Exhibit 4.2
GENESIS HEALTH VENTURES, INC.
CERTIFICATE OF DESIGNATION OF SERIES I SENIOR
CONVERTIBLE EXCHANGEABLE PARTICIPATING
CUMULATIVE PREFERRED STOCK
Genesis Health Ventures, Inc. (hereinafter referred to as the
"Company"), a corporation organized and existing under the Pennsylvania Business
Corporation Law of 1988, as amended (the "Pennsylvania Law"), in accordance with
the provisions thereof, does HEREBY CERTIFY:
That, pursuant to authority expressly granted to and vested in the
Board of Directors of the Company (the "Board of Directors") by the provisions
of Article 6 of the Amended and Restated Articles of Incorporation of the
Company (the "Articles") and the provisions of Sections 1521 and 1522 of the
Pennsylvania Law, the Board of Directors hereby creates a series of the
Company's previously authorized preferred stock, par value $.01 per share (the
"Preferred Stock"), and determines the designation and number of shares which
constitute such series and the relative rights, preferences and limitations of
such series as follows:
SERIES I SENIOR CONVERTIBLE EXCHANGEABLE
PARTICIPATING CUMULATIVE PREFERRED STOCK
Section 1. Designation and Amount.
The shares of such series shall be designated as "Series I Senior
Convertible Exchangeable Participating Cumulative Preferred Stock" (the "Series
I Preferred Stock"), and the number of shares constituting the Series I
Preferred Stock shall be 17,631; provided, that the number of shares
constituting the Series I Preferred Stock shall be increased from time to time
as necessary for the issuance of additional shares of Series I Preferred Stock
as dividends upon the Company's Series H Senior Convertible Participating
Cumulative Preferred Stock (the "Series H Preferred Stock") in accordance with
the terms thereof. Capitalized terms used without previous definition herein are
defined in Section 10 hereof.
Section 2. Rank.
The Series I Preferred Stock shall, with respect to dividend rights and
rights on liquidation, winding-up and dissolution, rank senior to all classes of
common stock of the Company, each series of preferred stock of the Company
outstanding on the Issue Date and each other class of Capital Stock and series
of preferred stock of the Company hereafter created which does not expressly
provide that it ranks senior to or on a parity with the Series I Preferred Stock
as to dividend rights and rights on liquidation, winding-up and dissolution
(collectively, the "Junior Securities"). The Series I Preferred Stock shall,
with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank on a parity with the Series H Preferred Stock and each other
series of preferred stock of the Company hereafter created which expressly
provides that it ranks on a parity with the Series I Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution
(collectively, the "Parity Securities"); provided, that any such securities not
issued in accordance with Section 4(c) hereof shall be deemed to be
Series I Preferred Stock
Junior Securities. The Series I Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding-up and dissolution, rank junior to
each series of preferred stock of the Company hereafter created which expressly
provides that it ranks senior to the Series I Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution (collectively, the
"Senior Securities"); provided, that any such securities not issued in
accordance with Section 4(c) hereof shall be deemed to be Junior Securities.
Section 3. Dividends.
(a) The holders of shares of Series I Preferred Stock shall be entitled
to receive with respect to each share of Series I Preferred Stock, when, as and
if declared by the Board of Directors, out of the assets of the Company legally
available therefor, cumulative preferential dividends for each Dividend Period
in cash calculated based on the then effective Liquidation Preference per share
at the rate per annum equal to the greater of (i) the Common Equivalent Rate
with respect to such Dividend Period and (ii) the Accumulation Rate.
(b) Dividends shall be payable in arrears on each March 31, June 30,
September 30 and December 31, unless such day is not a Business Day, in which
event such dividends shall be payable on the next succeeding Business Day (each
such date being hereinafter referred to as a "Dividend Payment Date"),
commencing on the first Dividend Payment Date in respect of a share of Series I
Preferred Stock which is at least seven days after the issuance thereof. For
shares of Series I Preferred Stock issued on November 15, 1999 (the "Issue
Date"), the first dividend payment shall be for the period from and including
the Issue Date to but excluding the date of the first Dividend Payment Date, and
each dividend payment thereafter shall be for the period from and including the
most recent Dividend Payment Date to but excluding the first Dividend Payment
Date thereafter. For shares of Series I Preferred Stock issued subsequent to the
Issue Date, the first dividend payment shall be for the period from and
including the date of issuance thereof to but excluding the date of the first
Dividend Payment Date thereafter, and each dividend payment thereafter shall be
for the period from and including the most recent Dividend Payment Date to but
excluding the first Dividend Payment Date thereafter. Each quarterly period
beginning on January 1, April 1, July 1 and October 1 in each year and ending on
and including the day next preceding the first day of the next such quarterly
period shall be a "Dividend Period". The amount of dividends payable for each
full Dividend Period shall be computed by dividing the annual dividend rate by
four. Dividends (or amounts equal to accumulated and unpaid dividends) payable
on Series I Preferred Stock for any period less than a full quarterly Dividend
Period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed in any period less than one month. The
record date for determination of holders of Series I Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon shall be, with
respect to the dividend payable on March 31, June 30, September 30 and December
31 of each year, the preceding March 1, June 1, September 1 and December 1,
respectively, or such other record date as shall be fixed by the Board of
Directors which record date shall be no less than 30 and no more than 60
calendar days prior to the date fixed for the payment thereof. Dividends and
distributions shall be payable to
2
Series I Preferred Stock
holders of record as they shall appear on the records of the Company on the
applicable record date. Dividends on account of arrears for any particular
Dividend Period in which dividends were not paid on the applicable Dividend
Payment Date shall be added to the then effective Liquidation Preference on the
relevant Dividend Payment Date. Any amounts so added to the then effective
Liquidation Preference shall be subject to reduction as provided below in
Section 3(c).
(c) An amount equal to accumulated and unpaid dividends for any past
Dividend Period may be declared and paid as a dividend on any subsequent
Dividend Payment Date to all holders of record on the record date relating to
such subsequent Dividend Payment Date. Each such payment shall automatically
reduce the then effective Liquidation Preference per share by an amount equal to
the aggregate amount of such payment divided by the number of shares of Series I
Preferred Stock outstanding on the record date relating to such subsequent
Dividend Payment Date; provided, however, that the Liquidation Preference shall
not be reduced below $10,000 per share.
(d) Dividends on the Series I Preferred Stock will accumulate, whether
or not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared, on a daily basis. Dividends will
cease to accumulate in respect of Series I Preferred Stock on the date of the
conversion, redemption or exchange thereof.
(e) Dividends paid on the shares of Series I Preferred Stock in an
amount less than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding, and any remainder not paid as
provided above shall be added to the Liquidation Preference as provided above in
Section 3(b).
(f) As long as any Series I Preferred Stock is outstanding, no
dividends or other distributions (other than dividends or other distributions
payable in shares of, or warrants, rights or options exerciseable for or
convertible into shares of, Junior Securities and cash in lieu of fractional
shares of such Junior Securities in connection with any such dividends) will be
paid on any Junior Securities unless: (i) full cumulative dividends on all
outstanding shares of Parity Securities and full cumulative dividends
accumulating from and after the fifth anniversary of the Issue Date on all
outstanding shares of Series I Preferred Stock have been paid, or declared and
set aside for payment, for all Dividend Periods terminating on or prior to the
payment date of such dividend or distribution and for the current Dividend
Period; (ii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement and
sinking funds, if any, for any outstanding shares of Parity Securities; and
(iii) the Company is not in default of any of its obligations to redeem any
outstanding shares of Parity Securities or Series I Preferred Stock.
(g) As long as any Series I Preferred Stock is outstanding, no shares
of any Junior Securities may be purchased, redeemed or otherwise acquired by the
Company or any of its
3
Series I Preferred Stock
subsidiaries (except in connection with a reclassification or exchange of any
Junior Securities through the issuance of shares of, or warrants, rights or
options exerciseable for or convertible into shares of, other Junior Securities
(and cash in lieu of fractional shares of such Junior Securities in connection
therewith) or the purchase, redemption or other acquisition of any Junior
Securities with any shares of, or warrants, rights or options exerciseable for
or convertible into shares of, other Junior Securities (and cash in lieu of
fractional shares of such Junior Securities in connection therewith)), nor may
any funds be set aside or made available for any sinking fund for the purchase
or redemption of any Junior Securities.
(h) As long as any Series I Preferred Stock is outstanding, no
dividends or other distributions (other than dividends or other distributions
payable in shares of, or warrants, rights or options exercisable for or
convertible into shares of, Junior Securities and cash in lieu of fractional
shares of such Junior Securities in connection with any such dividends) will be
paid on any Parity Securities unless such dividends or other distributions are
declared and paid pro rata so that the amounts of any such dividends or other
distributions declared and paid per share on outstanding Series I Preferred
Stock and each other share of such Parity Securities will in all cases bear to
each other the same ratio that the then effective Liquidation Preference per
share of outstanding Series I Preferred Stock and the liquidation preference per
share of such other outstanding shares of Parity Securities bear to each other.
(i) As long as any Series I Preferred Stock is outstanding, no shares
of any Parity Securities may be purchased, redeemed or otherwise acquired by the
Company or any of its subsidiaries (except with shares of, or warrants, rights
or options exercisable for or convertible into shares of, Junior Securities and
cash in lieu of fractional shares of such Junior Securities in connection
therewith) unless the Series I Preferred Stock and such Parity Securities are
purchased, redeemed or otherwise acquired pro rata so that the Fair Market Value
of the consideration applied to the purchase, redemption or other acquisition of
each share of Series I Preferred Stock and each other share of such Parity
Securities will in all cases bear to each other the same ratio that the then
effective Liquidation Preference per share of outstanding Series I Preferred
Stock and the liquidation preference per share of such other outstanding shares
of Parity Securities bear to each other.
(j) Subject to the provisions described above, such dividends or other
distributions (payable in cash, property or Junior Securities) as may be
determined from time to time by the Board of Directors may be declared and paid
on the shares of any Junior Securities and/or Parity Securities and from time to
time Junior Securities and/or Parity Securities may be purchased, redeemed or
otherwise acquired by the Company or any of its subsidiaries. In the event of
the declaration and payment of any such dividends or other distributions, the
holders of such Junior Securities and/or Parity Securities, as the case may be,
will be entitled, to the exclusion of holders of any outstanding Series I
Preferred Stock, to share therein according to their respective interests.
Section 4. Voting Rights.
4
Series I Preferred Stock
(a) The holders of the Series I Preferred Stock shall have no voting
rights other than as set forth in this Section 4 or otherwise provided by law.
Holders of the Series I Preferred Stock shall be entitled to vote as a separate
class on matters as to which the Pennsylvania Law requires a separate class vote
of the Series I Preferred Stock and shall have such other voting rights as are
set forth in this Section 4.
(b) If and whenever at any time (i) the Company shall be in default of
any of its obligations to redeem any outstanding shares of Series I Preferred
Stock or (ii) dividends on shares of Series I Preferred Stock have not been paid
in full in cash for four consecutive fiscal quarters except to the extent that
the terms of the Company's then existing indebtedness under bank credit
facilities or Public Debt prohibits the payment of such dividends in cash,
thereafter and until, in the case of clause (i), the Company shall have
fulfilled its redemption obligations and, in the case of clause (ii), until all
accumulated and unpaid dividends payable in cash, whether or not declared, on
the outstanding shares of Series I Preferred Stock shall have been paid in full
in cash or declared and cash set apart for the payment thereof (except to the
extent that the terms of the Company's then existing indebtedness under bank
credit facilities or Public Debt prohibits the payment of such dividends in
cash), the number of directors then constituting the Board of Directors shall be
increased by two and the holders of shares of Series I Preferred Stock and, to
the extent that the Series H Preferred Stock is entitled to participate in the
election of additional directors pursuant to Section 4(b) of the Certificate of
Designations relating to the Series H Preferred Stock, Series H Preferred Stock,
voting as a single class, shall be entitled to elect the two additional
directors to serve on the Board of Directors by majority vote at any annual
meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series I Preferred Stock and Series H
Preferred Stock called as hereinafter provided. The remaining directors of the
Company shall be elected by the classes of stock entitled to vote therefor,
voting together, at each meeting of shareholders held for the purpose of
electing directors, all in accordance with the terms and procedures set forth in
the Company's Articles and By-Laws. At no time shall the holders of the Series I
Preferred Stock and Series H Preferred Stock be entitled to elect more than two
additional directors pursuant to this Section 4(b) and Section 4(b) of the
Certificate of Designations relating to the Series H Preferred Stock. Whenever,
in the case of clause (i), the Company shall have fulfilled its redemption
obligation and, in the case of clause (ii), all accumulated and unpaid dividends
payable in cash, whether or not declared, on the outstanding shares of Series I
Preferred Stock shall have been paid in full in cash or declared and cash set
apart for the payment thereof (except to the extent that the terms of the
Company's then existing indebtedness under bank credit facilities or Public Debt
prohibits the payment of such dividends in cash), then, subject to any right to
elect additional directors pursuant to Section 4(b) of the Certificate of
Designations relating to the Series H Preferred Stock, the right of the holders
of the Series I Preferred Stock and Series H Preferred Stock to elect such
additional directors pursuant to this Section 4(b) shall cease and the term of
office of any person elected as director by the holders of the Series I
Preferred Stock and Series H Preferred Stock shall forthwith terminate and the
number of directors comprising the Board of Directors shall be reduced
accordingly. At any time after voting power to elect a director shall have
become vested and be continuing in the holders of Series I Preferred Stock and
Series H
5
Series I Preferred Stock
Preferred Stock pursuant to this Section 4(b) or if a vacancy shall exist in the
office of a director elected by the holders of Series I Preferred Stock and
Series H Preferred Stock, a proper officer of the Company may, and upon the
written request of the holders of record of at least twenty-five percent (25%)
of the shares of Series I Preferred Stock and Series H Preferred Stock then
outstanding addressed to the Secretary of the Company shall, call a special
meeting of the holders of Series I Preferred Stock and Series H Preferred Stock,
for the purpose of electing the directors which such holders are entitled to
elect. If such meeting shall not be called by a proper officer of the Company
within twenty (20) days after personal service of written request upon the
Secretary of the Company, or within twenty (20) days after mailing the same
within the United States by certified mail, addressed to the Secretary of the
Company at its principal executive offices, then the holders of at least
twenty-five percent (25%) of the outstanding shares of Series I Preferred Stock
and Series H Preferred Stock may designate in writing one of their number to
call such meeting at the expense of the Company, and such meeting may be called
by the person so designated upon the notice required for the annual meeting of
stockholders of the Company and shall be held at the place for holding the
annual meetings of stockholders. Any holder of Series I Preferred Stock and
Series H Preferred Stock so designated shall have, and the Company shall
provide, access to the lists of stockholders to be called pursuant to the
provisions hereof.
(c) So long as any shares of Series I Preferred Stock are outstanding,
subject to the applicable provisions of the Pennsylvania Law, the Company shall
not, without consent of the holders of at least a majority of the number of
shares of Series I Preferred Stock and Series H Preferred Stock at the time
outstanding, voting as a class given in person or by proxy, either in writing or
by vote at a special meeting called for the purpose:
(i) increase the number of shares of authorized Series I
Preferred Stock or Series H Preferred Stock or issue any additional
shares of Series I Preferred Stock or Series H Preferred Stock, other
than as contemplated by the terms of the Series I Preferred Stock or
the Series H Preferred Stock;
(ii) amend or modify the relative rights, preferences and
limitations of the Series I Preferred Stock or Series H Preferred Stock
or amend, alter or repeal any of the provisions of the Company's
Articles or By-Laws (including by merger or similar transaction or
otherwise) so as to eliminate the Series I Preferred Stock or Series H
Preferred Stock or otherwise affect adversely the relative rights,
preferences and limitations of the Series I Preferred Stock or Series H
Preferred Stock;
(iii) other than the Series I Preferred Stock and the Series H
Preferred Stock, create, authorize, issue or permit to exist any class
of Capital Stock or series of preferred stock that ranks senior to or
on a parity with the Series I Preferred Stock (other than preferred
stock with an aggregate liquidation preference and accumulated and
unpaid dividends not exceeding $75 million at any time outstanding
ranking on a parity with the Series I Preferred Stock with respect to
dividend rights and rights on liquidation, winding-up and dissolution)
with respect to dividend rights and/or rights on liquidation,
6
Series I Preferred Stock
winding-up or dissolution, or reclassify any class or series of any
Junior Securities into, or authorize any securities exchangeable for,
convertible into or evidencing the right to purchase any such class or
series; or
(iv) enter into any transaction or series of transactions
which would constitute a Change of Control (as defined below) or engage
in any transaction pursuant to Rule 13e-3 under the Securities Exchange
Act of 1934, as amended, except in a transaction in which each share of
Series I Preferred Stock is converted into or exchanged for the right
to receive cash consideration in an amount that is at least equal to
the greater of (x) 101% of the then effective Liquidation Preference
plus accumulated and unpaid dividends from and including the most
recent Dividend Payment Date and (y) the Fair Market Value of the
consideration the holder of such share of Series I Preferred Stock
would be entitled to receive in respect of such share if such holder
were to convert such share into the Company's Non-Voting Common Stock
as provided in Section 6 immediately prior to the effective time of the
transaction. For purposes of this clause (iv), a "Change of Control"
shall occur at any time that (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), in a
single transaction or through a series of related transactions, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) (but not including, for purposes of
this clause (i), TPG, Cypress and any investment funds under common
control with TPG or Cypress, individually or in the aggregate),
directly or indirectly, of more than 50% of the total Voting Stock of
the Company; (ii) the Company consolidates or merges with or into
another corporation or conveys, transfers or leases all or
substantially all of its assets to any Person, or any corporation
consolidates or mergers with or into the Company, in any such event
pursuant to a transaction in which the outstanding Voting Stock of the
Company is changed into or exchanged for cash, securities not issued in
violation of Section 4(c) or other property, other than any such
transaction where (A) the outstanding Voting Stock of the Company is
changed into or exchanged for (x) Voting Stock of the surviving
corporation which is not Redeemable Capital Stock or (y) cash,
securities or other property in an amount which, if there is Public
Debt outstanding at the time of such transaction, could be paid under
the terms of such Public Debt and (B) the holders of the Voting Stock
of the Company immediately prior to such transaction own, directly or
indirectly, not less than 50% of the Voting Stock of the surviving
corporation immediately after such transaction; (iii) during any period
of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the stockholders of the Company was approved
by a vote of at least 662/3% of the directors then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Company then in office; or (iv) the Company is liquidated or dissolved
or adopts a plan of liquidation.
7
Series I Preferred Stock
Section 5. Redemption.
(a) The Series I Preferred Stock shall not be redeemable except as
provided in this Section 5. At any time on or after the twelfth anniversary of
the Issue Date, the Series I Preferred Stock shall, to the extent that the
Company shall have funds legally available therefore, be redeemable in whole or
in part at the option of the holders of the Series I Preferred Stock at a
redemption price per share in cash equal to the then effective Liquidation
Preference plus accumulated and unpaid dividends for the period from and
including the most recent Dividend Payment Date through and including the date
of redemption.
(b) If any holder of Series I Preferred Stock desires to exercise such
holder's redemption right pursuant to Section 5(a) hereof, such holder shall
give written notice to the Company stating such holder's election and specifying
the number of shares to be redeemed pursuant to Section 5(a) hereof. Within 10
days after the receipt of such notice, the Company shall give written notice
(the "Redemption Notice") to such holder, by first-class mail, postage prepaid,
at such holder's address as it appears on the records of the Company,
(i) notifying such holder of the date fixed for redemption
(which shall not be later than 30 days after the receipt by the Company
of the Redemption Notice);
(ii) stating that the Series I Preferred Stock may be
converted until the close of business on the Business Day prior to the
date of redemption by surrendering to the Company or its transfer agent
for the Series I Preferred Stock the certificate or certificates for
the shares to be converted, accompanied by written notice specifying
the number of shares to be converted, and stating the name and address
of the transfer agent for the Series I Preferred Stock, if any;
(iii) stating the place or places at which the shares called
for redemption shall, upon presentation and surrender of the
certificates evidencing such shares, be redeemed, and the redemption
price to be paid therefor;
(iv) stating that dividends shall cease to accumulate on the
date of redemption unless the Company defaults in the payment of the
redemption price; and
(v) stating the name and address of the Redemption Agent.
(c) The Company shall appoint one or more Redemption Agents. All funds
necessary for redemption shall be deposited with the Redemption Agent in trust
at least two Business Days prior to the date fixed for redemption, for the pro
rata benefit of the holders of the Series I Preferred Stock entitled thereto, so
as to be and continue to be available therefor.
(d) If a Redemption Notice shall have been given as hereinbefore
provided, then each holder of Series I Preferred Stock shall be entitled to all
relative rights, preferences and
8
Series I Preferred Stock
limitations accorded to holders of the Series I Preferred Stock until and
including the date of redemption. Provided that the Company shall have complied
with its obligations pursuant to Sections 5(b) and 5(c), from and after the date
of redemption, Series I Preferred Stock shall no longer be deemed to be
outstanding, and all rights of the holders of such shares shall cease and
terminate, except the right of the holders of such shares, upon surrender of
certificates therefor, to receive amounts to be paid hereunder. Upon redemption
of only a portion of the number of shares covered by a certificate representing
shares of Series I Preferred Stock surrendered for redemption, the Company shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for redemption, at the expense of the Company, a new certificate
covering the number of shares of Series I Preferred Stock as to which redemption
was not elected.
(e) The deposit of monies in trust with the Redemption Agent shall be
irrevocable except that the Company shall be entitled to receive from the
Redemption Agent the interest or other earnings, if any, earned on any monies so
deposited in trust, and the holders of the shares redeemed shall have no claim
to such interest or other earnings, and any balance of monies so deposited by
the Company and unclaimed by the holders of the Series I Preferred Stock
entitled thereto at the expiration of two years from the date of redemption
shall be repaid, together with any interest or other earnings thereon, to the
Company, and after any such repayment, the holders of the shares entitled to the
funds so repaid to the Company shall look only to the Company for such payment,
without interest.
Section 6. Conversion Rights.
(a) Subject to and upon compliance with the provisions of this Section
6, the holder of any share of Series I Preferred Stock shall have the right at
such holder's option to convert such share of Series I Preferred Stock into
fully paid and nonassessable shares of Non-Voting Common Stock, in each case, at
the Conversion Price in effect on the date of conversion. The right to convert
any shares of Series I Preferred Stock as to which a Redemption Notice or an
Exchange Notice has been delivered shall terminate at the close of business on
the Business Day prior to the date fixed for redemption or exchange, as the case
may be.
(b) Each share of Series I Preferred Stock shall be converted into a
number of shares of Non-Voting Common Stock determined by dividing (i) the sum
of the Liquidation Preference on the date of conversion plus accumulated and
unpaid dividends for the period from and including the most recent Dividend
Payment Date through and including the date of conversion by (ii) the Conversion
Price in effect on the date of conversion.
(c) The holder of any shares of Series I Preferred Stock may exercise
the conversion right specified in Section 6(a) by surrendering to the Company or
its transfer agent for the Series I Preferred Stock the certificate or
certificates for the shares to be converted, accompanied by written notice
specifying the number of shares to be converted. Conversion shall be deemed to
have been effected on the date when delivery of notice of an election to convert
and certificates
9
Series I Preferred Stock
for shares are received by the Company. Subject to the provisions of Section
6(f)(vii), as promptly as practicable thereafter, the Company shall issue and
deliver to or upon the written order of such holder a certificate or
certificates for the number of full shares of Non-Voting Common Stock to which
such holder is entitled and a check or cash with respect to any fractional
interest in a share of Non-Voting Common Stock, as provided in Section 6(e).
(d) Subject to the provisions of Section 6(f)(vii), the person in whose
name the certificate or certificates for Non-Voting Common Stock are to be
issued shall be deemed to have become a holder of record of such Non-Voting
Common Stock immediately prior to the close of business on the date of
conversion. Upon conversion of only a portion of the number of shares covered by
a certificate representing shares of Series I Preferred Stock surrendered for
conversion, the Company shall issue and deliver to or upon the written order of
the holder of the certificate so surrendered for conversion, at the expense of
the Company, a new certificate covering the number of shares of Series I
Preferred Stock representing the unconverted portion of the certificate so
surrendered.
(e) No fractional shares of Non-Voting Common Stock shall be issued
upon conversion of shares of Series I Preferred Stock. If more than one share of
Series I Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of NonVoting Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares of Series I Preferred Stock so surrendered. Instead of any fractional
shares of Non-Voting Common Stock that would otherwise be issuable upon
conversion of any shares of Series I Preferred Stock, the Company shall pay a
cash adjustment in respect of such fractional interest in an amount equal to
that fractional interest of a share multiplied by the Market Value of the Voting
Common Stock.
(f) The Conversion Price shall be subject to adjustment from time to
time as follows.
(i) Common Stock Issued at Less Than the Market Value. If the
Company shall issue any Common Stock, other than Excluded Stock or Common Stock
issued in an Excluded Transaction, without consideration or for a consideration
per share less than the Market Value immediately prior to such issuance, the
Conversion Price in effect immediately prior to each such issuance shall
immediately (except as provided below) be reduced to the price determined by
multiplying the Conversion Price in effect immediately prior to such issuance by
a fraction (A) the numerator of which is the sum of (1) the number of shares of
Voting Common Stock and Non-Voting Common Stock outstanding immediately prior to
such issuance and (2) the number of shares of Voting Common Stock and Non-Voting
Common Stock that the aggregate consideration, if any, received by the Company
upon such issuance, would purchase at such Market Value and (B) the denominator
of which is the total number of shares of Voting Common Stock and Non-Voting
Common Stock outstanding immediately after such issuance.
For the purposes of any adjustment of the Conversion
Price pursuant to clause (i), the following provisions shall
be applicable.
10
Series I Preferred Stock
(A) Cash. In the case of the issuance of
Common Stock for cash, the amount of the consideration
received by the Company shall be deemed to be the amount of
the cash proceeds received by the Company for such Common
Stock before deducting therefrom any discounts, commissions,
taxes or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with
the issuance and sale thereof.
(B) Consideration Other Than Cash. In the
case of the issuance of Non-Voting Common Stock (otherwise
than upon the conversion of shares of Capital Stock or other
securities of the Company) for a consideration in whole or in
part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be
deemed to be the Fair Market Value thereof, irrespective of
any accounting treatment.
(C) Options and Convertible Securities. In
the case of the issuance of (x) options, warrants or other
rights to purchase or acquire Common Stock (whether or not at
the time exercisable) (but any adjustment pursuant to this
provision shall be made only to the extent any adjustment
shall not have been made pursuant to Section 6(f)(iv)(D)), (y)
securities by their terms convertible into or exchangeable for
Common Stock (whether or not at the time so convertible or
exchangeable) or (z) options, warrants or rights to purchase
such convertible or exchangeable securities (whether or not at
the time exercisable),
(1) the aggregate maximum number of
shares of Common Stock deliverable upon exercise of such
options, warrants or other rights to purchase or acquire
Common Stock shall be deemed to have been issued at the time
such options, warrants or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subclauses (A) and (B) above), if any,
received by the Company upon the issuance of such options,
warrants or rights plus the minimum purchase price provided in
such options, warrants or rights for the shares of Common
Stock covered thereby,
(2) the aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable securities,
or upon the exercise of options, warrants or other rights to
purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof,
shall be deemed to have been issued at the time such
convertible or exchangeable securities were issued or such
options, warrants or rights were issued and for a
consideration equal to the consideration, if any, received by
the Company for any such convertible or exchangeable
securities or options, warrants or rights (excluding any cash
received on account of accumulated interest or accumulated
dividends), plus the
11
Series I Preferred Stock
additional consideration (determined in the manner provided in
subclauses (A) and (B) above), if any, to be received by the
Company upon the conversion or exchange of such securities, or
upon the exercise of any related options, warrants or rights
to purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof,
(3) on any change in the number of
shares of Common Stock deliverable upon exercise of any such
options, warrants or rights or conversion or exchange of such
convertible or exchangeable securities or any change in the
consideration to be received by the Company upon such
exercise, conversion or exchange (but excluding any change
resulting solely from the operation of the anti-dilution
provisions thereof if, and only if, such anti-dilution
provisions would not require an adjustment to the exercise
price or conversion price thereof in the event of any change
to the Conversion Price pursuant to the provisions of this
Section 6), the Conversion Price as then in effect shall
forthwith be readjusted to such Conversion Price as would have
been obtained had an adjustment been made upon the issuance of
such options, warrants or rights not exercised prior to such
change, or of such convertible or exchangeable securities not
converted or exchanged prior to such change, upon the basis of
such change,
(4) on the expiration or
cancellation of any such options, warrants or rights that are
unexercised, or the termination of the right to convert or
exchange such convertible or exchangeable securities, if the
Conversion Price shall have been adjusted upon the issuance
thereof, the Conversion Price shall forthwith be readjusted to
such Conversion Price as would have been obtained had an
adjustment been made upon the issuance of such options,
warrants, rights or such convertible or exchangeable
securities on the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of
such options, warrants or rights, or upon the conversion or
exchange of such convertible or exchangeable securities and
(5) if the Conversion Price shall
have been adjusted upon the issuance of any such options,
warrants, rights or convertible or exchangeable securities no
further adjustment of the Conversion Price shall be made for
the actual issuance of Common Stock upon the exercise,
conversion or exchange thereof.
(ii) Excluded Stock. All shares of Excluded Stock which the
Company has reserved for issuance shall be deemed to be outstanding for all
purposes of computations under Section 6(f)(i).
(iii) Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Company shall (A) declare a dividend or make a distribution
on its Common Stock in shares of
12
Series I Preferred Stock
its Common Stock, (B) subdivide, split or reclassify (by merger, consolidation
or otherwise) the outstanding shares of Common Stock into a greater number of
shares, (C) combine or reclassify (by merger, consolidation or otherwise) the
outstanding Common Stock into a smaller number of shares or (D) issue any shares
of its Common Stock in a reclassification (by merger, consolidation or
otherwise), the Conversion Price in effect at the time of the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
holder of any shares of Series I Preferred Stock surrendered for conversion
after such date shall be entitled to receive the number of shares of Common
Stock which such holder would have owned or been entitled to receive had such
Series I Preferred Stock been converted immediately prior to such date.
Successive adjustments in the Conversion Price shall be made whenever any event
specified above shall occur.
(iv) Other Distributions. In case the Company shall fix a
record date for the making of a distribution to all holders of shares of its
Common Stock (A) of shares of any class other than its Common Stock or (B) of
evidence of indebtedness of the Company or any subsidiary or (C) of assets or
other property, including but not limited to, securities issued by subsidiaries
or others (excluding regular cash dividends, and dividends or distributions
referred to in Section 6(f)(iii) above), or (D) of options, warrants or other
rights, in each such case the Conversion Price in effect immediately prior
thereto shall be reduced immediately thereafter to the price determined by
dividing (1) an amount equal to the difference resulting from (A) the sum of (i)
the number of shares of Non-Voting Common Stock outstanding on such record date
multiplied by the Conversion Price per share on such record date and (ii) the
number of shares of Voting Common Stock outstanding on such record date
multiplied by the Conversion Price (determined in accordance with and pursuant
to the Certificate of Designations of Series H Preferred Stock) per share on
such record date, less (B) the Fair Market Value of such shares or evidences of
indebtedness or assets or rights or warrants to be so distributed, by (2) the
number of shares of Voting Common Stock and Non-Voting Common Stock outstanding
on such record date. Such adjustment shall be made successively whenever such a
record date is fixed. In the event that such distribution is not so made, the
Conversion Price then in effect shall be readjusted, effective as of the date
when the Board of Directors determines not to distribute such shares, evidences
of indebtedness, assets, property, options, rights or warrants, as the case may
be, to the Conversion Price which would then be in effect if such record date
had not been fixed. Rights (including, without limitation, those to be issued
pursuant to, and in accordance with, the Rights Agreement, dated as of April 20,
1995, between the Company and Mellon Securities Trust Company, as Rights Agent)
issued by the Company to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase Equity Securities, which rights (x) are
deemed to be transferred with such shares of Common Stock, (y) are not
exercisable and (z) are also issued in respect of future issuances of Common
Stock, including shares of Common Stock issued upon conversion of the Series I
Preferred Stock, in each case in clauses (x) through (z) until the occurrence of
a specified event or events (a "Trigger Event"), shall for purposes of this
paragraph not be deemed issued until the occurrence of the earliest Trigger
Event.
13
Series I Preferred Stock
(v) Consolidation, Merger, Sale, Lease or Conveyance. In case
of any consolidation or merger of the Company with or into another corporation
or entity, or in case of any sale, lease or conveyance to another corporation or
entity of the assets of the Company as an entirety or substantially as an
entirety, each share of Series I Preferred Stock shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into the number
of shares of stock or other securities or property (including cash) to which the
Non-Voting Common Stock issuable (immediately prior to the time of such
consolidation, merger, sale, lease or conveyance) upon conversion of such share
of Series I Preferred Stock would have been entitled upon such consolidation,
merger, sale, lease or conveyance, and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the holders of the shares of Series I Preferred Stock shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be possible, to any
shares of stock or other securities or property thereafter deliverable on the
conversion of the shares of Series I Preferred Stock.
(vi) Rounding of Calculations. All calculations under this
subparagraph (f) shall be made to the nearest cent or to the nearest one ten
thousandth of a share, as the case may be.
(vii) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of this subparagraph
(f) shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (A) issuing to the holder of any share of Series I Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of a fractional share of Common
Stock, provided, that the Company, upon request, shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.
(g) Statement Regarding Adjustments. Whenever the Conversion Price
shall be adjusted, the Company shall forthwith file, at the office of the
transfer agent for the Series I Preferred Stock, if any, and at the principal
office of the Company, a statement showing in detail the facts requiring such
adjustment and the Conversion Price that shall be in effect after such
adjustment, and the Company shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each holder of shares of Series I
Preferred Stock at its address appearing on the Company's records.
(h) Notice to Holders. In the event the Company shall propose to take
any action of the type described in clause (i) (but only if the action of the
type described in clause (i) would result in an adjustment in the Conversion
Price), (iii), (iv) or (v) of Section 6(f), the Company shall give notice to
each holder of shares of Series I Preferred Stock, in the manner set forth in
14
Series I Preferred Stock
subparagraph 6(g), which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable upon conversion of shares of Series I Preferred
Stock. In the case of any action which would require the fixing of a record
date, such notice shall be given at least ten days prior to the date so fixed,
and in case of all other action, such notice shall be given at least fifteen
days prior to the taking of such proposed action. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any such
action.
(i) Treasury Stock. For the purposes of this paragraph 6, the sale or
other disposition of any Common Stock theretofore held in the Company's treasury
shall be deemed to be an issuance thereof.
(j) Costs. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of shares of
Non-Voting Common Stock upon conversion of any shares of Series I Preferred
Stock, provided that the Company shall not be required to pay any taxes which
may be payable in respect of any transfer involved in the issuance or delivery
of any certificate for such shares in a name other than that of the holder of
the shares of Series I Preferred Stock in respect of which such shares are being
issued.
(k) Reservation of Shares. The Company shall reserve at all times so
long as any shares of Series I Preferred Stock remain outstanding, free from
preemptive rights, out of its treasury stock (if applicable) or its authorized
but unissued shares, or both, solely for the purpose of effecting the conversion
of the shares of Series I Preferred Stock, sufficient shares of Non-Voting
Common Stock to provide for the conversion of all outstanding shares of Series I
Preferred Stock.
(l) Approvals. If any shares of Non-Voting Common Stock to be reserved
for the purpose of conversion of shares of Series I Preferred Stock require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly issued or delivered upon conversion,
then the Company will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be. If, and so long as,
any Non-Voting Common Stock into which the shares of Series I Preferred Stock
are then convertible is listed on any national securities exchange, the Company
will, if permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of such Non-Voting Common
Stock issuable upon conversion.
(m) Valid Issuance. All shares of Non-Voting Common Stock which may be
issued upon conversion of the shares of Series I Preferred Stock will upon
issuance by the Company be duly and validly issued, fully paid and
nonassessable, not issued in violation of any preemptive rights arising under
law or contract and free from all taxes, liens and charges with respect to the
15
Series I Preferred Stock
issuance thereof, and the Company shall take no action which will cause a
contrary result (including without limitation, any action which would cause the
Conversion Price to be less than the par value, if any, of the Non-Voting Common
Stock).
Section 7. Liquidation Preference.
(a) In the event of the liquidation, winding-up or dissolution of the
business of the Company, whether voluntary or involuntary, the holders of Series
I Preferred Stock then outstanding, after payment or provision for payment of
the debts and other liabilities of the Company and the payment or provision for
payment of any distribution on any shares of the Company having a preference and
a priority over the Series I Preferred Stock on liquidation, and before any
distribution to holders of any shares of the Company that are junior and
subordinate to the Series I Preferred Stock on liquidation, shall be entitled to
be paid out of the assets of the Company available for distribution to its
stockholders in respect of each share of Series I Preferred Stock the greater of
(i) the then effective Liquidation Preference per share of Series I Preferred
Stock plus accumulated and unpaid dividends from and including the most recent
Dividend Payment Date through and including the date of liquidation, winding-up
or dissolution and (ii) the amount that would be payable to the holders of the
Series I Preferred Stock if the shares of Series I Preferred Stock had been
converted into shares of Non-Voting Common Stock immediately prior to such
liquidation, winding-up or dissolution. In the event the assets of the Company
available for distribution to the holders of the Series I Preferred Stock upon
any dissolution, winding-up or liquidation of the Company shall be insufficient
to pay in full the liquidation payments payable to the holders of outstanding
Series I Preferred Stock and of all other Parity Securities, the holders of
Series I Preferred Stock and all other Parity Securities shall share ratably in
such distribution of assets in proportion to the amount which would be payable
on such distribution if the amounts to which the holders of outstanding Series I
Preferred Stock and the holders of outstanding shares of such Parity Securities
were paid in full. Except as provided in this Section 7, holders of Series I
Preferred Stock shall not be entitled to any distribution in the event of the
liquidation, winding-up or dissolution of the Company.
(b) For the purposes of this Section 7, none of the following shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding-up
of the Company:
(i) the sale, lease, transfer or exchange of all or
substantially all of the assets of the Company; or
(ii) the consolidation or merger of the Company with or into
one or more other corporations or entities (whether or not the Company
is the corporation surviving such consolidation or merger).
Section 8. Exchange.
16
Series I Preferred Stock
(a) The Company shall have the right to exchange the Series I Preferred
Stock, in whole or in part, at any time, for Series H Preferred Stock. The
number of shares of Series H Preferred Stock to be issued in exchange for each
share of Series I Preferred Stock shall equal the then effective Liquidation
Preference of a share of Series I Preferred Stock to be exchanged plus
accumulated and unpaid dividends from and including the most recent Dividend
Payment Date through and including the date of exchange, divided by the then
effective Liquidation Preference per share of the Series H Preferred Stock,
rounded up or down to the nearest full share after taking into account all
shares of Series I Preferred Stock owned by the holder thereof; provided, that
if such quotient shall result in one-half of a share of Series H Preferred
Stock, it shall be rounded up.
(b) A notice of the Company's intent to exchange any shares of Series I
Preferred Stock (the "Exchange Notice") shall be sent by or on behalf of the
Company, by first class mail, postage prepaid, to each applicable holder of
record at such holder's address as it shall appear on the records of the
Company, not less than 30 days or more than 120 days prior to the date fixed for
exchange,
(i) notifying such holder of the election of the Company to
exchange such shares and of the date fixed for exchange;
(ii) stating the number of shares of Series I Preferred Stock
held by such holder that the Company intends to exchange;
(iii) stating the place or places at which the shares called
for exchange shall, upon presentation and surrender of the certificates
evidencing such shares, be exchanged, and the number of shares of
Series H Preferred Stock to be issued in exchange therefor; and
(iv) stating that dividends shall cease to accumulate on the
date of exchange.
(c) On or before the date fixed for exchange, each holder of Series I
Preferred Stock called for exchange shall surrender a certificate or
certificates representing at least the number of shares of Series I Preferred
Stock owned by such holder called for exchange, in the manner and at the place
designated in the Exchange Notice. As promptly as practicable after the date
fixed for exchange, the Company shall issue and deliver to or upon the written
order of such holder a certificate or certificates for the number of shares of
Series H Preferred Stock to which such holder is entitled. Such shares of Series
H Preferred Stock will thereupon be duly authorized, validly issued, fully paid
and nonassessable.
(d) The person in whose name the certificate or certificates for Series
H Preferred Stock are to be issued shall be deemed to have become a holder of
record of such Series H Preferred Stock immediately prior to the close of
business on the date fixed for exchange. Upon exchange of only a portion of the
number of shares covered by a certificate representing shares of
17
Series I Preferred Stock
Series I Preferred Stock surrendered for exchange, the Company shall issue and
deliver to or upon the written order of the holder of the certificate so
surrendered for exchange, at the expense of the Company, a new certificate
covering the number of shares of Series I Preferred Stock representing the
unexchanged portion of the certificates so surrendered.
(e) If an Exchange Notice shall have been given as hereinafter
provided, then each holder of Series I Preferred Stock called for exchange
shall, with respect to such shares, be entitled to all relative rights,
preferences and limitations accorded to holders of the Series I Preferred Stock
until and including the date of exchange. From and after the date of exchange,
Series I Preferred Stock called for exchange shall no longer be deemed to be
outstanding, and all rights of the holders of such shares shall cease and
terminate, except the right of the holders of such shares to receive shares of
Series H Preferred Stock.
Section 9. Re-issuance. Series I Preferred Stock that has been issued
and reacquired in any manner, including shares purchased, exchanged or
converted, shall not be reissued as shares of Series I Preferred Stock and shall
(upon compliance with any applicable provisions of the laws of the Commonwealth
of Pennsylvania) have the status of authorized and unissued shares of the
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of Preferred Stock (including Series I Preferred Stock
issued in accordance with Section 1).
Section 10. Definitions.
For the purposes hereof, the following definitions shall apply:
"Accumulation Rate" means 5.00%; provided, that the then effective
Accumulation Rate shall increase by 0.50% on November 15th of each year
beginning on November 15, 2004 up to a maximum of 8.50%; provided, further, that
in the event that on any Dividend Payment Date occurring on or after the 2nd
anniversary of the Issue Date the exchange by the Company of any shares of
Series I Preferred Stock held by (A) Cypress Merchant Banking Partners, L.P.
("Cypress"), TPG Partners II, L.P. ("TPG") or any investment funds under common
control with Cypress or TPG or (B) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) for shares of
Series H Preferred Stock would not result in Cypress, TPG and such investment
funds or any such "person," respectively, beneficially owning Voting Stock of
the Company or securities convertible into or exercisable for Voting Stock of
the Company where all such Voting Stock represents more than 49% of the total
Voting Stock of the Company, the Accumulation Rate for all shares of Series I
Preferred Stock held by Cypress, TPG and such investment funds or any such
"person," respectively, shall be increased to the then effective Accumulation
Rate plus 8.00%; provided, further, that if at any time the Company shall be in
default of its obligation to redeem any shares of the Series I Preferred Stock,
the then effective Accumulation Rate shall be further increased by 2.00%.
Notwithstanding the foregoing, if, and for so long as, at any time on or after
the 3rd anniversary of the Issue Date, (i) there are no shares of Series H
Preferred Stock outstanding and (ii) the exchange of any shares of
18
Series I Preferred Stock
Series I Preferred Stock held by Cypress, TPG and such investment funds or any
"person" for Series H Preferred Stock would result in Cypress, TPG and such
investment funds or any such "person," respectively, beneficially owning Voting
Stock of the Company or Securities convertible or exercisable for Voting Stock
of the Company where all such Voting Stock represents more than 49% of the total
Voting Stock of the Company, the Accumulation Rate for all shares of Series I
Preferred Stock held by Cypress, TPG and such investment funds or any such
"person", respectively, shall be 0.00%. For purposes of clause (i), shares of
Series H Preferred Stock called for redemption pursuant to Section 5 of the
certificate of designations relating to the Series H Preferred Stock shall not
be considered outstanding after the date fixed for redemption for such shares;
provided, and for so long as, the Company shall have complied in all material
respects with its obligations in connection with such redemption.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized or required by
law to close.
"Capital Stock" means any and all shares, interests, participations,
rights in or other equivalents (however designated and whether voting or
non-voting) or corporate stock, and any and all rights (other than any evidence
of indebtedness), warrants or options exchangeable for or convertible into such
corporate stock.
"Common Equivalent Rate" means, with respect to any Dividend Period,
the quotient of (a) the product of (i) all dividends declared during such
Dividend Period with respect to a share of Common Stock, (ii) four and (iii) the
number of shares of Common Stock issuable upon conversion of a share of Series I
Preferred Stock on the last day of such Dividend Period, divided by (b) the
Liquidation Preference of a share of Series I Preferred Stock on the first day
of such Dividend Period.
"Common Stock" means the Voting Common Stock or the Non-Voting Common
Stock.
"Conversion Price" means the price per share of Non-Voting Common Stock
used to determine the number of shares of Non-Voting Common Stock deliverable
upon conversion of a share of the Series I Preferred Stock, which price shall
initially be $8.75 per share, subject to adjustment in accordance with the
provisions of Section 6.
"Equity Securities" of any Person means any and all common stock,
preferred stock, any other class of capital stock and partnership or limited
liability company interests of such Person or any other similar interests of any
Person that is not a corporation, partnership or limited liability company.
"Excluded Stock" means shares of Non-Voting Common Stock issued or
reserved for issuance by the Company (a) as a stock dividend payable in shares
of Non-Voting Common Stock, (b) upon any subdivision or split-up of the
outstanding shares of Non-Voting Common Stock or (c) upon conversion of shares
of Series I Preferred Stock.
19
Series I Preferred Stock
"Excluded Transaction" means (i) an underwritten public offering of
Common Stock and (ii) the issuance of Common Stock solely in exchange for assets
or all of the stock of another Person (whether by merger, exchange or otherwise)
in a transaction in which a nationally recognized investment banking firm has
advised the Company that the transaction is fair and reasonable to the Company
from a financial point of view.
"Fair Market Value" of any securities shall mean the Market Value
thereof and of any consideration other than cash or securities shall mean the
amount which a willing buyer would pay to a willing seller in an arm's length
transaction as determined by an independent investment banking or appraisal firm
experienced in the valuation of such securities or property selected in good
faith by the Board of Directors.
"Liquidation Preference" means, on any date, the sum of $10,000 per
share of Series I Preferred Stock, plus accumulated and unpaid dividends added
to the Liquidation Preference in accordance with Section 3(a).
"Market Value," with respect to any security, means the average of the
daily closing prices of such security for the 30 trading day period ending on
the relevant date of determination. The closing price for each day shall be the
last reported sales price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange, or, if such security
is not listed or admitted to trading on the New York Stock Exchange, on the
American Stock Exchange, or, if such security is not listed or admitted to
trading on the American Stock Exchange, the average of the closing bid and asked
prices of such security in the over-the-counter market as reported on the NASDAQ
system of the National Association of Securities Dealers, Inc. or if the such
security is not so quoted, the average of the closing bid and asked price of the
such security in the over-the-counter market as furnished by any nationally
recognized New York Stock Exchange member firm selected by the Company for such
purpose. If such security is not so listed, quoted or traded, the closing price
shall mean the amount which a willing buyer would pay to a willing seller in an
arm's length transaction as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the issuer of such security.
"Non-Voting Common Stock" means the Company's non-voting common stock,
par value $.02 per share and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Non-Voting Common Stock upon any reclassification thereof in which the
shares of Non-Voting Common Stock are converted into a new class of capital
stock and (ii) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Non-Voting Common Stock.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
20
Series I Preferred Stock
"Public Debt" means obligations evidenced by bonds, notes, debentures
or other similar instruments issued in an underwritten public offering requested
under the Securities Act of 1933, in an offering pursuant to Rule 144A under the
Securities Act of 1933 or in an exchange offer registered on Form S-4.
"Redeemable Capital Stock" means, with respect to any Person, any
Capital Stock of such Person that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or otherwise, is, or upon
the happening of an event or passage of time would be, required to be redeemed
prior to the last stated maturity of the principal of any Public Debt of such
Person outstanding at the time of issuance of such Capital Stock or is
redeemable at the option of the holder thereof at any time prior to any such
stated maturity, or is convertible into or exchangeable for debt securities at
any time prior to any such stated maturity at the option of the holder thereof.
"Redemption Agent" means a bank or trust company in good standing,
organized under the laws of the United States of America or any jurisdiction
thereof, having capital, surplus and undivided profits aggregating at least One
Hundred Million Dollars, appointed by the Company to act as agent to redeem the
Series I Preferred Stock.
"Voting Common Stock" means the Company's common stock, par value $.02
per share and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of Voting
Common Stock upon any reclassification thereof in which the shares of Voting
Common Stock are converted into a new class of capital stock and (ii) shares of
common stock of any successor or acquiring corporation received by or
distributed to the holders of Voting Common Stock.
"Voting Stock" means stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
and
That the issuance of 17,631 shares of Series I Senior Convertible
Exchangeable Participating Cumulative Preferred Stock has been initially
authorized by the Board of Directors of said Company.
21
Series I Preferred Stock
In Witness Whereof, the Company has caused this Certificate of
Designation to be signed and acknowledged by Michael R. Walker, and its
corporate seal to be hereunto affixed and attested by Ira C. Gubernick, this the
11th day of November, 1999.
Genesis Health Ventures, Inc.
/s/ Michael R. Walker
By:________________________________
Name: Michael R. Walker
Title: Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
Attest:
/s/ Ira C. Gubernick
By:_____________________________
Name: Ira C. Gubernick
Title: Vice President - Office of
the Chairman and
Corporate Secretary
22