Exhibit 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDSOURCE TECHNOLOGIES, INC.
----------------------------
The undersigned having filed its original certificate of incorporation
under the name "Veratek International, Inc." with the Secretary of State of the
state of Delaware on April 14, 1998, thereby forming a corporation under and
subject to the requirements of the Delaware General Corporation Law, does hereby
further amend and restate its certificate of incorporation as follows:
ARTICLE 1.
The name of the corporation (hereinafter called the "Corporation") is
MedSource Technologies, Inc.
ARTICLE 2.
The address, including street, number, city, and county, of the
registered office of the Corporation in the state of Delaware is c/o United
Corporate Services, Inc., 15 East North Street, City of Dover, Kent County,
Delaware 19901; and the name of the registered agent of the Corporation in the
state of Delaware at such address is United Corporate Services, Inc.
ARTICLE 3.
The nature of the business and the purposes to be conducted and
promoted by the Corporation shall be to conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law.
ARTICLE 4.
The Corporation shall have perpetual existence.
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ARTICLE 5.
(a) The total number of shares of all classes of capital stock which
the Company has authority to issue is 41,000,000 shares consisting of (i)
1,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred
Stock") and (ii) 40,000,000 shares of Common Stock, par value $.01 per share
(the "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of Directors,
each of said series to be distinctly designated. The designations, number,
voting powers, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations or restrictions thereof, if
any, of each such series may differ from those of any and all other series of
Preferred Stock at any time outstanding, and the Board of Directors is hereby
expressly granted authority to fix or alter, by resolution or resolutions, and
to file a certificate with respect thereto pursuant to the applicable law of the
state of Delaware, the designation, number, voting powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of each such series,
including but without limiting the generality of the foregoing, the following:
(i) The distinctive designation of, and the number of shares of
Preferred Stock that shall constitute, such series, which number
(except where otherwise provided by the Board of Directors in the
resolution establishing such series) may be increased or decreased (but
not below the number of shares of such series then outstanding) from
time to time by like action of the Board of Directors;
(ii) The rights in respect of dividends, if any, of such series of
Preferred Stock, the extent of the preference or relation, if any, of
such dividends to the dividends payable on any other class or classes
or on any other series of the same or other class or classes of capital
stock of the Company and whether such dividends shall be cumulative or
noncumulative;
(iii) The right, if any, of the holders of such series of Preferred
Stock to convert the same into, or exchange the same for, shares of any
other class or classes or of any other series of the same or any other
class or classes of capital stock of the Company, and the terms and
conditions of such conversion or exchange;
(iv) Whether or not shares of such series of Preferred Stock shall
be subject to redemption, and the redemption price or prices and the
time or time at which, and the terms and conditions on which, shares of
such series of Preferred Stock may be redeemed;
(v) The rights, if any, of the holders of such series of
Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Company or in the event of any merger
or consolidation of or sale of assets by the Company;
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(vi) The voting powers, if any, of the holders of any series of
Preferred Stock generally or with respect to any particular matter,
which may be less than, equal to or greater than one vote per share;
and
(vii) Such other powers, preferences and relative, participating,
optional and other special rights, and the qualifications, limitations
and restrictions thereof, as the Board of Directors shall determine.
ARTICLE 6.
The Corporation shall, to the fullest extent permitted by section 145
of the Delaware General Corporation Law, as the same may be amended and
supplemented from time to time, indemnify each stockholder, director, officer,
employee and agent, and each person whom it shall have power to indemnify under
that section 145 from and against any and all of the expenses, liabilities or
other matters referred to in or covered by that section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in this
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a stockholder,
director, officer, employee or agent or other indemnifiable person and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
ARTICLE 7.
The personal liability of the stockholders, directors and officers of
the Corporation is hereby eliminated or limited to the fullest extent permitted
by paragraph 7 of subsection (b) of section 102 of the Delaware General
Corporation Law, as the same may be amended or supplemented from time to time.
ARTICLE 8.
From time to time any of the provisions of this Amended and Restated
Certificate of Incorporation may be amended, altered or repealed, and other
provisions authorized by the laws of the state of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the Corporation by
this Amended and Restated Certificate of Incorporation are granted subject to
the provisions of this article 8.
We, the undersigned officers of the Corporation, have herewith set our
hands as the Chairman and Assistant Secretary, respectively, of the Corporation
this 21st day of January, 1999 and we hereby certify that this Amended and
Restated Certificate of Incorporation was duly adopted in accordance with
sections 242 and 245 of the Delaware General Corporation Law and
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we hereby affirm that the foregoing certificate is our act and deed and the act
and deed of the Corporation and that the facts stated therein are true.
/s/ Richard J. Effress
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Richard J. Effress
Chairman
Attest:
/s/ Edward R, Mandell
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Edward R. Mandell
Assistant Secretary
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__________________________________________
CERTIFICATE OF DESIGNATION
OF
MEDSOURCE TECHNOLOGIES, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
__________________________________________
SERIES A PREFERRED STOCK
MedSource Technologies, Inc., a Delaware corporation (the
"Company"), hereby certifies that the following resolution has been duly adopted
by the Board of Directors of the Company:
RESOLVED, that pursuant to the authority granted to and vested in the
board of directors of the Company (the "Board") by the provisions of the
certificate of incorporation of the Company (as amended, the "Certificate of
Incorporation"), there hereby is created, out of the 1,000,000 shares of
preferred stock, par value $.01 per share, of the Company authorized by Article
5 of the Certificate of Incorporation (the "Preferred Stock"), a series of the
Preferred Stock consisting of 100,000 shares, which series shall have the
following powers, designations, preferences and relative, participating,
optional and other special rights, and the following qualifications, limitations
and restrictions:
1. Designation. This series of Preferred Stock shall be designated
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"Series A Preferred Stock." There are 100,000 shares of the Company's preferred
stock, par value $.01 per share, designated as Series A Preferred Stock.
2. Dividends.
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(a) Amount. The holders of shares of Series A Preferred Stock shall be
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entitled to receive dividends on each share of Series A Preferred Stock held at
the annual rate of $60.00.
(b) No Cash Dividends. Except in connection with any redemption of
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shares of Series A Preferred Stock or upon liquidation of the Company, or as
otherwise determined by the Board, dividends on the Series A Preferred Stock
shall not be paid in cash. Upon conversion of any share of Series A Preferred
Stock pursuant to section 4, all
accumulated but unpaid dividends thereon shall be extinguished. Dividends shall
accumulate on the basis of a 365 or 366 day year, as the case may be, with
respect to any share of Series A Preferred Stock from date of issuance.
(c) Dividends Priority. Unless all accumulated but unpaid dividends
------------------
shall be declared and paid in cash in full on all outstanding shares of Series A
Preferred Stock, without the consent of holders of a majority of the outstanding
shares of Series A Preferred Stock (voting together as a single class, at a
meeting called for such purpose or by written consent), no dividends shall be
declared or paid on any shares of Junior Stock (as defined below) or any Parity
Stock (as defined below) that by its terms ranks pari passu with the Series A
Preferred Stock as to dividends, other than dividends in shares of the same
class and series of Junior Stock or Parity Stock, as the case may be, to the
holders of Junior Stock or Parity Stock, as the case may be, in respect of which
such dividend is declared or paid.
(d) Junior Stock. "Junior Stock" shall mean the Company's common
------------
stock, par value $.01 per share ("Common Stock"), and each other class of the
Company's capital stock or series of the Company's preferred stock the terms of
which do not provide that shares of such class or series shall rank senior to or
on a parity with shares of the Series A Preferred Stock as to distributions of
dividends and distributions upon the liquidation, winding-up and dissolution of
the Company.
(e) "Parity Stock" means each class of the Company's capital stock or
------------
series of the Company's preferred stock, the terms of which provide that shares
of such class or series shall rank pari passu with the Series A Preferred Stock
as to distributions of dividends and/or distributions upon the liquidation,
winding-up and dissolution of the Company, as the case may be.
(f) "Senior Stock" means each class of the Company's capital stock or
------------
series of the Company's preferred stock, the terms of which provide that shares
of such series shall rank senior to the Series A Preferred Stock as to
distributions of dividends and/or distributions upon the liquidation, winding-up
and dissolution of the Company, as the case may be, including without limitation
shares of the Company's 6% Series B Cumulative Convertible Redeemable Preferred
Stock.
3. Liquidation Rights. Upon the voluntary or involuntary liquidation,
------------------
winding-up or dissolution of the Company, after payment or provision for payment
of all outstanding indebtedness and debts of the Company and all amounts due on
liquidation, dissolution or winding-up in respect of all Senior Stock, the
holders of shares of Series A Preferred Stock shall be entitled to receive out
of the assets of the Company, for each share of Series A Preferred Stock, cash
in an amount equal to the sum of $1,000 (the "Liquidation Value") plus an amount
equal to all accumulated but unpaid dividends thereon (whether or not declared)
before any payment or distribution upon liquidation,
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winding-up or dissolution shall be made on Junior Stock. After the payment in
cash to the holders of shares of Series A Preferred Stock of the full
preferential amounts set forth above, the holders of shares of Series A
Preferred Stock as such shall have no right or claim to any of the remaining
assets of the Company. If the assets of the Company available for distribution
to the holders of shares of Series A Preferred Stock upon any liquidation,
dissolution or winding-up of the Company are insufficient to pay the full
preferential amount to which the holders of Series A Preferred Stock are
entitled, then the holders of Series A Preferred Stock shall share ratably in
such distribution (along with the holders of any Parity Stock) in accordance
with the amount that would be payable on such distribution if the amounts to
which such holders were entitled if paid in full. Neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the Company
nor any consolidation, merger or other business combination of the Company with
or into one or more corporations shall be deemed to be a liquidation,
dissolution or winding-up, voluntary or involuntary, of the Company.
4. Conversion Rights.
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(a) Conversion. Each share of Series A Preferred Stock shall be
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convertible, at the option of the holder thereof upon exercise in accordance
with section 4(b), without the payment of additional consideration, into five
(as such number may be adjusted from time to time, the "Per Share Conversion
Number") fully paid and nonassessable shares of Class A Common Stock.
(b) Conversion Procedures. The optional conversion of shares of Series
---------------------
A Preferred Stock in accordance with section 4(a) may be effected at any time
whatsoever by a holder of record thereof by making written demand for such
conversion (a "Conversion Demand") upon the Company at its principal executive
offices setting forth therein (i) the number of shares of Series A Preferred
Stock to be converted; (ii) the certificate or certificates representing such
shares; and (iii) the proposed date of such conversion, which shall be a
business day not less than 10 nor more than 30 days after the date of such
Conversion Demand (the "Conversion Date"). Within five days of receipt of the
Conversion Demand, the Company shall give written notice (a "Conversion Notice")
to such holder setting forth therein (i) the address of the place or places at
which the certificate or certificates representing the shares so to be converted
are to be surrendered; and (ii) whether the certificate or certificates to be
surrendered are required to be indorsed for transfer or accompanied by a duly
executed stock power or other appropriate instrument of assignment and, if so,
the form of such indorsement or power or other instrument of assignment. The
Conversion Notice shall be sent by first class mail, postage prepaid, to such
holder at such holder's address as may be set forth in the Conversion Demand. On
or before the Conversion Date, the holder of Series A Preferred Stock to be
converted shall surrender the certificate or certificates representing such
shares, duly indorsed for transfer or accompanied by a duly executed stock power
or other instrument
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of assignment, if the Conversion Notice so provides, to the Company at any place
set forth in such notice or, if no such place is so set forth, at the principal
executive offices of the Company. As soon as practicable after the Conversion
Date and the surrender of the certificate or certificates representing such
shares, the Company shall issue and deliver to such holder, or its nominee, a
certificate or certificates for the number of whole shares of Class A Common
Stock issuable upon such conversion in accordance with the provisions hereof.
Upon surrender of certificates of Series A Preferred Stock to be converted in
part, the Company shall issue a balance certificate representing the number of
full shares of Series A Preferred Stock not so converted.
(c) Reservation of Class A Common Stock. The Company shall at all
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times when any shares of Series A Preferred Stock shall be outstanding, reserve
and keep available out of its authorized but unissued stock, such number of
shares of Class A Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series A Preferred Stock.
(d) Effect of Conversion. All outstanding shares of Series A Preferred
--------------------
Stock to be converted pursuant to the Conversion Notice shall, on the Conversion
Date, be converted into common stock for all purposes, notwithstanding the
failure of the holder thereof to surrender any certificate representing such
shares on or prior to such date. On and after the Conversion Date, (i) no such
share of Series A Preferred Stock shall be deemed to be outstanding or be
transferrable on the books of the Company or the stock transfer agent, if any,
for the Series A Preferred Stock, and (ii) the holder of such shares, as such,
shall not be entitled to receive any dividends or other distributions, to
receive notices or to vote such shares or to exercise or to enjoy any other
powers, preferences or rights in respect thereof, other than the right, upon
surrender of the certificate or certificates representing such shares, to
receive a certificate or certificates for the number of shares of common stock
into which such shares shall have been converted. On the Conversion Date, all
such shares shall be retired and canceled and shall not be reissued.
(e) Hart-Scott-Rodino Act. In the event that prior to the conversion
---------------------
of any share of Series A Preferred Stock, approval under the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976, as amended, is required, the Company will
take all action necessary to comply with the filing requirements of such Act.
5. Adjustment of Per Share Conversion Number. If at any time the
-----------------------------------------
number of outstanding shares of Common Stock shall increase by virtue of or in
connection with any dividend on the Common Stock or any stock split or other
subdivision of the outstanding shares of Common Stock or a reclassification,
then the Per Share Conversion Number shall be adjusted, concurrently with the
effectiveness of such increase, to a Per Share Conversion Number that would
entitle each holder of Series A Preferred Stock to receive on conversion thereof
the same percentage of the outstanding shares of Common Stock that such holder
would have received on conversion thereof immediately prior to
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such increase. If the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock (including, without limitation, pursuant to a reverse stock
split), the Per Share Conversion Number in effect immediately prior to such
combination or consolidation shall be adjusted, concurrently with the
effectiveness of such decrease, to a Per Share Conversion Number that would
entitle each holder of Series A Preferred Stock to receive on conversion thereof
the same percentage of the outstanding shares of Common Stock that such holder
would have received on conversion thereof immediately prior to such combination
or consolidation.
6. Changes in Capital Stock.
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(a) In case at any time the Company shall be a party to any
transaction (including, without limitation, a merger, consolidation, sale of all
or substantially all of the Company's assets, liquidation or recapitalization)
in which previously outstanding Common Stock shall be changed into or exchanged
for different securities of the Company (other than by subdivision of its
outstanding shares of Common Stock by reason of which an adjustment to the
Conversion Price is made under section 5) or Common Stock or other securities of
another corporation or interests in a noncorporate entity or other property
(including cash) or any combination of any of the foregoing (each such
transaction being hereinafter referred to as the "Transaction"), then
immediately following consummation of the Transaction, and without any action on
the part of the holder of any share of Series A Preferred Stock, each holder of
a share of Series A Preferred Stock, upon the conversion thereof, shall be
entitled to receive, and such shares of Series A Preferred Stock shall
thereafter represent the right to receive, in lieu of the Common Stock or other
securities issuable upon such exercise prior to such consummation, the highest
amount of securities, cash or other property to which such holder would actually
have been entitled as a shareholder upon the consummation of the Transaction if
such holder had converted those shares of Series A Preferred Stock immediately
prior thereto.
(b) Notwithstanding anything contained herein to the contrary, the
Company shall not effect any Transaction unless prior to the consummation
thereof each corporation or entity (other than the Company) that may be required
to deliver any securities, cash or other property upon the conversion of share
of Series A Preferred Stock as provided herein shall assume the obligation to
deliver to such holder such securities, cash or other property as to which, in
accordance with the foregoing provisions, such holder may be entitled, and such
corporation or entity shall have similarly delivered to the holder of the shares
of Series A Preferred Stock an opinion of counsel for such corporation or
entity, which opinion shall state that the shares of Series A Preferred Stock
and the provisions of this certificate of designation, including, without
limitation, the conversion provisions, shall thereafter continue in full force
and effect and shall be enforceable against the Company and such corporation or
entity in accordance with the terms hereof and thereof.
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7. Report or Certificate as to Adjustments. In each case of any
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adjustment or readjustment in the shares of Common Stock (or other securities)
issuable upon the conversion of a share of Series A Preferred Stock, the Company
at its expense will promptly deliver a certificate of the Chief Financial
Officer showing in reasonable detail the computation of such adjustment or
readjustment in accordance with the terms of this certificate of designation.
The Company will forthwith (and in any event not later than 30 days following
the occurrence of the event requiring such adjustment) furnish a copy of each
such report to each holder, and will, upon the written request at any time of a
holder, furnish to such holder a like report setting forth the Per Share
Conversion Number at the time in effect and showing how it was calculated. The
Company will also keep copies of all such reports at its principal office and
will cause the same to be available for inspection at such office during normal
business hours by each holder or any prospective purchaser of shares of Series A
Preferred Stock designated by the holder thereof.
8. Notices of Corporate Action. In the event of
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(i) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive any other
right, or
(ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company,
any consolidation or merger involving the Company and any other Person in
which the Company is not the surviving entity or any transfer of all or
substantially all the assets of the Company to any other Person, or
(iii) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company will deliver to the holders of the Series A Preferred Stock a notice
specifying (i) the date or expected date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right or (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be furnished at least 30 days prior to the date or
expected date therein specified; provided, however, that (i) if such date is
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prior to a public announcement relating to the events set forth and on
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such date the Company is either bound by an agreement with a third party of
confidentiality with respect to the corporate action the subject of this section
8, or the Company's securities are traded or quoted on any recognized national
securities exchange or quotation system, then such notice shall be provided to
each holder of a share of Series A Preferred Stock simultaneously with the
notice provided to the Company's other stockholders and (ii) if such transaction
does not occur on the date specified or within 45 days thereafter, then the
Company shall again be subject to this provision and shall furnish notice
hereunder to the holder.
9. Redemption.
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(a) Optional Redemption. Subject to the rights of the holders of any
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Senior Stock, the Company may, at its option, redeem all or part of the
outstanding shares of Series A Preferred Stock at any time beginning with the
earliest to occur of:
(i) the closing of an initial public offering of the
Company's equity securities;
(ii) the first anniversary of the first issuance of any shares
of Series A Preferred Stock, but not before March 31, 2000; and
(iii) a merger or consolidation of the Company with any other
entity, other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent at least 50% of the combined voting power in
the election of directors generally of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation.
In case the Company shall elect to redeem fewer than all the outstanding shares
of Series A Preferred Stock, the shares to be redeemed shall be selected by lot
or pro rata (as nearly as may be practicable) or in any other equitable manner
determined by the Board of Directors.
(b) Redemption Price. The redemption price per share of the Series A
----------------
Preferred Stock shall be an amount (the "Redemption Price") equal to $1,000 plus
an amount equal to all accumulated but unpaid dividends (whether or not
declared) up to the Redemption Date (as defined in section 9(b)).
(c) Notice of Redemption. Written notice of any redemption of shares
--------------------
of Series A Preferred Stock (a "Notice of Redemption") shall be mailed, first
class postage prepaid, to each registered holder of the shares at the holder's
last address as it appears on the Company's books at least 45, and not more than
90, days prior to the date specified for
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redemption (such specified date, the "Redemption Date"); provided, however, that
if, not later than 20 days after receiving the Notice of Redemption, holders of
not less than 51% of the outstanding shares of Series A Preferred Stock deliver
a written request to the Company that the Redemption Date be deferred, then the
Redemption Date shall be deferred to a date selected by the Company that shall
not be less than ten days but not more than 30 days after the original date and
the Company shall mail a new Notice of Redemption specifying the deferred
Redemption Date. The Notice of Redemption shall specify the time and place of
redemption; the number of shares to be redeemed and, if less than all the shares
held by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; the Redemption Price; that dividends on the shares to be
redeemed will cease on the Redemption Date; and that any right of conversion of
the shares to be redeemed shall terminate on and after the Redemption Date. On
or after the Redemption Date, each holder of shares of Series A Preferred Stock
called for redemption shall surrender such holder's certificate for the shares
being redeemed to the Company at the place specified in the Notice of Redemption
and then the Company shall pay the holder (or shall cause such holder to be
paid) the Redemption Price in cash. After the giving of a Redemption Notice and
before the Redemption Date, the Company shall make officers of the Company
reasonably available to the holders of the Series A Preferred Stock for the
purpose of answering reasonable inquiries regarding the Company.
(d) Cessation of Stockholder Rights. Unless the Company defaults in
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the payment in full of the Redemption Price, on the Redemption Date, the shares
of Series A Preferred Stock called for redemption shall be deemed to be not
outstanding and shall not be transferable on the books of the Company, dividends
on the shares shall cease to accumulate, the right to convert shares of the
Series A Preferred Stock into shares of Common Stock shall terminate and all
other rights of the holders of the shares of Series A Preferred Stock by reason
of their ownership of the shares shall cease on the Redemption Date, except the
right to receive the Redemption Price on surrender to the Company of the
certificates representing the shares.
(e) Right to Convert Continues. Receipt of a Notice of Redemption
--------------------------
shall not prevent a holder from exercising the conversion rights granted in
section 4; provided that any holder exercising such conversion rights must make
a Conversion Demand (as defined in section 4(b)) not later than ten days prior
to the Redemption Date.
(e) Put Option for Stockholder not Notified. Any holder of Series A
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Preferred Stock to whom the Company does not timely mail a notice substantially
complying with the requirements of a Notice of Redemption specified in section
9(c)(i) and whose ability to participate in a redemption by the Company is
materially impaired as a result of such failure shall have the right
(exercisable by written notice to the Company within 30 days after notice of the
redemption is mailed to the holder by the Company) to cause the Company to
purchase, at the Redemption Price, the number of shares of Series A Preferred
Stock that would have been redeemed in the redemption.
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10. Voting Rights.
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(a) General. Holders of shares of Series A Preferred Stock shall not
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be entitled to vote on any matter, except as otherwise provided herein and as
required by law. With respect to any matter on which the holders of shares of
Series A Preferred Stock shall be entitled to vote, holders of shares of Series
A Preferred Stock shall be entitled to one vote for each share held. In the
event the holders of shares of Series A Preferred Stock may be entitled, if
ever, to vote with the holders of Common Stock together as one class, holders of
shares of Series A Preferred Stock shall be entitled to a number of votes for
each share held determined on an as-converted basis; provided, however, that
this sentence shall not imply that the holders have any rights whatsoever to
vote with the holders of Common Stock or otherwise give rise to any voting
rights not otherwise required under Delaware law. All notice, record date and
quorum provisions of the Delaware General Corporation Law (or any successor
statute) shall pertain to meetings to be held and consents to be obtained under
this Certificate of Designation.
(b) Amendment of Certificate of Designation. At any time when shares
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of Series A Preferred Stock are outstanding, without the consent of holders of a
majority of the outstanding shares of Series A Preferred Stock (voting together
as a single class, at a meeting called for such purpose or by written consent),
the Company will not amend or repeal any provision of, or add any provision to,
this Certificate of Designation, if such action would materially alter, change
or affect, in a manner adverse to the holders, the rights, preferences,
privileges or powers of, or the restrictions provided for the benefit of, the
Series A Preferred Stock.
(c) Waivers. Any required action or inaction by a holder of Series A
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Preferred Stock that would not be in accordance with the terms of this
Certificate of Designation may be waived only by a written instrument signed by
the Company. Any action or inaction by the Company that would not be in
accordance with the terms of this Certificate of Designation or (to the extent
waivable) law may be waived with the consent of holders of a majority of the
outstanding shares of Series A Preferred Stock (voting together as a single
class, at a meeting called for such purpose or by written consent).
11. Restrictive Legends. Each certificate representing shares of
-------------------
Series A Preferred Stock and each certificate representing shares of Common
Stock issuable upon conversion of any shares of Series A Preferred Stock shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SHARES
ACQUIRED UPON THE CONVERSION OF THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED IN THE
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ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER
SUCH ACT EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION
NOR SUCH AN EXEMPTION IS REQUIRED BY LAW."
12. Notices. Except as may otherwise be provided for in this
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Certificate of Designation, all notices referred to herein shall be in writing,
and all notices hereunder shall be deemed to have been given upon the earlier of
(i) receipt of such notice; (ii) three Business Days after the mailing of such
notice; or (iii) the Business Day following sending of such notice by recognized
overnight courier or delivery service, in any case with postage or delivery
charges prepaid and addressed: if to the Company, c/o Kidd & Company, LLC, 3
Pickwick Plaza, Greenwich, Connecticut 06830, Attention: Secretary, or, if to
any holder of the Series A Preferred Stock, to such holder at the address of
such holder as listed in the stock record books of the Company (or to such other
address as the Company or holder, as the case may be, shall have designated by
notice similarly given). "Business Day" means any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of Delaware.
IN WITNESS WHEREOF, the Company has caused this certificate of
designation to signed by its Chairman of the Board on this 29th day of March
1999.
MEDSOURCE TECHNOLOGIES, INC.
By: /s/ Richard J. Effress
------------------------------
Name: Richard J. Effress
Title: Chairman
-10-
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
-----------
herein shall have the meanings set forth in Section 2.D.
B. Authorized Shares. The Corporation shall have authority to issue (a)
-----------------
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
-----------------------------------------------------
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.
------------------------
1. Ranking. The Series B Preferred Stock shall, with respect to
-------
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.
---------------------------
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
2
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
3
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.
----------
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
---
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.
4
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
5
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
----
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,
6
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
----
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
7
(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
----
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
----
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
----
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
8
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
9
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).
(iv) 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
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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
-------
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. Invalidity. 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 ____, 2000.
MEDSOURCE TECHNOLOGIES, INC.
By: /s/
--------------------------------------------------
Name: Richard J. Effress
Title: Chairman
S-1
MEDSOURCE TECHNOLOGIES, INC.
CERTIFICATE OF DESIGNATION OF 6.0% CUMULATIVE
CONVERTIBLE REDEEMABLE PREFERRED STOCK, SERIES C,
SETTING FORTH THE POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law,
MedSource Technologies, Inc., a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation has duly
adopted the following resolution creating a series of Preferred Stock designated
as 6.0% Cumulative Convertible Redeemable Preferred Stock, Series C, and such
resolution has not been modified and is in full force and effect on the date
hereof:
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Charter, a
series of the authorized Preferred Stock, par value $0.01 per share, of the
Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
Section 1. Designation and Number.
----------------------
(a) The shares of such series shall be designated as 6.0%
Cumulative Convertible Redeemable Preferred Stock, Series C (the "Series C
Preferred Stock"). The number of shares initially constituting the Series C
Preferred Stock shall be 52,029, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
--------
however, that such number may not be decreased below the number of then
- -------
outstanding shares of Series C Preferred Stock or shares of Series C Preferred
Stock which may be issued pursuant to the Stock Purchase Agreement.
(b) The Series C Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution or winding up, rank (i) prior to
all other classes and series of Junior Stock (as defined below) of the
Corporation now or hereafter authorized including, without limitation, the
Common Stock, the Series A Preferred Stock, par value $.01 per share (the
"Series A Preferred Stock"), of the Corporation and the Series Z Preferred
Stock, par value $.01 per share (the "Series Z Preferred Stock"), of the
Corporation and (ii) pari passu with the shares of Series B Preferred Stock, par
value $.01 per share (the "Series B Preferred Stock"), of the Corporation.
(c) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 12 below.
2
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series C Preferred Stock, in
preference to the holders of shares of Common Stock and of any shares of other
Junior Stock of the Corporation, shall be entitled to receive, when, as and if
declared by the Board of Directors, out of the assets of the Corporation legally
available therefor, cumulative cash dividends at an annual rate on the
Liquidation Preference thereof equal to (x) 6.0%, (y) from and after the first
anniversary of the Original Issue Date, 8.0%, or (z) from and after the
occurrence of a Mandatory Redemption/Change of Control Default, 12.0%, in each
case, calculated on the basis of a 360-day year consisting of twelve 30-day
months, accruing and payable in equal quarterly payments, in immediately
available funds, on the last day of March, June, September and December or, if
any such day is not a Business Day, the next succeeding Business Day, in each
year (each such date being referred to herein as a "Dividend Payment Date"),
commencing on the first such date occurring after the date of issuance of such
share of Series C Preferred Stock; provided, however, that with respect to the
first Dividend Payment Date occurring after the date of issuance of a share of
Series C Preferred Stock, the holders of shares of Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor, a
cumulative cash dividend in respect of each share of Series C Preferred Stock in
the amount of (i) $15, multiplied by (ii) a fraction equal to (A) the number of
days from (and including) the date of issuance of such share of Series C
Preferred Stock to (but excluding) such Dividend Payment Date divided by (B) 90.
(b) If as of any Dividend Payment Date there is a Dividend
Arrearage (as hereinafter defined), an additional dividend (the "Additional
Dividend") shall accrue on each share of the Series C Preferred Stock for the
period from such Dividend Payment Date through the next succeeding Dividend
Payment Date, in an amount equal to the product of (i) (x) 6% or (y) from and
after the first anniversary of the Original Issue Date, 8% (in each case
calculated in accordance with Section 2(a)) and (ii) the amount of such Dividend
Arrearage as of such Dividend Payment Date. For purposes of this Section 2(b),
"Dividend Arrearage" shall mean, with respect to each share of Series C
Preferred Stock, as of any Dividend Payment Date, the excess, if any of the (i)
sum of all dividends theretofore accrued on such share in accordance with
Section 2(a) (including those accrued as of and including such Dividend Payment
Date) plus all Additional Dividends, if any, theretofore accrued on such share
in accordance with this Section 2(b) (including those accrued as of and
including such Dividend Payment Date), over (ii) all dividends actually paid
with respect to such share on or before such Dividend Payment Date.
(c) Dividends payable pursuant to Section 2(a) shall begin to
accrue and be cumulative from the Issue Date, and shall accrue on a daily basis,
in each case whether or not declared. Dividend payments shall be made on the
shares of Series C Preferred Stock and shares of Parity Stock on a pari passu
---- -----
basis. If dividends are paid on the shares of Series C Preferred Stock and
shares of Parity Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares, such dividends shall be
allocated pro rata (in proportion to the respective liquidation preferences)
among all such shares of Series C Preferred
3
Stock and shares of Parity Stock at the time outstanding based on the amount
of dividends then due with respect to each such share. The Board of Directors
may fix a record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive payment of a dividend declared thereon,
which record date shall be no more than 60 days or less than 10 days prior to
the date fixed for the payment thereof. Accumulated but unpaid dividends for any
past dividend periods shall accrue and be cumulative in accordance with Section
2(b) and shall be payable only in connection with a liquidation, dissolution,
winding-up or similar event in accordance with Section 7 or a Mandatory
Redemption in accordance with Section 10, or in connection with a conversion of
shares of Series C Preferred Stock in the manner provided in Section 8.
(d) In addition to the dividends or distributions on the Series C
Preferred Stock described in Section 2(a) and 2(b), 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 C Preferred Stock and Series B 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 holder of the number of shares of Common
Stock for which such share of Series C Preferred Stock (or share of Series B
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 C Preferred Stock and the holders of shares of Series B Preferred
Stock at the same time such dividend or distribution is made to holders of
Common Stock.
(e) The holders of shares of Series C Preferred Stock shall not
be entitled to receive any dividends or other distributions except as provided
herein. Notwithstanding anything to contrary in this Section 2, in no event
shall the Company be required to pay any dividends at any time if such payment
is prohibited at such time under the terms of the Credit Agreement.
Section 3. Voting Rights.
-------------
In addition to any voting rights provided by law, the holders of
shares of Series C Preferred Stock shall have the following voting rights:
(a) So long as the Series C Preferred Stock is outstanding, each
share of Series C Preferred Stock shall entitle the holder thereof to vote, in
person or by proxy, at a special or annual meeting of stockholders, on all
matters voted on by holders of Common Stock voting together as a single class
with the holders of the Common Stock and all other shares entitled to vote
thereon as a single class with the Common Stock. With respect to any such vote,
each share of Series C Preferred Stock shall entitle the holder thereof to cast
that number of votes per share as is equal to the number of votes that such
holder would be entitled to cast had such
4
holder converted his shares of Series C Preferred Stock into Common Stock on
the record date for determining the stockholders of the Corporation eligible to
vote on any such matters.
(b) Unless the consent or approval of a greater number of shares
shall then be required by law, the affirmative vote of the holders of at least
66-2/3% of the outstanding shares of Series C Preferred Stock, voting separately
as a single class, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to:
(i) authorize, increase the authorized number of shares of,
or issue (including on conversion or exchange of any convertible or exchangeable
securities or by reclassification), any shares of any class or classes of Senior
Stock or Parity Stock (including additional shares of Series C Preferred Stock)
other than pursuant to the Stock Purchase Agreement;
(ii) authorize, increase the authorized number of shares of,
or issue any shares of any class of capital stock of the Corporation having an
optional or mandatory redemption date earlier than October 20, 2005 or adopt or
approve an amendment to any class of capital stock of the Corporation to provide
that such class of capital stock has an optional or mandatory redemption date
earlier than October 20, 2005;
(iii) authorize, adopt or approve an amendment to the Charter
that would increase or decrease the par value of the shares of Series C
Preferred Stock, or alter or change the powers, preferences or special rights of
the shares of Series C Preferred Stock, other Parity Stock or Senior Stock;
(iv) amend or alter the Charter or By-laws of the
Corporation (including, without limitation, the Series B Certificate of
Designation) so as to affect the shares of Series C Preferred Stock adversely,
including, without limitation, by granting any voting right to any holder of
notes, bonds, debentures or other debt obligations of the Corporation or by
reclassifying any capital stock into Senior Stock or Parity Stock (provided,
that the consent or approval of such holders of the Series C Preferred Stock
shall not be required for the Corporation to effect a stock split by way of a
stock dividend) or by amending the provisions governing any capital stock of the
Corporation relating to redemption, liquidation or change of control payments;
(v) authorize or issue any security convertible into,
exchangeable for or evidencing the right to purchase or otherwise receive any
shares of any class or classes of Senior Stock or Parity Stock;
(vi) declare or pay any dividend or make 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
3(b)(vi));
(vii) other than (x) the purchase of shares of capital stock
or other securities owned by employees of, or consultants or advisors to, the
Corporation or any
5
Subsidiary in connection with, or promptly following the termination of, the
relationship of any such Person with the Corporation in an amount not to exceed
in any twelve month period an aggregate of 50,000 shares of Common Stock or
other Junior Stock (assuming the exercise or conversion into Common Stock of any
convertible securities or options that constitute such Junior Stock), or
individually with respect to any such Person, 10,000 shares of Common Stock or
other Junior Stock (assuming the exercise or conversion into Common Stock of any
convertible securities or options that constitute such Junior Stock) and (y) the
purchase or redemption of shares of Series B Preferred Stock in accordance with
(I) Section 10 or Section 12, as applicable, of this Certificate of Designation
and (II) the Series B Certificate of Designation, 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);
(viii) engage in any business other than the business in
which the Corporation or its Subsidiaries are currently engaged, and reasonable
extensions thereof;
(ix) a voluntary dissolution, liquidation or winding up;
(x) 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, 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 (A) pursuant to the agreements in effect as of the Issue
Date and reflected in Schedule 5.12 to the Stock Purchase Agreement and (B) 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;
(xi) on or prior to the second anniversary of the Original
Issue Date, (A) effect a consolidation or merger of the Corporation with or into
any other Person (except a wholly-owned subsidiary of the Corporation), or (B)
the sale or other distribution to another Person of all or substantially all of
the assets of the Corporation; provided, however, that the separate vote of the
-------- -------
holders of shares of Series C Preferred Stock as a class shall only be required
in the case of a consolidation, merger or sale of assets of the Corporation if
the Value (as defined below) of the consideration received per share of Common
Stock in connection with such consolidation, merger or sale of assets is less
than (x) $20.00 (as such amount may be adjusted, for stock splits,
recapitalizations, stock dividends and other changes in the capital structure of
the Corporation), if such consolidation, merger or sale of assets occurs on or
prior to the first anniversary of the Original Issue Date or (y) $25.00 (as such
amount may be adjusted, for stock splits, recapitalizations, stock dividends and
other changes in the capital structure of the Corporation), if such
consolidation, merger or sale of assets occurs after the first anniversary of
the Original Issue Date and on or prior to the second anniversary of the
Original Issue Date; and
6
(xii) on or prior to the first anniversary of the Original
Issue Date, effect a public offering of securities of the Corporation pursuant
to a registration statement declared effective under the Securities Act unless
the offering price to the public in such offering of such shares is greater than
$20.00 per share (as such amount may be adjusted, for stock splits,
recapitalizations, stock dividends and other changes in the capital structure of
the Corporation).
(c) At each meeting of stockholders at which the holders of shares of
Series C Preferred Stock shall have the right, voting separately as a single
class, to take any action, the presence in person or by proxy of the holders of
record of one-half of the total number of shares of Series C Preferred Stock
then outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
thereof:
(i) the absence of a quorum of the holders of shares of Series
C Preferred Stock shall not prevent the election of directors, and the absence
of a quorum of the holders of shares of any other class or series of capital
stock shall not prevent the taking of any action as provided in this Section 3;
and
(ii) in the absence of a quorum of the holders of shares of
Series C Preferred Stock, a majority of the holders of such shares present in
person or by proxy shall have the power to adjourn the meeting as to the actions
to be taken by the holders of shares of Series C Preferred Stock from time to
time and place to place without notice other than announcement at the meeting
until a quorum shall be present.
For taking of any action as provided in Section 3(b) by the holders
of shares of Series C Preferred Stock, each such holder shall have one vote for
each share of such stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date be
fixed, at the close of business on the Business Day next preceding the day on
which notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held; provided,
--------
however, that shares of Series C Preferred Stock held by the Corporation or any
- -------
Affiliate of the Corporation shall not be deemed to be outstanding for purposes
of taking any action as provided in this Section 3; provided, further, however,
-------- ------- -------
that nothing in this Section 3 shall prohibit the Series C Preferred Stock from
taking an action by written consent (including, without limitation, any action
specified in Section 3(b) above) in accordance with the provisions of Section
228 of the Delaware General Corporation Law or any similar provision of any
successor statute.
Section 4. Certain Restrictions.
--------------------
(a) Whenever the Corporation shall not have converted or redeemed
shares of Series C Preferred Stock at a time required by Section 8, 10, 11 or
12, at such time and thereafter until all conversion or redemption obligations
provided in Section 8, 10, 11 or 12 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 Parity Stock, except dividends or distributions
paid ratably on the Series C Preferred
7
Stock and all Parity 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
C Preferred Stock and such Parity Stock are then entitled.
(b) Whenever the Corporation shall not have converted or redeemed
shares of Series C Preferred Stock at a time required by Section 8, 10, 11 or 12
to so convert or redeem such shares, at such time and thereafter until all
conversion or redemption obligations provided in Section 8, 10, 11 or 12 to so
convert or redeem such shares that have come due shall have been satisfied or
all necessary funds have been set apart for payment, the Corporation shall not
redeem, purchase or otherwise acquire for consideration any shares of Junior
Stock or Parity Stock; provided, however, that (x) the Corporation may accept
-------- -------
shares of any Senior Stock, Parity Stock or Junior Stock for conversion into
Junior Stock and (y) the Corporation may at any time redeem, purchase or
otherwise acquire shares of any Parity Stock pursuant to any mandatory
redemption, put, sinking fund or other similar obligation contained in such
Parity Stock, pro rata with the Series C Preferred Stock in proportion to the
total amount then required to be applied by the Corporation to redeem,
repurchase, convert, exchange or otherwise acquire shares of Series C Preferred
Stock and shares of such Parity Stock.
(c) The Corporation shall not permit any Subsidiary of the
Corporation, or cause any other Person, to purchase or otherwise acquire for
consideration any shares of capital stock of the Corporation that are issued and
outstanding immediately prior to such purchase unless the Corporation could,
pursuant to Section 4(b), purchase such shares at such time and in such manner.
Section 5. Optional Redemption.
-------------------
(a) The Corporation shall not have any right to optionally redeem any
shares of Series C Preferred Stock prior to October 20, 2005. On and after
October 20, 2005, the Corporation shall have the right, at its sole option and
election, to redeem the shares of Series C Preferred Stock, in whole but not in
part, on not less than 30 days notice of the date of redemption (any such date
an "Optional Redemption Date") at a price per share (the "Optional Redemption
Price") equal to (i) the Liquidation Preference plus (ii) an amount per share
equal to all accrued and unpaid dividends thereon (including, without
limitation, the amount of the Additional Dividend), whether or not declared or
payable, to the applicable Optional Redemption Date, in immediately available
funds.
(b) Notice of any redemption of shares of Series C Preferred Stock
pursuant to Section 5(a) shall be given by publication in a newspaper of general
circulation in the Borough of Manhattan, The City of New York (if such
publication shall be required by applicable law, rule, regulation or securities
exchange requirement), not less than 30, nor more than 60, days prior to the
date fixed for redemption. In any case, a similar notice shall be mailed at
least 30, but not more than 60, days prior to the date fixed for redemption to
each holder of shares of Series C Preferred Stock to be redeemed, at such
holder's address as it appears on the transfer books of the Corporation. In
order to facilitate the redemption of shares of Series C Preferred Stock, the
Board of Directors may fix a record date for the determination of shares of
Series C
8
Preferred Stock to be redeemed, or may cause the transfer books of the
Corporation for the Series C Preferred Stock to be closed, not more than 60 days
or less than 30 days prior to the date fixed for such redemption.
(c) At any time after a notice of redemption shall have been mailed
and on or before the Optional Redemption Date, the Corporation shall deposit for
the benefit of the holders of shares of Series C Preferred Stock to be redeemed
the funds necessary for such redemption with a bank or trust company in the
Borough of Manhattan, The City of New York, having a capital and surplus of at
least $500,000,000. Any moneys so deposited by the Corporation and unclaimed at
the end of one year from the date designated for such redemption shall revert to
the general funds of the Corporation. After such reversion, any such bank or
trust company, upon demand, shall pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof and any holder of shares of Series C Preferred
Stock to be redeemed shall look only to the Corporation for the payment of the
Optional Redemption Price. In the event that moneys are deposited pursuant to
this Section 5(c) in respect of shares of Series C Preferred Stock that are
converted in accordance with the provisions of Section 8, such moneys shall,
upon such conversion, revert to the general funds of the Corporation and, upon
demand, such bank or trust company shall pay over to the Corporation such moneys
and shall be relieved of all responsibilities to the holders of such converted
shares in respect thereof. Any interest accrued on funds deposited pursuant to
this Section 5(c) shall be paid from time to time to the Corporation for its own
account.
(d) Notice of redemption having been given as aforesaid, upon the
deposit of funds pursuant to Section 5(c) in respect of shares of Series C
Preferred Stock to be redeemed pursuant to Section 5(a), notwithstanding that
any certificates for such shares shall not have been surrendered for
cancellation, from and after the date of redemption designated in the notice of
redemption (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to accrue
and (iii) all rights of the holders of shares of Series C Preferred Stock to be
redeemed or to receive any amounts in respect of any liquidation, dissolution,
winding up or otherwise shall cease and terminate, excepting only the right to
receive the Optional Redemption Price therefor and the right to convert such
shares into shares of Common Stock until the close of business on the date of
redemption, in accordance with Section 8; provided, however, that if the
-------- -------
Corporation shall default in the payment of the Optional Redemption Price, the
shares of Series C Preferred Stock that were to be redeemed shall thereafter be
deemed to be outstanding and the holders thereof shall have all of the rights of
a holder of Series C Preferred Stock until such time as such default shall no
longer be continuing or shall have been waived by holders of at least 66-2/3% of
the then outstanding shares of Series C Preferred Stock.
Section 6. Reacquired Shares.
-----------------
Any shares of Series C Preferred Stock converted, exchanged,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Series C Preferred Stock shall upon their cancellation become
authorized but unissued shares of Series C Preferred Stock,
9
par value $.01 per share, of the Corporation and, upon the filing of an
appropriate Certificate of Designation with the Secretary of State of the State
of Delaware, may be reissued as part of another class or series of preferred
stock, par value $.01 per share, of the Corporation subject to the conditions or
restrictions on issuance set forth herein, but in any event may not be reissued
as shares of Series C Preferred Stock.
Section 7. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) If the Corporation shall commence a voluntary case under the
United States bankruptcy laws or any applicable bankruptcy, insolvency or
similar law of any other country, or consent to the entry of an order for relief
in an involuntary case under any such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or make
an assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due (any such event, a
"Voluntary Liquidation Event"), or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the United States bankruptcy laws or any applicable
bankruptcy, insolvency or similar law of any other country, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and on account of any
such event the Corporation shall liquidate, dissolve or wind up, if the
Corporation shall otherwise liquidate, dissolve or wind up, no distribution
shall be made:
(i) to the holders of shares of Junior Stock unless, prior
thereto, the holders of shares of Series C Preferred Stock, subject to Section
8, shall have received the greater of (I) the Liquidation Preference, plus all
accrued and unpaid dividends (including, without limitation, the amount of the
Additional Dividend), whether or not declared or currently payable, to the date
of distribution, with respect to each share and (II) an amount per share of
Series C Preferred Stock, with respect to each share of Series C Preferred
Stock, equal to the amount to which the holder of one share of Series C
Preferred Stock would be entitled upon the occurrence of an event described in
Section 7(a) (a "Liquidation Event") had such share of Series C Preferred Stock
been converted into Common Stock in accordance with Section 8 immediately prior
to such Liquidation Event; or
(ii) to the holders of shares of Parity Stock (including upon an
event that is deemed a Liquidation Event pursuant to the terms of such Parity
Stock), except distributions made ratably on the Series C Preferred Stock and
all other Parity Stock in proportion to the total amounts to which the holders
of all shares of the Series C Preferred Stock and other Parity Stock are
entitled upon such liquidation, dissolution or winding up.
(b)
(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
10
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 7.
(ii) The consummation of a Change of Control shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes of
this Section 7, unless within 30 days after delivery of written notice of such
Change of Control by the Corporation to the holders of the Series C Preferred
Stock, the holders of a majority of shares of the Series C Preferred Stock
provide the Corporation with written notice that such Change of Control shall
not be deemed a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 7. The Corporation shall give each holder of the Series
C Preferred Stock notice of any Change of Control within 5 days of the
occurrence thereof. In the event amounts are due to any holder of Series C
Preferred Stock under Section 12, no distribution shall be made on Parity Stock
upon a Liquidation Event (or upon an event that is deemed a Liquidation Event
pursuant to the terms of such Parity Stock) except distributions made ratably on
the shares of Series C Preferred Stock and all other Parity Stock in proportion
to the total amounts to which the holders of all shares of Series C Preferred
Stock and other Parity Stock are entitled under Section 12 and upon such
Liquidation Event or upon an event that is deemed a Liquidation Event pursuant
to the terms of such Parity Stock, respectively, and no such distribution shall
be made on shares of Parity Stock unless made simultaneously with the repurchase
of shares of Series C Preferred Stock pursuant to Section 12. In the event that
amounts are due to any holder of Series C Preferred Stock under this Section 7
in connection with a Change of Control, no repurchase of shares of Parity Stock
shall be made in connection with the occurrence of such Change of Control,
except for repurchases of shares of Parity Stock made ratably with distributions
made on the shares of Series C Preferred Stock under this Section 7 in
proportion to the total amounts to which the holders of all shares of Series C
Preferred Stock and Parity Stock are then entitled, and no such repurchase of
shares of Parity Stock shall be made unless made simultaneously with the
distribution on shares of Series C Preferred Stock pursuant to this Section 7.
Upon the indefeasible payment in full in cash of such amount pursuant to this
provision, the holders of Series C Preferred Stock shall not be entitled to any
further participation in any distribution of the assets of the Corporation.
Section 8. Voluntary Conversion.
--------------------
(a) Any holder of Series C Preferred Stock shall have the right, at
its option, at any time and from time to time, to convert, subject to the terms
and provisions of this Section 8, any or all of such holder's shares of Series C
Preferred Stock into such number of fully paid and non-assessable shares of
Common Stock as is equal, subject to Section 8(g), to the product of the number
of shares of Series C Preferred Stock being so converted multiplied by the
quotient of (i) the Liquidation Preference, plus an amount per share equal to
----
all accrued and unpaid dividends thereon (including, without limitation, the
amount of the Additional Dividend), whether or not declared or currently
payable, to the date of conversion, divided by (ii) the Conversion Price (as
----------
defined below) then in effect, except that with respect to any shares which
shall be called for redemption, such right shall terminate at the close of
business on the date of redemption for such shares, unless in any such case the
Corporation shall default in performance
11
or payment due upon redemption thereof. The Conversion Price shall be
$20.00, subject to adjustment as set forth in Section 8(d). Such conversion
right shall be exercised by the surrender of the shares to be converted to the
Corporation at any time during usual business hours at its principal place of
business to be maintained by it, accompanied by written notice that the holder
elects to convert such shares and specifying the name or names (with address) in
which a certificate or certificates for shares of Common Stock are to be issued
and (if so required by the Corporation) by a written instrument or instruments
of transfer in form reasonably satisfactory to the Corporation duly executed by
the holder or its duly authorized legal representative and transfer tax stamps
or funds therefor, if required pursuant to Section 8(k). All shares of Series C
Preferred Stock surrendered for conversion shall be delivered to the Corporation
for cancellation and canceled by it and no shares of Series C Preferred Stock
shall be issued in lieu thereof.
(b) As promptly as practicable after the surrender, as herein
provided, of any shares of Series C Preferred Stock for conversion pursuant to
Section 8(a), the Corporation shall deliver to or upon the written order of the
holder of such shares so surrendered a certificate or certificates representing
the number of fully paid and non-assessable shares of Common Stock into which
such shares of Series C Preferred Stock may be or have been converted in
accordance with the provisions of this Section 8. Subject to the following
provisions of this paragraph and of Section 8(d), such conversion shall be
deemed to have been made immediately prior to the close of business on the date
that such shares of Series C Preferred Stock shall have been surrendered in
satisfactory form for conversion, and the Person or Persons entitled to receive
the Common Stock deliverable upon conversion of such shares of Series C
Preferred Stock shall be treated for all purposes as having become the record
holder or holders of such Common Stock at such time, and such conversion shall
be at the Conversion Price in effect at such time; provided, however, that no
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surrender shall be effective to constitute the Person or Persons entitled to
receive the Common Stock deliverable upon such conversion as the record holder
or holders of such Common Stock while the share transfer books of the
Corporation shall be closed (but not for any period in excess of five days), but
such surrender shall be effective to constitute the Person or Persons entitled
to receive such Common Stock as the record holder or holders thereof for all
purposes immediately prior to the close of business on the next succeeding day
on which such share transfer books are open, and such conversion shall be deemed
to have been made at, and shall be made at the Conversion Price in effect at,
such time on the date such shares shall have been surrendered in satisfactory
form for conversion.
(c) If a holder of shares of Series C Preferred Stock converts
shares of Series C Preferred Stock in connection with the occurrence of a Change
of Control (as defined below) prior to the first anniversary of the Original
Issue Date, and if the Value of the consideration to be received by such holder
in the transaction constituting a Change of Control (the "Change of Control
Value"), for shares of Common Stock issued to such holder upon conversion of
shares of Series C Preferred Stock is less than an amount which would result in
such holder achieving at least a 35% annual Internal Rate of Return, then at the
time such holder converts its shares of Series C Preferred Stock, in addition to
the shares of Common Stock issued to such holder under Section 8(a), the number
of additional fully paid and non-assessable shares of Common Stock issuable by
the Corporation upon such conversion to such holder shall be increased so that
the
12
Value of the consideration received by such holder for Common Stock issued
on conversion of shares of Series C Preferred Stock in connection with the
transaction constituting a Change of Control shall be such that such holder
shall achieve a 35% annual Internal Rate of Return; provided, that, without
--------
duplication of the foregoing, if the Change of Control Value is less than the
Conversion Price in effect immediately prior to such conversion, then in no
event shall the aggregate number of additional shares of Common Stock issued
pursuant to this Section 8(c) to such holder upon a conversion result in such
holder receiving a number of shares of Common Stock that is greater than the
aggregate number of shares of Common Stock that would be issuable to such holder
if the Conversion Price in effect immediately prior to such conversion was equal
to the product of 0.75 and the Conversion Price actually in effect immediately
prior to such conversion; provided, further that, there shall be no adjustment
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pursuant to this Section 8(c) with respect to any shares of Series C Preferred
Stock issued by the Corporation pursuant to Section 2.1(b) of the Stock Purchase
Agreement less than 90 days prior to the date of such Change of Control.
(d) The Conversion Price shall be subject to adjustment as
follows:
(i) In case the Corporation shall at any time or from time
to time after the Original Issue Date (A) pay a dividend or make a distribution
(other than a dividend or distribution paid or made to holders of shares of
Series C Preferred Stock in the manner provided in Section 2(d)) on the
outstanding shares of Common Stock in capital stock (which, for purposes of this
Section 8(d) shall include, without limitation, any options, warrants or other
rights to acquire capital stock) of the Corporation, (B) subdivide the
outstanding shares of Common Stock into a larger number of shares, (C) combine
the outstanding shares of Common Stock into a smaller number of shares, (D)
issue any shares of its capital stock in a reclassification of the Common Stock
or (E) pay a dividend or make a distribution (other than a dividend or
distribution paid or made to holders of shares of Series C Preferred Stock in
the manner provided in Section 2(d)) on the outstanding shares of Common Stock
in securities of the Corporation pursuant to a shareholder rights plan, "poison
pill" or similar arrangement, then, and in each such case, the Conversion Price
in effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Corporation) so that the holder of any
share of Series C Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other securities of
the Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series C Preferred Stock been converted immediately prior to the occurrence
of such event. An adjustment made pursuant to this Section 8(d)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
(ii) (A) In case the Corporation shall at any time or from
time to time after the Original Issue Date issue shares of Common Stock (or
securities convertible into
13
or exchangeable for Common Stock, or any options, warrants or other rights
to acquire shares of Common Stock) for a consideration per share greater than,
or equal to, the Adjusted Floor Amount but less than the Conversion Price then
in effect at the record date or issuance date, as the case may be (the "Date"),
referred to in the following sentence (treating the price per share of any
security convertible or exchangeable or exercisable into Common Stock as equal
to (I) the sum of the price for such security convertible, exchangeable or
exercisable into Common Stock plus any additional consideration payable (without
regard to any anti-dilution adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided by (II) the number of shares
of Common Stock initially underlying such convertible, exchangeable or
exercisable security), then, and in each such case, the Conversion Price then in
effect shall be adjusted by dividing the Conversion Price in effect on the day
immediately prior to the Date by a fraction (x) the numerator of which shall be
the sum of the number of shares of Common Stock outstanding on the Date on a
Fully-Diluted Basis (as defined below) plus the number of additional shares of
Common Stock issued or to be issued (or the maximum number into which such
convertible or exchangeable securities initially may convert or exchange or for
which such options, warrants or other rights initially may be exercised) and (y)
the denominator of which shall be the sum of the number of shares of Common
Stock outstanding on the Date on a Fully-Diluted Basis plus the number of shares
of Common Stock which the aggregate consideration for the total number of such
additional shares of Common Stock so issued or be issued upon the conversion,
exchange or exercise of such convertible or exchangeable securities or options,
warrants or other rights (plus the aggregate amount of any additional
consideration initially payable upon such conversion, exchange or exercise of
such security) would purchase at the Conversion Price on the Date; and
(B) In case the Corporation shall at any time or from
time to time after the Original Issue Date issue shares of Common Stock (or
securities convertible into or exchangeable for Common Stock, or any options,
warrants or other rights to acquire shares of Common Stock) for a consideration
per share (the "New Issue Price") less than the Adjusted Floor Amount (treating
the price per share of any security convertible or exchangeable or exercisable
into Common Stock as equal to (I) the sum of the price for such security
convertible, exchangeable or exercisable into Common Stock plus any additional
consideration payable (without regard to any anti-dilution adjustments) upon the
conversion, exchange or exercise of such security into Common Stock divided by
(II) the number of shares of Common Stock initially underlying such convertible,
exchangeable or exercisable security), then, and in each such case, the
Conversion Price then in effect shall be adjusted to equal the New Issue Price;
provided, however, that such adjustment shall be made only if such adjustment
- -------- -------
results in a Conversion Price (as adjusted) which is lower than the Conversion
Price in effect immediately prior to such record date.
(C) Any such adjustment pursuant to this Section
8(d)(ii) shall be made whenever such shares, securities, options, warrants or
other rights are issued, and shall become effective retroactively to a date
immediately following the close of business (1) in the case of issuance to
stockholders of the Corporation, as such, on the record date for the
determination of stockholders entitled to receive such shares, securities,
options, warrants or
14
other rights and (2) in all other cases, on the date ("issuance date") of such
issuance; provided that:
--------
(I) the determination as to whether an adjustment is
required to be made pursuant to this Section 8(d)(ii) shall be made upon the
issuance of such shares or such convertible or exchangeable securities, options,
warrants or other rights;
(II) if any convertible or exchangeable securities,
options, warrants or other rights (or any portions thereof) which shall have
given rise to an adjustment pursuant to this Section 8(d)(ii) shall have expired
or terminated without the exercise thereof and/or if by reason of the terms of
such convertible or exchangeable securities, options, warrants or other rights
there shall have been an increase or increases, with the passage of time or
otherwise, in the price payable upon the exercise or conversion thereof, then
the Conversion Price hereunder shall be readjusted (but to no greater extent
than originally adjusted) on the basis of (x) eliminating from the computation
any additional shares of Common Stock corresponding to such convertible or
exchangeable securities, options, warrants or other rights as shall have expired
or terminated, (y) treating the additional shares of Common Stock, if any,
actually issued or issuable pursuant to the previous exercise of such
convertible or exchangeable securities, options, warrants or other rights as
having been issued for the consideration actually received and receivable
therefor and (z) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time;
(III) no adjustment in the Conversion Price shall be
made pursuant to this Section 8(d)(ii) as a result of any issuance of securities
by the Corporation in respect of which an adjustment to the Conversion Price is
made pursuant to Section 8(d)(i)
(IV) The consideration per share for the issuance or
sale of any shares of Common Stock (or any securities convertible into or
exchangeable for Common Stock, or any options, warrants or other rights to
acquire shares of Common Stock) shall, irrespective of the accounting treatment
of such consideration:
(a) insofar as such consideration consists of cash,
be computed as the amount of cash received by the Corporation;
(b) insofar as such consideration consists of
property (including securities) other than cash, be computed at the
fair market value thereof at the time of such issuance or sale; and
(c) in case shares of Common Stock (or any securities
convertible into or exchangeable for Common Stock, or any options,
warrants or other rights to acquire shares of Common Stock) that are
issued or sold by the Corporation together with other stock or
securities or other assets of the Corporation for consideration that
covers both, be the portion of such consideration so received,
computed as provided in the preceding clauses (a) and (b) above,
allocable to such shares of Common Stock (or any securities
15
convertible into or exchangeable for Common Stock, or any options,
warrants or other rights to acquire shares of Common Stock);
all as determined in good faith by a resolution of the Board of Directors of the
Corporation, provided that, if the holders of at least 15% of the outstanding
shares of Series C Preferred Stock object to any valuation of non-cash
consideration determined by the Board of Directors of the Corporation within
fifteen (15) days of receipt of written notice of such valuation, such holders
may request that the Corporation obtain an opinion of a nationally recognized
investment banking firm chosen by such holders (at the Corporation's expense) in
which case the consideration per share of such securities shall be as determined
by such investment banking firm.
(iii) In case the Corporation shall at any time or from time
to time after the Original Issue Date distribute to all holders of shares of its
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the resulting or surviving
corporation and the Common Stock is not changed or exchanged) cash, evidences of
indebtedness of the Corporation or another issuer, securities of the Corporation
or another issuer or other assets (excluding (A) dividends or distributions paid
or made to holders of shares of Series C Preferred Stock in the manner provided
in Section 2(d), and (B) dividends payable in shares of Common Stock for which
adjustment is made under Section 8(d)(i)) or rights or warrants to subscribe for
or purchase securities of the Corporation (excluding those referred to in
Section 8(d)(ii) or those in respect of which an adjustment in the Conversion
Price is made pursuant to Section 8(d)(i) or (ii)), then, and in each such case,
the Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect immediately prior to the date of such distribution by a fraction
(x) the numerator of which shall be the Current Market Price of the Common Stock
on the record date referred to below and (y) the denominator of which shall be
such Current Market Price of the Common Stock less the then Fair Market Value
(as determined by the Board of Directors of the Corporation) of the portion of
the cash, evidences of indebtedness, securities or other assets so distributed
or of such subscription rights or warrants applicable to one share of Common
Stock (but such denominator not to be less than one). Such adjustment shall be
made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.
(iv) If, on or prior to the first anniversary of the
Original Issue Date, a Qualified IPO has not been consummated, then, as of the
first anniversary of the Original Issue Date, the Conversion Price then in
effect shall be reduced to an amount equal to the product of (x) the
Conversation Price then in effect and (y) 0.75.
(v) In the case the Corporation, at any time or from time
to time, shall take any action affecting its Common Stock similar to or having
an effect similar to any of the actions described in any of Section 8(d)(i)
through Section 8(d)(iii), inclusive, or Section 8(h) (but not including any
action described in any such Section) and the Board of Directors of the
Corporation in good faith determines that it would be equitable in the
circumstances to adjust the
16
Conversion Price as a result of such action, then, and in each such case,
the Conversion Price shall be adjusted in such manner and at such time as the
Board of Directors of the Corporation in good faith determines would be
equitable in the circumstances (such determination to be evidenced in a
resolution, a certified copy of which shall be mailed to the holders of the
Series C Preferred Stock).
(vi) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(d) need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1% of such
Conversion Price. Any adjustment to the Conversion Price carried forward and not
theretofore made shall be made immediately prior to the conversion of any shares
of Series C Preferred Stock pursuant hereto.
(vii) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(d) shall be made upon (x) the grant or exercise
of not more than the greater of (i) 2,430,000 or (ii) 10% of the number of
outstanding shares of Common Stock on a fully-diluted basis, of options to
employees or directors of, or consultants to, the Corporation or any Subsidiary
pursuant to benefit plans approved by the Board of Directors of the Corporation
or upon the issuance of shares of Common Stock upon exercise of such options if
the exercise price thereof was not less than the Market Price of the Common
Stock on the date such options were granted or (y) upon the issuance of shares
of Common Stock or other Junior Stock in an aggregate amount not exceeding
2,000,000 shares of Common Stock or other Junior Stock (assuming the conversion
or exercise into Common Stock of any convertible securities or options that
constitute such Junior Stock) with an issue price per share which is less than
the Conversion Price in effect at the time of such issuance 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 (y), any Common Stock or Junior Stock
(assuming the conversion or exercise into Common Stock of any convertible
securities or options that constitute such Junior Stock) so issued must be
issued at a price per share of Common Stock or Junior Stock (assuming the
conversion or exercise into Common Stock of any convertible securities or
options that constitute such Junior Stock) which is no less than the Market
Price on the date of such issuance; provided, further, that any shares of Common
-------- -------
Stock or other 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 with an issue price per share (determined
as provided in Section 8(d)(ii)(A)) equal to, or in excess of, the Conversion
Price in effect at the time of such issuance shall not be counted in the basket
of 2,000,000 shares of Common Stock or other Junior Stock in this item (y).
(viii) Notwithstanding any provision in Section 8(d) to the
contrary and without limitation to or duplication of any other provision in
Section 8(d), in the event any securities of the Corporation (other than the
Series C Preferred Stock) (collectively, the "Subject Securities") are amended
or otherwise modified by operation of its terms or otherwise (including,
17
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 8(d) as if the Subject Securities which
have been amended or modified have been terminated and treated in accordance
with Section 8(d)(ii)(C)(II) and new securities issued in lieu of the Subject
Securities with the amended or modified terms, and an appropriate anti-dilution
adjustment shall be made hereunder with respect to such new securities (which
such adjustment shall be in lieu of the original anti-dilution adjustment
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 Conversion Price in accordance with Section
8(d), but in no event shall the 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 Section 8(d), without such Subject Securities having been
exercised, converted or exchanged in full pursuant to their terms, the
Conversion Price shall be appropriately readjusted in the manner specified in
such Section.
(e) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the taking of such record.
(f) Upon any increase or decrease in the Conversion Price, then,
and in each such case, the Corporation promptly shall deliver to each registered
holder of Series C Preferred Stock promptly following any of the foregoing
transactions a certificate, signed by the President or a Vice-President and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation, setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the increased or decreased Conversion Price then in effect
following such adjustment.
(g) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Series C Preferred Stock.
If more than one share of Series C Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Liquidation Preference of the shares of Series C Preferred Stock so
surrendered. If the conversion of any share or shares of Series C Preferred
Stock results in a fraction, an amount equal to such fraction multiplied by the
Current Market Price of the
18
Common Stock on the Business Day preceding the day of conversion shall be paid
to such holder in cash by the Corporation.
(h) In case of any capital reorganization or reclassification or
other change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value), or
in case of any consolidation or merger of the Corporation with or into another
Person (other than a consolidation or merger in which the Corporation is the
resulting or surviving Person and which does not result in any reclassification
or change of outstanding Common Stock), or in case of any sale or other
disposition to another Person of all or substantially all of the assets of the
Corporation (any of the foregoing, a "Transaction"), the Corporation, or such
successor or purchasing Person, as the case may be, shall execute and deliver to
each holder of Series C Preferred Stock at least 10 Business Days prior to
effecting any of the foregoing Transactions a certificate that the holder of
each share of Series C Preferred Stock then outstanding shall only have the
right thereafter to convert such share of Series C Preferred Stock into the kind
and amount of shares of stock or other securities (of the Corporation or another
issuer) or property or cash receivable upon such Transaction by a holder of the
number of shares of Common Stock into which such share of Series C Preferred
Stock could have been converted immediately prior to such Transaction. Such
certificate shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8. If, in the
case of any such Transaction, the stock, other securities, cash or property
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities of a Person other than the successor or purchasing Person and
other than the Corporation, which controls or is controlled by the successor or
purchasing Person or which, in connection with such Transaction, issues stock,
securities, other property or cash to holders of Common Stock, then such
certificate also shall be executed by such Person, and such Person shall, in
such certificate, specifically acknowledge the obligations of such successor or
purchasing Person and acknowledge its obligations to issue such stock,
securities, other property or cash to the holders of Series C Preferred Stock
upon conversion of the shares of Series C Preferred Stock as provided above. The
provisions of this Section 8(h) and any equivalent thereof in any such
certificate similarly shall apply to successive Transactions.
(i) In case at any time or from time to time:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock;
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or purchase
any shares of stock of any class or of any other rights or warrants;
(iii) there shall be any reclassification of the Common
Stock, or any consolidation or merger to which the Corporation is a party and
for which approval of any shareholders of the Corporation is required, or any
sale or other disposition of all or substantially all of the assets of the
Corporation; or
19
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall mail to each holder of shares of Series C Preferred
Stock at such holder's address as it appears on the transfer books of the
Corporation, as promptly as possible but in any event at least 10 days prior to
the applicable date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution or
rights or warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution
or rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
is expected to become effective. Such notice also shall specify the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for shares of stock or other securities or property
or cash deliverable upon such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.
(j) The Corporation shall at all times reserve and keep available
for issuance upon the conversion of the Series C Preferred Stock pursuant to
Section 8, 10 or 11, such number of its authorized but unissued shares of Common
Stock as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series C Preferred Stock, and shall take all action
required to increase the authorized number of shares of Common Stock if at any
time there shall be insufficient authorized but unissued shares of Common Stock
to permit such reservation or to permit the conversion of all outstanding shares
of Series C Preferred Stock.
(k) The issuance or delivery of certificates for Common Stock
upon the conversion of shares of Series C Preferred Stock pursuant to Section 8,
10 or 11 shall be made without charge to the converting holder of shares of
Series C Preferred Stock for such certificates or for any tax in respect of the
issuance or delivery of such certificates or the securities represented thereby,
and such certificates shall be issued or delivered in the respective names of,
or (subject to compliance with the applicable provisions of federal and state
securities laws) in such names as may be directed by, the holders of the shares
of Series C Preferred Stock converted; provided, however, that the Corporation
-------- -------
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a name
other than that of the holder of the shares of Series C Preferred Stock
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount of such tax or
shall have established to the reasonable satisfaction of the Corporation that
such tax has been paid.
Section 9. Certain Remedies.
----------------
Any registered holder of Series C Preferred Stock shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Certificate of Designation
20
and to enforce specifically the terms and provisions of this Certificate of
Designation 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.
Section 10. Mandatory Redemption.
--------------------
(a) Upon the earlier to occur of (i) a mandatory redemption of
any class of preferred stock of the Corporation (including, without limitation,
the Series B Preferred Stock) and (ii) October 20, 2009, the Corporation shall
redeem (unless otherwise required by law or prohibited by the terms of the
Credit Agreement) the shares of Series C Preferred Stock, in whole but not in
part, on not less than 30 days notice of the date of redemption (any such date a
"Mandatory Redemption Date") at a price per share (the "Mandatory Redemption
Price") equal to (x) the Liquidation Preference plus (y) an amount per share
equal to all accrued and unpaid dividends thereon (including, without
limitation, the amount of the Additional Dividend), whether or not declared or
payable, to the applicable Mandatory Redemption Date, in immediately available
funds.
(b) Notice of any redemption of shares of Series C Preferred
Stock pursuant to Section 10(a) shall be given by publication in a newspaper of
general circulation in the Borough of Manhattan, The City of New York (if such
publication shall be required by applicable law, rule, regulation or securities
exchange requirement), not less than 30, nor more than 60, days prior to the
date fixed for redemption. In any case, a similar notice shall be mailed at
least 30, but not more than 60, days prior to the date fixed for redemption to
each holder of shares of Series C Preferred Stock to be redeemed, at such
holder's address as it appears on the transfer books of the Corporation. In
order to facilitate the redemption of shares of Series C Preferred Stock, the
Board of Directors may fix a record date for the determination of shares of
Series C Preferred Stock to be redeemed, or may cause the transfer books of the
Corporation for the Series C Preferred Stock to be closed, not more than 60 days
or less than 30 days prior to the date fixed for such redemption.
(c) At any time after a notice of redemption shall have been
mailed and before the Mandatory Redemption Date, the Corporation shall deposit
for the benefit of the holders of shares of Series C Preferred Stock to be
redeemed the funds necessary for such redemption with a bank or trust company in
the Borough of Manhattan, The City of New York, having a capital and surplus of
at least $500,000,000. Any moneys so deposited by the Corporation and unclaimed
at the end of one year from the date designated for such redemption shall revert
to the general funds of the Corporation. After such reversion, any such bank or
trust company, upon demand, shall pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof and any holder of shares of Series C Preferred
Stock to be redeemed shall look only to the Corporation for the payment of the
Mandatory Redemption Price. In the event that moneys are deposited pursuant to
this Section 10(c) in respect of shares of Series C Preferred Stock that are
converted in accordance with the provisions of Section 8, such moneys shall,
upon such conversion, revert to the general funds of the Corporation and, upon
demand, such bank or trust company shall pay over to the Corporation such moneys
and shall be relieved of all responsibilities to the holders of such
21
converted shares in respect thereof. Any interest accrued on funds deposited
pursuant to this Section 10(c) shall be paid from time to time to the
Corporation for its own account.
(d) Notice of redemption having been given as aforesaid, upon the
deposit of funds pursuant to Section 10(c) in respect of shares of Series C
Preferred Stock to be redeemed pursuant to Section 10(a), notwithstanding that
any certificates for such shares shall not have been surrendered for
cancellation, from and after the date of redemption designated in the notice of
redemption (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to accrue
and (iii) all rights of the holders of shares of Series C Preferred Stock to be
redeemed shall cease and terminate, excepting only the right to receive the
Mandatory Redemption Price therefor and the right to convert such shares into
shares of Common Stock until the close of business on the date of redemption, in
accordance with Section 8; provided, however, that if the Corporation shall
-------- -------
default in the payment of the Mandatory Redemption Price, the shares of Series C
Preferred Stock that were to be redeemed shall thereafter be deemed to be
outstanding and the holders thereof shall have all of the rights of a holder of
Series C Preferred Stock until such time as such default shall no longer be
continuing or shall have been waived by holders of at least 66-2/3% of the then
outstanding shares of Series C Preferred Stock.
(e) If the Corporation is unable to redeem the Series C Preferred
Stock pursuant to the terms of the Credit Agreement on the Mandatory Redemption
Date, 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 the Credit Agreement or otherwise
that prevented the Corporation from paying the Mandatory Redemption Price and
redeeming all of the shares of Series C Preferred Stock to be redeemed hereunder
and no shares of Series B Preferred Stock shall be redeemed unless
simultaneously redeemed with the Series C Preferred Stock. If the funds of the
Corporation available for redemption of the Series C Preferred Stock and shares
of Series B Preferred Stock pursuant to the terms of the Credit Agreement or
otherwise on the Mandatory Redemption Date (the "Available Redemption Funds")
are insufficient for such redemption on such date, the holders of Series C
Preferred Stock shall, along with any Series B Preferred Stock redeemed on such
date, share ratably in the 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 Mandatory Redemption Date
were redeemed in full. At any time thereafter when additional funds of the
Corporation are available under the Credit Agreement or otherwise for the
redemption of shares of Series C Preferred Stock and 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 pro rata basis set forth above. In the
event that the Corporation is unable to pay in full both (x) the Mandatory
Redemption Price for the shares of Series C Preferred Stock to be so redeemed on
the Mandatory Redemption Date and (y) an amount equal to the liquidation
preference of, plus all accrued and unpaid dividends on, the Series B Preferred
Stock to be redeemed on the Mandatory Redemption Date, then in such instance,
the Corporation shall be obligated to make such partial redemption so that the
number of shares of Series C Preferred Stock and Series B Preferred Stock held
by
22
each holder shall be reduced on a pro rata basis as set forth above. In the
event that the Corporation fails to redeem the full number of shares of Series C
Preferred Stock for which redemption is required, then during the period from
----
the Series C Mandatory Redemption Date through the date on which such shares
that the Corporation failed to redeem on the Series C Mandatory Redemption Date
are actually redeemed, dividends on such shares shall continue to accrue and be
cumulative as specified in Section 2(a).
Section 11. Mandatory Conversion.
--------------------
(a) Upon the occurrence of a Qualified IPO, each outstanding
share of Series C Preferred Stock shall be automatically converted (the
"Mandatory Conversion"), with no further action required to be taken by the
Corporation or the holder thereof into the following:
(i) the number of fully paid and non-assessable shares of
Common Stock (the "Primary Conversion Shares") as is equal, subject to Section
8(g), to the product of the number of shares of Series C Preferred Stock being
so converted multiplied by the quotient of (x) the Liquidation Preference plus
----
an amount per share equal to all accrued and unpaid dividends thereon
(including, without limitation, the amount of the Additional Dividend), whether
or not declared or payable, to the date of such Qualified IPO, divided by (y)
----------
the Conversion Price then in effect; and
(ii) if the amount (the "Base Market Value") equal to the
product of (x) the number of Primary Conversion Shares received by a holder of
Series C Preferred Stock multiplied by (y) the IPO Price is not equal to or
---------- --
greater than an amount (the "130% Value") equal to 130% of the Liquidation
Preference, then such holder shall also receive in connection with such
Mandatory Conversion (and in addition to the Primary Conversion Shares) such
number of fully paid and non-assessable shares of Common Stock (the "Additional
Conversion Shares") so that the product of (A) the sum of the number of Primary
Conversion Shares plus such number of Additional Conversion Shares and (B) the
IPO Price is equal to the 130% Value; provided, that if a Qualified IPO occurs
--------
prior to the first anniversary of the Original Issue Date and if, in connection
with a Mandatory Conversion, an amount equal to the product of (x) the number of
Primary Conversion Shares and Additional Conversion Shares to be received by a
holder of shares of Series C Preferred Stock multiplied by (y) the IPO Price is
---------- --
less than the amount which would result in such holder achieving at least a 35%
annual Internal Rate of Return, then in connection with such Mandatory
Conversion the number of Additional Conversion Shares to be issued to such
holder upon such exercise shall be increased so that the product of (x) sum of
the number of Primary Conversion Shares plus such number of Additional
Conversion Shares multiplied by (y) the IPO Price is equal to an amount
---------- --
necessary for such holder to achieve a 35% annual Internal Rate of Return;
provided, that, without duplication of the foregoing, if the IPO Price is less
- --------
than the Conversion Price in effect immediately prior to such conversion, then
in no event shall the aggregate number of additional shares of Common Stock
issued pursuant to this Section 11(a) to such holder upon a conversion result in
such holder receiving a number of shares of Common Stock that is greater than
the aggregate number of shares of Common Stock that would be issuable to such
holder if the Conversion Price in effect immediately prior to such conversion
was equal to the product of 0.75 and the Conversion Price
23
actually in effect immediately prior to such conversion; provided, further
-------- -------
that, there shall be no adjustment pursuant to this Section 11(a) with respect
to any shares of Series C Preferred Stock issued by the Corporation pursuant to
Section 2.1(b) of the Stock Purchase Agreement less than 90 days prior to the
date of such Change of Control.
(b) On the date of conversion pursuant to this Section 11, the
Corporation shall deliver to or upon the written order of the holder of Series C
Preferred Stock being converted a certificate or certificates representing the
number of fully paid and non-assessable shares of Common Stock into which such
shares of Series C Preferred Stock may be or have been converted in accordance
with the provisions of this Section 11. Subject to the following provisions of
this paragraph, such conversion shall be deemed to have been made upon
consummation of the Qualified IPO on the date of required conversion pursuant to
this Section 11, and the Person or Persons entitled to receive the Common Stock
deliverable upon conversion of such shares of Series C Preferred Stock shall be
treated for all purposes as having become the record holder or holders of such
Common Stock at such time, and such conversion shall be at the Conversion Price
in effect at such time; provided, however, that no surrender shall be effective
-------- -------
to constitute the Person or Persons entitled to receive the Common Stock
deliverable upon such conversion as the record holder or holders of such Common
Stock while the share transfer books of the Corporation shall be closed (but not
for any period in excess of five days), but such surrender shall be effective to
constitute the Person or Persons entitled to receive such Common Stock as the
record holder or holders thereof for all purposes immediately prior to the close
of business on the next succeeding day on which such share transfer books are
open, and such conversion shall be deemed to have been made at, and shall be
made at the Conversion Price in effect at, such time the date such shares shall
have been surrendered in satisfactory form for conversion.
Section 12. Change of Control Offer.
-----------------------
(a) The Corporation shall no less than 10 Business Days prior to
any Change of Control that occurs prior to the fifth anniversary of the Original
Issue Date offer to purchase from each holder of shares of Series C Preferred
Stock (a "Change of Control Offer"), and thereafter shall purchase (unless
otherwise required by law or prohibited by the terms of the Credit Agreement)
from each holder which accepts such Change of Control Offer, all (but not less
than all) outstanding shares of Series C Preferred Stock then held by such
holder pursuant to such Change of Control Offer for cash at a purchase price
(the "Change of Control Purchase Price") equal to the Liquidation Preference,
plus an amount per share equal to all accrued and unpaid dividends thereon
(including, without limitation, the amount of the Additional Dividend), whether
or not declared or payable, to the date of such purchase pursuant to the Change
of Control Offer.
(b) The Change of Control Offer shall remain open from the time
of mailing until the purchase date (the "Change of Control 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 Stock Purchase
Agreement. The Notice of Offer shall contain all instruments and materials
necessary
24
to enable the holders to tender shares of Series C Preferred Stock pursuant
to the Change of Control Offer. The Notice of Offer, which shall govern the
terms of the Change of Control Offer, shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 12 and that tendered shares of Series C Preferred Stock
will be purchased;
(ii) the purchase price and the date designated for
purchase;
(iii) that the Change of Control Offer is being made for all
(but not less than all) shares of Series C Preferred Stock held by a holder;
(iv) that the shares of 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;
(v) 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
(vi) 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, facsimile transmission or letter setting forth the name
of the holder, the number of shares of Series C Preferred Stock 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 C
Preferred Stock purchased.
(c) In the event that amounts are due to any holder of Series C
Preferred Stock under this Section 12, no payment or distribution shall be made
on Parity Stock upon a Change of Control, except distributions made ratably on
the shares of Series C Preferred Stock and all other Parity Stock in proportion
to the total amounts to which all holders of shares of Series C Preferred Stock
and other Parity Stock are entitled under this Section 12 and otherwise upon
such Change of Control, respectively, and no such purchase or distribution shall
be made on shares of Parity Stock unless made simultaneously with the repurchase
of shares of Series C Preferred Stock pursuant to this Section 12.
(d) If the Corporation is unable to purchase the Series C
Preferred Stock pursuant to the terms of the Credit Agreement on the Change of
Control Purchase Date, 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 the Credit Agreement
that prevented the Corporation from paying the Change of Control Purchase Price
and purchasing all of the shares of Series C Preferred Stock to be purchased
hereunder and no shares of Series B Preferred Stock shall be purchased in
connection with such Change of Control unless purchased simultaneously with the
purchase of the Series C Preferred Stock. If the funds of the Corporation
available for purchase of the Series C Preferred Stock and the Series
25
B Preferred Stock pursuant to the terms of the Credit Agreement or otherwise
on the Change of Control Purchase Date (the "Available Purchase Funds") are
insufficient for such purchase on such date, the holders of Series C Preferred
Stock shall, along with any Series B Preferred Stock purchased on such date,
share ratably in the Available Purchase 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 Change of Control Purchase Date
were purchased in full. At any time thereafter when additional funds of the
Corporation are available under the Credit Agreement or otherwise for the
purchase of shares of Series C Preferred Stock and shares of Series B Preferred
Stock, such funds will be used, at the end of the next succeeding fiscal
quarter, to purchase the balance of such shares, or such portion thereof for
which funds are available, on the pro rata basis set forth above. In the event
that the Corporation is unable to pay in full the Change of Control Purchase
Price for the shares of Series C Preferred Stock and the amount payable with
respect to the shares of Series B Preferred Stock to be so purchased on the
Change of Control Purchase Date, then the Corporation shall be obligated to make
such partial purchase so that the number of shares of Series C Preferred Stock
and Series B Preferred Stock held by each holder shall be reduced on the pro
rata basis as set forth above. In the event that the Corporation fails to
purchase the full number of shares of Series C Preferred Stock for which
purchase is required, then during the period from the Change of Control Purchase
----
Date through the date on which such shares that the Corporation failed to
purchase on the Change of Control Purchase Date are actually purchased,
dividends on such shares shall continue to accrue and be cumulative as specified
in Section 2(a).
Section 13. Definitions.
-----------
For the purposes of this Certificate of Designation of Series C
Preferred Stock, the following terms shall have the meanings indicated:
"Adjusted Floor Amount" means an amount equal to the lesser of
---------------------
(x) $7.33, as such amount would be adjusted pursuant to Section 8 if such amount
was the Conversion Price, and (y) the amount of the Adjusted Series B Conversion
Price (as defined in the Series B Certificate of Designation), as such amount
may be reduced (but not increased) from time to time in accordance with the
terms of the Series B Preferred Stock.
"Affiliate" shall have the meaning ascribed to such term in Rule
---------
12b-2 of the General Rules and Regulations under the Exchange Act; provided that
--------
"Affiliate" shall not include the Purchaser or any Affiliate of the Purchaser.
"Business Day" shall mean any day other than a Saturday, Sunday
------------
or other day on which commercial banks in The City of New York, New York are
authorized or required by law or executive order to close.
A "Change of Control" of the Corporation shall mean, so long as
-----------------
any Series C Preferred Stock is issued and outstanding, such time as:
26
(i) Any Person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of outstanding shares of stock of the Corporation entitling such
Person or Persons to exercise 50% or more of the total votes (excluding the
Series C Preferred Stock) entitled to be cast at a regular or special meeting,
or by action by written consent, of shareholders of the Corporation (the term
"beneficial owner" shall be determined in accordance with Rule 13d-3,
promulgated by the Commission under the Exchange Act);
(ii) A majority of the Board of Directors of the
Corporation shall consist of Persons other than Continuing Directors. The term
"Continuing Director" shall mean any member of the Board of Directors on the
Closing Date (as defined in the Stock Purchase Agreement) and any other member
of the Board of Directors who shall be recommended or elected to succeed or
become a Continuing Director by a majority of Continuing Directors who are then
members of the Board of Directors;
(iii) The Corporation shall consummate a recapitalization,
reorganization, merger, consolidation or similar transaction, in each case with
respect to which all or substantially all the Persons who were the respective
beneficial owners, directly or indirectly, of the outstanding shares of capital
stock of the Corporation immediately prior to such recapitalization,
reorganization, merger, consolidation or similar transaction, will own less than
50% of the combined voting power of the then outstanding shares of capital stock
of the Corporation resulting from such recapitalization, reorganization, merger,
consolidation or similar transaction;
(iv) The Corporation shall consummate the sale or other
disposition of all or substantially all the assets of the Corporation in one
transaction or in a series of related transactions;
(v) Any transaction occurs after the occurrence of an
Initial Public Offering, the result of which is that the Common Stock is not
required to be registered under Section 12 of the Exchange Act and that the
holders of Common Stock do not receive common stock of the Person surviving such
transaction which is required to be registered under Section 12 of the Exchange
Act;
(vi) Immediately after any merger, consolidation,
recapitalization or similar transaction a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) shall be the beneficial owners, directly or
indirectly, of outstanding shares of capital stock of the Company (or any Person
surviving such transaction) entitling them collectively to exercise 50% or more
of the total voting power of shares of capital stock of the Company (or the
surviving Person in such transaction) and in connection with or as a result of
such transaction, the Company (or such surviving Person) shall have incurred or
issued additional indebtedness such that the total indebtedness so incurred or
issued equals at least 50% of the consideration payable in such transaction;
provided, that any such transaction shall not be considered a Change of Control
- --------
if the holders of Series C Preferred Stock have the right to participate on at
least a pari passu basis; or
---- -----
27
(vii) An "Organic Transaction" (as defined in the Series B
Certificate of Designation) shall have occurred with respect to the Series B
Preferred Stock.
"Common Stock" shall mean and include the Common Stock, par value
------------
$.01 per share, of the Corporation and each other class of capital stock of the
Corporation that does not have a preference over any other class of capital
stock of the Corporation as to dividends or upon liquidation, dissolution or
winding up of the Corporation and, in each case, shall include any other class
of capital stock of the Corporation into which such stock is reclassified or
reconstituted.
"Current Market Price" per share shall mean, on any date
--------------------
specified herein for the determination thereof, (a) the average daily Market
Price of the Common Stock for those days during the period of 15 days, ending on
such date, which are Trading Days, and (b) if the Common Stock is not then
listed or admitted to trading on any national securities exchange or quoted in
the over-the-counter market, the Market Price on such date.
"Credit Agreement" means the Credit Agreement dated March 30,
----------------
1999 among the Corporation, MedSource Technologies, LLC, the lenders party to
the Credit Agreement and Deutsche Bank AG, New York Branch, as administrative
agent (as amended, modified, supplemented, refinanced, replaced or refunded from
time to time).
"Documents" has the meaning assigned to that term in Section
---------
5.21.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Fair Market Value" shall mean the amount which a willing buyer,
-----------------
under no compulsion to buy, would pay a willing seller, under no compulsion to
sell, in an arm's-length transaction (assuming (i) that the Common Stock is
valued "as if fully distributed" and (ii) no consideration is given for minority
investment discounts, or discounts related to illiquidity or restrictions on
transferability).
"Fully Diluted Basis" means, as of any date, the number of shares
-------------------
of Common Stock actually issued and outstanding, plus an amount equal to the
----
number of shares of Common Stock that would be outstanding as of such date if
(x) all options, warrants or other convertible securities that have an exercise
or conversion price which is then equal to or greater than the Market Price of a
share of Common Stock as of such date had been exercised or converted and (y)
without duplication of the amounts determined pursuant to clause (x) all shares
of convertible preferred stock and convertible notes had been converted.
"Initial Public Offering" shall mean the initial public offering
-----------------------
of shares of Common Stock of the Corporation pursuant to a registration
statement declared effective under the Securities Act.
28
"Internal Rate of Return" means, as of a particular date, with
-----------------------
respect to any shares of Series C Preferred Stock, an internal rate of return
equal to the annual compound rate of interest that would discount the Value of
the sum of the consideration received by a holder upon conversion of such Series
C Preferred Stock and any and all dividends received prior to such conversion or
upon such conversion, giving effect to the timing of receipt thereof, to a
present value, as of the Original Issue Date, equal to the Liquidation
Preference.
"IPO Price" shall mean the initial offering price to the public
---------
in the Initial Public Offering.
"IPO Valuation" shall mean an amount equal to the product of (i)
-------------
the number of issued and outstanding shares of Common Stock on a fully diluted
basis and (ii) the IPO Price.
"Issue Date" shall mean, with respect to any shares of Series C
----------
Preferred Stock, the original date of issuance of such shares of Series C
Preferred Stock to the holders pursuant to the Stock Purchase Agreement.
"Junior Stock" shall mean any capital stock of the corporation
------------
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock including, without limitation, the
Common Stock, the Series A Preferred Stock and the Series Z Preferred Stock.
"Liquidation Preference" with respect to a share of Series C
----------------------
Preferred Stock shall mean $1,000.
"Mandatory Redemption/Change of Control Default" means that the
----------------------------------------------
Corporation has failed to eliminate or receive the exemption, waiver or
exemption from the terms of the Credit Agreement with respect to the full
redemption of shares of Series C Preferred Stock under Section 10 or the full
purchase of shares of Series C Preferred Stock under Section 12, in either case
within 30 days of the Mandatory Redemption Date or Change of Control Purchase
Date, as the case may be, other than by reason of the existence of an event of
default by the Company under the financial covenants set forth in the Credit
Agreement that is in existence prior to the Mandatory Redemption Date or Change
of Control Purchase Date, as the case may be.
"Market Price" shall mean, per share of Common Stock on any date
------------
specified herein: (a) if the Common Stock is not then listed or admitted to
trading on any national securities exchange but is designated as a national
market system security, the last trading price of the Common Stock on such date;
or (b) if there shall have been no trading on such date or if the Common Stock
is not so designated, the average of the reported closing bid and asked prices
of the Common Stock on such date as shown by NASDAQ and reported by any member
firm of the NYSE, selected by the Corporation. If neither (a) or (b) is
applicable, Market Price shall mean the Fair Market Value per share determined
in good faith by the Board of Directors of the Corporation which shall be deemed
to be Fair Market Value unless holders of at least 15% of the outstanding shares
of Series C Preferred Stock request, that the Corporation obtain an opinion of a
nationally recognized investment banking firm chosen by such holders (at the
Corporation's
29
expense) in which event Fair Market Value shall be as determined by such
investment banking firm.
"NASDAQ" shall mean the National Market System of the NASDAQ
------
Stock Market.
"NYSE" shall mean the New York Stock Exchange, Inc.
----
"Original Issue Date" means the date of the original closing
-------------------
under the Stock Purchase Agreement.
"Parity Stock" shall mean any capital stock of the corporation,
------------
including the Series C Preferred Stock, ranking on a par (either as to dividends
or upon liquidation, dissolution or winding up) with the Series C Preferred
Stock, including, without limitation, the shares of Series B Preferred Stock.
"Person" shall mean any individual, firm, corporation,
------
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political subdivision thereof)
or other entity of any kind, and shall include any successor (by merger) of such
entity.
"Public Market Float" shall mean, determined as of the date of
-------------------
the Initial Public Offering, the product of (x) the IPO Price and (y) the number
of shares of Common Stock to be registered under the Securities Act in
connection with the Initial Public Offering.
"Qualified IPO" shall mean an Initial Public Offering following
-------------
which the Public Market Float exceeds either (x) $75 million or (y) 20% of the
IPO Valuation, and in connection with such Initial Public Offering a "Qualified
IPO" shall have occurred with respect to the Series B Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended,
--------------
and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Senior Stock" shall mean any capital stock of the Corporation
------------
ranking senior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock.
"Series A Preferred Stock" has the meaning set forth in Section
------------------------
1(b).
"Series B Certificate of Designation" means the Certificate of
-----------------------------------
Designation of the Series B Preferred Stock filed on March 30, 1999 with the
Secretary of State of the State of Delaware, as amended from time to time in
accordance with its terms.
"Series B Preferred Stock" has the meaning set forth in Section
------------------------
1(b).
"Series Z Preferred Stock" has the meaning set forth in Section
------------------------
1(b).
30
"Stock Purchase Agreement" shall mean the Stock Purchase
------------------------
Agreement, dated October 24, 2000, among the Corporation, The 1818 Fund III,
L.P., and the other parties thereto, as the same may be amended from time to
time.
"Subsidiary" shall mean, with respect to any person, a
----------
corporation or other entity of which 50% or more of the voting power of the
voting equity securities or equity interest in owned, directly or indirectly, by
such persons.
"Trading Days" shall mean a day on which the national securities
------------
exchanges are open for trading.
"Value" means, per share of Common Stock, the sum of (x) the
-----
amount of cash plus (y) an amount equal to the market price of the securities
----
received (as determined in good faith by the Board of Directors of the
Corporation, unless holders of at least 15% of the outstanding shares of Series
C Preferred Stock request, that the Corporation obtain an opinion of a
nationally recognized investment banking firm chosen by such holders (at the
Corporation's expense) in which case the market price of such securities shall
be as determined by such investment banking firm).
Section 14. Modification or Amendment.
-------------------------
Except as specifically set forth herein, modifications or
amendments to this Certificate of Designation may be made by the Corporation
with the consent of the holders of at least 50% of the outstanding shares of
Series C Preferred Stock.
31
IN WITNESS WHEREOF, MedSource Technologies, Inc. has caused this
Certificate to be duly executed in its corporate name on this 24/th/ day of
October, 2000.
MEDSOURCE TECHNOLOGIES, INC.
By: /s/_________________________________
Name:
Title:
___________________________________________
CERTIFICATE OF DESIGNATION
OF
MEDSOURCE TECHNOLOGIES, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
___________________________________________
SERIES D 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
MedSource Technologies, Inc., a Delaware corporation (the "Company"),
hereby certifies that the following resolution has been duly adopted by the
Board of Directors of the Company:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the board of directors of the Company (the "Board") by the provisions
of the certificate of incorporation of the Company (as amended, the "Certificate
of Incorporation"), there hereby is created, out of the 1,000,000 shares of
preferred stock, par value $.01 per share, of the Company authorized by Article
5(a) of the Certificate of Incorporation (the "Preferred Stock"), a series of
the Preferred Stock consisting of 43,000 shares, which series shall have the
following powers, designations, preferences and relative, participating,
optional and other special rights, and the following qualifications, limitations
and restrictions:
1. Designation and Number. This series of Preferred Stock shall be
designated Series D 6% Cumulative Convertible Preferred Stock (the "Series D
Preferred Stock"). The number of shares initially constituting the Series D
Preferred Stock shall be 43,000, which number may be decreased (but not
increased) by the Board without a vote of stockholders; provided, however, that
such number may not be decreased below the number of outstanding shares of
Series D Preferred Stock.
2. Dividends.
(a) The holders of shares of Series D Preferred Stock shall be entitled
to receive, when, as and if declared by the Board, out of assets of the Company
legally available therefor cumulative dividends on each share of Series D
Preferred Stock held at the annual rate on the Liquidation Value (as defined in
Section 3) thereof equal to (x) 6.0%, or (y) from and after the first
anniversary of the Original Issue Date (as defined in Section 4) 8%, in each
case calculated on the basis of a 360-day year consisting of twelve 30-day
months.
(b) Except in connection with any redemption of shares of Series D
Preferred Stock or upon liquidation of the Company, or as otherwise determined
by the Board, dividends on the Series D Preferred Stock shall not be paid in
cash. Upon conversion of any share of Series D Preferred Stock pursuant to
Section 4 and 5, all accumulated but unpaid dividends thereon shall be
extinguished. Dividends shall accrue quarterly and be cumulative with respect to
any share of Series D Preferred Stock from date of issuance whether or not
declared.
(c) Unless all accrued dividends shall be declared and paid in cash in
full on all outstanding shares of Series D Preferred Stock, without the consent
of holders of a majority of the outstanding shares of Series D Preferred Stock
(voting together as a single class, at a meeting called for such purpose or by
written consent), no dividends shall be declared or paid on any shares of Junior
Stock (as defined below) other than dividends in shares of the same class and
series of Junior Stock to the holders of Junior Stock in respect of which such
dividend is declared or paid. Dividend payments shall be made on the shares of
Series D Preferred Stock and shares of Parity Stock (as defined below) on a pari
passu basis (other than dividends in shares of the same class or series of
Parity Stock to the holders of Parity Stock in respect of which such dividend is
declared or paid). If dividends are paid on the shares of Series D Preferred
Stock and shares of Parity Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares, such dividends shall
be allocated pro rata (in proportion to the respective liquidation preferences)
among all such shares of Series D Preferred Stock and shares of Parity Stock at
the time outstanding based on the amount of dividends then due with respect to
each such share.
(d) "Junior Stock" shall mean (i) the Company's Series A Preferred
Stock, par value $.01 per share, (ii) the Company's Series Z Convertible Nominal
Value Redeemable Preferred Stock, $.01 par value per share (iii) the Company's
common stock, par value $.01 per share ("Common Stock") and (iv) each other
class of the Company's capital stock or series of the Company's preferred stock
the terms of which do not provide that shares of such class or series shall rank
senior to or on a parity with shares of the Series D Preferred Stock as to
distributions of dividends and distributions upon the liquidation, winding-up
and dissolution of the Company.
(e) "Parity Stock" shall mean each class of the Company's capital stock
or series of the Company's preferred stock the terms of which provide that the
shares of such class or series rank on a parity with shares of the Series D
Preferred Stock as to distribution of dividends and distributions upon the
liquidation, winding-up and dissolution of the Company.
(f) The holders of shares of Series D Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein. Notwithstanding anything to the contrary in this Section 2, in no event
shall the Company be required to pay any dividends prior to liquidation or upon
redemption if such payment is prohibited at such time under the terms of any
agreement relating to indebtedness for money borrowed ("Indebtedness") to which
the Company is a party (including without limitation, the Credit Agreement) or
under the terms of any agreement or certificate of designation pursuant to which
Senior Stock (as hereinafter defined) has been issued (a "Senior Stock
Agreement"). "Credit Agreement" means the Credit Agreement dated March 30, 1999
among the Company, MedSource Technologies, LLC, the lenders party to the Credit
Agreement and Deutsche Bank AG, New York Branch, as
2
administrative agent (as amended, modified, supplemented, refinanced, replaced
or refunded from time to time). Notwithstanding the foregoing, dividends shall
continue to accumulate for the benefit of the holders of the shares of Series D
Preferred Stock even if such dividends are not payable to the holders of shares
of Series D Preferred Stock prior to liquidation or upon redemption.
3. Liquidation Rights.
(a) Upon the voluntary or involuntary liquidation, winding-up or
dissolution of the Company, the holders of shares of Series D Preferred Stock
shall be entitled to receive out of the assets of the Company, for each share of
Series D Preferred Stock, cash in an amount equal to the sum of $1,000 (the
"Liquidation Value"), plus an amount equal to all accumulated but unpaid
dividends thereon (whether or not declared) before any payment or distribution
upon liquidation, winding up or dissolution shall be made on Junior Stock, but
after payment of all outstanding indebtedness and all amounts due on
liquidation, dissolution or winding-up in respect of the Company's 6% Series B
Cumulative Convertible Redeemable Preferred Stock, the Company's 6% Cumulative
Convertible Redeemable Preferred Stock, Series C, and each other class of the
Company's capital stock which by its terms ranks senior to the Series D
Preferred Stock as to distribution of dividends and/or distributions upon
liquidation, winding up and dissolution of the Company ("Senior Stock").
(b) After the payment in cash to the holders of shares of Series D
Preferred Stock of the full preferential amounts set forth above, the holders of
shares of Series D Preferred Stock as such shall have no right or claim to any
of the remaining assets of the Company. If the assets of the Company available
for distribution to the holders of shares of Series D Preferred Stock, upon any
liquidation, dissolution or winding-up of the Company, are insufficient to pay
the full preferential amount to which the holders of Series D Preferred Stock
are entitled, then the holders of Series D Preferred Stock shall share ratably
in such distribution of assets (along with the holders of any Parity Stock) in
accordance with the amount that would be payable on such distribution if the
amounts to which such holders were entitled if paid in full.
(c) The voluntary sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
the property or assets of the Company or any consolidation or merger of the
Company with or into one or more corporations resulting in the holders of the
issued and outstanding voting securities of the Company immediately prior to
such transaction beneficially owning or controlling less than a majority of the
voting securities of the continuing, surviving or successor entity immediately
following the transaction shall be deemed to be a liquidation, dissolution or
winding-up, voluntary or involuntary, of the Company.
4. Voluntary Conversion.
(a) Any holder of Series D Preferred Stock shall have the right, at its
option, at any time and from time to time, to convert, subject to the terms and
provisions of this Section 4, any or all of such holder's shares of Series D
Preferred Stock into such number of fully paid and non-assessable shares of
Common Stock as is equal, subject to Section 4(f), to the product of the number
of shares of Series D Preferred Stock being so converted multiplied by the
quotient of (i)
3
the Liquidation Value divided by (ii) the Conversion Price (as defined below)
then in effect, except that with respect to any shares which shall be called for
redemption, such right shall terminate at the close of business on the date of
redemption for such shares, unless in any such case the Company shall default in
performance or payment due upon redemption thereof. The "Conversion Price" shall
be $20.00, subject to adjustment as set forth in Section 4(c). Such conversion
right shall be exercised by the surrender of the shares to be converted to the
Company at any time during usual business hours at its principal place of
business to be maintained by it, accompanied by written notice that the holder
elects to convert such shares and specifying the name or names (with address) in
which a certificate or certificates for shares of Common Stock are to be issued
and (if so required by the Company) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company duly executed by the
holder or its duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 4(j). All shares of Series D
Preferred Stock surrendered for conversion shall be delivered to the Company for
cancellation and canceled by it and no shares of Series D Preferred Stock shall
be issued in lieu thereof.
(b) As promptly as practicable after the surrender, as herein provided,
of any shares of Series D Preferred Stock for conversion pursuant to Section
4(a), the Company shall deliver to or upon the written order of the holder of
such shares so surrendered a certificate or certificates representing the number
of fully paid and non-assessable shares of Common Stock into which such shares
of Series D Preferred Stock may be or have been converted in accordance with the
provisions of this Section 4. Subject to the following provisions of this
paragraph and of Section 4(d), such conversion shall be deemed to have been made
immediately prior to the close of business on the date that such shares of
Series D Preferred Stock shall have been surrendered in satisfactory form for
conversion, and the person or persons entitled to receive the Common Stock
deliverable upon conversion of such shares of Series D Preferred Stock shall be
treated for all purposes as having become the record holder or holders of such
Common Stock at such time, and such conversion shall be at the Conversion Price
in effect at such time; provided, however, that no surrender shall be effective
to constitute the person or persons entitled to receive the Common Stock
deliverable upon such conversion as the record holder or holders of such Common
Stock while the share transfer books of the Company shall be closed (but not for
any period in excess of five days), but such surrender shall be effective to
constitute the person or persons entitled to receive such Common Stock as the
record holder or holders thereof for all purposes immediately prior to the close
of business on the next succeeding day on which such share transfer books are
open, and such conversion shall be deemed to have been made at, and shall be
made at the Conversion Price in effect at, such time on the date such shares
shall have been surrendered in satisfactory form for conversion.
(c) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Company shall at any time or from time to time
after the Original Issue Date (A) pay a dividend in Common Stock on the
outstanding shares of Common Stock of the Company, (B) subdivide the outstanding
shares of Common Stock into a larger number of shares, (C) combine the
outstanding shares of Common Stock into a smaller number of shares, or (D) pay a
dividend or make a distribution on the outstanding shares of Common
4
Stock in securities of the Company pursuant to a shareholder rights plan,
"poison pill" or similar arrangement, then, and in each such case set forth in
(A), (B) and (C) above, the Conversion Price in effect immediately prior to such
event shall be adjusted, and in the case of (D) above, other appropriate actions
shall be taken by the Company, so that the holder of any share of Series D
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock or other securities of the Company
that such holder would have owned or would have been entitled to receive upon or
by reason of any of the events described above, had such share of Series D
Preferred Stock been converted immediately prior to the occurrence of such
event. An adjustment made pursuant to this Section 4(c)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision or combination, to the
close of business on the day upon which such corporate action becomes effective.
(ii) (A) In case the Company shall at any time or from time to
time after the Original Issue Date issue shares of Common Stock (or securities
convertible into or exchangeable for Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) for a consideration per share
less than the Adjusted Conversion Amount (as defined below) then in effect at
the issuance date (treating the price per share of any security convertible or
exchangeable or exercisable into Common Stock as equal to (I) the sum of the
price for such security convertible, exchangeable or exercisable into Common
Stock plus any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion, exchange or exercise of such
security into Common Stock divided by (II) the number of shares of Common Stock
initially underlying such convertible, exchangeable or exercisable security),
then, and in each such case, the Conversion Price then in effect shall be
reduced in the same proportion as the reduction in the Adjusted Conversion
Amount determined by dividing (x) an amount equal to the sum of (1) the number
of shares of Common Stock outstanding on a Fully Diluted Basis (as defined
below) immediately prior to the issuance of such shares multiplied by the then
existing Adjusted Conversion Amount and (2) the aggregate consideration, if any
received by the Company upon such issuance, by (y) the total number of shares of
Common Stock outstanding on a Fully Diluted Basis immediately following such
issuance; and
(B) Any such adjustment pursuant to this Section 4(c)(ii)
shall be made whenever such shares, securities, options, warrants or other
rights are issued; provided that:
(I) the determination as to whether an adjustment
is required to be made pursuant to this Section 4(c)(ii) shall be made upon the
issuance of such shares or such convertible or exchangeable securities, options,
warrants or other rights;
(II) if any convertible or exchangeable securities,
options, warrants or other rights (or any portions thereof) which shall have
given rise to an adjustment pursuant to this Section 4(c)(ii) shall have expired
or terminated without the exercise thereof and/or if by reason of the terms of
such convertible or exchangeable securities, options, warrants
5
or other rights there shall have been an increase or increases, with the passage
of time or otherwise, in the price payable upon the exercise or conversion
thereof, then the Conversion Price hereunder shall be readjusted (but to no
greater extent than originally adjusted) on the basis of (x) eliminating from
the computation any additional shares of Common Stock corresponding to such
convertible or exchangeable securities, options, warrants or other rights as
shall have expired or terminated, (y) treating the additional shares of Common
Stock, if any, actually issued or issuable pursuant to the previous exercise of
such convertible or exchangeable securities, options, warrants or other rights
as having been issued for the consideration actually received and receivable
therefor and (z) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time;
(III) no adjustment in the Conversion Price shall be made
pursuant to this Section 4(c)(ii) as a result of any issuance of securities by
the Company in respect of which an adjustment to the Conversion Price is made
pursuant to Section 4(c)(i);
(IV) The consideration per share for the issuance or sale
of any shares of Common Stock (or any securities convertible into or
exchangeable for Common Stock, or any options, warrants or other rights to
acquire shares of Common Stock) shall, irrespective of the accounting treatment
of such consideration:
(a) insofar as such consideration consists of cash,
be computed as the amount of cash received by the Company;
(b) insofar as such consideration consists of
property (including securities) other than cash, be computed at the fair market
value thereof at the time of such issuance or sale; and
(c) in case shares of Common Stock (or any
securities convertible into or exchangeable for Common Stock, or any options,
warrants or other rights to acquire shares of Common Stock) that are issued or
sold by the Company together with other stock or securities or other assets of
the Company for consideration that covers both, be the portion of such
consideration so received, computed as provided in the preceding clauses (a) and
(b) above, allocable to such shares of Common Stock (or any securities
convertible into or exchangeable for Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock);
all as determined in good faith by a resolution of the Board of Directors of the
Company, provided that, if the holders of at least 15% of the outstanding shares
of Series D Preferred Stock object to any valuation of non-cash consideration
determined by the Board of Directors of the Company within fifteen (15) days of
receipt of written notice of such valuation, such holders may request that the
Company obtain an opinion of a nationally recognized investment banking firm
chosen by such holders (at the Company's expense) in which case the
consideration per share of such securities shall be as determined by such
investment banking firm.
(iii) Notwithstanding anything herein to the contrary, no adjustment
under this
6
Section 4(c) need be made to the Conversion Price unless such adjustment would
require an increase or decrease of at least 1% of the Conversion Price then in
effect. Any lesser adjustment shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment, which, together with
any adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least 1% of such Conversion Price. Any adjustment to the
Conversion Price carried forward and not theretofore made shall be made
immediately prior to the conversion of any shares of Series D Preferred Stock
pursuant hereto.
(iv) Notwithstanding anything herein to the contrary, no adjustment
under Section 4(c)(ii) shall be made except upon issuance of Common Stock (or
securities convertible or exchangeable for common stock, or any options,
warrants or other rights to acquire shares of Common Stock) issued for cash in
connection with a transaction entered into following the Original Issue Date in
which the principal purpose of the Company is to finance the business of the
Company, but excluding specifically and without limitation, the issuance of any
security (x) upon conversion, exchange or exercise of any other security of the
Company outstanding at the Original Issue Date or (y) pursuant to the terms of
the Series C Agreement (as defined below).
(v) In the event any securities of the Company issued following the
Original Issue Date to which the provisions of Section 4(c)(ii) shall apply
(collectively, the "Subject Securities") are amended or otherwise modified
(other than 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 4(c)(ii) as if the Subject Securities which have
been amended or modified have been terminated and treated in accordance with
Section 4(c)(ii)(B)(II) and new securities issued in lieu of the Subject
Securities with the amended or modified terms, and an appropriate anti-dilution
adjustment shall be made hereunder with respect to such new securities (which
such adjustment shall be in lieu of the original anti-dilution adjustment
hereunder, if any, made upon the issuance of the Subject Securities). The
Company shall make all necessary adjustments (including successive adjustments
if required) to the Conversion Price in accordance with Section 4(c)(ii), but in
no event shall the 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
Section 4(c)(ii), without such Subject Securities having been exercised,
converted or exchanged in full pursuant to their terms, the Conversion Price
shall be appropriately readjusted in the manner specified in such Section.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such
7
dividend or distribution, then thereafter no adjustment otherwise required by
this Section 4 shall be required by reason of the taking of such record.
(e) Upon any increase or decrease in the Conversion Price, then, and in
each such case, the Company promptly shall deliver to each registered holder of
Series D Preferred Stock promptly following any of the foregoing transactions a
certificate, signed by the President or a Vice-President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth in reasonable detail the event requiring the adjustment
and the method by which such adjustment was calculated and specifying the
increased or decreased Conversion Price then in effect following such
adjustment.
(f) No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of any shares of Series D Preferred Stock. If more
than one share of Series D Preferred Stock shall be surrendered for conversion
at one time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
Liquidation Value of the shares of Series D Preferred Stock so surrendered. If
the conversion of any share or shares of Series D Preferred Stock results in a
fraction, an amount equal to such fraction multiplied by the Current Market
Price (as defined below) of the Common Stock on the Business Day (as defined
below) preceding the day of conversion shall be paid to such holder in cash by
the Company.
(g) In case of any capital reorganization or reclassification or other
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value), or in
case of any consolidation or merger of the Company with or into another person
(other than a consolidation or merger in which the Company is the resulting or
surviving person and which does not result in any reclassification or change of
outstanding Common Stock), or in case of any sale or other disposition to
another person of all or substantially all of the assets of the Company (any of
the foregoing, a "Transaction"), the Company, or such successor or purchasing
person, as the case may be, shall execute and deliver to each holder of Series D
Preferred Stock at least 10 Business Days prior to effecting any of the
foregoing Transactions a certificate that the holder of each share of Series D
Preferred Stock then outstanding shall have the right but not the obligation
thereafter to convert such share of Series D Preferred Stock into the kind and
amount of shares of stock or other securities (of the Company or another issuer)
or property or cash receivable upon such Transaction by a holder of the number
of shares of Common Stock into which such share of Series D Preferred Stock
could have been converted immediately prior to such Transaction. Such
certificate shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in Section 4(c). If, in the
case of any such Transaction, the stock, other securities, cash or property
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities of a person other than the successor or purchasing person and
other than the Company, which controls or is controlled by the successor or
purchasing person or which, in connection with such Transaction, issues stock,
securities, other property or cash to holders of Common Stock, then such
certificate also shall be executed by such person, and such person shall, in
such certificate, specifically acknowledge the obligations of such successor or
purchasing person and acknowledge its obligations to issue such
8
stock, securities, other property or cash to the holders of Series D Preferred
Stock upon conversion of the shares of Series D Preferred Stock as provided
above. The provisions of this Section 4(g) and any equivalent thereof in any
such certificate similarly shall apply to successive Transactions.
(h) In case at any time or from time to time:
(i) the Company shall declare a dividend (or any other distribution)
on its Common Stock;
(ii) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or of any other rights or warrants;
(iii) there shall be any reclassification of the Common Stock, or any
consolidation or merger to which the Company is a party and for which approval
of any shareholders of the Company is required, or any sale or other disposition
of all or substantially all of the assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall mail to each holder of shares of Series D Preferred Stock
at such holder's address as it appears on the transfer books of the Company, as
promptly as possible but in any event at least 10 days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or rights or warrants
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights are to
be determined, or (y) the date on which such reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up is expected to
become effective. Such notice also shall specify the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for shares of stock or other securities or property or cash
deliverable upon such reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up.
(i) The Company shall at all times reserve and keep available for issuance
upon the conversion of the Series D Preferred Stock pursuant to Section 4 or 5,
such number of its authorized but unissued shares of Common Stock as will from
time to time be sufficient to permit the conversion of all outstanding shares of
Series D Preferred Stock, and shall take all action required to increase the
authorized number of shares of Common Stock if at any time there shall be
insufficient authorized but unissued shares of Common Stock to permit such
reservation or to permit the conversion of all outstanding shares of Series D
Preferred Stock.
(j) The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Series D Preferred Stock pursuant to Section 4 or 5
shall be made without charge to the
9
converting holder of shares of Series D Preferred Stock for such certificates or
for any tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or (subject to compliance with the
applicable provisions of federal and state securities laws) in such names as may
be directed by, the holders of the shares of Series D Preferred Stock converted;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate in a name other than that of the holder of the shares of
Series D Preferred Stock converted, and the Company shall not be required to
issue or deliver such certificate unless or until the person or persons
requesting the issuance or delivery thereof shall have paid to the Company the
amount of such tax or shall have established to the reasonable satisfaction of
the Company that such tax has been paid.
(k) In the event that prior to the conversion of any share of Series D
Preferred Stock, approval under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, is required, the Company shall take all action necessary on
its part as a "seller"(or its equivalent) to comply with the filing requirements
of such Act and any holder of Series D Preferred Stock as to whom such filing
requirement applies shall take all action necessary on its part as a "buyer"(or
its equivalent) to comply with the filing requirements of such Act; provided
that the Company shall pay all reasonable fees and expenses of the "buyer"
associated with each filing, including reasonable fees and expenses of the
counsel for the holders of the Series D Preferred Stock required to make such
filing.
(l) For purposes of this Section 4, the following terms shall have the
meanings indicated:
"Adjusted Conversion Amount" shall mean initially $18, subject to
adjustment as provided in Section 4(c)(ii)(A).
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in The City of New York, New York are authorized
or required by law or executive order to close.
"Current Market Price" per share shall mean, on any date specified herein
for the determination thereof, (a) the average daily Market Price of the Common
Stock for those days during the period of 15 days, ending on such date, which
are Trading Days, and (b) if the Common Stock is not then listed or admitted to
trading on any national securities exchange or quoted in the over-the-counter
market, the Market Price on such date.
"Fair Market Value" shall mean the amount which a willing buyer, under no
compulsion to buy, would pay a willing seller, under no compulsion to sell, in
an arm's-length transaction (assuming no consideration is given for minority
investment discounts, or discounts related to illiquidity or restrictions on
transferability).
"Fully Diluted Basis" means, as of any date, the number of shares of Common
Stock actually issued and outstanding, plus an amount equal to the number of
shares of Common Stock
10
that would be outstanding as of such date if (x) all options, warrants or other
convertible securities that have an exercise or conversion price which is less
than the Market Price of a share of Common Stock as of such date had been
exercised or converted and (y) without duplication of the amounts determined
pursuant to clause (x) all shares of convertible preferred stock and convertible
notes had been converted.
"Market Price" shall mean, per share of Common Stock on any date
specified herein: (a) if the Common Stock is not then listed or admitted to
trading on any national securities exchange but is designated as a national
market system security, the last trading price of the Common Stock on such date;
or (b) if there shall have been no trading on such date or if the Common Stock
is not so designated, the average of the reported closing bid and asked prices
of the Common Stock on such date as shown by NASDAQ and reported by any member
firm of the NYSE, selected by the Company. If neither (a) or (b) is applicable,
Market Price shall mean the Fair Market Value per share determined in good faith
by the Board of Directors of the Company.
"Original Issue Date" means the effective time of the merger
contemplated by that certain Agreement and Plan of Merger, by and between the
Company, ACT Acquisition Corp., ACT Medical, Inc. and the other parties named
therein.
"Series C Agreement" means that certain Stock Purchase Agreement by and
between the Company, The 1818 Fund III LP and the other parties named therein,
dated October 24, 2000.
(m) The provisions of this Section 4 may be waived by the affirmative
vote or written consent of the holders (acting together as a separate class) of
a majority of the then outstanding Series D Preferred Stock.
5. Mandatory Conversion.
(a) Upon the occurrence of a Qualified IPO, each outstanding share of
Series D Preferred Stock shall be automatically converted, with no further
action required to be taken by the Company or the holder thereof into the number
of fully paid and non-assessable shares of Common Stock as is equal, subject to
Section 4(f), to the product of the number of shares of Series D Preferred Stock
being so converted multiplied by the quotient of (x) the Liquidation Value,
divided by (y) the Conversion Price then in effect; and
(b) On the date of conversion pursuant to this Section 5, the Company
shall deliver to or upon the written order of the holder of Series D Preferred
Stock being converted a certificate or certificates representing the number of
fully paid and non-assessable shares of Common Stock into which such shares of
Series D Preferred Stock may be or have been converted in accordance with the
provisions of this Section 5. Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made upon consummation
of the Qualified IPO on the date of required conversion pursuant to this Section
5, and the person or persons entitled to receive the Common Stock deliverable
upon conversion of such shares of Series D Preferred Stock shall be treated for
all purposes as having become the record holder or holders of such Common Stock
at such time, and such conversion shall be at the Conversion Price in effect at
11
such time; provided, however, that no surrender shall be effective to constitute
the person or persons entitled to receive the Common Stock deliverable upon such
conversion as the record holder or holders of such Common Stock while the share
transfer books of the Company shall be closed (but not for any period in excess
of five days), but such surrender shall be effective to constitute the person or
persons entitled to receive such Common Stock as the record holder or holders
thereof for all purposes immediately prior to the close of business on the next
succeeding day on which such share transfer books are open, and such conversion
shall be deemed to have been made at, and shall be made at the Conversion Price
in effect at, such time the date such shares shall have been surrendered in
satisfactory form for conversion.
(c) For purposes of this Section 5, the following terms shall have the
meanings indicated:
"Initial Public Offering" shall mean the initial public offering of
shares of Common Stock of the Company pursuant to a registration statement
declared effective under the Securities Act.
"IPO Price" shall mean the initial offering price to the public in the
Initial Public Offering.
"IPO Valuation" shall mean an amount equal to the product of (i) the
number of issued and outstanding shares of Common Stock on a fully diluted basis
and (ii) the IPO Price.
"Public Market Float" shall mean, determined as of the date of the
Initial Public Offering, the product of (x) the IPO Price and (y) the number of
shares of Common Stock to be registered under the Securities Act of 1933, as
amended, in connection with the Initial Public Offering.
"Qualified IPO" shall mean an Initial Public Offering following which
the Public Market Float exceeds either (x) $75 million or (y) 20% of the IPO
Valuation, and in connection with such Initial Public Offering a "Qualified IPO"
shall have occurred with respect to the Series B and Series C Preferred Stock.
(d) All or any part of the requirements for a Qualified IPO may be
waived by the affirmative vote or written consent of the holders (acting
together as a separate class) of a majority of the then outstanding Series D
Preferred Stock.
6. Optional Redemption.
(a) The Company shall not have any right to optionally redeem any
shares of Series D Preferred Stock prior to the fifth anniversary of the
Original Issue Date. On and after such date, the Company shall have the right,
at its sole option and election, to redeem the shares of Series D Preferred
Stock, in whole but not in part, on not less than 30 days notice of the date of
redemption, at a price per share in cash equal to (i) the Liquidation Value plus
(ii) an amount per share equal to all accrued and unpaid dividends thereon,
whether or not declared or payable, to
12
the date of redemption.
(b) Notice of any redemption of shares of Series D Preferred Stock
pursuant to Section 5(a) shall be given by mail to each holder of shares of
Series D Preferred Stock to be redeemed, at such holder's address as it appears
on the transfer books of the Company. In order to facilitate the redemption of
shares of Series D Preferred Stock, the Board of Directors may fix a record date
for the determination of shares of Series D Preferred Stock to be redeemed, or
may cause the transfer books of the Company for the Series D Preferred Stock to
be closed, not more than 60 days or less than 30 days prior to the date fixed
for such redemption. The notice (i) shall specify the date of redemption and the
number of shares to be redeemed from each stockholder and (ii) the place of
surrender of the certificate representing the shares to be redeemed, duly
endorsed in blank or accompanied by proper instruments of transfer. On or after
the date fixed for redemption, each holder of shares of Series D Preferred Stock
called for redemption shall surrender the certificate or certificates evidencing
such shares to the Company at the place designated in such notice and shall
thereupon be entitled to receive payment. On and after the date fixed for
redemption, all rights of any holder of Series D Preferred Stock shall cease and
terminate and such shares shall no longer be outstanding, whether or not
certificates representing such shares have been received by the Company;
provided, however, that if the Company defaults in payment of the redemption
price for any reason, the rights of the holders of Series D Preferred Stock
shall continue until the Company cures the default or it is waived by the
affirmative vote or written consent of the holders of a majority of the Series D
Preferred Stock, voting separately as a class.
(c) If the Company deposits, on or prior to any date fixed for
redemption of shares of Series D Preferred Stock, with any bank or trust company
having capital and surplus of at least $100,000,000, as a trust fund, a
sufficient sum to redeem, on the date fixed for redemption thereof, the shares
then called for redemption, with instructions and authority to such bank or
trust company to pay the redemption price on or after the date fixed for
redemption or prior thereto upon the surrender of the certificates representing
the shares then being redeemed, then and from and after the date of such
deposit, and notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, the shares so
called for redemption shall no longer be deemed to be outstanding and all rights
with respect thereto shall forthwith cease and terminate, except only (i) the
right of the holders thereof to receive from such bank or trust company, at any
time after the date of such deposit, the sum so deposited, without interest, and
(ii) the right to convert such shares as provided in Section 4 hereof. Any funds
so deposited and unclaimed at the end of one year from such redemption date
shall be released or repaid to the Company after which the holders of the shares
so called for redemption shall be entitled to receive payment of the redemption
price only from the Company.
8. Mandatory Redemption.
(a) Upon the earlier to occur of (i) a mandatory redemption of each
class of Senior Stock of the Company (including, without limitation, the Series
B Preferred Stock and Series C Preferred Stock), but at all times subject to
prior payment in full of such Senior Stock, and (ii) the twentieth anniversary
of the Original Issue Date, the Company shall redeem (unless
13
otherwise required by law or prohibited by the terms of the Indebtedness or the
Senior Stock Agreements) the shares of Series D Preferred Stock, in whole but
not in part, on not less than 30 days notice of the date of redemption (the
"Mandatory Redemption Date") at a price per share in cash equal to (x) the
Liquidation Value plus (y) an amount per share equal to all accrued and unpaid
dividends thereon, whether or not declared or payable, to the Mandatory
Redemption Date.
(b) Notice of any redemption of shares of Series D Preferred Stock
pursuant to Section 8(a) shall be mailed at least 30, but not more than 60, days
prior to the Mandatory Redemption Date to each holder of shares of Series D
Preferred Stock to be redeemed, at such holder's address as it appears on the
transfer books of the Company. In order to facilitate the redemption of shares
of Series D Preferred Stock, the Board of Directors may fix a record date for
the determination of shares of Series D Preferred Stock to be redeemed, or may
cause the transfer books of the Company for the Series D Preferred Stock to be
closed, not more than 60 days or less than 30 days prior to the date fixed for
such redemption. The notice (i) shall specify the date of redemption and the
number of shares to be redeemed from each stockholder and (ii) the place of
surrender of the certificate representing the shares to be redeemed, duly
endorsed in blank or accompanied by proper instruments of transfer. On or after
the Mandatory Redemption Date, each holder of shares of Series D Preferred Stock
called for redemption shall surrender the certificate or certificates evidencing
such shares to the Company at the place designated in such notice and shall
thereupon be entitled to receive payment. On and after the Mandatory Redemption
Date, all rights of any holder of Series D Preferred Stock shall cease and
terminate and such shares shall no longer be outstanding, whether or not
certificates representing such shares have been received by the Company;
provided, however, that if the Company defaults in payment of the redemption
price for any reason, the rights of the holders of Series D Preferred Stock
shall continue until the Company cures the default or it is waived by the
affirmative vote or written consent of the holders of a majority of the Series D
Preferred Stock, voting separately as a class.
(c) If the Company deposits, on or prior to any date fixed for
redemption of shares of Series D Preferred Stock, with any bank or trust company
having capital and surplus of at least $100,000,000, as a trust fund, a
sufficient sum to redeem, on the date fixed for redemption thereof, the shares
then called for redemption, with instructions and authority to such bank or
trust company to pay the redemption price on or after the date fixed for
redemption or prior thereto upon the surrender of the certificates representing
the shares then being redeemed, then and from and after the date of such
deposit, and notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, the shares so
called for redemption shall no longer be deemed to be outstanding and all rights
with respect thereto shall forthwith cease and terminate, except only (i) the
right of the holders thereof to receive from such bank or trust company, at any
time after the date of such deposit, the sum so deposited, without interest, and
(ii) the right to convert such shares as provided in Section 4 hereof. Any funds
so deposited and unclaimed at the end of one year from such redemption date
shall be released or repaid to the Company after which the holders of the shares
so called for redemption shall be entitled to receive payment of the redemption
price only from the Company.
14
(d) If the funds of the Company available by law or otherwise for
redemption of the Series D Preferred Stock on the Mandatory Redemption Date (the
"Available Redemption Funds") are insufficient for such redemption on such date,
the holders of Series D Preferred Stock shall share ratably in the 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 Mandatory Redemption Date were redeemed in full. The Company 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 Company from paying the redemption price and
redeeming all of the shares of Series D Preferred Stock to be redeemed
hereunder. At any time thereafter when additional funds of the Company are
available for the redemption of shares of Series D 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 pro rata basis set forth above. In the event that the Company fails to
redeem the full number of shares of Series D Preferred Stock for which
redemption is required, the rights of the holders of the shares of Series D
Preferred Stock not so redeemed shall continue until the Company cures such
failure, or such failure is waived by the affirmative vote or written consent of
the holders of a majority of the outstanding Series D Preferred Stock, acting
together as a separate class.
9. Voting Rights.
(a) In addition to any voting rights required by law or as set forth in
paragraph (b) below, for so long as the Series D Preferred Stock is outstanding,
each share of Series D Preferred Stock shall entitle the holder thereof to vote,
in person or by proxy, at a special or annual meeting of stockholders, on all
matters, other than the election of directors of the Company, voted on by
holders of Common Stock, voting together as a single class with the holders of
the Common Stock and all other shares entitled to vote thereon as a single class
with the Common Stock.
(b) Without affirmative vote or written consent of the holders of a
majority of the outstanding Series D Preferred Stock (acting together as a
separate class), the Company shall not after the Original Issue Date authorize
any shares of Parity Stock, except in connection with a transaction or
transactions in which the principal purpose of the Company is to finance the
business of the Company.
(c) With respect to any such vote, each share of Series D Preferred
Stock shall entitle the holder thereof to cast that number of votes per share as
is equal to the number of votes that such holder would be entitled to cast had
such holder converted such holder's shares of Series D Preferred Stock into
Common Stock on the record date for determining the stockholders of the Company
eligible to vote on any such matters.
10. Observer Rights. If at any time while shares of Series D Preferred
Stock are outstanding, a holder of Series D Preferred Stock or affiliate of any
such holder is not a director of the Company, the Series D Preferred Stock, by
affirmative vote or written consent of the holders of a majority of the
outstanding shares of Series D Preferred Stock, voting separately as a
15
single class, shall be entitled to designate, subject to execution and delivery
of an agreement of confidentiality reasonably satisfactory to the Company, one
person, reasonably satisfactory to the Company, who shall be entitled to receive
all notices and materials distributed to the members of the Board of Directors
of the Company, and who shall be entitled to attend all meetings of the Board of
Directors and to receive minutes of all such meetings upon preparation thereof,
unless the Company reasonably believes that such attendance would result in the
forfeiture of any attorney-client privilege between the Company or such
directors and its or their counsel,
11. Modification or Amendment. Modifications or amendments to this
Certificate of Designation may be made by the Company with the consent of the
holders of at least 50% of the outstanding shares of Series D Preferred Stock.
16
IN WITNESS WHEREOF, the Company has caused this certificate of designation
to be signed by its duly authorized officer on this 28th day of December, 2000.
MEDSOURCE TECHNOLOGIES, INC.
By: _/s/_____________________________
Richard J. Effress
Chairman of the Board and
Chief Executive Officer
MEDSOURCE TECHNOLOGIES, INC.
CERTIFICATE OF DESIGNATION OF 6% SERIES E PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law,
MedSource Technologies, Inc., a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Certificate of Incorporation of the Corporation (the
"Charter"), the Board of Directors of the Corporation has duly adopted the
following resolution creating a series of Preferred Stock designated as 6%
Series E Preferred Stock, and such resolution has not been modified and is in
full force and effect on the date hereof:
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Charter, a
series of the authorized Preferred Stock, par value $.01 per share, of the
Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
Section 1. Designation and Number.
----------------------
(a) The shares of such series shall be designated as 6% Series E
Preferred Stock (the "Series E Preferred Stock"). The number of shares initially
constituting the Series E Preferred Stock shall be 6,000, which number may be
increased or decreased by the Board of Directors; provided, however, that such
-------- -------
number may not be decreased below the number of then outstanding shares of
Series E Preferred Stock.
(b) The Series E Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution or winding up, rank:
(i) junior to all classes and series of Senior Stock (as
defined below);
(ii) pari passu with all classes and series of Parity Stock (as
---- -----
defined below); provided, however, that, notwithstanding the foregoing, the
-------- -------
Corporation may, subject, in any event, to Section 8, redeem (x) the Series
E Preferred Stock prior to redemption of the Corporation's Series D
Preferred Stock, par value $.01 per share, and (y) the Corporation's Series
F Preferred Stock, par value $.01 per share, prior to redemption of the
Series E Preferred Stock; and
(iii) senior to all classes and series of Junior Stock (as
defined below).
(c) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 9 below.
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series E Preferred Stock, in preference
to the holders of shares of Common Stock and shares of any other Junior Stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
cumulative dividends at a rate per annum equal to 6% of the Original Series E
--- -----
Issue Price during the first twelve month period following the date on which the
Series E Preferred Stock is first issued (the "Issue Date"). However, in the
event that the Series E Preferred Stock remains outstanding after the end of
such twelve month period, then holders shall be entitled to cumulative dividends
at a rate per annum equal to 16% of the Original Series E Issue Price ab initio
--- ----- -- -------
from the Issue Date.
(b) Dividends payable pursuant to Section 2(a) on any shares of
Series E Preferred Stock shall accrue and be cumulative from the Issue Date of
such shares until such shares shall cease to be outstanding.
(c) In no event may any dividends be paid on the Series E Preferred
Stock unless, at the time of such payment, any and all dividends then accrued
and payable on the shares of any Senior Stock have been paid in full. If
dividends are paid on the shares of Series E Preferred Stock and shares of
Parity Stock in an amount less than the total amount of such dividends at the
time accrued and payable on all of such shares, such dividends shall be
allocated pro rata (in proportion to the respective amounts due with respect
--- ----
thereto) among all such shares of Series E Preferred Stock and shares of Parity
Stock at the time outstanding based on the amount of dividends then due with
respect to each such share.
(d) The holders of shares of Series E Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
Section 3. Voting Rights.
-------------
(a) Each share of Series E Preferred Stock shall entitle the holder
thereof to vote, in person or by proxy, at a special or annual meeting of the
stockholders of the Corporation, on all matters, voted on by holders of Common
Stock, voting together as a single class with the holders of the Common Stock
and all other shares entitled to vote thereon as a single class with the Common
Stock, other than the election of directors of the Corporation as to which the
Series E Preferred Stock shall not be entitled to vote. With respect to any such
matters as to which holders of the Series E Preferred Stock shall be entitled to
vote, each issued and outstanding share of Series E Preferred Stock shall
entitle the holder thereof to cast that number of votes per share as is equal to
the number of votes that such holder would be entitled to cast had such holder
exercised such holder's Warrants for the Common Stock issuable upon exercise
thereof on the record date for determining the stockholders of the Corporation
eligible to vote on any such matters.
(b) Except as and to the extent provided in the preceding Section
3(a) or as required by law, the holders of shares of Series E Preferred Stock
shall not have any voting rights. With respect to any matter on which holders
shall be required by law to vote, holders of such shares shall be entitled to
one vote for each share held.
-2-
Section 4. Optional Redemption.
-------------------
(a) At any time following the Issue Date, the Corporation shall have
the right, at its sole option and election, to redeem in cash the shares of
Series E Preferred Stock, in whole or in part, on not less than 15 days prior
written notice of the date of redemption (any such date an "Optional Redemption
Date") at a price per share (the "Optional Redemption Price") equal to the
Liquidation Preference.
(b) A notice shall be mailed to each holder of shares of Series E
Preferred Stock to be redeemed at such holder's address as it appears on the
transfer books of the Corporation. In order to facilitate the redemption of
shares of Series E Preferred Stock, the Board of Directors may fix a record date
for the determination of shares of Series E Preferred Stock to be redeemed, or
may cause the transfer books of the Corporation for the Series E Preferred Stock
to be closed, not more than 30 days or less than 15 days prior to the date fixed
for such redemption. Each holder of shares of Series E Preferred Stock shall
deliver the certificate or certificates representing such shares within five
days after receipt of such notice.
(c) Notice of redemption having been given as aforesaid, on and
after the Optional Redemption Date, notwithstanding that any certificates in
respect of shares of Series E Preferred Stock to be redeemed shall not have been
surrendered for cancellation, from and after the Optional Redemption Date (i)
the shares represented thereby shall no longer be deemed outstanding, (ii) the
rights to receive dividends thereon shall cease to accrue and (iii) all rights
of the holders of shares of Series E Preferred Stock to be redeemed or to
receive any amounts in respect of any liquidation, dissolution, winding up or
otherwise shall cease and terminate, excepting only the right to receive the
Optional Redemption Price therefor.
(d) On the Optional Redemption Date, (i) the Corporation shall pay
to each holder of shares of Series E Preferred Stock the Optional Redemption
Price in respect thereof by delivery of a good check to the address of such
holder at such holder's address as it appears on the transfer books of the
Corporation and (ii) all such shares of Series E Preferred Stock shall be deemed
to have been redeemed (and shall be deemed to cease to be outstanding) as of the
Optional Redemption Date.
Section 5. Reacquired Shares.
-----------------
Any shares of Series E Preferred Stock converted, exchanged,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Series E Preferred Stock shall upon their cancellation become
authorized but unissued shares of preferred stock, par value $.01 per share, of
the Corporation and, upon the filing of an appropriate Certificate of
Designation with the Secretary of State of the State of Delaware, may be
reissued as part of another class or series of preferred stock, par value $.01
per share, of the Corporation, including, without limitation, Series E Preferred
Stock, all subject to the conditions or restrictions on issuance set forth
herein.
-3-
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) If the Corporation shall liquidate, dissolve or wind up (each, a
"Liquidation Event") distributions shall be made to the holders of shares of
Series E Preferred Stock and all other Parity Stock in proportion to the total
amounts to which the holders of all shares of the Series E Preferred Stock and
other Parity Stock are entitled upon such Liquidation Event.
(b) No distribution shall be made in respect of any shares of Series
E Preferred Stock pursuant to Section 6(a) unless, at the time of such
distribution, all amounts due in respect of any shares of Senior Stock have been
paid in full.
(c) No distribution shall be made in respect of any shares of Junior
Stock unless, at the time of such distribution, the holders of shares of Series
E Preferred Stock shall have received the Liquidation Preference with respect to
each share.
Section 7. Voluntary Conversion.
--------------------
(a) At any time during the 20-day period following a Change of
Control, each holder of Series E Preferred Stock shall have the right, at such
holder's option, to convert, subject to the terms and provisions of this Section
7, any or all of such holder's shares of Series E Preferred Stock into the
number of fully paid and non-assessable shares of Common Stock that shall equal
the quotient of the Liquidation Preference and the Market Price on the date of
such conversion. Such conversion right shall be exercised by the surrender of
one or more certificates representing the shares to be converted to the
Corporation during usual business hours at its principal place of business,
accompanied by written notice that the holder elects to convert such shares and
specifying the name or names (with address) in which a certificate or
certificates representing shares of Common Stock are to be issued and (if so
required by the Corporation) by a written instrument or instruments of transfer
in form reasonably satisfactory to the Corporation duly executed by the holder
or such holder's duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 7(d). All certificates
representing shares of Series E Preferred Stock surrendered for conversion shall
be delivered to the Corporation for cancellation.
(b) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Series E Preferred Stock.
If more than one share of Series E Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Liquidation Preference of the shares of Series E Preferred Stock so
surrendered. If the conversion of any share or shares of Series E Preferred
Stock results in a fraction, an amount equal to such fraction multiplied by the
Market Price of the Common Stock on the day preceding the day of conversion
shall be paid to such holder in cash by the Corporation.
(c) The Corporation shall reserve and keep available for issuance
upon the conversion of the Series E Preferred Stock pursuant to this Section 7,
such number of its authorized but unissued shares of Common Stock as will from
time to time be sufficient to
-4-
permit the conversion of all outstanding shares of Series E Preferred Stock, and
shall take all action required to increase the authorized number of shares of
Common Stock if at any time there shall be insufficient authorized but unissued
shares of Common Stock to permit such reservation or to permit the conversion of
all outstanding shares of Series E Preferred Stock.
(d) The issuance or delivery of certificates for Common Stock upon
the conversion of shares of Series E Preferred Stock pursuant to this Section 7
shall be made without charge to the converting holder of shares of Series E
Preferred Stock for such certificates or for any tax in respect of the issuance
or delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of, or
(subject to compliance with the applicable provisions of federal and state
securities laws) in such names as may be directed by, the holders of the shares
of Series E Preferred Stock converted; provided, however, that the Corporation
-------- -------
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a name
other than that of the holder of the shares of Series E Preferred Stock
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount of such tax or
shall have established to the reasonable satisfaction of the Corporation that
such tax has been paid.
(e) In the event that a holder of Series E Preferred Stock shall
elect to convert such holder's shares following a Change of Control (as
contemplated by Section 7(a) above), such conversion shall be deemed to have
occurred on the date of such Change of Control. The Corporation shall deliver
one or more certificates representing the shares of Common Stock issuable upon
conversion of such Series E Preferred Stock to the holder thereof promptly
following the surrender by a holder of the Series E Preferred Stock of one or
more certificates representing the shares to be converted.
Section 8. Credit Agreement.
----------------
In no event shall the Corporation be required to make payments in
respect of the Series E Preferred Stock (pursuant to Section 2, 4 or 6 or
otherwise) if such payment is prohibited under the terms of the Credit
Agreement.
Section 9. Definitions.
-----------
For the purposes of this Certificate of Designation of Series E
Preferred Stock, the following terms shall have the meanings indicated:
A "Change of Control" of the Corporation shall mean, so long as any
Series E Preferred Stock is issued and outstanding, such time as:
(i) Any Person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of outstanding shares of stock of the Corporation entitling
such Person or Persons to exercise 50% or more of the total votes
(excluding the Series E Preferred Stock) entitled to be cast at a regular
or special meeting, or by action by written consent, of shareholders of the
Corporation (the term "beneficial owner" shall be determined in accordance
with
-5-
Rule 13d-3, promulgated by the Securities Exchange Commission under the
Exchange Act);
(ii) The Corporation shall consummate the sale or other
disposition of all or substantially all of the assets of the Corporation in
one transaction or in a series of related transactions;
(iii) The Corporation shall consummate a recapitalization,
reorganization, merger, consolidation or similar transaction, in each case
with respect to which all or substantially all the Persons who were the
respective beneficial owners, directly or indirectly, of the outstanding
shares of capital stock of the Corporation immediately prior to such
recapitalization, reorganization, merger, consolidation or similar
transaction, will own less than 50% of the combined voting power of the
then outstanding shares of capital stock of the Corporation resulting from
such recapitalization, reorganization, merger, consolidation or similar
transaction;
(iv) Any transaction occurs after the occurrence of an Initial
Public Offering, the result of which is that the Common Stock is not
required to be registered under Section 12 of the Exchange Act and that the
holders of Common Stock do not receive common stock of the Person surviving
such transaction which is required to be registered under Section 12 of the
Exchange Act; or
(v) Immediately after any merger, consolidation,
recapitalization or similar transaction an individual or "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall be the
beneficial owners, directly or indirectly, of outstanding shares of capital
stock of the Corporation (or any Person surviving such transaction)
entitling them collectively to exercise 50% or more of the total voting
power of shares of capital stock of the Corporation (or the surviving
Person in such transaction);
"Common Stock" shall mean the Common Stock, par value $.01 per share,
of the Corporation. In the event that the Common Stock should, as a result of a
dividend or change or exchange for other securities by reclassification,
reorganization, redesignation, merger, consolidation, recapitalization,
split-up, spinoff, partial or complete liquidation, sale of assets, distribution
to stockholders or otherwise, be changed into or exchanged, in whole or in part,
for a different number or kind of shares of capital stock or other securities of
the Corporation or of another Person, the term "Common Stock" shall include,
without limitation, such shares of capital stock or other securities or
property; provided, however, that, in the event the Common Stock shall cease to
-------- -------
be outstanding following any such reclassification, reorganization,
redesignation, merger, consolidation, recapitalization, split-up, spinoff,
partial or complete liquidation, sale of assets, distribution to stockholders or
otherwise, then the term "Common Stock" shall only refer to such shares of
capital stock or other securities or property.
"Credit Agreement" means the Credit Agreement dated March 30, 1999
among the Corporation, MedSource Technologies, LLC, the lenders party to the
Credit Agreement and Deutsche Bank AG, New York Branch, as administrative agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and/or security documents), as the same has been and may be
amended, extended, renewed, increased, restated,
-6-
modified, supplemented, refinanced, replaced or refunded from time to time,
including, without limitation, any such amendment, extension, renewal, increase,
restatement, supplement, refinancing, replacement or refunding which relates to
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 and/or
group of lenders.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Initial Public Offering" shall mean the initial public offering of
shares of Common Stock of the Corporation pursuant to a registration statement
declared effective under the Securities Act.
"Junior Stock" shall mean any now or hereafter authorized capital
stock of the Corporation ranking junior (as to dividends and upon liquidation,
dissolution or winding up) to the Series E Preferred Stock, including, without
limitation, the Common Stock, the Corporation's Series A Preferred Stock, par
value $.01 per share, and the Corporation's Series Z Preferred Stock, par value
$.01 per share.
"Liquidation Preference" with respect to a share of Series E
Preferred Stock shall mean the Original Series E Issue Price plus all accrued
----
and unpaid dividends thereon, whether or not declared.
"Market Price" shall mean, as applied to shares of any class of stock
on any date, the last reported sales price, regular way, per share of such
shares on such day, or if no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in each case, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if shares of
such stock are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of such stock are listed or admitted to trading, or, if the
shares of such stock are not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, in
either case as reported by the National Association of Securities Dealers, Inc.
or, if not so reported, as reported by any similar interdealer system selected
by the Board of Directors of the Corporation then in general use, or, if on any
such date the shares of stock are not quoted or reported by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of stock selected by the
Board of Directors of the Corporation. If any such class of stock is not
publicly held or so listed or publicly traded, "Market Price" means the fair
market value per share as determined in good faith by the Board of Directors of
the Corporation.
"Original Series E Issue Price" with respect to a share of Series E
Preferred Stock shall mean $1,000.
"Parity Stock" shall mean any now or hereafter authorized capital
stock of the Corporation ranking on a par (as to dividends and upon liquidation,
dissolution or winding up)
-7-
with the Series E Preferred Stock, including, without limitation, the
Corporation's Series D Preferred Stock, par value $.01 per share, and the
Corporation's Series F Preferred Stock, par value $.01 per share.
"Person" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger) of such entity.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission thereunder.
"Senior Stock" shall mean any now or hereafter authorized capital
stock of the Corporation that by its terms ranks senior (as to dividends and
upon liquidation, dissolution or winding up) to the Series E Preferred Stock,
including, without limitation, the Corporation's Series B Preferred Stock, par
value $.01 per share, and the Corporation's Series C Preferred Stock, par value
$.01 per share.
"Warrants" means the Warrants issued to the holders of the Series E
Preferred Stock pursuant to the Stock Purchase Agreement dated as of the date of
the filing hereof among the Corporation and the initial purchasers of Series E
Preferred Stock.
Section 10. Modification or Amendment.
-------------------------
Modifications or amendments to this Certificate of Designation may
be made by the Corporation upon the vote or consent of the holders of a majority
of the outstanding shares of Series E Preferred Stock.
IN WITNESS WHEREOF, MedSource Technologies, Inc. has caused this
Certificate to be duly executed in its corporate name on this 2nd day of
January, 2002.
MEDSOURCE TECHNOLOGIES, INC.
By: /s/ Daniel Croteau
------------------------------------
Name: Daniel Croteau
Title: Vice President - Corporate Development
-8-
MEDSOURCE TECHNOLOGIES, INC.
CERTIFICATE OF DESIGNATION OF 6% SERIES F PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law,
MedSource Technologies, Inc., a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Certificate of Incorporation of the Corporation (the
"Charter"), the Board of Directors of the Corporation has duly adopted the
following resolution creating a series of Preferred Stock designated as 6%
Series F Preferred Stock, and such resolution has not been modified and is in
full force and effect on the date hereof:
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Charter, a
series of the authorized Preferred Stock, par value $.01 per share, of the
Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
Section 1. Designation and Number.
----------------------
(a) The shares of such series shall be designated as 6% Series F
Preferred Stock (the "Series F Preferred Stock"). The number of shares initially
constituting the Series F Preferred Stock shall be 4,000, which number may be
increased or decreased by the Board of Directors; provided, however, that such
-------- -------
number may not be decreased below the number of then outstanding shares of
Series F Preferred Stock.
(b) The Series F Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution or winding up, rank:
(i) junior to all classes and series of Senior Stock (as
defined below);
(ii) pari passu with all classes and series of Parity Stock
---- -----
(as defined below); provided, however, that, notwithstanding the foregoing,
-------- -------
the Corporation may, subject, in any event, to Section 8, redeem the Series
F Preferred Stock prior to redemption of (x) the Corporation's Series D
Preferred Stock, par value $.01 per share, and (y) the Corporation's Series
E Preferred Stock, par value $.01 per share; and
(iii) senior to all classes and series of Junior Stock (as
defined below).
(c) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 9 below.
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series F Preferred Stock, in preference
to the holders of shares of Common Stock and shares of any other Junior Stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
cumulative dividends at a rate per annum equal to 6% of the Original Series F
--- -----
Issue Price during the first twelve month period following the date on which the
Series F Preferred Stock is first issued (the "Issue Date"). However, in the
event that the Series F Preferred Stock remains outstanding after the end of
such twelve month period, then holders shall be entitled to cumulative dividends
at a rate per annum equal to 16% of the Original Series F Issue Price ab initio
--- ----- -- ------
from the Issue Date.
(b) Dividends payable pursuant to Section 2(a) on any shares of
Series F Preferred Stock shall accrue and be cumulative from the Issue Date of
such shares until such shares shall cease to be outstanding.
(c) In no event may any dividends be paid on the Series F Preferred
Stock unless, at the time of such payment, any and all dividends then accrued
and payable on the shares of any Senior Stock have been paid in full. If
dividends are paid on the shares of Series F Preferred Stock and shares of
Parity Stock in an amount less than the total amount of such dividends at the
time accrued and payable on all of such shares, such dividends shall be
allocated pro rata (in proportion to the respective amounts due with respect
--- ----
thereto) among all such shares of Series F Preferred Stock and shares of Parity
Stock at the time outstanding based on the amount of dividends then due with
respect to each such share.
(d) The holders of shares of Series F Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
Section 3. Voting Rights.
-------------
Except as required by law, the holders of shares of Series F
Preferred Stock shall not have any voting rights. With respect to any matter on
which holders shall be required by law to vote, holders of such shares shall be
entitled to one vote for each share held.
Section 4. Optional Redemption.
-------------------
(a) At any time following the Issue Date, the Corporation shall have
the right, at its sole option and election, to redeem in cash the shares of
Series F Preferred Stock, in whole or in part, on not less than 15 days prior
written notice of the date of redemption (any such date an "Optional Redemption
Date") at a price per share (the "Optional Redemption Price") equal to the
Liquidation Preference.
(b) A notice shall be mailed to each holder of shares of Series F
Preferred Stock to be redeemed at such holder's address as it appears on the
transfer books of the Corporation. In order to facilitate the redemption of
shares of Series F Preferred Stock, the Board of Directors may fix a record date
for the determination of shares of Series F Preferred Stock to be redeemed, or
may cause the transfer books of the Corporation for the Series F Preferred Stock
to be closed, not more than 30 days or less than 15 days prior to the date fixed
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for such redemption. Each holder of shares of Series F Preferred Stock shall
deliver the certificate or certificates representing such shares within five
days after receipt of such notice.
(c) Notice of redemption having been given as aforesaid, on and after
the Optional Redemption Date, notwithstanding that any certificates in respect
of shares of Series F Preferred Stock to be redeemed shall not have been
surrendered for cancellation, from and after the Optional Redemption Date (i)
the shares represented thereby shall no longer be deemed outstanding, (ii) the
rights to receive dividends thereon shall cease to accrue and (iii) all rights
of the holders of shares of Series F Preferred Stock to be redeemed or to
receive any amounts in respect of any liquidation, dissolution, winding up or
otherwise shall cease and terminate, excepting only the right to receive the
Optional Redemption Price therefor.
(d) On the Optional Redemption Date, (i) the Corporation shall pay to
each holder of shares of Series F Preferred Stock the Optional Redemption Price
in respect thereof by delivery of a good check to the address of such holder at
such holder's address as it appears on the transfer books of the Corporation and
(ii) all such shares of Series F Preferred Stock shall be deemed to have been
redeemed (and shall be deemed to cease to be outstanding) as of the Optional
Redemption Date.
Section 5. Reacquired Shares.
-----------------
Any shares of Series F Preferred Stock converted, exchanged,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Series F Preferred Stock shall upon their cancellation become
authorized but unissued shares of preferred stock, par value $.01 per share, of
the Corporation and, upon the filing of an appropriate Certificate of
Designation with the Secretary of State of the State of Delaware, may be
reissued as part of another class or series of preferred stock, par value $.01
per share, of the Corporation, including, without limitation, Series F Preferred
Stock, all subject to the conditions or restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) If the Corporation shall liquidate, dissolve or wind up (each, a
"Liquidation Event") distributions shall be made to the holders of shares of
Series F Preferred Stock and all other Parity Stock in proportion to the total
amounts to which the holders of all shares of the Series F Preferred Stock and
other Parity Stock are entitled upon such Liquidation Event.
(b) No distribution shall be made in respect of any shares of Series
F Preferred Stock pursuant to Section 6(a) unless, at the time of such
distribution, all amounts due in respect of any shares of Senior Stock have been
paid in full.
(c) No distribution shall be made in respect of any shares of Junior
Stock unless, at the time of such distribution, the holders of shares of Series
F Preferred Stock shall have received the Liquidation Preference with respect to
each share.
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Section 7. Voluntary Conversion.
--------------------
(a) At any time during the 20-day period following a Change of
Control, each holder of Series F Preferred Stock shall have the right, at such
holder's option, to convert, subject to the terms and provisions of this Section
7, any or all of such holder's shares of Series F Preferred Stock into the
number of fully paid and non-assessable shares of Common Stock that shall equal
the quotient of the Liquidation Preference and the Market Price on the date of
such conversion. Such conversion right shall be exercised by the surrender of
one or more certificates representing the shares to be converted to the
Corporation during usual business hours at its principal place of business,
accompanied by written notice that the holder elects to convert such shares and
specifying the name or names (with address) in which a certificate or
certificates representing shares of Common Stock are to be issued and (if so
required by the Corporation) by a written instrument or instruments of transfer
in form reasonably satisfactory to the Corporation duly executed by the holder
or such holder's duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 7(d). All certificates
representing shares of Series F Preferred Stock surrendered for conversion shall
be delivered to the Corporation for cancellation.
(b) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Series F Preferred Stock.
If more than one share of Series F Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Liquidation Preference of the shares of Series F Preferred Stock so
surrendered. If the conversion of any share or shares of Series F Preferred
Stock results in a fraction, an amount equal to such fraction multiplied by the
Market Price of the Common Stock on the day preceding the day of conversion
shall be paid to such holder in cash by the Corporation.
(c) The Corporation shall reserve and keep available for issuance
upon the conversion of the Series F Preferred Stock pursuant to this Section 7,
such number of its authorized but unissued shares of Common Stock as will from
time to time be sufficient to permit the conversion of all outstanding shares of
Series F Preferred Stock, and shall take all action required to increase the
authorized number of shares of Common Stock if at any time there shall be
insufficient authorized but unissued shares of Common Stock to permit such
reservation or to permit the conversion of all outstanding shares of Series F
Preferred Stock.
(d) The issuance or delivery of certificates for Common Stock upon
the conversion of shares of Series F Preferred Stock pursuant to this Section 7
shall be made without charge to the converting holder of shares of Series F
Preferred Stock for such certificates or for any tax in respect of the issuance
or delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of, or
(subject to compliance with the applicable provisions of federal and state
securities laws) in such names as may be directed by, the holders of the shares
of Series F Preferred Stock converted; provided, however, that the Corporation
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shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a name
other than that of the holder of the shares of Series F Preferred Stock
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount
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of such tax or shall have established to the reasonable satisfaction of the
Corporation that such tax has been paid.
(e) In the event that a holder of Series F Preferred Stock shall
elect to convert such holder's shares following a Change of Control (as
contemplated by Section 7(a) above), such conversion shall be deemed to have
occurred on the date of such Change of Control. The Corporation shall deliver
one or more certificates representing the shares of Common Stock issuable upon
conversion of such Series F Preferred Stock to the holder thereof promptly
following the surrender by a holder of the Series F Preferred Stock of one or
more certificates representing the shares to be converted.
Section 8. Credit Agreement.
----------------
In no event shall the Corporation be required to make payments in
respect of the Series F Preferred Stock (pursuant to Section 2, 4 or 6 or
otherwise) if such payment is prohibited under the terms of the Credit
Agreement.
Section 9. Definitions.
-----------
For the purposes of this Certificate of Designation of Series F
Preferred Stock, the following terms shall have the meanings indicated:
A "Change of Control" of the Corporation shall mean, so long as any
Series F Preferred Stock is issued and outstanding, such time as:
(i) Any Person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) is or becomes the beneficial owner, directly
or indirectly, of outstanding shares of stock of the Corporation entitling
such Person or Persons to exercise 50% or more of the total votes
(excluding the Series F Preferred Stock) entitled to be cast at a regular
or special meeting, or by action by written consent, of shareholders of the
Corporation (the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, promulgated by the Securities Exchange Commission under
the Exchange Act);
(ii) The Corporation shall consummate the sale or other
disposition of all or substantially all of the assets of the Corporation in
one transaction or in a series of related transactions;
(iii) The Corporation shall consummate a recapitalization,
reorganization, merger, consolidation or similar transaction, in each case
with respect to which all or substantially all the Persons who were the
respective beneficial owners, directly or indirectly, of the outstanding
shares of capital stock of the Corporation immediately prior to such
recapitalization, reorganization, merger, consolidation or similar
transaction, will own less than 50% of the combined voting power of the
then outstanding shares of capital stock of the Corporation resulting from
such recapitalization, reorganization, merger, consolidation or similar
transaction;
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(iv) Any transaction occurs after the occurrence of an Initial
Public Offering, the result of which is that the Common Stock is not
required to be registered under Section 12 of the Exchange Act and that the
holders of Common Stock do not receive common stock of the Person surviving
such transaction which is required to be registered under Section 12 of the
Exchange Act; or
(v) Immediately after any merger, consolidation,
recapitalization or similar transaction an individual or "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall be the
beneficial owners, directly or indirectly, of outstanding shares of capital
stock of the Corporation (or any Person surviving such transaction)
entitling them collectively to exercise 50% or more of the total voting
power of shares of capital stock of the Corporation (or the surviving
Person in such transaction);
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation. In the event that the Common Stock should, as a
result of a dividend or change or exchange for other securities by
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization, split-up, spinoff, partial or complete liquidation, sale of
assets, distribution to stockholders or otherwise, be changed into or exchanged,
in whole or in part, for a different number or kind of shares of capital stock
or other securities of the Corporation or of another Person, the term "Common
Stock" shall include, without limitation, such shares of capital stock or other
securities or property; provided, however, that, in the event the Common Stock
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shall cease to be outstanding following any such reclassification,
reorganization, redesignation, merger, consolidation, recapitalization,
split-up, spinoff, partial or complete liquidation, sale of assets, distribution
to stockholders or otherwise, then the term "Common Stock" shall only refer to
such shares of capital stock or other securities or property.
"Credit Agreement" means the Credit Agreement dated March 30, 1999
among the Corporation, MedSource Technologies, LLC, the lenders party to the
Credit Agreement and Deutsche Bank AG, New York Branch, as administrative agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and/or security documents), as the same has been and may be
amended, extended, renewed, increased, restated, modified, supplemented,
refinanced, replaced or refunded from time to time, including, without
limitation, any such amendment, extension, renewal, increase, restatement,
supplement, refinancing, replacement or refunding which relates to 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 and/or group of
lenders.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Initial Public Offering" shall mean the initial public offering of
shares of Common Stock of the Corporation pursuant to a registration statement
declared effective under the Securities Act.
"Junior Stock" shall mean any now or hereafter authorized capital
stock of the Corporation ranking junior (as to dividends and upon liquidation,
dissolution or winding up) to the Series F Preferred Stock, including, without
limitation, the Common Stock, the Corporation's
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Series A Preferred Stock, par value $.01 per share, and the Corporation's Series
Z Preferred Stock, par value $.01 per share.
"Liquidation Preference" with respect to a share of Series F
Preferred Stock shall mean the Original Series F Issue Price plus all accrued
----
and unpaid dividends thereon, whether or not declared.
"Market Price" shall mean, as applied to shares of any class of
stock on any date, the last reported sales price, regular way, per share of such
shares on such day, or if no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in each case, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if shares of
such stock are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of such stock are listed or admitted to trading, or, if the
shares of such stock are not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, in
either case as reported by the National Association of Securities Dealers, Inc.
or, if not so reported, as reported by any similar interdealer system selected
by the Board of Directors of the Corporation then in general use, or, if on any
such date the shares of stock are not quoted or reported by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of stock selected by the
Board of Directors of the Corporation. If any such class of stock is not
publicly held or so listed or publicly traded, "Market Price" means the fair
market value per share as determined in good faith by the Board of Directors of
the Corporation.
"Original Series F Issue Price" with respect to a share of Series F
Preferred Stock shall mean $1,000.
"Parity Stock" shall mean any now or hereafter authorized capital
stock of the Corporation ranking on a par (as to dividends and upon liquidation,
dissolution or winding up) with the Series F Preferred Stock, including, without
limitation, the Corporation's Series D Preferred Stock, par value $.01 per
share, and the Corporation's Series E Preferred Stock, par value $.01 per share.
"Person" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger) of such entity.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission thereunder.
"Senior Stock" shall mean any now or hereafter authorized capital
stock of the Corporation that by its terms ranks senior (as to dividends and
upon liquidation, dissolution or winding up) to the Series F Preferred Stock,
including, without limitation, the Corporation's
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Series B Preferred Stock, par value $.01 per share, and the Corporation's Series
C Preferred Stock, par value $.01 per share.
Section 10. Modification or Amendment.
-------------------------
Modifications or amendments to this Certificate of Designation may
be made by the Corporation upon the vote or consent of the holders of a majority
of the outstanding shares of Series F Preferred Stock.
IN WITNESS WHEREOF, MedSource Technologies, Inc. has caused this
Certificate to be duly executed in its corporate name on this 2nd day of January
2002.
MEDSOURCE TECHNOLOGIES, INC.
By: /s/ Daniel Croteau
-------------------------------------------
Name: Daniel Croteau
Title: Vice President - Corporate Development
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