XXXXXXX, XXXXX & CO.
PRIVATE & CONFIDENTIAL
February 13, 2008
FOAMEX INTERNATIONAL INC.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is hereby made to the First Lien Term Credit Agreement, dated as
of February 12, 2007, by and among Foamex L.P., as Borrower (the "Borrower"),
Foamex International Inc., as Parent Guarantor ("Holdings"), Bank of America,
N.A., as Administrative Agent and Collateral Agent (the "Administrative Agent"),
and the lenders and other parties named therein, and the Second Lien Term Credit
Agreement, dated as of February 12, 2007, by and among the Borrower, Holdings,
the Administrative Agent and the lenders and other parties named therein
(together, the "Credit Agreements") and the Revolving Credit Agreement, dated as
of February 12, 2007, by and among the Borrower, Holdings and the other
Guarantors named thereto, the Administrative Agent and the lenders and other
parties named thereto (the "Revolver"). Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Credit Agreements or
Revolver.
In connection with the Borrower's compliance with its obligations under
Section 7.12 of the Credit Agreements and Section 7.25 of the Revolver with
respect to each of its fiscal quarters in its 2008 fiscal year and with respect
to its first fiscal quarter in its 2009 fiscal year and upon the basis of the
representations and warranties contained in Annex A hereto, we hereby agree,
subject to the terms and conditions of this Letter Agreement, to purchase from
time to time upon receipt of a Notice (as defined below), at the option of
Holdings, for cash Securities (as defined below) of Holdings in an aggregate
amount up to 27.940725% of the total amount estimated in good faith by Holdings
to be necessary to facilitate the Borrower's ability pursuant to Section 8.02(b)
of the Credit Agreements or Section 9.2(d) of the Revolver, as applicable, to
comply with its financial covenants under Section 7.12 of the Credit Agreements
or Section 7.25 of the Revolver, as applicable, with respect to the relevant
quarter (each, a "QCS Transaction"). "Securities" shall mean, at our election,
which election shall be made within two business days of the receipt of the
Notice (as defined below), (1) shares of Series D Preferred Stock of Holdings
(the "Series D Preferred Stock") having the terms set forth in the Certificate
of Designations attached as Annex B hereto (the "Series D Certificate of
Designations"), (2) shares of Series E Preferred Stock of Holdings (the "Series
E Preferred Stock") having the terms set forth in the Certificate of
Designations attached as Annex C hereto (the "Series E Certificate of
Designations") or (3) a combination of Series D Preferred Stock and Series E
Preferred Stock. The total amount referred to in this Letter Agreement shall not
exceed $5,588,145.00 in the aggregate (the "Maximum Obligation"). The purchase
price for the Series D Preferred Stock or the Series E Preferred Stock shall be
$1,000 per share. The Borrower shall use any contribution from Holdings from the
proceeds from any issuance and sale of Securities under this Letter Agreement
only for the purpose of funding ordinary course expenditures, and not to prepay
any debt (whether revolver, term or other).
Certain representations and warranties made by us and Holdings are set
forth in Annex A hereto.
We agree to purchase and pay for the Securities hereunder in cash by wire
transfer of immediately available funds to a bank account designated by Holdings
upon a 3 business day prior written notice from Holdings to us specifying the
number of shares of the Securities to be purchased up to the Maximum Obligation
(the "Notice") and sent to us at Xxxxxxx, Xxxxx & Co., 00 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx, Facsimile: (212)
000-0000, Telephone: (000) 000-0000, E-mail: xxxxxx.xxxxxx@xx.xxx.
Our obligation to purchase shares of Securities under this Letter Agreement
is subject to the condition that at the time a Notice is delivered by Holdings
hereunder, (i) the Borrower be in compliance with its obligation (determined as
of the time the Notice is delivered) to deliver financial statements under
Section 6.01(a) and (b) under the Credit Agreements and Section 5.1(a) and (b)
of the Revolver and (ii) there be no Event of Default under the Credit
Agreements or the Revolver that cannot be cured (as estimated in good faith by
Holdings) pursuant to Section 8.02(b) of the Credit Agreements or Section 9.2(d)
of the Revolver with proceeds from the issuance of Securities pursuant to this
Letter Agreement (together with the other Letter Agreements executed at
approximately the same time as this Letter Agreement).
As consideration for the option granted to Holdings to require Xxxxxxx,
Xxxxx & Co. ("Investor") to purchase Securities pursuant to this Letter
Agreement, Holdings hereby agrees to pay Investor a premium (the "Premium") in
an amount equal to 5% of the Maximum Obligation, payable in shares of common
stock of Holdings to be issued to Investor at the time of the earliest of (i)
the first issuance of Securities under this Letter Agreement, (ii) the
consummation of the Rights Offering (as defined in the Series D Certificate of
Designations) and (iii) the termination of this Letter Agreement. The number of
shares of common stock of Holdings to be issued shall be calculated based upon
the Average Trading Price (as defined in the Series D Certificate of
Designations, and subject to the adjustments set forth therein) of the common
stock of Holdings for the thirty-Trading Day (as defined in the Series D
Certificate of Designations) period ending on the fifth Trading Day immediately
preceding the earliest of (i), (ii) and (iii) above. Holdings and its
subsidiaries shall also pay all reasonable fees and expenses incurred by us in
connection with the consideration and implementation of each QCS Transaction.
This Letter Agreement shall automatically terminate upon the earliest of
(a) 11:59 p.m. on May 20, 2009, (b) 11:59 p.m. on the day that is ten days after
the date on which the financial statements of Xxxxxxxx as of, and for the fiscal
quarter ended March 29, 2009, are required to be delivered to the Administrative
Agent pursuant to the Credit Agreements and the Revolver, (c) the date on which
Investor has purchased the Maximum Obligation of Securities under this Letter
Agreement and (d) the date on which a Rights Offering (as defined in the
Certificate of Designations) is consummated.
This Letter Agreement is intended to be binding on the parties and shall be
governed by, and construed in accordance with, the laws of the State of New
York. To the fullest extent permitted by applicable law, each party hereto (i)
agrees that any claim, action or proceeding by such party seeking any relief
whatsoever arising out of, or in connection with, this Letter Agreement or the
transactions contemplated hereby shall be brought only in the United States
District Court for the Southern District of New York and in any New York State
court located in the Borough of Manhattan and not in any other state or federal
court in the United States of America or any court in any other country, (ii)
agrees to submit to the exclusive jurisdiction of such courts located in the
State of New York for purposes of all legal proceedings arising out of, or in
connection with, this Letter Agreement or the transactions contemplated hereby
and (iii) irrevocably waives any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum. The parties hereto hereby irrevocably waive, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Letter Agreement.
This Letter Agreement constitutes the entire agreement and supersedes all
other prior agreements, both written and oral, among the parties with respect to
the subject matter hereof. This Letter Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original of this Letter
Agreement and all of which, taken together, shall be deemed to constitute one
and the same Letter Agreement.
Very truly yours,
XXXXXXX, XXXXX & CO.
By:/s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
Agreed to on February 13, 2008 by:
FOAMEX INTERNATIONAL INC.
FOAMEX INTERNATIONAL INC.
By:/s/ Xxxx X. Xxxxxxx, Xx.
----------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: President and CEO
ANNEX A
I. Representations and Warranties of Holdings.
Holdings represents and warrants to, and agrees with, Investor as set forth
below. Each representation, warranty and agreement set forth in this Annex A is
made as of the date hereof and as of any issue date of the Securities:
(a) Each of Holdings and its Subsidiaries (as defined below) has been duly
organized and is validly existing as a corporation or other form of entity in
good standing under the laws of its state of organization, with the requisite
power and authority to own its properties and conduct its business as currently
conducted. Each of Holdings and its Subsidiaries has been duly qualified as a
foreign corporation or other form of entity for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, except to the extent the failure to be so qualified or be in good
standing has not had or could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the business, assets,
liabilities, condition (financial or otherwise) or results of operations of
Holdings and its Subsidiaries taken as a whole or on the ability of Holdings to
consummate the transactions contemplated by this Letter Agreement. For the
purposes of this Letter Agreement, a "Subsidiary" of any person means, with
respect to such person, any corporation, partnership, joint venture or other
legal entity of which such person (either alone or through or together with any
other subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, has the power to elect a majority of the board of
directors or similar governing body, or has the power to direct the business and
policies.
(b) Holdings has the requisite corporate power and authority to enter into,
execute, deliver and perform its obligations under this Letter Agreement.
Subject to the approval of the Series E Certificate of Designations by the Board
of Directors of Holdings and, subject to the filing of the Series D Certificate
of Designations or Series E Certificate of Designations, if and as applicable,
with the Secretary of State of Delaware pursuant to Section 103 of the Delaware
General Corporation Law, Holdings and its Subsidiaries have taken all necessary
corporate action required for the due authorization, execution, delivery and
performance by each of them of this Letter Agreement, including having obtained
the approval of the boards of directors of Holdings and, where required, such
Subsidiaries and the approval of the special committee of the board of directors
of Holdings formed in connection with this Letter Agreement and related
transactions.
(c) This Letter Agreement has been duly and validly executed and delivered
by Holdings, and constitutes a valid and binding obligation of Holdings,
enforceable against Holdings in accordance with its terms.
(d) Subject to filing the Series D Certificate of Designations or Series E
Certificate of Designations, if and as applicable, with the Secretary of State
of Delaware pursuant to Section 103 of the Delaware General Corporation Law and
subject to approval of the Series E Certificate of Designations by the Board of
Directors of Holdings under the Delaware General Corporation Law, the issuance
of the Securities has been duly and validly authorized and, if and when issued
pursuant to the terms of this Letter Agreement and the Series D Certificate of
Designations or Series E Certificate of Designations, if and as applicable, will
be duly and validly issued, fully paid and non-assessable, and free and clear of
all taxes, liens, preemptive rights, rights of first refusal, subscription and
similar rights. The shares of common stock of Holdings (the "Common Stock")
issuable in satisfaction of the Premium and initially issuable upon conversion
of the Series D Preferred Stock have been duly and validly authorized and, when
issued in satisfaction of the Premium or when issued upon conversion of the
Series D Preferred Stock, will be validly issued, fully paid and nonassessable,
and free and clear of all taxes, liens, preemptive rights, rights of first
refusal, subscription and similar rights; and the Board of Directors of Holdings
has duly and validly adopted resolutions reserving such shares of Common Stock
for issuance in satisfaction of the Premium and upon conversion of the Series D
Preferred Stock.
(e) Except for the Securities, stock options and restricted stock of
Holdings' employees and directors and a Rights Offering (as defined in the
Series D Certificate of Designations) to all shareholders of Holdings, there are
no outstanding subscription rights, options, warrants, convertible or
exchangeable securities or other rights of any character whatsoever to which
Holdings is a party relating to issued or unissued capital stock of Holdings, or
any commitments of any character whatsoever relating to issued or unissued
capital stock of Holdings or pursuant to which Holdings is or may become bound
to issue or grant additional shares of its capital stock or related subscription
rights, options, warrants, convertible or exchangeable securities or other
rights, or to grant preemptive rights.
(f) All the outstanding shares of capital stock of each Subsidiary of
Holdings have been duly and validly authorized and issued and are fully paid and
nonassessable, and all outstanding shares of capital stock of Holdings'
Subsidiaries are owned by Holdings either directly or through wholly owned
Subsidiaries free and clear of any taxes, liens, preemptive rights, rights of
first refusal, subscription and similar rights (except for any liens that have
been or may be granted to lenders in accordance with the Credit Agreements and
the Revolver), and there are no outstanding options, warrants, convertible or
exchangeable securities or other rights of any character whatsoever to which any
Subsidiary is a party relating to issued or unissued capital stock of such
Subsidiary, or any commitments of any character whatsoever relating to issued or
unissued capital stock of such Subsidiary or pursuant to which such Subsidiary
is or may become bound to issue or grant additional shares of its capital stock
or related subscription rights, options, warrants, convertible or exchangeable
securities or other rights, or to grant preemptive rights.
(g) None of the execution and delivery by Holdings of this Letter
Agreement, the performance of and compliance by Holdings or any of its
Subsidiaries with all of the provisions hereof and the consummation of the
transactions contemplated herein (including compliance by Investor with its
obligations hereunder and including as a result of any change in ownership of
Holdings) (i) will conflict with, or result in a breach or violation of, any of
the terms or provisions of, or constitute a default under (with or without
notice or lapse of time, or both), or result in the acceleration, termination,
modification or cancellation of, or the creation of any lien under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Holdings or any of its Subsidiaries is a party or by which
Holdings or any of its Subsidiaries is bound or to which any of the property or
assets of Holdings or any of its Subsidiaries is subject, (ii) will result in
any violation of the provisions of the certificate of incorporation or by-laws
of Holdings, or any of the equivalent organizational documents of any of its
Subsidiaries, or (iii) will result in any violation of, or any termination or
material impairment of any rights under, any statute, license, authorization,
injunction, judgment, order, decree, rule or regulation of any court,
governmental agency or body, or arbitration or similar tribunal having
jurisdiction over Holdings or any of its Subsidiaries or any of their respective
properties.
(h) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over Holdings or any of its Subsidiaries or any of their respective
properties is required for the execution and delivery by Holdings of this Letter
Agreement, the performance of and compliance by Holdings or any of its
Subsidiaries with all of the provisions hereof and the consummation of the
transactions contemplated herein (including compliance by Investor with its
obligations hereunder and including as a result of any change in ownership of
Holdings), except for the filing of the Series D Certificate of Designations or
Series E Certificate of Designations, if and as applicable, with the Secretary
of State of Delaware pursuant to Section 103 of the Delaware General Corporation
Law.
(i) No registration under the Securities Act of 1933, as amended (the
"Securities Act") of the Securities or the Common Stock issuable upon conversion
of the Series D Preferred Stock is required for the offer and sale of the
Securities to Investor in the manner contemplated herein.
(j) The audited consolidated financial statements of Holdings as of and for
the year ended December 31, 2006 and filed on April 2, 2007 with the Securities
and Exchange Commission (the "SEC") as part of Holdings' annual report on Form
10-K, and the unaudited consolidated financial statements of Holdings as of and
for the three months ended April 1, 2007, the six months ended July 1, 2007 and
the nine months ended September 30, 2007 and filed with the SEC on May 14, 2007,
August 10, 2007 and November 13, 2007, respectively, as part of Holdings'
quarterly reports on Form 10-Q present fairly in all material respects, in each
case together with the related notes, the financial position of Holdings and its
consolidated Subsidiaries at the dates indicated and, to the extent included in
such reports, the statements of operations, stockholders' equity and cash flows
of Holdings and its consolidated Subsidiaries for the periods specified, except
that the unaudited financial statements are subject to normal and recurring
year-end adjustments that are not expected to be material in amount; such
financial statements have been prepared in conformity with generally accepted
accounting principles in the United States, except as otherwise noted in such
financial statements or related notes, applied on a consistent basis throughout
the periods involved and with past practices, and in conformity with the rules
and regulations of the SEC.
(k) All written information and other materials concerning Holdings and its
Subsidiaries (the "Information") which has been, or is hereafter, prepared by,
or on behalf of, Holdings and delivered to Investor is, or when delivered will
be, when considered as a whole, complete and correct in all material respects as
of the date on which such Information was or will be delivered and does not, or
will not when delivered, contain any untrue statement of material fact or omit
to state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such statements
have been made. To the extent that any such Information contains projections,
such projections at the time they were or will be delivered to Investor were or
will be prepared in good faith on the basis of (i) assumptions, methods and
tests which are believed by Holdings and its Subsidiaries to be reasonable and
(ii) information believed by Holdings and its Subsidiaries to have been accurate
based upon the information available to Holdings and its Subsidiaries at the
time such projections were furnished to Investor.
(l) Holdings is not and, after giving effect to the sale of the Securities
and the application of the proceeds thereof, will not be an "investment company"
as defined in the Investment Company Act of 1940, as amended.
(m) None of Holdings or any of its Subsidiaries has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Securities Act) that
is or will be integrated with the sale of the shares of Securities in a manner
that would require registration under the Securities Act of the sale of the
shares of Securities to Investor.
II. Representations and Warranties of Investor.
Investor represents and warrants to, and agrees with, Holdings as set forth
below. Each representation, warranty and agreement set forth in this Annex A is
made as of the date hereof and as of any issue date of the Securities:
(a) Investor has the requisite power and authority to enter into, execute
and deliver this Letter Agreement and to perform its obligations hereunder and
has taken all necessary action required for the due authorization, execution,
delivery and performance by it of this Letter Agreement.
(b) This Letter Agreement has been duly and validly executed and delivered
by Investor, and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms.
(c) Any Securities and the Common Stock issuable upon conversion of the
Series D Preferred Stock that may be acquired by Investor is solely for its own
account, for investment and not with a view toward resale or other distribution
within the meaning of the Securities Act.
(d) Investor has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in any Securities and the Common Stock issuable upon conversion of the Series D
Preferred Stock that may be acquired by it. Investor is an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act or a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act.
Investor understands and is able to bear any economic risks associated with such
investment.
(e) Investor acknowledges that it has been afforded the opportunity to ask
questions and receive answers concerning Holdings and to obtain additional
information that it has requested to verify the accuracy of the information
contained herein. Notwithstanding the foregoing, nothing contained herein will
operate to modify or limit in any respect the representations and warranties of
Holdings or to relieve it from any obligations to Investor for breach thereof or
the making of misleading statements or the omission of material facts in
connection with the transactions contemplated herein.
(f) None of the execution and delivery by Investor of this Letter
Agreement, the performance of and compliance by Investor with all of the
provisions hereof and the consummation of the transactions contemplated herein
(i) will conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute a default under (with or without notice or lapse
of time, or both), or result in the acceleration, termination, modification or
cancellation of, or the creation of any lien under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which Investor
is a party or by which Investor is bound or to which any of the property or
assets of Investor is subject, (ii) will result in any violation of the
provisions of the certificate of incorporation or by-laws or equivalent
organizational documents of Investor, or (iii) will result in any violation of,
or any termination or material impairment of any rights under, any statute,
license, authorization, injunction, judgment, order, decree, rule or regulation
of any court, governmental agency or body, or arbitration or similar tribunal
having jurisdiction over Investor or any of its properties.
(g) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over Investor or any of its properties is required for the
execution and delivery by Investor of this Letter Agreement, the performance of
and compliance by Investor with all of the provisions hereof and the
consummation of the transactions contemplated herein.
(h) The Investor is an Equity Investor (as defined in the Credit Agreements
and the Revolver) and meets the beneficial ownership conditions set forth in
clause (II) of Section 8.02(b) of the Credit Agreements and Section 9.02(d) of
the Revolver.
ANNEX B
CERTIFICATE OF DESIGNATIONS
of
SERIES D PREFERRED STOCK
of
FOAMEX INTERNATIONAL INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
----------------------
Foamex International Inc., a Delaware corporation (the "Corporation"),
hereby certifies that this Certificate of Designations was duly adopted by
resolution of the Board of Directors of the Corporation (the "Board") in
accordance with Section 151 of the Delaware General Corporation Law.
Pursuant to the authority expressly granted to and vested in the Board by
the provisions of the Second Amended and Restated Certificate of Incorporation
of the Corporation (the "Certificate of Incorporation"), there is hereby
created, out of the Seven Million (7,000,000) shares of Preferred Stock, par
value $0.01 per share, of the Corporation authorized in Article V of the
Certificate of Incorporation (the "Preferred Stock"), a series of the Preferred
Stock consisting of Sixty Thousand (60,000) shares, which series shall have the
following powers, designations, preferences and relative, participating,
optional or other rights, and the following qualifications, limitations and
restrictions (in addition to the powers, designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations and
restrictions, set forth in the Certificate of Incorporation which are applicable
to the Preferred Stock):
Section 1. Designation and Amount.
The shares of such series shall be designated as "Series D Preferred Stock"
(the "Series D Preferred Stock") and the number of shares constituting the
Series D Preferred Stock shall be Sixty Thousand (60,000). Such number of shares
may be increased or decreased by resolution of the Board; provided, that no
decrease shall reduce the number of shares of Series D Preferred Stock to a
number less than the number of such shares then outstanding.
Section 2. Rank.
The Series D Preferred Stock shall with respect to (i) the payment of the
Accrued Liquidation Preference (as defined below) in the event of a liquidation,
dissolution or winding up of the Corporation, (ii) dividends and (iii) all other
rights, preferences and privileges, rank senior to the common stock, par value
$0.01 per share, of the Corporation (the "Common Stock"), and each other class
or series of capital stock of the Corporation now or hereafter outstanding,
including, without limitation, any other class or series of Preferred Stock of
the Corporation now existing or hereafter created (the "Junior Securities");
provided, however, that the foregoing shall not apply to the extent the Holders
(as defined below) give the approvals described in Section 4(b) hereof.
Section 3. Dividends and Distributions.
(a) The holders of record of shares of Series D Preferred Stock (the
"Holders") will be entitled to cumulative dividends on their shares at an annual
rate of 4.5% (the "Dividend Rate") of the Accrued Liquidation Preference,
compounding monthly. Dividends on the outstanding shares of Series D Preferred
Stock shall be calculated on the basis of a 360-day year, shall accrue daily
commencing on the respective dates of original issue of such shares (which dates
shall be reflected on the certificates evidencing the same), and shall be deemed
to accrue from such date whether or not earned or declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends. Accrued dividends shall not be payable by the
Corporation periodically (in cash or otherwise) while Series D Preferred Stock
is outstanding. In lieu of such periodic payment, the amount of accrued
dividends per share of Series D Preferred Stock shall be added to the Accrued
Liquidation Preference of that share on the last day of each month (such amount
will accrue further dividends each month in accordance with this Section 3(a)).
(b) If the Corporation, during any fiscal quarter of the Corporation while
Series D Preferred Stock is outstanding, distributes or pays as a dividend to
holders of Common Stock (i) evidences of its indebtedness, (ii) any security
(including a distribution of Common Stock), (iii) rights or warrants to
subscribe for or purchase any security, except for any rights issued in a Rights
Offering (as defined below), or (iv) any other asset (including, without
limitation, cash) (the "Distributed Property"), in an aggregate amount (as
determined below) greater than the amount of dividends that otherwise would have
accrued on shares of Series D Preferred Stock during such quarter under Section
3(a), then in each case the Corporation shall simultaneously deliver to each
Holder, in lieu of the addition of dividends accrued during such quarter to the
Accrued Liquidation Preference pursuant to Section 3(a), the Distributed
Property that each such Holder would have been entitled to receive in respect of
the number of shares of Common Stock then issuable to such Holder pursuant to
Section 7 hereof had the Holder been the record holder of such shares of Common
Stock immediately prior to the applicable record or payment date. The amount of
the Distributed Property shall equal: (i) in case of cash, the amount of cash so
distributed per share of Common Stock, (ii) in case of securities traded on a
securities exchange or over-the-counter market, the Volume Weighted Average
Price of a share of such securities on the date of such distribution multiplied
by the number of shares of such securities distributed per share of Common
Stock, and (iii) in case of any property other than cash or securities referred
in clause (ii) above, the fair market value thereof as determined in good faith
by the Board.
Section 4. Voting Rights.
(a) The Holders shall not be entitled to any voting rights except as
hereinafter provided in this Section 4 or as otherwise required by law.
(b) In addition to any vote or consent of stockholders required by law, the
affirmative vote or consent of the Holders of at least 80% of the shares of
Series D Preferred Stock at the time outstanding, voting or consenting as a
separate class (with each Holder being entitled to one vote per share), given in
person or by proxy, shall be necessary to (a) authorize, create, issue or
increase (including by way of reclassifying, converting or exchanging any
securities of the Corporation) the amount of any (i) class or series of capital
stock of the Corporation ranking senior or pari passu to the Series D Preferred
Stock (including any security exchangeable for, convertible into, or evidencing
the right to purchase, any such capital stock) or (ii) any class or series of
capital stock of the Corporation or any security convertible or exercisable for
any class or series of capital stock of the Corporation that is redeemable
mandatorily or at the option of the holder thereof; (b) amend, alter or repeal
any provision of the Certificate of Incorporation of the Corporation if such
amendment or alteration alters or changes the powers, preferences or rights of
the Series D Preferred Stock so as to affect them adversely; (c) declare, pay or
set aside for payment, any dividend on any Junior Securities or redeem,
repurchase or otherwise acquire (or permit any person directly or indirectly
controlled by the Corporation to redeem, repurchase or otherwise acquire) any
Junior Securities (other than the repurchase of Common Stock held by employees,
officers or directors of the Corporation or any of its subsidiaries in
accordance with arrangements approved by the Board); or (d) authorize or take
any other action if such action alters or changes any of the rights of the
Series D Preferred Stock in any respect or otherwise would be inconsistent with
this Certificate of Designations.
Section 5. Registration.
(a) The Corporation shall register the issuance and ownership of shares of
the Series D Preferred Stock, upon records to be maintained by the Corporation
for that purpose (the "Series D Preferred Stock Register"), in the name of the
Holders thereof from time to time. The Corporation may deem and treat the
registered Holder of shares of Series D Preferred Stock as the absolute owner
thereof for the purpose of any conversion thereof or any distribution to such
Holder, and for all other purposes, absent actual notice to the contrary.
(b) The Corporation shall register the transfer of any shares of Series D
Preferred Stock in the Series D Preferred Stock Register, upon surrender of
certificates evidencing such shares to the Corporation at its address specified
herein and delivery of such additional documents as the Corporation shall
reasonably request in connection with such transfer. Upon any such registration
of transfer, a new certificate evidencing the shares of Series D Preferred Stock
so transferred shall be issued to the transferee and a new certificate
evidencing the remaining portion of the shares not so transferred, if any, shall
be issued to the transferring Holder.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon the occurrence of a liquidation, dissolution or winding up of the
Corporation, the Holders as of the record date established by the Board for
determination of stockholders entitled to receive a distribution in such
liquidation, dissolution or winding up of the Corporation, as applicable (the
"Record Date"), shall be paid in cash for each share of Series D Preferred Stock
then held, out of, but only to the extent of, the assets of the Corporation
legally available for distribution to its stockholders, before any payment or
distribution is made in respect of any Junior Securities, the greater of (i) an
amount equal to the sum of (A) the Original Liquidation Preference (as defined
below) (as adjusted for any stock split, combination, reclassification or
similar event involving the Series D Preferred Stock), plus (B) the monthly
addition to the Accrued Liquidation Preference pursuant to Section 3(a) hereof
and, (C) without duplication of any amounts referred to in the preceding clause
(B), all accrued and unpaid dividends on such shares of Series D Preferred Stock
(such sum, the "Accrued Liquidation Preference") on the date of such payment in
respect of the Series D Preferred Stock, and (ii) the amount per share that
would be payable to a Holder had all shares of Series D Preferred Stock been
converted to shares of Common Stock pursuant to Section 7 hereof immediately
prior to the occurrence of such liquidation, dissolution or winding up. If the
assets of the Corporation available for distribution to the Holders shall be
insufficient to permit payment in full to such Holders of the aggregate amount
payable pursuant to the preceding sentence, then all of the assets available for
distribution to the Holders shall be distributed among and paid to such Holders
ratably in proportion to the amounts that would be payable to such Holders if
such assets were sufficient to permit payment in full. As used herein, the
"Original Liquidation Preference" shall mean $1,000.00 per share of Series D
Preferred Stock.
(b) After the Holders of all shares of Series D Preferred Stock as of the
Record Date shall have been paid in full the amounts to which they are entitled
in Section 6(a) hereof, such Holders shall not be entitled to any further
participation in any distribution of assets of the Corporation and the remaining
assets of the Corporation shall be distributed to the holders of Junior
Securities in accordance with their terms.
(c) Written notice of the Record Date for a liquidation, dissolution or
winding up of the Corporation, as applicable, stating a payment or payments and
the place where such payment or payments shall be payable, shall be delivered to
the Holders not less than 15 (fifteen) Business Days prior to the earliest
payment date stated therein. As used herein, "Business Day" shall mean any day
other than a Saturday, Sunday or other day on which commercial banks in the
State of New York are authorized or required by law or executive order to close.
(d) For the purposes of this Section 6, neither the sale, lease, transfer,
conveyance or other disposition (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property, stock or assets of
the Corporation nor the consolidation or merger of the Corporation with or into
one or more entities, or any dividend on or repurchase of any capital stock of
the Corporation, or any recapitalization of the Corporation, shall be deemed to
be a liquidation, dissolution or winding up of the Corporation; provided that
the Holders shall nevertheless be entitled from and after any such sale, lease,
transfer, conveyance or other disposition or consolidation or merger to the
rights provided by this Section 6.
Section 7. Conversion.
(a) The shares of Series D Preferred Stock shall be convertible, in whole
or in part, at the option of the Holders thereof, at any time prior to the
Anniversary Date (as defined below) into a number of shares of Common Stock
equal to (A) the aggregate Accrued Liquidation Preference of the Series D
Preferred Stock to be converted as of the Conversion Date (as defined below),
divided by (B) the Conversion Price (as defined below). In order to convert
shares of Series D Preferred Stock, the Holder thereof shall (i) deliver an
irrevocable written notice (the "Conversion Notice") to the Corporation
specifying the number of shares of Series D Preferred Stock to be converted and
the name in which such Holder wishes the certificate for shares of Common Stock
to be issued, and (ii) surrender the certificate for such shares of Series D
Preferred Stock to the Corporation and deliver such additional documents as the
Corporation shall reasonably request in connection with such conversion.
(b) The shares of Series D Preferred Stock shall be convertible, in whole
and not in part, at the option of the Corporation, on the Corporation Conversion
Date (as defined below) into a number of shares of Common Stock equal to (A) the
aggregate Accrued Liquidation Preference of the Series D Preferred Stock to be
converted, divided by (B) the Conversion Price. In order to convert shares of
Series D Preferred Stock, the Corporation shall deliver a written notice to each
Holder.
(c) If the Series D Preferred Stock is converted into the Common Stock
pursuant to Section 7(a) or Section 7(b), the Corporation shall deliver or cause
to be delivered as directed by the relevant Holder promptly (i) certificates
representing the full number of validly issued, fully paid and nonassessable
shares of Common Stock to which such Holder shall be entitled, and (ii) if less
than the full number of shares of Series D Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares of Series D Preferred
Stock evidenced by such surrendered certificate or certificates less the number
of shares of Series D Preferred Stock being converted. Such conversion shall be
deemed to have occurred at the close of business on the Conversion Date so that
as of such time the rights of the Holder thereof to the shares of Series D
Preferred Stock being converted shall cease, except for the right to receive
certificates representing shares of Common Stock in accordance herewith, and the
Holder entitled to receive the shares of Common Stock issued as a result of such
conversion shall be treated for all purposes as having become the holder of
record of such shares of Common Stock at such time.
(d) In connection with the conversion of any shares of Series D Preferred
Stock, no fractions of shares of Common Stock shall be issued. If more than one
share of Series D Preferred Stock shall be surrendered for conversion by the
same Holder on the same Conversion Date, the number of full shares of Common
Stock issuable on conversion thereof shall be computed on the basis of the total
number of shares of Series D Preferred Stock so surrendered. If the conversion
of any shares of Series D Preferred Stock results in a fraction of a share of
Common Stock, the number of shares of Common Stock issuable to the Holder shall
be rounded down to the nearest whole number.
(e) The Corporation shall at all times when the Series D Preferred Stock
shall be outstanding, reserve and keep available out of its authorized but
unissued capital stock, for the purpose of effecting the conversion of the
Series D Preferred Stock, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding Series D Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series D Preferred Stock,
the Corporation shall take such corporate action as may be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation, engaging
in best efforts to obtain the requisite stockholder approval of any necessary
amendment to the Certificate of Incorporation.
(f) The Corporation's obligations to issue and deliver shares of Common
Stock upon conversion of Series D Preferred Stock in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
any Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by any Holder or any other person
of any obligation to the Corporation or any violation or alleged violation of
law by any Holder or any other person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Corporation to
any Holder in connection with the issuance of such shares of Common Stock.
Section 8. Adjustment of Conversion Price.
(a) If the Corporation, at any time after the commencement of the Trading
Price Averaging Period and before the Conversion Date, pays a dividend or makes
a distribution to all holders of shares of Common Stock in shares of Common
Stock, then in each such case the Volume Weighted Average Price of the Common
Stock on each Trading Day during the Trading Price Averaging Period prior to the
Ex-Dividend Date (as defined below) shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding
immediately before such dividend or distribution and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such
dividend or distribution.
(b) If the Corporation, at any time after the commencement of the Trading
Price Averaging Period and before the Conversion Date, (i) subdivides the
outstanding shares of Common Stock into a larger number of shares or (ii)
combines the outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Volume Weighted Average Price of the Common Stock on
each Trading Day during the Trading Price Averaging Period prior to the
effective date for such subdivision or combination shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
(c) If the Corporation, at any time after the commencement of the Trading
Price Averaging Period and before the Conversion Date, issues rights or warrants
to all holders of Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market Price
(as defined below) of the Common Stock (except for any rights issued in a Rights
Offering), then the Volume Weighted Average Price of the Common Stock on each
Trading Day during the Trading Price Averaging Period prior to the Ex-Dividend
Date for such issuance shall be multiplied by a fraction of which (x) the
numerator shall be the number of shares of Common Stock outstanding immediately
before such issuance plus the number of shares of Common Stock equal to the
quotient of (A) the aggregate price payable to exercise such rights or warrants
divided by (B) the Current Market Price of the Common Stock, and (y) the
denominator shall be the number of shares of Common Stock outstanding
immediately before such issuance plus the total number of shares of Common Stock
issuable pursuant to such rights or warrants.
(d) If the Corporation, at any time after the commencement of the Trading
Price Averaging Period and before the Conversion Date, pays a dividend or makes
a distribution to all holders of Common Stock of any Distributed Property (but
excluding the Common Stock and rights or warrants to subscribe for Common
Stock), then the Volume Weighted Average Price of the Common Stock on each
Trading Day during the Trading Price Averaging Period prior to the Ex-Dividend
Date for such distribution or dividend shall be multiplied by a fraction of
which (x) the numerator shall be the Current Market Price of Common Stock and
(y) the denominator shall be such Current Market Price of Common Stock plus the
amount (as determined pursuant to subsection (g) below), on the Ex-Dividend Date
for such distribution, of the Distributed Property so distributed, expressed as
an amount per share of Common Stock.
(e) If, at any time after the commencement of the Trading Price Averaging
Period and before the Conversion Date, a tender or exchange offer made by the
Corporation or any subsidiary of the Corporation for all or any portion of the
Common Stock shall be consummated and such tender or exchange offer shall
involve a consideration per share of Common Stock having a value (as determined
pursuant to subsection (g) below) on the Expiration Date (as defined below) that
exceeds the Closing Sale Price of the Common Stock on the Trading Day next
succeeding such Expiration Date, then the Volume Weighted Average Price of the
Common Stock on each Trading Day during the Trading Price Averaging Period on or
prior to such Expiration Date shall be multiplied by a fraction of which (x) the
numerator shall be the product of the Closing Sale Price of the Common Stock on
the Expiration Date multiplied by the number of shares of Common Stock
outstanding on the Expiration Date, and (y) the denominator shall be the sum of
(A) the product of the Closing Sale Price of the Common Stock on the Expiration
Date multiplied by the number of shares of Common Stock outstanding immediately
after the Expiration Date and (B) the aggregate value (as determined pursuant to
subsection (g) below), on the Expiration Date, of all cash and any other
consideration paid or payable for shares validly tendered or exchanged and not
withdrawn as of the Expiration Date. For purposes of this subsection, the
"Expiration Date" means the last date on which tenders or exchanges may be made
pursuant to the tender or exchange offer.
(f) If there is a Change of Control at any time while Series D Preferred
Stock is outstanding, then upon any subsequent conversion of Series D Preferred
Stock, each Holder shall have the right to receive, for each share of Common
Stock that would have been issuable upon such conversion absent such Change of
Control, the same kind and amount of securities, cash or property as it could
have been entitled to receive upon the occurrence of such Change of Control if
it had been, immediately prior to such Change of Control, the holder of one
share of Common Stock (the "Alternate Consideration"). For purposes of any such
conversion, the determination of the applicable Conversion Prices for the Series
D Preferred Stock shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Change of Control, and the Corporation
shall apportion the Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Change of Control, then
each Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of Series D Preferred Stock following such Change
of Control. To the extent necessary to effectuate the foregoing provisions, any
successor to the Corporation or surviving entity in such Change of Control shall
issue to the Holder a new series of preferred stock consistent with the
foregoing provisions and evidencing the Holders' right to convert such preferred
stock into Alternate Consideration. The terms of any agreement pursuant to which
a Change of Control is effected shall include terms requiring any such successor
or surviving entity to comply with the provisions of this paragraph (f) and
insuring that the Series D Preferred Stock (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a Change
of Control.
(g) For purposes of subsections (c) and (d) above, the "Current Market
Price" means the average of the Closing Sale Prices of the Common Stock for the
ten consecutive Trading Days immediately prior to the Ex-Dividend Date for the
distribution requiring such computation. For purposes of subsections (d) and (e)
above, the amount of the Distributed Property or the value of the consideration
shall equal: (i) in case of cash, the amount of cash so distributed per share of
Common Stock, (ii) in case of securities traded on a securities exchange or
over-the-counter market, the Volume Weighted Average Price of a share of such
securities on the applicable date multiplied by the number of shares of such
securities distributed per share of Common Stock, and (iii) in case of any
property other than cash or securities referred in clause (ii) above, the fair
market value thereof as determined in good faith by the Board. All calculations
under this Section 8 shall be made to the nearest cent or the nearest 1/100th of
a share, as applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Corporation, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.
(h) Upon the occurrence of each adjustment pursuant to this Section 8, the
Corporation at its expense will promptly compute such adjustment in accordance
with the terms hereof and prepare a certificate describing in reasonable detail
such adjustment and the transactions giving rise thereto, including all facts
upon which such adjustment is based. Upon written request, the Corporation will
promptly deliver a copy of each such certificate to each Holder.
(i) If the Corporation (i) declares a dividend or any other distribution of
cash, securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or
purchase any capital stock of the Corporation or any subsidiary (except for a
Rights Offering), (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Change of Control, or
(iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Corporation, then the Corporation shall deliver to each Holder a
notice describing the material terms and conditions of such transaction, at
least 20 Business Days prior to the applicable record or effective date on which
a person would need to hold Common Stock in order to participate in or vote with
respect to such transaction.
Section 9. Charges, Taxes and Expenses. Issuance of certificates for shares
of Series D Preferred Stock and for shares of Common Stock issued on conversion
of (or otherwise in respect of) the Series D Preferred Stock shall be made
without charge to the Holders for any issue or transfer tax, withholding tax,
transfer agent fee or other incidental tax or expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid by the
Corporation. The Holder shall be responsible for all other tax liability that
may arise as a result of holding or transferring the Series D Preferred Stock or
receiving shares of Common Stock in respect of the Series D Preferred Stock.
Section 10. Replacement Certificates. If any certificate evidencing Series
D Preferred Stock or shares of Common Stock is mutilated, lost, stolen or
destroyed, or a Holder fails to deliver such certificate as may otherwise be
provided herein, the Corporation shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and
substitution for such certificate, a new certificate, but only upon receipt of
evidence reasonably satisfactory to the Corporation of such loss, theft or
destruction (in such case) and, in each case, customary and reasonable
indemnity, if requested. Applicants for a new certificate under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Corporation
may prescribe.
Section 11. Rights Offering Credit. In connection with any Rights Offering,
each Holder of Series D Preferred Stock may elect, at its option, either (1) to
credit the Accrued Liquidation Preference of such Holder's Series D Preferred
Stock toward any financial commitment such Holder may have in respect of Common
Stock not acquired pursuant to the exercise of rights in such Rights Offering,
provided such Holder shall convert such Series D Preferred Stock in accordance
with the terms hereof (the "Crediting Option"), (2) to separately satisfy such
commitment and to have the conversion of such Series D Preferred Stock result in
the issuance of shares of Common Stock in addition to those acquired in the
Rights Offering (the "Overallotment Option") or (3) to elect a combination of
the Crediting Option and the Overallotment Option.
Section 12. Definitions.
(a) "Anniversary Date" means one-year anniversary of the first date on
which shares of the Series D Preferred Stock are issued pursuant to this
Certificate of Designations.
(b) "Average Trading Price" of the Common Stock for the Trading Price
Averaging Period means the average of each Volume Weighted Average Price of the
Common Stock on each Trading Day during such period.
(c) "Change of Control" means:
(i) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), 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 one of its wholly owned
subsidiaries;
(ii) the adoption of a plan relating to the liquidation, dissolution
or winding up of the Corporation;
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) or series of transactions pursuant
to which immediately after the consummation thereof the persons owning the
then-outstanding Voting Securities (as defined below) of the Corporation
immediately prior to such consummation shall not own, directly or
indirectly, a majority in the aggregate (by reason of such prior ownership)
of the then-outstanding Voting Securities of the Corporation or the
surviving entity if other than the Corporation; and
(iv) the first day on which a majority of the members of the Board are
not Continuing Directors (as defined below).
(d) "Closing Sale Price" of any share of Common Stock or any other security
on any Trading Day means:
(i) the closing sale price per share of such security (or, if no
closing sale price is reported, the average of the closing bid and closing
ask prices or, if more than one in either case, the average of the average
closing bid and the average closing ask prices) on such date as reported in
composite transactions for the principal U.S. securities exchange on which
such security is traded;
(ii) if such security is not listed on a U.S. national or regional
securities exchange, the last quoted bid price of such security on that
date in the over-the-counter market as reported by Pink Sheets LLC or a
similar organization; or
(iii) if such security is not so quoted by Pink Sheets LLC or a
similar organization, as determined by a nationally recognized securities
dealer retained by the Corporation for that purpose.
The Closing Sale Price shall be determined without reference to extended or
after hours trading.
(e) "Continuing Director" means, as of any date of determination, any
member of the Board who:
(i) was a member of such Board on the date hereof; or
(ii) was nominated for election or elected to the Board with the
approval of a majority of the Continuing Directors who were members of the
Board at the time of such nomination or election (or any Continuing
Directors appointed by Continuing Directors).
(f) "Conversion Date" means: (i) if the shares of Series D Preferred Stock
are converted at the option of the Holders thereof, the date on which the
Conversion Notice is delivered to the Corporation; and (ii) if the shares of
Series D Preferred Stock are converted at the option of the Corporation, the
Corporation Conversion Date.
(g) "Conversion Price" means: (i) if (x) a Rights Offering is consummated
prior to the ninetieth day following the first date on which shares of the
Series D Preferred Stock are issued pursuant to this Certificate of Designations
and (y) the Series D Preferred Stock is converted at the option of a Holder
thereof during the period of ten Business Days immediately following the
consummation of such Rights Offering or the Series D Preferred Stock is
converted at the option of the Corporation on the tenth Business Day following
such consummation, the subscription price for a share of Common Stock in such
Rights Offering; and (ii) in all other cases, the Average Trading Price of the
Common Stock for the thirty-Trading Day period ending on the fifth Trading Day
immediately preceding the Conversion Date (the "Trading Price Averaging
Period").
(h) "Corporation Conversion Date" means: (i) if a Rights Offering is
consummated prior to the ninetieth day following the first date on which shares
of the Series D Preferred Stock are issued pursuant to this Certificate of
Designations, the tenth Business Day following such consummation; and (ii) if no
Rights Offering is consummated prior to the ninetieth day following the first
date on which shares of the Series D Preferred Stock are issued pursuant to this
Certificate of Designations, the Anniversary Date.
(i) "Ex-Dividend Date" means the first date on which the shares of Common
Stock trade on the applicable exchange or in the applicable market, regular way,
without the right to receive the relevant dividend, distribution or issuance.
(j) "Market Disruption Event" means the occurrence or existence on any
scheduled Trading Day of any material suspension or limitation imposed on
trading (by reason of movements in price exceeding limits permitted by the stock
exchange or otherwise) of, or any material unavailability, through a recognized
system of public dissemination of transaction information, of accurate price,
volume or related information in respect of (1) the Common Stock on the
principal exchange or market on which the Common Stock is traded, or (2) any
options contracts or futures contracts relating to the Common Stock, or any
options on such futures contracts, on any exchange or market.
(k) "Rights Offering" means an SEC-registered offering by the Corporation
of rights to purchase additional Common Stock to existing holders of Common
Stock that raises gross proceeds of at least $50 million.
(l) "Trading Day" means a day during which (i) the principal exchange or
market on which the Common Stock is traded is open for trading and has a
scheduled closing time of 4:00 p.m., New York City time (or the then standard
closing time for regular trading on the relevant exchange or market), or if the
Common Stock is not traded on any exchange or market, any Business Day, and (ii)
there is no Market Disruption Event.
(m) "Volume Weighted Average Price" on any Trading Day means:
(i) with respect to the Common Stock, the per share volume weighted
average price as displayed on Bloomberg (or any successor service) Page
XXXX.XX(equity)AQR in respect of the period from 9:30 a.m. to 4:00 p.m.
(New York City time) on such Trading Day (or, if such Volume Weighted
Average Price is unavailable, the market value per share of Common Stock on
such Trading Day as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Corporation).
(ii) with respect to any other securities, the per share volume
weighted average price as determined in a manner substantially consistent
with the manner in which the "Volume Weighted Average Price" of a share of
Common Stock is to be determined in accordance with clause (i) as
determined in good faith by the Board.
(n) "Voting Securities" means securities of any class or classes of the
Corporation then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors (or persons
performing similar functions).
Section 13. Miscellaneous.
(a) Any and all notices or other communications or deliveries hereunder
(including without limitation any Conversion Notice) shall be in writing and
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section 13 prior to 4:30 p.m. (New York City
time) on a Business Day, (ii) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section 13 on a day that is not a Business
Day or later than 4:30 p.m. (New York City time) on any Business Day, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be:
(i) if to the Corporation, to 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000,
facsimile: (000) 000-0000, Attention: General Counsel, or (ii) if to a Holder,
to the address or facsimile number appearing on the Corporation's stockholder
records or such other address or facsimile number as such Holder may provide to
the Corporation in accordance with this Section 13.
(b) Any registered Holder may proceed to protect and enforce its rights and
the rights of such Holder by any available remedy by proceeding at law or in
equity to protect and enforce any such rights, whether for the specific
enforcement of any provision in this Certificate of Designations or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its ____________________ this __ day of February, 2008.
FOAMEX INTERNATIONAL INC.
By:__________________________
Name:
Title:
ANNEX C
CERTIFICATE OF DESIGNATIONS
of
SERIES E PREFERRED STOCK
of
FOAMEX INTERNATIONAL INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
----------------------
Foamex International Inc., a Delaware corporation (the "Corporation"),
hereby certifies that this Certificate of Designations was duly adopted by
resolution of the Board of Directors of the Corporation (the "Board") in
accordance with Section 151 of the Delaware General Corporation Law.
Pursuant to the authority expressly granted to and vested in the Board by
the provisions of the Second Amended and Restated Certificate of Incorporation
of the Corporation (the "Certificate of Incorporation"), there is hereby
created, out of the Seven Million (7,000,000) shares of Preferred Stock, par
value $0.01 per share, of the Corporation authorized in Article V of the
Certificate of Incorporation (the "Preferred Stock"), a series of the Preferred
Stock consisting of Sixty Thousand (60,000) shares, which series shall have the
following powers, designations, preferences and relative, participating,
optional or other rights, and the following qualifications, limitations and
restrictions (in addition to the powers, designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations and
restrictions, set forth in the Certificate of Incorporation which are applicable
to the Preferred Stock):
Section 1. Designation and Amount.
The shares of such series shall be designated as "Series E Preferred Stock"
(the "Series E Preferred Stock") and the number of shares constituting the
Series E Preferred Stock shall be Sixty Thousand (60,000). Such number of shares
may be increased or decreased by resolution of the Board; provided, that no
decrease shall reduce the number of shares of Series E Preferred Stock to a
number less than the number of such shares then outstanding.
Section 2. Rank.
The Series E Preferred Stock shall with respect to (i) the payment of the
Accrued Liquidation Preference (as defined below) in the event of a liquidation,
dissolution or winding up of the Corporation, (ii) dividends and (iii) all other
rights, preferences and privileges, rank senior to the common stock, par value
$0.01 per share, of the Corporation (the "Common Stock"), and each other class
or series of capital stock of the Corporation now or hereafter outstanding,
including, without limitation, any other class or series of Preferred Stock of
the Corporation now existing or hereafter created (the "Junior Securities");
provided, however, that the foregoing shall not apply to the extent the Holders
(as defined below) give the approvals described in Section 4(b) hereof.
Section 3. Dividends and Distributions. The holders of record of shares of
Series E Preferred Stock (the "Holders") will be entitled to cumulative
dividends on their shares at an annual rate equal to 9.00% per annum (the
"Dividend Rate") of the Accrued Liquidation Preference, compounding monthly.
Dividends on the outstanding shares of Series E Preferred Stock shall be
calculated on the basis of a 360-day year, shall accrue daily commencing on the
respective dates of original issue of such shares (which dates shall be
reflected on the certificates evidencing the same), and shall be deemed to
accrue from such date whether or not earned or declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. Accrued dividends shall not be payable by the Corporation
periodically (in cash or otherwise) while Series E Preferred Stock is
outstanding. In lieu of such periodic payment, the amount of accrued dividends
per share of Series E Preferred Stock shall be added to the Accrued Liquidation
Preference of that share on the last day of each month (such amount will accrue
further dividends each month in accordance with this Section 3).
Section 4. Voting Rights.
(a) The Holders shall not be entitled to any voting rights except as
hereinafter provided in this Section 4 or as otherwise required by law.
(b) In addition to any vote or consent of stockholders required by law, the
affirmative vote or consent of the Holders of at least 80% of the shares of
Series E Preferred Stock at the time outstanding, voting or consenting as a
separate class (with each Holder being entitled to one vote per share), given in
person or by proxy, shall be necessary to (a) authorize, create, issue or
increase (including by way of reclassifying, converting or exchanging any
securities of the Corporation) the amount of any (i) class or series of capital
stock of the Corporation ranking senior or pari passu to the Series E Preferred
Stock (including any security exchangeable for, convertible into, or evidencing
the right to purchase, any such capital stock) or (ii) any class or series of
capital stock of the Corporation or any security convertible or exercisable for
any class or series of capital stock of the Corporation that is redeemable
mandatorily or at the option of the holder thereof; (b) amend, alter or repeal
any provision of the Certificate of Incorporation of the Corporation if such
amendment or alteration alters or changes the powers, preferences or rights of
the Series E Preferred Stock so as to affect them adversely; (c) declare, pay or
set aside for payment, any dividend on any Junior Securities or redeem,
repurchase or otherwise acquire (or permit any person directly or indirectly
controlled by the Corporation to redeem, repurchase or otherwise acquire) any
Junior Securities (other than the repurchase of Common Stock held by employees,
officers or directors of the Corporation or any of its subsidiaries in
accordance with arrangements approved by the Board); or (d) authorize or take
any other action if such action alters or changes any of the rights of the
Series E Preferred Stock in any respect or otherwise would be inconsistent with
this Certificate of Designations.
Section 5. Registration.
(a) The Corporation shall register the issuance and ownership of shares of
the Series E Preferred Stock, upon records to be maintained by the Corporation
for that purpose (the "Series E Preferred Stock Register"), in the name of the
Holders thereof from time to time. The Corporation may deem and treat the
registered Holder of shares of Series E Preferred Stock as the absolute owner
thereof for the purpose of any conversion thereof or any distribution to such
Holder, and for all other purposes, absent actual notice to the contrary.
(b) The Corporation shall register the transfer of any shares of Series E
Preferred Stock in the Series E Preferred Stock Register, upon surrender of
certificates evidencing such shares to the Corporation at its address specified
herein and delivery of such additional documents as the Corporation shall
reasonably request in connection with such transfer. Upon any such registration
of transfer, a new certificate evidencing the shares of Series E Preferred Stock
so transferred shall be issued to the transferee and a new certificate
evidencing the remaining portion of the shares not so transferred, if any, shall
be issued to the transferring Holder.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon the occurrence of a liquidation, dissolution or winding up of the
Corporation, the Holders as of the record date established by the Board for
determination of stockholders entitled to receive a distribution in such
liquidation, dissolution or winding up of the Corporation, as applicable (the
"Record Date"), shall be paid in cash for each share of Series E Preferred Stock
then held, out of, but only to the extent of, the assets of the Corporation
legally available for distribution to its stockholders, before any payment or
distribution is made in respect of any Junior Securities, an amount equal to
the sum of (A) the Original Liquidation Preference (as defined below) (as
adjusted for any stock split, combination, reclassification or similar event
involving the Series E Preferred Stock), plus (B) the monthly addition to the
Accrued Liquidation Preference pursuant to Section 3 hereof and, (C) without
duplication of any amounts referred to in the preceding clause (B), all accrued
and unpaid dividends on such shares of Series E Preferred Stock (such sum, the
"Accrued Liquidation Preference") on the date of such payment in respect of the
Series E Preferred Stock. If the assets of the Corporation available for
distribution to the Holders shall be insufficient to permit payment in full to
such Holders of the aggregate amount payable pursuant to the preceding sentence,
then all of the assets available for distribution to the Holders shall be
distributed among and paid to such Holders ratably in proportion to the amounts
that would be payable to such Holders if such assets were sufficient to permit
payment in full. As used herein, the "Original Liquidation Preference" shall
mean $1,000.00 per share of Series E Preferred Stock.
(b) After the Holders of all shares of Series E Preferred Stock as of the
Record Date shall have been paid in full the amounts to which they are entitled
in Section 6(a) hereof, such Holders shall not be entitled to any further
participation in any distribution of assets of the Corporation and the remaining
assets of the Corporation shall be distributed to the holders of Junior
Securities in accordance with their terms.
(c) Written notice of the Record Date for a liquidation, dissolution or
winding up of the Corporation, as applicable, stating a payment or payments and
the place where such payment or payments shall be payable, shall be delivered to
the Holders not less than 15 (fifteen) Business Days prior to the earliest
payment date stated therein. As used herein, "Business Day" shall mean any day
other than a Saturday, Sunday or other day on which commercial banks in the
State of New York are authorized or required by law or executive order to close.
(d) For the purposes of this Section 6, neither the sale, lease, transfer,
conveyance or other disposition (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property, stock or assets of
the Corporation nor the consolidation or merger of the Corporation with or into
one or more entities, or any dividend on or repurchase of any capital stock of
the Corporation, or any recapitalization of the Corporation, shall be deemed to
be a liquidation, dissolution or winding up of the Corporation; provided that
the Holders shall nevertheless be entitled from and after any such sale, lease,
transfer, conveyance or other disposition or consolidation or merger to the
rights provided by this Section 6.
Section 7. Redemption, Repurchase and Cancellation.
(a) At any time or from time to time following the issuance of the Series E
Preferred Stock, the Corporation may elect to redeem, in whole or in part, out
of funds legally available therefor, the outstanding shares of Series E
Preferred Stock by paying in cash therefor an amount per share (such amount, the
"Redemption Price") equal to 100% of the Accrued Liquidation Preference on the
redemption date. If less than all outstanding shares of Series E Preferred Stock
are to be redeemed, the Corporation shall redeem shares pro rata among the
Holders thereof in accordance with the respective numbers of shares of Series E
Preferred Stock held by each of them.
(b) At any time or from time to time beginning on a date that is six months
and one day following the latest of (i) the Maturity Date as defined in the
First Lien Term Credit Agreement, (ii) the Maturity Date as defined in the
Second Lien Term Credit Agreement and (iii) the Stated Termination Date as
defined in the Revolving Credit Agreement, each Holder shall have the right, at
such Holder's option, to require the Corporation to repurchase for cash all or a
portion of such Holder's shares of Series E Preferred Stock at a price per share
(such price, the "Repurchase Price") equal to 100% of the Accrued Liquidation
Preference on the repurchase date; provided, however, that the Corporation shall
not be required to purchase such shares if prohibited by any provision of the
Credit Agreements.
(c) Notice of any redemption of shares of Series E Preferred Stock pursuant
to Section 7(a) hereof shall specify a date and procedures for such redemption
and shall be sent not less than 30, but not more than 60, days prior to such
date fixed for redemption to each Holder of shares of Series E Preferred Stock
to be redeemed.
(d) In order to facilitate the redemption of shares of Series E Preferred
Stock pursuant to Section 7(a) hereof, the Board may fix a record date for the
determination of the Holders of shares of Series E Preferred Stock to be
redeemed, not more than 60 days or less than 30 days prior to the date fixed for
such redemption.
(e) Repurchases of shares of Series E Preferred Stock pursuant to Section
7(b) hereof shall be made upon (i) delivery to the Corporation by a Holder,
prior to the close of business on the third Business Day immediately preceding
the repurchase date, of a notice setting forth the number of shares of Series E
Preferred Stock to be repurchased and stating that such shares are to be
repurchased by the Corporation pursuant to the applicable provisions of this
Certificate of Designations, and (ii) delivery to the Corporation by a Holder of
the shares of Series E Preferred Stock to be repurchased on or before the third
Business Day immediately preceding the repurchase date.
(f) If the Series E Preferred Stock is to be redeemed or repurchased
pursuant to this Section 7, then, upon payment of the Redemption Price or
Repurchase Price, as applicable, in accordance with this Section 7, on and after
the date of such redemption or repurchase, all rights of any Holder of such
shares of Series E Preferred Stock shall cease and terminate. Such redeemed or
repurchased shares of Series E Preferred Stock shall no longer be deemed to be
outstanding, whether or not the certificates representing such shares have been
received by the Corporation.
Section 8. Charges, Taxes and Expenses. Issuance of certificates for shares
of Series E Preferred Stock shall be made without charge to the Holders for any
issue or transfer tax, withholding tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Corporation. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or
transferring the Series E Preferred Stock.
Section 9. Replacement Certificates. If any certificate evidencing Series E
Preferred Stock is mutilated, lost, stolen or destroyed, or a Holder fails to
deliver such certificate as may otherwise be provided herein, the Corporation
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution for such certificate, a new
certificate, but only upon receipt of evidence reasonably satisfactory to the
Corporation of such loss, theft or destruction (in such case) and, in each case,
customary and reasonable indemnity, if requested. Applicants for a new
certificate under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party
costs as the Corporation may prescribe.
Section 10. Rights Offering Credit. In connection with any Rights Offering
(as defined below), each Holder of Series E Preferred Stock may elect, at its
option, to credit the Accrued Liquidation Preference of such Holder's Series E
Preferred Stock, in whole or in part, toward any financial commitment such
Holder may have in respect of such Rights Offering.
Section 11. Definitions.
"Credit Agreements" means the First Lien Term Credit Agreement, the Second
Lien Term Credit Agreement and the Revolving Credit Agreement.
"First Lien Term Credit Agreement" means the First Lien Term Credit
Agreement, dated as of February 12, 2007, by and among Foamex L.P., as Borrower
(the "Borrower"), the Corporation, as Parent Guarantor, Bank of America, N.A.,
as Administrative Agent and Collateral Agent (the "Administrative Agent"), and
the lenders and other parties named therein, as may be amended or restated from
time to time.
"Revolving Credit Agreement" means the Revolving Credit Agreement, dated as
of February 12, 2007, by and among the Borrower, the Corporation and the other
Guarantors named thereto, the Administrative Agent and the lenders and other
parties named thereto, as may be amended or restated from time to time.
"Rights Offering" means an SEC-registered offering by the Corporation of
rights to purchase additional Common Stock to existing holders of Common Stock
that raises gross proceeds of at least $50 million.
"Second Lien Term Credit Agreement" means the Second Lien Term Credit
Agreement, dated as of February 12, 2007, by and among the Borrower, the
Corporation, the Administrative Agent and the lenders and other parties named
therein, as may be amended or restated from time to time.
Section 12. Miscellaneous.
(a) Any and all notices or other communications or deliveries hereunder
(including without limitation any Conversion Notice) shall be in writing and
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section 12 prior to 4:30 p.m. (New York City
time) on a Business Day, (ii) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section 12 on a day that is not a Business
Day or later than 4:30 p.m. (New York City time) on any Business Day, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be:
(i) if to the Corporation, to 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000,
facsimile: (000) 000-0000, Attention: General Counsel, or (ii) if to a Holder,
to the address or facsimile number appearing on the Corporation's stockholder
records or such other address or facsimile number as such Holder may provide to
the Corporation in accordance with this Section 12.
(b) Any registered Holder may proceed to protect and enforce its rights and
the rights of such Holder by any available remedy by proceeding at law or in
equity to protect and enforce any such rights, whether for the specific
enforcement of any provision in this Certificate of Designations or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its ___________________ this __ day of ___________,
_______.
FOAMEX INTERNATIONAL INC.
By: ____________________
Name:
Title:
