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EXHIBIT 10.37
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and among
UNC INCORPORATED
AND
THE PURCHASERS SIGNATORY HERETO
Dated as of October 4, 1995
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TABLE OF CONTENTS
Page
1. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Acquisition Shares. . . . . . . . . . . . . . . . . . 1
1.2 Firm Shares . . . . . . . . . . . . . . . . . . . . . 1
1.3 Terms of Series B Preferred Stock and Series C
Preferred Stock . . . . . . . . . . . . . . . . . . . 2
1.4 Purchase Price. . . . . . . . . . . . . . . . . . . . 2
1.5 Closing . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Commitment and Funding Fees . . . . . . . . . . . . . 3
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 3
2.1 Corporate Organization and Good Standing. . . . . . . 3
2.2 Authorization . . . . . . . . . . . . . . . . . . . . 3
2.3 Consents and Approvals; No Violations . . . . . . . . 4
2.4 Capital Stock . . . . . . . . . . . . . . . . . . . . 4
2.5 Good Title. . . . . . . . . . . . . . . . . . . . . . 5
2.6 Subsidiaries. . . . . . . . . . . . . . . . . . . . . 5
2.7 Offering of Shares. . . . . . . . . . . . . . . . . . 5
2.8 SEC Reports; Financial Information. . . . . . . . . . 6
2.9 Absence of Certain Changes or Events. . . . . . . . . 6
2.10 Legal Proceedings, etc. . . . . . . . . . . . . . . . 7
2.11 Title to Properties, Absence of Liens and
Encumbrances, etc.. . . . . . . . . . . . . . . . . . 7
2.12 Contracts and Commitments, etc. . . . . . . . . . . . 7
2.13 Compliance with Applicable Law. . . . . . . . . . . . 7
2.14 Investment Company Act of 1940. . . . . . . . . . . . 8
2.15 Public Utility Holding Company Act of 1935, etc.. . . 8
2.16 No Brokers. . . . . . . . . . . . . . . . . . . . . . 8
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. . . . . . . . . 8
3.1 Authorization . . . . . . . . . . . . . . . . . . . . 8
3.2 Consents and Approvals; No Violations . . . . . . . . 8
3.3 No Brokers. . . . . . . . . . . . . . . . . . . . . . 9
3.4 Investment Intent; Related Matters. . . . . . . . . . 9
3.5 Ownership of Company Capital Stock. . . . . . . . . . 9
4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Conduct of the Business of the Company Prior to
the Outside Date. . . . . . . . . . . . . . . . . . . 9
4.2 Confidentiality . . . . . . . . . . . . . . . . . . . 10
4.3 Public Announcements. . . . . . . . . . . . . . . . . 11
4.4 Best Efforts. . . . . . . . . . . . . . . . . . . . . 11
4.5 Shareholder Rights Plan . . . . . . . . . . . . . . . 11
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5. CONDITIONS PRECEDENT TO THE PURCHASERS' OBLIGATIONS . . . . . . . 12
5.1 Representations and Warranties of the Company True;
Performance by the Company. . . . . . . . . . . . . . 12
5.2 Litigation Affecting Closing. . . . . . . . . . . . . 12
5.3 Approvals and Consents. . . . . . . . . . . . . . . . 12
5.4 Opinions of Counsel to the Company. . . . . . . . . . 13
5.5 The Shares. . . . . . . . . . . . . . . . . . . . . . 14
5.6 No Material Adverse Change. . . . . . . . . . . . . . 14
5.7 No Adverse Events Under Shareholder Rights Plan . . . 15
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AT THE
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Representations and Warranties of the Purchasers True;
Performance by the Purchasers . . . . . . . . . . . . 15
6.2 The Purchase Price. . . . . . . . . . . . . . . . . . 15
6.3 Opinion of Counsel to the Purchaser . . . . . . . . . 15
6.4 Litigation Affecting Closing. . . . . . . . . . . . . 16
6.5 Approvals and Consents. . . . . . . . . . . . . . . . 16
7. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Restrictive Legend. . . . . . . . . . . . . . . . . . 17
7.2 Required Registrations. . . . . . . . . . . . . . . . 17
7.3 "Piggy-Back" Registrations. . . . . . . . . . . . . . 18
7.4 Registration Procedures . . . . . . . . . . . . . . . 19
7.5 Indemnification; Contribution . . . . . . . . . . . . 20
8. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITIES . . . . . 23
10. CERTAIN AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Standstill. . . . . . . . . . . . . . . . . . . . . . 24
10.2 Agreement Respecting Board Representation . . . . . . 25
10.3 No redemptions or cash payments . . . . . . . . . . . 26
11. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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12. GENERAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
12.1 Amendment and Waiver. . . . . . . . . . . . . . . . . 27
12.2 Assignment. . . . . . . . . . . . . . . . . . . . . . 28
12.3 Governing Law . . . . . . . . . . . . . . . . . . . . 28
12.4 Counterparts. . . . . . . . . . . . . . . . . . . . . 28
12.5 Headings. . . . . . . . . . . . . . . . . . . . . . . 28
12.6 Severability. . . . . . . . . . . . . . . . . . . . . 28
12.7 Termination . . . . . . . . . . . . . . . . . . . . . 28
SCHEDULES
SCHEDULE 1 Names of Purchasers
SCHEDULE 2 Acceptable Acquisition
EXHIBITS
Exhibit A Series B Certificate of Designation
Exhibit B Series C Certificate of Designation
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 4, 1995, by and among UNC
Incorporated, a Delaware corporation (the "Company"), and the persons set
forth on Schedule 1 hereto (the "Purchasers").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, up to 250,000 shares of
a newly created series of Preferred Stock of the Company, upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE.
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1.1 Acquisition Shares. Upon the terms and subject to the
conditions set forth herein, if the Company shall consummate one or more
acquisitions of a business or entity meeting the terms and conditions set
forth on Schedule 2 hereto (an "Acceptable Acquisition") on or prior to the
Outside Date (as hereinafter defined), the Company shall have the option (the
"Company Option") to sell to the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to the extent that the Company exercises
the Company Option, to purchase from the Company, on any Closing Date (as
hereinafter defined) the number of shares (collectively, the "Acquisition
Shares") of the Company's Series B Senior Cumulative Convertible Preferred
Stock, par value $1.00 per share (the "Series B Preferred Stock"), set forth
opposite the name of each such Purchaser on Schedule 1 hereto under the column
"Acquisition Shares." The Company Option may be exercised by the Company upon
written notice delivered to each of the Purchasers at least 20 days prior to
any Closing Date. The Company Option may be exercised by the Company, in
whole or in part, provided, however, that the Company Option may only be
exercised by the Company for a minimum of 50,000 Acquisition Shares in the
aggregate and in integral multiples of 10,000 Acquisition Shares in the
aggregate. Any sales of Acquisition Shares by the Company pursuant to a
partial exercise of the Company Option by the Company shall be made to the
Purchasers pro rata in proportion to the number of Acquisition Shares set
forth opposite the name of each Purchaser on Schedule 1 hereto.
1.2 Firm Shares. Upon the terms and subject to the conditions
set forth herein, the Purchasers shall have the option (the "Purchasers'
Option") to purchase from the Company, and the Company agrees to sell to the
Purchasers, to the extent that the Purchasers exercise the Purchasers' Option,
on the Outside Date a number of shares (collectively, the "Firm Shares" and,
together with the Acquisition Shares, the "Shares") of Series B Preferred
Stock equal to the positive difference, if any, between (a) 100,000 and (b)
the aggregate number of Acquisition Shares sold by the Company to the
Purchasers on or prior to the Outside Date. The Purchasers' Option may be
exercised by the Purchasers, in whole or in part, provided, however, that the
Purchasers' Option may only be exercised by the Purchasers for a minimum of
10,000 Firm Shares in the aggregate and in integral multiples of 10,000 Firm
Shares in the aggregate. Any purchase of Firm Shares by the Purchasers
pursuant to a partial exercise of the Purchasers' Option by the Purchasers
shall be made by the Purchasers exercising the Purchasers' Option pro rata in
proportion to the number of Acquisition Shares set forth opposite the name of
each Purchaser on Schedule 1 hereto. The Purchasers' Option may be exercised
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by the Purchasers upon twenty days prior written notice delivered to the
Company on or prior to April 4, 1996.
1.3 Terms of Series B Preferred Stock and Series C Preferred
Stock. The Series B Preferred Stock shall have such designations,
preferences, qualifications, voting rights, limitations, restrictions and
relative rights as set forth in the Certificate of Designation, Preferences
and Rights attached hereto as Exhibit A (the "Series B Certificate of
Designation"). The Series C Senior Cumulative Preferred Stock, par value
$1.00 per share (the "Series C Preferred Stock"), of the Company issuable as
dividends on the Series B Preferred Stock shall have such designations,
preferences, qualifications, voting rights, limitations, restrictions and
relative rights as set forth in the Certificate of Designation, Preferences
and Rights attached hereto as Exhibit B (the "Series C Certificate of
Designation" and, together with the Series B Certificate of Designation, the
"Certificates of Designation").
1.4 Purchase Price. The purchase price for the Shares shall be
$100 per Share (the "Purchase Price").
1.5 Closing. Upon the terms and subject to the conditions set
forth herein, the closing (the "Closing") of the purchase and sale of (a) if
the Purchasers' Option is exercised by the Purchasers, any Firm Shares, and
(b) if the Company Option is exercised by the Company, any Acquisition Shares,
shall take place at the offices of Coudert Brothers, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York time, on (i) with
respect to any Acquisition Shares, the date of closing of the Acceptable
Acquisition, and (ii) with respect to the Firm Shares, the Outside Date, or
on such other date and at such other time and place as the parties hereto may
agree (the "Closing Date"). As used in this agreement the term "Outside Date"
shall mean the later of (i) April 4, 1996 or (ii) the date on which the twenty
day notice period with respect to the last Company Option notice or
Purchasers' Option notice delivered on or prior to April 4, 1996 expires. In
no event shall the Outside Date be later than April 24, 1996. The Purchasers
agree that any Closing with respect to the purchase and sale of Acquisition
Shares shall occur and the Company Option may be exercised by the Company
(subject to the notice provisions set forth in Section 1.1 hereof) in a manner
such that the Company receives the proceeds from the sale of the Acquisition
Shares as to which the Company Option is exercised immediately prior to or
simultaneous with the Company's consummation of the Acceptable Acquisition.
At any Closing, the Company shall deliver to each of the Purchasers
certificates representing the number of Shares to be sold to each such
Purchaser hereunder and each such Purchaser shall deliver to the Company by
wire transfer of immediately available funds an amount equal to the Purchase
Price for such Shares. Such Shares shall be delivered to the Purchasers free
and clear of all liens, security interests, options, charges, beneficial
interests, claims and encumbrances of every kind (and free and clear of any
agreement to create any of the foregoing), except for restrictions on transfer
imposed by this Agreement and restrictions on transfer arising under
applicable securities laws.
1.6 Commitment and Funding Fees. Simultaneously with the
execution of this Agreement, the Company shall pay Network III Holdings, LDC
or its designee ("Network III") a commitment fee in an amount equal to $1.00
multiplied by the aggregate number of Acquisition Shares set forth opposite
the names of all of the Purchasers on Schedule 1 hereto. At any Closing, the
Company shall pay to Network III an amount equal to $1.75 multiplied by the
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aggregate number of Shares purchased by all of the Purchasers at that Closing.
In the event that the Company does not exercise the Option as to all
Acquisition Shares and the Company shall, within one year of the Outside Date,
consummate the sale of any of its equity securities having terms similar to
the Series B Preferred Stock and on terms similar to the terms set forth
herein, the Company shall pay to Network III upon consummation of the sale of
such equity securities an amount equal to $2.00 multiplied by the difference
between (a) the aggregate number of Acquisition Shares set forth opposite the
names of all of the Purchasers on Schedule 1 hereto and (b) the aggregate
number of Shares sold by the Company to all Purchasers on or prior to the
Outside Date.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents, warrants and agrees with each of the Purchasers as follows:
2.1 Corporate Organization and Good Standing. The Company and
each Subsidiary (as defined in Section 2.6 hereof) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to
conduct its business as now being conducted and to own or lease the assets and
properties it now owns or holds under lease. The Company and each Subsidiary
is duly qualified or licensed to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted by it or the character of the assets and properties owned or leased
by it makes such qualification necessary, except for such jurisdictions where
the failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the business, financial condition,
operations, properties, assets or liabilities (collectively, the "Business")
of the Company and its Subsidiaries taken as a whole. The Company has
delivered to the Purchaser complete and correct copies of its Certificate of
Incorporation and By-Laws, the Certificate of Incorporation and By-Laws of
each Subsidiary, the Certificates of Designation and all resolutions of the
Board of Directors of the Company relating to this Agreement or the
transactions contemplated hereby (certified as correct in each case by the
Company's Secretary or an Assistant Secretary), in each case as in effect on
the date hereof (it being understood that the Company shall have two business
days from the date of this Agreement to file the Certificates of Designation
with the Secretary of State of the State of Delaware).
2.2 Authorization. The Company has full right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of the Company has
duly approved this Agreement and has duly authorized the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement constitutes the legal, valid and binding
agreement of the Company enforceable in accordance with its terms. The
issuance, sale and delivery of (a) the Shares, (b) the shares of Series C
Preferred Stock, issuable as dividends on the Shares pursuant to the Series
B Certificate of Designation (the "Dividend Shares"), and (c) the shares of
Common Stock, par value $.20 per share, of the Company (including the
associated stock purchase rights, the "Common Stock") issuable upon conversion
of the Shares (the "Conversion Shares") have been duly authorized by all
requisite corporate action on the part of the Company and, when issued and
delivered as provided in this Agreement and the Certificates of Designation,
will be validly issued, fully paid and non-assessable. The Dividend Shares
and Conversion Shares have been, and at all times prior to the issuance
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thereof in accordance with the Certificates of Designation, will be, duly
reserved for issuance.
2.3 Consents and Approvals; No Violations. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not: (i) violate any provision of the
Certificate of Incorporation or By-Laws of the Company or any Subsidiary; (ii)
assuming that all required approvals are obtained under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, violate any statute, ordinance, rule,
regulation, order or decree of any court or of any public, governmental or
regulatory body, agency or authority applicable to the Company or any
Subsidiary or by which any of their respective properties or assets may be
bound; (iii) except for any required filings under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, require any filing, declaration or
registration with, or permit, consent or approval of, or the giving of any
notice to, any public, governmental or regulatory body, agency or authority;
or (iv) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, or other evidence of indebtedness,
indenture, license, franchise, permit, agreement or other instrument or
obligation to which the Company or any Subsidiary is a party, or by which any
of them or any of their respective properties or assets may be bound,
excluding from the foregoing clause (iv) violations, breaches and defaults
which would not have a material adverse effect on the Business of the Company
and the Subsidiaries taken as a whole.
2.4 Capital Stock. The Company's authorized capital stock
consists of 50,000,000 shares of Common Stock, 17,692,781 shares of which are
issued and outstanding and 700,000 shares of which are held in treasury on the
date hereof, and 12,000,000 shares of preferred stock (which includes 250,000
shares of Series A Junior Participating Preferred Stock), no shares of which
are issued and outstanding on the date hereof. All of the issued and
outstanding shares of the Company's capital stock and of each Subsidiary's
capital stock have been duly authorized and validly issued and are fully paid
and non-assessable. Other than approximately 2,515,000 shares of Common Stock
reserved for issuance under employee benefit plans, shares of Common Stock
reserved for issuance pursuant to the conversion of the Company's 7-1/2%
Convertible Subordinated Debentures Due 2006, up to 300,000 shares of Common
Stock reserved for issuance to current or prospective members of senior
management of the Company for compensatory purposes ("Management Compensation
Shares") and 250,000 shares of Series A Junior Participating Preferred Stock
reserved for issuance under the Shareholder Rights Plan, as of the date of
this Agreement there are no existing options, warrants, calls, commitments or
agreements of any character to which the Company or any Subsidiary is a party
or by which it is bound calling for the issuance or sale of shares of its
respective capital stock or securities convertible into or exchangeable for
shares of such capital stock. As of the date of this Agreement neither the
Company nor any Subsidiary is a party to or otherwise bound by any agreement,
instrument or commitment for the purchase or repurchase of capital stock of
the Company or any Subsidiary or entitled to the benefit of any option, right
of first refusal or other elective privilege to purchase capital stock of the
Company or any Subsidiary. Neither the Company nor any Subsidiary owns,
directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any other corporation, partnership, association,
trust, joint venture or other entity other than, in the case of the Company
and its Subsidiaries, equity interests in the Subsidiaries.
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2.5 Good Title. Upon payment of the Purchase Price by each of
the Purchasers, the Company will deliver to each of the Purchasers good and
valid title to the Shares, and upon the issuance of the Dividend Shares and
the Conversion Shares, the Company will deliver to each of the Purchasers good
and valid title to the Dividend Shares and the Conversion Shares, in each
case, free and clear of all liens, security interests, options, charges,
beneficial interests, claims and encumbrances of every kind (and any agreement
to create any of the foregoing), except for restrictions on transfer imposed
by this Agreement and restrictions on transfer arising under applicable
securities laws.
2.6 Subsidiaries. The Company has no direct or indirect
subsidiaries other than those entities listed on Schedule 2.6 hereto (each a
"Subsidiary" and collectively the "Subsidiaries"). All outstanding shares of
capital stock of the Subsidiaries owned by the Company are owned, directly or
indirectly, by the Company free and clear of all liens, security interests,
options, beneficial interests, claims and encumbrances of every kind (and any
agreement to create any of the foregoing). No subsidiary is in default in the
performance, observation or fulfillment of its Certificate of Incorporation
or its By-laws. Except with respect to ordinary course intercompany
transactions between or among the Company and various Subsidiaries and except
for obligations of the Subsidiaries with respect to obligations arising with
respect to the Company's 9-1/8% Senior Notes due 2003 and the Company's
secured Revolving Credit Facility from various Lenders with First Union
Commercial Corporation, as Agent, dated May 30, 1995 (the "Senior Credit
Facility"), neither the Company nor any Subsidiary is subject to any
obligation or requirement to provide funds for or to make any investment (in
the form of a loan, capital contribution or otherwise) in any entity.
2.7 Offering of Shares. Neither the Company nor any person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Shares under the Securities Act of 1933 (the "Securities Act") and the rules
and regulations of the Securities and Exchange Commission (the "SEC")
thereunder) which might subject the offering, issuance or sale of the Shares,
the Conversion Shares or the Dividend Shares to the registration requirements
of Section 5 of the Securities Act or to any similar provision of any
applicable state blue sky law.
2.8 SEC Reports; Financial Information. The Company has
heretofore furnished each of the Purchasers with the following information:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994; (ii) the Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1995 and June 30, 1995; (iii) the Company's
proxy statement for the Company's 1995 Annual Meeting of Stockholders; and
(iv) any other reports or registration statements filed by the Company with
the SEC since December 31, 1993. As of their respective dates, such reports
and statements (including any amendments or supplements thereto) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All of the financial statements contained in the reports referred
to above have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated (subject, in
the case of the unaudited interim statements, to normal year-end audit
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adjustments). The financial statements in the reports referred to above
present fairly in all material respects the financial position, results of
operations and the related changes in financial position as at the dates and
for the periods indicated. Except for liabilities or obligations, which were
incurred in the ordinary course of business and consistent with past practice,
since June 30, 1995, neither the Company nor any Subsidiary has incurred any
liabilities or obligations which are material to the Business of the Company
and the Subsidiaries taken as a whole.
2.9 Absence of Certain Changes or Events. Since June 30, 1995,
there has not been, occurred or arisen: (i) any event or development which
has had or is reasonably likely to have a material adverse effect on the
Business of the Company and the Subsidiaries taken as a whole; (ii) any change
in any accounting principle or practice of the Company or any Subsidiary;
(iii) any damage, destruction or loss, whether covered by insurance or not,
materially adversely affecting the Business of the Company and the
Subsidiaries taken as a whole; (iv) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) in
respect of the capital stock of the Company or any issuance or sale of any
capital stock of the Company or any Subsidiary or any redemption, purchase or
other acquisition of any shares of capital stock of the Company or any
Subsidiary by the Company or any Subsidiary or any split, combination or
reclassification of shares of capital stock of the Company or any Subsidiary
declared or made by the Company or any Subsidiary; (v) any capital
expenditures or commitments by the Company or any Subsidiary for additions to
property or equipment which in the aggregate exceed $5,000,000 for all such
companies taken together or any new borrowings by the Company or any
Subsidiary (other than in the ordinary course of business or pursuant to the
Senior Credit Facility); (vi) any transaction other than in the ordinary
course of business; (vii) any Shares Acquisition Date or Distribution Date (as
defined in the Rights Agreement, dated as of September 25, 1987, between the
Company and Manufacturers Hanover Trust Company (the "Shareholder Rights
Plan")) or any other event causing the Rights issued thereunder to become
exercisable; and (viii) any agreement, whether in writing or otherwise, to
take any action described in this Section 2.9.
2.10 Legal Proceedings, etc. There are no suits, actions,
claims, proceedings or investigations pending or, to the best knowledge of the
Company, threatened against, relating to or involving the Company or any
Subsidiary or any properties or rights of the Company or any Subsidiary,
before any court, arbitrator or administrative or governmental body, United
States or foreign, which is reasonably likely, either individually or in the
aggregate, to have a material adverse effect on the Business of the Company
and the Subsidiaries taken as a whole. There are no such suits, actions,
claims, proceedings or investigations pending or, to the best knowledge of the
Company, threatened challenging the validity or propriety of the transactions
contemplated by this Agreement. Neither the Company nor any Subsidiary is
subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator or,
to the best knowledge of the Company, any governmental restriction applicable
to the Company or any Subsidiary, which is reasonably likely to have a
material adverse effect on the Business of the Company and the Subsidiaries
taken as a whole.
2.11 Title to Properties, Absence of Liens and Encumbrances, etc.
Each of the Company and each of its Subsidiaries has good, valid and
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marketable title to or, in the case of leases and licenses, valid and
subsisting leasehold interests or licenses in, all of its assets and property,
of whatever kind (whether real or personal, tangible or intangible), free and
clear of all mortgages, liens, security interests, options, pledges, claims,
charges, beneficial interests and encumbrances of every kind (and any
agreement to create any of the foregoing) other than liens for taxes not
delinquent, liens arising in the ordinary course of business and liens arising
under the Senior Credit Facility.
2.12 Contracts and Commitments, etc. As of the date of this
Agreement, neither the Company nor any Subsidiary is a party to or bound by
any contract (including leases), agreement, instrument, arrangement or
understanding which is not disclosed in the Company's SEC reports referred to
in Section 2.8 hereof and which is material to the Business of the Company and
its Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is
in violation of or in default in respect of (nor have any events occurred
which with notice or lapse of time or both would constitute violations of or
defaults in respect of) any contract (including leases), agreement,
instrument, arrangement or understanding to which it is a party or by which
it is bound and, to the best knowledge of the Company, there are no facts or
circumstances which would reasonably indicate that the Company or any
Subsidiary will be or may be in violation of or in default in respect of (or
with notice or lapse of time or both would be in violation of or in default
in respect of) any such contract, agreement, instrument, arrangement or
understanding subsequent to the date hereof, except in all cases for such
violations and defaults (and events which, with notice or lapse of time or
both, would constitute violations or defaults) which in the aggregate would
not have a material adverse effect on the Business of the Company and its
Subsidiaries taken as a whole.
2.13 Compliance with Applicable Law. The Company and each
Subsidiary currently holds, and is in compliance with the terms of, all
licenses, permits and authorizations necessary for the lawful conduct of their
respective businesses, and has complied with, and, to the best of its
knowledge, neither the Company nor any Subsidiary is in violation of, or in
default in any respect under, the applicable statutes, ordinances, rules,
regulations, orders or decrees of all federal, state, local and foreign
governmental bodies, agencies and authorities having, asserting or claiming
jurisdiction over it or over any part of its operations or assets, except for
such violations and defaults which in the aggregate would not have a material
adverse effect on the Business of the Company and its Subsidiaries.
2.14 Investment Company Act of 1940. Neither the Company nor any
Subsidiary is an investment company within the meaning of the Investment
Company Act of 1940, as amended.
2.15 Public Utility Holding Company Act of 1935, etc. Neither
the Company nor any Subsidiary is a public utility holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended, nor is
the Company or any Subsidiary a public utility subject to regulation as such
by any federal or state authority.
2.15 No Brokers. All negotiations relating to this Agreement and
the sale contemplated hereby have been carried on by the Company with the
Purchasers without the intervention of any other person and there exists no
basis for any valid claim against the Company or against any of the Purchasers
for a brokerage commission, finder's fee or other like payment.
12
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of
the Purchasers, severally and not jointly, represents, warrants and agrees
with the Company, as to itself, as follows:
3.1 Authorization. Each of the Purchasers has full right, power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby has
been duly authorized by each of the Purchasers. This Agreement constitutes
the legal, valid and binding agreement of each of the Purchasers enforceable
in accordance with its terms.
3.2 Consents and Approvals; No Violations. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not: (i) violate any provision of the
constitutive documents, if applicable, of any of the Purchasers; (ii) assuming
that all required approvals are obtained under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, violate any statute, ordinance, rule, regulation,
order or decree of any court or of any public, governmental or regulatory
body, agency or authority applicable to any of the Purchasers or by which any
of their respective properties or assets may be bound; (iii) except for any
required filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, require any filing, declaration or registration with, or permit, consent
or approval of, or the giving of any notice to, any public, governmental or
regulatory body, agency or authority; or (iv) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, or other evidence of indebtedness, indenture, license,
franchise, permit, agreement or other instrument or obligation to which any
of the Purchasers is a party, or by which any of them or any of their
respective properties or assets may be bound, excluding from the foregoing
clause (iv) violations, breaches and defaults which would not have a material
adverse effect on such Purchaser.
3.3 No Brokers. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried on without the
intervention of any other person and there exists no basis for any valid claim
against the Company or any of the Purchasers for a brokerage commission,
finder's fee or other like payment.
3.4 Investment Intent; Related Matters. (a) The Purchaser
acknowledges that the Shares have not been registered under the Securities Act
or any state securities act. The Purchaser represents that the Shares are
being acquired for investment and without any present view toward distribution
thereof in violation of the Securities Act or any state securities act and the
Purchaser will not sell or otherwise dispose of the Shares except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any state securities act and the rules and regulations
under such acts.
(b) Each Purchaser is, and on the Closing Date will
be, an "accredited investor," as such term is defined in Regulation D under
the Securities Act. Each Purchaser possesses such knowledge and experience
in business matters that it is capable of evaluating the merits and risks of
its purchase of the Shares. Each Purchaser acknowledges that it has reviewed
13
such information about the Company as it deems necessary to evaluate the
merits and risks of its investment in the Shares; provided, however, that such
review of such information shall not be deemed to impair or in any way affect
the Purchasers' ability to rely on the representations and warranties,
covenants and other agreements contained herein.
3.5 Ownership of Company Capital Stock. The Purchasers do not
presently have any direct or indirect legal or beneficial ownership interest
in any capital stock of the Company, any securities convertible into capital
stock of the Company or any rights to acquire any capital stock of the Company
or any securities convertible into capital stock of the Company (other than
as set forth herein). Immediately following the Closing Date, the Purchasers
will not have any direct or indirect legal or beneficial ownership interest
in any capital stock of the Company, or securities convertible into capital
stock of the Company, or have any rights with respect to the acquisition of
any capital stock of the Company or securities convertible into capital stock
of the Company other than the Shares, the Dividend Shares and the Conversion
Shares.
4. COVENANTS.
4.1 Conduct of the Business of the Company Prior to the Outside
Date. During the period commencing on the date hereof and continuing until
the Outside Date, the Company agrees that:
(a) The Company and each Subsidiary will carry on
its business in, and only in, the usual, regular and ordinary course and
consistent with past practice and, to the extent consistent with such
business, use all reasonable efforts to preserve intact its present business
organizations, keep substantially available the services of its present
management and preserve its relationships with material customers, suppliers
and others having material business dealings with it.
(b) Except for issuances of up to 2,515,000 shares
of Common Stock pursuant to the terms of employee benefit plans as in effect
on the date hereof, shares of Common Stock issued pursuant to the conversion
of the Company's 7-1/2% Convertible Subordinated Debentures Due 2006 and
Series A Junior Participating Preferred Stock, up to 300,000 Management
Compensation Shares or Common Stock pursuant to the terms of the Shareholder
Rights Plan, the Company will not declare, pay or set aside for payment any
dividends on or make other distributions in respect of its capital stock.
Neither the Company nor any Subsidiary will amend its Certificate of
Incorporation or By-Laws as in effect on the date hereof.
(c) Except for issuances of up to 2,515,000 shares
of Common Stock pursuant to the terms of employee benefit plans as in effect
on the date hereof, shares of Common Stock issued pursuant to the conversion
of the Company's 7-1/2% Convertible Subordinated Debentures Due 2006 and
Series A Junior Participating Preferred Stock, up to 300,000 Management
Compensation Shares or Common Stock pursuant to the terms of the Shareholder
Rights Plan, neither the Company nor any Subsidiary will, directly or
indirectly, issue, grant or sell, or authorize or propose the issuance of, or
split, combine, reclassify or redeem, purchase or otherwise acquire or propose
the purchase of, any shares of any class of the capital stock of the Company
or any Subsidiary or issue any securities convertible into, or rights to
subscribe to, or warrants or options to acquire, or enter into any arrangement
or contract with respect to the issuance of, any such shares or other
14
convertible securities, or make any other changes in its equity capital
structure.
(d) The Company will not knowingly and intentionally
(i) breach any of the terms or provisions of this Agreement, or (ii) cause any
of the representations or warranties of the Company contained herein to be or
become untrue in any material respect.
(e) The Company will, and will cause each
Subsidiary, upon reasonable request by any of the Purchasers, to provide the
Purchasers and their respective accountants, counsel and other authorized
representatives full access, during reasonable business hours and under
reasonable circumstances, to any and all premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) of the Company and each Subsidiary.
4.2 Confidentiality. The Purchasers will, and will instruct
their employees and agents to, hold in strict confidence, all Confidential
Information (as hereinafter defined), and will not disclose the same to any
person without the prior consent of the Company, unless compelled to disclose
any such Confidential Information by judicial or administrative process or,
in the opinion of their counsel, by other requirements of law. If this
Agreement is terminated, the Purchasers will promptly return to the Company
or destroy all documents (including all copies thereof) furnished by the
Company and received by the Purchasers containing such Confidential
Information. For purposes hereof, "Confidential Information" shall mean all
information of any kind concerning the Company, wherever obtained, except
information (i) ascertainable or obtained from the public or publicly
available information, (ii) received from a third party not known to the
Purchasers to be under an obligation to the Company to keep such information
confidential, (iii) which is or becomes known to the public (other than
through a breach of this Agreement), (iv) which the Purchasers can demonstrate
was in their possession prior to disclosure thereof to the Purchasers in
connection with this Agreement, or (v) which the Purchasers can demonstrate
was independently developed by them.
4.3 Public Announcements. The Company, on the one hand, and the
Purchasers, on the other hand, agree to consult promptly with each other prior
to issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange.
4.4 Best Efforts. Upon the terms and subject to the conditions
hereof, each of the parties hereto agrees to use its reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and shall use its reasonable
efforts promptly to obtain all waivers, permits, consents and approvals and
to effect all registrations, filings and notices with or to third parties or
governmental or public bodies or authorities which are necessary or desirable
in connection with the transactions contemplated by this Agreement. Nothing
contained in this Section 4.4 shall require any party to pay any money to any
third party other than filing fees or similar costs or expenses that may be
required or imposed by governmental authorities.
15
4.5 Shareholder Rights Plan. The Company will take all such
action as may be necessary to ensure that each of the Purchasers and all of
the Purchasers together shall not constitute an "Acquiring Person" under the
Shareholder Rights Plan by reason of their acquisition of the Shares, the
Dividend Shares and the Conversion Shares. The Board of Directors of the
Company has determined that, consistent with the objectives of the Shareholder
Rights Plan, the Purchasers should not be considered "Acquiring Persons" under
the Shareholder Rights Plan with respect to their acquisition of the Shares,
the Dividend Shares and the Conversion Shares and the transactions
contemplated by the terms of this Agreement. The Board of Directors of the
Company will take reasonable steps to amend the Shareholder Rights Plan in
order to: (i) confirm, if necessary, that the Purchaser(s) shall not be
Acquiring Persons by reason of their acquisition of the Shares, the Dividend
Shares and the Conversion Shares and (ii) to ensure that, in the event that
rights distributed under the Shareholder Rights Plan become exercisable, each
Purchaser will be provided, with respect to their Shares, with substantially
the same rights that they would have had if such Shares had theretofore been
converted into shares of the Company's Common Stock (the "Shareholder Rights
Plan Amendment"). Such Shareholder Rights Plan Amendment shall be in a form
reasonably satisfactory to the Purchasers.
5. CONDITIONS PRECEDENT TO THE PURCHASERS' OBLIGATIONS. The
obligations of each of the Purchasers under this Agreement to purchase any
Shares on any Closing Date shall be subject to the satisfaction, or waiver in
writing (it being understood that any waiver of a condition with respect to
any Closing Date shall also constitute a waiver with respect to any remedy
that a Purchaser may otherwise have with respect to the matter or condition
that is the subject of the waiver with respect to Shares purchased on such
Closing Date but not as to any other purchase of Shares occurring prior or
subsequent to such Closing Date), of the following conditions on the Closing
Date.
5.1 Representations and Warranties of the Company True;
Performance by the Company. The representations and warranties of the Company
contained in this Agreement shall each be true and correct in all material
respects as of the Closing Date and, except for representations and warranties
which speak of a specified date, with the same effect as though made on and
as of that date. The Company shall have performed and complied in all
material respects with all agreements and conditions required by this
Agreement and the transactions contemplated hereby to be performed or complied
with by the Company before or at the Closing Date. The Purchasers shall have
been furnished with such certificates of officers of the Company, dated the
Closing Date, as the Purchasers may reasonably request, certifying to the
fulfillment of the foregoing conditions.
5.2 Litigation Affecting Closing. On the Closing Date, no suit,
action or other proceeding shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit the
consummation or implementation of this Agreement or the transactions
contemplated hereby, or to obtain damages or other relief in connection with
this Agreement or the transactions contemplated hereby, and on the Closing
Date, no governmental investigation that might result in any such suit, action
or proceeding shall be pending or, based on a communication from a
governmental official, threatened.
16
5.3 Approvals and Consents. (a) All consents, approvals or
authorizations of regulatory authorities having jurisdiction over the
Company's or any Subsidiary's business relating to the Company's or any
Subsidiary's business as it is currently conducted or in connection with the
consummation of the transactions contemplated hereby shall have been obtained
in final and definitive form and shall be in full force and effect.
(b) All additional consents, approvals or
authorizations required for the consummation of the transactions contemplated
hereby or to preserve for the Company and its Subsidiaries, and to maintain
in full force and effect, all material contracts, leases, instruments and
other agreements to which the Company and its Subsidiaries are a party or by
which any of their respective property or assets are bound, shall have been
obtained and shall be in full force and effect.
5.4 Opinions of Counsel to the Company. The Purchasers shall
have been furnished with an opinion, dated the Closing Date, of Miles &
Stockbridge, a professional corporation, special counsel to the Company,
satisfactory to the Purchasers, substantially in the following form:
(a) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding agreement of the Company;
(b) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, will
not result in any violation of, or constitute a default under, and will not
be in conflict with, any terms of the Company's Certificate of Incorporation
or By-Laws, in each case as amended to date, or to the knowledge of such
counsel, the terms of any mortgage, note, bond, evidence of indebtedness,
indenture, contract, lease or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of its
assets or properties may be subject;
(c) Upon payment of the Purchase Price for the
Shares, the Company will deliver to the Purchaser good and valid title to the
Shares free and clear of any liens, security interests, options, charges,
beneficial interests, claims and encumbrances of any kind (and any agreement
to create any of the foregoing) except for restrictions on transfer created
pursuant to the terms of this Agreement and applicable securities laws;
(d) The Shares have been duly and validly authorized
and issued and are fully paid and non-assessable, such Shares constitute all
of the issued and outstanding shares of the Series B Preferred Stock, and such
Shares are entitled to all of the rights and preferences set forth in the
Certificate of Designation. The Dividend Shares and the Conversion Shares,
when issued in accordance with the terms of the Certificates of Designation,
will be duly and validly authorized and issued, fully paid and non-assessable;
(e) No consents, approvals, authorizations and
orders of any public, governmental or regulatory body, agency or authority
and, to the knowledge of such counsel, of any other party (except such as
shall have been obtained) are necessary for the due authorization, execution
and delivery by the Company of this Agreement and the valid sale and delivery
of the Shares to be sold by the Company hereunder;
17
(f) The Company has taken all action, legal or
otherwise, necessary to authorize the issuance of and reserve the Dividend
Shares and the Conversion Shares;
(g) The Company and each of the Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the State of its jurisdiction of incorporation and has full corporate
power to own its property and carry on its business as currently conducted;
(h) To the knowledge of such counsel, there are no
actions, suits, proceedings or investigations pending or, so far as is known
to such counsel after inquiry of the officers of the Company, threatened
against the Company or any of the Subsidiaries which (i) question or challenge
the validity of this Agreement or any action to be taken hereunder or
thereunder or (ii) singly or in the aggregate could reasonably be expected to
materially and adversely affect the Business of the Company and the
Subsidiaries taken as a whole;
(i) The issuance, sale and delivery of the Shares,
the Dividend Shares and the Conversion Shares under the circumstances
contemplated by this Agreement are exempted transactions under the
registration provisions of the Securities Act and all applicable state
securities laws, and do not require the registration of the Shares, the
Dividend Shares or the Conversion Shares thereunder; and
(j) The Company is not an "investment company" or
a company controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In giving the above opinions, such counsel may assume the genuineness of the
signatures of the officers of the Company and may rely, as to factual matters,
without independent check or verification, upon the representations and
warranties made in this Agreement, the documents delivered in connection
herewith and certificates of the officers of the Company. Miles & Stockbridge
may also rely upon opinions given or expressed by Xxxxxxx X. Xxxxx, Esquire,
General Counsel to the Company, provided that such firm has no reason to
believe that it is unreasonable to so rely on such opinions and provided
further that counsel for the Purchasers consent to such reliance (which
consent shall not be unreasonably withheld).
5.5 The Shares. The Company shall issue and deliver to the
Purchasers certificates representing the Shares registered in the name of the
Purchasers.
5.6 No Material Adverse Change. Prior to any Closing Date,
there shall be no material adverse change in the Business of the Company, and
the Company shall have delivered to the Purchaser a certificate, dated the
Closing Date, to such effect.
5.7 No Adverse Events Under Shareholder Rights Plan. The
Shareholder Rights Plan Amendment shall have become effective or the Company
and the Purchasers shall have agreed to other satisfactory arrangements with
respect to the Shareholders Rights Plan. No "Shares Acquisition Date" or
"Distribution Date" (as defined in the Shareholder Rights Plan) or any other
event causing the Rights issued under the Shareholder Rights Plan to become
exercisable shall have occurred and there shall have been no amendment or
18
modification to the Shareholder Rights Plan other than the Shareholder Rights
Plan Amendment.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AT
THE CLOSING. The obligations of the Company under this Agreement to sell the
Firm Shares and the Acquisition Shares on any Closing Date shall be subject
to the satisfaction, or waiver in writing (it being understood that any waiver
of a condition with respect to any Closing Date shall also constitute a waiver
with respect to any remedy that the Company may otherwise have with respect
to the matter or condition that is the subject of the waiver with respect to
Shares acquired on such Closing Date but not as to any other sale of Shares
occurring prior or subsequent to such Closing Date), of the following
conditions on the Closing Date:
6.1 Representations and Warranties of the Purchasers True;
Performance by the Purchasers. The representations and warranties of the
Purchasers contained in this Agreement shall each be true and correct in all
material respects as of the Closing Date, with the same effect as though made
on and as of that date. The Purchasers shall have performed and complied in
all material respects with all agreements and conditions required by this
Agreement and the transactions contemplated hereby to be performed or complied
with by the Purchasers before or at the Closing Date.
6.2 The Purchase Price. Each of the Purchasers shall have
delivered to the Company by wire transfer of immediately available funds an
amount equal to the Purchase Price for the Firm Shares and the Acquisition
Shares to be purchased by such Purchaser.
6.3 Opinion of Counsel to the Purchaser. The Company shall have
been furnished with an opinion, dated the Closing Date, of Coudert Brothers,
special counsel for the Purchasers, satisfactory to the Company, substantially
in the following form:
(a) Upon execution and delivery, this Agreement
shall constitute the legal, valid and binding obligations of the Purchasers;
(b) The execution and delivery of this Agreement by
the Purchasers and the consummation of the transactions contemplated hereby
do not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any of the constitutive documents of any
of the Purchasers or to the knowledge of such counsel any mortgage, note, bond
or other evidence of indebtedness or indenture, contract, lease or other
agreement known to such counsel to which any of the Purchasers is a party;
(c) To the knowledge of such counsel, there are no
actions, suits, proceedings or investigations pending or threatened against
the Purchasers which question or challenge the validity of this Agreement or
the purchase by the Purchasers of the Shares hereunder; and
(d) No consents, approvals, authorizations and
orders of any public, governmental or regulatory body, agency or authority
(except such as shall have been obtained) are necessary for the due
authorization, execution and delivery by the Purchasers of this Agreement and
the purchase of the Shares to be purchased by the Purchasers hereunder;
19
In giving the above opinions, such counsel may assume the genuineness of the
signatures of the Purchasers and their officers or other authorized
representatives and may rely, as to factual matters, without independent check
or verification, upon the representations and warranties made in this
Agreement, the documents delivered in connection herewith and certificates of
the Purchasers and their officers or other authorized representatives.
6.4 Litigation Affecting Closing. On the Closing Date, no suit,
action or other proceeding shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit the
consummation or implementation of this Agreement or the transactions
contemplated hereby, or to obtain damages or other relief in connection with
this Agreement or the transactions contemplated hereby, and on the Closing
Date, no governmental investigation that might result in any such suit, action
or proceeding shall be pending or, based on a communication from a
governmental official, threatened.
6.5 Approvals and Consents. (a) All consents, approvals or
authorizations of regulatory authorities having jurisdiction over the
Company's or any Subsidiary's business relating to the Company's or any
Subsidiary's business as it is currently conducted or in connection with the
consummation of the transactions contemplated hereby shall have been obtained
in final and definitive form and shall be in full force and effect.
(b) All additional consents, approvals or authorizations
required for the consummation of the transactions contemplated hereby or to
preserve for the Company and its Subsidiaries, and to maintain in full force
and effect, all material contracts, leases, instruments and other agreements
to which the Company and its Subsidiaries are a party or by which any of their
respective properties or assets are bound, shall have been obtained and shall
be in full force and effect.
7. REGISTRATION RIGHTS.
7.1 Restrictive Legend. Each certificate representing the
Shares, the Dividend Shares and the Conversion Shares shall bear legends
substantially in the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT PERTAINING THERETO
UNDER SAID ACT AND COMPLIANCE WITH APPLICABLE STATE LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION AND COMPLIANCE ARE NOT REQUIRED.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS, INCLUDING RESTRICTIONS ON
TRANSFERABILITY. THE COMPANY WILL FURNISH ANY STOCKHOLDER UPON
REQUEST AND WITHOUT CHARGE A STATEMENT OF THE RESTRICTIONS ON
TRANSFERABILITY WHICH ARE CONTAINED IN A STOCK PURCHASE AGREEMENT
BY AND AMONG THE COMPANY AND PURCHASERS SIGNATORY THERETO DATED
AS OF OCTOBER 4, 1995. THE TERMS CONTAINED IN THAT STOCK
PURCHASE AGREEMENT ARE BINDING UPON TRANSFEREES AND PURCHASERS OF
THE SHARES REPRESENTED BY THIS CERTIFICATE IN CERTAIN
CIRCUMSTANCES.
20
7.2 Required Registrations. If at any time the Company shall
be requested by any of the Purchasers (or the successors and assigns of any
of the Purchasers, who for purposes of this Section 7 shall be deemed to be
included within the term Purchaser) who holds, or upon the conversion of
Shares held by the Purchaser would hold, in the aggregate, at least the number
of Conversion Shares that would be issuable upon the conversion of 50% of the
Shares held in the aggregate by the Purchasers (including the Dividend
Shares), to effect the registration under the Securities Act of the Shares,
the Dividend Shares or the Conversion Shares, the Company shall notify in
writing all Purchasers of the receipt of the registration request within 10
days of said receipt and shall use its reasonable efforts promptly to effect
the registration under the Securities Act of such Shares, Dividend Shares and
Conversion Shares as were covered by the original request or as may be
requested to be registered in one or more writings delivered to the Company
within 30 days after the giving of notice by the Company to all Purchasers,
for disposition in accordance with the intended method or methods of
disposition specified by the Purchaser requesting registration of such Shares,
Dividend Shares and Conversion Shares, as well as to effect any notification,
registration or qualification under any state securities laws which shall be
reasonably necessary to permit the sale of such Shares, Dividend Shares and
Conversion Shares. The registration statement filed by the Company with the
SEC for the registration of such Shares, Dividend Shares and Conversion Shares
shall be kept effective for such period as may be requested in the
registration request, including any period then permitted under Rule 415 under
the Securities Act (it being understood that in no case, however, shall the
Company be required to keep any registration hereunder effective for a period
of more than two years in the aggregate, not including any period in which
sales of Shares, Dividend Shares or Conversion Shares cannot be made
thereunder). Any obligation of the Company to register Shares, Dividend
Shares or Conversion Shares shall be deemed satisfied when a registration
statement covering the Shares, Dividend Shares and the Conversion Shares shall
be declared effective and shall have remained effective for the period
specified above. All expenses of any registration and offering under this
paragraph (including, without limitation, registration fees and fees and
disbursements of the Company's counsel) shall be borne by the Company, except
that the Company shall not bear underwriting discounts or commissions
attributable to Shares, Dividend Shares or Conversion Shares, fees and
expenses of any separate counsel for the Purchasers selling Shares, Dividend
Shares or Conversion Shares or any related transfer taxes. The Company shall
only be required to file two registration statements covering the Shares,
Dividend Shares or Conversion Shares pursuant to the terms of this Section
7.2.
7.3 "Piggy-Back" Registrations. If at any time the Company
shall determine to register any of its Common Stock or securities convertible
into Common Stock under the Securities Act, whether in connection with a
public offering by the Company, a public offering by shareholders, or both,
including, without limitation, by means of any shelf registration pursuant to
Rule 415 under the Securities Act or any similar rule or regulation, but other
than a registration to implement an employee benefit or dividend reinvestment
plan, the Company shall promptly give written notice thereof to the Purchasers
who shall be registered holders of Shares or Conversion Shares and shall use
its reasonable efforts to effect the registration under the Securities Act of
such Conversion Shares as may be requested in a writing delivered to the
Company within 30 days after such notice by the Purchasers as well as to
include such Conversion Shares in any notifications, registrations or
qualifications under any state securities laws which shall be made or obtained
21
with respect to the securities being registered by the Company; provided,
however, that (a) any distribution of Conversion Shares pursuant to such
registration shall be managed by the investment banking firm, if any, managing
the distribution of the securities being offered by the Company on the same
terms as all other securities to be registered, and (b) the Company shall not
be required under this Section 7.3 to include Conversion Shares in any
registration of securities if the Company shall have been advised by the
investment banking firm managing the offering of the securities proposed to
be registered by the Company or others that the inclusion of Conversion Shares
in such offering would substantially interfere with the orderly sale of such
securities which the Company or others propose to register; provided, however,
that in making any determination under this subparagraph (b) as to the
inclusion of the Conversion Shares in any such offering, (i) a first priority
shall be given to the registration of 1,750,000 Conversion Shares, (ii)
thereafter, a second priority shall be given to all remaining Conversion
Shares over any other securities as to which the Company has granted or may
in the future grant registration rights that were (or will be) issued by the
Company in any merger transaction or similar business combination transaction
and (iii) with respect to circumstances not addressed in clauses (i) and (ii),
Conversion Shares shall be registered on a pro-rata basis with any other
securities as to which the Company has granted or may in the future grant
registration rights. All expenses of any registration and offering of
Conversion Shares pursuant to this Section 7.3 (including, without limitation,
registration fees and fees and disbursements of the Company's counsel) shall
be borne by the Company, except that the Company shall not bear underwriting
discounts or commissions attributable to Conversion Shares, the fees of any
separate counsel for the holders of Conversion Shares or related transfer
taxes.
7.4 Registration Procedures. 1. In connection with any
registration pursuant to Sections 7.2 or Section 7.3 hereof, the Company will
prepare and file with the SEC, a registration statement, and any amendments
and supplements thereto, on any form for which the Company then qualifies or
which counsel for the Company shall deem appropriate, and use its reasonable
efforts to cause such registration statement to become effective; provided
that before filing with the SEC a registration statement or prospectus or any
amendments or supplements thereto, the Company will (i) furnish to counsel
selected by the Purchasers copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel, and (ii) notify
the Purchasers of any stop order issued or threatened by the SEC and take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered. The Company will also (i) promptly notify each
Purchaser of the effectiveness of such registration statement, (ii) furnish
to each Purchaser such number of copies of such registration statement, and
each amendment and supplement thereto, the prospectus included in such
registration statement and such other documents as such Purchaser may
reasonably request; (iii) use its reasonable efforts to register or qualify
such securities to be registered under such other securities or blue sky laws
of such jurisdictions as any Purchaser reasonably requests; (iv) use its
reasonable efforts to cause all such securities to be registered to be listed
on each securities exchange on which similar securities issued by the Company
are then listed, and to provide a transfer agent and registrar for such
securities to be registered no later than the effective date of such
registration statement; (v) enter in to such customary agreements (including
an underwriting agreement in customary form) and take all such other actions
as the Purchasers or the underwriters retained by the Purchasers, if any,
22
reasonably request in order to expedite or facilitate the disposition of such
securities to be registered, including customary indemnification; and (vi)
otherwise use its reasonable efforts to comply with all applicable rules and
regulations of the SEC. The terms of this Section 7.4 shall not require the
Company to qualify as a foreign corporation or as a dealer in securities or
to execute or file any general consent to service of process under the laws
of any such jurisdiction where it is not so subject.
(b) The Company shall be entitled to postpone, for
up to 60 days, the filing of any registration statement otherwise required to
be prepared and filed by it pursuant to this Agreement if, at the time it
receives a request, the Company would be required to prepare any financial
statements other than those it customarily prepares or the Company determines
in its reasonable business judgment that such registration and offering would
interfere with any material financing, acquisition, corporate reorganization
or other material corporate transaction or development involving the Company
and the Company promptly gives the Purchaser written notice of such
determination. If the Company shall so postpone the filing of a registration
statement, the Purchaser shall have the right to withdraw the request by
giving written notice to the Company within 30 days after the receipt of the
notice of postponement and, in the event of such withdrawal, the request which
was withdrawn shall not be deemed to have been made.
(c) In connection with any effective registration
statement filed pursuant to this Agreement, the Company will immediately
notify each Purchaser participating in the distribution to which such
registration statement relates of the happening of any event as a result of
which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and will promptly
prepare and furnish to each such Purchaser a supplement or amendment to such
prospectus so that such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing. Notwithstanding the foregoing, if the Company
determines in its reasonable business judgment that an amendment or supplement
to any such prospectus would interfere with any material financing,
acquisition, corporate reorganization, or other material corporate transaction
or development involving the Company, the Company may delay the preparation
and filing of such amendment or supplement for a period of up to 60 days in
order to complete or make a public announcement with respect to such material
transaction or development (it being understood that the Company shall be
obligated to extend the period of time it is required to maintain in effect
any such registration statement to take into account the period of time that
the Purchasers are unable to offer or sell Shares, Dividend Shares or
Conversion Shares by reason of this Section 7.4(c)).
(d) In the event that the Company conducts an
underwritten public offering of Common Stock or securities convertible into
Common Stock during the term of this Agreement, the Purchasers covenant and
agree that, except for sales of Shares, Dividend Shares or Common Shares
pursuant to such underwritten public offering, they shall not offer or sell
any of the Shares, Dividend Shares or Conversion Shares for a period of 120
days following the date on which the Company's underwritten public offering
is consummated. Except for sales of Shares, Dividend Shares or Common Shares
23
pursuant to such underwritten public offering, the Purchasers shall be
obligated to perform the covenants contained in this Section 7.4(d)
irrespective of whether or not some or all of the Purchasers' Shares, Dividend
Shares or Conversion Shares are included in the underwritten public offering
or are then included in a registration statement that has been filed pursuant
to Section 7.2 of this Agreement (it being understood that the Company shall
be obligated to extend the period of time it is required to maintain in effect
any registration statement that has been filed pursuant to Section 7.2 of this
Agreement at the time an underwritten public offering is consummated to take
into account the period of time that the Purchasers are unable to offer or
sell Shares, Dividend Shares or Conversion Shares by reason of this Section
7.4(d)).
7.5 Indemnification; Contribution. (a) Indemnification by the
Company. In connection with each registration effected by the Company
pursuant to this Agreement, the Company agrees to indemnify and hold harmless
each holder of Shares, Dividend Shares and Conversion Shares participating
therein (a "Selling Shareholder"), its officers, directors, agents and
Affiliates (as hereinafter defined) and each underwriter of Shares, Dividend
Shares and Conversion Shares (an "Underwriter") registered and each person who
controls any Underwriter within the meaning of Section 15 of the Securities
Act against any and all losses, claims, damages or liabilities to which any
of them may be subject under the Securities Act or any other statute or the
common law, and to reimburse them for any legal or other expenses incurred by
them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions arise out
of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained in the registration statement relating to the sale
of such Shares, Dividend Shares and Conversion Shares, or any post-effective
amendment thereof, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus,
if used prior to the effective date of such registration statement or
contained in the prospectus (as amended or supplemented if the Company shall
have filed with the SEC any amendment thereof or supplement thereto), if used
within the period during which the Company is required to keep the
registration statement to which such prospectus relates current pursuant to
the terms of this Agreement, or the omission or alleged omission to state
therein (if so used) a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the indemnification agreement contained
in this subparagraph (a) shall not apply to such losses, claims, damages,
liabilities or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by such
Selling Shareholders or such Underwriter specifically for inclusion in the
registration statement or any preliminary prospectus or prospectus contained
in the registration statement or any such amendment thereof or supplement
thereto.
(b) Indemnification By Selling Shareholders and
Underwriters. Each request that registration be effected by the Company
pursuant to this Agreement (and each notice of any Purchaser to the effect
that such holder wishes to join in any such request) shall be accompanied by
24
an agreement of each party making such request, and shall be accompanied or
followed by an agreement of each Underwriter, to indemnify and hold harmless,
which indemnity, as to the Purchasers, shall be several and not joint and in
proportion to the offering price of the securities sold by each of the
Purchasers, in the same manner and to the same extent as set forth in
subparagraph (a) of this Section 7.5, the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
the directors of the Company or any such person and those officers of the
Company who shall have signed any such registration statement with respect to
any statement in or omission from such registration statement or any post-
effective amendment thereof or any preliminary prospectus (as amended or as
supplemented, if amended or supplemented as aforesaid) contained in such
registration statement, if such statement or omission was made in reliance
upon and in conformity with information furnished in writing to the Company
by any such holder or underwriter specifically for inclusion in such
registration statement or any preliminary prospectus or prospectus contained
in such registration statement or any such amendment thereof or supplement
thereto.
(c) If the indemnification provided for in this
Section 7.5 is unavailable other than in accordance with its terms to an
indemnified party under subparagraph (a) or (b) above, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages, liabilities or actions referred
to in subparagraph (a) or (b) above in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Selling Shareholders and Underwriters on the other from the offering of the
Shares, Dividend Shares or Conversion Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Selling Shareholders and Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or actions as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Selling Shareholders and Underwriters participating in
the offering on the other shall be deemed to be in the same proportion as (i)
the total net proceeds from the offering (before deducting expenses) received
by the Company bear to (ii) the total net proceeds from the offering (before
deducting expenses) received by the Selling Shareholders and the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters or by the Selling Shareholders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims,
damages, liabilities or actions referred to above in this subparagraph (c)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subparagraph (c).
Notwithstanding the provisions of this subparagraph (c), no Selling
Shareholder shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares, Dividend Shares and Conversion
25
Shares sold by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Selling Shareholder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Selling Shareholders in
this subparagraph (c) to contribute are several in proportion to the
respective number of Shares, Dividend Shares and Conversion Shares sold by
them and not joint.
8. EXPENSES. Each of the parties hereto will pay its own legal
fees and other expenses relating to the transactions contemplated by this
Agreement; provided, however, that the Company agrees to pay to the Purchasers
their reasonable legal fees and up to $10,000 of other expenses incurred by
the Purchasers in connection with the negotiation and execution of this
Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITIES.
(a) The representations and warranties included or provided for in this
Agreement shall survive for a period of two years from the Closing Date;
provided that such survival shall continue during the pendency of any suit,
action, claim or other proceeding brought in respect of such representations
and warranties prior to the termination of such two-year period; and provided,
further, that the representations and warranties contained in Section 2.5
shall survive the Closing indefinitely. The Company agrees to indemnify,
defend and hold harmless the Purchasers, their respective permitted successors
and assigns and the respective affiliates (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934) of such Purchasers and such respective
permitted successors and assigns (collectively, the "Purchaser Indemnified
Parties") from and against and in respect of any demand, action, damage,
deficiency, liability, loss, cost or expense (including, without limitation,
reasonable counsel fees incurred in litigation or otherwise) to the Purchaser
Indemnified Parties arising out of any breach of representation or warranty
or nonfulfillment by it of any agreement or covenant contained herein
(collectively "Purchaser Indemnified Party Losses"); provided, however, that
the Company's indemnification obligations under this Section 9(a) shall arise
only in the event that the accumulated amount of all Purchaser Indemnified
Party Losses, in the aggregate, shall exceed $100,000. If the accumulated
amount of all Purchaser Indemnified Party Losses in the aggregate exceeds
$100,000, the Company shall then be liable on a dollar for dollar basis for
the full amount of all Purchaser Indemnified Party Losses. The Purchasers and
the Purchaser Indemnified Parties shall not be entitled to indemnification
with respect to any claim under the foregoing provisions of this Section 9 as
to which notice shall not have been given by a Purchaser Indemnified Party to
the Company within two years of the date of occurrence of the events giving
rise to such claim, or, with respect to indemnification for claims arising out
of the breach of the representations and warranties contained in Section 2.5,
within two years from the date of discovery of the breach by the Purchaser
Indemnified Parties.
(b) Each of the Purchasers agrees to indemnify,
defend and hold harmless the Company from and against and in respect of any
demand, action, damage, deficiency, liability, loss, cost or expense
(including, without limitation, reasonable counsel fees incurred in litigation
or otherwise) to the Company arising out of any material breach of any
representation or warranty or nonfulfillment by such Purchaser of any
agreement or covenant contained herein (collectively "Company Losses");
26
provided, however, that each Purchaser's indemnification obligations under
this Section 9(b) shall arise only in the event that the accumulated amount
of all Company Losses attributable to all Purchasers shall exceed $100,000 in
the aggregate. If the accumulated amount of all Company Losses in the
aggregate exceeds $100,000 each Purchaser shall then be liable on a dollar-
for-dollar basis for the full amount of all Company Losses attributable to
such Purchaser. The Company shall not be entitled to indemnification with
respect to any claim under the foregoing provision of this Section 9 as to
which notice shall not have been given by the Company to such Purchaser within
two years of the date of the occurrence of the event giving rise to such
claim.
(c) Promptly after receipt by an indemnified party
under this Agreement of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under Section 7.5 or Section 9 hereof, notify
the indemnifying party in writing of the claim or the commencement of that
action. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under Section 7.5 or Section 9
hereof for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Purchasers shall have the
right to employ counsel to represent jointly the Purchasers and their
respective controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Purchasers
against the Company under Section 7.5 hereof if, in the reasonable judgment
of the Purchasers, it is advisable for the Purchasers and such controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Company.
10. CERTAIN AGREEMENTS.
10.1 Standstill. (a) For so long as a Purchaser shall hold
Shares and/or Conversion Shares, such Purchaser will not (i) acquire, or make
any offer to acquire or announce any intention to acquire, additional
ownership (including beneficial ownership) of any of the shares of the voting
securities of the Company, or other securities of the Company convertible into
voting securities, or the right or option to acquire any such securities,
except for the Shares, the Dividend Shares and the Conversion Shares, (ii)
participate in any "group," as that term is defined in Section 13(d)(3) of the
Exchange Act, with respect to the voting securities of the Company, other than
any group comprised of the Purchasers and their respective affiliates, (iii)
make or in any way participate, directly or indirectly, in any material
respect in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the SEC), whether before or after the formal commencement of
any such solicitation, or any solicitation of shareholder written consents,
in opposition to, or designed to influence the management of the Company, (iv)
execute any written consent or initiate any shareholder proposal for action
by shareholders, (v) except as provided in the Certificates of Designation
seek to place more than one representative on the Board of Directors of the
27
Company, seek the removal of any member of the Board of Directors of the
Company, or seek to have called any meeting of the stockholders of the
Company, (vi) otherwise act, alone or in concert with others, to seek to
control or influence in any material respect the management, Board of
Directors or policies of the Company or any of its Subsidiaries, (vii)
request, the Company (or its directors, officers, employees or agents) to
amend or waive any provision of this Section 10.1(a), (viii) knowingly and
intentionally sell or otherwise transfer Shares or Conversion Shares
representing in the aggregate beneficial ownership of 5% or more of the then
outstanding Common Stock to any person, entity or "group", as that term is
defined in Section 13(d)(3) of the Exchange Act, (ix) knowingly and
intentionally sell or otherwise transfer any Shares or Conversion Shares to
any person, entity or "group", as that term is defined in Section 13(d)(3) of
the Exchange Act, as to which person, entity or group the Purchasers have
received notice from the Company of such person, entity or group's intention
to seek to take, assist or participate in any of the actions set forth in
clauses (iii) through (vi) above, and (x) assist, participate in, encourage
or solicit in any material respect any effort or attempt by any other person
or group to do or seek to do any of the foregoing. Notwithstanding anything
in this Section 10.1(a) to the contrary, the Purchasers shall have the right
to (i) make or effect open-market sales of any Shares or Conversion Shares
through a broker-dealer, without any duty of inquiry as to the identity of any
purchaser of Shares or Conversion Shares (in the absence of actual knowledge
that the purchaser of Shares or Conversion Shares in the open market from the
Purchasers is a person, entity or group of the type specified in clause (ix)
above) and (ii) make or effect transfers to their affiliates, other persons
with respect to whom the Purchaser has investment authority with respect to
any Shares or Conversion Shares to be transferred to any such person or any
person under common investment management with such Purchaser (collectively,
"Permitted Transferees") and other Purchasers and their Permitted
Transferees.
(b) During the period in which the Purchasers shall
hold Shares and/or Conversion Shares which represent, in the aggregate, 5% of
the shares of the Company's Common Stock issued and outstanding after giving
effect to the pro forma conversion of all outstanding shares into Conversion
Shares and ending on the date on which a Change in Control occurs, each
Purchaser covenants and agrees that he shall not sell, transfer or dispose,
in any three-month period, in the aggregate, Shares or Conversion Shares
which, when aggregated with any sale, transfer or disposal of Shares or
Conversion Shares of any other Purchaser during any such three month period,
represent beneficial ownership of more than the greater of (i) 1,000,000
shares of the Common Stock then issued and outstanding, or (ii) the volume of
Shares and Conversion Shares saleable under Rule 144(e) promulgated under the
Securities Act. The Purchasers shall have the right to make or effect sales,
transfers or other dispositions to their Permitted Transferees and to other
Purchasers and their Permitted Transferees, without regard to the limitations
set forth in this Section 10.1(b), subject to compliance with all applicable
securities laws.
10.2 Agreement Respecting Board Representation. From and after
the exercise of the Company Option by the Company and the purchase of the
Acquisition Shares by the Purchasers (but only for so long as the Purchasers
shall hold Shares and/or Conversion Shares which represent, in the aggregate,
10% of the shares of the Company's Common Stock issued and outstanding after
giving effect to the pro forma conversion of all outstanding Shares into
28
Conversion Shares), the Company shall take all action necessary, including,
without limitation, increasing the number of directors constituting the entire
Board of Directors of the Company, to cause one person (the "Purchasers'
Nominee") nominated by the Purchasers holding a majority of the Conversion
Shares issued or issuable upon conversion of the Shares to be nominated for
election to the Board of Directors of the Company, at any regular or special
meeting of stockholders of the Company called for the purpose of filling
positions on the Board of Directors of the Company, or in any written consent
executed in lieu of such a meeting of stockholders, and to recommend the
Purchasers' Nominee for election to the Board of Directors in the same manner
as all other nominees of the Company for election as director. Not fewer than
20 days after receipt of a written notice from the Company requesting such
information, the Purchasers shall notify the Secretary of the Company of the
identity of the Purchasers' Nominee and provide such information concerning
the Purchasers' Nominee as may be required by Regulation 14A under the
Exchange Act. The Company shall have the right to reject any particular
Purchasers' Nominee if the Company determines in its reasonable business
judgement that the election as a director of such Purchasers' Nominee would
materially impair the Company's reputation in the business and financial
community. Consistent with the foregoing, the Company will advise the
Purchasers promptly of the non-approval of any proposed nominee so that an
alternative can be selected by the Purchasers. In the event of non-approval,
the Purchasers and the Company's Organization Committee will meet and use
their best efforts to agree upon an acceptable nominee. It is hereby agreed
by the Company that Xxxx X. Xxxxxx shall be an acceptable nominee. If, prior
to his election to the Board of Directors of the Company, the Purchasers'
Nominee shall, be unable or unwilling to serve as a director of the Company,
the Purchasers who nominated such Purchasers' Nominee shall be entitled to
nominate a replacement who (subject to the procedures set forth in the
preceding sentences with respect to unacceptable nominees) shall then be the
Purchasers' Nominee for purposes of this Section 10.2. If, following election
to the Board of Directors of the Company, any Purchasers' Nominee shall resign
or be removed or be unable to serve for any reason prior to the expiration of
his term as a director of the Company, the Purchasers who nominated such
Purchasers' Nominee shall within 30 days of such event, notify the Board of
Directors of the Company in writing of a replacement Purchasers' Nominee and
the Board of Directors of the Company shall take all action necessary (subject
to the procedures set forth herein with respect to unacceptable nominees) to
cause such replacement Purchasers' Nominee to be elected or appointed to fill
the unexpired term of such Purchasers' Nominee and to recommend the
replacement Purchasers' Nominee for election to the Board of Directors in the
same manner as all other nominees of the Company for election as director at
any subsequent annual or special meeting of shareholders or pursuant to any
written consent in lieu of such a meeting. For purposes of this Section 10.2,
the term Purchasers shall refer to the Purchasers' signatory hereto, persons
with respect to whom a Purchaser signatory has investment authority with
respect to any Shares transferred to any such person and any other person
which is under common investment management with any Purchaser signatory.
10.3 No redemptions or cash payments. The Company hereby
covenants and agrees that, whenever any share of the Series C Preferred Stock
is issued and outstanding, it shall not (i) make or pay any cash dividends,
distributions or other cash payments of any type on or with respect to any
Junior Security (as hereinafter defined) or (ii) redeem for cash (in whole or
in part) any Junior Security. For purposes of this agreement, the term
"Junior Security" shall mean any security constituting part of a class of
29
equity securities of the Company or any of its Subsidiaries, other than the
Series B and Series C Preferred Stock.
11. NOTICES, ETC. All notices, requests, demands or other com-
munications hereunder shall be in writing and shall be deemed to have been
duly given when delivered upon receipt or if mailed:
If to the Company, to:
UNC Incorporated
000 Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
General Counsel
with a copy to:
Xxxx X. Xxxxxx, Esq.
Miles & Stockbridge,
A Professional Corporation
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to the Purchasers, to:
Xxxxxx Management Company, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. X'Xxxxxxx
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
12. GENERAL.
12.1 Amendment and Waiver. Neither this Agreement nor any term
hereof may be changed, waived, amended or terminated orally, but only by
written act of the Purchasers and the Company (or, in respect of a waiver, the
waiving party or parties).
12.2 Assignment. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and legal
representatives, but shall not be assignable by any party without the written
consent of the other party; provided, however, that the rights and obligations
of any Purchaser may be assigned to one or more of its affiliates or other
persons or entities with respect to whom such Purchaser has investment
authority with respect to any Shares transferred to such affiliate or other
person or entity or which is under common investment management with any
Purchaser, if such affiliate or other person or entity agrees in writing to
be bound by all of the terms and conditions of this Agreement. The terms of
this Agreement, including, without limitation, Section 9 and Section 10.1
hereof, shall be binding upon any person or entity who acquires Shares,
30
Dividend Shares or Conversion Shares from a Purchaser hereunder unless such
Shares are acquired at least three years from the date such Shares were
issued, in an underwritten public offering or in unsolicited broker's
transactions effected in compliance with all of the terms and provisions of
Rule 144 under the Securities Act.
12.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the conflicts of law provisions thereof.
12.4 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which, when taken
together, shall constitute one and the same instrument.
12.5 Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning and interpretation of this Agreement.
12.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereto hereby waive any
provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
12.7 Termination. Anything herein to the contrary
notwithstanding, this Agreement may be terminated by either the Purchasers or
the Company, upon written notice to the other, if the Closing of the purchase
and sale of any Shares shall not have occurred on or prior to the Outside
Date. This Agreement may also be terminated by mutual consent of the
Purchasers and the Company. After termination, the Purchasers and the Company
shall have no liability or further obligation to the other under this
Agreement, other than their respective obligations under Sections 1.6, 4.2,
4.3, 8, 9, 10 and Section 12 hereof.
31
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
UNC INCORPORATED
By: ---------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President and Treasurer
PURCHASERS
NETWORK III HOLDINGS LDC
By:
---------------------------------------------
Name: Xxxx Xxxxxx
Title: Director
XXXXXX INVESTMENT COMPANY
By:
---------------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
IRON CITY PARTNERS, INC.
By:
---------------------------------------------
Name: Xxxxxxx X. X'Xxxxxxx
Title: Vice President
ARIEL FUND LTD.
By:
---------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Investment Adviser
PEQUOD INVESTMENTS, .L.P.
By:
---------------------------------------------
Name: Xxxx Xxxxxx
Title: General Partner
32
SCHEDULE 1
----------
Name of Purchaser Acquisition Shares
----------------- ------------------
Network III Holdings, LDC 30,000
Xxxxxx Investment Company 20,000
Iron City Partners, Inc. 50,000
Ariel Fund Ltd. 146,000
Pequod Investments, L.P. 4,000
===========
Total 250,000
33
SCHEDULE 2
----------
For purposes of this Agreement, an "Acceptable Acquisition" shall mean
an acquisition or series of related acquisitions by the Company of a
corporation or other entity (or its assets, businesses or divisions) whose
principal business or businesses is supplying products and services to the
aviation industry of a nature similar to, or complementary with, the Company's
currently existing lines of business. An Acceptable Acquisition must (a) be
approved by the Board of Directors of the Company and the company to be
acquired and, if required, the stockholders of the Company and the company to
be acquired and any third parties or governmental bodies, agencies and
authorities whose approval is required; (b) not violate any statute,
ordinance, rule, regulation, order or decree of any court or federal, state,
local or foreign governmental body, agency or authority; (c) not violate or
result in a default in respect of any contract, lease, agreement, instrument,
arrangement or understanding to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound; (d)
not violate any of the constitutive documents of the Company or any of its
Subsidiaries; and (e) not result in a breach of, or default under, any of the
representations and warranties, covenants and other agreements and terms of
this Agreement.
34
UNC INCORPORATED
CERTIFICATE OF THE DESIGNATION, POWERS,
PREFERENCES AND RIGHTS OF THE SERIES B SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The following resolutions were duly adopted by the Board of Directors
of UNC Incorporated, a Delaware corporation (the "Corporation"), pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, on September 29, 1995 at a meeting of the Board of Directors at
which there was at all times present and acting a quorum of the Board of
Directors of the Corporation:
WHEREAS, the Board of Directors of the Corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation,
to fix by resolution or resolutions the designation of each series of
Preferred Stock and the powers, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, including, without limiting the generality of the
foregoing, such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution or resolutions of the Board of Directors
under the General Corporation Law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of such Preferred Stock and the number of shares constituting such
series:
NOW, THEREFORE, BE IT RESOLVED:
(1) Designation and Number of Shares. The designation of said series
of Preferred Stock, par value $1.00 per share (the "Series Preferred Stock"),
authorized by this resolution shall be "Series B Senior Cumulative Convertible
Preferred Stock" (the "Series B Preferred Stock"). The number of shares of
Series B Preferred Stock authorized hereby shall be 250,000 and no more,
except as provided herein.
(2) Rank. The Series B Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (a) on a
parity with the Series C Senior Cumulative Preferred Stock, par value $1.00
per share (the "Series C Preferred Stock"), and (b) prior to any other equity
securities of the Corporation, whether currently authorized or hereafter
created, including any other series of Series Preferred Stock and the Common
Stock, par value $.20 per share, of the Corporation (the "Common Stock", all
of such equity securities of the Corporation to which the Series B Preferred
Stock ranks prior, including any other series of Series Preferred Stock and
the Common Stock, are referred to herein collectively as the "Junior
Securities").
35
(3) Dividends. (a) (i) The holders of the shares of Series B Preferred
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate (subject to adjustment as set forth
in subparagraph (iv) below) of $8.50 per share in equal quarterly payments on
the last business day of each calendar quarter (each of such dates being a
"Dividend Payment Date"), commencing with the last day of the calendar quarter
in which the shares of Series B Preferred Stock are issued, in preference to
dividends on the Junior Securities. Such dividends shall be paid to the
holders of record at the close of business on the date which is ten (10)
business days prior to the Dividend Payment Date. Each of such quarterly
dividends (whether payable in cash or in stock) shall be fully cumulative and
shall accrue (whether or not declared), without interest, from the Date of
Issuance. Subject to subparagraph (iii) below, any dividend payments due with
respect to the Series B Preferred Stock on any Dividend Payment Date shall be
made by issuing fully paid and non-assessable shares of Series C Preferred
Stock, valued as set forth below (a "PIK Dividend"); provided, however, that
in lieu of issuing shares of Series C Preferred Stock, dividends may be paid,
in the sole discretion of the Corporation, in cash or any combination of cash
and Series C Preferred Stock. The issuance of such shares or the issuance of
such shares together with payment of cash in lieu of the issuance of any
shares shall constitute full payment of such dividend.
(ii) Shares of Series C Preferred Stock used for the purpose of paying
dividends on the Series B Preferred Stock will be valued at $100.00 per share.
(iii) In the event that the Corporation is no longer a party to any
Restrictive Agreement (as defined below) prohibiting the payment of cash
dividends on the Series B Preferred Stock, dividend payments with respect to
the Series B Preferred Stock shall be made in cash. "Restrictive Agreement"
shall mean any agreement to which the Corporation is a party on the date
hereof (including as modified, amended, extended, refinanced or replaced)
which by its terms restricts the Corporation's ability to (A) pay dividends
in cash with respect to the Series B Preferred Stock or (B) redeem the Series
B Preferred Stock, excluding any such agreement which has been substantially
assigned to a party which is not a party thereto on the date hereof.
(iv) In the event that the Corporation shall make a PIK Dividend at any
time after the third anniversary of the date of issuance of the Series B
Preferred Stock (the "Date of Issuance"), the annual rate of PIK Dividends
payable thereafter with respect to the Series B Preferred Stock shall be
increased to $9.50 per share. In the event that the Corporation shall make
a PIK Dividend at any time after the fourth anniversary of the Date of
Issuance, the annual rate of PIK Dividends payable thereafter with respect to
the Series B Shares shall be increased to $10.50 per share. In the event that
the Corporation shall make a PIK Dividend at any time after the fifth
anniversary of the Date of Issuance, the annual rate of PIK Dividends payable
thereafter with respect to the Series B Preferred Stock shall be increased to
$11.00 a share. Any adjustment to the annual rate of PIK Dividends payable
with respect to the Series B Preferred Stock pursuant to this subparagraph
(iv) shall be effective after the date of the applicable PIK Dividend and the
dividend payment in fully paid non-assessable shares of Series C Preferred
Stock with respect to the next following date of PIK Dividend shall be
adjusted to reflect the applicable increased annual rate. Dividend payments,
or any portion thereof, with respect to the Series B Preferred Stock to be
paid in cash will be at annual rate of $8.50 per share.
36
(b) All dividends paid with respect to shares of Series B Preferred
Stock pursuant to paragraph (3)(a) shall be paid pro rata to the holders
entitled thereto.
(c) No full cash dividends shall be declared or paid or set apart for
payment on the Series C Preferred Stock for any period unless full cumulative
cash dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such
payment on the Series B Preferred Stock for all dividend payment periods
terminating on or prior to the date of payment of such full cumulative
dividends. If any cash dividends are not paid in full, as aforesaid, upon the
shares of Series B Preferred Stock and the Series C Preferred Stock, all cash
dividends declared upon shares of Series B Preferred Stock and the Series C
Preferred Stock shall be declared pro rata so that the amount of cash
dividends declared per share on the Series B Preferred Stock and the Series
C Preferred Stock shall in all cases bear to each other the same ratio that
accrued cash dividends per share on the Series B Preferred Stock and the
Series C Preferred Stock bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series B Preferred Stock which may be in arrears.
(d) (i) Whenever dividends or distributions payable on the Series B
Preferred Stock as provided in this Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions,
on any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up); or
(B) redeem or purchase or otherwise acquire for consideration
shares of any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up), provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such Junior Securities in
exchange for shares of any other Junior Securities.
(ii) Subject to the foregoing provisions of this Section 3, the Board
of Directors may declare, and the Corporation may pay or set apart for
payment, dividends and other distributions on any of the Junior Securities,
and may purchase or otherwise redeem any of the Junior Securities or any
warrants, rights or options exercisable for or convertible into any of the
Junior Securities, and the holders of the shares of Series B Preferred Stock
shall not be entitled to share therein.
(4) Liquidation Preference. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series B Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount in cash equal to
$100.00 for each share outstanding, plus an amount in cash equal to all
accrued but unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding up, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities. If the assets of
the Corporation are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of Series B Preferred Stock and
37
Series C Preferred Stock, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of Series B Preferred Stock and Series C Preferred Stock
are entitled were paid in full.
(b) The liquidation payment with respect to each fractional share of
Series B Preferred Stock outstanding or accrued but unpaid shall be equal to
a ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series B Preferred Stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation or the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
lease, exchange or transfer shall be in connection with a dissolution or
winding up of the business of the Corporation.
(5) Redemption. Commencing after the Effective Date (as defined
below), the Corporation at its option may redeem, to the extent funds are
legally available therefor, the Series B Preferred Stock, at any time in whole
or from time to time in part, at the per share redemption price equal to
$100.00 plus all accrued and unpaid dividends thereon to the date fixed for
redemption, without interest (the "Redemption Price"). "Effective Date" shall
mean, the last day of any ninety (90) consecutive calendar day period that
occurs after the fourth anniversary of the Date of Issuance in which the last
reported sales price regular way for the Common Stock of the Corporation on
the New York Stock Exchange (or any other national securities exchange or
NASDAQ on which the Common Stock is listed or quoted) on all trading days in
that period is at least equal to 200% of the Conversion Price (as defined in
Section 7).
(b) The Corporation shall not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming, all outstanding shares
of Series C Preferred Stock at the Redemption Price for the Series C
Preferred Stock.
(c) Unless the Corporation is prohibited by the terms of any
Restrictive Agreement from redeeming any shares of Series B Preferred Stock,
in the event of any Change in Control (as defined below) with respect to the
Corporation, each holder of the Series B Preferred Stock may, from time to
time, require the Corporation to, and the Corporation shall, redeem any number
of the shares of Series B Preferred Stock held by it for the Redemption Price
upon thirty (30) days prior written notice. "Change in Control" shall mean
(A) any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) which will result in
the Corporation's stockholders immediately prior to such transaction not
holding (by virtue of such shares or securities issued solely with respect
thereto) at least fifty percent (50%) of the voting power of the surviving or
continuing entity, (B) a sale of all or substantially all of the assets of the
Corporation, unless the Corporation's stockholders immediately prior to such
sale will, as a result of such sale, hold (by virtue of securities issued as
consideration for the Corporation's sale) at least fifty percent (50%) of the
voting power of the purchasing entity, or (C) during any period of two
38
consecutive years, individuals who at the beginning of such period constitute
the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.
(d) Shares of Series B Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued shares of the class
of Series Preferred Stock, undesignated as to series, and may be redesignated
and reissued as part of any series of the Series Preferred Stock, par value
$1.00 per share, of the Corporation; provided, however, that no such issued
and reacquired shares of Series B Preferred Stock shall be reissued or sold
as Series B Preferred Stock.
(e) Notwithstanding the foregoing provisions of this Section 5, unless
the full cumulative dividends on all outstanding shares of Series B Preferred
Stock shall have been paid or contemporaneously are declared and paid for all
past dividend periods, none of the shares of Series B Preferred Stock shall
be redeemed unless all outstanding shares of Series B Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire (except pursuant to Section 6 hereof) any shares of Series B Preferred
Stock; provided, however, that the foregoing shall not prevent the purchase
or acquisition of shares of Series B Preferred Stock pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding shares
of Series B Preferred Stock.
(6) Procedure for Redemption. (a) In the event that fewer than all
the outstanding shares of Series B Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may
be determined by the Board of Directors.
(b) In the event the Corporation shall redeem shares of Series B
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty
(60) days prior to the date of redemption (the "Redemption Date"), to each
holder of record of the shares to be redeemed at such holder's address as the
same appears on the stock register of the Corporation; provided, however, that
no failure to mail such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any shares of Series B
Preferred Stock to be redeemed except as to the holder to whom the Corporation
has failed to mail said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) the Redemption Date; (ii) the
number of shares of Series B Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed from such holder, the
number of shares to be redeemed from such holder; (iii) the Redemption Price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such Redemption Date.
(c) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
39
redemption) dividends on the shares of Series B Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed
to be outstanding and shall have the status of authorized but unissued shares
of Preferred Stock, unclassified as to series, and shall not be reissued as
shares of Series B Preferred Stock, and all rights of the holders thereof as
stockholders of the Corporation with respect to said shares (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 Board of
Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the Redemption Price
aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(7) Conversion. (a) Subject to and upon compliance with the
provisions of this Section 7, unless previously redeemed by the Corporation,
the holders of shares of Series B Preferred Stock shall have the right, at
such holders' option, at any time and from time to time, to convert such
shares into fully paid and non-assessable shares of Common Stock of the
Corporation. The number of shares of Common Stock issuable upon conversion
of each share of Series B Preferred Stock shall be equal to $100.00 divided
by the Conversion Price (as hereinafter defined) in effect at the time of
conversion, determined as hereinafter provided. The price at which shares of
Common Stock shall be delivered upon conversion (the "Conversion Price") shall
initially be $7.00 (subject to the adjustments set out in this Section 7).
The right to convert shares called for redemption pursuant to this Section 7
shall terminate at the close of business on the date fixed for such redemption
unless the Corporation shall default in making payment of the amount payable
upon such redemption.
(b) The holders of shares of Series B Preferred Stock at the close of
business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof or the Corporation's default in payment
of the dividend due on such Dividend Payment Date. However, shares of Series
B Preferred Stock surrendered for conversion during the period between the
close of business on any dividend payment record date and the opening of
business on the corresponding Dividend Payment Date must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of shares of Series B Preferred Stock on a
dividend payment record date who (or whose transferee) surrenders any of such
shares for conversion into shares of Common Stock on a Dividend Payment Date
will receive the dividend payable by the Corporation on such shares of Series
B Preferred Stock on such date, and the converting holder need not include
payment in the amount of such dividend upon surrender of shares of Series B
Preferred Stock for conversion. Except as provided above, the Corporation
shall make no payment or allowance for unpaid dividends, whether or not in
arrears, on converted shares or for dividends on the shares of Common Stock
issued upon such conversion.
(c) (i) In order to exercise the conversion privilege, the holders of
each share of Series B Preferred Stock to be converted shall surrender the
certificate representing such share at the office of the transfer agent for
the Series B Preferred Stock, appointed for such purpose by the Corporation,
with the Notice of Election to Convert on the back of said certificate
40
completed and signed. Unless the shares of Common Stock issuable on
conversion are to be issued in the same name in which such share of Series B
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender of the certificates
for shares of Series B Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver at such office to such holder, or on his written
order, a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such shares in accordance with the
provisions of this Section 7, and any fractional interest in respect of a
share of Common Stock arising upon such conversion shall be settled as
provided in paragraph (d) of this Section 7.
(iii) Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
shares of Series B Preferred Stock shall have been surrendered and such notice
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date,
unless the stock transfer books of the Corporation shall be closed on that
date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next
succeeding day on which such stock transfer books are open, and such notice
received by the Corporation. All shares of Common Stock delivered upon
conversion of the Series B Preferred Stock will upon delivery be duly and
validly issued and fully paid and non-assessable, free of all liens and
charges and not subject to any preemptive rights.
(d) The Conversion Price in effect at any time and the number and kind
of securities issuable upon the conversion of each share of Series B Preferred
Stock shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
(i) In the event that the Corporation shall make a PIK Dividend
pursuant to Section 3 hereof after the third anniversary of the Date of
Issuance, then the Conversion Price shall be reduced by five percent
(5%); provided that a reduction in the Conversion Price pursuant to this
subparagraph (i) shall be made only once.
(ii) In case the Corporation shall hereafter (A) pay a dividend
or make a distribution on its Common Stock in shares of its Common
Stock, (B) subdivide its outstanding Common Stock, (C) combine its
outstanding Common Stock into a smaller number of shares, or (D) issue
any shares by reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Corporation is the continuing corporation), the Conversion Price in
effect at the time of the record date for such dividend or distribution
or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder
of any share of Series B Preferred Stock converted after such date shall
be entitled to receive the aggregate number and kind of shares of Common
Stock which, if such share of Series B Preferred Stock had been
41
converted immediately prior to such record date or effective date, he
would have owned upon such conversion and been entitled to receive upon
such dividend, distribution, subdivision, combination or
reclassification.
(iii) In case the Corporation shall hereafter issue rights or
warrants to all holders of its Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Conversion Price in effect on
the record date with respect to such issuance, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on
such record date plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at the Conversion
Price in effect immediately prior to the date of such issuance, and of
which the denominator shall be the number of shares of Common Stock
outstanding on the record date for determination of the Stockholders
entitled to receive such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase
(or into which the convertible securities so offered are then
convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately
prior to the date of such issuance; and to the extent that shares of
Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or
warrants, the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of delivery
of only the number of shares of Common Stock (or securities convertible
into Common Stock) actually delivered.
(iv) In case the Corporation shall hereafter distribute to all
holders of its Common Stock shares of stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends or
distributions out of retained earnings and dividends or distributions
referred to in subparagraph (ii) above) or rights or warrants (excluding
those referred to in subparagraph (iii) above), then in each such case
the Conversion Price in effect thereafter shall be determined by
multiplying the Conversion Price in effect immediately prior to the date
of such distribution by a fraction, of which the numerator shall be the
total number of outstanding shares of Common Stock multiplied by the
Conversion Price in effect immediately prior to the date of such
distribution, less the then fair market value (as determined in good
faith by the Corporation's Board of Directors, irrespective of the
accounting treatment thereof, whose determination shall be described in
a certified Board Resolution) of said shares of stock, assets or
evidences of indebtedness so distributed or of such rights or warrants,
and of which the denominator shall be the total number of outstanding
shares of Common Stock multiplied by the Conversion Price in effect
immediately prior to the date of such distribution. Such adjustments
shall be made whenever any such distribution is made and shall become
effective immediately prior to the date of such distribution.
42
(v) In case the Corporation shall hereafter issue shares of its
Common Stock (excluding shares issued (A) in any of the transactions
described in subparagraph (ii) above, (B) upon conversion or exchange
of securities convertible into or exchangeable for Common Stock, or upon
conversion of rights or warrants issued to the holders of Common Stock,
for which an adjustment has already been made pursuant to subparagraph
(iii) above, (C) by grant to or upon exercise of options granted or to
be granted to employees or directors pursuant to any employee benefit
plan or program of the Corporation or any of its subsidiaries in
existence on the Date of Issuance or subsequently approved by the
Corporation's stockholders, (D) upon conversion of shares of Series B
Preferred Stock, (E) to shareholders of any corporation which merges
into the Corporation or a subsidiary of the Corporation in proportion
to their stockholdings of such corporation immediately prior to such
merger, upon such merger, (F) in a bona fide public offering pursuant
to a firm commitment underwriting, or (G) pursuant to any stockholders
rights plan of the Corporation) for a consideration per share of Common
Stock less than the Conversion Price in effect on the date the
Corporation fixes or has fixed the offering, conversion, exchange or
exercise price of such additional shares, the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior thereto by a fraction, of
which the numerator shall be the total number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares
plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided in subparagraph (vii)
below) for the issuance of such additional shares would purchase at the
Conversion Price in effect on the date the Corporation fixes or has
fixed the offering, conversion, exchange or exercise price of such
additional shares, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made successively
whenever such an issuance is made and shall become effective immediately
prior to the date of such issuance.
(vi) In case the Corporation shall hereafter issue any securities
convertible into or exchangeable for its Common Stock (excluding
securities issued (A) in transactions described in subparagraphs (iii)
and (iv) above or (B) pursuant to any stockholders rights plan of the
Corporation) for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities (determined
as provided in subparagraph (vii) below) less than the Conversion Price
in effect on the issuance date of such securities, the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date
of such issuance by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided in subparagraph (vii)
below) for such securities would purchase at the Conversion Price prior
to any adjustment pursuant hereto, and of which the denominator shall
be the number of shares of Common Stock outstanding immediately prior
to such issuance plus the maximum number of shares of Common Stock of
the Corporation deliverable upon conversion of or in exchange for such
securities at the initial conversion or exchange price or rate. Such
adjustment shall be made successively whenever such an issuance is made
43
and shall become effective immediately prior to date of issuance of such
securities.
(vii) For purposes of any computation respecting consideration
received pursuant to subparagraphs (v) and (vi) above, the following
shall apply:
(A) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that
in no case shall any deduction be made for any commissions, discounts
or other expenses incurred by the Corporation for any underwriting of
the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Corporation
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive and described in a certified Board Resolution; and
(C) in the case of the issuance of securities convertible into
or exchangeable for shares of Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by
the Corporation for the issuance of such securities plus the additional
minimum consideration, if any, to be received by the Corporation upon
the conversion or exchange thereof (the consideration in each case to
be determined in the same manner as provided in clauses (A) and (B) of
this subparagraph (vii)).
(viii) In case the Corporation is a participant in a
consolidation, merger or combination with another corporation (other
than with a wholly-owned subsidiary of the Corporation and other than
a merger which does not result in any reclassification, conversion,
exchange or cancellation of the Common Stock) or in case of any sale or
transfer of all or substantially all of the assets of the Corporation,
as a result of which holders of the Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash)
with respect to or in exchange for such Common Stock, or any share
exchange whereby the Common Stock is converted into other securities or
property of the Corporation, then as a condition to the consummation of
such transaction, lawful and adequate provision shall be made so that
the holder of each share of Series B Preferred Stock then outstanding
shall have the right, with respect to such shares of Series B Preferred
Stock, to receive stock, other securities or property or assets
(including cash) or any combination thereof, having a value equal to the
value of the stock, other securities, property and assets (including
cash) which such holder would have been entitled to receive upon such
consolidation, merger, combination, sale or transfer, or exchange, if
such holder had held the Common Stock issuable upon the conversion of
such shares of Series B Preferred Stock immediately prior to such
consolidation, merger, combination, sale or transfer, or exchange.
(ix) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least
ten cents ($0.10) in such price; provided, however, that any adjustments
not required to be made shall be carried forward and taken into account
44
in any subsequent adjustment. All calculations under this paragraph
7(d) shall be made to the nearest cent or to the nearest one-thousandth
of a share, as the case may be.
(x) Anything in this paragraph 7(d) to the contrary
notwithstanding, the Corporation shall be entitled, but shall not be
required, to make such changes in the Conversion Price, in addition to
those required by this paragraph 7(d), as it in its discretion shall
determine to be advisable in order that any dividend or distribution in
shares of Common Stock, subdivision, reclassification or combination of
shares of Common Stock, issuance of rights or warrants to purchase
Common Stock or distribution of shares of stock other than Common Stock,
evidences of indebtedness or assets (other than distributions in cash
out of retained earnings) referred to hereinabove in this paragraph
7(d), hereafter made by the Corporation to the holders of the Series B
Preferred Stock shall not be taxable to them.
(xi) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly cause a notice setting forth
the adjusted Conversion Price and adjusted number of shares issuable
upon conversion of each share of Series B Preferred Stock to be mailed
to the holders, at their last addresses appearing in the Series B
Preferred Stock share register. The certificate setting forth the
computation shall be signed by the chief financial officer of the
Corporation.
(xii) In the event that at any time, as a result of any
adjustment made pursuant to paragraph (a) above, the holder of any share
of Series B Preferred Stock thereafter shall become entitled to receive
any shares of the Corporation, other than Common Stock, thereafter the
number of such other shares so receivable upon conversion of any share
of Series B Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in subparagraphs
(i) to (ix) inclusive, above.
(e) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purposes of effecting conversions
of the Series B Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Series B
Preferred Stock not theretofore converted. For purposes of this paragraph
(e), the number of shares of Common Stock which shall be deliverable upon the
conversion of all outstanding shares of Series B Preferred Stock shall be
computed as if at the time of computation all such outstanding shares were
held by a single holder.
(f) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the
provisions of this Section 7 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series B Preferred Stock against impairment.
45
(8) Voting Rights. The holders of record of shares of Series B
Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this Section 8 or as otherwise provided by law.
(a) Whenever dividends are in arrears and remain unpaid for six (6) or
more Dividend Payment Dates, the holders of the then outstanding Series B
Preferred Stock, voting as a class, shall have the exclusive right to appoint
one additional director to the Board of Directors of the Corporation (in
addition to any rights to appoint or have nominated any director pursuant to
any contractual agreement between the Corporation and any holders of the
Series B Preferred Stock) until such time as all accrued and unpaid dividends
shall have been paid in full, at which time the term of office of such
director shall terminate.
(b) So long as any shares of Series B Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the
holders of at least a majority of the outstanding shares of Series B Preferred
Stock, voting as a class (i) create, authorize or issue any shares of any
other class of senior or parity dividend stock or senior or parity liquidation
stock or having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series B Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series B Preferred Stock or otherwise reduce the
number of outstanding shares of Series B Preferred Stock other than pursuant
to Section 4, 5 or 7 hereof; provided, however, that the approval of not less
than two-thirds of the outstanding shares of Series B Preferred Stock, voting
as a class, shall be required to amend, alter, or repeal any of the provisions
of the Certificate of Incorporation of the Corporation that would adversely
affect the dividend provisions, liquidation rights, conversion terms, or
voting rights of the Series B Preferred Stock or the holders thereof.
(c) A special meeting of holders of the Series B Preferred Stock (or a
request for a vote by written consent without a meeting) to approve or
disapprove any action of the Corporation on which the holders of the Series
B Preferred Stock are entitled to vote as a separate class by law or pursuant
to this Section 8 may be called by the Secretary of the Corporation or by the
holder(s) of twenty-five percent (25%) or more of the outstanding shares of
Series B Preferred Stock on written notice to the address of each holder
thereof as it appears on the records of the Corporation deposited in the U.S.
mail, all charges prepaid, at least ten (10) but no more than sixty (60) days
prior to the applicable vote. The record date for determination of the
holders of the Series B Preferred Stock entitled to vote by written consent
or at a meeting shall be set by the Corporation's Board of Directors, and only
holders who are holding of record on the stock book of the Corporation on that
date will be entitled to participate in such vote. At any time at which any
share of Series B Preferred Stock has been issued and is outstanding, no
proposal for the Corporation to take any action described in paragraph (b)
shall be adopted, nor shall the Corporation be authorized to take any such
action, unless the holders of at least two-thirds of the outstanding shares
of Series B Preferred Stock voting as a separate class vote in favor of such
proposal.
46
(d) Copies of all notices sent to the holders of Common Stock shall be
simultaneously sent to each holder of the Series B Preferred Stock.
(e) In exercising the voting rights set forth in this Section 8, each
share of Series B Preferred Stock shall have one vote per share.
(f) No consent of the holders of the Series B Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of
the Series Preferred Stock or Common Stock, shall be required for (i) the
creation, authorization or issuance of any indebtedness of any kind of the
Corporation, (ii) the creation, authorization or issuance of any other class
of stock of the Corporation subordinate as to dividends and upon liquidation
to the Series B Preferred Stock, (iii) any increase or decrease in the amount
of authorized Common Stock or Series Preferred Stock or any increase, decrease
or change in the par value thereof, or (iv) any increase in the amount of the
Series C Preferred Stock for the purpose of paying dividends in shares of
Series C Preferred Stock as provided herein, and none of the foregoing shall
be deemed to affect adversely the powers, special rights or preferences of
holders of the Series B Preferred Stock.
IN WITNESS WHEREOF, UNC Incorporated caused this certificate to be
signed by its Chairman of the Board and Chief Executive Officer and attested
by its Secretary this 5th day of October, 1995.
UNC INCORPORATED
By:_____________________
Xxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
ATTEST:
___________________
Secretary
47
UNC INCORPORATED
CERTIFICATE OF THE DESIGNATION, POWERS,
PREFERENCES AND RIGHTS OF THE SERIES C SENIOR CUMULATIVE
PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The following resolutions were duly adopted by the Board of Directors
of UNC Incorporated, a Delaware corporation (the "Corporation"), pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, on September 29, 1995 at a meeting of the Board of Directors at
which there was at all times present and acting a quorum of the Board of
Directors of the Corporation:
WHEREAS, the Board of Directors of the Corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation,
to fix by resolution or resolutions the designation of each series of
Preferred Stock and the powers, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, including, without limiting the generality of the
foregoing, such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution or resolutions of the Board of Directors
under the General Corporation Law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of such Preferred Stock and the number of shares constituting such
series:
NOW, THEREFORE, BE IT RESOLVED:
(1) Designation and Number of Shares. The designation of said series
of Preferred Stock, par value $1.00 per share (the "Series Preferred Stock"),
authorized by this resolution shall be "Series C Senior Cumulative Preferred
Stock" (the "Series C Preferred Stock"). The number of shares of Series C
Preferred Stock authorized hereby shall be 250,000 and no more, except as
provided herein.
(2) Rank. The Series C Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (a) on a
parity with the Series B Senior Cumulative Preferred Stock, par value $1.00
per share (the "Series B Preferred Stock"), and (b) prior to any other equity
securities of the Corporation, whether currently authorized or hereafter
created, including any other series of Series Preferred Stock and the Common
Stock, par value $.20 per share, of the Corporation (the "Common Stock", all
of such equity securities of the Corporation to which the Series C Preferred
Stock ranks prior, including any other series of Series Preferred Stock and
the Common Stock, are referred to herein collectively as the "Junior
Securities").
48
(3) Dividends. (a) The holders of the shares of Series C Preferred
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate of $8.50 per share in equal quarterly
payments on the last business day of each calendar quarter (each of such dates
being a "Dividend Payment Date"), commencing with the last day of the calendar
quarter in which the shares of Series C Preferred Stock are issued, in
preference to dividends on the Junior Securities. Such dividends shall be
paid to the holders of record at the close of business on the date which is
ten (10) business days prior to the Dividend Payment Date. Each of such
quarterly dividends shall be fully cumulative and shall accrue (whether or not
declared), without interest, from the Date of Issuance. Any dividend payments
due with respect to the Series C Preferred Stock on any Dividend Payment Date
shall be made in cash.
(b) All dividends paid with respect to shares of Series C Preferred
Stock pursuant to paragraph (3)(a) hereof shall be paid pro rata to the
holders entitled thereto.
(c) No full cash dividends shall be declared or paid or set apart for
payment on the Series B Preferred Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for such payment on the
Series C Preferred Stock for all dividend payment periods terminating on or
prior to the date of payment of such full cumulative dividends. If any cash
dividends are not paid in full, as aforesaid, upon the shares of Series C
Preferred Stock and Series B Preferred Stock, all cash dividends declared upon
shares of Series C Preferred Stock and Series B Preferred Stock shall be
declared pro rata so that the amount of cash dividends declared per share on
the Series C Preferred Stock and Series B Preferred Stock shall in all cases
bear to each other the same ratio that accrued dividends per share on the
Series C Preferred Stock and Series B Preferred Stock bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series C Preferred Stock which may be
in arrears.
(d) (i) Whenever dividends or distributions payable on the Series C
Preferred Stock as provided in this Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions, on
any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up); or
(B) redeem or purchase or otherwise acquire for consideration
shares of any Junior Securities (either as to dividends or upon
liquidation, dissolution or winding up), provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any such
Junior Securities in exchange for shares of any other Junior Securities.
(ii) Subject to the foregoing provisions of this Section 3, the Board
of Directors may declare, and the Corporation may pay or set apart for
payment, dividends and other distributions on any of the Junior Securities,
and may purchase or otherwise redeem any of the Junior Securities or any
49
warrants, rights or options exercisable for or convertible into any of the
Junior Securities, and the holders of the shares of Series C Preferred Stock
shall not be entitled to share therein.
(4) Liquidation Preference. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series C Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount in cash equal to
$100.00 for each share outstanding, plus an amount in cash equal to all
accrued but unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding up, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities. If the assets of
the Corporation are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of Series C Preferred Stock and
Series B Preferred Stock, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of Series C Preferred Stock and Series B Preferred Stock
are entitled were paid in full.
(b) The liquidation payment with respect to each fractional share of
Series C Preferred Stock outstanding or accrued but unpaid shall be equal to
a ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series C Preferred Stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation or the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
lease, exchange or transfer shall be in connection with a dissolution or
winding up of the business of the Corporation.
(5) Redemption. (a) The Corporation at its option may redeem, to the
extent funds are legally available therefor, the Series C Preferred Stock, at
any time in whole or from time to time in part, at the per share redemption
price equal to $100.00 plus all accrued and unpaid dividends thereon to the
date fixed for redemption, without interest (the "Redemption Price").
(b) The Corporation shall not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming all outstanding shares of
Series C Preferred Stock at the Redemption Price.
(c) Unless the Corporation is prohibited by the terms of any
Restrictive Agreement (as defined below) from redeeming any shares of Series
C Preferred Stock, in the event of any Change in Control (as defined below)
with respect to the Corporation, each holder of the Series C Preferred Stock
may, from time to time, require the Corporation to, and the Corporation shall,
redeem any number of the shares of Series C Preferred Stock held by it for the
Redemption Price upon thirty (30) days prior written notice. "Restrictive
Agreement" shall mean any agreement to which the Corporation is a party on the
date hereof (including, as modified, amended, extended, refinanced or
replaced) which by its terms restricts the Corporation's ability to (A) pay
dividends in cash with respect to the Series C Preferred Stock or (B) redeem
50
the Series C Preferred Stock, excluding any such agreement which has been
substantially assigned to a party which is not a party thereto on the date
hereof. "Change in Control" shall mean (A) any transaction or series of
related transactions (including, without limitation, any reorganization,
merger or consolidation) which will result in the Corporation's stockholders
immediately prior to such transaction not holding (by virtue of such shares
or securities issued solely with respect thereto) at least fifty percent (50%)
of the voting power of the surviving or continuing entity, (B) a sale of all
or substantially all of the assets of the Corporation, unless the
Corporation's stockholders immediately prior to such sale will, as a result
of such sale, hold (by virtue of securities issued as consideration for the
Corporation's sale) at least fifty percent (50%) of the voting power of the
purchasing entity, or (C) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board
of Directors shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Corporation's
stockholders, of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of the period.
(d) Shares of Series C Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued shares of the class
of Series Preferred Stock, undesignated as to series, and may be redesignated
and reissued as part of any series of the Series Preferred Stock, par value
$1.00 per share, of the Corporation; provided, however, that no such issued
and reacquired shares of Series C Preferred Stock shall be reissued or sold
as Series C Preferred Stock.
(e) Notwithstanding the foregoing provisions of this Section 5, unless
the full cumulative dividends on all outstanding shares of Series C Preferred
Stock shall have been paid or contemporaneously are declared and paid for all
past dividend periods, none of the shares of Series C Preferred Stock shall
be redeemed unless all outstanding shares of Series C Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire (except pursuant to Section 6 hereof) any shares of Series C Preferred
Stock; provided, however, that the foregoing shall not prevent the purchase
or acquisition of shares of Series C Preferred Stock pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding shares
of Series C Preferred Stock.
(6) Procedure for Redemption. A. In the event that fewer than all the
outstanding shares of Series C Preferred Stock are to be redeemed, the number
of shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
(b) In the event the Corporation shall redeem shares of Series C
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty
(60) days prior to the date of redemption (the "Redemption Date"), to each
holder of record of the shares to be redeemed at such holder's address as the
same appears on the stock register of the Corporation; provided, however, that
no failure to mail such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any shares of Series C
51
Preferred Stock to be redeemed except as to the holder to whom the Corporation
has failed to mail said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) the Redemption Date; (ii) the
number of shares of Series C Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed from such holder, the
number of shares to be redeemed from such holder; (iii) the Redemption Price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such Redemption Date.
(c) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption) dividends on the shares of Series C Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed
to be outstanding and shall have the status of authorized but unissued shares
of Preferred Stock, unclassified as to series, and shall not be reissued as
shares of Series C Preferred Stock (unless reissued as a stock dividend on
Series C Preferred Stock or Series B Preferred Stock), and all rights of the
holders thereof as stockholders of the Corporation with respect to said shares
(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
Board of Directors of the Corporation shall so require and the notice shall
so state), such shares shall be redeemed by the Corporation at the Redemption
Price aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(7) Voting Rights. The holders of record of shares of Series C
Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this Section 7 or as otherwise provided by law.
(b) So long as any shares of Series C Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the
holders of at least a majority of the outstanding shares of Series C Preferred
Stock, voting as a class (i) create, authorize or issue any shares of any
other class of senior or parity dividend stock or senior or parity liquidation
stock or having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series C Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series C Preferred Stock or otherwise reduce the
number of outstanding shares of Series C Preferred Stock other than pursuant
to Section 4 or 5 hereof; provided, however, that the approval of not less
than two-thirds of the outstanding shares of Series C Preferred Stock, voting
as a class, shall be required to amend, alter, or repeal any of the provisions
of the Certificate of Incorporation of the Corporation that would adversely
affect the dividend provisions, liquidation rights, conversion terms, or
voting rights of the Series C Preferred Stock or the holders thereof.
(c) A special meeting of holders of the Series C Preferred Stock (or
a request for a vote by written consent without a meeting) to approve or
disapprove any action of the Corporation on which the holders of the Series
C Preferred Stock are entitled to vote as a separate class by law or pursuant
52
to this Section 7 may be called by the Secretary of the Corporation or by the
holder(s) of twenty-five percent (25%) or more of the outstanding shares of
Series C Preferred Stock on written notice to the address of each holder
thereof as it appears on the records of the Corporation deposited in the U.S.
mail, all charges prepaid, at least ten (10) but no more than sixty (60) days
prior to the applicable vote. The record date for determination of the
holders of the Series C Preferred Stock entitled to vote by written consent
or at a meeting shall be set by the Corporation's Board of Directors, and only
holders who are holding of record on the stock book of the Corporation on that
date will be entitled to participate in such vote. At any time at which any
share of Series C Preferred Stock has been issued and is outstanding, no
proposal for the Corporation to take any action described in this paragraph
(b) shall be adopted, nor shall the Corporation be authorized to take any such
action, unless the holders of at least two-thirds of the outstanding shares
of Series C Preferred Stock voting as a separate class vote in favor of such
proposal.
(d) Copies of all notices sent to the holders of Common Stock shall be
simultaneously sent to each holder of the Series C Preferred Stock.
(e) In exercising the voting rights set forth in this Section 7, each
share of Series C Preferred Stock shall have one vote per share.
(f) No consent of the holders of the Series C Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of
the Series B Preferred Stock or Common Stock, shall be required for (i) the
creation, authorization or issuance of any indebtedness of any kind of the
Corporation, (ii) the creation, authorization or issuance of any other class
of stock of the Corporation subordinate as to dividends and upon liquidation
to the Series C Preferred Stock, or (iii) any increase or decrease in the
amount of authorized Common Stock or Series B Preferred Stock or any increase,
decrease or change in the par value thereof, and none of the foregoing shall
be deemed to affect adversely the powers, special rights or preferences of
holders of the Series C Preferred Stock.
(8) Business Combinations. In case the Corporation is a participant
in a consolidation, merger or combination with another corporation (other than
with a wholly-owned subsidiary of the Corporation and other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock) or in case of any sale or transfer of all
or substantially all of the assets of the Corporation, as a result of which
holders of the Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, or any share exchange whereby the Common Stock is converted
into other securities or property of the Corporation, then as a condition to
the consummation of such transaction, lawful and adequate provision shall be
made so that the holder of each share of Series C Preferred Stock then
outstanding shall have the right, with respect to such shares of Series B
Preferred Stock, to receive stock, other securities or property or assets
(including cash) or any combination thereof, having a value equal to the
product of (a) the quotient obtained by dividing (x) $100 plus all accrued and
unpaid dividends, whether or not declared, on the Series C Preferred Stock by
(y) the then Existing Conversion Price for the Series B Preferred Stock (as
adjusted to give effect to such transaction), and (b) the value of the stock,
other securities, property and assets (including cash) which each holder of
one share of Common Stock is entitled to receive upon such consolidation,
merger, combination, sale or transfer, or exchange.
53
IN WITNESS WHEREOF, UNC Incorporated has caused this certificate to be
signed by its Chairman of the Board and Chief Executive Officer and attested
by its Secretary this 5th day of October, 1995.
UNC INCORPORATED
By: _____________________
Xxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
ATTEST:
_________________________
Secretary
