EXHIBIT 4.2
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
LABORATORY CORPORATION OF AMERICA HOLDINGS
[ ]% SERIES B CONVERTIBLE PAY-IN-KIND PREFERRED STOCK
(Par Value $0.10 Per Share)
Pursuant to Section 151(g) of the
General Corporation Law of the
State of Delaware
[ ], 1997
TABLE OF CONTENTS
Page
----
Section 1. Designation..............................................1
Section 2. Ranking..................................................1
Section 3. Dividends................................................2
Section 4. Mandatory Redemption.....................................4
Section 5. Optional Redemption......................................5
Section 6. Procedure for Redemption.................................5
Section 7. Convertibility...........................................7
Section 8. Liquidation Rights......................................17
Section 9. Voting Rights...........................................18
Section 10. Registration, Transfer and Exchanges....................21
Section 11. Definitions.............................................21
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
[ ]% SERIES B CONVERTIBLE PAY-IN-KIND PREFERRED STOCK
OF
LABORATORY CORPORATION OF AMERICA HOLDINGS
The undersigned, Wesley R. Elingburg and Bradford T.
Smith, being respectively an Executive Vice President and the Secretary of
Laboratory Corporation of America Holdings, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), certify that, pursuant to the authority expressly granted
to and vested in the Board of Directors of the Corporation (the "Board of
Directors") by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), which authorizes the issuance, by the
Corporation, of up to 10,000,000 shares of preferred stock, par value $0.10
per share (the "Preferred Stock"), the Board of Directors in accordance
with the provisions of Section 151 of the General Corporation Law of the
State of Delaware on [ ], 1997 duly adopted the following resolutions:
RESOLVED, that pursuant to Article Fourth of the Certificate
of Incorporation of the Corporation and in accordance with the provisions
of Sections 141 and 151 of the General Corporation Law of the State of
Delaware, the Board of Directors hereby creates and provides for the
issuance of a series of Preferred Stock, par value $0.10 per share and with
a liquidation preference of $50.00 per share, of the Corporation and hereby
fixes the number, voting powers, designation, preferences, and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, and other matters relating to, said
series as follows:
Section 1. Designation. [ ] shares of the Preferred Stock of
the Corporation are hereby constituted as a series of Preferred Stock, par
value $0.10 per share, with a liquidation preference of $50.00 per share,
designated as "[ ]% Series B Convertible Pay-in-Kind Preferred Stock" (the
"Series B PIK Preferred Stock").
Section 2. Ranking. The Series B PIK Preferred Stock will
have priority as to dividends over the common stock, par value $0.01 per
share, of the Corporation ("Common Stock") and any other series or class of
the Corporation's stock issued after the date hereof that by its terms
ranks junior as to dividends to the Series B PIK Preferred Stock, when and
if issued ("Junior Dividend Stock") and priority as to distributions of
assets upon liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, over the Common Stock and any series or
class of the Corporation's stock issued after the date hereof that by its
terms ranks junior as to liquidation, dissolution and winding up to the
Series B PIK Preferred Stock, when and if issued ("Junior Liquidation
Stock") (the Common Stock and any other capital stock of the Corporation
that is both Junior Dividend Stock and Junior Liquidation Stock, "Junior
Stock"). The Series B PIK Preferred Stock will be junior as to dividends
to any series or class of the Corporation's stock issued after the date
hereof that by its terms ranks senior as to dividends to the Series B PIK
Preferred Stock, when and if issued ("Senior Dividend Stock") and junior as
to distributions of assets upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, to any series or class
of the Corporation's stock issued after the date hereof that by its terms
ranks senior as to liquidation, dissolution and winding up to the Series B
PIK Preferred Stock, when and if issued ("Senior Liquidation Stock" and
collectively with the Senior Dividend Stock, "Senior Stock"). The Series B
PIK Preferred Stock will have parity as to dividends with the [ ]% Series A
Convertible Exchangeable Preferred Stock, par value $0.10 per share (the
"Series A Exchangeable Preferred Stock") and any series or class of the
Corporation's stock issued after the date hereof that by its terms ranks on
a parity as to dividends with the Series B PIK Preferred Stock, when and if
issued ("Parity Dividend Stock") and parity as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, with the Series A Exchangeable Preferred Stock
and any series or class of the Corporation's stock issued after the date
hereof that by its terms ranks on a parity as to liquidation, dissolution
and winding up with the Series B PIK Preferred Stock, when and if issued
("Parity Liquidation Stock") (the Series A Exchangeable Preferred Stock,
the Parity Dividend Stock and the Parity Liquidation Stock, collectively,
"Parity Stock"). The Series B PIK Preferred Stock shall be subject to the
creation of Junior Stock. The Series B PIK Preferred Stock shall be
subject to the creation of Parity Stock and Senior Stock only if the
provisions of Section 9(d)(ii) have been complied with. The respective
definitions of Senior Dividend Stock, Senior Liquidation Stock, Junior
Dividend Stock, Junior Liquidation Stock, Parity Dividend Stock and Parity
Liquidation Stock shall also include any warrants, rights, calls or
options, exercisable for or convertible into any of the Senior Dividend
Stock, Senior Liquidation Stock, Junior Dividend Stock, Junior Liquidation
Stock, Parity Dividend Stock and Parity Liquidation Stock, as the case may
be.
Section 3. Dividends. (a) Each holder of a share of Series B
PIK Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds of the Corporation legally available
therefor, dividends at an annual rate of [ ]% of the Liquidation Preference
(as defined herein) of the Series B PIK Preferred Stock, or $[ ] per share
of Series B PIK Preferred Stock payable in shares of Series B PIK Preferred
Stock until ___, 2003 and cash thereafter. Such dividend shall be
cumulative and shall accrue (whether or not earned or declared, whether or
not there are funds legally available for the payment thereof and whether
or not restricted by the terms of any of the Corporation's indebtedness
outstanding at any time) from the date such shares are issued by the
Corporation and shall be payable quarterly in arrears on [ ], [ ], [ ] and
[ ] of each year (each a "Dividend Payment Date") commencing, [ ], 1997.
No interest will be payable in respect of any dividend payment on the
Series B PIK Preferred Stock which may be in arrears.
(b) The dividend payment period for any dividend payable on a Dividend
Payment Date shall be the period beginning on the immediately preceding
Dividend Payment Date (or on the issue date in the case of the first
dividend payment period) and ending on the day preceding such later
Dividend Payment Date. If any date on which a payment of a dividend or any
other amount is due in respect of Series B PIK Preferred Stock is not a
Business Day, such payment shall be made on the next day that is a Business
Day.
(c) The amount of dividends payable per share of Series B PIK Preferred
Stock for each dividend payment period will be computed by dividing the
annual dividend amount by four; provided, however, that the amount of
dividends payable for the first dividend payment period and for any
dividend payment period shorter than a full quarterly dividend period will
be computed on the basis of a 360-day year of twelve 30-day months. No
fractional shares of Series B PIK Preferred Stock will be issued, so that
the number of shares to be paid as a dividend shall be rounded to the
nearest whole number of shares. All dividends paid in additional shares of
Series B PIK Preferred Stock shall be deemed issued on the applicable
Dividend Payment Date and will thereupon be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all liens and
charges.
(d) Dividends payable on any Dividend Payment Date shall be payable to
the holders of record of the Series B PIK Preferred Stock as they appear on
the stock transfer books of the Corporation at the close of business on
such record dates as are fixed by the Board of Directors (provided that no
record date shall be later than (a) the sixth Business Day prior to the
date fixed for any redemption of the Series B PIK Preferred Stock or, (b)
in the case of the dividend payment date occurring on [ ], the tenth
Business Day prior to such date). Dividends paid on the shares of Series B
PIK Preferred Stock in an amount less than accumulated and unpaid dividends
payable therein shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding.
(e) If at any time the Corporation shall have failed to pay all
dividends which have accrued on any outstanding shares of Senior Dividend
Stock at the times such dividends are payable, unless otherwise provided in
the terms of the Senior Dividend Stock, no dividend shall be declared by
the Board of Directors or paid or set apart for payment by the Corporation
on shares of the Series B PIK Preferred Stock unless prior to or
concurrently with such declaration, payment or setting apart for payment,
all accrued and unpaid dividends on all outstanding shares of such Senior
Dividend Stock shall have been or be declared, paid or set apart for
payment.
(f) No dividends (other than dividends payable solely in Junior Stock)
shall be paid or declared and set apart for payment on any Junior Dividend
Stock, and no payment shall be made on account of the purchase, redemption,
retirement, or other acquisition of Junior Dividend Stock and Junior
Liquidation Stock (other than such acquisitions pursuant to employee or
director incentive or benefit plans or arrangements, or in exchange solely
for Junior Stock), unless all accrued and unpaid dividends on the Series B
PIK Preferred Stock for all dividend payment periods ending on or before
the date of payment of such dividends on Junior Dividend Stock, or such
payment for such Junior Divident Stock and Junior Liquidation Stock, shall
have been paid or declared and set apart for payment.
(g) Except as set forth in the second following sentence, no dividends
shall be paid or declared and set apart for payment on the Series B PIK
Preferred Stock unless all accrued and unpaid dividends for all dividend
payment periods through such Dividend Payment Date on any Parity Dividend
Stock, including the Series A Exchangeable Preferred Stock, have been paid
or declared and set apart for payment or are contemporaneously paid or
declared and set apart for payment. Except as set forth in the following
sentence, no dividends shall be paid or declared and set apart for payment
on any Parity Dividend Stock, including the Series A Exchangeable Preferred
Stock, unless all accrued and unpaid dividends for all dividend payment
periods through such Dividend Payment Date on the Series B PIK Preferred
Stock have been paid or declared and set apart for payment or are
contemporaneously paid or declared and set apart for payment. Whenever all
accrued and unpaid dividends have not been paid upon the Series B PIK
Preferred Stock or any other Parity Dividend Stock, including the Series A
Exchangeable Preferred Stock, for all dividend payment periods through such
Dividend Payment Date, all dividends paid or declared and set apart for
payment on the Series B PIK Preferred Stock or any other Parity Dividend
Stock, including the Series A Exchangeable Preferred Stock, shall be paid
or declared pro rata so that the amount of dividends declared and paid per
share on the Series B PIK Preferred Stock and such Parity Dividend Stock,
including the Series A Exchangeable Preferred Stock, will bear to each
other the same ratio that the accrued and unpaid dividends to the date of
payment, on the Series B PIK Preferred Stock and such Parity Dividend
Stock, including the Series A Exchangeable Preferred Stock, bear each
other.
(h) No payment shall be made on account of the purchase, redemption,
retirement or other acquisition of Parity Stock, including the Series A
Exchangeable Preferred Stock, (other than such acquisitions pursuant to
employee or director or incentive or benefit plans or arrangements, or in
exchange solely for Junior Stock) unless all accrued and unpaid dividends
on the Series B PIK Preferred Stock for all dividend payment periods ending
on or before such payment for such Parity Stock, including the Series A
Exchangeable Preferred Stock, shall have been paid or declared and set
apart for payment.
Section 4. Mandatory Redemption. All outstanding shares of
the Series B PIK Preferred Stock shall be mandatorily redeemed by the
Corporation out of funds legally available therefor on _________, 2012, at
a redemption price of $50.00 per share plus $50.00 per share for all
accrued and unpaid dividends, whether or not declared.
Section 5. Optional Redemption. (a) The shares of Series B PIK
Preferred Stock may be redeemed by the Corporation, at its option, in whole
or in part out of funds legally available therefor at any time on or after
[ ], 2000 and if redeemed during the 12-month period beginning [ ] of the
years indicated below, the cash redemption price per share shall be as set
forth below plus, in each case, $50.00 per share for all accrued and unpaid
dividends thereon to the date of redemption plus any cash payable in
respect of fractional shares in the form of accrued and unpaid dividends as
set forth herein or an amount equal to all accrued and unpaid dividends, as
the case may be (the "Optional Redemption Price"):
Optional
Year Redemption Price
---- ----------------
2000................................... [ ]%
2001................................... [ ]
2002................................... [ ]
2003................................... [ ]
2004................................... [ ]
2005................................... [ ]
2006 and thereafter.................... 100
(b) If fewer than all the outstanding shares of Series B PIK
Preferred Stock are to be redeemed pursuant to this Section 5, the
Corporation will select those shares to be redeemed pro rata or by lot or
in such other manner as the Board of Directors may determine to be fair and
reasonable; provided, however, that if at any time dividends on the Series
B PIK Preferred Stock are in arrears, the Corporation may not redeem less
than all of the then outstanding shares of Series B PIK Preferred Stock.
(c) No fractional shares of Series B PIK Preferred Stock will be
issued upon a redemption of less than all of the Series B PIK Preferred
Stock pursuant to this Section 5, but in lieu thereof, an appropriate
amount will be paid in cash based on the Closing Price for the Series B PIK
Preferred Stock on the date of such redemption.
Section 6. Procedure for Redemption. (a) In the event of
redemption of the Series B PIK Preferred Stock pursuant to Section 4, or an
offer by the Corporation to redeem any shares of Series B PIK Preferred Stock
pursuant to Section 5, notice of such redemption or offer to redeem shall be
given by hand or by nationally recognized "overnight courier" for delivery at
the earliest time offered by such overnight courier (which may not necessarily
be the next day) to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock transfer books of the
Corporation at least 30 but not more than 60 days before the date fixed for
redemption, provided, however, that no failure to give such notice nor any
defect therein shall affect the validity of the redemption of any share of
Series B PIK Preferred Stock to be redeemed except as to the holder to whom
the Corporation has failed to give said notice or except as to the holder
whose notice was defective. Each such notice shall state: the redemption
date; the number of shares of Series B PIK Preferred Stock to be redeemed
and, if less than all the shares held by such holder are to be redeemed, the
number of shares to be redeemed from such holder; the Optional Redemption
Price, if applicable; the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; the specific
provision hereof pursuant to which such redemption is to be made; and that
dividends on the shares to be redeemed will cease to accrue on such redemption
date. Each such notice shall be effective upon delivery if given by hand or
upon deposit with a nationally recognized overnight courier if given by such a
courier. Upon giving any notice of a redemption pursuant to Section 5(a), the
Corporation shall become obligated to redeem the shares of Series B PIK
Preferred Stock specified in such notice on the redemption date specified in
such notice.
(b) Notice having been given as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares
called for redemption), dividends on the shares of Series B PIK Preferred
Stock called for redemption shall cease to accrue, and such shares shall no
longer be deemed to be outstanding and shall have the status of authorized
but unissued shares of Series B PIK Preferred Stock, unclassified as to
series, and shall not be reissued as shares of Series B PIK Preferred
Stock, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the
redemption price without interest) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of
the Corporation shall so require and the notice shall so state), such share
shall be redeemed by the Corporation at the redemption price aforesaid;
provided, however, in the case of a redemption pursuant to Section 5(a) if
fewer than all the shares represented by any such certificate are to be
redeemed, upon surrender of such certificate a new certificate shall be
issued representing the unredeemed shares without cost to the holder
thereof.
(c) If a notice of redemption shall have been given, and if, prior
to the redemption date, the Corporation shall have irrevocably deposited
the aggregate redemption price of the shares of Series B PIK Preferred
Stock to be redeemed in trust for the pro rata benefit of the holders of
the shares of Series B PIK Preferred Stock to be redeemed, so as to be and
to continue to be available therefor, with a bank or trust company that is
organized under the laws of the United States of America or any state
thereof, has capital and surplus of not less than $250,000,000 and has, or,
if it has no publicly traded debt securities rated by a nationally
recognized rating agency, is the subsidiary of a bank holding company that
has, publicly traded debt securities rated at least "A" or the equivalent
thereof by Standard & Poor's Corporation or "A-2" or the equivalent by
Moody's Investor Service Inc., then upon making such deposit, all rights of
holders of the shares so called for redemption shall cease, except (i)
conversion rights, (ii) as otherwise ser forth herein and (iii) the right
of holders of such shares to receive the redemption price against delivery
of such shares, but without interest, and such shares shall cease to be
outstanding. Any funds so deposited that are unclaimed by holders of
shares at the end of three years from such redemption date shall be repaid
to the Corporation upon its request, after which repayment the holders of
shares of Series B PIK Preferred Stock so called for redemption shall
thereafter be entitled to look only to the Corporation for payment of the
redemption price.
Section 7. Convertibility. (a) Holders of shares of Series B
PIK Preferred Stock will have the right at any time on or after [ ], 2000,
at the holder's option, to convert any or all shares into fully paid and
nonassessable shares of Common Stock at the conversion rate (subject to
adjustment as described below) of [ ] shares of Common Stock for each share
of Series B PIK Preferred Stock. If the Series B PIK Preferred Stock is
called for redemption, the conversion right will terminate at 5:00 p.m.
New York City time on the Business Day prior to the date fixed for such
redemption and if not exercised prior to such time, such conversion right
will be lost, unless the Corporation defaults in making the payment due
upon redemption; provided, however, with respect to any redemption
occurring on [ ] or one business day thereafter, the conversion right will
terminate at 5:00 p.m. New York City time on the date fixed for
redemption. Following conversion, the holder will no longer have any right
to payment of dividends on the shares of Series B PIK Preferred Stock
surrendered for conversion.
(b) Any holder of shares of Series B PIK Preferred Stock desiring to
convert such shares into Common Stock shall surrender the certificate or
certificates evidencing such shares of Series B PIK Preferred Stock at the
office of the transfer agent for the Series B PIK Preferred Stock, which
certificate or certificates, if the Corporation shall so require, shall be
duly endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice to the Corporation that the holder elects so to
convert such shares of Series B PIK Preferred Stock and specifying the name
or names (with address or addresses) in which a certificate or certificates
evidencing shares of Common Stock are to be issued.
No payments or adjustments in respect of dividends on shares of
Series B PIK Preferred Stock surrendered for conversion or on account of any
dividend on the Common Stock issued upon conversion shall be made upon the
conversion of any shares of Series B PIK Preferred Stock; provided, however,
that:
(i) if a dividend record date fixed for the Series B PIK
Preferred Stock as established herein results in a holder who undertakes
conversion being eligible to receive on any Dividend Payment Date both a
dividend on the Series B PIK Preferred Stock and a dividend on the
Common Stock issued upon conversion thereof, then such holder shall be
entitled to receive only the higher of such dividend amounts; and
(ii) if the Corporation shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in Section 7(c)(iv)
or 7(c)(v) (including, without limitation, dividends or distributions
referred to in the last sentence of Section 7(c)(iv)), the holder of
each share of Series B PIK Preferred Stock, upon the conversion thereof
subsequent to the close of business on the date fixed for the
determination of shareholders entitled to receive such dividend or
distribution and prior to the effectiveness of the conversion price
adjustment in respect of such dividend or distribution, shall also be
entitled to receive for each share of Common Stock into which such share
of Series B PIK Preferred Stock is converted, the portion of the shares
of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that at the election of the Corporation
(whose election shall be evidenced by a resolution of the Board of
Directors) with respect to all holders so converting, the Corporation
may, in lieu of distributing to such holder any portion of such
distribution not consisting of cash or securities of the Corporation,
pay such holder an amount in cash equal to the fair market value thereof
(as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors).
The Corporation shall, as soon as practicable after such
deposit of certificates evidencing shares of Series B PIK Preferred Stock
accompanied by the written notice and compliance with any other conditions
herein contained, deliver at the office of such transfer agent to the person
for whose account such shares of Series B PIK Preferred Stock were so
surrendered, or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person
shall be entitled as aforesaid, together with a cash adjustment in respect of
any fraction of a share of Common Stock as hereinafter provided. Such
conversion shall be deemed to have been made as of the date of such surrender
of the shares of Series B PIK Preferred Stock to be converted, and the person
or persons entitled to receive the Common Stock deliverable upon conversion of
such Series B PIK Preferred Stock shall be treated for all purposes as the
record holder or holders of such Common Stock on such date.
(c) The conversion price at which a share of Series B PIK Preferred
Stock is convertible into Common Stock shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall
pay or make a dividend or other distribution on any other class or
series of capital stock of the Corporation which dividend or
distribution includes Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by:
A/(A + B), where:
A = the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination; and
B = the total number of shares of Common Stock constituting such
dividend or other distribution,
such reduction to become effective immediately after the opening of
business on the day following the date fixed for such
determination. For purposes of this subparagraph (i), the number
of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Corporation. The
Corporation shall not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue to all holders of its Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the Current Market Price Per
Share of the Common Stock on the date fixed for the determination of
shareholders entitled to receive such rights or warrants, the conversion
price in effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying such
conversion price by: (A + B)/(A + C), where:
A = the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination,
B = the number of shares of Common Stock which the aggregate of the
offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Current
Market Price Per Share, and
C = the number of additional shares of Common Stock so offered for
subscription or purchase,
such reduction to become effective immediately after the opening of
business on the day following the date fixed for such
determination.
In case any rights or warrants referred to in this subparagraph
(ii) in respect of which an adjustment shall have been made shall
expire unexercised [within 45 days after the shares] shall have
been distributed or issued by the Corporation the conversion price
shall be readjusted at the time of such expiration to the
conversion price that would have been in effect if no adjustment
had been made on account of the distribution or issuance of such
expired rights or warrants; provided that no such readjustment upon
expiration of such rights or warrants shall affect the number of
shares of Common Stock issued upon conversion of shares of Series
B PIK Preferred Stock prior to such readjustment.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and conversely, in case outstanding shares of
Common Stock shall be combined into a smaller number of shares of Common
Stock, the conversion price in effect at the opening of business on the
day following the day upon which such combination becomes effective
shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or
combination becomes effective.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness, shares of any class or series of capital stock, cash or
assets (including securities, but excluding any rights or warrants
referred to in subparagraph (ii) of this Section 7(c), any dividend or
distribution paid exclusively in cash and any dividend or distribution
referred to in subparagraph (i) of this Section 7(c)), the conversion
price shall be reduced so that the same shall equal the price determined
by multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
subparagraph (iv) by: (A - B)/A, where:
A = the Current Market Price Per Share of the Common Stock
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution (the
"Reference Date"), and
B = the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors), on the Reference
Date, of the portion of the evidence of indebtedness, shares of capital
stock, cash and assets so distributed applicable to one share of Common
Stock,
such reduction to become effective immediately prior to the
opening of business on the day following the Reference Date,
provided, however, that for purposes of this subparagraph (iv),
any dividend or distribution that includes shares of Common Stock
or rights or warrants to subscribe for or purchase shares of
Common Stock shall be deemed instead to be a dividend or
distribution of the evidences of indebtedness, cash, assets or
shares of capital stock other than such shares of Common Stock or
rights or warrants (making any further conversion price reduction
required by this subparagraph (iv)) immediately followed by a
dividend or distribution of such shares of Common Stock or such
rights or warrants (making any further conversion price reduction
required by subparagraph (i) or (ii) of this Section 7(c), except
the Reference Date of such dividend or distribution as defined in
this subparagraph (iv) shall be substituted as "the date fixed for
the determination of shareholders entitled to receive such
dividend or other distribution", "the date fixed for the
determination of shareholders entitled to receive such rights or
warrants" and "the date fixed for such determination" within the
meaning of subparagraph (i) and (ii) of this Section 7(c) and any
shares of Common Stock included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the
date fixed for such determination within the meaning of
subparagraph (i) of this Section 7(c)). If the Board of Directors
determines the fair market value of any distribution for purposes
of this subparagraph (iv) by reference to the actual or when
issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such
market over the same period used in computing the Current Market
Price Per Share of Common Stock.
(v) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in cash (excluding
cash that is part of the distribution referred to in (iv) above and, in
the case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the per share amount of the next preceding
quarterly cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in subparagraph (i),
(ii), (iii) and (iv) of this Section 7(c)), or all of such quarterly
cash dividend if the amount thereof per share amount of Common Stock
multiplied by four does not exceed [ %] of the Current Market Price Per
Share of the Common Stock on the Trading Day next preceding the date of
declaration of such dividend), the conversion price shall be reduced so
that the same shall equal the conversion price in effect immediately
prior to the effectiveness of the conversion price reduction
contemplated by this subparagraph (v) by: (A - B)/A, where:
A = the Current Market Price Per Share of the Common Stock
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution, and
B = the amount of cash so distributed and not excluded as
provided above applicable to one share of Common Stock,
such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for the
payment of such distribution.
(vi) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at least
1% in the conversion price; provided, however, that any adjustments
which by reason of this subparagraph (vi) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(vii) Whenever the conversion price is adjusted as herein
provided: the Corporation shall compute the adjusted conversion price and
shall prepare a certificate signed by the Chief Financial Officer of the
Corporation setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the transfer agent for the Series
B PIK Preferred Stock; and a notice stating that the conversion price has
been adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is required,
such notice shall be mailed by the Corporation to all record holders of
shares of Series B PIK Preferred Stock at their last addresses as they
shall appear upon the stock transfer books of the Corporation.
(viii) The Corporation from time to time may reduce the
conversion price by any amount for any period of time if the period is
at least twenty days, the reduction is irrevocable during the period and
the Board of Directors of the Corporation shall have made a
determination that such reduction would be in the best interest of the
Corporation, which determination shall be conclusive. Whenever the
conversion price is reduced pursuant to the preceding sentence, the
Corporation shall mail to holders of record of the Series B PIK
Preferred Stock a notice of the reduction at least fifteen days prior to
the date the reduced conversion price takes effect, and such notice
shall state the reduced conversion price and the period it will be in
effect.
(d) No fractional shares of Common Stock shall be issued upon
conversion of Series B PIK Preferred Stock. If more than one certificate
evidencing shares of Series B PIK Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares
issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Series B PIK Preferred Stock so surrendered.
Instead of any fractional share of Common Stock that would otherwise be
issuable to a holder upon conversion of any shares of Series B PIK
Preferred Stock, the Corporation shall pay a cash adjustment in respect of
such fractional share in an amount equal to the same fraction of the market
price per share of Common Stock (as determined by the Board of Directors or
in any manner prescribed by the Board of Directors, which, if available,
shall be the Closing Price (as defined herein) for the shares of Common
Stock, on the day of conversion.
(e) In the event that the Corporation shall be a party to any
transaction (including without limitation any recapitalization or
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination of the Common Stock), any
consolidation of the Corporation with, or merger of the corporation into,
any other person, any merger of another person into the Corporation (other
than a merger which does not result in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all of the
assets of the Corporation or any share exchange) pursuant to which the
Common Stock is converted into the right to receive other securities, cash
or other property, then lawful provisions shall be made as part of the
terms of such transaction whereby the holder of each share of Series B PIK
Preferred Stock then outstanding shall have the right thereafter to convert
such share only into in the case of any such transaction other than a
Common Stock Fundamental Change and subject to funds being legally
available for such purpose under applicable law at the time of such
conversion, the kind and amount of securities, cash and other property
receivable upon such transaction by a holder of the number of shares of
Common Stock into which such share of Series B PIK Preferred Stock might
have been converted immediately prior to such transaction, after giving
effect, in the case of any Non-Stock Fundamental Change, to any adjustment
in the conversion price required by the provisions of Section 7(h), and in
the case of a Common Stock Fundamental Change, common stock of the kind
received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions of
Section 7(h). The Corporation or the person formed by such consolidation
or resulting from such merger or which acquires such assets or which
acquires the Corporation's shares, as the case may be, shall make
provisions in its certificate or articles of incorporation or other
constituent document to establish such right. Such certificate or articles
of incorporation or other constituent document shall provide for
adjustments which, for events subsequent to the effective date of such
certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 7. The above provisions shall similarly apply
to successive transactions of the foregoing type.
(f) After [ ], the Corporation shall at all times reserve and keep
available, free from preemptive rights out of its authorized and unissued
stock, solely for the purpose of effecting the conversion of the Series B
PIK Preferred Stock, such number of shares of its Common Stock as shall
from time to time be sufficient to effect that conversion of all shares of
Series B PIK Preferred Stock from time to time outstanding in accordance
with their terms.
If any shares of Common Stock required to be reserved for
purposes of conversion of the Series B PIK Preferred Stock hereunder require
registration with or approval of any governmental authority under any Federal
or State law before such shares may be issued upon conversion, the Corporation
will in good faith and as expeditiously as possible endeavor to cause such
shares to be duly registered or approved as the case may be. If the Common
Stock is listed on the New York Stock Exchange or any other national
securities exchange or traded through the Nasdaq National Market, the
Corporation will, if permitted by the rules of such exchange or market, list
and keep listed on such exchange or make and keep eligible for trading on such
market (as the case may be), upon official notice of issuance, all shares of
Common Stock issuable upon conversion of the Series B PIK Preferred Stock;
provided, however, that such shares of Common Stock may be delisted from such
exchange or may cease to be eligible for trading through such market (as the
case may be) if, prior to or concurrent with such delisting or cessation of
eligibility for trading, the Corporation causes such shares of Common Stock to
be listed on or eligible for trading through any other national securities
exchange or on the Nasdaq National Market.
(g) In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash out of its
retained earnings other than any special or nonrecurring or other
extraordinary dividend or (2) declare or authorize a redemption or
repurchase of in excess of 10% of the then-outstanding shares of Common
Stock; or
(ii) the Corporation shall authorize the granting to all holders
of Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or series or of any other rights or
warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the Corporation
is a party and for which approval of any shareholders of the Corporation
shall be required, or of the sale or transfer of all or substantially
all of the assets of the Corporation or of any share exchange whereby
the Common Stock is converted into other securities, cash or other
property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Series B PIK Preferred Stock, and shall cause to be
mailed to the holders of record of the Series B PIK Preferred
Stock, at their last addresses as they shall appear upon the stock
transfer books of the Corporation, at least ten days prior to the
applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be
taken for the purpose of such dividend, distribution, redemption,
repurchase, rights or warrants or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up is expected to
become effective and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(h) Notwithstanding any other provision in this Section 7 to
the contrary, if any Fundamental Change occurs, then the conversion
price in effect will be adjusted immediately after such Fundamental
Change as described below. In addition, in the event of a Common Stock
Fundamental Change, each share of Series B PIK Preferred Stock shall be
convertible solely into common stock of the kind received by holders of
Common Stock as the result of such Common Stock Fundamental Change.
For purposes of calculating any adjustment to be made pursuant
to this Section 7(h) in the event of a Fundamental Change, immediately after
such Fundamental Change:
(i) In the case of a Non-Stock Fundamental Change, the
conversion price of the Series B PIK Preferred Stock shall thereupon
become the lower of the conversion price in effect immediately prior to
such Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to this Section 7, and the result of
A x $50/B, where:
A = the greater of the Applicable Price or the then applicable
Reference Market Price, and
B = (x) the then-current Optional Redemption Price per share of
Series B PIK Preferred Stock or (y) for any Non-Stock Fundamental Change
that occurs before the Series B PIK Preferred Stock becomes redeemable
by the Corporation pursuant to Section 5, the applicable price per share
set forth for the date of such Non-Stock Fundamental Change in the
following table:
After date of original issuance of Series B PIK Preferred Stock and on or
before [ ], 1998 ............................................... $
After [ ], 1998 and on or before [ ], 1999............ $
After [ ], 1998 and on or before [ ], 2000 ........... $
plus, in any case referred to in this clause (y), a similar amount for
all per share dividends on the Series B PIK Preferred Stock accrued and
unpaid thereon, whether or not declared, to but excluding the date of
such Non-Stock Fundamental Change plus any cash payable in respect of
fractional shares with respect to such accrued and unpaid dividends, as
set forth herein; and
(ii) In the case of a Common Stock Fundamental Change, the
conversion price of the Series B PIK Preferred Stock in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to this
Section 7, shall thereupon be adjusted by multiplying such conversion
price by a fraction of which the numerator shall be the Purchaser Stock
Price and the denominator shall be the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in
which 100% of the value of the consideration received by a holder of
Common Stock is common stock of the successor, acquiror or other third
party (and cash, if any, is paid with respect to any fractional
interests in such common stock resulting from such Common Stock
Fundamental Change) and all of the Common Stock shall have been
exchanged for, converted into or acquired for common stock (and cash
with respect to fractional interests) of the successor, acquiror or
other third party, the conversion price of the Series B PIK Preferred
Stock in effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by dividing such conversion price by
the number of shares of common stock of the successor, acquiror, or
other third party received by a holder of one share of Common Stock as
a result of such Common Stock Fundamental Change.
(i) Notwithstanding the foregoing provisions, the issuance of
any shares of Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the
Corporation and the investment of additional optional amounts in shares of
Common Stock under any such plan, and the issuance of any shares of Common
Stock or options or rights to purchase such shares pursuant to any employee
benefit plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date the Series B PIK Preferred Stock was first
designated shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Corporation to
which any of the adjustment provisions described above applies. There
shall also be no adjustment of the conversion price in case of the issuance
of any stock (or securities convertible into or exchangeable for stock) of
the Corporation except as specifically described in this Section 7. If any
action would require adjustment of the conversion price pursuant to more
than one of the provisions described above, only one adjustment shall be
made and such adjustment shall be the amount of adjustment which has the
highest absolute value to holders of Series B PIK Preferred Stock.
Section 8. Liquidation Rights. (a) In the case of the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, holders of outstanding shares of Series B PIK Preferred Stock
shall be entitled to receive a liquidation preference from the net assets
of the Corporation available for distribution to stockholders in an amount
in cash which for each such share shall equal $50 per share (the
"Liquidation Preference"), plus a similar amount for any accrued and unpaid
dividends to the payment date plus any cash payable in respect of
fractional shares with respect to such accrued and unpaid dividends, as set
forth herein, before any payment or distribution is made to the holders of
Common Stock or any other Junior Liquidation Stock, but the holders of the
shares of the Series B PIK Preferred Stock will not be entitled to receive
the liquidation preference of such shares until the liquidation preference
of any Senior Liquidation Stock has been paid in full.
(b) The holders of Series B PIK Preferred Stock and Parity Liquidation
Stock, including the Series A Exchangeable Preferred Stock, shall share
ratably in any liquidation, distribution or winding up of the Corporation
(after payment of the liquidation preference of the Senior Liquidation Stock)
in which the net assets or the proceeds thereof are not sufficient to pay in
full the aggregate of the amounts payable thereon, in the same ratio that the
respective amounts which would be payable on such distribution if the amounts
to which the holders of all the outstanding shares of Series B PIK Preferred
Stock and Parity Liquidation Stock, including the Series A Exchangeable
Preferred Stock, are entitled were paid in full, bear to each other. After
payment in full of the liquidation preference of the shares of the Series B
PIK Preferred Stock, the holders of such shares will not be entitled to any
further participation in any distribution of assets by the Corporation.
(c) Neither a consolidation nor merger of the Corporation with another
corporation nor a sale or transfer of all or substantially all of the
Corporation's property or assets will be considered a liquidation, dissolution
or winding up of the Corporation.
Section 9. Voting Rights. (a) The holders of shares of
Series B PIK Preferred Stock shall not be entitled to vote on any matter on
which the holders of any voting securities of the Corporation shall be
entitled to vote except as otherwise provided by this Section 9 or as
required by law from time to time. In exercising any such vote, each
outstanding share of Series B PIK Preferred Stock will be entitled to one
vote, excluding shares held by any entity controlled by the Corporation,
which shares shall have no voting rights.
(b) In the event that the Corporation shall have failed to pay
dividends on Series B PIK Preferred Stock or on any outstanding shares of
Parity Dividend Stock, including the Series A Exchangeable Preferred Stock,
in an aggregate amount equal to at least six quarterly dividends on such
shares (whether or not consecutive) (such failure, a "Dividend Non-
Payment"), the number of directors constituting the Board of Directors of
the Corporation, without further action, shall be increased by two and the
holders of the outstanding shares of Series B PIK Preferred Stock shall
have the right, voting separately as a class with the holders of Parity
Dividend Stock on which like voting rights have been conferred and are
exercisable, including the Series A Exchangeable Preferred Stock, to elect
such two additional members of the Board of Directors, at any annual
meeting of stockholders of the Corporation or by written consent pursuant
to Section 228 of the General Corporation Law of the State of Delaware, in
each case, who shall continue to serve so long as such dividends on the
Series B PIK Preferred Stock and Parity Dividend Stock, including the
Series A Exchangeable Preferred Stock, have not been paid. If and when all
such accrued and unpaid dividends on the Series B PIK Preferred Stock and
Parity Dividend Stock, including the Series A Exchangeable Preferred Stock,
have been paid or declared and set apart for payment, the holders of shares
of the Series B PIK Preferred Stock and Parity Dividend Stock, including
the Series A Exchangeable Preferred Stock, shall be divested of the special
voting rights provided by this Section 9, subject to revesting in the event
of every subsequent Dividend Non-Payment. Upon termination of such special
voting rights, the term of office of each director elected pursuant to this
Section 9 by the holders of shares of Series B PIK Preferred Stock and
Parity Dividend Stock, including the Series A Exchangeable Preferred Stock,
(a "Preferred Stock Director") shall terminate immediately and the number
of directors constituting the entire Board of Directors shall, without
further action, be reduced by two, subject always to the increase of the
number of directors pursuant to this Section 9 in the case of the future
right of the holders of Series B PIK Preferred Stock to elect Preferred
Stock Directors. Any Preferred Stock Director may be removed by, and shall
not be removed otherwise than by, the vote of the holders of record of a
majority of the outstanding shares of the Series B PIK Preferred Stock and
the Parity Dividend Stock, including the Series A Exchangeable Preferred
Stock, entitled to vote thereon present at a meeting called for such
purpose at which a quorum is present or by written consent pursuant to
Section 228 of the General Corporation Law of the State of Delaware. So
long as a Dividend Non-Payment shall continue, any vacancy in the office of
a Preferred Stock Director may be filled by vote of the holders of record
of a majority of the outstanding shares of the Series B PIK Preferred Stock
and the Parity Dividend Stock, including the Series A Exchangeable
Preferred Stock, entitled to vote thereon present at a meeting called for
such purpose at which a quorum is present or by written consent pursuant to
Section 228 of the General Corporation Law of the State of Delaware. As
long as a Dividend Non-Payment shall continue, holders of shares of the
Series B PIK Preferred Stock shall not, as such stockholders, be entitled
to vote on the election or removal of directors other than Preferred Stock
Directors, but shall not be divested of any other voting rights provided to
such stockholders by law or this Certificate of Designation with respect to
any other matter to be acted upon by the stockholders of the Corporation.
(c) At any meeting held for the purpose of electing directors at
which the holders of outstanding shares of Series B PIK Preferred Stock
shall have the right to elect directors as provided in this Section 9, the
presence, in person or by proxy, of the holders of at least a majority of
the then outstanding shares of Series B PIK Preferred Stock and the Parity
Dividend Stock, including the Series A Exchangeable Preferred Stock, on
which like voting rights have been conferred and are exercisable shall be
required and be sufficient to constitute a quorum of such class for the
election of directors by such class. At any such meeting or adjournment
thereof (i) the absence of a quorum of the holders of the Series B PIK
Preferred Stock and the Parity Dividend Stock, including the Series A
Exchangeable Preferred Stock, present in person or by proxy shall not
prevent the election of directors other than those to be elected by the
holders of the Series B PIK Preferred Stock and the Parity Dividend Stock,
including the Series A Exchangeable Preferred Stock, and the absence of a
quorum or quorums of the holders of any class or classes of any stock or
other securities of the Corporation other than the Series B PIK Preferred
Stock and the Parity Dividend Stock, including the Series A Exchangeable
Preferred Stock, shall not prevent the election of directors to be elected
by the holders of the Series B PIK Preferred Stock and the Parity Dividend
Stock, including the Series A Exchangeable Preferred Stock, and (ii) in the
absence of a quorum of the holders of any class of stock entitled to vote
for the election of directors, a majority of the holders present in person
or by proxy of such class shall have the power to adjourn the meeting for
the election of directors which the holders of such class are entitled to
elect, from time to time, without notice (except as required by law) other
than announcement at the meeting, until a quorum shall be present.
(d) So long as any shares of Series B PIK Preferred Stock remain
outstanding, the Corporation will not, without the affirmative vote or consent
of the holders of at least 66 (2)/(3)% of all shares of Series B PIK Preferred
Stock and Series A Exchangeable Preferred Stock and other Parity Stock, voting
separately as a one class:
(i) amend, alter or repeal (by merger or otherwise) any
provision of the Certificate of Incorporation or any terms or
provisions of this Certificate of Designation or the by-laws of the
Corporation so as to affect adversely the relative rights,
preferences, qualifications, limitations, or restrictions of the
Series B PIK Preferred Stock; or
(ii) authorize or issue, or increase the authorized or issued
amount of any Senior Dividend Stock, Senior Liquidation Stock or any
security convertible into such Senior Dividend Stock or such Senior
Liquidation Stock; or
(iii) effect any reclassification of the Series B PIK Preferred
Stock.
or, without the consent of the holders of a majority of Series
A Exchangeable Preferred Stock and Series B PIK Preferred Stock and other
Parity Stock, voting separately as one class authorize or issue, or increase
the authorized or issued amount of any additional class of Parity Stock or any
Security Convertible into such Parity Stock.
Section 10. Registration, Transfer and Exchanges. The
Corporation will keep with American Stock Transfer & Trust Company, the
registrar and transfer agent, a register in which the Corporation will provide
for the registration and transfer of shares of Series B PIK Preferred Stock.]
Any holder of shares of Series B PIK Preferred Stock may, at its option, in
person or by duly authorized attorney, surrender the certificate representing
the same for exchange at with American Stock Transfer & Trust Company, the
registrar and transfer agent, (duly endorsed or accompanied, if so required by
the Corporation, by a written instrument of transfer duly executed by such
holder or his or her duly authorized attorney), and, within a reasonable time
thereafter and without expense (other than transfer taxes, if any), receive in
exchange therefor one or more duly executed certificate or certificates dated
as of the date to which dividends have been paid on the shares of Series B PIK
Preferred Stock so surrendered, or if no dividend has yet been so paid, then
dated the date hereof, and registered in such name or names, all as may be
designated by such holder, for the same aggregate number of shares of Series B
PIK Preferred Stock as represented by the certificate or certificates so
surrendered. The Corporation covenants and agrees to take and cause to be
taken all action reasonably necessary to effect such registrations, transfers
and exchanges. Each share of Series B PIK Preferred Stock issued in exchange
for any share shall carry the same rights to unpaid dividends and redemption
payments which were carried by the share so exchanged, so that neither gain
nor loss of any such right shall result from any such transfer or exchange.
The Corporation and any agent of the Corporation may treat the
person in whose name any share of Series B PIK Preferred Stock is registered
as the owner of such share for the purpose of receiving payment of dividends,
and amounts payable on redemption and liquidation in respect of such share and
for all other purposes.
Section 11. Definitions. Unless the context or use indicates
another or different meaning or intent, as used herein, the following terms
shall have the following meanings, terms defined in the singular to have a
correlative meaning when used in the plural and vice versa:
"Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by the holder of one share of Common Stock and
(ii) in the event of any other Non-Stock Fundamental Change or any Common
Stock Fundamental Change, the average of the Closing Prices for the Common
Stock during the ten consecutive Trading Days prior to and including the
record date for the determination of the holders of Common Stock entitled to
receive cash, securities, property or other assets in connection with such
Non-Stock Fundamental Change or Common Stock Fundamental Change, or, if there
is no such record date, the date upon which the holders of the Common Stock
shall have the right to receive such cash, securities, property or other
assets, in each case, as adjusted in good faith by the Board of Directors or
the Corporation to appropriately reflect any of the events referred to in
clauses (i) through (v) of Section 7(c).
"Business Day" shall mean any day other than a Saturday, Sunday
or any day on which banking institutions are authorized to close in New York,
New York.
"Closing Price" of any security means on any day the last
reported sale price regular way on such day or in case no sale takes place on
such day, the average of the reported closing bid and asked prices regular way
in each case on the New York Stock Exchange, Inc. or, if the security is not
quoted on such system, on the principal national securities exchange or
quotation system on which such security is listed or admitted to trading or
quoted, or, if not listed or admitted to trading on any national securities
exchange or quotation system, the average of the closing bid and asked prices
in the over-the-counter market on such day as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange Member firm selected from time to time by the Board of
Directors for that purpose.
"Common Stock Fundamental Change" means any Fundamental Change
in which more than 50% of the value (as determined in good faith by the Board
of Directors of the Corporation) of the consideration received by holders of
Common Stock consists of common stock that for each of the ten consecutive
Trading Days referred to with respect to such Fundamental Change in the
definition of "Applicable Price" has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market, provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Corporation continues to exist after the occurrence of such Fundamental Change
and the outstanding shares of Series B PIK Preferred Stock continue to exist
as outstanding Series B PIK Preferred Stock, or (ii) not later than the
occurrence of such Fundamental Change, the outstanding shares of Series B PIK
Preferred Stock are converted into or exchanged for shares of preferred stock
of a corporation succeeding to the business of the Corporation, which
preferred stock has powers, preferences and relative, participating, optional
or other rights, and qualifications, limitations and restrictions,
substantially similar to those of the Series B PIK Preferred Stock.
"Current Market Price Per Share" shall mean, as to the Common
Stock on any date in question, the average of the daily Closing Prices for the
five consecutive Trading Days prior to and including the date in question;
provided, however, that:
(i) if the Ex Date for any event (other than the issuance or
distribution requiring such computation) that required an adjustment to
the conversion price pursuant to subparagraphs (i), (ii), (iii), (iv) or
(v) of Section 7(c) ("Other Event") occurs after the fifth Trading Day
prior to the day in question and prior to the Ex Date for the issuance
or distribution requiring such computation (the "Current Event"), the
Closing Price for each Trading Day prior to the Ex Date for such Other
Event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as
a result of such Other Event,
(ii) if the Ex Date for any Other Event occurs after the Ex Date
for the Current Event and on or prior to the date in question, the
Closing Price for each Trading Day on and after the Ex Date for such
Other Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the conversion price is so required
to be adjusted as a result of such Other Event,
(iii) if the Ex Date for any Other Event occurs on the Ex Date
for the Current Event, one of those events, as determined by the
Corporation, shall be deemed for purposed of clauses (i) and (ii) of
this proviso to have an Ex Date occurring prior to the Ex Date for the
other of those events, and
(iv) if the Ex Date for the Current Event is on or prior to the
date in question, then after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each
Trading Day on or after such Ex Date shall be adjusted by adding thereto
the amount of any cash and the fair market value on the date in question
(as determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of
paragraph (iv) or (v) of Section 7(c), whose determination shall be
conclusive and described in a resolution of the Board of Directors) of
the portion of the rights, warrants, evidences of indebtedness, shares
of capital stock or assets being distributed applicable to one share of
Common Stock.
"Ex Date" shall mean (i) when used with respect to any issuance
or distribution, means the first date on which the Common Stock trades regular
way on the relevant exchange or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or distribution
and (ii) when used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades regular
way on such exchange or in such market after the time at which such
subdivision or combination becomes effective.
"Fundamental Change" means the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) provided, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when substantially all of
the Common Stock of the Corporation shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive cash, securities,
property or other assets, but the adjustment shall be based upon the highest
weighted average per share consideration which a holder of Common Stock
could have received in such transactions or events as a result of which
more than 50% of the Common Stock of the Corporation shall have been
exchanged for, converted into, or acquired for or constitute solely the
right to receive cash, securities, property or other assets.
"Non-Stock Fundamental Change" means any Fundamental Change
other than a Common Stock Fundamental Change.
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive
Trading Days prior to and including the record date for the determination of
the holders of Common Stock entitled to receive such common stock, or if there
is no such record date, the date upon which the holders of the Common Stock
shall have the right to receive such common stock, in each case, as adjusted
in good faith by the Board of Directors to appropriately reflect any of the
events referred to in clauses (i) through (v) Section 7(c); provided, however,
that if no such Closing Prices exist, the Purchaser Stock Price shall be set
at a price determined in good faith by the Board of Directors of the
Corporation.
"Reference Market Price" shall mean $[ ] (which is an
amount equal to 66 2/3% of the reported last sale price for the Common Stock
on the New York Stock Exchange on [ ], 1997) and in the event of any
adjustment to the conversion price other than as a result of a Fundamental
Change, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the conversion price after giving effect to any
such adjustment shall always be the same ratio of $ to the initial
conversion price specified in the first sentence of Section 7.
"Trading Day" shall mean a day on which securities traded on
the national securities exchange or quotation system or in the
over-the-counter market used to determine the Closing Price.
IN WITNESS WHEREOF, LABORATORY CORPORATION OF AMERICA HOLDINGS
has caused this Certificate to be signed by one of its [ ] and to be
attested to by its Secretary, as of the ____ day of [ ] 1997.
LABORATORY CORPORATION
OF AMERICA HOLDINGS
By_____________________________
Name:
Title:
Attest_____________________________
Name: Bradford T. Smith
Title: Secretary