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EXHIBIT 99.4
CERTIFICATE OF DESIGNATIONS,
RIGHTS AND PREFERENCES OF THE
SERIES A 9.75%
CUMULATIVE CONVERTIBLE
PAY-IN-KIND PREFERRED STOCK
AND THE
SERIES B NON-VOTING PARTICIPATING
PREFERRED STOCK
OF
ALTERRA HEALTHCARE CORPORATION
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
ALTERRA HEALTHCARE CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolutions were adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law of the State of Delaware by unanimous written consent dated as
of May 30, 2000:
"RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Company in accordance
with the provisions of the Restated Certificate of
Incorporation, as amended, the Board of Directors hereby
creates (i) a series of 9.75% Cumulative Convertible
Pay-In-Kind Preferred Stock (the "Series A Preferred Stock") of
the Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and
limitations thereof as set forth in Part A attached hereto; and
(ii) a series of Non-Voting Participating Preferred Stock (the
"Series B Preferred Stock") of the Corporation and hereby
states the designation and number of shares, and fixes the
relative rights, preferences, and limitations thereof as set
forth in Part B attached hereto;"
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PART A. SERIES A 9.75 CUMULATIVE CONVERTIBLE PAY-IN-KIND PREFERRED STOCK
1. Designation. The Preferred Stock of Alterra Healthcare
Corporation (the "Corporation"), created and authorized for issuance hereby,
shall be designated as "Series A 9.75% Cumulative Convertible Pay-In-Kind
Preferred Stock" (hereinafter, "Series A Preferred Stock") which will consist of
2,500,000 shares of such Series A Preferred Stock, each of which has a stated
value of $4.00 per share (the "Stated Value").
2. Priority. The Series A Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up or dissolution, whether
voluntary or involuntary, whether now or hereafter issued, rank (i) senior to
(A) any other class or series of Preferred Stock of the Corporation ("Preferred
Stock") established by the Board of Directors of the Corporation (the "Board of
Directors"), including the Corporation's Series A Junior Participating Preferred
Stock (the "Series A Junior Preferred Stock") and the Corporation's Series B
Non-Voting Participating Preferred Stock (the "Series B Preferred Stock") but
specifically excluding any Equivalent Securities (hereinafter defined) or Senior
Securities (hereinafter defined) issued in accordance with Section 5 hereof, (B)
the Corporation's Common Stock, $.01 par value per share (the "Common Stock"),
and (C) any other equity securities of the Corporation (all of such equity
securities of the Corporation to which the Series A Preferred Stock ranks
senior, including the Common Stock, the Series A Junior Preferred Stock and the
Series B Preferred Stock, are at times collectively referred to herein as the
"Junior Securities").
3. Dividends.
(a) Holders of shares of Series A Preferred Stock shall
be entitled to receive out of funds legally available therefor cumulative
dividends for each share of Series A Preferred Stock at an annual rate (the
"Dividend Rate") of 9.75% of the Stated Value (unless such rate has been
adjusted pursuant to the provisions of Section 3(d)), payable semi-annually on
January 1 and July 1 of each year commencing on January 1, 2001 (or at such
additional times and for such interim periods, if any, as determined by the
Board of Directors) (each of such dates being referred to herein as a "Dividend
Payment Date"), except that if such date is a Saturday, Sunday or legal holiday,
then such dividend shall be payable on the next date that is not a Saturday,
Sunday or legal holiday on which banks in the State of New York are permitted or
required to be closed (a "Business Day"). Each of such semi-annual dividends
shall be fully cumulative and shall accrue (whether or not declared), on a daily
basis from the first day of the period in which such dividend may be accruable
as provided herein; provided, however, that with respect to the first Dividend
Payment Date following any issuance of shares of Series A Preferred Stock, the
dividend with respect to such shares shall accrue from the date of issuance of
such shares of Series A Preferred Stock. Dividends on shares of Series A
Preferred Stock shall be payable in shares of Series A Preferred Stock
(calculated with reference to the Stated Value of the Series A Preferred Stock).
The Board of Directors shall declare and pay such accrued dividends at such time
and to the extent permitted by law. No fractional shares shall be issued by the
Corporation in respect of any Dividend Payment Date, so that the number of
shares
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of Series A Preferred Stock to be paid as a dividend pursuant to this Section
3(a) to a holder of Series A Preferred Stock shall be rounded down to the
nearest whole number of shares; provided however, that any such fractional
shares to which a holder of Series A Preferred Stock would otherwise be entitled
shall be aggregated with any fractional shares otherwise issuable in connection
with any subsequent Dividend Payment Dates and each time such fractional shares
shall equal one full share, such full share shall be issued to the holder
entitled thereto on the next subsequent Dividend Payment Date with all attendant
rights and preferences attaching thereto. Dividends shall be paid to the holders
of record of shares of Series A Preferred Stock at the close of business on the
date specified by the Board of Directors at the time such dividend is declared
(the "Record Date"); provided, however, that such Record Date shall not be more
than 60 days nor less than 10 days prior to the respective Dividend Payment
Date. The Corporation shall deliver or cause to be delivered to the respective
record holders of shares of Series A Preferred Stock certificates representing
the shares of Series A Preferred Stock (if any) to which they are entitled
pursuant to this Section 3(a) promptly following each Dividend Payment Date.
(b) All dividends paid with respect to shares of Series A
Preferred Stock pursuant to Section 3(a) hereof shall be paid pro rata to the
holders entitled thereto, subject to the treatment of fractional shares
described in Section 3(a) hereof. All shares of Series A Preferred Stock issued
in respect of any Dividend Payment Date shall be deemed issued on the applicable
Dividend Payment Date, and will thereupon be duly authorized, validly issued,
fully paid and non-assessable and free and clear of all liens and charges. On
and after a Dividend Payment Date, until certificates representing additional
shares of Series A Preferred Stock shall have been issued pursuant to Section
3(a) hereof, the certificates representing shares of Series A Preferred Stock
held by a holder of Series A Preferred Stock on the Record Date shall represent
not only such existing shares, but also the additional shares of Series A
Preferred Stock issued to such holder pursuant to such dividend.
(c) (i) Holders of shares of Series A Preferred
Stock shall be entitled to receive the dividends provided for in Section 3(a)
hereof in preference to and in priority over any dividends declared upon any of
the Junior Securities.
(ii) So long as any shares of Series A Preferred
Stock are outstanding, the Corporation shall not, without first obtaining the
consent or approval of the holders of a majority of the then outstanding shares
of Series A Preferred Stock, declare, pay or set apart for payment any dividend
on any of the Junior Securities or make any payment on account of, or set apart
for payment money or establish a sinking or other similar fund for, the
purchase, redemption, retirement or other acquisition of, or otherwise acquire
for value, any of the Junior Securities or any warrants, rights, calls or
options exercisable for any of the Junior Securities, or make any distribution
in respect thereof, either directly or indirectly, whether in cash, obligations
or shares of the Corporation or other property (other than distributions or
dividends payable solely in the same Junior Securities to the holders of such
Junior Securities), or permit any company or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Junior Securities
or any warrants, rights, calls or options exercisable for any of the Junior
Securities (other than the exchange or redemption of the Rights
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pursuant to the terms of the Rights Agreement between the Corporation and
American Stock Transfer & Trust Company dated as of December 10, 1998, as
amended or modified from time to time (the "Rights Agreement")), unless prior to
or concurrently with such declaration, payment, setting apart for payment,
purchase, redemption or distribution, as the case may be, all accrued and unpaid
dividends, if any, on shares of Series A Preferred Stock not paid on the dates
provided for in Section 3(a) hereof shall have been paid.
(iii) Subject to the foregoing provisions of this
Section 3 and the provisions of Section 8(f) hereof, the Board of Directors may
declare and the Corporation may pay or set apart for payment dividends and other
distributions on any of the Junior Securities, and may purchase or otherwise
redeem any of the Junior Securities or any warrants, rights or options
exercisable for any of the Junior Securities, and the holders of the shares of
Series A Preferred Stock shall not be entitled to participate therein.
If at any time the Common Stock is not listed or admitted to
trading on the American Stock Exchange, the New York Stock Exchange or the
NASDAQ National Market System (each a "National Exchange"), then beginning on
the date the Common Stock is no longer so listed or admitted to trading and
continuing until the date the Common Stock is again listed or admitted to
trading on a National Exchange, the Dividend Rate shall be adjusted to an annual
rate of 12.25% of the Stated Value.
4. Liquidation Preference.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of Series A Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its stockholders an amount in cash equal to the Stated Value for each share
outstanding, plus an amount in cash equal to all accrued but unpaid dividends
thereon to the date fixed for liquidation, before any payment shall be made or
any assets distributed to the holders of any of the Junior Securities (the
"Liquidation Preference"). No full preferential payment on account of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, shall be made to the holders of any class of Equivalent Securities
(as hereinafter defined in Section 5 below) unless there shall likewise be paid
at the same time to holders of Series A Preferred Stock the full amounts to
which such holders are entitled with respect to such distribution. If the assets
of the Corporation are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of Series A Preferred Stock and
outstanding shares of Equivalent Securities, then the holders of all such shares
shall share ratably in such distribution of assets in accordance with the full
respective preferential amounts that would be payable on such shares of Series A
Preferred Stock and such shares of Equivalent Securities if all amounts payable
thereon were paid in full.
(b) For the purposes of this Section 4, (i) the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation (unless and until such sale,
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conveyance, exchange or transfer is followed by the dissolution of the
Corporation pursuant to the DGCL) or (ii) the consolidation or merger of the
Corporation with one or more other companies or entities shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary.
5. Certain Restrictions.
Notwithstanding anything contained herein to the contrary, so long as
any shares of the Series A Preferred Stock shall remain outstanding, the
Corporation shall not, without first obtaining the consent or approval of the
holders of a majority of the then outstanding shares of Series A Preferred
Stock, establish, create, authorize or issue any shares of (i) any class or
series of Preferred Stock the terms of which provide that such class or series
shall rank on parity with the Series A Preferred Stock with respect to dividends
or rights on liquidation, winding up or dissolution ("Equivalent Securities"),
including (A) the reclassification of any class or series of stock of the
Corporation into shares of Equivalent Securities and (B) the issuance of any
security exchangeable for, convertible into or evidencing the right to purchase
any shares of Equivalent Securities; or (ii) any other class or series of
Preferred Stock, the terms of which provide that such class or series shall rank
senior to the Series A Preferred Stock with respect to dividend rights or rights
on liquidation, winding up or dissolution ("Senior Securities"), including (A)
the reclassification of any class or series of stock of the Corporation into
shares of Senior Securities and (B) the issuance of any security exchangeable
for, convertible into or evidencing the right to purchase any shares of Senior
Securities.
6. Redemption by the Corporation.
(a) The Corporation may out of funds legally available
therefor, at its option, on or after the third anniversary of the first date on
which shares of the Series A Preferred Stock are issued, redeem all, but not
less than all, shares of Series A Preferred Stock, upon notice as set forth in
Section 6(d) hereof at the redemption price set forth in Section 6(c) hereof any
time if the average Trading Price (as defined in Section 8(n)) of the Common
Stock for the 30 consecutive Trading Days preceding the Redemption Notice Date
(as defined in Section 6(d)) shall equal or exceed an amount equal to 200% of
the Conversion Price (as defined in Section 8(b)).
(b) Upon the earlier of (i) Maturity or (ii) the
Corporation's redemption of its Series A 9.75% Convertible Pay-in-Kind
Debentures due 2007 and its Series B 9.75% Convertible Pay-in-Kind Debentures
due 2007 (collectively, the "Debentures"), the Corporation shall redeem all
outstanding shares of Series A Preferred Stock at the redemption price set forth
in Section 6(c) hereof out of funds legally available therefor.
(c) The redemption price per share of the Series A
Preferred Stock shall be an amount in cash equal to the Stated Value of such
share of Series A Preferred Stock plus all accrued but unpaid dividends thereon
to the Redemption Date. The Corporation shall
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take all actions required or permitted under the General Corporation Law of the
State of Delaware (the "DGCL") to permit such redemption of Series A Preferred
Stock.
(d) Notice of any redemption shall be sent by or on
behalf of the Corporation not less than 60 days prior to the date specified for
redemption in such notice (the "Redemption Date"), by first-class mail, postage
prepaid, to all holders of record of Series A Preferred Stock at their last
addresses as they shall appear on the books of the Corporation (the date such
notice is mailed by or on behalf of the Corporation is referred to herein as the
"Redemption Notice Date"); provided, however, that no failure to give such
notice or any defect therein or in the mailing thereof shall affect the validity
of the proceedings for the redemption of any shares of Series A Preferred Stock
except as to the holder to whom the Corporation has failed to give notice or
except as to the holder to whom notice was defective. In addition to any
information required by law, such notice shall state: (i) whether such
redemption is being made pursuant to the optional redemption provisions hereof
or the mandatory redemption provisions hereof; (ii) the Redemption Date; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accumulate as of the
Redemption Date. Upon the mailing of any such notice of redemption, the
Corporation shall become obligated to redeem at the time of redemption specified
thereon all shares called for redemption.
(e) If notice has been mailed in accordance with Section
6(d) hereof and provided that on or before the Redemption Date specified in such
notice, all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds in trust and for the pro
rata benefit of the holders of the shares so called for redemption, so as to be,
and to continue to be available therefor, then, from and after the Redemption
Date, dividends on the shares of Series A Preferred Stock so called for
redemption shall cease to accumulate, and such shares shall no longer be deemed
to be outstanding and shall not have the status of shares of Series A Preferred
Stock, and all rights of the holders thereof as stockholders of the Corporation
(except the right to receive from the Corporation the redemption price therefor)
shall cease. Upon surrender, in accordance with such notice, of the certificates
for any shares so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the redemption price therefor.
(f) Any deposit of funds with a bank or trust company for
the purpose of redeeming shares of Series A Preferred Stock shall be irrevocable
except that (i) any balance of monies so deposited by the Corporation with
respect to shares of Series A Preferred Stock converted by the holder pursuant
to Section 8 hereof prior to the Redemption Date shall be repaid, together with
interest or other earnings thereon, to the Corporation within 30 days after the
Redemption Date and (ii) any balance of monies so deposited by the Corporation
and unclaimed by the holders of shares of Series A Preferred Stock entitled
thereto at the expiration of two years from the applicable Redemption Date shall
be repaid, together with any interest or other earnings earned thereon, to the
Corporation, and after any such repayment, the holders of
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the shares of Series A Preferred Stock entitled to the funds so repaid to the
Corporation shall look only to the Corporation for payment without interest or
other earnings.
(g) In connection with any redemption of Series A
Preferred Stock, holders of Series A Preferred Stock may exercise their right to
convert in accordance with Section 8 hereof by notifying the Corporation on or
before the Redemption Date.
7. Voting Rights. In addition to any voting rights provided
elsewhere herein, and any voting rights provided by law, the holders of shares
of Series A Preferred Stock shall have the following voting rights:
(a) For so long as any shares of Series A Preferred Stock
shall remain outstanding, each share of Series A Preferred Stock shall entitle
the holder thereof to vote on all matters voted on by holders of the Common
Stock, voting together as a single class with the Common Stock and all other
shares entitled to vote, if any, at all meetings of the stockholders of the
Corporation; provided, however, that the holders of shares of Series A Preferred
Stock shall not have the right to vote for any directors of the Corporation
(other than the right to elect the Preferred Directors in accordance with
Section 7(b) hereof.) With respect to any matter voted on by holders of the
Common Stock and the Series A Preferred Stock voting together as a single class,
each share of Series A Preferred Stock shall entitle the holder thereof to cast
the number of votes equal to the number of votes which could be cast in such
vote by a holder of the shares of Common Stock into which such share of Series A
Preferred Stock are convertible on the record date for such vote.
(b) So long as shares of the Series A Preferred Stock and
the Debentures, having collectively, an aggregate Stated Value (with respect to
the Series A Preferred Stock) or principal amount (with respect to the
Debentures), equal to or greater than Fifty Million Dollars ($50,000,000) remain
outstanding, the Board of Directors shall consist of nine (9) members and the
holders of shares of Series A Preferred Stock shall have, in addition to the
other voting rights set forth herein, the exclusive right, voting separately as
a single class, to elect four (4) directors of the Corporation (the "Preferred
Directors"), the remaining directors to be elected by the other classes of stock
entitled to vote therefor (excluding the Series A Preferred Stock in accordance
with Section 7(a) hereof), at each meeting of stockholders held for the purpose
of electing directors. So long as holders of the Series A Preferred Stock have
the right to elect the Preferred Directors, (i) any or all of the Preferred
Directors may be removed by a vote of the holders of a majority of the issued
and outstanding shares of Series A Preferred Stock or by the written consent of
holders of 100% of the issued and outstanding shares of Series A Preferred
Stock; and (ii) any vacancies created by the removal, resignation or death of
any Preferred Director may be filled by a majority vote of the remaining
Preferred Directors, by a vote of the holders of a majority of the issued and
outstanding shares of Series A Preferred Stock or by the written consent of
holders of 100% of the issued and outstanding shares of Series A Preferred
Stock.
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(c) Notwithstanding anything to the contrary contained
herein, any action required or permitted to be taken by the holders of Series A
Preferred Stock at any meeting of the holders of Series A Preferred Stock may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
100% of the issued and outstanding shares of Series A Preferred Stock. If the
holders of not less than ten percent (10%) of the issued and outstanding shares
of Series A Preferred Stock deliver to the Secretary of the Corporation a
written request to hold a special meeting of the holders of the Series A
Preferred Stock for the purpose of considering any matter or taking any action
with respect to which the holders of Series A Preferred Stock are entitled to a
vote pursuant to the terms hereof, the Corporation shall take such action as is
required under the DGCL and the Bylaws of the Corporation to duly call and hold
a special meeting of the holders of Series A Preferred Stock at a date, time and
place determined by the Board of Directors.
8. Conversion Rights.
(a) Each share of Series A Preferred Stock may be
converted at the option of the holder, at any time (except that, with respect to
any shares of Series A Preferred Stock which shall be called for redemption,
such right shall terminate as provided in Section 6 hereof) into the number of
fully paid, non-assessable shares of Common Stock obtained by dividing the
Stated Value by the Conversion Price (as defined in Section 8(b) below) in
effect on the date of conversion (the "Conversion Date"), in accordance with and
subject to the terms and conditions of this Section 8 and the right to receive
an additional number of fully paid and non-assessable shares of Common Stock
having a Share Value (as defined herein) equal to all accrued and unpaid
dividends on such share of Series A Preferred Stock (other than previously
declared dividends payable to a holder of record on a prior Record Date which
dividends shall be paid by the Corporation to such holder on the next Dividend
Payment Date) to the Conversion Date, whether or not declared, such shares to be
issued concurrently with the issuance of the shares of Common Stock pursuant to
Section 8(d) hereof. Subject to Section 6(g) hereof, a holder of shares of
Series A Preferred Stock shall have the right to convert all or any portion of
such shares pursuant to this Section 8 at any time and from time to time.
(b) The "Conversion Price" shall initially equal $4.00,
provided, however, that such Conversion Price shall be adjusted and readjusted
from time to time as provided in this Section 8 and, as so adjusted and
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by this Section 8.
(c) Upon surrender to the Corporation at the office of
the transfer agent or such other place or places, if any, as the Board of
Directors may determine, of certificates duly endorsed to the Corporation or in
blank for shares of Series A Preferred Stock to be converted together with
appropriate evidence of the payment of any transfer or similar tax, if required,
and written instructions to the Corporation requesting conversion of such shares
and specifying the name and address of the person, corporation, firm or other
entity to whom shares of Common Stock are to be issued upon conversion thereof,
the Corporation shall issue the
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number of full shares of Common Stock rounded down to the nearest whole number
issuable upon conversion thereof as of the time of such surrender and as
promptly as practicable thereafter will deliver or cause to be delivered
certificates for such shares of Common Stock. In addition, the Corporation
shall, issue a number of shares of Common Stock having a Share Value equal to
all accrued and unpaid dividends on each share of Series A Preferred Stock so
surrendered for conversion (other than previously declared dividends payable to
a holder of record on a prior Record Date which dividends shall be paid by the
Corporation to such holder on the next Dividend Payment Date.) Upon surrender of
a certificate representing shares of Series A Preferred Stock to be converted in
part, in addition to the foregoing, the Corporation shall also issue to such
holder a new certificate representing any unconverted shares of Series A
Preferred Stock represented by the certificate surrendered for conversion.
(d) No fractional shares of Common Stock shall be issued
pursuant to this Section 8 and the number of shares of Common Stock shall be
rounded down to the nearest whole number of shares; provided, however, that any
such fractional shares to which a holder of Series A Preferred Stock would
otherwise be entitled shall be aggregated with any fractional shares otherwise
issuable in connection with any subsequent conversion by such holder of shares
of Series A Preferred Stock and each time such fractional share shall equal one
full share, such full share shall be issued to the holder entitled thereto.
(e) The Corporation shall pay all documentary, stamp, or
similar issue or transfer tax due upon conversion of Series A Preferred Stock.
(f) The Conversion Price shall be subject to adjustment
as follows:
(i) In case the Corporation shall (i) pay or
make a dividend or other distribution on the outstanding shares of
Common Stock in shares of Common Stock, (ii) subdivide or reclassify
the outstanding shares of Common Stock into a greater number of shares,
or (iii) combine or reclassify the outstanding shares of Common Stock
into a smaller number of shares, the Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or
other distribution or subject to such subdivision, combination or
reclassification shall be adjusted by multiplying such Conversion Price
by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination and of which the denominator shall be the sum of
such number of shares outstanding immediately after the event described
in clause (i), (ii) or (iii) of this paragraph (i) of Section 8(f),
such adjustment to the Conversion Price to become effective immediately
after the opening of business on the day following the date fixed for
such determination.
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(ii) In case the Corporation shall issue rights,
options or warrants to all holders of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the Conversion Price in effect immediately prior to the date
fixed for the determination of stockholders entitled to receive such
rights, options or warrants (the "Pre-Determination Conversion Price"),
the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by
multiplying the Pre-Determination Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock (as
defined herein) outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which
the aggregate offering price of the total number of shares of Common
Stock so offered for subscription would purchase at the
Pre-Determination Conversion Price, and of which the denominator shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such
reduction of the Conversion Price to become effective immediately after
the opening of business on the day following the date fixed for such
determination.
(iii) In case the Corporation shall, by dividend
or otherwise, distribute to all holders of Common Stock (i) shares of
capital stock of any class other than Common Stock, (ii) evidences of
its indebtedness or (iii) assets (excluding any rights, options or
warrants referred to in paragraph (ii) of this Section 8(f), any cash
dividend or distribution lawfully paid under the laws of the state of
incorporation of the Corporation, and any dividend or distribution
referred to in paragraph (i) of this Section 8(f)), the Conversion
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution (the
"Pre-Determination Conversion Price") by a fraction of which the
numerator shall be the Pre-Determination Conversion Price less the fair
market value (as determined by the Board of Directors of the
Corporation) of the portion of the shares of capital stock or evidences
of indebtedness or assets so distributed applicable to one share of
Common Stock, and of which the denominator shall be the
Pre-Determination Conversion Price, such adjustment to become effective
immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive
such distribution.
(iv) In case the Corporation shall issue any
securities convertible into or exchangeable for Common Stock (other
than securities issued in transactions described in paragraph (ii) or
(iii) of this Section 8(f)), for a consideration per share of Common
Stock less than the Conversion Price immediately prior to the date of
issuance of such securities (the "Pre-Issuance Conversion Price"), the
Conversion Price shall be adjusted immediately thereafter
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so that it shall equal the price determined by multiplying the
Pre-Issuance Conversion Price by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such securities plus the number of shares of
Common Stock which the aggregate consideration received for such
securities would purchase at the Pre-Issuance Conversion Price, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the maximum number
of shares of Common Stock deliverable upon conversion of or in exchange
for such securities at the initial conversion or exchange price or
rate. Upon the termination of the right to convert or exchange such
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustments made upon
the issuance of such convertible or exchangeable securities been made
upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon conversion or exchange of such securities
and upon the basis of the consideration actually received by the
Corporation for such securities.
(v) In case of any reclassification of the
Common Stock (including any reclassification upon a consolidation or
merger in which the Corporation is the continuing or surviving
corporation) into securities other than Common Stock, the Series A
Preferred Stock shall thereafter be convertible into the kind and
amount of shares of such securities receivable upon such
reclassification by a holder of the number of shares of Common Stock
into which the Series A Preferred Stock would be convertible
immediately prior to such reclassification.
(vi) In case the Corporation shall issue shares
of Common Stock for a consideration per share less than the Conversion
Price immediately prior to the date on which the Corporation fixes the
offering price of such additional shares (the "Pre-Offering Conversion
Price"), the Conversion Price shall be adjusted immediately thereafter
so that it shall equal the price determined by multiplying the
Pre-Offering Conversion Price by a fraction, of which the numerator
shall be the total number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares plus the
number of shares of Common Stock which the aggregate consideration
received for the issuance of such additional shares would purchase at
the Pre-Offering Conversion Price, and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after
the issuance of such additional shares. There shall be no adjustment,
however, pursuant to this paragraph (vi) with respect to any shares of
Common Stock issued (i) in any of the transactions described in
paragraph (ii) of this Section 8(f) where there has been an adjustment
in respect thereto; (ii) upon conversion or exchange of securities
convertible into or exchangeable for Common Stock where there has been
an adjustment; (iii) upon the exercise or conversion of any stock
option, warrant or other convertible
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security outstanding on the first date on which shares of Series A
Preferred Stock are issued (the "Original Issue Date"); (iv) upon the
exercise of any stock option granted by the Company (provided that, if
applicable, any adjustment required pursuant to paragraph (iii) of this
Section 8(f) upon the grant of such option has been made), (v) upon the
conversion of any convertible debenture of the Company outstanding on
the Original Issue Date or upon the conversion of any of the Debentures
or (vi) the exercise of any Rights pursuant to the terms of the Rights
Agreement.
(g) Anything herein to the contrary notwithstanding, no
adjustment will be made to the Conversion Price by reason of the issuance of
Common Stock upon the conversion of Series A Preferred Stock, the Debentures or
the Series C 9.75% Convertible Pay-in-Kind Debentures of the Corporation or by
reason of the issuance of Series B Preferred Stock upon the conversion of any of
the Debentures. The Corporation shall not issue any shares of Series B Preferred
Stock except pursuant to the Certificate of Designations of the Rights and
Preferences of the Series B Preferred Stock or pursuant to the terms of the
Debentures (including the Indenture relating to the Debentures).
(h) No adjustment in the Conversion Price need be made
unless the adjustment pursuant to Section 8(f) hereof would require an increase
or decrease of at least 1% in the Conversion Price; provided, however, that any
adjustments which by reason of this paragraph are not required to be made shall
be carried forward and taken into account in any subsequent adjustment required
to be made hereunder, and, in any event, shall be made no later than the third
anniversary of the date the adjustment pursuant to Section 8(f) hereof would
have been made if it would have required an increase or decrease of at least 1%
in the Conversion Price. All adjustments to the Conversion Price shall be made
to the nearest one-one thousandth of a dollar.
(i) No adjustment need be made for a change in the par
value of the Common Stock.
(j) Whenever the Conversion Price is adjusted, the
Corporation shall promptly mail to holders of Series A Preferred Stock a notice
of adjustment briefly stating the facts requiring the adjustment and the manner
of computing such adjustment.
(k) In case of any consolidation or merger of the
Corporation with any other entity, or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, or in the case of any share
exchange, in any such case pursuant to which all of the outstanding shares of
Common Stock are converted into other securities or property, the Corporation
shall make appropriate provision or cause appropriate provision to be made so
that the holder of each share of Series A Preferred Stock then outstanding shall
have the right thereafter, in lieu of the right to convert into Common Stock, to
convert such share of Series A Preferred Stock into the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation, merger, sale, transfer or share exchange by a holder of the
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number of shares of Common Stock into which such share of Series A Preferred
Stock might have been converted immediately prior to the effective date of such
consolidation, merger, sale, transfer or share exchange; provided, however, that
if a purchase, tender or exchange offer shall have been made to and accepted by
the holders of more than 50% of the outstanding shares of Common Stock, and if a
holder of shares of Series A Preferred Stock so designates in a notice given to
the Corporation on or before the date immediately preceding the date of the
consummation of such transaction, the holder of such Series A Preferred Stock
shall be entitled to receive the highest amount of securities, cash or other
property to which such holder would actually have been entitled as a holder of
Common Stock if the holder of Series A Preferred Stock had converted shares of
Series A Preferred Stock into Common Stock prior to the expiration of such
purchase, tender or exchange offer and accepted such offer, subject to
adjustments (from and after the consummation of such purchase, tender or
exchange offer) as nearly equivalent as possible to the adjustments provided for
in this Section 8. If in connection with any such consolidation, merger, sale,
transfer or share exchange, each holder of shares of Common Stock is entitled to
elect to receive either securities, cash or other assets upon completion of such
transaction, the Corporation shall provide or cause to be provided to each
holder of Series A Preferred Stock the right to elect to receive the securities,
cash or other assets into which Series A Preferred Stock held by such holder
shall be convertible after completion of any such transaction on the same terms
and subject to the same conditions applicable to holders of the Common Stock
(including, without limitation, notice of the right to elect, limitations on the
period in which such election shall be made and the effect of failing to
exercise the election). The Corporation shall not effect any such transaction
unless the provisions of this paragraph have been fulfilled. The above
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers or share exchanges.
(l) In case any other stock (other than Common Stock but
including, without limitation, any class or series of Preferred Stock) or other
securities of any other entity (corporate or otherwise) or the Corporation
("Other Securities") shall be issued or sold or shall become subject to issue or
sale upon the conversion or exchange of any stock (or Other Securities) of the
Corporation or to subscription, purchase or other acquisition for a
consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of this Section 8, the conversion rights of
the Series A Preferred Stock, then, and in each such case, the computations,
adjustments and readjustments provided for in this Section 8 with respect to the
Conversion Price shall be made as nearly as possible in the manner so provided
and applied to determine the amount of Other Securities from time to time
receivable upon the conversion of shares of Series A Preferred Stock, so as to
protect the holders of Series A Preferred Stock against the effect of such
dilution.
(m) The Corporation shall reserve and at all times keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of Series A Preferred Stock,
such number of its duly authorized Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred Stock. The Corporation covenants that all shares of Common Stock
issued upon conversion of outstanding shares of Series A Preferred Stock shall,
upon issuance, be duly
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authorized, validly issued, fully paid and non-assessable and free and clear of
all liens and charges.
(n) For purposes hereof, the following terms have the
following meanings:
(i) "Trading Price" on any Trading Day with
respect to the per share price of any shares of Common Stock means the average
of the reported high and low sale price or, in case no such reported sale takes
place on such day, the average of the reported high and low bid and asked
prices, in either case, on the American Stock Exchange or, if shares of Common
Stock are not listed or admitted to trading on such exchange, on the principal
national securities exchange on which such shares are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the NASDAQ or, if such shares are not listed or admitted to trading
on any national securities exchange or quoted on NASDAQ, the average of the high
and low bid and asked prices in the over-the-counter market as furnished by any
American Stock Exchange member firm that is selected from time to time by the
Corporation for that purpose.
(ii) "Maturity" means the seventh anniversary of
the Original Issue Date of the Series A Preferred Stock.
(iii) "Share Value" means the average Trading
Price of the Common Stock for the five consecutive Trading Days immediately
preceding the Conversion Date; provided, however, that in the event that the
Trading Price of the Common Stock cannot be determined pursuant to subsection
n(i) hereof, the "Share Value" shall mean the fair market value of a share of
Common Stock on the Conversion Date as agreed to by the Corporation, on the one
hand, and a majority of the holders of the Series A Preferred Stock requesting
conversion (voting or consenting in writing as a separate class), on the other
hand; provided, further, that if such holders and the Corporation cannot agree
on the Trading Price within 10 days, the Trading Price shall be determined by an
independent nationally-recognized investment banking firm mutually acceptable to
the Company, on the one hand, and a majority of such holders (voting or
consenting in writing as a separate class), on the other hand, or if the
Corporation and such holders are unable to so agree within 5 days, by an
independent nationally recognized investment banking firm selected by the
American Arbitration Association.
(iv) "Trading Day," with respect to a securities
exchange or automated quotation system, means a day on which such exchange or
system is open for a full day of trading.
9. Shares to Be Retired. Any share of Series A Preferred Stock
converted, redeemed, repurchased or otherwise acquired by the Corporation shall
be retired and cancelled and shall upon cancellation and the filing of an
appropriate certificate with the Delaware Secretary of State be restored to the
status of authorized but unissued shares of preferred stock,
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subject to reissuance by the Board of Directors as Series A Preferred Stock or
shares of Preferred Stock of one or more other series.
10. Record Holders. The Corporation and the Corporation's transfer
agent may deem and treat the record holder of any shares of Series A Preferred
Stock as the true and lawful owner thereof for all purposes, and neither the
Corporation nor the Corporation's transfer agent shall be affected by any notice
to the contrary.
11. Notice. Except as may otherwise be provided for herein, all
notices referred to herein shall be in writing, and all notices hereunder shall
be deemed to have been given upon, the earlier of receipt of such notice or
three Business Days after the mailing of such notice if sent by registered mail
(unless first-class mail shall be specifically permitted for such notice under
the terms of this Certificate of Designations) with postage prepaid, addressed,
if to the Corporation, to its offices at 10000 Innovation Drive, Milwaukee,
Wisconsin 53005, (Attention: Chief Financial Officer) or to an agent of the
Corporation designated as permitted by the Certificate of Incorporation or, if
to any holder of Series A Preferred Stock, to such holder at the address of such
holder of Series A Preferred Stock as listed in the stock record books of the
Corporation (which may include the records of the Corporation's transfer agent);
or to such other address as the Corporation or holder, as the case may be, shall
have designated by notice similarly given.
12. Cross-References/Definitions. All references in this Part A to
any other Section are references to other Sections of this Part A and not to any
Section of Part B hereof and capitalized terms in this Part A shall have the
meanings ascribed to them in this Part A.
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PART B. SERIES B NON-VOTING PARTICIPATING PREFERRED STOCK
1. Designation. The Preferred Stock of Alterra Healthcare
Corporation (the "Corporation"), created and authorized for issuance hereby
shall be designated as "Series B Non-Voting Participating Preferred Stock"
(hereinafter "Series B Preferred Stock") which will consist of 750,000 shares of
such Series B Preferred Stock, each of which has a stated value of $400 per
share as adjusted, from time to time, in accordance with the provisions of
Section 8 hereof (the "Stated Value"). The Corporation shall not issue any
shares of Series B Preferred Stock except pursuant to Section 8 of this
Certificate of Designations, Rights and Preferences or the terms of the
Corporation's Series B 9.75% Senior Convertible Pay-in-Kind Debentures due 2007
(the "Series B Debentures") or the Indenture relating to such Debentures.
2. Priority. The Series B Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up or dissolution, whether
voluntary or involuntary, whether now or hereafter issued, rank (i) junior to
the Corporation's Series A 9.75% Cumulative Convertible Pay-in-Kind Preferred
Stock (the "Series A Preferred Stock"), any other series of Preferred Stock
established by the Corporation's Board of Directors (the "Board of Directors"),
the terms of which shall specifically provide that such series shall rank senior
to the Series B Preferred Stock with respect to dividend rights and rights on
liquidation, winding up or dissolution (all of such series of Preferred Stock to
which the Series B Preferred Stock ranks junior, are at times collectively
referred to herein as the "Senior Securities"), and (ii) senior to the
Corporation's Common Stock, $.01 par value per share (the "Common Stock"),
(except that with respect to dividends the Series B Preferred Stock shall rank
pari passu with the Common Stock) and the Corporation's Series A Junior
Participating Preferred Stock (the "Junior Preferred Stock") (except that with
respect to dividends, the Series B Preferred Stock shall rank junior to the
Junior Preferred Stock), and, subject to clause (i) of this Section 2, any other
equity securities of the Corporation, with respect to dividend rights and rights
on liquidation, winding up or dissolution (all of such equity securities of the
Corporation to which the Series B Preferred Stock ranks senior, including the
Common Stock, are at times collectively referred to herein as the "Junior
Securities").
3. Dividends.
(a) Each Holder of a share of Series B Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available therefor under the General Corporation Law of the
State of Delaware (the "DGCL"), dividends for each share of Series B Preferred
Stock in an amount equal the amount of all cash dividends, all non cash
dividends and all other distributions (other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common Stock by
reclassification or otherwise, each of which are addressed in Section 8 hereof)
declared and paid on the Common Stock, as if the shares of Series B Preferred
Stock had been converted immediately prior to the record date for payment of
such dividends or distributions at the conversion rate set forth in
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Section 5 hereof. Dividends on shares of Series B Preferred Stock shall be
payable in cash or in such other property, securities or assets (other than
shares of Common Stock) as may be declared and paid by the Corporation as a
dividend to the holders of the Corporation's issued and outstanding shares of
Common Stock. Dividends shall be paid to the holders of record of shares of
Series B Preferred Stock at the close of business on the date specified by the
Board of Directors of the Corporation at the time such dividend is declared;
provided, however, that such record date shall not be more than 60 days nor less
than 10 days prior to the respective dividend payment date.
(b) All dividends paid with respect to shares of Series B
Preferred Stock pursuant to Section 3(a) hereof shall be paid pro rata to the
holders entitled thereto.
(c) If at any time the Corporation shall have failed to
pay all dividends which have accrued on any outstanding shares of Senior
Securities at the times such dividends are payable, unless otherwise provided in
the terms of such Senior Securities, no cash or stock dividend (except in shares
of Series B Preferred Stock) shall be declared by the Board of Directors or paid
or set apart for payment by the Corporation on shares of Series B Preferred
Stock unless prior to or concurrently with such declaration, payment or setting
apart for payment, all accrued and unpaid dividends on all outstanding shares of
such Senior Securities shall have been declared, paid or set apart for payment,
without interest.
4. Liquidation Preference.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of Series B Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its stockholders an amount in cash equal to the greater of (i) the Stated Value
and (ii) the Common Stock Liquidation Amount (as defined below) for each share
of Series B Preferred Stock outstanding plus all declared but unpaid dividends
thereon to the date fixed for liquidation, before any payment shall be made or
any assets distributed to the holders of any of the Junior Securities (the
"Liquidation Preference"); provided, however, that the holders of outstanding
shares of Series B Preferred Stock shall not be entitled to receive such
liquidation payment until the liquidation payments on all outstanding shares of
Senior Securities shall have been paid in full. If the assets of the Corporation
are not sufficient to pay in full the liquidation payments payable to the
holders of outstanding shares of Series B Preferred Stock, then the holders of
all such shares shall share ratably in such distribution of assets in accordance
with the full respective preferential amounts that would be payable on such
shares of Series B Preferred Stock if all amounts payable thereon were paid in
full.
(b) For the purposes of this Section 4, "Common Stock
Liquidation Amount" means the amount, if any, that each outstanding share of
Series B Preferred Stock would be entitled to receive following the payment by
the Corporation of any liquidation preferences with respect to the Senior
Securities, out of assets legally available for distribution as contemplated by
the relevant provisions of the DGCL and applicable law, assuming that the
holders of shares of Series B Preferred Stock were entitled to participate with
the holders of
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Common Stock in all other assets of the Corporation (with each share of Series B
Preferred Stock entitled to participate on the same basis as one hundred (100)
shares of Common Stock).
(c) For the purposes of this Section 4, (i) the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation (unless and until such sale, conveyance, exchange or transfer is
followed by the dissolution of the Corporation pursuant to the DGCL) or (ii) the
consolidation or merger of the Corporation with one or more other companies or
entities shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary.
5. Conversion by the Corporation.
(a) The Corporation may, at its option, on or after May
31, 2003, convert all, but not less than all, of the shares of Series B
Preferred Stock then outstanding, upon notice as set forth in Section 5(d)
hereof, into shares of Common Stock with each share of Series B Preferred Stock
being converted into one hundred (100) shares of fully paid non-assessable
shares of Common Stock in accordance with and subject to the terms of this
Section 5.
(b) Notice of any conversion shall be sent by or on
behalf of the Corporation not less than 30 days prior to the date specified for
such conversion in such notice (the "Conversion Date"), by first-class mail,
postage prepaid, to all holders of record of Series B Preferred Stock at their
last addresses as they shall appear on the books of the Corporation (the date
such notice is mailed by or on behalf of the Corporation is referred to herein
as the "Conversion Notice Date"); provided, however, that no failure to give
such notice or any defect therein or in the mailing thereof shall affect the
validity of the proceedings for the conversion of any shares of Series B
Preferred Stock except as to the holder to whom the Corporation has failed to
give notice or except as to the holder to whom such notice was defective. In
addition to any information required by law, such notice shall state: (i) the
place or places where certificates for such shares are to be surrendered; and
(ii) that dividends on the shares to be converted will cease to be declared as
of and after the Conversion Date.
(c) If notice has been mailed in accordance with Section
5(b) hereof and, provided that on or before the Conversion Date specified in
such notice, all shares of Common Stock necessary for such conversion shall have
been set aside by the Corporation for the pro rata benefit of the holders of the
Series B Preferred Stock so called for conversion, so as to be, and to continue
to be available therefor, then, from and after the Conversion Date, dividends on
the shares of Series B Preferred Stock so called for conversion shall cease to
be declared, and such shares shall no longer be deemed to be outstanding and
shall not have the status of shares of Series B Preferred Stock, and all rights
of the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation shares of Common Stock in connection with the
conversion) shall cease.
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(d) Upon surrender to the Corporation at the office of
the transfer agent or such other place or places, if any, as the Board of
Directors may determine and as specified in the Conversion Notice, of
certificates duly endorsed to the Corporation or in blank for shares of Series B
Preferred Stock called for conversion together with appropriate evidence of the
payment of any transfer or similar tax, if required, the Corporation shall issue
the number of shares of Common Stock issuable upon conversion thereof as of the
time of such surrender and as promptly as practicable thereafter will deliver or
cause to be delivered certificates for such shares of Common Stock to the record
holder of the shares so surrendered.
(e) No fractional shares of Common Stock shall be issued
pursuant to this Section 5 and the aggregate number of shares of Common Stock
issued to a holder of Series B Preferred Stock shall be rounded down to the
nearest whole number of shares.
(f) The Corporation shall pay all documentary, stamp, or
similar issue or transfer tax due upon conversion of Series B Preferred Stock.
6. Redemption at the Request of the Holder.
(a) Any holder of Series B Preferred Stock may, at its
option, on or after May 31, 2003, from time to time, cause the Corporation to
redeem all, but not less than all, of the Series B Preferred Stock held by such
holder on such date, upon notice as set forth in Section 6(c) hereof at the
redemption price set forth in Section 6(b) hereof.
(b) The Redemption Price of each share of the Series B
Preferred Stock shall be an amount in cash equal to one hundred (100) times the
Common Share Value (hereinafter defined) on the Redemption Date (as defined
herein) and, at the election of the Corporation, may be paid in cash or may be
satisfied in full by issuing to the holder one hundred (100) shares of Common
Stock for each share of Series B Preferred Stock that is subject to redemption.
The Corporation shall take all actions required or permitted under the DGCL to
permit such redemption of Series B Preferred Stock.
(c) Notice of any requested redemption pursuant to
Section 6(a) hereof shall be sent by or on behalf of the holder of shares of
Series B Preferred Stock by first-class mail, postage prepaid, to the
Corporation at its address set forth in Section 11 hereof (the date of such
mailing being referred to herein as the Redemption Date). Such notice shall
state: (i) that such redemption is being requested pursuant the redemption
provisions hereof; and (ii) the number of shares of Series B Preferred Stock to
be redeemed. Upon receipt by the Corporation of any such notice of requested
redemption, the Corporation shall become obligated to redeem as soon as
practicable thereafter all shares as to which redemption has been requested.
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(d) For purposes hereof, the following terms have the
following meanings:
(i) "Closing Price" on any Trading Day with
respect to the per share price of any shares of Common Stock means the
last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the American Stock Exchange
or, if shares of Common Stock are not listed or admitted to trading on
such exchange, on the principal national securities exchange on which
such shares are listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the NASDAQ
or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on NASDAQ, the average of the
closing bid and asked prices in the over-the-counter market as
furnished by any American Stock Exchange member firm that is selected
from time to time by the Corporation for that purpose.
(ii) "Common Share Value" means the average
of the Closing Price of the Common Stock for the five (5) consecutive
Trading Days immediately preceding the Redemption Date; provided,
however, that in the event that the Closing Price of Common Stock
cannot be determined pursuant to subsection d(i) hereof, the "Common
Share Value" shall mean the fair market value of a share of Common
Stock on the Redemption Date as agreed to by the Corporation, on the
one hand, and the holders of a majority of the shares of Series B
Preferred Stock that are subject to redemption (voting or consenting in
writing as a separate class), on the other hand; provided, further,
that if the Corporation and such holders are unable to so agree within
10 days after the Redemption Date, the fair market value of a share of
Common Stock shall be determined by an independent
nationally-recognized investment banking firm mutually acceptable to
the Corporation, on the one hand, and the holders of a majority of the
shares of Series B Preferred Stock that are subject to redemption
(voting or consenting in writing as a separate class), on the other
hand, or if the Corporation and such holders are unable to so agree
within 5 days, by an independent nationally-recognized investment
banking firm selected by the American Arbitration Association.
(iii) "Trading Day," with respect to a securities
exchange or automated quotation system, means a day on which such
exchange or system is open for a full day of trading.
7. Voting Rights. Except as otherwise provided herein or as
otherwise required by law, holders of the Series B Preferred Stock shall have no
voting rights; provided, however, that, notwithstanding the foregoing, the
holders of the Series B Preferred Stock, acting by vote of a majority of the
then outstanding Series B Preferred Stock, shall be entitled to approve, voting
together as a single class: (i) any amendment or modification, direct or
indirect, of the rights or
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preferences of the Common Stock or the Series B Preferred Stock, whether by
amendment of the Certificate of Incorporation, recapitalization, merger or
otherwise (including, without limitation, the authorization or the filing of any
certificate of designations with respect to any additional class or series of
capital stock of the Corporation) and (ii) any merger, amendment of the
Certificate of Incorporation, share exchange or other corporate action
(including, without limitation, any offer by the Corporation to repurchase
shares of Common Stock or any amendment to the Rights Agreement between the
Corporation and American Stock Transfer & Trust Corporation dated as of December
10, 1998 as amended or modified from time to time) involving the conversion or
exchange of Common Stock or the receipt of cash, securities (whether of the
Corporation or any other entity), options, warrants or rights to acquire
securities or other property by holders of Common Stock (except to the extent
such transaction is subject to the provisions of Section 8 hereof) unless the
holders of Series B Preferred Stock are entitled to participate in such
transaction on the same terms as the holders of Common Stock (with each share of
Series B Preferred Stock entitled to participate on the same basis as one
hundred (100) shares of Common Stock). Each share of Series B Preferred Stock
shall entitle the holder thereof to cast one vote on any matter submitted to a
vote of the holders of the Series B Preferred Stock in accordance with the
preceding sentence. Notwithstanding anything to the contrary contained herein,
any action required or permitted to be taken by the holders of Series B
Preferred Stock at any meeting of the holders of Series B Preferred Stock may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
100% of the issued and outstanding shares of Series B Preferred Stock.
8. Anti-Dilution Adjustments.
(a) In case the Corporation shall (i) pay or make a
dividend or other distribution on the outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or reclassify the
outstanding shares of Common Stock into a smaller number of shares, the number
of issued and outstanding shares of Series B Preferred Stock (the "Outstanding
Number") at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution or subject to such subdivision, combination or reclassification
(the "Record Date") shall be adjusted by multiplying such Outstanding Number by
a fraction of which the numerator shall be the sum of such number of shares of
Common Stock outstanding immediately after the event described in clauses (i),
(ii) or (iii) of this Section 8(a) and of which the denominator shall be the
number of shares of Common Stock outstanding at the close of business on the
Record Date, such adjustment to the Outstanding Number to become effective
immediately after the opening of business on the Record Date. No adjustment to
the Outstanding Number need be made for a change in the par value of the Common
Stock. Whenever the Outstanding Number is adjusted, the Stated Value of each
share of Series B Preferred Stock shall be adjusted proportionately such that
the aggregate Stated Value of all issued and outstanding shares of Series B
Preferred Stock shall not change as the result of the adjustment of the
Outstanding Number.
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(b) Whenever the Outstanding Number is adjusted, the
Corporation shall promptly mail to the holders of Series B Preferred Stock (i) a
notice of adjustment briefly stating the facts requiring the adjustment, the
manner of computing such adjustment and any adjustment to the Stated Value; and
(ii) a certificate or certificates representing the number of whole shares of
Series B Preferred Stock to which such holder is entitled pursuant to Section
8(a) hereof or, in the case of a reduction in the Outstanding Number, a new
certificate or certificates, in exchange for such holder's existing certificate
or certificates, representing the number of whole shares of Series B Preferred
Stock to which such holder is entitled following the adjustment provided for in
Section 8(a) hereof. No fractional shares of Series B Preferred Stock shall be
issued by the Corporation, so that the number of shares of Series B Preferred
Stock to be issued pursuant to this Section 8 to a holder of Series B Preferred
Stock shall be rounded down to the nearest whole number of shares and the
Corporation shall make a cash payment to a holder of shares of Series B
Preferred Stock who would otherwise have received a fractional share of Series B
Preferred Stock in an amount equal to the greater of (i) the portion of the
Stated Value represented by such fraction or (ii) the portion of the Common
Stock Liquidation Amount represented by such fraction determined as of the
Record Date of the action necessitating the adjustment; provided, however, that,
at the option of the Corporation, the number of shares of Series B Preferred
Stock to be issued to each holder of Series B Preferred Stock may be rounded up
to the nearest whole number in lieu of making a cash payment with respect to any
fractional amount.
(c) In case of any consolidation or merger of the
Corporation with any other entity, or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, or in the case of any share
exchange pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property, the Corporation shall make
appropriate provision or cause appropriate provision to be made so that the
holder of each share of Series B Preferred Stock then outstanding shall have the
right thereafter to receive, in lieu of Common Stock, in exchange for holder's
shares of Series B Preferred Stock, the kind and amount of shares of stock and
other securities and property receivable upon such consolidation, merger, sale,
transfer or share exchange by a holder of one hundred (100) shares of Common
Stock; provided, however, that if a purchase, tender or exchange offer shall
have been made to and accepted by the holders of more than 50% of the
outstanding shares of Common Stock, and if a holder of shares of Series B
Preferred Stock so designates in a notice given to the Corporation on or before
the date immediately preceding the date of the consummation of such transaction,
the holder of such Series B Preferred Stock shall be entitled to receive the
highest amount of securities, cash or other property to which a holder of a
number of shares of Common Stock equal to one hundred (100) times the number of
shares of Series B Preferred Stock held by such holder of Series B Preferred
Stock would actually have been entitled to receive upon the consummation of such
purchase, tender or exchange offer, subject to adjustments (from and after the
consummation of such purchase, tender or exchange offer) as nearly equivalent as
possible to the adjustments provided for in this Section 8. If in connection
with any such consolidation, merger, sale, transfer or share exchange, each
holder of shares of Common Stock is entitled to elect to receive either
securities, cash or other assets upon completion of such transaction, the
Corporation shall provide or cause to be provided to each holder of Series B
Preferred Stock the right to elect to receive the securities, cash or other
assets a holder of a number of shares of
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Common Stock equal to one hundred (100) times the number of shares of Series B
Preferred Stock held by such holder of Series B Preferred Stock would have been
entitled to elect to receive on the same terms and subject to the same
conditions applicable to holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on the period in which
such election shall be made and the effect of failing to exercise the election).
The Corporation shall not effect any such transaction unless the provisions of
this paragraph have been fulfilled. The above provisions shall similarly apply
to successive consolidations, mergers, sales, transfers or share exchanges.
(d) Anything herein to the contrary notwithstanding, no
adjustment will be made pursuant to Section 8 hereof by reason of the issuance
of Common Stock upon the conversion of Series A Preferred Stock or the
Corporation's Series A 9.75% Convertible Pay-in-Kind Debentures due 2007 or the
Corporation's Series C 9.75% Convertible Pay-in-Kind Debentures due 2007 or by
reason of the issuance of Series B Preferred Stock upon the conversion of the
Series B Debentures.
9. Shares to Be Retired. Any share of Series B Preferred Stock
redeemed, repurchased or otherwise acquired by the Corporation shall be retired
and cancelled and shall upon cancellation and the filing of an appropriate
certificate with the Delaware Secretary of State be restored to the status of
authorized but unissued shares of Preferred Stock, subject to reissuance by the
Board of Directors as Series B Preferred Stock or shares of preferred stock of
one or more other series.
10. Record Holders. The Corporation and the Corporation's transfer
agent may deem and treat the record holder of any shares of Series B Preferred
Stock as the true and lawful owner thereof for all purposes, and neither the
Corporation nor the Corporation's transfer agent shall be affected by any notice
to the contrary.
11. Notice. Except as may otherwise be provided for herein, all
notices referred to herein shall be in writing, and all notices hereunder shall
be deemed to have been given upon, the earlier of receipt of such notice or
three Business Days after the mailing of such notice if sent by registered mail
(unless first-class mail shall be specifically permitted for such notice under
the terms of this Certificate of Designations) with postage prepaid, addressed,
if to the Corporation, to its offices at 10000 Innovation Drive, Milwaukee,
Wisconsin 53005, (Attention: Chief Financial Officer) or to an agent of the
Corporation designated as permitted by the Certificate of Incorporation or, if
to any holder of Series B Preferred Stock, to such holder at the address of such
holder of Series B Preferred Stock as listed in the stock record books of the
Corporation (which may include the records of the Corporation's transfer agent);
or to such other address as the Corporation or holder, as the case may be, shall
have designated by notice similarly given.
12. Cross References/Definitions. All reference in this Part B to
any other Section are references to other Sections of this Part B and not to any
Section of Part A hereof and capitalized terms used in this Part B shall have
the meanings ascribed to them in this Part B.
[Signature page to follow.]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be executed and acknowledged by its duly authorized officer this
31st day of May, 2000.
ALTERRA HEALTHCARE CORPORATION
/s/ William F. Lasky
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William F. Lasky
President and Chief Executive Officer
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