EXHIBIT 99.5
CERTIFICATE OF DESIGNATIONS
OF
SERIES E SENIOR CUMULATIVE CONVERTIBLE PARTICIPATING
PREFERRED STOCK
OF
URS CORPORATION
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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THE UNDERSIGNED, being the President of URS Corporation, a Delaware
corporation (the "Corporation"), does hereby certify that pursuant to the
authority contained in Article Fourth of its Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), and in accordance with the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation has adopted the following
resolution, which resolution remains in full force and effect on the date
hereof:
RESOLVED, that there is hereby established a series of authorized
preferred stock, having a par value of $.01 per share, which series shall be
designated as "Series E Senior Cumulative Convertible Participating Preferred
Stock" (the "Permanent Preferred Stock"), consisting of one hundred thousand
(100,000) shares and having the following voting powers, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions thereof:
1. Certain Definitions.
Unless the context otherwise requires, the terms defined in this
paragraph 1 shall have, for all purposes of this resolution, the meanings herein
specified (with terms defined in the singular having comparable meanings when
used in the plural).
"Affiliate" means (i) with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with such Person, whether through the ownership of equity interests, by
contract or otherwise; and (ii) with respect to an individual, in addition to
any Person specified in clause (i), the spouse, any parent or any child of such
individual and any trust for the benefit of such individual's spouse, parent or
child.
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person"
shall be deemed to have beneficial ownership of all securities that such
"person" has the right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition. The terms "Beneficially Owns" and
"Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means the Board of Directors of the
Corporation.
"Bridge Preferred Stock" means the Series D Senior Convertible
Participating Preferred Stock, $.01 par value per share, of the Corporation.
"Bridge Preferred Stock Certificate of Designations" means the
Certificate of Designations of the Series D Senior Convertible Participating
Preferred Stock, $.01 par value per share, of the Corporation.
"Business Day" means a day other than a Saturday or Sunday or a day
on which commercial banks in the City of New York are authorized or obligated by
law or executive order to close.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or
other disposition (other than by way of merger, consolidation or
transfer of the Corporation's Voting Stock), in one or a series of
related transactions, of all or substantially all of the properties
or assets of the Corporation and its Subsidiaries, taken as a whole,
to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act) other than the Corporation or a wholly-owned
Subsidiary of the Corporation;
(2) the consummation of any transaction or series of related
transactions (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined
above), other than the holders of the Permanent Preferred Stock,
becomes the Beneficial Owner, directly or indirectly, of more than
thirty-five percent (35%) of the Voting Stock of the Corporation,
measured by voting power rather than number of shares, unless (a)
either TC Group, L.L.C. and its affiliates or Blum Strategic
Partners, L.P. and its affiliates holds more than the percentage
held by such person or group and neither TC Group, L.L.C. or any of
its affiliates nor Blum Strategic Partners, L.P. or any of its
affiliates is acting in concert with such person or group or (b) TC
Group, L.L.C. and Blum Strategic Partners, L.P. together hold more
than the percentage held by such person or group and have agreed to
act in concert on all matters pursuant to a written agreement;
(3) a "change of control" or other similar event shall occur
under any issue of Indebtedness with an aggregate principal amount
in excess of $50,000,000 of the Corporation or its Subsidiaries;
(4) during any period of twelve (12) consecutive months
after the Initial Bridge Preferred Issue Date, the individuals who
at the beginning of any
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such 12-month period constituted the Board of Directors (the
"Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided that (i) any individual becoming a
director whose election, or nomination for election by the
Corporation's stockholders, was approved by a vote of the
stockholders having the right to designate such director (including,
without limitation, the exercise by the holders of Permanent
Preferred Stock of their right to elect directors) and (ii) any
director whose election to the Board of Directors or whose
nomination for election by the stockholders of the Corporation was
approved by majority vote of the Board of Directors, shall, in each
such case, be considered as though such individual were a member of
the Incumbent Board, but excluding, as a member of the Incumbent
Board, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to
the election of the directors of the Corporation (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) and further excluding any person who is an affiliate or
associate (as those terms are defined in the General Rules and
Regulations under the Exchange Act) of any Person (other than Blum
Capital Partners, L.P. and its Affiliates) having or proposing to
acquire beneficial ownership of twenty-five percent (25%) or more of
the Voting Stock of the Corporation, measured by voting power and
not by number of shares; or
(5) the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case after which
the individuals and entities who were the respective Beneficial
Owners of the Voting Stock immediately prior to such reorganization,
merger or consolidation do not, following such reorganization,
merger or consolidation, Beneficially Own, directly or indirectly,
more than fifty percent (50%) of the Voting Stock, measured by
voting power rather than number of shares, of the corporation
surviving or resulting from such reorganization, merger or
consolidation;
provided that the occurrence of any event identified in clauses (1) through (5)
above that would otherwise be treated as a Change of Control shall not
constitute a Change of Control hereunder if (i) the Board of Directors, by vote
duly taken, and (ii) the holders of a majority of the outstanding shares of
Permanent Preferred Stock, by written consent shall so determine.
"Change of Control Offer" has the meaning set forth in paragraph 8
below.
"Change of Control Payment" has the meaning set forth in paragraph 8
below.
"Change of Control Payment Date" has the meaning set forth in
paragraph 8 below.
"Commission" means the United States Securities and Exchange
Commission.
"Common Equity" means all shares now or hereafter authorized of any
class of common stock of the Corporation, including the Common Stock, and any
other stock of the Corporation, howsoever designated, authorized after the
Initial Bridge Preferred Issue Date,
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which has the right (subject always to prior rights of any class or series of
preferred stock) to participate in the distribution of the assets and earnings
of the Corporation without limit as to per share amount.
"Common Stock" means the common stock, par value $0.01 per share, of
the Corporation.
"Conversion Date" has the meaning set forth in paragraph 5(b) below.
"Conversion Price" shall initially mean $22.1835, subject to
adjustment from time to time pursuant to the terms of paragraph 5 below.
"Corporation" has the meaning set forth in the recitals above.
"Current Market Price" means, for a share of Common Stock on any
date, the average of Quoted Prices for ten (10) consecutive Trading Days
commencing fifteen (15) Trading Days before the date in question.
"Default Event" means the occurrence of any of the following events:
(i) the failure of the Corporation to purchase any shares of Permanent Preferred
Stock that it is required to purchase pursuant to paragraph 8 hereof on the
Change of Control Payment Date; (ii) the material breach of the provisions of
paragraph 7 hereof; (iii) the failure of the Corporation to redeem, on the
Redemption Date, all shares of Permanent Preferred Stock pursuant to paragraph 6
hereof; or (iv) the failure of the Corporation to purchase any shares of
Permanent Preferred Stock required to be repurchased on any Repurchase Event
Payment Date pursuant to paragraph 9; provided, that any Default Event referred
to in clause (ii) shall be deemed to have been cured in the event that the
Corporation rescinds the transaction or other occurrence giving rise to such
Default Event such that the economic, legal and/or other effect of such
transaction on the holders of the Permanent Preferred Stock or on the rights of,
privileges and preferences of the Permanent Preferred Stock has been removed or
rescinded.
"Director" means a member of the Corporation's Board of Directors.
"Dividend Payment Date" has the meaning set forth in paragraph 3(b).
"Dividend Period" means (i) the period from and including the
Initial Bridge Preferred Issue Date to, but not including, the date that is
three months after the Initial Bridge Preferred Date and (ii) each quarterly
period thereafter from and including each date that is three months after the
end of the last Dividend Period.
"Dividend Rate" means 12.5% per annum of the Liquidation Preference
beginning as of the Initial Bridge Preferred Issue Date; provided, however,
that, until the Required Stockholder Approval is obtained, the Dividend Rate
shall increase thereafter by 2% per annum of the Liquidation Preference upon the
expiration of each subsequent 90-day period following the Initial Conversion
Date (up to a maximum Dividend Rate of 22.5% per annum, subject to the
penultimate proviso of this sentence); provided, however, that any such increase
shall be retroactive to the Initial Bridge Preferred Issue Date and shall be
given effect as if (and
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the aggregate amount of accrued dividends on any outstanding share of Permanent
Preferred Stock shall be calculated as if) the Dividend Rate from and after the
Initial Bridge Preferred Issue Date was such increased rate and the
then-outstanding shares of Permanent Preferred Stock had been issued and
outstanding on the Initial Bridge Preferred Issue Date; provided, further, that,
in the event that a Default Event shall have occurred and shall be continuing,
the applicable Dividend Rate then in effect shall increase by 2% of the
Liquidation Preference per annum for each full 90-day period during which such
Default Event is continuing until such Default Event shall have been cured;
provided, further, that the aggregate increase to the Dividend Rate as the
result of the occurrence of any Default Event shall not result in the Dividend
Rate exceeding by more than 10% per annum the applicable Dividend Rate that
would otherwise be in effect if such Default Event had not occurred.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Indebtedness" of any Person means (a) all liabilities and
obligations of such Person, contingent or otherwise (i) in respect of borrowed
money, (ii) evidenced by bonds, notes, debentures or similar instruments, (iii)
representing the balance deferred and unpaid of the purchase price of any
property or services, except those incurred in the ordinary course of business
that would constitute ordinarily a trade payable to trade creditors, (iv)
evidenced by bankers' acceptances, (v) for payment of money relating to leases
that are required to be capitalized for financial reporting purposes under
generally accepted accounting principles or (vi) evidenced by a letter of credit
or reimbursement obligation of such Person with respect to any letter of credit,
and (b) all liabilities and obligations of others of the kind described in the
preceding clause (a) that such Person has guaranteed or that is otherwise its
legal liability or which are secured by the assets or property of such Person.
"Initial Bridge Preferred Issue Date" means the date that shares of
Bridge Preferred Stock are first issued by the Corporation.
"Initial Conversion Date" means the date which is 180 calendar days
after the Initial Bridge Preferred Issue Date
"Initial Redemption Date" means the earlier of (i) August 31, 2007
and (ii) the date immediately following the date on which the Senior Debt (and
any Indebtedness incurred to refinance such Senior Debt) has been paid in full.
"Junior Stock" means, for purposes of paragraph 3 below, Common
Equity, any other class or series of capital stock of the Corporation (other
than the Bridge Preferred Stock) outstanding as of the Initial Bridge Preferred
Issue Date, and any class or series of capital stock of the Corporation which is
not entitled to receive any dividends in any Dividend Period unless all
dividends required to have been paid on the Permanent Preferred Stock and any
other Parity Stock shall have been paid, and, for purposes of paragraph 4 below,
Common Equity, any other class or series of capital stock of the Corporation
(other than Bridge Preferred Stock) outstanding as of the Initial Bridge
Preferred Issue Date, and any class or series of stock of the Corporation which
is not entitled to receive any assets upon liquidation, dissolution or winding
up of the affairs of the Corporation until the Permanent Preferred Stock and any
other Parity Stock shall
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have received the entire amount to which such stock is entitled upon such
liquidation, dissolution or winding up.
"Liquidation Event" means any voluntary or involuntary liquidation,
dissolution or other winding up of affairs of the Corporation (in connection
with the bankruptcy or insolvency of the Corporation or otherwise), and, with
respect to any shares of Permanent Preferred Stock the holder of which has so
elected in accordance with paragraph 4(f) below, any Optional Liquidation Event.
"Liquidation Preference" shall mean (i) $467.3343 per share of
Permanent Preferred Stock, plus (ii) the aggregate amount of all cumulative
accrued and unpaid dividends added to the Liquidation Preference of the
Permanent Preferred Stock pursuant to subparagraph 3(b) below, minus (iii) the
aggregate amount of all dividends paid on account of accrued and unpaid
dividends previously added to the Liquidation Preference of such share of
Permanent Preferred Stock.
"Optional Liquidation Event" has the meaning set forth in paragraph
4(f) below.
"Parity Stock" means, for purposes of paragraph 3 below, the Bridge
Preferred Stock and any other class or series of stock of the Corporation
authorized after the Initial Bridge Preferred Issue Date which is entitled to
receive payment of dividends on a parity with the Permanent Preferred Stock
without preference or priority of one over the other, and, for purposes of
paragraph 4 below, the Bridge Preferred Stock and any other class or series of
stock of the Corporation authorized after the Initial Bridge Preferred Issue
Date which is entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of the Corporation on a parity with the Permanent
Preferred Stock without preference or priority of one over the other.
"Permanent Preferred Stock" has the meaning set forth in paragraph 2
below.
"Person" means any individual, corporation, association,
partnership, joint venture, limited liability company, trust, estate or other
entity.
"Preferred Stock Director" has the meaning set forth in paragraph
7(d) below.
"Pre-existing Debt" has the meaning set forth in paragraph 7(b)
below.
"Quoted Price" means, with respect to Common Stock, (i) the last
reported sales price of the Common Stock on the New York Stock Exchange or (ii)
if not listed on the New York Stock Exchange, the last reported sales price of
the Common Stock on such other principal exchange on which the Common Stock is
listed or admitted for trading or (iii) if not listed or admitted for trading on
a securities exchange, the last reported sales price for Common Stock as
reported by the National Association of Securities Dealers, Inc. Automatic
Quotations Systems - National Market System, or (iv) if not so reported or
listed or admitted for trading, the last reported bid price of the applicable
security in the over-the-counter market. In the event that the Quoted Price
cannot be determined as aforesaid, the Board of Directors of the Corporation
shall determine the Quoted Price on the basis of such quotations as it in good
faith considers appropriate. Such determination may be challenged in good faith
by holders of a majority of the
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shares of Permanent Preferred Stock then outstanding, and any dispute shall be
resolved by the determination of an investment banking firm of recognized
national standing selected by the Corporation and acceptable to such holders of
a majority of the shares of Permanent Preferred Stock, which determination shall
be made in good faith at the cost of the party against whom such determination
is made, and shall be conclusive absent manifest error.
"Record Date" means the date designated by the Board of Directors at
the time a dividend is declared, provided, however that such Record Date shall
not be more than thirty (30) days nor less than ten (10) days prior to the
respective Dividend Payment Date.
"Redemption Date" with respect to any share of Permanent Preferred
Stock means the date on which such share of Permanent Preferred Stock is
required to be redeemed pursuant to paragraph 6 hereof.
"Redemption Demand" has the meaning set forth in paragraph 6(b)
below.
"Redemption Price" means a price per share equal to the Liquidation
Preference per share, plus an amount equal to all dividends accrued and unpaid
thereon from the beginning of the Dividend Period during which the Redemption
Date occurs to the Redemption Date.
"Repurchase Event" means the consummation of any transaction
involving (i) the issuance or sale of any capital stock, equity securities,
Convertible Securities or Rights or Options of the Corporation or any of its
Subsidiaries (other than the issuance of shares of capital stock upon the
exercise of currently outstanding Convertible Securities or Rights or Options
and the issuance of Rights or Options (or capital stock issuable upon the
exercise of such Rights or Options) issued to directors, officers, employees or
consultants of the Corporation or its Subsidiaries pursuant to a bona fide
employee stock ownership or stock option plan adopted by the Corporation's Board
of Directors or the Compensation/Option Committee or Non-Officer Option
Committee thereof); and (ii) any sale, transfer assignment, lease or other
disposition of any assets of the Corporation or any of its Subsidiaries other
than the sale of inventory in the ordinary course of business resulting in the
Corporation and/or its Subsidiaries receiving net cash proceeds in excess of
$20,000,000.
"Repurchase Event Proceeds" has the meaning set forth in paragraph 9
below.
"Repurchase Event Offer" has the meaning set forth in paragraph 9
below.
"Repurchase Event Payment" has the meaning set forth in paragraph 9
below.
"Repurchase Event Payment Date" has the meaning set forth in
paragraph 9 below.
"Required Stockholder Approval" means the affirmative vote of a
majority of shares of the Common Stock represented in person or by proxy at a
meeting of the stockholders of the Corporation in favor of approval of the
Stockholder Proposal (as defined in the Bridge Preferred Stock Certificate of
Designations), provided that the total vote cast on the Stockholder
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Proposal represents over 50% in interest of all securities entitled to vote on
the Stockholder Proposal.
"Senior Debt" means the obligations of the Corporation and its
Subsidiaries in respect of all Indebtedness incurred under the following
agreements, each as amended, amended and restated, extended, supplemental,
refinanced or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing or replacing or otherwise restructuring
all or any portion of the Indebtedness incurred under such agreement:
(1) Indenture, dated as of February 15, 1987, between the
Corporation and First Interstate Bank of California, as trustee;
(2) Indenture, dated effective as of March 16, 1989, between the
Corporation and MTrust Corp., National Association, as trustee;
(3) Indenture, dated as of June 23, 1999, among the Corporation,
the Subsidiary Guarantors (as defined therein) and Firstar Bank of Minnesota,
N.A., as trustee;
(4) Credit Agreement relating to the senior secured credit
facility, dated as of August 22, 2002, among the Corporation, various lenders,
and Credit Suisse First Boston and Wells Fargo Bank, National Association, as
co-lead arrangers, Credit Suisse First Boston, as administrative agent, various
documentation agents and Wells Fargo Bank, National Association, as syndication
agent; and
(5) Indenture relating to the issuance of senior notes, dated as
of August 22, 2002, among the Corporation, various subsidiary guarantors and US
Bank, N.A., as trustee.
"Significant Subsidiary" means any Subsidiary of the Corporation
that would be a "significant subsidiary" as defined in Regulation S-X
promulgated by the Securities and Exchange Commission.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Voting
Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(2) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any
combination thereof).
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"Trading Day" means, with respect to any security, any day on which
any market in which the applicable security is then traded and in which a quoted
price may be ascertained is open for business.
"Voting Stock" as of any date, and with respect to any corporation,
means the capital stock of that corporation that is at the time entitled to vote
in the election of the board of directors of that Corporation.
2. Number of Shares and Designations. One hundred thousand (100,000)
shares of the preferred stock, $.01 par value per share, of the Corporation are
hereby constituted as a series of the preferred stock designated as Series E
Senior Cumulative Convertible Participating Preferred Stock (the "Permanent
Preferred Stock").
3. Dividends.
(a) The record holders of Permanent Preferred Stock as of
the applicable Record Date shall be entitled to receive cumulative per share
dividends, when and as declared by the Board of Directors of the Corporation,
out of funds legally available for payment of dividends. Such dividends shall be
payable by the Corporation in cash in accordance with paragraph 3(b).
(b) Dividends on shares of Permanent Preferred Stock shall
be cumulative and shall accrue beginning on the Initial Bridge Preferred Issue
Date, regardless of when any such share of Permanent Preferred Stock was issued,
at the Dividend Rate. All or any portion of the accrued but unpaid dividends
shall be payable in arrears when and as declared by the Board of Directors of
the Corporation (each date as so declared a "Dividend Payment Date"). If any
Dividend Payment Date occurs on a day that is not a Business Day, any accrued
dividends otherwise payable on such Dividend Payment Date shall be payable on
the next succeeding Business Day. To the extent declared by the Board of
Directors of the Corporation, dividends shall be payable to the holders of
record of the Permanent Preferred Stock as their names shall appear on the share
register of the Corporation on the Record Date for such dividend. Dividends on
account of arrears for any past Dividend Periods may be declared and paid at any
time to holders of record on the Record Date therefor. For any Dividend Period
in which accrued dividends are not paid in full on or prior to the end of such
Dividend Period, such accrued and unpaid dividends shall be added to the
Liquidation Preference of the Permanent Preferred Stock effective at the
commencement of the Dividend Period succeeding the Dividend Period as to which
such dividends were not paid and shall thereafter accrue additional dividends in
respect thereof at the Dividend Rate until such accrued and unpaid dividends
have been paid in full. Dividends payable on the Permanent Preferred Stock will
be computed on the basis of a 360-day year consisting of twelve 30-day months
and will be deemed to accrue and accumulate on a daily basis.
(c) So long as any shares of Permanent Preferred Stock shall
be outstanding, the Corporation shall not declare, pay or set apart for payment
on any Parity Stock any dividends whatsoever (other than dividends payable
solely in shares of Parity Stock or Junior Stock), whether in cash, property or
otherwise, nor shall the Corporation make any distribution on any Parity Stock,
nor shall any Parity Stock be purchased, redeemed or otherwise acquired by the
Corporation or any of its Subsidiaries, nor shall any monies be paid or made
available for a sinking
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fund for the purchase or redemption of any Parity Stock, unless any dividends
declared upon any other class or series of Parity Stock shall be declared, and
any monies paid or made available for a sinking fund for the purchase or
redemption of any class or series of Parity Stock is paid or made available,
ratably in proportion to the respective amounts of dividends accumulated and
unpaid on the Permanent Preferred Stock and accumulated and unpaid on such
Parity Stock.
(d) So long as any shares of Permanent Preferred Stock shall
be outstanding, the Corporation shall not declare, pay or set apart for payment
on any Junior Stock any dividends whatsoever (other than dividends payable
solely in shares of Junior Stock), whether in cash, property or otherwise, nor
shall the Corporation make any distribution on any Junior Stock, nor shall any
Junior Stock be purchased, redeemed or otherwise acquired by the Corporation or
any of its Subsidiaries (except for acquisitions of Common Stock by the Company
pursuant to agreements in effect on the date the Permanent Preferred Stock is
initially issued or subsequently approved by the Board of Directors which permit
the Company to repurchase such shares upon termination of services to the
Company or any Subsidiary), nor shall any monies be paid or made available for a
sinking fund for the purchase or redemption of any Junior Stock, unless all
accrued but unpaid dividends to which the holders of Permanent Preferred Stock
are entitled shall have been paid.
(e) In the event that the Corporation declares and/or pays
any dividend or other distribution on the Common Stock (other than a dividend
payable solely in shares of Common Stock), the Corporation shall, at the time of
such declaration and payment, declare and pay a dividend or other distribution
on the Permanent Preferred Stock consisting of the dividend or distribution that
would have been payable on the shares of Common Stock issuable upon conversion
of the Permanent Preferred Stock (assuming the occurrence of the Required
Stockholder Approval) if the Permanent Preferred Stock had been converted into
Common Stock immediately prior to the record date for such dividend or
distribution, or, if no such record was taken, the date as of which the record
holders of Common Stock entitled to such dividend or distribution were
determined. Any such dividend or distribution declared, or required to be
declared or to be paid, on the Permanent Preferred Stock shall be deemed accrued
on the Permanent Preferred Stock for all purposes of this Certificate of
Designations and shall remain an accrued dividend on the Permanent Preferred
Stock for all purposes of this Certificate of Designations until paid.
(f) Dividends on the Permanent Preferred Stock shall accrue
and accumulate daily and compound quarterly whether or not the Corporation has
earnings or profits, whether or not there are funds legally available for the
payment of such dividends and whether or not dividends are declared or paid.
(g) In the event that the amount of any dividends on the
shares of Permanent Preferred Stock declared and actually paid or made available
for payment to the holders of such shares with respect to any Dividend Period is
less than the full amount of the dividend which accrued on such shares during
such Dividend Period, then the entire amount paid or made available for payment
by the Corporation shall be distributed ratably among all such holders of
Permanent Preferred Stock in proportion to the full amount to which they would
otherwise respectively be entitled.
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4. Distributions Upon Liquidation, Dissolution or Winding Up.
(a) In the event of any Liquidation Event, (i) Permanent
Preferred Stock shall rank prior to all other classes and series of the
Corporation's capital stock authorized or outstanding on the Initial Bridge
Preferred Issue Date and (ii) before any payment or distribution of the assets
of the Corporation (whether capital or surplus), or any other consideration in
connection with such Liquidation Event, shall be made to or set apart for the
holders of Junior Stock, the holders of Permanent Preferred Stock shall be
entitled to be paid out of the assets of the Corporation in cash or property at
its fair market value as reasonably determined in good faith by the Board of
Directors of the Corporation an amount per share equal to the Liquidation
Preference plus an amount equal to all dividends accrued and unpaid thereon from
the beginning of the Dividend Period during which the Liquidation Event occurs
to the date of such Liquidation Event.
(b) If, upon any such Liquidation Event, the assets of the
Corporation shall be insufficient to permit the payment in full of the
Liquidation Preference per share, plus an amount equal to all dividends accrued
and unpaid thereon from the beginning of the Dividend Period during which the
Liquidation Event occurs to the date of such Liquidation Event, as provided in
paragraph 4(a) above, and the full liquidating payments on all Parity Stock,
then the assets of the Corporation or the proceeds thereof shall be ratably
distributed among the holders of Permanent Preferred Stock and of any Parity
Stock in proportion to the full amounts to which they would otherwise be
entitled if all amounts payable thereon were paid in full.
(c) After the payment of the full Liquidation Preference of
the Permanent Preferred Stock as set forth in paragraph 4(a) above, the holders
of the Common Stock shall be entitled to be paid out of the assets of the
Corporation an amount per share of Common Stock equal to (i) the Liquidation
Preference paid on behalf of a share of Permanent Preferred Stock pursuant to
paragraph 4(a) divided by (ii) the number of shares of Common Stock issuable
upon conversion of a share of Permanent Preferred Stock. If, upon any such
Liquidation Event, the assets of the Corporation shall be insufficient to make
payment in full to all holders of Common Stock of the amount set forth in this
paragraph 4(c), then such assets shall be distributed among the holders of
Common Stock at the time outstanding, ratably in proportion to the full amounts
to which they would otherwise be respectively entitled.
(d) In the event of any Liquidation Event, upon completion
of the distributions and payments required by paragraphs 4(a) and (c) and any
other distributions and payments that may be required with respect to any other
series of preferred stock that may be authorized after the Initial Bridge
Preferred Issue Date, the remaining assets of the Corporation shall be
distributed among the holders of the then outstanding shares of Common Stock and
Permanent Preferred Stock, pro rata based on the number of shares of Common
Stock held by each such holder. For the purpose of determining the number of
shares of Common Stock held by each holder of Permanent Preferred Stock, such
holders shall be deemed to hold the number of shares of Common Stock then
issuable (assuming the occurrence of the Required Stockholder Approval) upon
conversion in full of all shares of Permanent Preferred Stock held by such
holder).
(e) Written notice of any Liquidation Event, stating the
payment date or dates when and the place where the amounts distributable in such
circumstances shall be payable,
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shall be given by first class mail, postage prepaid, not less than 30 days prior
to any payment date stated therein, to the holders of record of the shares of
Permanent Preferred Stock at their address as the same shall appear in the
records of the Corporation.
(f) Notwithstanding anything to the contrary in this
Certificate of Designations, each holder of Permanent Preferred Stock will be
entitled, in its sole discretion, to elect to treat as a Liquidation Event any
of the following transactions: any sale or disposition of the Corporation to a
third party not an Affiliate of the Corporation, whether by merger,
consolidation, sale of all or substantially all of the Corporation's assets or
sale of capital stock, provided that the stockholders of the Corporation
immediately prior to such sale or disposition (other than the non-Affiliate
third party) do not after such sale or disposition hold at least 50% of the
Common Stock of the Corporation (or the successor or transferee entity, as the
case may be) (any such transaction, an "Optional Liquidation Event"). Notice
shall be sent by or on behalf of the Corporation not more than sixty (60) days
nor less than thirty (30) days prior to any Optional Liquidation Event, by first
class mail, postage prepaid, to all holders of record of the Permanent Preferred
Stock at their respective last addresses as they shall appear on the books of
the Corporation (i) describing in reasonable detail the contemplated Optional
Liquidation Event, including without limitation the consideration to be paid
such Optional Liquidation Event to the Corporation and/or its stockholders, (ii)
stating that such holder is entitled to treat the Optional Liquidation Event as
a Liquidation Event, (iii) stating the expected date of the Optional Liquidation
Event, (iv) stating the amount that would be payable on each share of Permanent
Preferred Stock in a Liquidation Event on such date, and (v) stating the
location in the United States where the holder must send notice of its decision
to elect to treat the Optional Liquidation Event as a Liquidation Event. In
order for the Optional Liquidation Event to be treated as a Liquidation Event
with respect to the Permanent Preferred Stock held by any holder, such holder
must, prior to such Optional Liquidation Event, notify the Corporation at the
location indicated in the Corporation's notice that such holder elects to have
the Corporation treat the Optional Liquidation Event as a Liquidation Event with
respect to its shares of Permanent Preferred Stock and the number of shares such
holder wishes to have so treated. If any holder delivers to the Corporation such
notice of such holder's election to have the Optional Liquidation Event treated
as a Liquidation Event, such Optional Liquidation Event will be treated as a
Liquidation Event with respect to all shares of Permanent Preferred Stock with
respect to which such election was made, and, notwithstanding anything to the
contrary in this Certificate of Designations, the Corporation will make
distributions on such shares of Permanent Preferred Stock in accordance with
paragraphs 4(a) and, if applicable, 4(b) above.
5. Conversion Rights.
(a) If the Required Stockholder Approval is obtained on or
prior to the date that is 270 days after the Initial Bridge Preferred Issue
Date, then each share of Permanent Preferred Stock shall automatically be
converted, without any further action on the part of the Corporation or any
holder of Permanent Preferred Stock, into a number of shares of Common Stock
equal to (x) the Liquidation Preference plus an amount equal to all dividends
accrued and unpaid thereon from the beginning of the Dividend Period during
which the Conversion Date occurs to the Conversion Date divided by (y) the
Conversion Price. Immediately following such conversion, the rights of the
holders of converted Permanent Preferred Stock shall cease and the persons
entitled to receive the
12
Common Stock upon the conversion of Permanent Preferred Stock shall be treated
for all purposes as having become the owners of such Common Stock.
(b) If the Required Stockholder Approval is not obtained on
or prior to the date that is 270 days after the Initial Bridge Preferred Issue
Date, the Permanent Preferred Stock will not automatically convert into shares
of Common Stock upon receipt of the Required Stockholder Approval and any of the
following may occur at any time after the date on which the Required Stockholder
Approval has been obtained and prior to the close of business on the Business
Day preceding the Redemption Date:
(i) each share of Permanent Preferred Stock shall be
convertible at the option of the holder into a number of shares of Common
Stock equal to (x) the Liquidation Preference plus an amount equal to all
dividends accrued and unpaid thereon from the beginning of the Dividend
Period during which the Conversion Date occurs to the Conversion Date
divided by (y) the Conversion Price; or
(ii) at the election of the holders of at least a
majority of the shares of Permanent Preferred Stock then outstanding, each
share of Permanent Preferred Stock shall be converted into a number of
shares of Common Stock equal to (x) the Liquidation Preference plus an
amount equal to all dividends accrued and unpaid thereon from the
beginning of the Dividend Period during which the Conversion Date occurs
to the Conversion Date divided by (y) the Conversion Price;
provided, however, that if the Corporation shall default in payment of the
Redemption Price, the rights of conversion set forth in paragraphs 5(b)(i) and
(ii) above shall be reinstated.
(c) If the Permanent Preferred Stock is converted pursuant
to paragraph 5(a), 5(b)(i) or 5(b)(ii), such conversion shall be effective for
all purposes on the date that the Required Stockholder Approval has been
obtained, the date that a holder elects to convert his or her shares of
Permanent Preferred Stock into shares of Common Stock or the date that the
holders of at least a majority of the shares of Permanent Preferred Stock elect
such conversion, respectively (the "Conversion Date"). Following the Conversion
Date, the holder of certificates formerly evidencing shares of Permanent
Preferred Stock shall (i) surrender the certificate or certificates evidencing
the shares of Permanent Preferred Stock to be converted, duly endorsed at the
principal office of the Corporation or transfer agent for the Permanent
Preferred Stock, if any, (ii) notify the Corporation in writing of the name or
names in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued and (iii) pay any transfer or similar tax if required
(provided, however, that no such payment shall be required if the Common Stock
issuable upon conversion is to be issued in the name of the converting holder of
Permanent Preferred Stock). In the case of lost or destroyed certificates
formerly evidencing ownership of shares of Permanent Preferred Stock to be
surrendered, the holder shall submit such proof of loss or destruction. The date
on which the holder satisfies the foregoing requirements is referred to as the
"Delivery Date." As soon as practicable after the Delivery Date, the Corporation
shall deliver or shall deliver through its transfer agent a certificate for the
number of full shares of Common Stock issuable upon such conversion and a check
for any fractional share. Notwithstanding the foregoing, regardless of whether a
holder shall have surrendered such holder's certificates evidencing shares of
Permanent
13
Preferred Stock and/or received in respect thereof certificates evidencing
shares of Common Stock, such holder shall from and after the Conversion Date be
treated for all purposes as a record holder of the number of shares of Common
Stock, into which such holder's shares of Permanent Preferred Stock shall have
been converted until such time as record ownership is transferred and the
certificate held by such holder formerly representing ownership of shares of
Permanent Preferred Stock shall, until surrendered in exchange for new
certificates evidencing shares of Common Stock as contemplated above, be deemed
for all purposes to evidence the shares of Common Stock issuable upon conversion
of the shares of Permanent Preferred Stock formerly held by such holder. All
shares of Common Stock issuable upon conversion of the Permanent Preferred Stock
shall be fully paid and nonassessable. Holders of Common Stock issued upon
conversion pursuant to paragraph 5(a) or 5(b) and this paragraph 5(c) shall not
be entitled to receive any dividend payable to holders of Common Stock as of any
record time before the close of business on the applicable Conversion Date.
(d) The Corporation shall not issue a fractional share of
Common Stock upon conversion of Permanent Preferred Stock. Instead, the
Corporation shall deliver a check for an amount equal to the value of the
fractional share. The value of a fraction of a share is determined by
multiplying the Current Market Price of the Common Stock as of the Conversion
Date by the fraction, rounded to the nearest cent. If a holder of Permanent
Preferred Stock converts more than one share at a time the number of full shares
of Common Stock issuable upon conversion shall be based on the total number of
all shares of Permanent Preferred Stock converted.
(e) A holder delivering Permanent Preferred Stock for
conversion will not be required to pay any taxes or duties in respect of the
issue or delivery of Common Stock on conversion but will be required to pay any
tax or duty that may be payable in respect of any transfer involved in the issue
or delivery of the shares of Common Stock. Certificates representing shares of
Common Stock will not be issued or delivered unless all taxes and duties, if
any, payable by the holder have been paid.
(f) The Corporation has reserved and shall continue to
reserve out of its authorized but unissued Common Stock or its Common Stock held
in treasury enough shares of Common Stock to permit the conversion of the
Permanent Preferred Stock in full. All shares of Common Stock issued upon
conversion of Permanent Preferred Stock shall be fully paid and nonassessable.
The Corporation shall comply with all securities laws regulating the offer and
delivery of shares of Common Stock upon conversion of Permanent Preferred Stock
and will list the shares of Common Stock on each national securities exchange on
which the Common Stock is listed.
(g) If the Corporation after the Initial Bridge Preferred
Issue Date:
14
(i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines its outstanding shares of Common Stock
into a smaller number of shares; or
(iv) issues by reclassification of its Common Stock any
shares of its capital stock;
then the Conversion Price (as in effect immediately prior to such action) shall
proportionately be adjusted so that the holder of Permanent Preferred Stock
thereafter converted into Common Stock may receive for the same aggregate
Conversion Price the aggregate number and kind of shares of capital stock of the
Corporation that such holder would have owned immediately following such action
if such holder had converted Permanent Preferred Stock immediately prior to such
action (assuming the occurrence of the Required Stockholder Approval). The
adjustment shall become effective immediately after the record date, in the case
of a dividend or distribution, and immediately after the effective date of a
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur. If, after an
adjustment referred to in clauses (i) through (iv) above, a holder of Permanent
Preferred Stock upon conversion of it may receive shares of two or more classes
of capital stock of the Corporation, the Corporation shall determine (subject to
paragraph 5(n)) the allocation of the Conversion Price between the classes of
capital stock. After such allocation, the conversion rights and the Conversion
Price with respect to each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
paragraph 5(f).
(h) If at any time or from time to time after the Initial
Bridge Preferred Issue Date, the Corporation issues or sells, or is deemed by
the provisions of this paragraph 5(g) to have issued or sold, Additional Shares
of Common Stock, otherwise than in connection with a transaction described in
paragraph 5(f), for an Effective Price (as hereinafter defined) that is less
than the Conversion Price in effect immediately prior to such issue or sale,
then, and in each such case, the Conversion Price shall be reduced, as of the
close of business on the date of such issue or sale, to a price determined by
multiplying the Conversion Price by a fraction (i) the numerator of which shall
be (A) the number of shares of Common Stock deemed outstanding (as defined
below) immediately prior to such issue or sale, plus (B) the number of shares of
Common Stock which the Aggregate Consideration Received (as defined in below) by
the Company for the total number of Additional Shares of Common Stock so issued
would purchase at such applicable Conversion Price, and (ii) the denominator of
which shall be the number of shares of Common Stock deemed outstanding (as
defined below) immediately prior to such issue or sale plus the total number of
Additional Shares of Common Stock so issued. For the purposes of the preceding
sentence, the number of shares of Common Stock deemed to be outstanding as of a
given date shall be the sum of (A) the number of shares of Common Stock actually
outstanding, (B) the number of shares of Common Stock into which the
then-outstanding shares of Bridge Preferred and Permanent Preferred could be
converted if fully converted on the day immediately preceding the given date,
and (C) the
15
number of shares of Common Stock which could be obtained through the exercise or
conversion of all other rights, options and convertible securities outstanding
on the day immediately preceding the given date. No adjustment shall be made to
the Conversion Price in an amount less than one cent per share. Any adjustment
otherwise required by this paragraph 5(h) that is not required to be made due to
the preceding sentence shall be included in any subsequent adjustment to the
Conversion Price.
For the purpose of making any adjustment required under this
paragraph 5(h):
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Corporation, other than (i) shares of Common Stock and
shares of Permanent Preferred Stock issued or issuable upon conversion of Bridge
Preferred Stock, (ii) shares of Common Stock issuable upon conversion of
Convertible Securities outstanding as of the Initial Bridge Preferred Issue Date
or upon exercise of Rights or Options outstanding on the Initial Bridge
Preferred Issue Date, and (iii) shares of Common Stock and/or Rights or Options
(and the Common Stock issued pursuant to such Rights or Options) issued after
the Initial Bridge Preferred Issue Date to employees, officers or directors of,
or consultants or advisors to, the Company or any Subsidiary pursuant to any
stock purchase or stock option plans or other compensatory arrangements that are
approved by the Board of Directors; (iv) shares of Common Stock and/or Rights or
Options (and the Common Stock issued pursuant to such Rights or Options) issued
for consideration other than cash pursuant to a merger, consolidation,
acquisition or similar business combination approved by the Board of Directors;
and (v) shares of Common Stock issued pursuant to any equipment leasing
arrangement, or debt financing from a bank or similar financial institution
approved by the Board of Directors.
The "Aggregate Consideration Received" by the Corporation for any
issue or sale (or deemed issue or sale) of securities shall (A) to the extent it
consists of cash, be computed at the amount of cash received by the Corporation
in connection with such issuance or sale; (B) to the extent it consists of
property other than cash, be computed at the fair value of that property; (C) if
Additional Shares of Common Stock, Convertible Securities or Rights or Options
to purchase either Additional Shares of Common Stock or Convertible Securities
are issued or sold together with other stock or securities or other assets of
the Corporation for a consideration which covers both, be computed as the
portion of the consideration so received that may be reasonably determined in
good faith by the Board of Directors to be allocable to such Additional Shares
of Common Stock, Convertible Securities or Rights or Options, as applicable; and
(D) if Additional Shares of Common Stock are issued or sold in a public offering
or private placement, the consideration shall be deemed to be the amount of cash
paid therefor after deducting therefrom any discounts, commissions or placement
fees payable by the Corporation to any underwriter or placement agent in
connection with the issuance and sale thereof.
"Convertible Securities" shall mean stock or other securities
convertible into or exchangeable for shares of Common Stock;
The "Effective Price" of Additional Shares of Common Stock shall
mean the quotient determined by dividing (i) the Aggregate Consideration
Received, or deemed to have been received, by the Corporation under this
paragraph 5(h), for the issue of such Additional
16
Shares of Common Stock by (ii) the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold, by the Corporation
under this paragraph 5(h); and
"Rights or Options" shall mean warrants, options or other rights to
purchase or acquire shares of Common Stock or Convertible Securities.
For the purpose of making any adjustment to the Conversion Price
required under this paragraph 5(h), if after the Initial Bridge Preferred Issue
Date the Corporation issues or sells any Rights or Options or Convertible
Securities and if the Effective Price of the shares of Common Stock issuable
upon exercise of such Rights or Options and/or the conversion or exchange of
Convertible Securities (computed without reference to any additional or similar
protective or antidilution clauses) is less than the Conversion Price, then the
Corporation shall be deemed to have issued, at the time of the issuance of such
Rights, Options or Convertible Securities, that number of Additional Shares of
Common Stock that is equal to the maximum number of shares of Common Stock
issuable upon exercise or conversion of such Rights, Options or Convertible
Securities upon their issuance and to have received, as the Aggregate
Consideration Received for the issuance of such shares, an amount equal to the
total amount of the consideration, if any, received by the Corporation for the
issuance of such Rights or Options or Convertible Securities, plus, in the case
of such Rights or Options, the minimum amounts of consideration, if any, payable
to the Corporation upon the exercise in full of such Rights or Options, plus, in
the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Corporation (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) upon the conversion or
exchange thereof; provided that (i) if the minimum amounts of such consideration
cannot be ascertained, but are a function of antidilution or similar protective
clauses, then the Corporation shall be deemed to have received the minimum
amounts of consideration without reference to such clauses, and (ii) if the
minimum amount of consideration payable to the Corporation upon the exercise of
Rights or Options or the conversion or exchange of Convertible Securities is
reduced over time or upon the occurrence or non-occurrence of specified events
other than by reason of antidilution or similar protective adjustments, then the
Effective Price shall be recalculated using the figure to which such minimum
amount of consideration is reduced. On any change ("Pricing Change") in the
number of shares of Common Stock deliverable upon exercise of any Rights or
Options or the conversion or exchange of any Convertible Securities or any
change in the consideration to be received by the Corporation upon such
exercise, conversion or exchange, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion Price as then
in effect shall forthwith be readjusted to such Conversion Price as would have
been obtained had the unexercised portion of such Rights or Options or
Convertible Securities been originally issued with the exercise or conversion
price in effect following such Pricing Change. On the expiration or cancellation
of any Rights or Options that are unexercised, or the termination of the right
to convert or exchange any such Convertible Securities, if the Conversion Price
shall have been adjusted upon the issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have been obtained had
an adjustment been made upon the issuance of such Rights or Options or such
Convertible Securities on the basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise of such Rights or Options or
upon the conversion or exchange of such Convertible Securities. No further
adjustment of the Conversion Price shall be made as a result of the actual
issuance of shares of Common Stock on
17
the exercise of any such Rights or Options or the conversion or exchange of any
such Convertible Securities.
(i) In case of any consolidation, amalgamation, arrangement
or merger of the Corporation with or into another Person or any merger of
another Person with or into the Corporation (other than a transaction to which
paragraph 5(g) applies), or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, subject to paragraph 4(e)
above, each share of Permanent Preferred Stock then outstanding shall, without
the consent of the holder of any Permanent Preferred Stock, become convertible
only into the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock (and other securities, if applicable) into which such
Permanent Preferred Stock was convertible immediately prior thereto (assuming
such holder of Common Stock (and other securities, if applicable) failed to
exercise any rights of election and that the Required Stockholder Approval was
obtained). Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than the Corporation, or the person to which such sale or conveyance shall have
been made, shall enter into a supplemental agreement so providing and further
providing for adjustments which shall be as equivalent as may be practicable to
the adjustments provided for in this paragraph.
(j) For purposes of any computation respecting consideration
received pursuant to a transaction described or contemplated by this paragraph
5, whenever this Certificate of Designations calls for the determination of
"fair market value," such fair market value shall be determined in good faith by
the Board of Directors as evidenced by a written resolution thereof, subject to
the provisions of paragraph 5(o) below.
(k) The Corporation shall take no action that would cause
any adjustment under this paragraph 5 that would reduce the Conversion Price
below the par value of the Common Stock.
(l) Whenever the Conversion Price is adjusted, the
Corporation shall promptly mail to holders of Permanent Preferred Stock, first
class, postage prepaid, a notice of the adjustment and a certificate from the
Corporation's independent public accountants briefly stating the facts requiring
the adjustment and the manner of computing it. Subject to paragraph 5(n) below,
the certificate shall be conclusive evidence that the adjustment is correct.
(m) The Corporation from time to time may, by a vote of
two-thirds of the Board of Directors reduce the Conversion Price by any amount
for any period of time if the period is at least twenty (20) Business Days and
if the reduction is irrevocable during the period, but in no event may the
Conversion Price be less than the par value of a share of Common Stock. Whenever
the Conversion Price is so reduced, the Corporation shall mail to holders of
Permanent Preferred Stock a notice of the reduction. The Corporation shall mail
the notice first class, postage prepaid, at least 20 days before the date the
reduction in the Conversion Price is to take effect. The notice shall state the
reduced Conversion Price and the period it will be in effect. A reduction of the
Conversion Price pursuant to this paragraph 5(m) does not change or adjust the
Conversion Price otherwise in effect for purposes of paragraph 5(g) above.
18
(n) If:
(i) the Corporation takes any action that would
require an adjustment in the Conversion Price pursuant to clause (iv) of
paragraph 5(g) above;
(ii) the Corporation consolidates or merges with, or
transfers all or substantially all of its assets to, another corporation,
and stockholders of the Corporation must approve the transaction; or
(iii) there is a dissolution or liquidation of the
Corporation;
a holder of Permanent Preferred Stock may want to convert such stock into shares
of Common Stock prior to the record date for or the effective date of such
transaction. Therefore, the Corporation shall mail to such holders a notice,
first class, postage prepaid, stating the proposed record or effective date, as
the case may be. The Corporation shall mail such notice at least ten (10)
business days before such date.
(o) Except as otherwise provided in this paragraph, any
determination that the Corporation or its Board of Directors must make pursuant
to this paragraph 5 shall be conclusive. Whenever the Corporation or its Board
of Directors shall be required to make a determination under this paragraph 5,
such determination shall be made in good faith and may be challenged in good
faith by the holders of a majority of the shares of Permanent Preferred Stock
then outstanding (with any shares held by the Corporation or any of its
Affiliates not being considered to be outstanding for purposes of this
Certificate of Designations), and any dispute shall be resolved, at the
non-prevailing party's expense, by an investment banking firm of recognized
national standing selected by the Corporation and reasonably acceptable to such
holders of a majority of the shares of Permanent Preferred Stock.
(p) All shares of Permanent Preferred Stock converted
pursuant to this paragraph 5 shall be retired and shall be restored to the
status of authorized and unissued shares of preferred stock, without designation
as to series and may thereafter be reissued as shares of any series of preferred
stock other than Permanent Preferred Stock.
(q) The Corporation shall not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Permanent Preferred
Stock against impairment.
6. Redemption by the Corporation.
(a) The Corporation shall (subject to the legal availability
of funds therefore) be required to redeem, at the option of the holders of the
Permanent Preferred Stock (exercised as provided in subparagraph 6(b)) all
outstanding shares of the Permanent Preferred Stock requested to be redeemed by
such holders (as provided in subparagraph 6(b)), at the Redemption Price, on or
at any time following the Initial Redemption Date; provided, however, that the
Corporation shall not be required to redeem shares of Permanent Preferred Stock
pursuant to this
19
Section 6(a) prior to August 31, 2010 to the extent such redemption is not
permitted by the terms of the Senior Debt.
(b) Notice shall be sent by or on behalf of the Corporation
not more than sixty (60) days nor less than thirty (30) days prior to the
Initial Redemption Date, by first class mail, postage prepaid, to all holders of
record of the Permanent Preferred Stock at their respective last addresses as
they shall appear on the books of the Corporation notifying each such holder
that all shares of Permanent Preferred Stock are eligible for redemption by the
Corporation; provided, however, that no failure to give such notice or any
defect therein or in the mailing thereof shall (i) relieve the Corporation from
its obligation to redeem the Permanent Preferred Stock pursuant to this
paragraph 6 or (ii) affect the validity of the proceedings for the redemption of
any shares of Permanent Preferred Stock; provided that the Corporation shall be
obligated in accordance with this paragraph 6 to redeem shares of Permanent
Preferred Stock held by any holder to whom the Corporation has failed to give
notice or as to whom notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which Permanent
Preferred Stock may be listed or admitted to trading, such notice shall state:
(i) the Initial Redemption Date; (ii) the Redemption Price; (iii) the place or
places in the United States where certificates for such shares are to be
surrendered for payment of the Redemption Price; (iv) that dividends on the
shares to be redeemed will cease to accrue on the Redemption Date; (v) the
Conversion Price; (vi) that Permanent Preferred Stock called for redemption may
be converted at any time before the close of business on the Redemption Date;
and (vii) that holders of Permanent Preferred Stock must satisfy the
requirements of paragraph 5 above if such holders desire to convert such shares.
In order for the Permanent Preferred Stock to be redeemed at the option of the
holder, the holder must (i) notify the Corporation at such office that such
holder elects to have the Corporation redeem it shares of Permanent Preferred
Stock and the number of shares such holder wishes to have redeemed (any such
notice being referred to as a "Redemption Demand") and (ii) surrender the
certificate or certificates evidencing the shares of Permanent Preferred Stock
to be redeemed, duly endorsed at the office of the Corporation or transfer agent
for the Permanent Preferred Stock (or such other location identified in the
Corporation's notice sent pursuant to this paragraph 6(b)). In the case of lost
or destroyed certificates evidencing ownership of shares of Permanent Preferred
Stock to be surrendered for redemption, the holder shall submit such proof of
loss or destruction. In the event that a holder fails to notify the Corporation
of the number of shares of Permanent Preferred Stock which such holder wishes to
redeem, such holder shall be deemed to have elected to redeem all shares
represented by the certificate or certificates surrendered for redemption. Upon
satisfaction of the foregoing requirements the Corporation shall on the later of
(i) the Initial Redemption Date and (ii) the date on which such requirements are
satisfied (the "Redemption Date"), redeem for the Redemption Price the shares of
Permanent Preferred Stock for which such requirements have been satisfied. As
soon as practicable after the Redemption Date and in any event within five (5)
Business Days of the Redemption Date, the Corporation shall deliver or cause to
be delivered to the holder of shares of Permanent Preferred Stock, the
Redemption Price for such shares of Permanent Preferred Stock for which such
holder is seeking redemption.
(c) On or prior to each Redemption Date, the Corporation
shall deposit the Redemption Price for all shares of Permanent Preferred Stock
required to be redeemed pursuant to this paragraph 6 with a bank or trust
corporation having aggregate capital and surplus in excess of $100,000,000 as a
trust fund for the benefit of the respective holders of the Permanent Preferred
20
Stock, with irrevocable instructions and authority to the bank or trust
corporation to pay the Redemption Price for such shares to their respective
holders on or after the Redemption Date, upon receipt of notification from the
Corporation that such holder has surrendered his, her or its share certificate
to the Corporation pursuant to paragraph 6(b) above.
(d) If a Redemption Demand has been received by the
Corporation in accordance with paragraph 6(b) above with respect to any shares
of Permanent Preferred Stock and provided that, on or before the Redemption Date
with respect to any shares of Permanent Preferred Stock, all funds necessary for
redemption of such shares shall have been set aside by the Corporation, separate
and apart from its other funds in trust for the pro rata benefit of the holders
of such shares of Permanent Preferred Stock, so as to be, and to continue to be
available therefor, then, from and after the Redemption Date, dividends on such
shares of Permanent Preferred Stock shall cease to accrue, and said shares shall
no longer be deemed to be outstanding and shall not have the status of shares of
Permanent Preferred Stock, and all rights of the holders thereof as shareholders
of the Corporation (except the right to receive from the Corporation the
Redemption Price) shall cease. Upon surrender, in accordance with said notice,
of the certificates for any shares so redeemed (properly endorsed or assigned
for transfer, if the Corporation shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the Redemption
Price.
(e) Any funds deposited with a bank or trust Corporation for
the purpose of redeeming Permanent Preferred Stock shall be irrevocable except
that:
(i) the Corporation shall be entitled to receive from
such bank or trust Corporation the interest or other earnings, if any,
earned on any money so deposited in trust, and the holders of any shares
redeemed shall have no claim to such interest or other earnings; and
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the holders of the Permanent Preferred Stock
entitled thereto at the expiration of two (2) 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 the shares entitled to the funds so repaid to the
Corporation shall look only to the Corporation for payment without
interest or other earnings.
(f) No Permanent Preferred Stock may be redeemed except with
funds legally available for the payment of the Redemption Price. If, upon any
Redemption Date, the assets of the Corporation legally available to redeem the
Permanent Preferred Stock shall be insufficient to redeem all outstanding shares
of Permanent Preferred Stock, (i) the Corporation shall redeem that number of
shares of Permanent Preferred Stock required to redeem on such Redemption Date
that may be redeemed with the assets of the Corporation legally available to
redeem the Permanent Preferred Stock (pro rata among the holders of Permanent
Preferred Stock requesting redemption on such Redemption Date based on the
relative number of shares of Permanent Preferred Stock held by such holders) and
(ii) any unredeemed shares shall be carried forward and shall be redeemed at
such time as funds are legally available to so redeem such shares. All shares of
Permanent Preferred Stock which are subject to redemption hereunder but which
have not been redeemed due to insufficient legally available funds and assets
shall continue to be
21
outstanding and entitled to all dividends, liquidation, conversion and other
rights, preferences and privileges of the Permanent Preferred Stock until such
shares are converted or redeemed.
(g) All shares of Permanent Preferred Stock redeemed
pursuant to this paragraph 6 shall be retired and shall be restored to the
status of authorized and unissued shares of preferred stock, without designation
as to series and may thereafter be reissued as shares of any series of preferred
stock other than shares of Permanent Preferred Stock.
(h) Except as specifically provided in this paragraph 6, the
Permanent Preferred Stock shall not be redeemable.
7. Voting Rights.
In addition to any voting rights provided by law, the holders of
shares of Permanent Preferred Stock shall have the following voting rights:
(a) On any matter on which the holders of Permanent
Preferred Stock are entitled by law or under the Certificate of Incorporation to
vote separately as a class, each such holder shall be entitled to one vote for
each share held, and such matter shall be determined by a majority of the votes
cast unless the Delaware General Corporation Law or this Certificate of
Designations requires approval by a higher percentage. Such voting right of the
holders of the Permanent Preferred Stock may be exercised at any annual meeting
of stockholders, any special meeting of stockholders (including any special
meeting of holders of such series of Permanent Preferred Stock), or by written
consent of the minimum number of shares required to take such action pursuant to
Section 228 of the Delaware General Corporation Law.
(b) During such time that the aggregate number of shares of
Permanent Preferred Stock outstanding is equal to at least twenty-five percent
(25%) of the shares of Bridge Preferred Stock outstanding on the Initial Bridge
Preferred Issue Date (after giving effect to the issuance of all shares of
Bridge Preferred Stock issued on the Initial Bridge Preferred Issue Date), the
Corporation shall not, without the affirmative vote or consent of the holders of
at least a majority of the issued and outstanding shares of Permanent Preferred
Stock:
(i) amend, modify, alter, repeal or waive the
application of (including by way of merger, consolidation,
combination or otherwise) any provision of the Certificate of
Incorporation or by-laws of the Corporation or any of its
Subsidiaries in any manner that adversely effects the powers,
rights, preferences or privileges of the holders of the Permanent
Preferred Stock, or enter into any agreement or take any other
corporate action (or permit any of its Subsidiaries to enter into
any agreement or take any corporate action) which would in any way
amend, modify alter, repeal or waive the powers, rights, preferences
or privileges of the Permanent Preferred Stock;
(ii) amend (including by way of merger, consolidation,
combination or otherwise) in any respect this Certificate of
Designations or
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subdivide, combine or reclassify the Permanent Preferred Stock,
other than changes in the name of the issuing corporation as
contemplated by paragraph 16;
(iii) redeem, acquire, purchase, defease or otherwise
retire for value or make any other payment or distribution in
respect of any shares of capital stock of the Corporation or any
Subsidiaries of the Corporation, other than (a) any such redemption,
acquisition, purchase, retirement or other payment or distribution
in respect of the Permanent Preferred Stock, (b) any redemption,
acquisition, purchase, retirement or other payment or distribution
by any Subsidiary of the Corporation in respect of shares of capital
stock of such Subsidiary held by the Corporation or another
wholly-owned Subsidiary of the Corporation, (c) to the extent
permitted under the terms of the then outstanding Indebtedness of
the Corporation and its Subsidiaries, the repurchase from terminated
or retired employees of shares of Common Stock or options to
purchase Common Stock, in each case, issued under any stock purchase
or stock option plans or other compensatory arrangements that are
approved by the Board of Directors, and (d) the cashless exercise of
Options and the surrender by holders of restricted shares of capital
stock of the Corporation in payment of any tax liabilities by such
holders pursuant to any stock purchase or stock option plans or
other compensatory arrangements that are approved by the Board of
Directors;
(iv) create, authorize or issue (including on
conversion or exchange of any convertible or exchangeable securities
or by reclassification) shares of any class or series of capital
stock of the Corporation other than: (i) the issuance of shares of
Common Stock or Permanent Preferred Stock upon conversion of the
Bridge Preferred Stock; (ii) the issuance of shares of Common Stock
upon conversion of Permanent Preferred Stock; (iii) the issuance of
shares of Common Stock upon exercise of Rights and Options or
conversion of Convertible Securities outstanding on the Initial
Bridge Preferred Issue Date; (iv) the issuance of a number of
Options (and the issuance of Common Stock upon exercise thereof)
under the Corporation's 1999 Equity Incentive Plan calculated as the
lesser of 1,500,000 or 5% of the Corporation's outstanding Common
Stock (adjusted appropriately for any stock split with respect to
the Common Stock or any subdivision or combination of the Common
Stock) in each year commencing July 1, 2000 through July 1, 2009;
provided however, that the per share exercise price of any such
Options shall not be less than the Conversion Price; and (v) the
issuance of a number of shares under the Corporation's Employee
Stock Purchase Plan calculated as the lesser of 800,000 or 3% of the
Corporation's outstanding Common Stock (adjusted appropriately for
any stock split with respect to the Common Stock or any subdivision
or combination of the Common Stock) in each year commencing July 1,
2000 through July 1, 2009.
(v) permit any Subsidiary of the Corporation to
create, authorize or issue (including on conversion or exchange of
any convertible or exchangeable securities or by reclassification)
any class or series of capital stock of such Subsidiary;
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(vi) enter into (or permit any Subsidiary of the
Corporation to enter into) any transaction involving (a) any payment
to, or any sale, lease, transfer or other disposition of any
properties or assets to, any Affiliate of the Corporation, (b) any
purchase, acquisition or lease of property or assets from any
Affiliate of the Corporation, or (c) any loan, guarantee or advance
to or from or for the benefit of, or any contract, agreement or
lease with, any Affiliate of the Corporation, other than (I) any
employment agreement entered into by the Corporation or any of its
Subsidiaries in the Corporation or any of its Subsidiaries in the
ordinary course of business with any employee of the Corporation or
any of its Subsidiaries; (II) any transaction between or among the
Corporation and/or its Subsidiaries; (III) payment of directors'
fees to Persons who are not otherwise Affiliates of the Corporation
other than by reason of their position as an officer or director;
(IV) compensation payable to or other benefits provided to, or any
agreement to pay such compensation or benefits with, officers and
employees of the Corporation; and (V) transactions with holders of
the Permanent Preferred Stock;
(viii) effect any voluntary liquidation, dissolution or
winding-up of the Corporation;
(ix) except as permitted by the express terms of the
Senior Debt (without regard to any waiver of rights thereunder),
purchase, acquire or lease (or permit any Subsidiary of the
Corporation to purchase, acquire or lease), in one transaction or
series of related transactions, assets, properties, capital stock or
other securities of any Person (other than any (i) inventory
purchases in the ordinary course of business pursuant to any
contract in effect or executed on or before the Initial Bridge
Preferred Issue Date and (ii) inventory purchases in the ordinary
course of business pursuant to any contract to be executed by the
Corporation after the Initial Bridge Preferred Issue Date, but not
including initial payments or consideration for inventory, license
fees, distribution rights or other similar payments;
(x) take any action (or permit any Subsidiary of the
Corporation to take any action) that would cause a dividend or other
distribution to be received by the holders of Bridge Preferred Stock
or Permanent Preferred Stock for federal income tax purposes unless
such dividend or other distributions is actually received by such
holders in cash;
(xi) except as permitted by the express terms of the
Senior Debt (without regard to any waiver of rights thereunder),
incur or guarantee or permit any Subsidiary of the Corporation to
incur or guarantee any Indebtedness; or
(xii) declare or pay any dividends or make any other
distributions in respect of Common Stock or any other class of
Junior Stock (other than dividends on Common Stock payable solely in
additional shares of Common Stock).
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(c) Upon the failure by the Corporation to pay six quarterly
dividends provided for in paragraph 3, the holders of Permanent Preferred Stock
shall have the exclusive right to elect two Directors at the Corporation's next
annual meeting of stockholders and at each subsequent annual meeting of
stockholders; provided, however, that if such voting rights shall become vested
more than 90 days or less than 20 days before the date prescribed for the annual
meeting of stockholders, thereupon the holders of the shares of Permanent
Preferred Stock shall be entitled to exercise their voting rights at a special
meeting of the holders of shares of Permanent Preferred Stock as set forth in
clauses (ii) and (iii) of this paragraph 7(c). At elections for such Directors,
each holder of Permanent Preferred Stock shall be entitled to one vote for each
share held. Upon the vesting of such right of the holders of Permanent Preferred
Stock, the maximum authorized number of members of the Board of Directors shall
automatically be increased by two and the two vacancies so created shall be
filled by vote of the holders of outstanding Permanent Preferred Stock as set
forth herein. The right of holders of Permanent Preferred Stock to elect members
of the Board of Directors as aforesaid shall continue until such time as all
accrued and unpaid dividends on the Permanent Preferred Stock have been paid in
full, at which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event that the Corporation
subsequently fails to pay six quarterly dividends provided for in paragraph 3.
Upon the request of the Corporation after termination of such right, any
Directors elected pursuant to this subparagraph 7(c) shall immediately resign.
(ii) Whenever such voting right shall have vested, such
right may be exercised initially either at a special meeting of the holders of
shares of Permanent Preferred Stock called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of electing Directors, and
thereafter at such meetings or by the written consent of such holders pursuant
to Section 228 of the General Corporation Law of the State of Delaware.
(iii) At any time when such voting right shall have
vested in the holders of shares of Permanent Preferred Stock entitled to vote
thereon, if such right shall not already have been initially exercised, an
officer of the Corporation shall, upon the written request of holders of record
of ten percent (10%) of the voting power represented by the shares of such
Permanent Preferred Stock then outstanding, addressed to the Secretary of the
Corporation, call a special meeting of holders of shares of such Permanent
Preferred Stock. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of stockholders at the place for
holding annual meetings of stockholders of the Corporation or, if none, at a
place designated by the Secretary of the Corporation. If such meeting shall not
be called by the proper officers of the Corporation within 30 days after the
personal service of such written request upon the Secretary of the Corporation,
or within 30 days after mailing the same within the United States, by registered
mail, addressed to the Secretary of the Corporation at its principal office
(such mailing to be evidenced by the registry receipt issued by the postal
authorities), then the holders of record of ten percent (10%) of the voting
power represented by the shares of Permanent Preferred Stock then outstanding
may designate in writing any person to call such meeting at the expense of the
Corporation, and such meeting may be called by such person so designated upon
the notice required for annual meetings of stockholders and shall be held at the
same place as is elsewhere provided in this paragraph. Any holder of shares of
Permanent Preferred Stock then outstanding that would be entitled to vote at
such meeting shall have access to the stock books of the Corporation for the
purpose of causing a meeting of stockholders to be
25
called pursuant to the provisions of this paragraph. Notwithstanding the
provisions of this paragraph, however, no such special meeting shall be called
or held during a period within 60 days immediately preceding the date fixed for
the next annual meeting of stockholders.
(iv) The directors elected pursuant to this paragraph
7(c) shall serve until the earlier of (i) the next annual meeting or until their
respective successors shall be elected and shall qualify or (ii) until the right
of the holders of Permanent Preferred Stock to elect such additional Directors
pursuant to this paragraph 7(c) shall terminate; any Director elected by the
holders of Permanent Preferred Stock pursuant to this paragraph 7(c) may be
removed by, and shall not be removed otherwise than by, the vote of the holders
of a majority of the voting power of the outstanding shares of the Permanent
Preferred Stock who were entitled to participate in such election of directors,
at a meeting called for such purpose or by written consent as permitted by law
and the Certificate of Incorporation and Bylaws of the Corporation. If the
office of any Director elected by the holders of Permanent Preferred Stock
pursuant to this paragraph 7(c), becomes vacant by reason of death, resignation,
retirement, disqualification or removal from office or otherwise, the holders of
a majority of the outstanding shares of Permanent Preferred Stock may choose a
successor who shall hold office for the unexpired term in respect of which such
vacancy occurred. Upon any termination of the right of the holders of Permanent
Preferred Stock to vote for directors as provided in this paragraph 7(c), the
term of office of all Directors then in office elected by the holders of
Permanent Preferred Stock shall terminate immediately. Whenever the terms of
office of the Directors elected by the holders of Permanent Preferred Stock
shall so terminate and the special voting powers vested in the holders of
Permanent Preferred Stock shall have expired, the number of Directors shall be
such number as may be provided for in the Bylaws or Certificate of Incorporation
irrespective of any increase made pursuant to the provisions of this paragraph
7(c).
8. Repurchase Upon Change of Control. To the extent permitted by the
terms of the Senior Debt, if a Change of Control occurs, each holder of the
Permanent Preferred Stock shall have the right to require the Corporation to
repurchase all or any part of that holder's Permanent Preferred Stock pursuant
to the offer described below (the "Change of Control Offer"). In the Change of
Control Offer, the Corporation shall offer a payment in cash for each
outstanding share of Permanent Preferred Stock equal to the greater of (i) 120%
of the sum of the Liquidation Preference per share of Permanent Preferred Stock
repurchased plus an amount equal to all dividends accrued and unpaid thereon
from the beginning of the Dividend Period during which the repurchase occurs to
the date of the repurchase and (ii) the aggregate Current Market Price of all
shares of Common Stock issuable (assuming receipt of the Required Stockholder
Approval) upon conversion of Permanent Preferred Stock so repurchased,
determined as of the date of such Change of Control (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Corporation shall
mail a notice to each holder of shares of Permanent Preferred Stock describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase the Permanent Preferred Stock on the date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by this Certificate of Designations and
described in such notice.
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The Corporation shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Permanent Preferred Stock as a result of a Change of Control.
On the Change of Control Payment Date, the Corporation shall, to the
extent lawful:
(1) accept for payment all shares of Permanent Preferred
Stock or portions thereof properly tendered pursuant to the Change
of Control Offer;
(2) promptly mail to each holder of Permanent Preferred
Stock so tendered the Change of Control Payment for each share of
Permanent Preferred Stock so tendered and promptly authenticate and
mail to each such holder a new certificate representing the shares
of Permanent Preferred Stock equal in Liquidation Preference and
other accrued and unpaid dividends to any unpurchased portion of the
Permanent Preferred Stock surrendered, if any.
This paragraph shall be applicable regardless of whether any other
provisions of this Certificate of Designations are applicable.
9. Repurchase Upon the Occurrence of any Repurchase Event. Upon the
occurrence of any Repurchase Event, to the extent permitted under the terms of
the Senior Debt, and so long as the Required Stockholder Approval has not been
obtained on or prior to the date that is 270 days after the Initial Bridg
Preferred Issue Date, the Corporation shall offer to repurchase all or any part
of the Permanent Preferred Stock then outstanding pursuant to the offer
described below (the "Repurchase Event Offer"). In the Repurchase Event Offer,
the Corporation shall use the net cash proceeds received by the Corporation
and/or its Subsidiaries in connection with such Repurchase Event (the
"Repurchase Event Proceeds") to repurchase the outstanding shares of Permanent
Preferred Stock at a repurchase price equal to the Liquidation Preference, plus
an amount equal to all dividends accrued and unpaid thereon from the beginning
of the Dividend Period during which the Repurchase Event Payment Date occurs to
the Repurchase Event Payment Date (the "Repurchase Event Payment"). Within 30
days following the occurrence of any Repurchase Event, the Corporation shall
mail a notice to each holder of shares of Permanent Preferred Stock describing
the transaction or transactions that constitute the Repurchase Event and
offering to repurchase the number of shares of Permanent Preferred Stock equal
to (x) the Repurchase Event Proceeds, divided by (y) the sum of (1) the
Liquidation Preference, on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed (the "Repurchase Event Payment Date"), plus, (2) an amount equal to
all dividends accrued and unpaid thereon from the beginning of the Dividend
Period during which the Repurchase Event Payment Date occurs to the Repurchase
Event Payment Date (the "Repurchase Offer Share Number"), pursuant to the
procedures required by this Certificate of Designations and described in such
notice. If the aggregate number of shares of Permanent Preferred Stock shares
tendered into such Repurchase Event Offer exceeds the Repurchase Offer Share
Number, the Corporation will select the shares of Permanent Preferred Stock to
be repurchased on a pro rata basis, based on the number of shares of Permanent
Preferred Stock held by each holder requesting repurchase of such shares.
27
The Corporation shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Permanent Preferred Stock pursuant to a Repurchase Event
Offer.
On the Repurchase Event Payment Date, the Corporation shall, to the
extent lawful:
(1) accept for payment all shares of Permanent Preferred
Stock or portions thereof properly tendered pursuant to a Repurchase
Event Offer;
(2) promptly mail to each holder of Permanent Preferred
Stock so tendered the Repurchase Event Payment for the shares of
Permanent Preferred Stock so tendered and promptly authenticate and
mail to each such holder a new certificate representing the shares
of Permanent Preferred Stock equal in Liquidation Preference and
other accrued and unpaid dividends to any unpurchased portion of the
Permanent Preferred Stock surrendered, if any. This paragraph shall
be applicable regardless of whether any other provisions of this
Certificate of Designations are applicable.
10. Optional Redemption by the Corporation. At any time on or after
August 31, 2010, the Corporation may, upon sixty (60) days notice to the holders
of the Permanent Preferred Stock, redeem all, but not less than all, of the
then-outstanding shares of Permanent Preferred Stock for cash in an amount per
share equal to the Redemption Price.
11. Modification and Waiver. Except as otherwise provided herein, the
terms of this Certificate of Designations may be amended and the rights
hereunder may be waived only with the consent of holders of a majority of the
shares of the Permanent Preferred Stock then outstanding.
12. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
13. Severability of Provisions. If any voting powers, preferences and
relative, participating, optional and other special rights of the Permanent
Preferred Stock and qualifications, limitations and restrictions thereof set
forth in this resolution (as such resolution may be amended from time to time)
is invalid, unlawful or incapable of being enforced by reason of any rule of law
or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of the Permanent Preferred
Stock and any qualifications, limitations and restrictions thereof set forth in
this resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of the Permanent Preferred
Stock or qualifications, limitations and restrictions thereof shall,
nevertheless, remain in full force and effect, and no voting powers, preferences
and relative, participating, optional or other special rights of the Permanent
Preferred Stock or qualifications, limitations and restrictions thereof herein
set forth shall be deemed dependent upon any other such voting powers,
preferences and relative, participating, optional or other special rights of
Permanent Preferred Stock or qualifications, limitations and restrictions
thereof unless so expressed herein.
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14. Record Holders. The Corporation and the transfer agent for the
Permanent Preferred Stock may deem and treat the record holder of any shares of
Permanent Preferred Stock as the true and lawful owner thereof for all purposes,
and neither the Corporation nor the transfer agent shall be affected by any
notice to the contrary.
15. 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 100 California Street, Suite 500, San
Francisco, California 94111, Attention: Secretary or to an agent of the
Corporation designated as permitted by this Certificate, or, if to any holder of
the Permanent Preferred Stock, to such holder at the address of such holder of
the Permanent Preferred Stock as listed in the stock record books of the
Corporation (which may include the records of any transfer agent for the
Permanent Preferred Stock); or to such other address as the Corporation or
holder, as the case may be, shall have designated by notice similarly given.
16. Merger or Consolidation of the Corporation. The Corporation shall
not merge or consolidate with any other Person, or enter into or effect any
reorganization, unless the surviving corporation or other entity resulting from
such merger, consolidation or reorganization shall make appropriate provision in
connection with such merger, consolidation or reorganization such that, subject
to paragraph 4(f) above, (i) the shares of Permanent Preferred Stock outstanding
immediately prior to the effective time of such merger, consolidation or
reorganization remain outstanding immediately following such merger,
consolidation or reorganization or (ii) the shares of Permanent Preferred Stock
outstanding immediately prior to the effective time of such merger,
consolidation or reorganization shall be converted into an equivalent number of
shares of convertible preferred stock of such surviving corporation or other
entity having terms identical to the terms of the Permanent Preferred Stock,
except that such shares of convertible preferred stock of such surviving
corporation or other entity shall be convertible into securities or other
property as provided in paragraph 5(i).
29
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be duly executed by Joseph Masters, its Vice President, this 22nd day of August,
2002.
URS CORPORATION
By: /s/ Joseph Masters
------------------
Name: Joseph Masters
Title: Vice President
ATTEST:
By: /s/ Kent P. Ainsworth
---------------------
Name: Kent P. Ainsworth
Title: Secretary
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