EXHIBIT 10.39
AMENDED
CERTIFICATE OF DESIGNATION
OF
6% SERIES B CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
AND
SERIES Z CONVERTIBLE NOMINAL VALUE
REDEEMABLE PREFERRED STOCK
OF
MEDSOURCE TECHNOLOGIES, INC.
The undersigned corporation, in order to amend its Certificate of
Designation of 6% Series B Cumulative Convertible Redeemable Preferred Stock and
Series Z Convertible Nominal Value Redeemable Preferred Stock, hereby certifies
the following:
FIRST: The present name of the corporation is MedSource Technologies, Inc.
SECOND: The name under which the corporation was originally incorporated
was Veratek International, Inc. The date of filing of its original certificate
of incorporation with the Secretary of State of the State of Delaware was April
14, 1998.
THIRD: The restated certificate of incorporation of MedSource Technologies,
Inc. was filed with the Secretary of State of the State of Delaware on January
21, 1999.
FOURTH: The Certificate of Designation of 6% Series B Cumulative
Convertible Redeemable Preferred Stock and Series Z Convertible Nominal Value
Redeemable Preferred Stock of MedSource Technologies, Inc, was filed with the
Secretary of State of the State of Delaware on March 30, 1999 and an amendment
to such Certificate of Designation was filed with the Secretary of State of the
State of Delaware on May 12, 1999 (as so amended, the "Certificate of
Designation").
FIFTH: The Certificate of Designation is hereby amended to read in its
entirety as set forth below:
Section 1.
A. Definitions. Capitalized terms used herein and not otherwise defined
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herein shall have the meanings set forth in Section 2.D.
B. Authorized Shares. The Corporation shall have authority to issue (a)
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Four Hundred Thousand (400,000) shares of 6% Series B Cumulative Convertible
Redeemable Preferred Stock, par value $.01 per share ("Series B Preferred
Stock"), and (b) Sixty-Five Thousand (65,000) shares of Series Z Convertible
Nominal Value Redeemable Preferred Stock, par value $.01 per share ("Series Z
Preferred Stock"), with the aggregate number of authorized shares of Series B
Preferred Stock and Series Z Preferred Stock equaling Four Hundred Sixty-Five
Thousand (465,000) shares.
Section 2. Powers, Preferences and Rights of the Preferred Stock. The
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powers, preferences, rights, qualifications, limitations and restrictions of the
Series B Preferred Stock and the Series Z Preferred Stock are as follows:
A. Series B Preferred Stock.
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1. Ranking. The Series B Preferred Stock shall, with respect to
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dividend rights and rights upon liquidation, dissolution, or winding up, rank
senior to the Junior Stock and pari passu with respect to the Series C Preferred
Stock.
2. Dividends and Distributions.
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A. Declaration of Dividends; Accrual of Dividends. The holders of
shares of Series B Preferred Stock shall be entitled to receive, as, when, and
if declared by the Board of Directors of the Corporation (the "Board"), out of
funds legally available for dividends ("Series B Legally Available Dividend
Funds"), dividends at an annual rate equal to 6% of the Series B Original Issue
Price per share for each of the then outstanding shares of Series B Preferred
Stock, calculated on the basis of a 360-day year consisting of twelve 30-day
months. Dividends payable on the Series B Preferred Stock shall begin to accrue
and shall accumulate on a daily basis and compound on a quarterly basis (to the
extent not otherwise declared and paid as set forth above) from the date of
issuance thereof, whether or not declared. Dividends shall be paid in the manner
provided in Section 2.A.2.C. The term "Series B Original Issue Price" shall mean
$73.33 per share for each of the then outstanding shares of Series B Preferred
Stock, as may be adjusted for subdivisions or combinations of the Series B
Preferred Stock.
B. Record Date. The Board may fix a record date (each a "Dividend
Payment Record Date") for the determination of holders of shares of Series B
Preferred Stock entitled to receive payment of the dividends payable pursuant to
Section 2.A.2.A, which record date shall not be more than 60 days nor less than
1 day prior to the date on which any such dividend is paid (each such date, a
"Dividend Payment Date").
C. Payment. All dividends on Series B Preferred Stock shall be
payable in cash, subject to Section 2.A.2.E. Upon the occurrence of either (a) a
consolidation, merger or other business combination or a recapitalization or
refinancing of the Corporation resulting in the holders of the issued and
outstanding voting securities of the Corporation immediately prior to such
transaction owning or controlling less than a majority of the voting securities
of the continuing or surviving entity immediately following such transaction, or
(b) a sale, lease, exchange, transfer or other disposition (including, without
limitation, by merger, consolidation or otherwise) of assets constituting all or
substantially all of the assets of the
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Corporation and its Subsidiaries, taken as a whole, to a Person or group of
Persons, all unpaid accrued or accumulated dividends on Series B Preferred Stock
shall be immediately due and payable in cash. Upon conversion of any shares of
Series B Preferred Stock pursuant to Section 2.A.3, all unpaid accrued or
accumulated dividends on such shares of Series B Preferred Stock shall be
immediately due and payable in cash. Notwithstanding anything in this Section
2.A.2.C. to the contrary, in no event shall the Corporation be required to pay
any dividends at any time if such payment is prohibited at such time under the
terms of any documents to which the Corporation is a party and evidencing the
Senior Credit Facility.
D. Dividends Pro Rata. All dividends paid with respect to shares
of Series B Preferred Stock shall be paid pro rata to the holders entitled
thereto. Dividend payments shall be made on the shares of the Series B Preferred
Stock and shares of Series C Preferred Stock on a pari passu basis based on the
amounts then due as dividends with respect to each such share. If the Series B
Legally Available Dividend Funds shall be insufficient for the payment of the
entire amount of cash dividends payable at any time to the Series B Preferred
Stock and the Series C Preferred Stock, such funds shall be allocated for the
payment of dividends pro rata among the shares of Series B Preferred Stock and
the shares of Series C Preferred Stock on the basis of (x) in the case of shares
of Series B Preferred Stock, the Series B Liquidation Preference, as defined
below, of the outstanding shares of Series B Preferred Stock and (y) in the case
of the shares of the Series C Preferred Stock, the Series C Preferred Stock
Liquidation Preference, as defined below, of the outstanding shares of such
Series C Preferred Stock.
E. Certain Restrictions. The Corporation shall not permit any
Subsidiary of the Corporation, or cause any other Person, to make any
distribution with respect to or purchase or otherwise acquire for consideration,
any shares of capital stock of the Corporation unless the Corporation could make
such distribution or purchase or otherwise acquire such shares at such time and
such manner. Whenever the Corporation shall not have converted or redeemed
shares of Series B Preferred Stock at a time required by Section 2.A.3 or 2.A.6,
at such time and thereafter until all conversion or redemption obligations
provided in Section 2.A.3 or 2.A.6 that have come due shall have been satisfied
or all necessary funds have been set apart for payment, the Corporation shall
not: (i) declare or pay dividends, or make any other distributions, on any
shares of Junior Stock or (ii) declare or pay dividends, or make any other
distributions, on any shares of Series C Preferred Stock, except dividends or
distributions paid ratably on the Series B Preferred Stock and the Series C
Preferred Stock on which dividends are payable or in arrears, in proportion to
the total amounts to which the holders of all shares of the Series B Preferred
Stock and the Series C Preferred Stock are then entitled.
F. Other Dividend Payments. In addition to the dividends or
distributions on the Series B Preferred Stock described in Section 2.A.2.A., in
the event that the Corporation shall declare a dividend or make any other
distribution (including, without limitation, in cash, in capital stock (which
shall include, without limitation, any options, warrants or other rights to
acquire capital stock) of the Corporation, whether or not pursuant to a
shareholder rights plan, "poison pill" or similar arrangement, or other property
or assets) to all holders of Common Stock, then the Board of Directors shall
declare, and the holder of each share of Series B Preferred Stock and Series C
Preferred Stock shall be entitled to receive, a dividend or distribution in an
amount equal to the amount of such dividend or distribution received by a
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holder of the number of shares of Common Stock for which such share of share of
Series B Preferred Stock or such share of Series C Preferred Stock (as
applicable) is convertible on the record date for such dividend or distribution.
Any such amount shall be paid to the holders of shares of Series B Preferred
Stock and the holders of shares of Series C Preferred Stock at the same time
such dividend or distribution is made to holders of Common Stock.
3. Conversion.
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A. Conversion. Upon the closing of a firm commitment underwritten
initial public offering of the Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), other than a registration statement relating solely to an
employee benefit plan or transaction covered by Rule 145 of the Securities Act,
which offering (a "Qualified IPO") (i) yields net proceeds (i.e., gross cash
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proceeds in respect of such offering minus reasonable brokerage commissions or
underwriting fees and other reasonable fees and expenses (including, without
limitation, reasonable fees, charges and disbursements of counsel and reasonable
fees and expenses of investment bankers relating to such offering)) to the
Corporation of not less than $40,000,000 at a per share price (the "Qualified
IPO Price") of not less than the amount that, when added to an amount equal to
(a) the sum of (x) the aggregate value of the Escrow Shares (as defined in the
Share Transfer Agreement), if any, received in connection with such initial
public offering pursuant to and in accordance with the term of Share Transfer
Agreement, (y) the value of all dividends and distributions received prior
thereto in respect of the Series B Preferred Stock, and in respect of any Common
Stock that may have been issued upon conversion thereof, and (z) the value of
all dividends to be received in respect of the Series B Preferred Stock upon
conversion divided by (b) the Investor Common Shares (as defined in the Share
Transfer Agreement) (the "Additional Value Per Share"), would equal twice the
Series B Original Issue Price, and (ii) results in a Qualified IPO Price which,
after giving consideration to the Additional Value Per Share, would allow the
initial holder of the shares of Series B Preferred Stock in question to realize
an internal rate of return (determined as specified below) of at least 30% with
respect to its investment in such shares of Series B Preferred Stock, assuming
that such holder then continued to hold all of its originally purchased shares
of Series B Preferred Stock and would convert such shares upon the Qualified IPO
and sell at the Qualified IPO Price the shares of Common Stock into which such
shares of Series B Preferred Stock were converted, each then outstanding share
of the Series B Preferred Stock shall be automatically converted into the number
of shares of Common Stock equal to the Series B Conversion Rate as then in
effect. For purposes hereof, (i) the Series B Conversion Rate shall be
determined by dividing the Series B Original Issue Price by the Adjusted Series
B Conversion Price per share, and (ii) the initial holder of the shares of
Series B Preferred Stock in question shall be deemed to have realized an
internal rate of return equal to the annual compound rate of interest that would
discount the value of the Qualified IPO Price, when added to the Additional
Value Per Share, giving effect to the timing of receipt thereof, to a present
value, as of the Issue Date, equal to the Series B Original Issue Price. At any
time prior to the closing of a Qualified IPO, and subject to and upon compliance
with the provisions of this paragraph, the holder of any shares of the Series B
Preferred Stock shall have the right, at its option, to convert, at the Series B
Conversion Rate, all or any portion of its shares of the Series B Preferred
Stock into one or more shares of Common Stock by surrendering the shares to be
converted, in the manner provided below.
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B. Exercise of Conversion Right.
(i) In order to exercise its conversion right, a holder of
shares of Series B Preferred Stock to be converted shall surrender the
certificate representing such shares to the conversion agent (which may be the
Corporation itself), with a notice of election to convert, duly completed and
signed, at the principal office of this conversion agent. Unless the shares
issuable upon conversion are to be issued in the same name as the name in which
the shares of the Series B Preferred Stock are registered, each share
surrendered for conversion shall be accompanied by instruments of transfer duly
executed by the holder or his duly authorized attorney. If the Corporation fails
to designate a conversion agent, the conversion agent shall be the Corporation.
(ii) At the close of business on a Dividend Payment Record
Date the holders shares of Series B Preferred Stock shall be entitled to the
dividend accruing on those shares on the corresponding Dividend Payment Date
notwithstanding the conversion of the shares after the Dividend Payment Record
Date. Dividends with respect to shares of the Series B Preferred Stock called
for redemption on a date fixed for redemption which falls between the close of
business on any Dividend Payment Record Date and the opening of business on the
corresponding Dividend Payment Date shall accrue on the Dividend Payment Date to
the holder of such shares of the Series B Preferred Stock on the Dividend
Payment Record Date notwithstanding the redemption of such shares of the Series
B Preferred Stock after the Dividend Payment Record Date, but prior to the
Dividend Payment Record Date the holders of shares of Series B Preferred Stock
who (or whose transferees) convert any of such shares on or after the
corresponding Dividend Payment Date will be entitled to the dividend accruing on
those shares of the Series B Preferred Stock on the Dividend Payment Date.
(iii) As promptly as practicable after the surrender by a
holder of the certificates for shares of the Series B Preferred Stock and in any
event within ten business days after such surrender, the Corporation shall issue
and deliver to the Person for whose account such shares of Series B Preferred
Stock were surrendered, or to its nominee or nominees (subject to compliance
with applicable stockholders' agreements and other applicable agreements
restricting transfer), a certificate or certificates for the number of full
shares of Common Stock or other securities issuable upon the conversion of those
shares and any fractional interest in respect of a share of Common Stock or
other security arising upon the conversion shall be settled as provided below.
In the event that a holder of shares of Series B Preferred Stock converts less
than all of the shares of Series B Preferred Stock evidenced by the
certificate(s) surrendered by such holder, the Corporation shall, simultaneously
with the issuance of certificates for the shares of Common Stock, issue and
deliver to such holder (or in accordance with the instructions of such holder) a
new certificate for the balance of the shares of Series B Preferred Stock not so
converted.
(iv) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the effective date of the
Qualified IPO, or the date on which shares of Series B Preferred Stock are
surrendered for conversion pursuant to the last sentence of Section 2.A.3.A, as
applicable, and the Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock
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or other securities represented by those certificates at such time on such date
and such conversion shall be at the Adjusted Series B Conversion Price in effect
at such time, unless the stock transfer books of the Corporation shall be closed
on the date, in which event such Person or Persons shall be deemed to have
become such holder or holders of record at the close of business on the next
succeeding day on which such stock transfer books are open, and such conversion
shall be at the Adjusted Series B Conversion Price in effect on the date such
transfer books are open. All shares of Common Stock delivered upon conversion of
any shares of Series B Preferred Stock will upon delivery in accordance with the
provisions hereof be duly and validly issued and fully paid and nonassessable,
free of all liens and charges and not subject to any preemptive rights. Upon the
surrender of certificates representing shares of the Series B Preferred Stock to
be converted, the shares shall no longer be deemed to be outstanding and all
rights of a holder with respect to the shares surrendered for conversion shall
immediately terminate except the right to receive the Common Stock or other
securities, cash or other assets as herein provided.
C. Fractional Shares. No fractional shares or securities
representing fractional shares of Common Stock shall be issued upon conversion
of any shares of Series B Preferred Stock. Any fractional interest in a share of
Common Stock resulting from conversion of a share of the Series B Preferred
Stock shall be paid in cash (computed to the nearest cent) equal to such
fraction multiplied by the Current Market Price. If more than one certificate
representing Series B 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 the
Series B Preferred Stock so surrendered for conversion.
D. Antidilution Provisions. Subject in all events to the
limitations set forth in Section 2.A.3.D(v), the Adjusted Series B Conversion
Price shall be subject to adjustment as follows if any of the events listed
below occur prior to the conversion of each share of the Series B Preferred
Stock.
(i) Divided, Subdivision, Combination or Reclassification of
Common Stock. If the Corporation shall, at any time or from time to time, (a)
declare a dividend on the Common Stock payable in shares of its capital stock
(including Common Stock), (b) subdivide the outstanding Common Stock, (c)
combine the outstanding Common Stock into a smaller number of shares or (d)
issue any shares of its capital stock in a reclassification of the Common Stock
(excluding any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation), then in each
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such case, the Adjusted Series B Conversion Price in effect immediately prior to
such event shall be proportionately adjusted so that, in connection with a
conversion of shares of Series B Preferred Stock after such date, the holder of
shares of Series B Preferred Stock shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if the conversion had occurred
immediately prior to such date, the holder would have owned upon such conversion
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. Any such adjustment shall become effective
immediately after the record date of such dividend or the effective date of such
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur. If a dividend is
declared and such dividend is not paid, the Adjusted Series B Conversion Price
then in effect shall be adjusted to the Adjusted Series B Conversion Price in
effect immediately prior to such record date,
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subject, however, to such other adjustments as may have been made or which would
have been made under this Section 2.A.3.D had such Adjusted Series B Conversion
Price been the Adjusted Series B Conversion Price in effect immediately prior to
such record date.
(ii) Issuance of Rights to Purchase Common Stock Below
Adjusted Series B Conversion Price. If the Corporation shall, at any time or
from time to time, fix a record date for the issuance of rights or warrants to
all holders of Common Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Common Stock
or securities convertible into, or exchangeable for, Common Stock at a price per
share of Common Stock, or having a conversion price, or exchange price, per
share of Common Stock, if a security is convertible into, or exchangeable for,
Common Stock (determined in each such case by dividing (x) the total
consideration payable to the Corporation upon exercise, conversion or exchange
of such rights, warrants or other securities convertible into, or exchangeable
for, Common Stock plus, without duplication, any amounts paid for such rights,
warrants or other securities upon issuance thereof, by (y) the total number of
shares of Common Stock issuable pursuant to such rights, warrants or other
securities convertible into, or exchangeable for, Common Stock), lower than the
Adjusted Series B Conversion Price in effect immediately prior to such record
date, then the Adjusted Series B Conversion Price shall be immediately reduced
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to the price equal to the price per share of such Common Stock (as determined
pursuant to clauses (x) and (y) above); provided, however, that such adjustment
shall be made only if such adjustment results in an Adjusted Series B Conversion
Price which is lower than the Adjusted Series B Conversion Price in effect
immediately prior to such record date. In case such price for subscription or
purchase may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be determined in good
faith by the Board of Directors of the Corporation and shall be that value which
is agreed upon by at least a majority of the members thereof; provided, that if
the holders of a majority of the shares of Series B Preferred Stock object to
such valuation as determined by the Board of Directors within fifteen (15) days
of receipt of written notice of such valuation or, if such percentage of the
members of the Board of Directors of the Corporation are unable to agree upon
the value of such consideration, the value thereof shall be determined by an
independent investment bank of nationally recognized stature that is selected by
a majority of the members of the Board of Directors. Any such adjustment shall
become effective immediately after the record date for such rights or warrants,
and no adjustment shall be made pursuant to either Section 2.A.3.D(iv) or
2.A.3.D(vi) by reason of the sale and issuance of such rights or warrants or the
exercise thereof. Such adjustment pursuant to this Section 2.A.3.D(ii) shall be
made successively whenever such a record date is fixed. If such rights or
warrants are not issued, or expire or terminate without the exercise of such
rights or warrants and no securities are issued pursuant thereto, the Adjusted
Series B Conversion Price shall be adjusted to the Adjusted Series B Conversion
Price in effect immediately prior to such record date, subject, however, to such
other adjustments as may have been made or which would have been made under this
Section 2.A.3.D had such Adjusted Series B Conversion Price been the Adjusted
Series B Conversion Price in effect immediately prior to such record date.
(iii) Certain Distributions. If the Corporation shall, at
any time or from time to time, fix a record date for the distribution to all
holders of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Corporation is the continuing
corporation) of evidences of Indebtedness, assets or other property
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(other than (a) cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or (b) dividends payable in capital stock for which
adjustment is made under Section 2.A.3.D(i)) or subscription rights or warrants
(excluding those referred to in Sections 2.A.3.D(ii) and 2.A.3.D(iv)), then in
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each such case for the purpose of this Section 2.A.3.D(iii), the holders of the
Series B Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series B Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock entitled to receive such distribution.
(iv) Issuance of Common Stock Below Adjusted Series B
Conversion Price. Subject to Section 2.A.3.D(v), the Adjusted Series B
Conversion Price shall be subject to adjustment as follows: If the Corporation
shall, at any time or from time to time, sell or issue shares of Common Stock
(regardless of whether originally issued or from the Corporation's treasury), or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock at a price per
share of Common Stock (determined, in the case of rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total consideration
received or receivable by the Corporation in consideration of the sale or
issuance of such rights, options, warrants or convertible or exchangeable
securities, plus the total consideration payable to the Corporation upon
exercise or conversion or exchange thereof, by (y) the total number of shares of
Common Stock issuable pursuant to such rights, options, warrants or convertible
or exchangeable securities) lower than the Adjusted Series B Conversion Price in
effect immediately prior to such sale or issuance, then the Adjusted Series B
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Conversion Price shall be immediately reduced to a price equal to the price per
share of such Common Stock issued at below the Adjusted Series B Conversion
Price (or, in the case of rights, options, warrants or convertible or
exchangeable securities, as determined pursuant to clauses (x) and (y) above);
provided, however, that such adjustment shall be made only if such adjustment
results in an Adjusted Series B Conversion Price which is lower than the
Adjusted Series B Conversion Price in effect immediately prior to taking such
action. Such adjustment shall be made successively whenever such sale or
issuance is made. For the purposes of such adjustments, the shares of Common
Stock which the holder of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of such sale or issuance and
the consideration "received" by the Corporation therefor shall be deemed to be
the consideration actually received or receivable by the Corporation (plus any
underwriting discounts or commissions in connection therewith) for such rights,
options, warrants or convertible or exchangeable securities, plus the
consideration stated in such rights, options, warrants or convertible or
exchangeable securities to be payable to the Corporation for the shares of
Common Stock covered thereby. If the Corporation shall sell or issue shares of
Common Stock for a consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the "price per share of
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Common Stock" and the "consideration" received or receivable by or payable to
the Corporation for purposes of the first sentence following the colon and the
immediately preceding sentence of this Section 2.A.3.D(iv), the fair value of
such property shall be determined in good faith by the Board of Directors of the
Corporation and shall be the value which is agreed upon by at least a majority
of the members thereof, provided, that if the holders of a majority of the
shares of Series B Preferred Stock object to such valuation as determined by the
Board of Directors within fifteen (15) days of receipt of
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written notice of such valuation or if such percentage of the members of the
Board of Directors of the Corporation are unable to agree upon the value of such
consideration, the value thereof shall be determined by an independent
investment bank of nationally recognized stature that is selected by a majority
of the members of the Board of Directors. The determination of whether any
adjustment is required under this Section 2.A.3.D(iv) by reason of the sale and
issuance of rights, options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made only at the time of
such issuance or sale and not at the subsequent time of issuance or sale of
Common Stock upon the exercise of such rights to subscribe or purchase. Upon the
expiration of any such rights, options or warrants or the termination of any
such rights to convert or exchange or the expiration of any options, warrants or
rights related to such convertible or exchangeable securities, without any of
such rights, options, warrants or convertible or exchangeable securities, as the
case may be, having been exercised and no shares of Common Stock issued pursuant
thereto, the Adjusted Series B Conversion Price shall be adjusted, as the case
may be, to the Adjusted Series B Conversion Price in effect immediately prior to
such sale or issuance, subject, however, to such other adjustments as may have
been made or which would have been made pursuant to this Section 2.A.3.D had
such Adjusted Series B Conversion Price been the Adjusted Series B Conversion
Price in effect immediately prior to such sale or issuance of such rights,
options, warrants or convertible or exchangeable securities, as the case may be.
Notwithstanding anything in this Section 2.A.3.D.(iv) to the contrary, in the
event the conversion price of the Series C Preferred Stock is, at any time,
reduced to a price that is less than the Adjusted Series B Conversion Price in
effect at such time, then the Adjusted Series B Conversion Price shall be
reduced to a price equal to such conversion price of the Series C Preferred
Stock.
(v) Certain Exceptions to Anti-Dilution Provisions.
Notwithstanding anything contained in this Section 2.A.3 to the contrary, there
shall be no adjustment of the Adjusted Series B Conversion Price pursuant to
Section 2.A.3.D(ii) or 2.A.3.D(iv) with respect to Common Stock or securities
convertible into or exchangeable for Common Stock to be issued (a) to an
employee, advisor, consultant or director of the Corporation directly or
pursuant to any stock option or stock plan or arrangement that has been approved
by the Corporation's Board of Directors and not exceeding, in the aggregate, the
greater of 2,430,000 shares and 10% of the number of outstanding shares of
Common Stock at the time of issuance (assuming the exercise, exchange or
conversion of all of the securities of the Corporation that are exercisable or
exchangeable for, or convertible into, Common Stock at the time of such issuance
(including, without limitation, securities issued pursuant to this Section
2.A.3.D(v)) (subject in each instance to adjustment in the circumstances set
forth in Section 2.A.3.D(i)), (b) at any time, upon the issuance of a number of
shares of Junior Stock convertible into no more than 2,000,000 shares of Common
Stock with an issue price per share (on an as-converted basis) that is less than
the Adjusted Series B Conversion Price in effect at such time in connection with
the acquisition by the Corporation or any Subsidiary of all or any substantial
part of the business or assets, or capital stock, of any Person, provided,
however, that, for purposes of this item (b), any Common Stock, or securities
convertible into or exchangeable for Common Stock, so issued must be issued at a
price per share of Common Stock, or having a conversion price, or exchange
price, per share of Common Stock, if a security is convertible into, or
exchangeable for, Common Stock (determined in each such case by dividing (x) the
total consideration payable to the Corporation upon exercise, conversion or
exchange of such rights, warrants or other securities convertible into, or
exchangeable for, Common Stock plus, without
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duplication, any amounts paid for such rights, warrants or other securities upon
issuance thereof, by (y) the total number of shares of Common Stock issuable
pursuant to such rights, warrants or other securities convertible into, or
exchangeable for, Common Stock) which is no less than the Current Market Price
on the date of such issuance; and provided, further, that in case such price for
subscription or purchase may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be
that value which is determined in good faith by at least a majority of the
members of the Board of Directors of the Corporation; provided, that if the
holders of a majority of the shares of Series B Preferred Stock object to such
valuation as determined by the Board of Directors within fifteen (15) days of
receipt of written notice of such valuation or, if such percentage of the
members of the Board of Directors of the Corporation are unable to agree upon
the value of such consideration, the value thereof shall be determined by an
independent investment bank of nationally recognized stature that is selected by
a majority of the members of the Board of Directors, (c) pursuant to the
exercise or conversion, as the case may be, of any option, warrant or
convertible security outstanding on the Issue Date, including but not limited to
any shares of Series A Preferred Stock and Series Z Preferred Stock issued on
that date, or (d) upon conversion of the Series B Preferred Stock.
Notwithstanding anything to the contrary in the preceding clause (b), any shares
of Junior Stock issued in connection with the acquisition by the Corporation or
any Subsidiary of all or any substantial part of the business or assets or
capital stock of any Person pursuant to such clause (b) with an issue price per
share equal to, or in excess of, the Adjusted Series B Conversion Price in
effect at the time of such issuance shall not be counted in the basket of a
number of shares of Junior Stock convertible into no more than 2,000,000 shares
of Common Stock referred to in such clause (b).
(vi) Amendment/Modification to other Securities.
Notwithstanding any provision in Section 2.A.3.D to the contrary and without
limitation to or duplication of any other provision contained in Section
2.A.3.D, in the event any securities of the Corporation (other than the Series B
Preferred Stock or the Series Z Preferred Stock), including, without limitation
those securities set forth as exceptions in Subsection 2.A.3.D(v) (collectively,
the "Subject Securities"), are amended or otherwise modified by operation of its
terms or otherwise (including, without limitation, by operation of such Subject
Securities' anti-dilution provisions) in any manner whatsoever that results in
(i) the reduction of the exercise, conversion or exchange price of such Subject
Securities payable upon the exercise for, or conversion or exchange into, Common
Stock or other securities exercisable for, or convertible or exchangeable into,
Common Stock and/or (ii) such Subject Securities becoming exercisable for, or
convertible or exchangeable into (A) more shares or dollar amount of such
Subject Securities which are, in turn exercisable for, or convertible or
exchangeable into, Common Stock, or (B) more shares of Common Stock, then such
----
amendment or modification shall be treated for purposes of Section 2.A.3.D as if
the Subject Securities which have been amended or modified have been terminated
and the Adjusted Series B Conversion Price treated in accordance with the last
sentence of Section 2.A.3.D(ii) and new securities have been issued in lieu of
the Subject Securities with the amended or modified terms, and an appropriate
adjustment to the Adjusted Series B Conversion Price shall be made hereunder
with respect to such new securities (which adjustment shall be in lieu of the
original adjustment to the Adjusted Series B Conversion Price hereunder, if any,
made upon the issuance of the Subject Securities). The Corporation shall make
all necessary adjustments (including successive adjustments if required) to the
Adjusted Series B Conversion Price in accordance with Section 2.A.3.D, but in no
event shall the Adjusted Series B Conversion
10
Price be greater than it was immediately prior to the application of this
subsection to the transaction in question. On the expiration or termination of
any such amended or modified Subject Securities for which adjustment has been
made pursuant to the operation of the provisions of this subsection under
Section 2.A.3.D(ii) or 2.A.3.D(iv), as the case may be, without such subject
Securities having been exercised, converted or exchanged in full pursuant to
their terms, the Adjusted Series B Conversion Price shall be appropriately
readjusted in the manner specified in such Section.
E. De Minimis Adjustments. No adjustment of the Adjusted Series B
Conversion Price shall be made if the amount of such adjustment would result in
a change in the Adjusted Series B Conversion Price per share of less than $.05,
but in such case any adjustment that would otherwise be required to be made
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment, which together with any adjustment so carried
forward, would result in a change in the Adjusted Series B Conversion Price of
$.05 or more per share. Notwithstanding the provisions of the first sentence of
this Section 2.A.3.E, any adjustment postponed pursuant to this Section 2.A.3.E
shall be made no later than the earlier of (a) three years from the date of the
transaction that would, but for the provisions of the first sentence of this
Section 2.A.3.E, have required such adjustment and (b) immediately prior to the
date of any conversion of shares of Series B Preferred Stock.
F. Reorganization, Reclassification, Merger and Sale of Assets
Adjustment. If there occurs any capital reorganization or any reclassification
of the Common Stock, the consolidation or merger of the Corporation with or into
another Person (other than a merger or consolidation of the Corporation in which
the Corporation is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock) or the sale,
transfer or other disposition of all or substantially all of the assets of the
Corporation to another Person, then each share of Series B Preferred Stock shall
----
thereafter be convertible into the same kind and amounts of securities
(including shares of stock) or other assets, or both, which were issuable or
distributable to the holders of outstanding Common Stock and upon such
reorganization, reclassification, consolidation, merger, sale or conveyance, in
respect of that number of shares of Common Stock into which such share of Series
B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, consolidation, merger, sale or conveyance;
and, in any such case, appropriate adjustments (as determined in good faith by
the Board of Directors of the Corporation) shall be made to assure that the
provisions set forth herein shall thereafter be applicable, as nearly as
reasonably may be practicable, in relation to any securities or other assets
thereafter deliverable upon the conversion of the Series B Preferred Stock.
G. Certificate as to Adjustments. Whenever the number of shares
of Common Stock issuable, or the securities or other property deliverable upon
the conversion of the Series B Preferred Stock, shall be adjusted pursuant to
the provisions hereof, the Corporation shall promptly give written notice
thereof to each holder of shares of Series B Preferred Stock at such holder's
address as it appears on the transfer books of the Corporation and shall
forthwith file, at its principal executive office and with any transfer agent or
agents for the Series B Preferred Stock, the Series Z Preferred Stock and the
Common Stock, a certificate, signed by the President or one of the Vice
Presidents of the Corporation, and by its Chief Financial Officer, its Treasurer
or one of its Assistant Treasurers, stating the number of shares of Common Stock
11
issuable, or the securities or other property deliverable, per share of Series B
Preferred Stock converted, calculated to the nearest cent or to the nearest one
one-hundredth of a share and setting forth in reasonable detail the method of
calculation and the facts requiring such adjustment and upon which such
calculation is based. Each adjustment shall remain in effect until a subsequent
adjustment hereunder is required.
H. No Amendment of Certificate of Incorporation. The Corporation
will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution. issue or
sale of securities or any other action, avoid or seek to avoid the observance or
performance of any term of the Certificate of Incorporation, but will at all
times in good faith assist in carrying out of all such terms and in taking of
all such action as may he necessary or appropriate in order to protect the
rights of the holders of Series B Preferred Stock against dilution or other
impairment. Without limiting the generality of the foregoing, the Corporation
(a) will not increase the par value of any shares of stock receivable on the
conversion of the Series B Preferred Stock, (b) will at all times reserve and
keep available the maximum number of its authorized shares of Common Stock, free
from all preemptive rights therein, which will be sufficient to permit the full
conversion of the Series B Preferred Stock, and (c) will take such action as may
be necessary or appropriate in order that all shares of Common Stock as may be
issued pursuant to the conversion of the Series B Preferred Stock will, upon
issuance, be duly and validly issued, fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof.
I. Certain Events. In case at any time prior to the conversion or
redemption of all of the Series B Preferred Stock:
(i) the Corporation shall authorize the granting to all the
holders of Common Stock of rights to subscribe for or purchase any shares of
stock of any class or of any other rights; or
(ii) there shall be any reclassification of the Common Stock
of the Corporation (other than a subdivision or combination of its outstanding
Common Stock); or
(iii) there shall be any capital reorganization by the
Corporation; or
(iv) there shall be an Organic Transaction; or
(v) there shall be voluntary or involuntary dissolution,
liquidation and winding up by the Corporation or dividend or distribution to
holders of Common Stock (other than the Corporation's customary cash and stock
dividends); or
(vi) any other event requiring adjustment of the Adjusted
Series B Conversion Price as set forth in Section 2.A.3.D;
then in any one or more of said cases, the Corporation shall cause to be
- ----
delivered to the holder, at the earliest practicable time (and, in any event,
not less than 15 days before any record date or the date set for definitive
action), written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or such
12
reorganization, sale, consolidation, merger, dissolution, liquidation or winding
up or other transaction shall take place, as the case may be. Such notice shall
also set forth such facts as shall indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Adjusted
Series B Conversion Price and the kind and amount of the shares of stock and
other securities and property deliverable upon conversion of the Series B
Preferred Stock. Such notice shall also specify the date, if known, as of which
the holders of record of the Common Stock shall participate in said dividend,
distribution or subscription rights or shall be entitled to exchange their
shares of the Common Stock for securities or other property (including cash)
deliverable upon such reorganization, sale, consolidation, merger, dissolution,
liquidation or winding up or other transaction, as the case may be.
J. Reservation of Common Stock. The Corporation shall at all
times reserve and keep available for issuance upon the conversion of the shares
of Series B Preferred Stock the maximum number of each of its authorized but
unissued shares of Common Stock as is reasonably anticipated to be sufficient to
permit the conversion of all outstanding shares of Series B Preferred Stock into
Common Stock and shall take all action required to increase the authorized
number of shares of Common Stock, as the case may be, if at any time there shall
be insufficient authorized but unissued shares of Common Stock, as the case may
be, to permit such reservation or to permit the conversion of all outstanding
shares of Series B Preferred Stock.
K. No Conversion Charge or Tax. The issuance and delivery of
certificates for shares of Common Stock upon the conversion of shares of Series
B Convertible Preferred Stock shall be made without charge to the holder of
shares of Series B Convertible Preferred Stock for any issue or transfer tax, or
other incidental expense in respect of the issuance or delivery of such
certificates or the securities represented thereby, all of which taxes and
expenses shall be paid by the Corporation.
4. Status on Conversion or Redemption. Upon any conversion or
----------------------------------
redemption of shares of the Series B Preferred Stock, the shares so converted or
redeemed shall be canceled.
5. Voting Rights; Special Required Approval. In addition to any voting
----------------------------------------
rights provided by law, the holders of shares of Series B Preferred Stock shall
have the following rights:
A. Voting Rights. The shares of the Series B Preferred Stock
shall be voted with the shares of the Common Stock at any annual or special
meeting of stockholders of the Corporation, or the holders of such shares of the
Series B Preferred Stock may act by written consent in the same manner as
holders of the Common Stock, upon the following basis: Each holder of shares of
the Series B Preferred Stock shall be entitled to such number of votes for the
Series B Preferred Stock held by such holder on the record date fixed for such
meeting, or on the effective date of such written consent, as shall be equal to
the largest number of whole shares of the Common Stock into which all of such
holder's shares of the Series B Preferred Stock are convertible immediately
after the close of business on the record date fixed for such meeting or the
effective date of such written consent.
13
B. Special Required Approval. Notwithstanding any other paragraph
or provision hereof, none of the following actions may be taken, directly or
indirectly, by the Corporation or any of its Subsidiaries without the approval
of the holders of at least sixty six and two thirds percent (66 2/3%) of all
issued and outstanding shares of Series B Preferred Stock voting in person or by
proxy, at a special or annual meeting called for the purpose or by written
consent:
(i) Any amendment, restatement or modification of the
Certificate of Incorporation, By-laws or other governance documents which could
adversely affect the rights of the holders of the Series B Preferred Stock,
including, without limitation, the certificate of designation filed with respect
to the Series C Preferred Stock (including, without limitation, any provision
therein relating to redemption, liquidation or change of control payments);
(ii) The declaration or payment of any dividend or making of
any distribution on or with respect to the Junior Stock (dividends, if any, to
which holders of Junior Stock are entitled shall continue to accrue
notwithstanding this Section 2.A.5.B(ii)) (provided, that such approval of such
holders of the Series B Preferred Stock shall not be required for the
Corporation to effect a stock split by way of a stock dividend);
(iii) Except as permitted herein or as permitted by the
certificate of designation filed with respect to the Series C Preferred Stock
(other than any redemption of the Series C Preferred Stock pursuant to Section
5(a) of the certificate of designation filed with respect to the Series C
Preferred Stock), the purchase, redemption or retirement, directly or
indirectly, of any shares of capital stock or other equity securities (or any
securities convertible or exchangeable into such securities), including, without
limitation, any redemption of the Series C Preferred Stock pursuant to Section
5(a) of the certificate of designation filed with respect to the Series C
Preferred Stock, except that the Corporation may acquire shares of capital stock
or other equity securities (or any securities convertible or exchangeable into
such securities) from one or more sellers in connection with an Acquisition in
satisfaction of any indemnification obligation owing by such seller or sellers
in connection with such Acquisition, so long as no cash is paid by the
Corporation or any of its Subsidiaries in connection therewith;
(iv) The authorization, creation or issuance of any shares
of capital stock or other securities which could adversely affect, or are ranked
prior to or pari passu with, the Series B Preferred Stock (including, without
limitation, any other shares of Series B Preferred Stock); provided, however,
-------- -------
that the Corporation may issue up to 34,092 shares of Series B Preferred Stock
without requiring any approvals pursuant to this Section 2.A.5.B;
(v) Engaging in any business other than the business in
which the Corporation or its Subsidiaries are currently engaged, and reasonable
extensions thereof;
(vi) A voluntary dissolution, liquidation or winding up;
(vii) The entering into any transaction or agreement with,
or making any payment to, any Affiliate of the Corporation or any Subsidiary,
amending or terminating any existing agreement with any Affiliate of the
Corporation or any Subsidiary,
14
purchasing from or providing to an Affiliate of the Corporation or any
Subsidiary any selling, general management or administrative services, directly
or indirectly making any sales to or purchases from an Affiliate of the
Corporation or any Subsidiary, or increasing the compensation being paid to an
Affiliate of the Corporation or any Subsidiary, in each case other than (i)
pursuant to the Fee Letters (as defined in the Purchase Agreement), (ii)
pursuant to agreements in effect as of the Issue Date and reflected in Section
2.4 of, or on Schedule 5.21 to, the Purchase Agreement, and (iii) the
reimbursement of reasonable expenses incurred by members of the Board of
Directors of the Corporation, consistent with the Corporation's then existing
policy of reimbursing directors for such expenses.
6. Redemption. The Corporation shall, as provided below, redeem the
----------
shares of Series B Preferred Stock.
A. Automatic Redemption. On March 29, 2008 (the "Series B
Mandatory Redemption Date"), each outstanding share of Series B Preferred Stock
shall automatically, with no further action required to be taken by the
Corporation or the holder thereof, be redeemed (unless otherwise prevented by
law or prohibited under the terms of any debt document to which the Corporation
is a party (including, without limitation, any debt document relating to the
Senior Credit Facility) existing on the date hereof or consented to in writing
by the holders of at least sixty-six and two-thirds percent (66 2/3%) of all
issued and outstanding shares of Series B Preferred Stock), at a redemption
price per share, in cash, equal to the greater of (i) the Series B Liquidation
Preference for such Series B Preferred Stock and (ii) the amount to which the
holder of such share of Series B Preferred Stock would be entitled upon
liquidation of the Corporation had such share of Series B Preferred Stock been
converted to Common Stock immediately prior to such redemption. The total sum
payable per share of Series B Preferred Stock to be redeemed (the "Series B
Redeemed Shares") on the Series B Mandatory Redemption Date is hereinafter
referred to as the "Series B Redemption Price," and the payment to be made on
the Series B Mandatory Redemption Date for the Series B Redeemed Shares is
hereinafter referred to as the "Series B Redemption Payment." Upon notice from
the Corporation, each holder of Series B Preferred Stock so redeemed shall
promptly surrender to the Corporation, at any place where the Corporation shall
maintain a transfer agent for its Series B Preferred Stock, certificates
representing the shares so redeemed, duly endorsed in blank or accompanied by
proper instruments of transfer.
B. Termination of Rights. Except as set forth in Section 2.A.5.C,
on and after the Series B Mandatory Redemption Date, all rights of any holder of
Series B Preferred Stock shall cease and terminate; and such Series B Redeemed
Shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation;
provided, however, that, if the Corporation defaults in the payment of the
Series B Redemption Payment for any reason, including, without limitation, the
lack of Series B Legally Available Redemption Funds therefor, the rights of the
holders of Series B Preferred Stock shall continue until the Corporation cures
such default.
C. Insufficient Funds for Redemption.
(i) If, on the Series B Mandatory Redemption Date, the funds
of the Corporation available by law or otherwise for redemption of the Series B
Preferred Stock
15
and Series C Preferred Stock to be redeemed on such date (the "Series B Legally
Available Redemption Funds") are insufficient to redeem the Series B Redeemed
Shares and such Series C Preferred Stock on such date, the holders of Series B
Redeemed Shares and such Series C Preferred Stock shall share ratably in the
Series B Legally Available Redemption Funds according to the respective amounts
which would be payable with respect to the number of shares owned by them if the
shares to be so redeemed on such Series B Mandatory Redemption Date were
redeemed in full.
(ii) The Corporation shall in good faith use all reasonable
efforts as expeditiously as possible to eliminate, or obtain an exception,
waiver or exemption from, any and all restrictions under applicable law or
otherwise (including, without limitation, any debt document relating to the
Senior Credit Facility) that prevented the Corporation from paying the Series B
Redemption Price and redeeming all of the shares of Series B Preferred Stock to
be redeemed hereunder. At any time thereafter when additional funds of the
Corporation are available by law or otherwise for the redemption of shares of
Series B Preferred Stock and Series C Preferred Stock, such funds will be used,
at the end of the next succeeding fiscal quarter, to redeem the balance of such
shares, or such portion thereof for which funds are available, on the basis set
forth above.
(iii) In the event that funds are not available by law or
otherwise for the payment in full of (x) the Series B Redemption Price for the
shares of Series B Preferred Stock to be so redeemed on the Series B Mandatory
Redemption Date and (y) any amounts due with respect to the redemption of the
Series C Preferred Stock, then the Corporation shall be obligated to make such
----
partial redemption so that the number of shares of Series B Preferred Stock held
by each holder thereof and the number of shares of Series C Preferred Stock held
by each holder thereof shall be reduced on the pro rata basis set forth in
Section 2.A.6.C(i) above. In the event that the Corporation fails to redeem
shares of Series B Preferred Stock and Series C Preferred Stock for which
redemption is required, then during the period from the Series B Mandatory
----
Redemption Date through the date on which such shares that the Corporation
failed to redeem on the Series B Mandatory Redemption Date are actually
redeemed, dividends on all such shares shall continue to accrue in cash and be
cumulative as specified in Section 2.A.2.A.
D. Change of Control Offer.
(i) The Company shall no less than 10 Business Days prior to
any Series C Change of Control that occurs prior to the fifth anniversary of the
Series C Original Issue Date offer to purchase from each holder of shares of
Series B Preferred Stock and each holder of any shares of Series C Preferred
Stock (a "Change of Control Offer"), and thereafter shall purchase (unless
otherwise prevented by law or prohibited under the terms of any debt document to
which the Corporation is a party (including, without limitation, any debt
document relating to the Senior Credit Facility) from each holder which accepts
such Change of Control Offer, all (but not less than all) outstanding shares of
Series B Preferred Stock or Series C Preferred Stock, as the case may be, then
held by such holder pursuant to such Change of Control Offer for cash at a
purchase price per share of Series B Preferred Stock equal to the Series B
Liquidation Preference and a purchase price per share of Series C Preferred
Stock equal to the liquidation preference with respect thereto, plus an amount
per share equal to all accrued and unpaid dividends thereon, whether or not
declared or payable, to the date of such purchase
16
pursuant to the Change of Control Offer. The total sum payable per share of
Series B Preferred Stock to be purchased (the Series B Purchased Shares") on the
Purchase Date (as defined below) is hereinafter referred to as the "Series B
Change of Control Purchase Price" and the aggregate payment to be made in
respect of the Series B Preferred Stock to be purchased on the Purchase Date is
hereinafter referred to as the "Series B Change of Control Payment."
(ii) The Change of Control Offer shall remain open from the
time of mailing until the purchase date (the "Purchase Date") set forth in the
notice of offer (the "Notice of Offer"). The Notice of Offer shall be
accompanied by a copy of the information most recently required to be supplied
under Section 8.1(a) and Section 8.1(b) of the Purchase Agreement. The Notice of
Offer shall contain all instruments and materials necessary to enable the
holders to tender shares of Series B Preferred Stock or shares of Series C
Preferred Stock, as the case may be, pursuant to the Change of Control Offer.
The Notice of Offer, which shall govern the terms of the Change of Control
Offer, shall state:
(a) that the Change of Control Offer is being made pursuant to this
Section 6(D) and that tendered shares of Series B Preferred Stock and
Series C Preferred Stock will be purchased;
(b) the purchase price to be paid with respect to the Series B
Preferred Stock and the Series C Preferred Stock and the date designated
for purchase;
(c) that the Change of Control Offer is being made for all (but not
less than all) shares of Series B Preferred Stock or shares of Series C
Preferred Stock, as the case may be, held by a holder;
(d) that the shares of Series B Preferred Stock and Series C Preferred
Stock purchased pursuant to the Change of Control Offer shall cease to
accrue dividends or interest after the date designated for purchase;
(e) such other information respecting the procedures for accepting the
Change of Control Offer as the Company shall include and such other
information as may be required by law; and
(f) that (unless otherwise required by law) any holder will be
entitled to withdraw its election if the Company receives, not later than
the close of business on the third business day next preceding the date
scheduled for purchase, a facsimile transmission or letter setting forth
the name of the holder, the number of shares of Series B Preferred Stock or
Series C Preferred Stock, as the case may be, owned by such holder (all of
which shall have been delivered for purchase) and a statement that such
holder is withdrawing its election to have such shares of Series B
Preferred Stock or Series C Preferred Stock, as the case may be, purchased.
E. Insufficient Funds for Change of Control Offer.
(i) If, on the Purchase Date, the funds of the Corporation
available by law or otherwise for purchase of the Series B Preferred Stock and
Series C Preferred
17
Stock to be purchased on such date (the "Series B Legally Available Change of
Control Funds") are insufficient to purchase the Series B Purchased Shares and
such Series C Preferred Stock on such date, the holders of Series B Purchased
Shares and such Series C Preferred Stock shall share ratably in the Series B
Legally Available Change of Control Funds according to the respective amounts
which would be payable with respect to the number of shares owned by them if the
shares to be so purchased on such Purchase Date were purchased in full.
(ii) The Corporation shall in good faith use all reasonable
efforts as expeditiously as possible to eliminate, or obtain an exception,
waiver or exemption from, any and all restrictions under applicable law or
otherwise that prevented the Corporation from paying the Series B Change of
Control Purchase Price and purchasing all of the shares of Series B Preferred
Stock to be purchased hereunder. At any time thereafter when additional funds of
the Corporation are available by law for the purchase of shares of Series B
Preferred Stock, such funds will be used, at the end of the next succeeding
fiscal quarter, to redeem the balance of such shares, or such portion thereof
for which funds are available, on the basis set forth above.
(iii) In the event that funds are not available by law or
otherwise for the payment in full of (x) the Series B Change of Control Purchase
Price for the shares of Series B Preferred Stock to be so purchased on the
Purchase Date and (y) any amounts due with respect to the purchase of the Series
C Preferred Stock, then the Corporation shall be obligated to make such partial
----
payment so that the number of shares of Series B Preferred Stock held by each
holder thereof and the number of shares of Series C Preferred Stock held by each
holder thereof shall be reduced on the pro rata basis set forth in Section
2.A.6.C(i) above. In the event that the Corporation fails to purchase shares of
Series B Preferred Stock and Series C Preferred Stock for which purchase is
required, then during the period from the Purchase Date through the date on
----
which such shares that the Corporation failed to redeem on the Series B
Mandatory Redemption Date are actually redeemed, dividends on all such shares
shall continue to accrue in cash and be cumulative as specified in Section
2.A.2.A.
7. Liquidation, Dissolution or Winding Up - Series B Preferred Stock.
-----------------------------------------------------------------
A. Liquidation, Dissolution or Winding Up. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary or
involuntary, before any distribution or payment to holders of Junior Stock, the
holders of shares of Series B Preferred Stock shall be entitled to be paid an
amount equal to the greater of (i) the Series B Liquidation Preference per
share, with respect to each share of Series B Preferred Stock, and (ii) an
amount per share of Series B Preferred Stock, with respect to each share of
Series B Preferred Stock, equal to the amount to which the holder of one share
of Series B Preferred Stock would be entitled upon liquidation of the
Corporation had such share of Series B Preferred Stock been converted to Common
Stock immediately prior to such liquidation, dissolution or winding up. In any
case where a liquidation, dissolution or winding up of the Corporation shall be
deemed to have occurred by reason of Section 2.A.7.C(ii), the holders of Series
B Preferred Stock shall be paid the amount specified above in this Section
2.A.7.A. Upon the indefeasible payment in full in cash of such amount pursuant
to this provision, the holders of Series B Preferred Stock shall not be entitled
to any further participation in any distribution of the assets of the
Corporation.
18
B. Pro-Rata Distribution. If, upon any liquidation, dissolution
or winding up of the Corporation (including, without limitation, a deemed
distribution pursuant to Section 2.A.7.C(ii)), the assets of the Corporation
available for distribution to the holders of Series B Preferred Stock and the
holders of Series C Preferred Stock shall be insufficient to permit payment in
full to all such holders of the sums which such holders are entitled to receive
in such case, then all of the assets available for distribution to holders of
----
the Series B Preferred Stock and the holders of Series C Preferred Stock shall
be distributed among and paid to such holders ratably in proportion to the
amounts that would be payable to such holders if such assets were sufficient to
permit payment in full. After payment in full of the Series B Liquidation
Preference for the Series B Preferred Stock, any assets available for
distribution shall be distributed to the holders of the Junior Stock in
accordance with the terms thereof and the holders of the Series B Preferred
Stock shall be not be entitled to any further participation in such distribution
in the remaining assets of the Corporation.
C. Certain Events.
(i) A consolidation or merger of the Corporation resulting
in the holders of the issued and outstanding voting securities of the
Corporation immediately prior to such transaction beneficially owning or
controlling a majority of the voting securities of the continuing or surviving
entity immediately following such transaction, shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 2.A.7.
(ii) The consummation of an Organic Transaction shall be
deemed to be a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 2.A.7, unless within 30 days after delivery of written
notice by the Corporation to the holders of the Series B Preferred Stock, the
holders of a majority of shares of the Series B Preferred Stock provide the
Corporation with written notice that such Organic Transaction shall not be
deemed a liquidation, dissolution or winding up of the Corporation for purposes
of this Section 2.A.7. The Corporation shall give each holder of the Series B
Preferred Stock notice of any Organic Transaction within 5 days of the
occurrence thereof.
B. Series Z Preferred Stock.
------------------------
1. Ranking. The Series Z Preferred Stock shall have no dividend rights
-------
and shall rank (A) junior to the Series B Preferred Stock and all Junior Stock
other than the Common Stock with respect to rights on liquidation, dissolution,
or winding up, and (B) senior to the Common Stock.
2. Conversion.
----------
A. Conversion. Subject to and upon compliance with this Section
2.B.2, each share of Series Z Convertible Preferred Stock shall be convertible,
at the option of the holder thereof, at any time and from time to time into that
number of shares of Common Stock equal to the Series Z Conversion Rate. The
"Series Z Conversion Rate" shall be determined by dividing the Series Z Base
Amount per share by the Adjusted Series Z Conversion Price per share.
19
B. Exercise of Conversion Right.
(i) In order to exercise its conversion right, a holder of
shares of Series Z Preferred Stock to be converted shall surrender the
certificate representing such shares to the conversion agent (which may be the
Corporation itself), with a notice of election to convert, duly completed and
signed, at the principal office of this conversion agent. Unless the shares
issuable upon conversion are to be issued in the same name as the name in which
the shares of the Series Z Preferred Stock are registered, each share
surrendered for conversion shall be accompanied by instruments of transfer duly
executed by the holder or his duly authorized attorney. If the Corporation fails
to designate a conversion agent, the conversion agent shall be the Corporation.
(ii) As promptly as practicable after the surrender by a
holder of the certificates for shares of the Series Z Preferred Stock and in any
event within ten business days after such surrender, the Corporation shall issue
and deliver to the Person for whose account such shares of Series Z Preferred
Stock were surrendered, or to its nominee or nominees (subject to compliance
with applicable stockholders' agreements and other applicable agreements
restricting transfer), a certificate or certificates for the number of full
shares of Common Stock or other securities issuable upon the conversion of those
shares and any fractional interest in respect of a share of Common Stock or
other security arising upon the conversion shall be settled as provided below.
Notwithstanding anything to the contrary set forth herein, no shares of Series Z
Preferred Stock may be converted as set forth herein unless all shares of Series
Z Preferred Stock are so converted.
(iii) Any conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which all of the
precedent conditions shall have been satisfied, and the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Common Stock or other securities
represented by those certificates at such time on such date. All shares of
Common Stock delivered upon conversion of the Series Z Preferred Stock will upon
delivery in accordance with the provisions hereof be duly and validly issued and
fully paid and nonassessable, free of all liens and charges and not subject to
any preemptive rights. Upon the surrender of certificates representing shares of
the Series Z Preferred Stock to be converted, the shares shall no longer be
deemed to be outstanding and all rights of a holder with respect to the shares
surrendered for conversion shall immediately terminate except the right to
receive the Common Stock or other securities, cash or other assets as herein
provided.
C. Fractional Shares. No fractional shares or securities
representing fractional shares of Common Stock shall be issued upon conversion
of the Series Z Preferred Stock. Any fractional interest in a share of Common
Stock resulting from conversion of a share of the Series Z Preferred Stock shall
be paid in cash (computed to the nearest cent) equal to such fraction multiplied
by the Current Market Price of the Common Stock. If more than one certificate
representing Series Z 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 the
Series Z Preferred Stock so surrendered for conversion.
20
D. Antidilution Provisions. Subject in all events to the
limitations set forth in Section 2.B.2.D(v), the Adjusted Series Z Conversion
Price shall be subject to adjustment as follows if any of the events listed
below occur prior to the conversion of each share of the Series Z Preferred
Stock.
(i) Dividend, Subdivision, Combination, or Reclassification
of Common Stock. If the Corporation shall, at any time or from time to time, (a)
declare a dividend on the Common Stock payable in shares of its capital stock
(including Common Stock), (b) subdivide the outstanding Common Stock, (c)
combine the outstanding Common Stock into a smaller number of shares or (d)
issue any shares of its capital stock in a reclassification of the Common Stock
(excluding any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation), then in each
----
such case, the Adjusted Series Z Conversion Price in effect immediately prior to
such event shall be proportionately adjusted so that, in connection with a
conversion of the Series Z Preferred Stock after such date, the holder of shares
of Series Z Preferred Stock shall be entitled to receive the aggregate number
and kind of shares of capital stock which, if the conversion had occurred
immediately prior to such date, the holder would have owned upon such conversion
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. Any such adjustment shall become effective
immediately after the record date of such dividend or the effective date of such
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur. If a dividend is
declared and such dividend is not paid, the Adjusted Series Z Conversion Price
then in effect shall be adjusted to the Adjusted Series Z Conversion Price in
effect immediately prior to such record date, subject, however, to such other
adjustments as may have been made or which would have been made under this
Section 2.B.2.D had such Adjusted Series Z Conversion Price been the Adjusted
Series Z Conversion Price in effect immediately prior to such record date.
(ii) Issuance of Rights to Purchase Common Stock Below
Adjusted Series Z Conversion Price. If the Corporation shall, at any time or
from time to time, fix a record date for the issuance of rights or warrants to
all holders of Common Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Common Stock
or securities convertible into, or exchangeable for, Common Stock at a price per
share of Common Stock, or having a conversion price, or exchange price, per
share of Common Stock, if a security is convertible into, or exchangeable for,
Common Stock (determined in each such case by dividing (x) the total
consideration payable to the Corporation upon exercise, conversion or exchange
of such rights, warrants or other securities convertible into, or exchangeable
for, Common Stock by (y) the total number of shares of Common Stock issuable
pursuant to such rights, warrants or other securities convertible into, or
exchangeable for, Common Stock), lower than the Adjusted Series Z Conversion
Price in effect immediately prior to such record date, then the Adjusted Series
----
Z Conversion Price shall be immediately reduced to the price equal to the price
per share of such Common Stock (as determined pursuant to clauses (x) and (y)
above); provided, however, that such adjustment shall be made only if such
adjustment results in an Adjusted Series Z Conversion Price which is lower than
the Adjusted Series Z Conversion Price in effect immediately prior to such
record date. In case such price for subscription or purchase may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be determined in good faith by the Board of
Directors of the Corporation and shall be that value which is agreed upon by at
least a majority of
21
the members thereof, provided, that if the holders of a majority of the shares
of Series Z Preferred Stock object to such valuation as determined by the Board
of Directors within fifteen (15) days of receipt of written notice of such
valuation or, if such percentage of the members of the Board of Directors of the
Corporation are unable to agree upon the value of such consideration, the value
thereof shall be determined by an independent investment bank of nationally
recognized stature that is selected by a majority of the members of the Board of
Directors. Any such adjustment shall become effective immediately after the
record date for such rights or warrants, and no adjustment shall be made
pursuant to either Section 2.B.2.D(iv) or 2.B.2.D(vi) by reason of the sale and
issuance of such rights or warrants or the exercise thereof. Such adjustment
pursuant to this Section 2.B.2.D(ii) shall be made successively whenever such a
record date is fixed. If such rights or warrants are not issued, or expire or
terminate without the exercise of such rights or warrants and no securities are
issued pursuant thereto, the Adjusted Series Z Conversion Price shall be
adjusted to the Adjusted Series Z Conversion Price in effect immediately prior
to such record date, subject, however, to such other adjustments as may have
been made or which would have been made under this Section 2.B.2.D had such
Adjusted Series Z Conversion Price been the Adjusted Series Z Conversion Price
in effect immediately prior to such record date.
(iii) Certain Distributions. If the Corporation shall, at
any time or from time to time, fix a record date for the distribution to all
holders of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Corporation is the continuing
corporation) of evidences of Indebtedness, assets or other property (other than
(a) cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or (b) dividends payable in capital stock for which adjustment is
made under Section 2.B.2.D(i)) or subscription rights or warrants (excluding
those referred to in Sections 2.B.2.D(ii) and 2.B.2.D(iv)), then in each such
----
case for the purpose of this 2.B.2.D(iii), the holders of the Series Z Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Series Z Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
entitled to receive such distribution.
(iv) Issuance of Common Stock Below Adjusted Series Z
Conversion Price. Subject to Section 2.B.2.D(v), the Adjusted Series Z
Conversion Price shall be subject to adjustment as follows: If the Corporation
shall, at any time or from time to time, sell or issue shares of Common Stock
(regardless of whether originally issued or from the Corporation's treasury), or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock at a price per
share of Common Stock (determined, in the case of rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total consideration
received or receivable by the Corporation in consideration of the sale or
issuance of such rights, options, warrants or convertible or exchangeable
securities, plus the total consideration payable to the Corporation upon
exercise or conversion or exchange thereof, by (y) the total number of shares of
Common Stock issuable pursuant to such rights, options, warrants or convertible
or exchangeable securities) lower than the Adjusted Series Z Conversion Price in
effect immediately prior to such sale or issuance, then the Adjusted Series Z
----
Conversion Price shall be immediately reduced to a price equal to the price per
share of such Common Stock issued at below the Adjusted Series Z
22
Conversion Price (or, in the case of rights, options, warrants or convertible or
exchangeable securities, as determined pursuant to clauses (x) and (y) above);
provided, however, that such adjustment shall be made only if such adjustment
results in an Adjusted Series Z Conversion Price which is lower than the
Adjusted Series Z Conversion Price in effect immediately prior to taking such
action. Such adjustment shall be made successively whenever such sale or
issuance is made. For the purposes of such adjustments, the shares of Common
Stock which the holder of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of such sale or issuance and
the consideration "received" by the Corporation therefor shall be deemed to be
the consideration actually received or receivable by the Corporation (plus any
underwriting discounts or commissions in connection therewith) for such rights,
options, warrants or convertible or exchangeable securities, plus the
consideration stated in such rights, options, warrants or convertible or
exchangeable securities to be payable to the Corporation for the shares of
Common Stock covered thereby. If the Corporation shall sell or issue shares of
Common Stock for a consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the "price per share of
----
Common Stock" and the "consideration" received or receivable by or payable to
the Corporation for purposes of the first sentence following the colon and the
immediately preceding sentence of this Section 2.B.2.D(iv), the fair value of
such property shall be determined in good faith by the Board of Directors of the
Corporation and shall be the value which is agreed upon by at least a majority
of the members thereof, provided, that if the holders of a majority of the
shares of Series Z Preferred Stock object to such valuation as determined by the
Board of Directors within fifteen (15) days of receipt of written notice of such
valuation or if such percentage of the members of the Board of Directors of the
Corporation are unable to agree upon the value of such consideration, the value
thereof shall be determined by an independent investment bank of nationally
recognized stature that is selected by a majority of the members of the Board of
Directors. The determination of whether any adjustment is required under this
Section 2.B.2.D(iv) by reason of the sale and issuance of rights, options,
warrants or convertible or exchangeable securities and the amount of such
adjustment, if any, shall be made only at the time of such issuance or sale and
not at the subsequent time of issuance or sale of Common Stock upon the exercise
of such rights to subscribe or purchase. Upon the expiration of any such rights,
options or warrants or the termination of any such rights to convert or exchange
or the expiration of any options, warrants or rights related to such convertible
or exchangeable securities, without any of such rights, options, warrants or
convertible or exchangeable securities, as the case may be, having been
exercised and no shares of Common Stock issued pursuant thereto, the Adjusted
Series Z Conversion Price shall be adjusted, as the case may be, to the Adjusted
Series Z Conversion Price in effect immediately prior to such sale or issuance,
subject, however, to such other adjustments as may have been made or which would
have been made pursuant to this Section 2.B.2.D had such Adjusted Series Z
Conversion Price been the Adjusted Series Z Conversion Price in effect
immediately prior to such sale or issuance of such rights, options, warrants or
convertible or exchangeable securities, as the case may be.
(v) Certain Exceptions to Anti-Dilution Provisions.
Notwithstanding anything contained in this Section 2.B.2 to the contrary, there
shall be no adjustment of the Adjusted Series Z Conversion Price pursuant to
Section 2.B.2.D(ii) or 2.B.2.D(iv) with respect to Common Stock or securities
convertible into or exchangeable for Common Stock to be issued (i) to an
employee, advisor, consultant or director of the Corporation
23
directly or pursuant to any stock option or stock plan or arrangement that has
been approved by the Corporation's Board of Directors and not exceeding, in the
aggregate, the greater of 2,430,000 shares and 10% of the number of outstanding
shares of Common Stock at the time of such issuance (assuming the exercise,
exchange or conversion of all securities of the Corporation that are exercisable
or exchangeable for, or convertible into, Common Stock at the time of such
issuance (including, without limitation, securities issued pursuant to this
Section 2.B.2.D(v)) (subject in each instance to adjustment in the circumstances
set forth in Section 2.B.2.D(i)), (ii) in connection with the acquisition by the
Corporation or any Subsidiary of all or any substantial part of the business or
assets, or capital stock, of any Person, provided, however, that, for purposes
of this item (ii), any Common Stock, or securities convertible into or
exchangeable for Common Stock, so issued must be issued at a price per share of
Common Stock, or having a conversion price, or exchange price, per share of
Common Stock, if a security is convertible into, or exchangeable for, Common
Stock (determined in each such case by dividing (x) the total consideration
payable to the Corporation upon exercise, conversion or exchange of such rights,
warrants or other securities convertible into, or exchangeable for, Common Stock
plus, without duplication, any amounts paid for such rights, warrants or other
securities upon issuance thereof, by (y) the total number of shares of Common
Stock issuable pursuant to such rights, warrants or other securities convertible
into, or exchangeable for, Common Stock) which is no less than the Current
Market Price on the date of such issuance; and provided, further, that in case
such price for subscription or purchase may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be that value which is determined in good faith by at least a majority of
the members of the Board of Directors of the Corporation: provided, that if the
holders of a majority of the shares of Series Z Preferred Stock object to such
valuation as determined by the Board of Directors within fifteen (15) days of
receipt of written notice of such valuation or, if such percentage of the
members of the Board of Directors of the Corporation are unable to agree upon
the value of such consideration, the value thereof shall be determined by an
independent investment bank of nationally recognized stature that is selected by
a majority of the members of the Board of Directors, (iii) pursuant to the
exercise or conversion, as the case may be, of any option, warrant or
convertible security outstanding on the Issue Date, including but not limited to
any shares of Series A Preferred Stock and Series B Preferred Stock issued on
that date, or (iv) upon conversion of the Series Z Preferred Stock.
(vi) Amendment/Modification to other Securities.
Notwithstanding any provision in Section 2.B.2.D to the contrary and without
limitation to or duplication of any other provision contained in Section
2.B.2.D, in the event any securities of the Corporation (other than the Series B
Preferred Stock or the Series Z Preferred Stock), including, without limitation
those securities set forth as exceptions in Subsection 2.B.2.D(v) (collectively,
the "Subject Securities"), are amended or otherwise modified by operation of its
terms or otherwise (including, without limitation, by operation of such Subject
Securities' anti-dilution provisions) in any manner whatsoever that results in
(i) the reduction of the exercise, conversion or exchange price of such Subject
Securities payable upon the exercise for, or conversion or exchange into, Common
Stock or other securities exercisable for, or convertible or exchangeable into,
Common Stock and/or (ii) such Subject Securities becoming exercisable for, or
convertible or exchangeable into (A) more shares or dollar amount of such
Subject Securities which are, in turn exercisable for, or convertible or
exchangeable into, Common Stock, or (B) more shares of Common Stock, then such
----
amendment or modification shall be treated for purposes of Section 2.B.2.D as if
the Subject Securities which have been amended or modified have been terminated
24
and the Adjusted Series Z Conversion Price treated in accordance with the last
sentence of Section 2.B.2.D(ii) and new securities have been issued in lieu of
the Subject Securities with the amended or modified terms, and an appropriate
adjustment to the Adjusted Series Z Conversion Price shall be made hereunder
with respect to such new securities (which adjustment shall be in lieu of the
original adjustment to the Adjusted Series Z Conversion Price hereunder, if any,
made upon the issuance of the Subject Securities). The Corporation shall make
all necessary adjustments (including successive adjustments if required) to the
Adjusted Series Z Conversion Price in accordance with Section 2.B.2.D, but in no
event shall the Adjusted Series Z Conversion Price be greater than it was
immediately prior to the application of this subsection to the transaction in
question. On the expiration or termination of any such amended or modified
Subject Securities for which adjustment has been made pursuant to the operation
of the provisions of this subsection under Section 2.B.2.D(ii), 2.B.2.D(iv),
2.B.2.D(v) or 2.B.2.D(vi), as the case may be, without such subject Securities
having been exercised, converted or exchanged in full pursuant to their terms,
the Adjusted Series Z Conversion Price shall be appropriately readjusted in the
manner specified in such Section.
E. De Minimis Adjustments. No adjustment of the Adjusted Series Z
Conversion Price shall be made if the amount of such adjustment would result in
a change in the Adjusted Series Z Conversion Price per share of less than l%,
but in such case any adjustment that would otherwise be required to be made
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment, which together with any adjustment so carried
forward, would result in a change in the Adjusted Series Z Conversion Price of
1% or more per share. Notwithstanding the provisions of the first sentence of
this Section 2.B.2.E, any adjustment postponed pursuant to this Section 2.B.2.E
shall be made no later than the earlier of (a) three years from the date of the
transaction that would, but for the provisions of the first sentence of this
Section 2.B.2.E, have required such adjustment and (b) immediately prior to the
date of any conversion of shares of Series Z Preferred Stock.
F. Reorganization, Reclassification, Merger and Sale of Assets
Adjustment. If there occurs any capital reorganization or any reclassification
of the Common Stock, the consolidation or merger of the Corporation with or into
another Person (other than a merger or consolidation of the Corporation in which
the Corporation is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock) or the sale,
transfer or other disposition of all or substantially all of the assets of the
Corporation to another Person, then each share of Series Z Preferred Stock shall
----
thereafter be convertible into the same kind and amounts of securities
(including shares of stock) or other assets, or both, which were issuable or
distributable to the holders of outstanding Common Stock and upon such
reorganization, reclassification, consolidation, merger, sale or conveyance, in
respect of that number of shares of Common Stock into which such share of Series
Z Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, consolidation, merger, sale or conveyance;
and, in any such case, appropriate adjustments (as determined in good faith by
the Board of Directors of the Corporation) shall be made to assure that the
provisions set forth herein shall thereafter be applicable, as nearly as
reasonably may be practicable, in relation to any securities or other assets
thereafter deliverable upon the conversion of the Series Z Preferred Stock.
25
G. Certificate as to Adjustments. Whenever the number of shares
of Common Stock issuable, or the securities or other property deliverable upon
the conversion of the Series Z Preferred Stock, shall be adjusted pursuant to
the provisions hereof, the Corporation shall promptly give written notice
thereof to each holder of shares of Series Z Preferred Stock at such holder's
address as it appears on the transfer books of the Corporation and shall
forthwith file, at its principal executive office and with any transfer agent or
agents for the Series Z Preferred Stock, the Series Z Preferred Stock and the
Common Stock, a certificate, signed by the President or one of the Vice
Presidents of the Corporation, and by its Chief Financial Officer, its Treasurer
or one of its Assistant Treasurers, stating the number of shares of Common Stock
issuable, or the securities or other property deliverable, per share of Series Z
Preferred Stock converted, calculated to the nearest cent or to the nearest one
one-hundredth of a share and setting forth in reasonable detail the method of
calculation and the facts requiring such adjustment and upon which such
calculation is based. Each adjustment shall remain in effect until a subsequent
adjustment hereunder is required.
H. No Amendment of Certificate of Incorporation. The Corporation
will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other action, avoid or seek to avoid the observance or
performance of any term of the Certificate of Incorporation, but will at all
times in good faith assist in carrying out of all such terms and in taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holders of Series Z Preferred Stock against dilution or other
impairment. Without limiting the generality of the foregoing, the Corporation
(a) will not increase the par value of any shares of stock receivable on the
conversion of the Series Z Preferred Stock, (b) will at all times reserve and
keep available the maximum number of its authorized shares of Common Stock, free
from all preemptive rights therein, which will be sufficient to permit the full
conversion of the Series Z Preferred Stock, and (c) will take such action as may
be necessary or appropriate in order that all shares of Common Stock as may be
issued pursuant to the conversion of the Series Z Preferred Stock will, upon
issuance, be duly and validly issued, fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof.
I. Certain Events. In case at any time prior to the conversion of
all of the Series Z Preferred Stock:
(i) the Corporation shall authorize the granting to all the
holders of Common Stock of rights to subscribe for or purchase any shares of
stock of any class or of any other rights; or
(ii) there shall be any reclassification of the Common Stock
of the Corporation (other than a subdivision or combination of its outstanding
Common Stock); or
(iii) there shall be any capital reorganization by the
Corporation; or
(iv) there shall be an Organic Transaction; or
26
(v) there shall be voluntary or involuntary dissolution,
liquidation and winding up by the Corporation or dividend or distribution to
holders of Common Stock (other than the Corporation's customary cash and stock
dividends); or
(vi) any other event requiring adjustment of the Adjusted
Series Z Conversion Price as set forth in Section 2.B.2.D;
then in any one or more of said cases, the Corporation shall cause to be
- ----
delivered to the holder, at the earliest practicable time (and, in any event,
not less than 15 days before any record date or the date set for definitive
action), written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or such reorganization, sale, consolidation, merger, dissolution,
liquidation or winding up or other transaction shall take place, as the case may
be. Such notice shall also set forth such facts as shall indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Adjusted Series Z Conversion Price and the kind and amount of the shares
of stock and other securities and property deliverable upon conversion of the
Series Z Preferred Stock. Such notice shall also specify the date, if known, as
of which the holders of record of the Common Stock shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their shares of the Common Stock for securities or other property (including
cash) deliverable upon such reorganization, sale, consolidation, merger,
dissolution, liquidation or winding up or other transaction, as the case may be.
J. Reservation of Common Stock. The Corporation shall at all
times reserve and keep available for issuance upon the conversion of the shares
of Series Z Preferred Stock the maximum number of each of its authorized but
unissued shares of Common Stock as is reasonably anticipated to be sufficient to
permit the conversion of all outstanding shares of Series Z Preferred Stock into
Common Stock and shall take all action required to increase the authorized
number of shares of Common Stock, as the case may be, if at any time there shall
be insufficient authorized but unissued shares of Common Stock, as the case may
be, to permit such reservation or to permit the conversion of all outstanding
shares of Series Z Preferred Stock.
K. No Conversion Charge or Tax. The issuance and delivery of
certificates for shares of Common Stock upon the conversion of shares of Series
Z Convertible Preferred Stock shall be made without charge to the holder of
shares of Series Z Convertible Preferred Stock for any issue or transfer tax, or
other incidental expense in respect of the issuance or delivery of such
certificates or the securities represented thereby, all of which taxes and
expenses shall be paid by the Corporation.
3. Status on Conversion or Redemption. Upon any conversion or
----------------------------------
redemption of shares of the Series Z Preferred Stock, the shares so converted
shall be canceled.
4. Voting Rights of the Series Z Preferred Stock. The shares of the
---------------------------------------------
Series Z Preferred Stock shall not have any right to vote except for voting
rights under applicable law.
5. Redemption. The Corporation may, at its option, redeem the shares
----------
of Series Z Preferred Stock in accordance with the terms set forth below.
27
A. Optional Redemption. On March 29, 2009 (the "'Series Z
Redemption Date"), each outstanding share of Series Z Preferred Stock may, at
the option of the Corporation, be redeemed (unless otherwise prevented by law),
at a redemption price per share, in cash, equal to 100% of the Series Z
Liquidation Preference for such Series Z Preferred Stock. The total sum payable
per share of Series Z Preferred Stock to be redeemed (the "Series Z Redeemed
Shares") on the Series Z Redemption Date is hereinafter referred to as the
"Series Z Redemption Price," and the payment to be made on the Series Z
Redemption Date for the Redeemed Shares is hereinafter referred to as the
"Series Z Redemption Payment." Upon written notice from the Corporation, each
holder of Series Z Preferred Stock so redeemed shall promptly surrender to the
Corporation, at any place where the Corporation shall maintain a transfer agent
for its Series Z Preferred Stock, certificates representing the shares so
redeemed, duly endorsed in blank or accompanied by proper instruments of
transfer.
B. Termination of Rights. Except as set forth in Section 2.B.5.C,
on and after the Series Z Redemption Date, all rights of any holder of Series Z
Preferred Stock shall cease and terminate; and such Redeemed Shares shall no
longer be deemed to be outstanding, whether or not the certificates representing
such shares have been received by the Corporation; provided, however, that, if
the Corporation defaults in the payment of the Series Z Redemption Payment for
any reason, including, without limitation, the lack of Series Z Legally
Available Redemption Funds therefor, the rights of the holders of Series Z
Preferred Stock shall continue until the Corporation cures such default.
C. Insufficient Funds for Redemption.
(i) If the funds of the Corporation available for redemption
of the Series Z Preferred Stock by law or otherwise on the Series Z Redemption
Date (the "Series Z Legally Available Redemption Funds") are insufficient to
redeem the Redeemed Shares on such date, the holders of Redeemed Shares shall
share ratably in the Legally Available Redemption Funds according to the
respective amounts which would be payable with respect to the number of shares
owned by them if the shares to be so redeemed on such Series Z Redemption Date
were redeemed in full.
(ii) The Corporation shall in good faith use all reasonable
efforts as expeditiously as possible to eliminate, or obtain an exception,
waiver or exemption from, any and all restrictions under applicable law that
prevented the Corporation from paying the Series Z Redemption Price and
redeeming all of the shares of Series Z Preferred Stock to be redeemed
hereunder. At any time thereafter when additional funds of the Corporation are
available by law for the redemption of shares of Series Z Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are
available, on the basis set forth above.
(iii) In the event that funds are not available by law for
the payment in full of the Series Z Redemption Price for the shares of Series Z
Preferred Stock to be so redeemed on the Series Z Redemption Date, then the
----
Corporation shall be obligated to make such partial redemption so that the
number of shares of Series Z Preferred Stock held by each holder shall be
reduced on a pro rata basis.
28
6. Liquidation, Dissolution or Winding Up - Series Z Preferred Stock.
-----------------------------------------------------------------
A. Liquidation, Dissolution or Winding Up. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary or
involuntary, before any distribution or payment to holders of any Junior Stock
ranking junior to the Series Z Preferred Stock, the holders of outstanding
shares of Series Z Preferred Stock shall be entitled to be paid an amount equal
to the Series Z Liquidation Preference per share, with respect to each share of
Series Z Preferred Stock. The term "Series Z Liquidation Preference" shall mean,
as to each share of Series Z Preferred Stock, an amount equal to the Series Z
Original Issue price per share of Series Z Preferred Stock. The term "Series Z
Original Issue Price" shall mean $.01 per share for each of the then outstanding
shares of Series Z Preferred Stock, as may be adjusted for subdivisions or
combinations of the Series Z Preferred Stock. In any case where a liquidation,
dissolution or winding up of the Corporation shall be deemed to have occurred by
reason of Section 2.B.6.C(ii), the holders of Series Z Preferred Stock shall be
paid the amount specified above in this Section 2.B.6.A. Upon the indefeasible
payment in full in cash of such amount pursuant to this provision, the holders
of Series Z Preferred Stock shall not be entitled to any further participation
in any distribution of the assets of the Corporation.
B. Pro-Rata Distribution. If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation available for
distribution to the holders of Series Z Preferred Stock shall be insufficient to
permit payment in full to such holders of the sums which such holders are
entitled to receive in such case, then all of the assets available for
----
distribution to holders of the Series Z Preferred Stock shall be distributed
among and paid to such holders ratably in proportion to the amounts that would
be payable to such holders if such assets were sufficient to permit payment in
full. After payment in full of the Series Z Liquidation Preference for the
Series Z Preferred Stock, any assets available for distribution shall be
distributed to the holders of the Junior Stock ranking junior to the Series Z
Preferred Stock and the holders of the Series Z Preferred Stock shall be not be
entitled to any further participation in such distribution in the remaining
assets of the Corporation.
C. Certain Events.
(i) A consolidation or merger of the Corporation resulting
in the holders of the issued and outstanding voting securities of the
Corporation immediately prior to such transaction owning or controlling a
majority of the voting securities of the continuing or surviving entity
immediately following such transaction, shall not be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this Section 2.B.6.
(ii) The consummation of an Organic Transaction shall be
deemed to be a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 2.B.6, unless within 30 days after delivery of written
notice by the Corporation to the holders of the Series Z Preferred Stock, the
holders of a majority of shares of the Series Z Preferred Stock provide the
Corporation with written notice that such Organic Transaction shall not be
deemed a liquidation, dissolution or winding up of the Corporation for purposes
of this Section 2.B.6. The Corporation shall give each holder of the Series Z
Preferred Stock notice of any Organic Transaction within 5 days of the
occurrence thereof.
29
C. General Provisions.
------------------
1. Notices. Except as otherwise expressly provided, whenever notices
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or other communications are required to be made, delivered or otherwise given to
holders of shares of the Series B Preferred Stock and the Series Z Preferred
Stock, the notice or other communication shall be made in writing and shall be
by registered or certified first class mail, return receipt requested,
telecopier, courier service or Personal delivery, addressed to the Persons shown
on the books of the Corporation as such holders at the addresses as they appear
in the books of the Corporation, as of a record date or dates determined in
accordance with the Corporation's Certificate of Incorporation and By-laws and
applicable law, as in effect from time to time. All such notices and
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; when delivered by courier, if delivered by commercial
overnight courier service; five business days after being deposited in the U. S.
mail, postage prepaid, if mailed; and when receipt is acknowledged, if
telecopied.
2. Certain Remedies. Any registered holder of shares of Series B
----------------
Preferred Stock or Series Z Preferred Stock shall be entitled to an injunction
or injunctions to prevent violations of the provisions of the Certificate of
Incorporation and to enforce specifically the terms and provisions of the
Certificate of Incorporation in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
such holder may be entitled at law or in equity. Notwithstanding the foregoing,
the observance of any term of the Corporation's Certificate of Incorporation
which benefits only the holders of the Series B Preferred Stock or Series Z
Preferred Stock may be waived by holders of sixty six and two thirds percent (66
2/3%) of all issued and outstanding Series B Preferred Stock or Series Z
Preferred Stock, as the case may be (either generally or in a particular
instance and either retroactively or prospectively).
3. lnvalidity. If any right, preference or limitation of the Series B
----------
Preferred Stock or the Series Z Preferred Stock set forth herein (as amended
from time to time) is invalid, unlawful or incapable of being enforced by reason
of any rule or law or public policy, all other rights, preferences and
limitations set forth in this Section 2 (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation herein set forth shall not be deemed dependent upon any other such
right, preference or limitation unless so expressed herein.
4. Repurchase of Common Stock. The Corporation covenants and agrees
--------------------------
that it will not, without the prior written consent of each affected Regulated
Holder, to the extent that such Regulated Holder is subject to the provisions of
the Bank Holding Company Act of 1956, as amended (including Regulation Y
promulgated thereunder), directly or indirectly, purchase, redeem, retire or
otherwise acquire any shares of capital stock of the Corporation if, as a result
of such purchase, redemption, retirement or other acquisition, any Regulated
Holder, together with its Affiliates, will own, or be deemed to own, Common
Stock or other shares of capital stock of the Corporation representing capital
equal to (x) 4.9% or more of the aggregate voting shares or (y) 24.9% or more of
the aggregate shares, in each case of the Corporation then outstanding (assuming
the conversion of all Series Z Preferred Stock then held by such Regulated
Holder and its Affiliates).
30
5. Regulatory Matters. The Corporation agrees to cooperate in good
------------------
faith with and assist any Regulated Holder or any of the Regulated Holder's
Affiliates as such Regulated Holder may reasonably request in connection with
any United States regulatory issues that may arise with respect to the
Corporation. Anything herein or in the Purchase Agreement to the contrary
notwithstanding, in the event that any Regulated Holder or any of such Regulated
Holder's Affiliates shall determine that it is illegal or unduly burdensome, by
reason of regulatory restriction, for such Regulated Holder or such Affiliate to
continue to hold some or all of the Series Z Preferred Stock or its Common Stock
(upon conversion of the Series Z Preferred Stock) or any other securities of the
Corporation held by it, such Regulated Holder or such Affiliate, as the case may
be, may sell or otherwise dispose of that portion of its Series Z Preferred
Stock or Common Stock, as the case may be, that such Regulated Holder or such
Affiliate determines to be appropriate in light of such regulatory restrictions
in as prompt and orderly a manner as is reasonably necessary. The Corporation
shall cooperate with and assist such Regulated Holder or such Affiliate, as the
case may be, in disposing of such Series Z Preferred Stock or Common Stock, and
(without limiting the foregoing) at the request of such Regulated Holder or such
Affiliate, as the case may be, the Corporation shall provide (and authorize such
Regulated Holder or such Affiliate, as the case may be, to provide) financial
and other information concerning the Corporation to any prospective purchaser of
the Series Z Preferred Stock or Common Stock owned by such Regulated Holder or
such Affiliate, as the case may be, subject to reasonable and appropriate
confidentiality arrangements. The provisions of this Section 2.C.5 shall inure
solely to the benefit of such Regulated Holders and their affiliates which are
subject to the provisions of the Bank Holding Company Act of 1956, as amended
(including Regulation Y promulgated thereunder).
D. Definitions. For the purposes of this Certificate of Designation, the
-----------
following terms shall have the meanings indicated:
"Acquisition" shall mean: (a) the acquisition by MedSource Technologies,
-----------
LLC of all of the capital stock of (i) National Wire and Stamping, Inc., a
Colorado corporation and (ii) Texcel, Inc., a Massachusetts corporation; (b) the
acquisition by Brimfield Precision, LLC, a wholly-owned Subsidiary of MedSource
Technologies, LLC, of substantially all of the assets of Brimfield Precision,
Inc., a Massachusetts corporation; (c) the acquisition by Kelco Acquisition LLC,
a wholly-owned Subsidiary of MedSource Technologies, LLC, of substantially all
of the assets of Kelco Industries, Inc., a Minnesota corporation, (d) the
acquisition by Hayden Precision Industries, LLC, a wholly-owned Subsidiary of
MedSource Technologies, LLC, of substantially all of the assets of W.N.
Rushwood, Inc., a New York corporation; (e) the acquisition by Portlyn, LLC, a
wholly-owned Subsidiary of MedSource Technologies, LLC, of substantially all of
the assets of Portlyn Corporation, a New Hampshire corporation or (f) the
acquisition by The MicroSpring Company, LLC, a wholly-owned Subsidiary of
MedSource Technologies, LLC of substantially all of the assets of The
MicroSpring Co., Inc., a Massachusetts corporation.
"Adjusted Series B Conversion Price" shall mean, with respect to each share
----------------------------------
of Series B Preferred Stock, the Series B Conversion Price, subject to
appropriate adjustment from time to time for events described in Section 2.A.3
occurring after the Issue Date.
31
"Adjusted Series Z Conversion Price" shall mean, with respect to each share
----------------------------------
of Series Z Preferred Stock, the Series Z Conversion Price, subject to
appropriate adjustment from time to time for events described in Section 2.B.2
occurring after the Issue Date.
"Affiliate" shall have the meaning assigned to that term in Regulation
---------
12b-2 promulgated under the Exchange Act.
"By-laws" shall mean the by-laws, as amended, of the Corporation and/or its
-------
Subsidiaries, as the context may require.
"Certificate of Incorporation" shall mean the Certificate of Incorporation,
----------------------------
as amended (including, without limitation, by any certificate of amendment or
certificate of designation), of the Corporation and/or its Subsidiaries, as the
context may require, together.
"Closing Price" shall mean, with respect to each share of Common Stock, for
-------------
any day, (a) the last reported sale price regular way or, in case no such sale
takes place on such day, the average of the closing bid and asked prices regular
way, in either case as reported on the principal national securities exchange on
which such Common Stock is listed or admitted for trading or (b) if such Common
Stock is not listed or admitted for trading on any national securities exchange,
the last reported sale price or, in case no such sale takes place on such day,
the average of the highest reported bid and the lowest reported asked quotation
for such Common Stock as reported on the Automatic Quotation System of NASDAQ or
a similar service if NASDAQ is no longer reporting such information.
"Common Stock" shall mean the Corporation's Common Stock, par value $.01
------------
per share.
"Contingent Obligation" as applied to any Person, shall mean any direct or
---------------------
indirect liability, contingent or otherwise, of that Person: (i) with respect to
any Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; or (iii)
under any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
32
"Current Market Price" shall mean, with respect to shares of Common Stock,
--------------------
on any date, the average of the daily Closing Prices per share of Common Stock
for the 10 consecutive trading days commencing 15 days before such date. If on
any such date the shares of such Common Stock are not listed or admitted for
trading on any national securities exchange or quoted on NASDAQ or a similar
service, the Current Market Price for such shares shall be the fair market value
of such shares on such date as determined in good faith by the Board of
Directors of the Corporation and shall be the value which is agreed upon by at
least a majority of the members thereof, or if such percentage of the members of
the Board of Directors of the Corporation are unable to agree upon the value of
such consideration, the value thereof shall be determined by an independent
investment bank of a nationally recognized stature that is selected by the
holders of a majority of the outstanding shares of Series B Preferred Stock.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
------------
amended, and the rules and regulations of the Commission thereunder.
"GAAP" means generally accepted United States accounting principles in
----
effect from time to time.
"Governmental Authority" shall mean the government of any nation, state,
----------------------
city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of any of the foregoing.
"Indebtedness" shall mean as to any Person (a) all obligations of such
------------
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, unfunded credit commitments,
letters of credit and bankers' acceptances, whether or not matured), (b) all
indebtedness, obligations or liability of such Person to another Person (whether
or not evidenced by notes, bonds, debentures or similar instruments) whether
matured or unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, or joint or several, (c) all Obligations of such Person to pay
the deferred purchase price of property or services, except trade accounts
payable and accrued commercial or trade liabilities arising in the ordinary
course of business, (d) all interest rate and currency swaps, caps, collars and
similar agreements or hedging devices under which payments are obligated to be
made by such Person, whether periodically or upon the happening of a
contingency, (e) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (f) all indebtedness secured by any Lien (other than Liens in favor
of lessors under leases other than leases included in clause (e)) on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
non-recourse to the credit of that Person, and (g) any Contingent Obligation of
such Person. The determination of the amount of the Indebtedness at the relevant
time of determination with respect to the Parent and its Subsidiaries shall be
made on a consolidated basis in accordance with GAAP consistently applied.
"Issue Date" shall mean the date on which the shares of Series B Preferred
----------
Stock or Series Z Preferred Stock, as the case may be, are issued.
33
"Junior Stock" shall mean the Common Stock, the Series A Preferred Stock,
------------
the Series Z Preferred Stock and any other series or class of common stock,
preferred stock or other capital stock now or hereafter authorized the terms of
which do not provide that such stock shall rank senior to or pari passu with the
Series B Preferred Stock on liquidation or as to dividends.
"NASDAQ" shall mean the National Association of Securities Dealers, Inc.
------
"Organic Transaction" shall mean (x) the sale, lease, exchange, transfer or
-------------------
other disposition, either directly or indirectly (including, without limitation,
by merger, consolidation or otherwise), of assets constituting all or
substantially all of the assets of the Corporation and its Subsidiaries taken as
a whole, to a Person or group of Persons, (y) any merger, consolidation or other
business combination, or refinancing or recapitalization that results in the
holders of the issued and outstanding voting securities of the Corporation
immediately prior to such transaction beneficially owning or controlling less
than a majority of the voting securities of the continuing or surviving entity
immediately following such transaction and/or (z) any Person or Persons acting
together or which would constitute a "group" for the purposes of Section 13(d)
of the Exchange Act, together or with any Affiliates thereof, other than the
holders of the Common Stock, the holders of the Series A Preferred Stock, the
holders of the Series B Preferred Stock, and the holders of the Series Z
Preferred Stock as of the Issue Date, and their respective Affiliates,
beneficially owning (as defined in Rule 13d-3 of the Exchange Act) or
controlling, directly or indirectly, at least 50% of the total voting power of
all classes of capital stock entitled to vote generally in the election of
Directors of the Corporation.
"Person" shall mean any individual, firm, corporation, limited liability
------
company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of any such
entity.
"Purchase Agreement" means the Securities Purchase Agreement, dated as of
------------------
March 30, 1999, by and among the Corporation, MedSource Technologies, LLC, J.H.
Whitney Mezzanine Fund, L.P., J.H. Whitney III, L.P., Whitney Strategic Partners
III, L.P. and German American Capital Corporation, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
"Qualified IPO" has the meaning assigned such term in Section 2.A.3.A.
-------------
"Regulated Holder" shall mean any holder which is subject to the provisions
----------------
of Regulation Y promulgated by the Board Governors of the Federal Reserve, or
any successor regulation thereto or which is affiliated with any entity subject
to the provisions of Regulation Y.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the Commission thereunder.
"Senior Credit Facility" shall mean the Credit Agreement, dated as of March
----------------------
30, 1999, among the Corporation, MedSource Technologies, LLC, the lenders party
thereto from time to time, and Deutsche Bank AG, New York Branch, as Agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement
34
thereto), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including, without limitation, increasing the amount of available
borrowings thereunder or adding Subsidiaries of the Corporation as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement, and whether by the
same or any other agent, lender or group of lenders (in each such case, such
amendments, supplements or other modifications shall be in compliance with and
subject to Section 9.4(j) of the Purchase Agreement).
"Series A Preferred Stock" shall mean the Series A Preferred Stock, par
------------------------
value $.01 per share, of the Corporation.
"Series B Conversion Price" shall mean, as of the Issue Date, with respect
-------------------------
to each share of Series B Preferred Stock, $73.33.
"Series B Legally Available Dividend Funds" has the meaning assigned such
-----------------------------------------
term in Section 2.A.2.A.
"Series B Liquidation Preference" means, as to each share of Series B
-------------------------------
Preferred Stock, an amount equal to the Series B Original Issue Price per share
of Series B Preferred Stock plus an amount equal to all unpaid accrued or
accumulated dividends (whether or not declared) on such share of Series B
Preferred Stock, to the final date of distribution, the Series B Mandatory
Redemption Date, or the date of the purchase pursuant to a Change of Control
Offer, as the case may be.
"Series B Mandatory Redemption Date" has the meaning assigned such term in
----------------------------------
Section 2.A.6.A.
"Series B Preferred Stock" has the meaning assigned such term in Section 1.
------------------------
"Series C Change of Control" means a "Change of Control" as defined in the
--------------------------
certificate of designation filed with respect to the Series C Preferred Stock.
"Series C Preferred Stock Liquidation Preference" means, as to each share
-----------------------------------------------
of Series C Preferred Stock, an amount equal to the liquidation preference of
such share of Series C Preferred Stock plus an amount equal to all unpaid
accrued or accumulated dividends (whether or not declared) on such share of
Series C Preferred Stock, to the final date of distribution or mandatory
redemption of such Series C Preferred Stock.
"Series C Original Issue Date" shall mean the date on which shares of
----------------------------
Series C Preferred Stock were first issued by the Corporation.
"Series C Preferred Stock" shall mean the 6.0% Cumulative Convertible
------------------------
Redeemable Preferred Stock, Series C, par value $.01 per share, of the
Corporation.
"Series Z Base Amount" shall mean with respect to each share of Series Z
--------------------
Preferred Stock $73.33, as may be adjusted for subdivisions or combinations of
the Series Z Preferred Stock.
35
"Series Z Conversion Price" shall mean, as of the Issue Date, with respect
-------------------------
to each share of Series Z Preferred Stock, $73.33.
"Series Z Preferred Stock" has the meaning assigned such term in Section 1.
------------------------
"Series Z Redemption Date" has the meaning assigned such term in Section
------------------------
2.B.5.A.
"Share Transfer Agreement" means the Share Transfer Agreement, dated as of
------------------------
March 30, 1999, by and among the Corporation, the stockholders named therein,
J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P., as the same now
exists or may hereafter be amended, modified or supplemented from time to time.
"Subsidiary" shall mean, with respect to any Person, a corporation, limited
----------
liability company or other entity of which more than 50% of the voting power of
the voting equity securities or equity interest is owned, directly or
indirectly, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Certificate of Designation shall refer
to a Subsidiary or Subsidiaries of the Corporation.
SIXTH: This amended and restated Certificate of Designation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
[The next page is the signature page]
36
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Corporation has executed this instrument and affirmed that the statements made
herein are true under the penalties of perjury as of October 24, 2000.
MEDSOURCE TECHNOLOGIES, INC.
By: /s/ Richard J. Effress
----------------------------------
Name: Richard J. Effress
Title: Chairman
S-1