applicable securities laws and notice
of such assignment is delivered to the Corporation promptly thereafter.
21. Preferred Share Register. The Corporation shall maintain at
its principal executive offices (or such other office or agency of the
Corporation as it may designate by notice to the holders of the Preferred
Shares), a register for the Preferred Shares, in which the Corporation shall
record the name and address of the persons in whose name the Preferred Shares
have been issued, as well as the name and address of each transferee. The
Corporation may treat the person in whose name any Preferred Share is registered
on the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events recognizing any
properly made transfers.
32
EXHIBIT I
CLEAN HARBORS, INC. CONVERSION NOTICE
Reference is made to the Certificate of Vote of Directors Establishing
a Series of a Class of Stock describing the Preference and Rights of Series C
Convertible Preferred Stock of Clean Harbors, Inc. (the "Certificate of Vote").
In accordance with and pursuant to the Certificate of Vote, the undersigned
hereby elects to convert the number of shares of Series C Convertible Preferred
Stock, par value $0.01 per share (the "Preferred Shares"), of Clean Harbors,
Inc., a Massachusetts corporation (the "Corporation"), indicated below into
shares of Common Stock, par value $0.01 per share (the "Common Stock"), of the
Corporation, as of the date specified below.
Date of Conversion:___________________________________________________
Number of Preferred Shares to be converted:___________________________
Stock certificate no(s). of Preferred Shares to be converted:__________
Tax ID Number (If applicable):________________________________________
Please confirm the following information:_______________________________________
Conversion Price:_____________________________________________________
Number of shares of Common Stock to be issued:________________________
Please issue the Common Stock into which the Preferred Shares are
being converted and, if applicable, any check drawn on an account of the
Corporation in the following name and to the following address:
Issue to:_____________________________________________________________
_____________________________________________________________
Address:______________________________________________________________
Telephone Number:_____________________________________________________
Facsimile Number:_____________________________________________________
Authorization:________________________________________________________
By:____________________________
Title:_________________________
Dated:
Account Number (if electronic book entry transfer):___________________
Transaction Code Number (if electronic book entry transfer):__________
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[NOTE TO HOLDER -- THIS FORM MUST BE SENT CONCURRENTLY TO TRANSFER AGENT]
34
SIGNED UNDER THE PENALTIES OF PERJURY this 9th day of September, 2002
/s/ Stephen H. Moynihan /*Vice President,
- ---------------------------------------------------------------
/s/ C. Michael Malm / **Clerk /
- ------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETFS
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A SERIES OF A CLASS OF STOCK
(General Laws, Chapter 156B, Section 26)
I hereby approve the within Certificate of
Vote of Directors and, the filing fee in the
amount of $100.00 having been paid, said
certificate is deemed to have been filed
with me this 9th day of September, 2002
Effective date:_____________________________
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
C. Michael Malm, Esq.
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Davis Malm & D'Agostine, P.C.
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One Boston Place, 37th Floor
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Boston, MA 02108
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Telephone: 617-367-2500
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