SECURITIES PURCHASE AND HOLDERS AGREEMENT
SECURITIES PURCHASE AND HOLDERS AGREEMENT, dated May 29, 1998 (the
"Agreement"), by and among MQ Acquisition Corporation, a Delaware corporation
("MQ"), MEDIQ Incorporated, a Delaware corporation ("MEDIQ"), Bruckmann, Xxxxxx,
Xxxxxxxx & Co. L.P., a Delaware limited partnership ("BRS"), the persons listed
on Schedule A hereto under the caption "Co-Investors" (the "Co-Investors"), the
individuals and trusts listed on Schedule A hereto under the caption "Xxxxx
Investors" (the "Xxxxx Investors") and the individuals listed on Schedule A
hereto under the caption "Management Investors" (the "Management Investors"). As
used herein, BRS and the Co-Investors are sometimes referred to hereinafter
individually as a "New Investor" and collectively as the "New Investors," and
the New Investors, the Xxxxx Investors and the Management Investors are
sometimes referred to hereinafter individually as an "Investor" and collectively
as the "Investors."
Background
A. MQ and Mediq have entered into an Agreement and Plan of Merger dated as
of January 14, 1998 and amended as of April 27, 1998 (the "Merger Agreement").
Pursuant to the Merger Agreement, MQ will be merged with and into MEDIQ, with
MEDIQ the surviving corporation (the "Merger"), and each issued and outstanding
share of capital stock of MQ shall be converted into and exchanged for one share
of capital stock of MEDIQ of the corresponding class and/or series. As provided
in the Merger Agreement, the Merger is intended to be recorded as a
recapitalization for financial reporting purposes.
B. MQ desires to sell, and each of the New Investors desires to purchase
(i) the number of shares of Series A Preferred Stock, par value $.01 per share,
of MQ (the "MQ Series A Preferred Stock") set forth opposite such New Investor's
name on Schedule A hereto, (ii) the number of shares of Series B Preferred
Stock, par value $.01 per share, of MQ (the "MQ Series B Preferred Stock") set
forth opposite such New Investor's name on Schedule A hereto, (iii) the number
of shares of Series C Preferred Stock, par value $.01 per share, of MQ (the "MQ
Series C Preferred Stock" and together with the MQ Series A Preferred Stock and
the MQ Series B Preferred Stock, the "MQ Preferred Stock") set forth opposite
such New Investor's name on Schedule A hereto, and (iv) the number of shares of
Common Stock, par value $.01 per share, of MQ (the "MQ Common Stock") set forth
opposite such New Investor's name.
C. MQ desires to sell, and each of the Management Investors desires to
purchase (i) the number of shares of MQ Series A Preferred Stock set forth
opposite such Management Investor's name on Schedule A hereto, (ii) the number
of shares of MQ Series B Preferred Stock set forth opposite such Management
Investor's name on Schedule A hereto, (iii) the number of shares of MQ Series C
Preferred Stock set forth opposite such Management Investor's name on Schedule A
hereto, and (iv) the number of shares of MQ Common Stock set forth opposite such
Management Investor's name. The Management Investors have agreed to use a
portion of the Option Consideration (as defined in the Merger Agreement)
received by them in exchange for cancellation by the Company of their existing
MEDIQ stock options to purchase the MQ Common Stock and the MQ Preferred Stock
pursuant to Article I. In addition, the Company has agreed to issue additional
shares of MEDIQ Preferred Stock and MEDIQ Common Stock in the aggregate amounts
set forth on Schedule A and Schedule B hereto opposite the caption "Management
Pool" (the "Management Pool Shares") to such persons as are selected by the
Board of Directors and the Chief Executive Officer of the Company who shall be
entitled to purchase such Management Pool Shares upon their execution and
delivery of a joinder to this
Agreement naming them as Management Investors hereunder or such other agreement
as may be reasonably acceptable to the Company.
D. Pursuant to the Merger, (i) each share of MQ Series A Preferred Stock
shall be converted into one share of Series A 13.0% Cumulative Compounding
Preferred Stock, par value $.01 per share, of MEDIQ (the "MEDIQ Series A
Preferred Stock"), (ii) each share of MQ Series B Preferred Stock shall be
converted into one share of Series B 13.25% Cumulative Compounding Perpetual
Preferred Stock, par value $.01 per share, of MEDIQ (the "MEDIQ Series B
Preferred Stock"), (iii) each share of MQ Series C Preferred Stock shall be
converted into one share of Series C 13.5% Cumulative Compounding Preferred
Stock, par value $.01 per share, of MEDIQ (the "MEDIQ Series C Preferred Stock"
and together with the MEDIQ Series A Preferred Stock and the MEDIQ Series B
Preferred Stock, the "MEDIQ Preferred Stock"), and (iv) each share of MQ Common
Stock shall be converted into one share of Common Stock, par value $.01 per
share, of MEDIQ (the "MEDIQ Common Stock"). The MQ Common Stock and MEDIQ Common
Stock are sometimes referred to hereinafter as the "Common Stock", the MQ
Preferred Stock and MEDIQ Preferred Stock are sometimes referred to hereinafter
as the "Preferred Stock," the MQ Series A Preferred Stock and the MEDIQ Series A
Preferred Stock are sometimes referred to hereinafter as the "Series A Preferred
Stock," the MQ Series B Preferred Stock and the MEDIQ Series B Preferred Stock
are sometimes referred to hereinafter as the "Series B Preferred Stock," and the
MQ Series C Preferred Stock and the MEDIQ Series C Preferred Stock are sometimes
referred to hereinafter as the "Series C Preferred Stock."
E. As used herein, "Rollover Securities" means the MEDIQ Common Stock and
MEDIQ Preferred Stock received by the Management Investors pursuant to the
Merger which MEDIQ Common Stock and MEDIQ Preferred Stock was acquired in
exchange for shares of MQ Common Stock and MQ Preferred Stock owned by the
Management Investors immediately prior to Effective Time, including shares of
MEDIQ Common Stock and MEDIQ Preferred Stock and all other securities of MQ or
MEDIQ (or a successor to either of them) received on account of ownership of the
shares of MEDIQ Common Stock or MEDIQ Preferred Stock received pursuant to the
Merger, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, reverse stock
split, stock combination, recapitalization, reclassification, subdivision,
conversion or similar transaction in respect thereof. The Management Pool Shares
described on Schedule A hereto shall be deemed to be Rollover Securities under
this Agreement. The term Rollover Securities shall not include shares of MEDIQ
Series A Preferred Stock acquired by the Management Investors as Merger
Consideration (as such term is defined in the Merger Agreement).
F. MEDIQ desires to sell, and each of the Management Investors desires to
purchase, the number of shares of MEDIQ Common Stock set forth opposite such
Management Investor's name on Schedule B hereto. As used herein, "Purchased
Securities" means the MEDIQ Common Stock purchased by the Management Investors
pursuant to Article III hereof, including shares of MEDIQ Common Stock and all
other securities of MQ or MEDIQ (or a successor to either of them) received on
account of ownership of the shares of MEDIQ Common Stock purchased pursuant to
Article III, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, reverse stock
split, stock combination, recapitalization, reclassification, subdivision,
conversion or similar transaction in respect thereof. The Management Pool Shares
described on Schedule B hereto shall be deemed to be Purchased Securities under
this Agreement.
G. In connection with the execution and delivery of the Merger Agreement,
MQ, MEDIQ and the Xxxxx Investors entered into the Agreement dated as of January
14, 1998
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(the "Rollover Agreement") pursuant to which the Xxxxx Investors agreed
to retain a continued equity investment in MEDIQ after the Effective Time (as
defined in the Merger Agreement) of the Merger.
H. As provided in the Rollover Agreement, the Xxxxx Investors desire to
convert, and MQ and MEDIQ desire that the Investors so convert, an aggregate of
1,000,000 shares (the "Rolled Shares") of Series A Preferred Stock, par value
$.50 per share, of MEDIQ which are issued and outstanding as of the date hereof
and immediately prior to the Effective Time (as defined in the Merger Agreement)
of the Merger, into an aggregate of 1,340,219 shares of the MEDIQ Series B
Preferred Stock and 109,781 shares of the MEDIQ Common Stock.
I. As used herein, the term "Company" shall refer to MQ prior to the
Effective Time of the Merger and shall refer to MEDIQ after the Effective Time
(as defined in the Merger Agreement) of the Merger. As used herein, the term
"Securities" shall mean the Common Stock and the Preferred Stock held or
hereafter acquired by any party hereto, including shares of Common Stock and
Preferred Stock and all other securities of MQ or MEDIQ (or a successor to
either of them) received on account of ownership of the Common Stock or
Preferred Stock, including the Rollover Securities, the Purchased Securities and
all securities issued in connection with any merger, consolidation, stock
dividend, stock distribution, stock split, reverse stock split, stock
combination, recapitalization, reclassification, subdivision, conversion or
similar transaction in respect thereof; provided that the term Securities shall
not include shares of MEDIQ Series A Preferred Stock acquired by the Management
Investors as Merger Consideration (as such term is defined in the Merger
Agreement). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Merger Agreement.
J. The parties hereto wish to set forth certain agreements regarding their
future relationships and their rights and obligations with respect to the
Securities.
Terms
In consideration of the mutual covenants contained herein and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE OF MQ SECURITIES
1.1 Sale and Purchase of MQ Securities. Subject to the terms and conditions
set forth herein, at the MQ Securities Closing (as defined below), MQ will issue
and sell to each of the New Investors and the Management Investors the number of
shares of MQ Common Stock and MQ Preferred Stock set forth opposite each such
Investor's name on Schedule A. The purchase price for the MQ Common Stock and
the MQ Preferred Stock shall be $10.00 per share, payable in cash.
1.2 MQ Securities Closing. The closing (the "MQ Securities Closing") of the
purchase and sale of the MQ Preferred Stock and the MQ Common Stock by the New
Investors and the Management Investors referred to in Section 1.1 will take
place immediately prior to the Effective Time of the Merger or at such other
time or on such other date as may be agreed by the parties hereto (the "MQ
Closing Date"). At the MQ Securities Closing, MQ will deliver to each New
Investor or Management Investor certificates for the number of shares of MQ
Common Stock and MQ Preferred Stock set forth opposite each such Investor's name
on Schedule A hereto, against payment of the
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purchase price therefor in cash, by federal wire transfer of immediately
available funds, with confirmed receipt. Pursuant to the Merger, at the
Effective Time, each share of MQ Common Stock or MQ Preferred Stock, as the case
may be, shall be converted into the shares of MEDIQ Common Stock or MEDIQ
Preferred Stock, as the case may be, as described in paragraph D above.
1.3 Conditions to the Obligations of New Investors and Management
Investors. The obligation of each New Investor and Management Investor to
purchase and pay for the MQ Common Stock and MQ Preferred Stock at the MQ
Securities Closing is subject to the satisfaction on or prior to the MQ Closing
Date of the following conditions:
(a) The representations and warranties of MQ and MEDIQ set forth in
Article IV shall be true and correct in all material respects on and as of the
MQ Closing Date as though then made, and all covenants of MQ and MEDIQ set forth
in Article IV required to be performed on or prior to the MQ Securities Closing
shall have been performed in all material respects.
(b) MQ's Certificate of Incorporation and Bylaws immediately prior to
the Effective Time shall be substantially in the forms of Exhibits A-l and A-2,
respectively, and MEDIQ's Certificate of Incorporation and Bylaws after the
Effective Time shall be substantially in the forms of Exhibits A-3 and A-4,
respectively.
(c) No preliminary or permanent injunction or order, decree or ruling
of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(d) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the Certificate of
Incorporation or Bylaws of MQ or MEDIQ, or any applicable laws or orders,
regulations, rules or requirements of a court, public body or authority by which
MQ or MEDIQ is bound.
(e) MQ shall have delivered to each such Investor certificates for the
Securities required pursuant to Section 1.1.
(f) All corporate and other proceedings, if any, taken or to be taken
by MQ or MEDIQ in connection with the transactions contemplated hereby to be
consummated at the MQ Securities Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to the New Investors and
the Management Investors and the New Investors and the Management Investors
shall have received from MQ and MEDIQ all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(g) MQ shall not have waived any material condition to its obligations
under the Merger Agreement set forth in Article V of the Merger Agreement.
1.4 Conditions to the Obligations of MQ. The obligation of MQ to issue the
securities referred to in Section 1.1 to each New Investor and Management
Investor as set forth herein at the MQ Securities Closing is subject to the
satisfaction on or prior to the MQ Securities Closing of the following
conditions:
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(a) The representations and warranties of each New Investor and
Management Investor set forth in Article V shall be true and correct in all
material respects at and as of the MQ Closing Date as though then made, and all
covenants of each New Investor and Management Investor required to be performed
at or prior to the MQ Securities Closing shall have been performed in all
material respects.
(b) The conditions set forth in Section 1.3(c) shall have been
satisfied, and the New Investors and Management Investors shall have purchased
or shall simultaneously purchase the Securities set forth opposite their
respective names on Schedule A.
(c) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the certificate of
incorporation, bylaws, declaration or deed of trust or other organizational or
governing instruments relating to each such Investor or any applicable laws or
orders, regulations, rules or requirements of a court, public body or authority
by which the respective Investor is bound.
(d) The conditions of the obligations of MQ and MEDIQ set forth in
Articles V and VI of the Merger Agreement shall have been satisfied or waived.
(e) All corporate and other proceedings, if any, taken or to be taken
by the New Investors or the Management Investors in connection with the
transactions contemplated hereby to be consummated at the MQ Securities Closing
and all documents incident thereto shall be reasonably satisfactory in form and
substance to MQ and MQ shall have received from the New Investors and the
Management Investors all such counterpart originals or certified or other copies
of such documents as they may reasonably request.
(f) The New Investors and the Management Investors shall have paid or
shall pay concurrently the purchase prices required of them pursuant to this
Article I.
1.5 Management Pool Shares. The Management Pool Shares set forth on
Schedule A which are subsequently issued by the Company will be issued to the
Management Investor purchasing such shares pursuant to this Article I. For this
purpose, the closing of the purchase and sale of such Management Pool Shares
will be deemed to be the MQ Securities Closing; the date of such closing shall
be deemed to be the MQ Closing Date.
ARTICLE II
THE ROLLOVER
2.1 Rolled Shares. Pursuant to Section 1.5(e) of the Merger Agreement, at
the Effective Time, the Rolled Shares shall be converted into an aggregate of
1,340,219 shares of MEDIQ Series B Preferred Stock and 109,781 shares of MEDIQ
Common Stock, allocated among the holders of the Rolled Shares as provided on
Schedule A hereto underneath the caption "Xxxxx Investors". As a result of their
conversion pursuant to Section 1.5(e) of the Merger Agreement, all of the Rolled
Shares shall cease to be outstanding and shall be automatically canceled and
retired and the holders of the certificates previously evidencing such Rolled
Shares shall cease to have any rights with respect to such Rolled Shares except
as otherwise provided in the Merger Agreement or by law.
2.2 Closing. The transactions referred to in Section 2.1 will take place at
the Effective Time of the Merger. After the Effective Time, MEDIQ will deliver
to each Xxxxx Investor
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certificates evidencing the number of shares of MEDIQ Series B Preferred Stock
and MEDIQ Common Stock to be received by such Xxxxx Investor, registered in such
Xxxxx Investor's name upon delivery of the Rolled Shares as described in Section
2.1 hereof.
ARTICLE III
PURCHASE OF MEDIQ SECURITIES
3.1 Sale and Purchase of MEDIQ Securities. Subject to the terms and
conditions set forth herein, at the MEDIQ Securities Closing (as defined below),
MEDIQ will issue and sell to each of the Management Investors the number of
shares of MEDIQ Common Stock set forth opposite each such Investor's name on
Schedule B. Such shares of Purchased Securities shall remain unvested until they
vest in accordance with Section 3.5 hereof.
3.2 MEDIQ Securities Closing. The closing (the "MEDIQ Securities Closing")
of the purchase and sale of the MEDIQ Common Stock by the Management Investors
referred to in Section 3.1 will take place after the Effective Time of the
Merger at such time and on such date as may be agreed by the Company and the
Management Investors (the "MEDIQ Closing Date"). At the MEDIQ Securities
Closing, MEDIQ will deliver to each Management Investor certificates for the
number of shares of MEDIQ Common Stock set forth opposite each such Investor's
name on Schedule B hereto, against payment of the purchase price therefor in
cash, by federal wire transfer of immediately available funds, with confirmed
receipt.
3.3 Conditions to Investor's Obligations. The obligation of each Management
Investor to purchase and pay for the MEDIQ Common Stock at the MEDIQ Securities
Closing is subject to the satisfaction on or prior to the MEDIQ Closing Date of
the following conditions:
(a) The representations and warranties of MEDIQ set forth in Article IV
shall be true and correct in all material respects on and as of the MEDIQ
Closing Date as though then made, and all covenants of MEDIQ set forth in
Article IV required to be performed on or prior to the MEDIQ Securities Closing
shall have been performed in all material respects.
(b) MEDIQ's Certificate of Incorporation and Bylaws after the Effective
Time shall be substantially in the forms of Exhibits A-3 and A-4, respectively.
(c) No preliminary or permanent injunction or order, decree or ruling
of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(d) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the Certificate of
Incorporation or Bylaws of MEDIQ, or any applicable laws or orders, regulations,
rules or requirements of a court, public body or authority by which MEDIQ is
bound.
(e) MEDIQ shall have delivered to each of the Management Investors
certificates for the Purchased Securities required pursuant to Section 3.1.
(f) All corporate and other proceedings, if any, taken or to be taken
by MEDIQ in connection with the transactions contemplated hereby to be
consummated at the
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MEDIQ Securities Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Management Investors and the
Management Investors shall have received from MEDIQ all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
3.4 Conditions to the Obligations of MEDIQ. The obligation of MEDIQ to
issue the securities referred to in Section 3.1 to each Management Investor as
set forth herein at the MEDIQ Securities Closing is subject to the satisfaction
on or prior to the MEDIQ Securities Closing of the following conditions:
(a) The representations and warranties of each Management Investor set
forth in Article V shall be true and correct in all material respects at and as
of the MEDIQ Closing Date as though then made, and all covenants of each
Management Investor required to be performed at or prior to the MEDIQ Securities
Closing shall have been performed in all material respects.
(b) The conditions set forth in Section 3.3(c) shall have been
satisfied, and the Management Investors shall have purchased or shall
simultaneously purchase the Purchased Securities set forth opposite their
respective names on Schedule B.
(c) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the certificate of
incorporation, bylaws, declaration or deed of trust or other organizational or
governing instruments relating to each such Management Investor or any
applicable laws or orders, regulations, rules or requirements of a court, public
body or authority by which the respective Management Investor is bound.
(d) All corporate and other proceedings, if any, taken or to be taken
by the Management Investors in connection with the transactions contemplated
hereby to be consummated at the MEDIQ Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to MEDIQ and MEDIQ shall
have received from the Management Investors all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(e) The Management Investors shall have paid or shall pay concurrently
the purchase prices required of them pursuant to this Article III.
3.5 Vesting of Purchased Securities. Shares of Purchased Securities shall
vest as to a Management Investor as set forth in this Section 3.5.
(a) So long as on the first anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, 20% of the shares of Purchased Securities
held by such Management Investor or his Permitted Transferee shall vest on such
anniversary.
(b) So long as on the second anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
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(c) So long as on the third anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
(d) So long as on the fourth anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
(e) So long as on the fifth anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
3.6 Management Pool Shares. The Management Pool Shares set forth on
Schedule B which are subsequently issued by the Company will be issued to the
Management Investors purchasing such shares pursuant to this Article III. For
this purpose, the closing of the purchase and sale of such Management Pool
Shares will be deemed to be the MEDIQ Securities Closing; the date of such
closing shall be deemed to be the MEDIQ Closing Date.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MQ AND MEDIQ
4.1 Representations and Warranties of MQ. MQ represents and warrants to,
and covenants and agrees with, each of the Investors as follows:
(a) MQ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) MQ has full corporate power and corporate authority to make,
execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) MQ has taken such corporate action as is necessary or appropriate
to enable it to perform its obligations hereunder, including, but not limited
to, the issuance of the Securities to be issued by it pursuant to Section 1.1
hereof, and this Agreement constitutes the legal, valid and binding obligation
of MQ, enforceable against MQ in accordance with the terms hereof.
(d) The shares of capital stock of MQ to be issued hereunder when
issued in compliance with the provisions of this Agreement will be validly
issued, fully paid and non-assessable.
(e) As of the Effective Time of the Merger and immediately prior to
giving effect thereto (but after giving effect to the issuance of the shares of
MQ Preferred Stock and MQ Common Stock as set forth in Section 1.1 and assuming
the issuance of all of the Management Pool Shares referred to in Section 1.5),
the authorized capital stock of MQ will consist of (i) 30,000,000 shares of MQ
Common Stock, of which 890,898 will be issued and
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outstanding, (ii) 40,000,000 shares of Preferred Stock of which (x) 10,000,000
shares shall be designated as MQ Series A Preferred Stock, of which 5,828,457
will be issued and outstanding, (y) 5,000,000 shares shall be designated as MQ
Series B Preferred Stock, of which 1,660,450 will be issued and outstanding, and
(z) 5,000,000 shares shall be designated as MQ Series C Preferred Stock, of
which 3,001,206 will be issued and outstanding. Except as set forth in the
Merger Agreement and except in respect of the Management Pool Shares, the Rolled
Shares, the Management Options (as defined herein) and the Warrants (as defined
herein), there will be no rights, subscriptions, warrants, options, conversion
rights, or agreements of any kind outstanding to purchase from MQ, or otherwise
require MQ to issue, any shares of capital stock of MQ or securities or
obligations of any kind convertible into or exchangeable for any shares of
capital stock of MQ and MQ will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock.
(f) Prior to the date hereof, MQ has not (i) incurred any liabilities
or obligations; (ii) engaged in any business or activities of any kind
whatsoever; (iii) entered into any agreement or arrangements with any person or
entity, or (iv) been subject to or bound by any obligation or undertaking,
except in each case as incurred in connection with its incorporation,
capitalization or the negotiation and consummation of the transactions
contemplated by this Agreement and the Merger Agreement including, but not
limited to, the financing relating to the consummation of the transactions
contemplated by the Merger Agreement. Set forth on Schedule 2.1(f) are the
material agreements and documents relating to the financing of the transactions
contemplated by the Merger Agreement. All such agreements are, or will be as of
the Effective Time of the Merger, binding on the parties thereto in accordance
with their terms and in full force and effect.
4.2 Representations and Warranties of MEDIQ. MEDIQ represents and warrants
to, and covenants and agrees with, each of the Investors as follows:
(a) MEDIQ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) MEDIQ has full corporate power and corporate authority to make,
execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) MEDIQ has taken such corporate action as is necessary or
appropriate to enable it to perform its obligations hereunder, including, but
not limited to, the issuance of the securities to be issued by it pursuant to
Sections 1.1, 2.1 and 3.1 hereof, and this Agreement constitutes the legal,
valid and binding obligation of MEDIQ, enforceable against MEDIQ in accordance
with the terms hereof.
(d) The shares of capital stock of MEDIQ to be issued to the holders of
shares of capital stock of MQ and the holders of the Rolled Shares in connection
with the Merger, when issued in compliance with the terms hereof and of the
Merger Agreement and the certificate of merger filed with the Secretary of State
of the State of Delaware effecting the Merger will be validly issued, fully paid
and non-assessable.
(e) As of the Effective Time of the Merger and after giving effect to
the Merger and the other transactions contemplated by the Merger Agreement,
including the transactions described on Schedule C hereof and assuming the
issuance of all of the Management Pool Shares referred to in Section 3.6 hereof,
the authorized capital stock of MEDIQ will consist
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of (i) 30,000,000 shares of MEDIQ Common Stock, of which 1,228,282 will be
issued and outstanding upon the issuance of all of the Management Pool Shares
and the issuance of shares pursuant to the Warrants and the Management Options
(subject to any antidilution adjustments), (ii) 40,000,000 shares of Preferred
Stock of which (x) 10,000,000 shares shall be designated as MEDIQ Series A
Preferred Stock, of which 7,825,847 (less amounts in respect of fractional
shares not issued in the Merger) will be issued and outstanding, (y) 5,000,000
shares shall be designated as MEDIQ Series B Preferred Stock, of which 3,000,669
shares will be issued and outstanding and (z) 5,000,000 shares shall be
designated as MEDIQ Series C Preferred Stock, of which 3,001,206 shares will be
issued and outstanding. Except as described on Schedule C as of the MEDIQ
Closing Date, and except in respect of the Management Pool Shares, the
Management Options and the Warrants, there will be no rights, subscriptions,
warrants, options, conversion rights, or agreements of any kind outstanding to
purchase from MEDIQ, or otherwise require MEDIQ to issue, any shares of capital
stock of MEDIQ or securities or obligations of any kind convertible into or
exchangeable for any shares of capital stock of MEDIQ; MEDIQ will not be subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock; and the shares of Common Stock and
Preferred Stock held by the Investors, together with the shares of MEDIQ Series
A Preferred Stock issued as Merger Consideration (as defined in the Merger
Agreement) and the shares of Common Stock and Preferred Stock issued in respect
of the Management Pool Shares, the Management Options and the Warrants, will
constitute all of the outstanding shares of MEDIQ's capital stock.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH INVESTOR
Representations, Warranties and Covenants of Each Investor. Each of the
Investors severally represents and warrants to, and covenants and agrees with,
MQ and MEDIQ that:
(a) Such Investor has full legal right, power and authority (including
the due authorization by all necessary corporate, fiduciary or other action in
the case of Investors who are not natural persons) to enter into this Agreement
and to perform such Investor's obligations hereunder without the need for the
consent of any other person; and this Agreement has been duly authorized,
executed and delivered and constitutes the legal, valid and binding obligation
of such Investor enforceable against such Investor in accordance with the terms
hereof.
(b) The Securities are being acquired by such Investor for investment
and not with a view to any distribution thereof that would violate the
Securities Act of 1933, as amended (the "Securities Act"), or the applicable
state securities laws of any state; and such Investor will not distribute the
Securities in violation of the Securities Act or the applicable securities laws
of any state.
(c) Such Investor understands that the Securities have not been
registered under the Securities Act or the securities laws of any state and may
not be sold unless registered under the Securities Act and any applicable state
securities laws or unless an exemption from such registration becomes or is
available.
(d) Such Investor is financially able to hold the Securities for
long-term investment, believes that the nature and amount of the Securities
being purchased are consistent with such Investor's overall investment program
and financial position, and recognizes that there are substantial risks involved
in the purchase of the Securities.
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(e) Such Investor confirms that (i) such Investor is familiar with the
proposed business of MQ and MEDIQ following the Merger, (ii) such Investor has
had the opportunity to ask questions of the officers and directors of MQ and
MEDIQ and to obtain (and that such Investor has received to its satisfaction)
such information about the business and financial condition of MQ and MEDIQ as
it has reasonably requested, and (iii) such Investor, either alone or with such
Investor's representative (as defined in Rule 501(h) promulgated under the
Securities Act), if any, has such knowledge and experience in financial and
business matters that such Investor is capable of evaluating the merits and
risks of the prospective investment in the Securities.
(f) Such Investor's residence, business address, business and residence
telephone numbers and taxpayer identification number are as set forth below such
Investor's signature to this Agreement.
(g) In formulating a decision to enter into this Agreement, such
Investor has relied upon an independent investigation of MQ's and MEDIQ's
respective businesses and upon consultations with such Investor's legal and
financial advisers with respect to this Agreement and the nature of such
Investor's investment; and that in entering into this Agreement no reliance was
placed upon any representations or warranties other than those contained in this
Agreement.
5.2 Additional Representations and Warranties of Each Xxxxx Investor. Each
of the Xxxxx Investors severally represents and warrants to MQ and MEDIQ that
such Xxxxx Investor is the sole beneficial owner of the Rolled Shares set forth
opposite such Xxxxx Investor's name on Schedule A and has good title to such
Rolled Shares, free and clear of any lien, security interest, restriction, right
of first refusal or encumbrance or claim of any kind, and at the Effective Time,
such Xxxxx Investor will be (or in the case of the Xxxxx Trust, the
beneficiaries of such trust is or are) the sole beneficial owner of such Rolled
Shares and will have good title to such Rolled Shares, free and clear of any
lien, security interest, restriction, right of first refusal or encumbrance or
claim of any kind.
5.3 Legend. The certificates representing the Securities to be issued
pursuant to this Agreement shall bear the following legend in addition to any
other legend required under applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF THE SECURITIES PURCHASE AND HOLDERS AGREEMENT BY
AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE,
TRANSFER OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF
SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF
COMPLIANCE THEREWITH.
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5.4 Restrictions on Transfers of Securities. The following restrictions on
Transfer shall apply to all Securities owned by any Investor or Permitted
Transferee (as hereinafter defined) (except a Permitted Transferee by virtue of
Section 5.4(e)(iv) or (viii) hereof):
(a) No Investor or Permitted Transferee (except a Permitted Transferee
by virtue of Section 5.4(e)(iv) or (viii) hereof) shall exchange, sell, assign,
transfer, pledge, hypothecate, make gifts of or in any manner whatsoever dispose
of (other than in connection with a redemption or purchase by the Company) or
encumber or grant any rights or interests in or in respect of, create any voting
trust or other agreement or arrangement with respect to the transfer of voting
rights or any other beneficial interest in, create any other claim or make any
other transfer or disposition whatsoever, whether voluntary or involuntary,
affecting the right, title, interest or possession in or to (any such transfer,
disposition or encumbrance being hereinafter referred to as a "Transfer") any
Securities unless (i) such Transfer is to a person or entity approved in advance
in writing by the holders of at least fifty percent (50%) of the outstanding
Common Stock then held by the Investors (including shares held by the
transferor) and (ii) such Transfer complies with the provisions of Article VI
and this Section 5.4.
(b) Any purported Transfer in violation of the covenant set forth in
this Section 5.4 shall be null and void and of no force and effect and the
purported transferee shall have no rights or privileges in or with respect to
the Company.
(c) Prior to any proposed Transfer of any Securities by any Investor,
the holder thereof shall give written notice to the Company describing the
manner and circumstances of the proposed Transfer accompanied by a written
opinion of legal counsel, addressed to the Company and the transfer agent, if
other than the Company, and reasonably satisfactory in form and substance to
each addressee, to the effect that the proposed Transfer of the Securities may
be effected without registration under the Securities Act and applicable state
securities laws. Each certificate evidencing the Securities transferred shall
bear the legend set forth in Section 5.3, except that such certificate shall not
bear such legend if the opinion of counsel referred to above is to the further
effect that such legend is not required in order to establish compliance with
any provision of the Securities Act or applicable state securities laws.
(d) Nothing in this Section 5.4 shall prevent the Transfer of
Securities by an Investor to one or more of its Permitted Transferees, or to the
Company; provided, however, that each such Investor or Permitted Transferee
(except a Permitted Transferee by virtue of Section 5.4(e)(iv) or (viii) hereof)
shall take such Securities subject to and be fully bound by the terms of this
Agreement applicable to it with the same effect as if it were a party hereto;
and provided, further, that (i) no entity or person shall be a Permitted
Transferee (other than a Permitted Transferee by virtue of Section 5.4(e)(iv) or
(viii) hereof) unless such transferee executes a joinder to this Agreement
satisfactory in form and substance to holders of at least fifty percent (50%) of
the shares of Common Stock then held by the Investors (including shares held by
the transferor) and the Company which joinder states (A) that such entity or
person agrees to be fully bound by this Agreement as if it were an Investor
hereto and (B) with respect to any Permitted Transferee other than a natural
person, that such Permitted Transferee agrees to Transfer such Securities to the
Investor from whom such Permitted Transferee received such Securities
immediately prior to the occurrence of any event which would result in such
person no longer being a Permitted Transferee of such Investor, (ii) no entity
or person shall be a Permitted Transferee if such Transfer shall violate the
covenant set forth in this Section 5.4, and (iii) no Transfer shall be effected
except in compliance with the registration requirements of the Securities Act
and any applicable state's securities laws or pursuant to an available exemption
therefrom.
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Each Investor agrees to accept the Transfer of Securities to such Investor
pursuant to clause (B) of the preceding sentence at any time from a Transferee
of such Investor.
(e) As used herein, "Permitted Transferee" shall mean:
(i) in the case of any Investor or Permitted Transferee who is a
natural person, such Investor's spouse or issue (in each case, natural or
adopted), any trust for such Investor's benefit or the benefit of such
Investor's spouse or issue (in each case, natural or adopted), or any
corporation or partnership in which the direct and beneficial owner of all of
the equity interest is such individual Investor or Permitted Transferee or such
Investor's spouse or issue (in each case, natural or adopted) or any trust for
the benefit of such persons;
(ii) in the case of any Investor or Permitted Transferee who is, in
each case, a natural person, the heirs, executors, administrators or personal
representatives upon the death of such Investor or Permitted Transferee or upon
the incompetency or disability of such Investor or Permitted Transferee for
purposes of the protection and management of such Investor's assets;
(iii) in the case of a New Investor who is not a natural person,
any Controlled Affiliate (as hereinafter defined) of such New Investor;
(iv) in the case of any Investor or Permitted Transferee, any
person or other entity if such person or other entity takes such Securities
pursuant to a sale in connection with a Public Offering (as defined herein) of
the class or series of the Securities which are the subject of such Transfer or
following a Public Offering of the class or series of the Securities which are
the subject of such Transfer in open market transactions or under Rule 144 under
the Securities Act (which shares transferred pursuant to this clause (iv) to a
Person other than an Investor or one of its Affiliates shall no longer be
subject to the terms of this Agreement); provided that such person or entity,
together with its Affiliates will not, to the knowledge of the Investor or
Permitted Transferee or any of its affiliates beneficially own securities
representing 3% or more of the class or series to which the securities subject
to the Transfer belong;
(v) in the case of BRS or any Controlled Affiliate of BRS (the "BRS
Entities"), any of its employees, officers or directors, any trust for any such
employee, officer or director's benefit or the benefit of any such person's
spouse, or issue (in each case, natural or adopted) or any corporation,
partnership or other entity at least a majority of the equity in which is held
in the aggregate by BRS, its employees, officers or directors or any of their
respective Controlled Affiliates;
(vi) in the case of Health Care Capital Partners, L.P. and Health
Care Executive Partners, L.P. (collectively, the "HCCP Entities") or any
Controlled Affiliate of the HCCP Entities, any of their employees, officers or
directors, any trust for any such employee, officer or director's benefit or the
benefit of any such person's spouse, or issue (in each case, natural or adopted)
or any corporation, partnership or other entity at least a majority of the
equity in which is held in the aggregate by the HCCP Entities, their employees,
officers or directors or any of their respective Controlled Affiliates;
(vii) in the case of Xxxxx Partners III, L.P., Xxxxx Partners
International III, L.P. and Xxxxx Employee Fund III, L.P. (collectively, the
"Xxxxx Entities") or any Controlled Affiliate of the Xxxxx Entities, any of
their employees, officers or directors, any trust for any such employee, officer
or director's benefit or the benefit of any such person's
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spouse, or issue (in each case, natural or adopted) or any corporation,
partnership or other entity at least a majority of the equity in which is held
in the aggregate by the Xxxxx Entities, their employees, officers or directors
or any of their respective Controlled Affiliates;
(viii) any partner or member of BRS, the HCCP Entities or the Xxxxx
Entities, as the case may be, in connection with a distribution of Securities to
such partners or members by BRS, the HCCP Entities or the Xxxxx Entities, as the
case may be; provided that such distribution of Securities of a particular class
or series of Securities has occurred following a Public Offering of such class
or series of Securities and the termination of any lock-up restrictions imposed
by the underwriters of such offering which is the subject of such distribution
to the partners or members of BRS, the HCCP Entities or the Xxxxx Entities, as
the case may be, and such transfer is made in accordance with the provisions of
paragraph (g) below;
(ix) in the case of Transfers by the Xxxxx Investors after the
fifth anniversary of the Effective Time, any transferee other than those
enumerated in the foregoing clauses (i), (ii) or (iv) pursuant to a Transfer
which otherwise complies with applicable law (including, without limitation,
applicable securities laws) and the other terms and provisions of this
Agreement; and
(x) in the case of Transfers pursuant to Approved Sales (as defined
herein), the exercise of Tag-Along Rights (as defined herein) or the exercise of
the Series B Purchase Option (as defined herein).
(f) Notwithstanding Section 5.4(a), (b), (c) and (d) above, nothing in
this Agreement shall prevent any Investor from granting any proxy to
representatives of BRS to vote Securities in accordance with the instructions of
BRS, or depositing of Securities with a voting trust where the trustee or
trustees of such trust are representatives of BRS.
(g) Notwithstanding any other provision to the contrary in this
Agreement, BRS, the HCCP Entities and the Xxxxx Entities each agrees with each
of the others that it shall provide at least 20 days notice to the others prior
to making any distribution referred to in Section 5.4(e)(viii) to its partners
or members.
5.5 Notation. A notation will be made in the appropriate transfer records
of the Company with respect to the restrictions on transfer of the Securities
referred to in this Agreement.
5.6 Reliance. Each Investor acknowledges that each of the other parties
hereto is entering into this Agreement in reliance upon such Investor's
representations and warranties and other covenants and agreements contained
herein.
5.7 Limitation on Repurchase or Redemption of Company Stock. Each Investor
understands that in connection with the Merger, the Company has entered into or
will enter into certain financing agreements which will contain prohibitions,
restrictions and limitations on the ability of the Company to purchase or redeem
any of the Securities and to pay dividends on the Securities.
5.8 Payment of Option Consideration. Each Management Investor agrees, and
authorizes MQ and MEDIQ to instruct the exchange agent appointed by them to
disburse the Option Consideration, to withhold from the Option Consideration
payable to each Management Investor an amount of cash equal to the purchase
price required to be paid by such Management Investor pursuant to Article I for
the shares purchased by such Management Investor and to pay over such withheld
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amount to the Company as the purchase price required to be paid by such
Management Investor pursuant to Article I.
ARTICLE VI
OTHER COVENANTS AND REPRESENTATIONS
6.1 Observers' Rights. So long as the BRS Entities and their Controlled
Affiliates (considered as a single Investor) remain a Major Shareholder (as
defined herein), if no employee of the BRS Entities is a member of the Company's
Board of Directors, BRS shall have the right to designate two observers (the
"Observers") to attend meetings of the Company's Board of Directors and
committees thereof. If at least one employee of BRS is a member of the Company's
Board of Directors, BRS shall have the right to designate one Observer to attend
meetings of the Company's Board of Directors and committees thereof. So long as
the HCCP Entities and their Controlled Affiliates (considered as a single
Investor) remain a Major Shareholder, if no employee of the HCCP Entities is a
member of the Company's Board of Directors, the HCCP Entities shall have the
right to designate one Observer to attend meetings of the Company's Board of
Directors and committees thereof. So long as the Xxxxx Entities and their
Controlled Affiliates (considered as a single Investor) remain a Major
Shareholder, if no employee of the Xxxxx Entities is a member of the Company's
Board of Directors, the Xxxxx Entities shall have the right to designate one
Observer to attend meetings of the Company's Board of Directors and committees
thereof. So long as the Xxxxx Investors and their Controlled Affiliates
(considered as a single Investor) remain a Major Shareholder, if the Xxxxx Trust
(as defined herein) has not designated a director pursuant to Section 6.3
hereof, the Xxxxx Trust shall have the right to designate one Observer to attend
meetings of the Company's Board of Directors and committees thereof. The
Observers shall not have the right to vote on any matter presented to the Board
of Directors or any committee thereof. The Company shall give each Observer
written notice of each meeting of the Board of Directors and committees thereof
at the same time and in the same manner as the members of the Board of Directors
or such committee receive notice of such meetings, and the Company shall permit
each Observer to attend as an observer all meetings of its Board of Directors
and committees thereof. Each Observer shall be entitled to receive all written
materials and other information given to the directors in connection with such
meetings at the same time such materials and information are given to the
directors, and each Observer shall keep such materials and information
confidential. If the Company proposes to take any action by written consent in
lieu of a meeting of its Board of Directors or a committee thereof, the Company
shall give written notice thereof to each Observer prior to the effective date
of such consent. The Company shall provide to each Observer all written
materials and other information given to the directors in connection with such
action by written consent at the same time such materials and information are
given to the directors, and each Observer shall keep such materials and
information confidential.
6.2 Financial Statements and Other Information. So long as an Investor
(together with its Controlled Affiliates) is a Major Shareholder, the Company
shall deliver to such Investor:
(a) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries as of the end of
such period, and consolidated statements of income and cash flows of the Company
and its subsidiaries for the period then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, and subject to the absence of footnotes and to
year-end adjustments; and
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its subsidiaries as of
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the end of such year, and consolidated statements of income and cash flows of
the Company and its subsidiaries for the year then ended prepared in conformity
with generally accepted accounting principles applied on a consistent basis,
except as otherwise noted therein, together with an auditor's report thereon of
a firm of established national reputation.
6.3 Directors and Voting Agreements. Each of the parties hereto and each
Permitted Transferee (other than a Permitted Transferee pursuant to Section
5.4(e)(iv)) agrees that it shall take, at any time and from time to time, all
action necessary (including voting any Securities owned by him, her or it,
calling special meetings of stockholders and executing and delivering written
consents) to ensure that the Board of Directors of the Company is composed at
all times of at least six persons and not more than nine (or such greater number
as may have been approved by the holders of a majority of the outstanding shares
of Common Stock then outstanding) persons (with the exact number to be
determined by BRS from time to time) as follows: (a) so long as the Xxxxx
Investors and their Controlled Affiliates (considered as a single Investor)
remain a Major Shareholder, one person designated by the trust known as T/D
Xxxxxxx X. Xxxxx Dated November 18, 1983 (the "Xxxxx Trust"), (b) so long as the
HCCP Entities and their Controlled Affiliates (considered as a single Investor)
remain a Major Shareholder, one person designated by the HCCP Entities, (c) so
long as the Xxxxx Entities and their Controlled Affiliates (considered as a
single Investor) remain a Major Shareholder, one person designated by the Xxxxx
Entities, (d) the chief executive officer of the Company and (e) such number of
persons as may be designated by BRS from time to time who shall constitute the
remainder of the Board of Directors; provided that if the number of directors
designated by BRS is more than three, such additional directors shall be
independent (within the meaning of Rule 3.03 of the rules of the New York Stock
Exchange) of the Company and each Investor, and shall have been approved by each
of the Xxxxx Entities and the HCCP Entities (so long as they remain Major
Shareholders), such approval not to be unreasonably withheld, it being
understood that the parties will use their reasonable best efforts to identify
and cause to be elected to the Board of Directors two independent directors
pursuant to this proviso promptly following the Closing.
The right to designate a director is not transferable by the Xxxxx
Investors or the Xxxxx Trust, the HCCP Entities or the Xxxxx Entities without
the prior written consent of BRS.
BRS agrees with the HCCP Entities and the Xxxxx Entities that it will not
assign to third parties unaffiliated with BRS the right to designate one or more
of the remaining members of the Board of Directors without the prior written
consent of the HCCP Entities and the Xxxxx Entities, which consent shall not be
unreasonably withheld. In the event BRS transfers to any person other than BRS
the right to designate one or more of the remaining members of the Board of
Directors, BRS agrees that it shall obtain from such transferee in the agreement
relating to the transfer of such right to designate director(s) an undertaking
by such transferee to vote any Securities owned by it in favor of the persons
designated pursuant to clauses (a), (b), (c) and (d) above.
So long as the HCCP Entities or the Xxxxx Entities are entitled to
designate a director, each of their designees (i) shall be a member of the
executive committee, if any, of the Company or any committee performing
substantially similar functions, and (ii) shall be included on such other
committee of the Board of Directors as they may request.
Each Investor who is entitled to designate one or more directors shall be
entitled to designate a proxy or proxies to attend and vote at meetings of the
Board of Directors of the Company or such committees of the Board of Directors
in their stead, to the extent designation of such proxy is permitted under
applicable law.
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6.4 Right to Remove Certain of the Company's Directors. Each of BRS, the
Xxxxx Trust, the HCCP Entities and the Xxxxx Entities, as the case may be, may
request that any director designated by it be removed (with or without cause) by
written notice to the other parties, and, in any such event, each Investor and
Permitted Transferee (other than a Permitted Transferee pursuant to Section
5.4(e)(iv)) shall promptly consent in writing or vote or cause to be voted all
Securities now or hereafter owned or controlled by them or it for the removal of
such person as a director and the Company shall take such actions as may be
necessary to effect such removal. In the event any person ceases to be a
director, such person shall also cease to be a member of any committee of the
Board of Directors of the Company.
6.5 Right to Fill Certain Vacancies in Company's Board. In the event that a
vacancy is created on the Company's Board of Directors at any time by the death,
disability, retirement, resignation or removal (with or without cause) of a
director designated by BRS, the Xxxxx Trust, the HCCP Entities or the Xxxxx
Entities, as the case may be, or if otherwise there shall exist or occur any
vacancy on the Company's Board of Directors in a directorship subject to
designation by BRS, the Xxxxx Trust, the HCCP Entities or the Xxxxx Entities, as
the case may be, such vacancy shall not be filled by the remaining members of
the Company's Board of Directors but each Investor and its Permitted Transferees
(other than a Permitted Transferee pursuant to Section 5.4(e)(iv)) hereby agree
promptly to consent in writing or vote or cause to be voted all Securities now
or hereafter owned or controlled by them or it to elect that individual
designated to fill such vacancy and serve as a director, as shall be designated
by the stockholder then entitled to designate such director pursuant to this
Article VI.
6.6 Sale of the Company.
(a) If (i) the holders of at least a majority of the outstanding shares
of the Company's Common Stock then held by the Investors approve in writing the
sale of the Company to any Person (other than transactions with an Affiliate of
the Company which are not approved by a majority of the directors of the Company
who are not designated by any such Affiliate) (whether by merger, consolidation,
sale of all or substantially all of its assets or sale of all of the outstanding
capital stock) (a "Sale of the Company") or (ii) the holders of at least a
majority of the outstanding shares of any class or series of the Company's
capital stock then held by the Investors approve in writing the sale of all of
such class or series of securities by the holders thereof to any Person (other
than transactions with an Affiliate of the Company which are not approved by a
majority of the directors of the Company who are not designated by any such
Affiliate), (the foregoing transactions described in (i) and (ii) above being an
"Approved Sale"), each Investor and Permitted Transferee will consent to, vote
for, and raise no objections against, and waive dissenters and appraisal rights
(if any) with respect to, the Approved Sale, and if the Approved Sale is
structured as a sale of stock, each Investor and Permitted Transferee will agree
to sell and will be permitted to sell all of such Investor's and Permitted
Transferee's Preferred or Common Stock or other Securities, as the case may be,
which are of the class or series which is the subject of the Approved Sale, on
the same terms and conditions approved by the holders of a majority of the
outstanding shares of the class or series then held by the Investors that is the
subject of the Approved Sale. Each Investor and Permitted Transferee will take
all necessary and desirable actions as may be reasonably requested by BRS and
the Company in connection with the consummation of an Approved Sale.
(b) The obligations of each of the Investors with respect to an
Approved Sale are subject to the satisfaction of the conditions that: (i) upon
the consummation of the Approved Sale all of the Investors and Permitted
Transferees (other than Permitted Transferees pursuant to Section 5.4(e)(iv))
will receive the same form and amount of
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consideration per share as that received by other holders of the same class or
series, as the case may be, and if any holder of a given class or series of
securities is given an option as to the form and amount of consideration to be
received, all Investors and Permitted Transferees holding the shares of the same
class or series will be given the same option; (ii) the terms of sale shall not
include any indemnification, guaranty or the similar undertaking of the Investor
(other than undertakings by management in respect of continued employment) that
is not made or given pro rata with other Investors on the basis of share
ownership; and (iii) nothing in this Section 6.6 shall obligate any designee of
an Investor serving on the Board of Directors of the Company to vote in favor of
any transaction which such person reasonably believes in good faith, upon advice
of counsel, would breach such director's fiduciary duties as a director of the
Company in a manner which could reasonably be expected to give rise to personal
liability on the part of such director.
(c) In the event that the written notice described in Section 6.6(a) is
delivered for an Approved Sale involving the sale of MEDIQ Series B Preferred
Stock to the Company or any person related to the Company within the meaning of
Section 351(g) of the Internal Revenue Code of 1986, as amended (the Company and
each such related person are hereinafter referred to as a "Disqualifed Person"),
then BRS shall either (x) designate a Person or Persons other than a
Disqualified Person (which such Persons may include BRS itself or an employee or
affiliate of BRS) or (y) designate the other Investors on a pro-rata basis, to
purchase from (i) the Xxxxx Investors who are original signatories hereto and
(ii) Persons who are Permitted Transferees of the Xxxxx Investors pursuant to
Sections 5.4(e)(i) and (ii), such shares of MEDIQ Series B Preferred Stock in
lieu of the Disqualified Person; provided that any such purchase shall not be
funded directly or indirectly by a Disqualified Person. Each Investor agrees
that it will, if requested by BRS or its assignee, purchase its pro rata portion
(based upon each Investors' ownership of the MEDIQ Series B Preferred Stock at
the time of the Approved Sale, excluding the shares of MEDIQ Series B Preferred
Stock held by the Xxxxx Investors) of the securities described in the preceding
sentence. By way of illustration, if BRS owns 40 shares of Series B Preferred
Stock, the HCCP Entities own 30 shares of MEDIQ Series B Preferred Stock, the
Xxxxx Entities own 20 shares of MEDIQ Series B Preferred Stock and the
Management Investors own 10 shares of MEDIQ Series B Preferred Stock, and as a
result of the Approved Sale, the Investors are required to repurchase 50 shares
of the MEDIQ Series B Preferred Stock from the Xxxxx Investors pursuant to this
Section 6.6(c), BRS, the HCCP Entities, the Xxxxx Entities and the Management
Investors will be obligated to repurchase 20, 15, 10 and 5 shares of MEDIQ
Series B Preferred Stock, respectively, from the Persons described in clauses
(i) and (ii) of the first sentence of this Section 6.6(c).
(d) The provisions of this Section 6.6 shall terminate with respect to
any class or series of securities upon the consummation of a Public Offering
with respect to such class or series of securities.
(e) Each Investor and Permitted Transferee shall, in connection with a
sale of its Securities pursuant to this Section 6.6, at the request of the
Company and without further cost and expense to the Company, execute and deliver
such other instruments of conveyance and transfer and take such other actions as
may reasonably be requested in order to consummate the Approved Sale. All
Investors will bear their pro rata share (based upon the number of shares sold)
of the reasonable costs and expenses of any Approved Sale to the extent such
costs and expenses are incurred for the benefit of all selling Investors and are
not otherwise paid by the Company or the acquiring party. Costs incurred by any
Investor on its own behalf will not be considered costs of the Approved Sale
hereunder.
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6.7 Tag-Along Rights.
(a) Each Investor agrees that in connection with the consummation of
any transaction or series of related transactions involving the Transfer of
shares of Preferred Stock or Common Stock that constitute a "Significant
Transfer" (as hereinafter defined), each of the Investors and their Permitted
Transferees (other than a Permitted Transferee pursuant to Section 5.4(e)(iv))
(collectively, the "Tag-Along Rightholders") will be offered an equal
opportunity (the "Tag-Along Right") to participate in such transaction or
transactions on a pro rata basis (based upon their respective ownership of
shares of the same series or class as the shares which are the subject of such
Significant Transfer) and on identical terms. As used herein, "Significant
Transfer" means a Transfer by an Investor to any Person or Persons (including
repurchases (but not redemptions) by the Company) of shares of Preferred Stock
or Common Stock, as the case may be, which are acquired by such Investor
pursuant to this Agreement and which represent more than 2% of the
then-outstanding shares of any series of Preferred Stock or Common Stock, as the
case may be, other than Transfers (i) following a Public Offering of such class
or series of Securities pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144 under the Securities Act, (ii)
pursuant to a bona fide pledge agreement (which pledge is with recourse), (iii)
by an Investor to a Permitted Transferee of such Investor, or (iv) pursuant to
an Approved Sale.
(b) In the event that a Significant Transfer by an Investor involves a
sale of shares of MEDIQ Series B Preferred Stock to a Disqualified Person, then
BRS shall either (x) purchase or designate a Person or Persons other than a
Disqualified Person (which such Persons may include BRS itself or an employee or
affiliate of BRS) who shall purchase (and if such designees fail to make such
purchase, BRS agrees to designate the other Investors pursuant to the following
clause (y)) or (y) designate the other Investors who have exercised their
Tag-Along Rights (as defined herein), together with the Tag-Along Seller (as
defined herein), who shall purchase, in lieu of the Disqualified Person, from
(i) the Xxxxx Investors who are original signatories hereto and (ii) Persons who
are Permitted Transferees of the Xxxxx Investors pursuant to Sections 5.4(e)(i)
and (ii), such shares of MEDIQ Series B Preferred Stock which have been
requested to be included in the Significant Transfer pursuant to the exercise of
Tag-Along Rights; provided that any such purchase shall not be funded directly
or indirectly by a Disqualified Person. Any such purchases required to be made
by the Investors pursuant to the foregoing clause (y) shall be pro rata based
upon the number of shares the Tag-Along Seller or the Investor exercising its
Tag-Along Rights has included in the Significant Transfer which is the subject
of this Section 6.7. Each Investor agrees that it will, if requested by BRS or
its assignee, purchase its pro rata portion (based upon the number of shares
included by each Investor (including the Tag-Along Seller) in the Significant
Transfer which is the subject of this Section 6.7). By way of illustration, if
BRS, the HCCP Entities, the Xxxxx Entities and the Management Investors have
included (whether as part of the Significant Transfer giving rise to Tag-Along
Rights pursuant to this Section 6.7 or pursuant to the exercise of Tag-Along
Rights pursuant to this Section 6.7) 40, 30, 20, and 10 shares of MEDIQ Series B
Preferred Stock, respectively, in a transaction involving the sale to a
Disqualified Person pursuant to which the Xxxxx Investors are entitled to
include 10 shares of MEDIQ Series B Preferred Stock, then in connection with the
exercise of Tag-Along Rights by the Xxxxx Investors, BRS, the HCCP Entities, the
Xxxxx Entities and the Management Investors will be required to purchase 4, 3, 2
and 1 share of MEDIQ Series B Preferred Stock, respectively, from the Xxxxx
Investors.
(c) Prior to any Significant Transfer subject to these provisions, the
seller (the "Tag-Along Seller") shall notify the Company in writing of the
proposed sale. Such notice (the "Tag-Along Sale Notice") shall set forth the
number of shares of Preferred Stock or Common Stock subject to the proposed sale
and the proposed amount of consideration and terms and conditions of payment
which are part of the proposed sale. The Company shall promptly, and
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in any event within 15 days, mail or cause to be mailed the Tag-Along Sale
Notice to the Tag-Along Rightholders. Each Tag-Along Rightholder may exercise
the Tag-Along Right by delivery of a written notice (the "Tag-Along Acceptance
Notice") to the Tag-Along Seller within 15 days of the date the Company mailed
or caused to be mailed the Tag-Along Sale Notice. The Tag-Along Acceptance
Notice shall state that the Tag-Along Rightholder proposes to include its pro
rata portion of Preferred Stock or Common Stock, as the case may be, in the
proposed sale. If no Tag-Along Acceptance Notice is received during the 15 day
period referred to above, the Tag-Along Seller shall have the right during the
subsequent six-month period to effect the proposed sale of shares of Preferred
Stock or Common Stock on terms and conditions no more favorable than those
stated in the Tag-Along Sale Notice.
(d) Each Tag-Along Rightholder acknowledges and agrees that BRS may
grant similar "tag-along" rights to other Persons and, in such event, such other
Persons shall be offered an equal opportunity to participate in such transaction
or transactions to the same extent as such Tag-Along Rightholders hereunder and
shall be included in the calculation of the pro rata basis upon which such
Tag-Along Rightholders may participate in such transaction or transactions.
(e) (i) Notwithstanding the requirements of this Section 6.7, a
Tag-Along Seller may sell Preferred Stock or Common Stock at any time without
complying with the requirements of Section 6.7(c) so long as the Tag-Along
Seller deposits into escrow with an independent third party at the time of sale
that amount of consideration received in the sale equal to the "Escrow Amount."
As used herein, the "Escrow Amount" shall equal that amount of consideration as
all Tag-Along Rightholders would have been entitled to receive if they had the
opportunity to participate in the sale on a pro rata basis, determined as if
each Tag-Along Rightholder (A) delivered a Tag-Along Notice to the Tag-Along
Seller in the time period set forth in Section 6.7(c) and (B) proposed to
include all of her, his or its shares of Preferred Stock or Common Stock in such
sale.
(ii) The Tag-Along Seller shall notify the Company in writing of
the sale pursuant to this Section 6.7(e) no later than 15 days after the date of
such sale. Such notice (the "Escrow Notice") shall set forth the information
required in the Tag-Along Sale Notice, and in addition, such notice shall state
the name of the escrow agent. The Company shall promptly, and in any event
within 15 days, mail or cause to be mailed the Escrow Notice to each Tag-Along
Rightholder. Such Tag-Along Rightholder may exercise the tag-along right by
delivery to the Tag-Along Seller, within 15 days of the date the Company mailed
or caused to be mailed the Escrow Notice, of (A) a written notice specifying the
number of shares of Preferred Stock or Common Stock it proposes to sell; and (B)
the certificates for such Preferred Stock or Common Stock, with stock powers
duly endorsed in blank and with signatures guaranteed.
(iii) Promptly after the expiration of the fifteenth day after the
Company has mailed or caused to be mailed the Preemptive Escrow Notice, (A) the
Tag-Along Seller shall purchase that number of shares of Preferred Stock or
Common Stock as the Tag-Along Seller would have been required to include in the
sale had the Tag-Along Seller complied with the provisions of Section 6.7(c),
(B) all shares of Preferred Stock or Common Stock not required to be purchased
by the Tag-Along Seller shall be returned to the Tag-Along Rightholders thereof
and (C) all funds and other consideration held in escrow shall be released to
the Tag-Along Seller. If the Tag-Along Seller received consideration other than
cash in her, his or its sale, the Tag-Along Seller shall purchase the shares of
Preferred Stock or Common Stock tendered by paying to the Tag-Along Rightholders
non-cash consideration and cash in the same proportion as received by the
Tag-Along Seller in the sale.
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(f) The Tag-Along Rights provided pursuant to this Section 6.7 shall
terminate with respect to any particular class or series of Securities upon
consummation of a Public Offering or an Approved Sale with respect to such class
or series.
(g) Each Tag-Along Rightholder that exercises its Tag-Along Rights
pursuant to this Section 6.7 shall, at the request of the Tag-Along Seller and
without further cost and expense to the Tag-Along Seller, execute and deliver
such other instruments of conveyance and transfer and take such other actions as
may reasonably be requested in order to consummate the proposed sale of
Preferred Stock or Common Stock by the Tag-Along Seller and the Tag-Along
Rightholders which have exercised their Tag-Along Rights pursuant to this
Section 6.7. Each Tag-Along Rightholder that exercises its Tag-Along Rights will
bear its pro rata share (based upon the number of shares sold) of the reasonable
costs and expenses of any sale of shares pursuant to this Section 6.7 to the
extent such costs are incurred for the benefit of all selling Investors and are
not otherwise paid by the Company or the acquiring party. Costs incurred by any
Investor on its own behalf will not be considered costs of the transaction
hereunder.
6.8 Redemptions by the Company.
(a) In the event that the Company redeems any shares of MEDIQ Series A
Preferred Stock (other than shares of MEDIQ Series A Preferred Stock which were
issued in the Merger as "Merger Consideration", as such term is defined in the
Merger Agreement) or MEDIQ Series C Preferred Stock pursuant to the optional or
mandatory redemption provisions of such securities, then BRS (or its assignee),
or an employee or Affiliate of BRS (or its assignee), or a third party (other
than a Disqualified Person) designated by BRS (or its assignee), including the
other Investors, or any combination of any of the foregoing shall offer to
purchase (the "Series B Purchase Option") from each of the Xxxxx Investors who
are original signatories hereto (or persons who are Permitted Transferees of
such Xxxxx Investors pursuant to clauses (i) or (ii) of Section 5.4(e)), on a
pro-rata basis, (i) the number of shares of MEDIQ Series B Preferred Stock owned
by such Xxxxx Investor (which, for purposes of this Section 6.8(a), shall be
reduced by the number of shares of MEDIQ Series B Preferred Stock which such
Xxxxx Investor has previously had the opportunity to exercise its rights to sell
pursuant to all previous Series B Purchase Options offered to it pursuant to
this Section 6.8, without regard to whether such Xxxxx Investor actually
exercised its rights to sell pursuant to the Series B Purchase Option)
multiplied by (ii) a fraction (the "Designated Percentage"), the numerator of
which is the aggregate liquidation preference of the MEDIQ Series A or Series C
Preferred Stock so redeemed and the denominator of which is the sum of the
aggregate liquidation preference of the Series A, B and C Preferred Stock then
outstanding (other than shares of MEDIQ Series A Preferred Stock which were
issued in the Merger as Merger Consideration) plus the original purchase price
(i.e., $10 per share) of the shares of Common Stock issued pursuant to Articles
I, II and III of this Agreement. The number of shares of MEDIQ Series B
Preferred Stock which are subject to the Series B Purchase Option are referred
to herein as the "Qualified Series B Shares"). The Investors acknowledge that,
as provided in Section 6.8(f), BRS may require some or all of the Investors
other than the Xxxxx Investors to make the offer to purchase required by the
Series B Purchase Option.
(b) The purchase price for the Qualified Series B Shares shall be equal
to (i) the sum of the aggregate redemption proceeds paid in respect of the
shares of MEDIQ Series A Preferred Stock (other than shares of MEDIQ Series A
Preferred Stock which were issued in the Merger as Merger Consideration) and the
shares of MEDIQ Series C Preferred Stock redeemed in the transaction which gives
rise to the Series B Purchase Option, times (ii) the Designated Percentage.
Promptly after the consummation of the redemption transaction, such
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other party or parties as may be designated by BRS, as provided in Sections 6.8
(a) and (f), prior to the closing of the Series B Purchase Option transaction,
or in the event such parties fail to purchase or no such parties are designated
by BRS, BRS shall purchase the Qualified Series B Shares tendered by paying to
such holders their proportionate share of the redemption proceeds as set forth
above.
(c) Prior to any redemption of MEDIQ Series A Preferred Stock or MEDIQ
Series C Preferred Stock which would give rise to the Series B Purchase Option
set forth above, the Company shall provide each Xxxxx Investor with written
notice of such redemption (the "Series B Purchase Option Notice"). The Company
shall promptly, and in any event within fifteen days, mail or cause to be mailed
the Series B Purchase Option Notice to the Investors. The Series B Purchase
Option Notice shall set forth with respect to each Xxxxx Investor the number of
shares of MEDIQ Series B Preferred Stock which are Qualified Series B Shares and
the Designated Percentage and the terms of the proposed redemption of MEDIQ
Series A or Series C Preferred Stock. Each Xxxxx Investor may exercise the
Series B Purchase Option by delivery of a written notice (the "Series B Purchase
Option Acceptance") to the Company and the other Investors within fifteen days
of the date the Company mailed or caused to be mailed the Series B Purchase
Option Notice. The Series B Purchase Option Acceptance shall state that the
Xxxxx Investor proposes to include all of its Qualified Series B Shares in the
proposed redemption. If no Series B Purchase Option Acceptance is received by
the Company and the other Investors during the ten-day period referred to above,
the Company shall have the right to effect the redemption proposed in the Series
B Purchase Option Notice and none of the Company, the other Investors or any
third party shall have any obligation to purchase the Qualified Series B Shares
from such Investor.
(d) (i) Notwithstanding the requirements of this Section 6.8, the
Company may effect a redemption of MEDIQ Series A Preferred Stock or MEDIQ
Series C Preferred Stock at any time without complying with the requirements of
Section 6.8(a), (b) and (c) so long as funds are deposited into escrow with an
independent third party at the time of the redemption in an amount equal to that
amount of the proceeds received in the redemption equal to the "Redemption
Escrow Amount." As used herein, the "Redemption Escrow Amount" shall equal that
amount of redemption as all Xxxxx Investors would have been entitled to receive
if they had the opportunity to exercise their rights pursuant to the Series B
Purchase Option, determined as if each such Xxxxx Investor (A) delivered a
Series B Purchase Option Acceptance to the Company and the other Investors in
the time period set forth in Section 6.8(c) and (B) proposed to include all of
such Xxxxx Investor's Qualified Series B Shares in such transaction.
(ii) The Company shall notify the Xxxxx Investors in writing of the
redemption pursuant to this Section 6.8(d) no later than fifteen days after the
date of such redemption. Such notice (the "Redemption Escrow Notice") shall set
forth the information required in the Series B Purchase Option Notice, and in
addition, such notice shall state the name of the escrow agent. Each Xxxxx
Investor with Qualified Series B Shares may exercise the Series B Purchase
Option by delivery to the Company and the other Investors, within fifteen days
of the date the Company mailed or caused to be mailed the Redemption Escrow
Notice, of (A) a written notice specifying that such Xxxxx Investor proposes to
include all of its Qualified Series B Shares in such redemption; and (B) the
certificates of such Qualified Series B Shares, with stock powers duly endorsed
in blank and with signatures guaranteed.
(iii) Promptly after the expiration of the fifteenth day after the
Company has mailed or caused to be mailed the Redemption Escrow Notice, (A) the
purchaser(s) of the Qualified Series B Shares proposed to be included in the
transaction by the Xxxxx Investors
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pursuant to Section 6.8(d)(ii) shall purchase such shares from such Xxxxx
Investors, (B) all shares of MEDIQ Series B Preferred Stock not required to be
purchased by such purchaser(s) shall be returned to the holder thereof and (C)
all funds and other consideration held in escrow shall be released as directed
by BRS and the Company.
(e) The rights provided to the Investors pursuant to this Section 6.8
shall terminate upon the earlier of (i) a successfully completed firm commitment
underwritten public offering or offerings pursuant to effective registration
statements under the Securities Act in respect of offers and sales of shares of
Series B Preferred Stock resulting in aggregate net proceeds to the Company and
any stockholder selling shares of Series B Preferred Stock in such offerings of
not less than $7.5 million; and (ii) the date on which BRS and its Affiliates
own less than 10% of the Common Stock.
(f) In the event that the Company redeems any shares of MEDIQ Series A
Preferred Stock (other than shares of MEDIQ Series A Preferred Stock which were
issued in the Merger as "Merger Consideration", as such term is defined in the
Merger Agreement) or MEDIQ Series C Preferred Stock pursuant to the optional or
mandatory redemption provisions of such securities, such that the Xxxxx
Investors are entitled to their rights pursuant to the Series B Purchase Option,
each Investor agrees that, if requested by BRS or its assignee, it shall
purchase its pro rata share (based upon each Investors' ownership of the series
of Securities which is the subject of the redemption) of the Securities which
are subject to the Series B Purchase Option. By way of illustration, if BRS owns
50 shares of MEDIQ Series C Preferred Stock, the HCCP Entities own 30 shares of
MEDIQ Series C Preferred Stock , the Xxxxx Entities own 20 shares of MEDIQ
Series C Preferred Stock and the Management Investors own 20 shares of MEDIQ
Series C Preferred Stock, and as a result of the redemption, 12 shares of MEDIQ
Series B Preferred Stock are subject to the Series B Purchase Option, then in
connection with the exercise of the Series B Purchase Option by the Xxxxx
Investors, BRS, the HCCP Entities, the Xxxxx Entities and the Management
Investors will be required to purchase 5, 3, 2 and 2 shares of MEDIQ Series B
Preferred Stock, respectively, from the Xxxxx Investors.
6.9 Repurchase of the Purchased Securities By the Company
(a) In the event that on or prior to the Lapse Date (as defined
herein), any Management Investor shall cease to be employed by the Company for
any reason (including, but not limited to, death, temporary or permanent
disability ("Disability"), retirement under the Company's retirement policies as
approved by a majority of the Board of Directors ("Retirement"), resignation or
termination by the Company, with or without Cause), other than by reason of a
leave of absence approved by the Company, such Management Investor (or his
heirs, executors, administrators, transferees, successors or assigns) shall give
prompt notice to the Company of such termination (except in the case of
termination by the Company with or without Cause), and the Company, or one or
more designee(s) selected by a majority of the members of the Board of
Directors, shall have the right and option at any time within 90 days after the
later of the effective date of such termination of employment (the "Termination
Date") or the date of the Company's receipt of the aforesaid notice, to purchase
from such Management Investor, or his heirs, executors, administrators,
transferees, successors or assigns, as the case may be, the Purchased Securities
then owned by such Management Investor described in this Section 6.9(b) or
6.9(c) below, as applicable. The Company or its designee(s) shall give notice to
the terminated Management Investor (or his heirs, executors, administrators,
transferees, successors or assigns) of its intention to purchase Purchased
Securities at any time not later than 90 days after the Termination Date. The
right of the Company and its designee(s) set forth in this Section 6.9 to
purchase a terminated Management Investor's Purchased Securities is hereinafter
referred to as
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the "Purchase Option." The Rollover Securities purchased by the Management
Investors pursuant to this Agreement shall not be subject to the Purchase
Option. To the extent the Purchased Securities have vested pursuant to Section
3.5 they are sometimes referred to herein as "Vested" and to the extent the
Securities have not vested pursuant to Section 3.5 they are sometimes referred
to herein as "Unvested".
(b) The Purchase Option shall be exercised by written notice to the
terminated Management Investor (or his heirs, executors, administrators,
transferees, successors or assigns) (the "Seller") signed by an officer of the
Company on behalf of the Company or by its designee(s), as the case may be. Such
notice shall set forth the number of shares of Purchased Securities desired to
be purchased and shall set forth a time and place of closing which shall be no
earlier than 10 days and no later than 30 days after the date such notice is
sent. At such closing, the Seller shall deliver the certificates evidencing the
number of shares of Purchased Securities to be purchased by the Company and/or
its designee(s), accompanied by stock powers duly endorsed in blank or duly
executed instruments of transfer, and any other documents that are necessary to
transfer to the Company and/or its designee(s) good title to such of the
Purchased Securities to be transferred, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature other than those imposed under this Agreement, and concurrently
with such delivery, the Company and/or its designee(s) shall deliver to the
Seller the full amount due the Seller pursuant to this Section 6.9 for such
Purchased Securities in cash by certified or bank cashier's check.
(c) If Xxxxxx X. Xxxxxxx ("Xxxxxxx") is terminated for Cause prior to
the Lapse Date, the Company and/or its designee(s) shall have the right to (i)
repurchase his Unvested Purchased Securities at a price equal to their Adjusted
Cost Price (defined below) and (ii) repurchase his Vested Purchased Securities
at the CEO Adjusted EBITDA Price (defined below). If Xxxxxxx resigns from the
Company prior to the Lapse Date, or if his employment is terminated prior to the
Lapse Date due to his death, Retirement or Disability, the Company and/or its
designee(s) shall have the right to repurchase his Unvested Purchased Securities
at a price equal to their Adjusted Cost Price but shall not have any Purchase
Option with respect to his Vested Purchased Securities. If Xxxxxxx is terminated
without Cause prior to the Lapse Date, the Company and/or its designee(s) shall
have the right to repurchase at the CEO Adjusted EBITDA Price the number of
shares of Purchased Securities as is the lesser of (i) 50% of the shares of
Purchased Securities purchased by Xxxxxxx pursuant to Article III of this
Agreement, regardless of whether such shares are Vested or Unvested pursuant to
Section 3.5 and (ii) the number of Unvested Purchased Securities.
(d) If a Management Investor other than Xxxxxxx is terminated for Cause
or resigns prior to the Lapse Date, the Company and/or its designee(s) shall
have the right to repurchase all of such Management Investor's Purchased
Securities at a price equal to their Adjusted Cost Price. If a Management
Investor other than Xxxxxxx is terminated without Cause prior to the Lapse Date,
or such Management Investor's employment is terminated due to death, Retirement
or Disability prior to the Lapse Date, the Company and/or its designee(s) shall
have the right to repurchase his Unvested Purchased Securities at a price equal
to their Adjusted Cost Price and (ii) repurchase his Vested Purchased Securities
at the Management Investor Adjusted EBITDA Price (defined below).
(e) The Purchase Option shall lapse on the earliest to occur of (i) the
fifth anniversary of the MEDIQ Closing Date, (ii) consummation of a Public
Offering of the Common Stock and (iii) a Sale of the Company (whether by merger,
consolidation, sale of all or substantially all of its assets or sale of all of
the outstanding capital stock) to any Person, firm,
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entity or group which, together with its Affiliates, prior to such transaction,
did not own more than 20% of the outstanding Common Stock of the Company.
6.10 Certain Definitions. For purposes of this Agreement the following
terms shall have the following meanings:
(a) "Adjusted Cost Price" means, with respect to Securities being
repurchased pursuant to Section 6.9, the product of (i) the number of shares to
be repurchased and (ii) the original price per share of Purchased Securities
paid by the Management Investor to the Company pursuant to the Agreement,
including any shares of Purchased Securities which have been converted into
other shares of capital stock of the Company, and adjusted for any stock
dividend payable upon or subdivision or combination of, the Purchased
Securities.
(b) "Affiliate" shall have the meaning ascribed to such term under Rule
12b-2 promulgated under the Securities Exchange Act.
(c) "Cause" means (i) theft, misappropriation or embezzlement of
MEDIQ's funds, (ii) conviction of any felony, crime involving fraud or
misrepresentation, or of any other crime (whether or not connected with
employment) the effect of which is likely to adversely affect MEDIQ, except if a
Management Investor's actions which result in such a conviction were taken in
good faith and in a manner such Management Investor reasonably believed not to
be adverse to the interests of MEDIQ, or (iii) abuse of alcohol or other drugs
which materially interferes with the performance by a Management Investor of his
duties, provided that such Management Investor has been given 30 days notice by
MEDIQ of its intent to terminate such Management Investor pursuant to this
provision during which time such Management Investor has not demonstrated the
cessation of such abuse to the reasonable satisfaction of the Board of
Directors; provided, however, that a Management Investor shall not be deemed to
have been terminated for Cause unless there shall have been delivered to such
Management Investor a copy of a resolution duly adopted by the affirmative vote
of a majority of the entire Board of Directors of MEDIQ at a meeting of such
Board of Directors called and held for that purpose (after at least 15 days
prior written notice to such Management Investor and an opportunity for such
Management Investor, together with such Management Investor's counsel, to be
heard before such Board), finding that, in the good faith opinion of the Board
of Directors of MEDIQ, such Management Investor was guilty of conduct set forth
above and specifying the particulars thereof in reasonable detail.
(d) "CEO Adjusted EBITDA Price" means, with respect to Securities being
repurchased pursuant to Section 6.9, an amount equal to (i) the number of shares
to be repurchased multiplied by (ii) eight times EBITDA for the twelve-month
period ended the month immediately prior to the month in which the Termination
Date occurs less the average amount of outstanding debt (including capital lease
obligations) during such period and the amount of outstanding Preferred Stock
(including accrued but unpaid dividends thereof) divided by (y) the average
number of Common Shares outstanding on a fully diluted basis during such period,
all as certified by the Chief Financial Officer of the Company as determined in
accordance with generally accepted accounting principles from the books of the
Company.
(e) "Controlled Affiliate" means, with respect to any person, a
corporation, partnership or other business association in which such person
owns, directly or indirectly through one or more intermediaries, fifty percent
(50%) or more of the outstanding capital stock or other equity interests of such
corporation, partnership or other business association.
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(f) "EBITDA" means, with respect to any period, the Company's earnings
before interest, taxes, depreciation and amortization as certified by the Chief
Financial Officer of the Company as determined in accordance with generally
accepted accounting principles from the books of the Company.
(g) "Management Investor Adjusted EBITDA Price" means, with respect to
Securities being repurchased pursuant to Section 6.9, an amount equal to (i) the
number of shares to be repurchased multiplied by (ii) seven times EBITDA for the
twelve-month period ended the month immediately prior to the month in which the
Termination Date occurs less the average amount of outstanding debt (including
capital lease obligations) during such period and the amount of outstanding
Preferred Stock (including accrued but unpaid dividends thereof) divided by (y)
the average number of Common Shares outstanding on a fully diluted basis during
such period, all as certified by the Chief Executive Officer of the Company as
determined in accordance with generally accepted accounting principles from the
books of the Company.
(h) "Major Shareholder" means each Investor or Permitted Transferee, or
in the case of the Xxxxx Investors such Xxxxx Investors in the aggregate, (other
than a Permitted Transferee under Section 5.4(e)(iv) or (viii)) that (together
with its Controlled Affiliates) owns at least five percent (5%) of the issued
and outstanding shares of Common Stock, on a fully-diluted basis.
(i) "Management Options" means options to acquire, in the aggregate, up
to 34,091 shares of MEDIQ Common Stock to be issued after the Effective Time to
employees of the Company.
(j) "Public Offering" means a successfully completed firm commitment
underwritten public offering or offerings underwritten by a nationally
recognized underwriter (other than offerings registered on a Special
Registration Statement or a Unit Offering) pursuant to effective registration
statements under the Securities Act in respect of offers and sales of shares of
Securities for the account of the Company resulting in aggregate net proceeds to
the Company and any stockholder selling in such offerings shares of the class or
series of Securities which is the subject of such public offering of not less
than (i) in the case of MEDIQ Series A Preferred Stock, $10 million, (ii) in the
case of MEDIQ Series B Preferred Stock, $7.5 million, (iii) in the case of MEDIQ
Series C Preferred Stock, $7.5 million, and (iv) in the case of MEDIQ Common
Stock, $20 million; provided that, in connection with such public offering, if
any Investor is permitted to sell Securities of the same class or series in such
public offering all Investors shall have been permitted to sell their Securities
ratably in such public offering.
(k) A "Special Registration Statement" means (i) a registration
statement on Forms S-8 or S-4 or any similar or successor form or any other
registration statement relating to an exchange offer or an offering of
securities solely to the Company's employees or security holders or used in
connection with the acquisition of the business of another person or entity,
(ii) a registration statement registering a Unit Offering or (iii) a
registration statement to register either the Warrants or the underlying Common
Stock issued in connection with the financing transactions described on Schedule
2.1(f) hereof.
(l) "Warrants" means the warrants to acquire 91,209 shares of MEDIQ
Common Stock to be issued in connection with the financing transactions
described on Schedule 2.1(f) hereof on the terms described in the Confidential
Offering Circular dated May 21, 1998.
-26-
(m) "Unit Offering" means an underwritten public offering of a
combination of debt securities and Common Stock of the Company in which (i) not
more than fifteen percent (15%) of the gross proceeds received for the sale of
such securities is attributed to Common Stock and (ii) after giving effect to
such offering, the Common Stock is not required to be registered under the
Securities Exchange Act.
6.11 Company's Right of First Refusal. Notwithstanding anything to the
contrary in Section 5.4 of this Agreement, in the event that any time after the
fifth anniversary and prior to the tenth anniversary of the Effective Time, a
Management Investor, or his Permitted Transferees, proposes to sell any or all
of such Management Investor's, or his Permitted Transferees' Common Stock to a
third party (other than a Permitted Transferee) in a bona fide transaction, the
Management Investor or his Permitted Transferees may not transfer such Common
Stock without first offering to sell such Common Stock to the Company pursuant
to this Section 6.11.
The Management Investor, or his Permitted Transferees, shall deliver a
written notice (a "Sale Notice") to the Company, describing in reasonable detail
the Securities being offered, the name of the offeree, the purchase price being
requested and all other material terms of the proposed Transfer. Upon receipt of
the Sale Notice, the Company, or a designee selected by a majority of the
non-employee members of the Board of Directors of the Company, shall have the
right and option to purchase all or any portion of the Securities being offered
at the price and on the terms of the proposed Transfer set forth in the Sale
Notice. Within 15 days after receipt of the Sale Notice, the Company shall
notify such Management Investor, or his Permitted Transferees, whether or not it
wishes to purchase any or all of the offered Securities.
If the Company elects to purchase any of the offered Securities, the
closing of the purchase and sale of such Securities shall be held at the place
and on the date established by the Company in its notice to the Management
Investor, or his Permitted Transferees, in response to the Sale Notice, which in
no event shall be less than 10 or more than 30 days (subject to any extension
reasonably required to obtain any necessary regulatory approval) from the date
of such notice. In the event that the Company does not elect to purchase all the
offered Securities, the Management Investor, or his Permitted Transferees, may,
subject to the other provisions of this Agreement, Transfer the remaining
offered Securities to the offeree specified in the Sale Notice at a price no
less than the price specified in the Sale Notice and on other terms no more
favorable to the transferee(s) thereof than specified in the Sale Notice during
the 180-day period immediately following the last date on which the Company
could have elected to purchase the offered Securities. Any such Securities not
transferred within such 180-day period will be subject to the provisions of this
Section 6.11 upon subsequent Transfer.
The provisions of this Section 6.11 shall terminate upon a Public Offering
of the Common Stock.
6.12 Involuntary Transfers, Notwithstanding anything to the contrary in
Section 5.4 of this Agreement, in the event that the Securities owned by any
Management Investor, or his Permitted Transferees, shall be subject to sale or
other Transfer (the date of such sale or Transfer shall hereinafter be referred
to as the "Transfer Date") prior to the tenth anniversary of the Effective Time
by reason of (i) bankruptcy or insolvency proceedings, whether voluntary or
involuntary, or (ii) distraint, levy, execution or other involuntary Transfer,
then such Management Investor, or his Permitted Transferees, shall give the
Company written notice thereof promptly upon the occurrence of such event
stating the terms of such proposed Transfer, the identity of the proposed
transferee, the price or other consideration, if readily determinable, for which
the Securities are proposed to be Transferred, and the number of shares of
Common Stock to be Transferred. After its receipt of such notice or, failing
such
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receipt, after the Company otherwise obtains actual knowledge of such a proposed
Transfer, the Company, or a designee selected by a majority of the non-employee
members of the Board of Directors of the Company, shall have the right and
option to purchase all, but not less than all of such Securities which right
shall be exercised by written notice given by the Company to such proposed
transferor within 60 days following the Company's receipt of such notice or,
failing such receipt, the Company obtaining actual knowledge of such proposed
Transfer. Any purchase pursuant to this Section 6.12 shall be at the price and
on the terms applicable to such proposed Transfer. If the nature of the event
giving rise to such involuntary Transfer is such that no readily determinable
consideration is to be paid for the Transfer of the Securities, the price to be
paid by the Company shall be the Option Purchase Price that would have been
applicable hereunder had the Management Investor incurred a Termination Date as
of the date of such proposed Transfer of the Securities. The closing of the
purchase and sale of Securities shall be held at the place and the date to be
established by the Company, which in no event shall be less than 10 or more than
60 days from the date on which the Company gives notice of its election to
purchase the Securities. At such closing, the Management Investor, or his
Permitted Transferees, shall deliver the certificates evidencing the number of
shares of Common Stock to be purchased by the Company, accompanied by stock
powers duly endorsed in blank or duly executed instruments of transfer, and any
other documents that are necessary to transfer to the Company good title to such
of the securities to be transferred, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature other than those imposed under this Agreement, and concurrently
with such delivery, the Company shall deliver to the Management Investor, or his
Permitted Transferees, the full amount of the purchase price for such Securities
in cash by certified or bank cashier's check.
6.13 Rollover Agreement Repurchase Obligation. In the event designees of
BRS do not constitute a majority of the numbers of the Board of Directors and
BRS does not own a majority of the outstanding shares of Common Stock of the
Company, the Company agrees that it will, if requested by BRS, obtain the
agreement of a person other than a "Disqualified Person" as defined in the
Rollover Agreement to purchase any shares of Series B Preferred Stock which may
be subject to the Series B Purchase Option, including in those circumstances
described in Sections 6.6(c), 6.7(b) and 6.8.
6.14 Restrictions. The Company shall not, directly or indirectly, and shall
not permit any of its subsidiaries to, take any of the following actions without
the approval of a majority of the Company's Board of Directors.
(a) consolidate or merge with or into any Person or enter into any
similar business combination transaction (including a sale of substantially all
of its assets) or effect any transaction or series of transactions in which more
than 33-1/3% of the Company's voting securities are transferred by the Company
to another Person, except a Public Offering or any such transaction or series of
transactions, as the case may be, involving only wholly-owned subsidiaries of
the Company;
(b) amend or repeal any provisions of, or add any provisions to, the
certificate of incorporation or the by-laws;
(c) alter or change the preferences, rights, privileges or powers of
the Preferred Stock;
(d) increase the number of authorized members of the Board above nine;
provided however that this Section 6.14 shall not derogate from the rights of
the parties set forth in this Agreement, including Section 6.3 and 9.3 hereof.
-28-
(e) voluntarily liquidate, dissolve or wind up;
(f) purchase, acquire or obtain any capital stock or other proprietary
interest, directly or indirectly, in any other entity or all or substantially
all of the business or assets of another Person for consideration in excess of
$100 million.
(g) enter into or commit to enter into any joint ventures (other than
in the ordinary course of business) or partnerships or establish any
non-wholly-owned subsidiaries, in each case, where the contributions or
investments by the Company exceed $50 million in cash or assets;
(h) sell, lease, transfer or otherwise dispose of any asset or group of
assets (other than in the ordinary course of business), for consideration in an
annual aggregate amount (as to the Company and any and all of its subsidiaries),
in excess of 25% of the book value of the Company's assets at the beginning of
such fiscal year;
(i) terminate the employment of the Chief Executive Officer of the
Company;
(j) materially amend or change the Company's business plan or enter
into a new business plan;
(k) agree or otherwise commit to take actions set forth in the
foregoing subparagraphs (a) through (j).
ARTICLE VII
CORPORATE ACTIONS
7.1 Certificate of Incorporation and Bylaws. Each Investor has reviewed the
Certificate of Incorporation and Bylaws of MQ and MEDIQ in the forms attached
hereto as Exhibits A-1 through A-4, respectively, and hereby approves and
ratifies the same.
7.2 Directors and Voting Agreements. Each Investor approves and ratifies
the election of Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxxx, L. Xxxx Xxxxxxxxx and Xxxxxxx X. Xxxxx as initial directors
of the Company. Each Investor agrees that it will vote for such additional
persons as may be designated from time to time by pursuant to Article VI hereof.
7.3 Amendment of Certificate and Bylaws. Each Investor agrees that it shall
not consent in writing or vote or cause to be voted any Securities now or
hereafter owned or controlled by it in favor of any amendment, repeal,
modification, alteration or rescission of, or the adoption of any provision in
the Company's Certificate of Incorporation or Bylaws inconsistent with, this
Agreement unless BRS consents in writing to such action or votes or causes to be
voted all of the Securities held by it in favor of such action.
-29-
ARTICLE VIII
CERTAIN RIGHTS OF INVESTORS
8.1 Preemptive Rights. (a) If the Company proposes to issue and sell, other
than in an Exempted Issuance (as defined below), any of its shares of Common
Stock or any securities containing options or rights to acquire any shares of
Common Stock or any securities convertible into shares of Common Stock (such
shares and other securities are hereinafter collectively referred to as "Newly
Issued Stock") (hereinafter, a "Preemptive Issuance"), the Company will first
offer to each Major Shareholder (and its Affiliates who are also Investors) and
each Management Investor who was a Management Investor at the Effective Time who
is an "accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended (each a "Qualified Investor") a portion of
the number or amount of such securities proposed to be sold in any such
transaction or series of related transactions equal to such Qualified Investor's
pro rata share of the proposed issue of Common Stock (or securities convertible
into or exchangeable for Common Stock), all for the same price and on the same
terms at which the Company has authorized the issuance of such securities. For
purposes of this Section 8.1, a Qualified Investor's "pro rata share" of an
issue of Common Stock (or securities convertible into or exchangeable for Common
Stock) shall be that number which is equal to the product of (i) the number of
shares of Common Stock which are to be issued by the Company in the transaction
which is the subject of this Section 8.1, times (ii) a fraction, the numerator
of which is the number of outstanding shares of Common Stock held by such
Qualified Investor, and the denominator of which is the aggregate number of
outstanding shares of Common Stock calculated on a fully diluted basis.
(b) The Company will cause to be given to the Qualified Investors a
written notice setting forth the terms and conditions upon which the Qualified
Investors may purchase such Common Stock or other securities (the "Preemptive
Notice"). After receiving a Preemptive Notice, the Qualified Investors must
reply, in writing, before the date specified in the Preemptive Notice, which
shall be a date no earlier than 15 days after the date of such Preemptive
Notice, that such persons agree to purchase all of such Qualified Investors'
allotted portion of such Common Stock or other securities offered pursuant to
this Section 8.1 on the date of sale (the "Preemptive Reply"). If any Qualified
Investor fails to make a Preemptive Reply in accordance with this Section 8.1,
the Common Stock or other securities offered to such Qualified Investor in
accordance with this Section 8.1 may thereafter, for a period not exceeding six
months following the expiration of such 15-day period, be issued, sold or
subjected to rights or options at a price not less than that at which they were
offered to the Qualified Investors. Any such Common Stock or other securities
not so issued, sold or subjected to rights or options during such six-month
period will thereafter again be subject to the preemptive rights provided for in
this Section 8.1.
(c) (i) Notwithstanding the requirements of this Section 8.1, the
Company may make a Preemptive Issuance at any time without complying with the
requirements of Section 8.1(a) and (b) so long as the Company deposits into
escrow with an independent third party at the time of sale a portion of the
Newly Issued Stock equal to the "Preemptive Escrow Amount." The "Preemptive
Escrow Amount" shall equal that amount of Newly Issued Stock which the Qualified
Investors would have been entitled to purchase if they had the opportunity to
participate in the Preemptive Issuance on a pro rata basis in accordance with
Section 8.1(a), determined as if each Qualified Investor delivered a Preemptive
Reply to the Company in the time period set forth in Section 8.1(b) agreeing to
purchase all of the Newly Issued Stock to which such Qualified Investor would
have been entitled to purchase pursuant to Section 6.1(a) had the Company given
such Qualified Investor a Preemptive Notice.
(ii) Within 10 days after the date of the Preemptive Issuance, the
Company shall notify the Qualified Investors in writing of the Preemptive
Issuance. Such notice (the "Preemptive Escrow Notice") shall set forth the terms
and conditions upon which the
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Qualified Investors may purchase shares of Newly Issued Stock, the pro rata
amount of Newly Issued Stock that such Qualified Investor is entitled to receive
(such amount to equal the amount of Newly Issued Stock that such Qualified
Investor would have been entitled to receive if they had the opportunity to
participate in the Preemptive Issuance on a pro rata basis in accordance with
Section 6.1(a)) and the name of the escrow agent.
(iii) A Qualified Investor may exercise the preemptive right by
delivery to the Company, within 10 days of the date the Preemptive Escrow Notice
is received by the Qualified Investor, of a written notice specifying the number
of shares of Newly Issued Stock it proposes to purchase of the number of shares
of Newly Issued Stock such Qualified Investor is entitled to purchase (the
"Preemptive Election").
(iv) Promptly after the expiration of the date specified in the
Preemptive Escrow Notice, which shall be a date no earlier than 15 days after
the date the Company has mailed or caused to be mailed the Preemptive Escrow
Notice, (A) the Company shall sell to each Qualified Investor that number of
shares of Newly Issued Stock that each such Qualified Investor proposed to
purchase pursuant to its Preemptive Election and (B) all remaining Newly Issued
Stock held in escrow may be sold upon the terms and conditions set forth in the
Preemptive Escrow Notice. Each Qualified Investor delivering a Preemptive Reply
shall be required to purchase the same strip of securities (including securities
other than Common Stock or securities convertible into or exchangeable for
Common Stock) that other purchasers of the offered securities are required to
purchase, on the same terms and conditions as such other purchasers.
(d) The rights granted to the Investors pursuant to this Section 8.1
shall expire upon the consummation of a Public Offering of the Common Stock.
8.2 Exempted Issuance. For purposes of Section 8.1 hereof, the term
"Exempted Issuance" shall mean the issuance by the Company of any equity
security (including, without limitation, any option, call, warrant or conversion
right): (i) upon the conversion or exercise of any securities of the Company or
any options or convertible securities issued by the Company, (ii) in connection
with the agreements set forth on Schedule C hereto (including in respect of the
Management Pool Shares, the Management Options and the Warrants), (iii) as a
dividend on the outstanding Common Stock or Preferred Stock, (iv) in
consideration, whether in whole or in part, for the extension of any credit or
the making of any loan to the Company or the issuance by the Company of any debt
security to any Person who is not an Investor, (v) in connection with any
merger, consolidation, recapitalization or other business combination which has
been approved by the board of directors of the Company, (vi) to any officer,
director or employee of the Company, (vii) in any transaction in respect of a
Security that is available to all holders of such Security on a pro rata basis
or (viii) in a Public Offering and in any subsequent public offering pursuant to
a registration statement filed pursuant to the Securities Act, including any
Unit Offering.
8.3 Registration Rights. The Investors shall have registration rights with
respect to the Securities as set forth in the Registration Rights Agreement
attached hereto as Exhibit B. Each of the Investors agrees not to effect any
public sale or distribution of any securities of the Company during the periods
specified in the Registration Rights Agreement, except as permitted by the
Registration Rights Agreement, and each such Investor agrees to be bound by the
rights of priority to participate in offerings as set forth therein.
-31-
ARTICLE IX
MISCELLANEOUS
9.1 Purchaser Representative. If the Company or any Investor enters into
any negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities and Exchange Commission under the
Securities Act may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each Investor will,
at the request of the Company, appoint a purchaser representative (as such term
is defined in Rule 501(h) promulgated by the Securities and Exchange Commission
under the Securities Act) reasonably acceptable to the Company. If any Investor
appoints the purchaser representative designated by the Company, the Company
will pay the fees of such purchaser representative, but if any Investor declines
to appoint the purchaser representative designated by the Company such Investor
will appoint another purchaser representative (reasonably acceptable to the
Company), and such Investor will be responsible for the fees of the purchaser
representative so appointed.
9.2 Termination. This Agreement will terminate only upon the termination of
the written agreement of all of the Investors who are still parties hereto or
when all of the Investors except any one Investor no longer hold any equity
securities of the Company.
9.3 Amendment and Modification. This Agreement may be amended or modified,
or any provision hereof may be waived, provided that such amendment or waiver is
set forth in a writing executed by (i) the Company, (ii) BRS and each other
Major Shareholder, (iii) Investors (or their Permitted Transferees) holding a
majority of the outstanding Common Stock on a fully diluted basis held by the
Investors (or their Permitted Transferees) subject to this Agreement (including
Securities owned by BRS and other Major Shareholders); provided, however, that
(a) the provisions of Sections 5.4(e)(i), (ii), (vi) or (viii), 6.1, 6.2, 6.3,
6.4, 6.5, 6.14, 8.1, or 8.2 or this Section 9.3 which are for the express
benefit of the HCCP Entities can not be amended, modified or waived unless
Health Care Capital Partners, L.P. has also executed such amendment,
modification or waiver, (b) the provisions of Sections 5.4(e)(i), (ii), (vii) or
(viii), 6.1, 6.2, 6.3, 6.4, 6.5, 6.14, 8.1, or 8.2 this Section 9.3 which are
for the express benefit of the Xxxxx Entities can not be amended, modified or
waived unless Xxxxx Partners III, L.P. has also executed such amendment,
modification or waiver, (c) the provisions of Sections 3.5, 6.9, 6.11 or 6.12 or
this Section 9.3 which are for the express benefit of the Management Investors
can not be amended, modified or waived unless the holders of a majority of the
shares of Common Stock then held by the Management Investors have also executed
such amendment, modification or waiver, (d) the provisions of Sections
5.4(e)(i), (ii) or (ix), 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(c), 6.7(a) or (b), 6.8,
8.1 or 8.2 or this Section 9.3 which are for the express benefit of the Xxxxx
Investors can not be amended, modified or waived unless the holders of a
majority of the shares of Common Stock then held by the Xxxxx Investors have
also executed such amendment, modification or waiver and (e) the provisions of
Sections 5.4(e)(v) or (viii), 5.4(f), 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(c), 6.7(a) or
(b), 6.8, 6.14, 8.1 or 8.2 or this Section 9.3 which are for the express benefit
of BRS can not be amended, modified or waived unless BRS has also executed such
amendment, modification or waiver; provided further that no amendment or waiver
which materially and adversely affects any Investor differently from any other
Investor shall be made unless such Investor executes such amendment or waiver.
No course of dealing between or among any persons having any interest in this
Agreement will be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any person under or by reason of
this Agreement.
9.4 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement and the MQ Closing Date, the
Effective Time and the MEDIQ Closing Date and the consummation of the
transactions contemplated hereby, regardless of any investigation made by an
Investor or on its behalf.
-32-
9.5 Successors and Assigns; Entire Agreement. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns and executors,
administrators and heirs. This Agreement sets forth the entire agreement and
understanding among the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
9.6 Separability. In the event that any provision of this Agreement or the
application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
9.7 Notices. All notices provided for or permitted hereunder shall be made
in writing by hand-delivery, registered or certified first-class mail, telex,
telecopier or air courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to MQ or BRS to:
x/x Xxxxxxxxx, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 000000
Attention: Xxxxx X. Xxxxxxxxx
with a required copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
If to MEDIQ to:
MEDIQ Incorporated
Xxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, President and Chief Executive Officer
with a required copy to BRS and its counsel as set forth above:
If to the other Investors or any of them, to their addresses as listed in
the books of the Company.
All such notices shall be deemed to have been duly given: when delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
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9.8 Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of the State of Delaware, without giving effect to principles of
conflicts of law.
9.9 Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
9.10 Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
9.11 Further Assurances. Each party shall cooperate and take such action as
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
9.12 Remedies. In the event of a breach or a threatened breach by any party
to this Agreement of its obligations under this Agreement, any party injured or
to be injured by such breach, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties agree that
the provisions of this Agreement shall be specifically enforceable, it being
agreed by the parties that the remedy at law, including monetary damages, for
breach of such provision will be inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived.
9.13 Investor No Longer Owning Securities. If an Investor ceases to own any
Securities, such person will no longer be deemed to be an Investor for purposes
of this Agreement, except that such party will continue to be obligated to
reacquire Securities Transferred to a Permitted Transferee as required by
Section 5.4(d) and will be deemed to be an Investor at such time as such party
reacquires such Securities.
9.14 Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
9.15 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
9.16 Management Pool Shares. Xxxxxxx agrees that, in the event other
employees of the Company fail to purchase all of the Management Pool Shares, he
will purchase the Management Pool Shares on the terms and conditions set forth
herein, as more fully described in the Undertaking made by Xxxxxxx and dated as
of an even date herewith.
9.17 Unwind. In the event the Effective Time of the Merger does not occur,
the parties agree that they shall rescind the transactions contemplated by this
Agreement; provided that such recision shall not relieve the parties of any
obligations arising out of a breach of this Agreement.
9.18 Miscellaneous. The Management Investors shall not be obligated under
Section 6.6(c), 6.7(b) or Section 6.8 (in respect of the Series B Purchase
Option) to purchase shares of MEDIQ Series B Preferred Stock in amounts which
exceed the after-tax proceeds realized by such Management Investor in the
transaction which gives rise to the obligation to repurchase such MEDIQ Series B
Preferred Stock under the circumstances set forth in Sections 6.6(c), 6.7(b)
and 6.8.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MQ ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Secretary
MEDIQ INCORPORATED
By: /s/ Xxx X. Xxxxxx
--------------------------------------
Name: Xxx X. Xxxxxx
Title: Senior Vice President - Finance
and Chief Financial Officer
BRUCKMANN, XXXXXX, XXXXXXXX & CO. L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director of
BRSE Associates, Inc.
XXXXX X. XXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
XXXXXX X. XXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
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BCB FAMILY PARTNERS, L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
NAZ FAMILY PARTNERS, L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
XXXXXX X. XXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
H. XXXXXX XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
XXXXX X. XXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
XXXX X. XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-in-Fact
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XXXX X. XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-In-Fact
XXXXX X. XXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-In-Fact
XXXXXX X. XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-In-Fact
XXXXXXXX XXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Attorney-In-Fact
XXXXX INVESTORS
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Xxxxxx X. Xxxxx
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
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/s/ Xxxxxx Xxxxxx
------------------------------------------
Xxxxxx Xxxxxx
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
/s/ Xxxxxxx X. Xxxxx
------------------------------------------
Xxxxxxx X. Xxxxx
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
X/X XXXXXXX X. XXXXX XXXXX
XXXXXXXX 00, 0000
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx, Trustee
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx, Trustee
By: PNC BANK, Trustee
By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Vice President
Address:
Phone:
-38-
HEALTHCARE CAPITAL PARTNERS, L.P.
By: /s/ Xxxxxx X. Xxxxxxxx
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HEALTHCARE EXECUTIVE PARTNERS, L.P.
By: /s/ Xxxxxx X. Xxxxxxxx
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XXXXX PARTNERS INTERNATIONAL III, L.P.
By: /s/ Xxxxx X. Xxxxxx
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XXXXX PARTNERS III, L.P.
By: /s/ Xxxxx X. Xxxxxx
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XXXXX EMPLOYEE FUND III, L.P.
By: /s/ Xxxxx X. Xxxxxx
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
-39-
EXHIBIT A-1
CERTIFICATE OF INCORPORATION
OF
MQ ACQUISITION CORPORATION
1. Name. The name of the Corporation is MQ Acquisition Corporation.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Delaware is 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, in the County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware and to possess and exercise all of the
powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the
Corporation shall have authority to issue is 1,000 shares, all of which are of
one class and are designated as Common Stock and each of which has a par value
of $0.01.
5. Incorporator. The name and mailing address of the incorporator are
Xxxxxx Berenknopf, 4000 Xxxx Atlantic Tower, 0000 Xxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000-0000.
6. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
7. Elections of Directors. Elections of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
8. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
9. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this Section 9 shall be
prospective only, and shall not affect, to the detriment of any director, any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Dated: January 12, 1998
/s/ Xxxxxx Berenknopf
-------------------------------
Xxxxxx Berenknopf, Incorporator
2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MQ ACQUISITION CORPORATION
MQ Acquisition Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company"), does hereby certify:
(i) the name of the Corporation is MQ Acquisition Corporation.
(ii) The Certificate of Incorporation of the Company hereby is amended by
striking out Article 4 thereof and by substituting in lieu thereof the following
new Article 4:
4. Authorized Capital. The aggregate number of shares of stock which
the Corporation shall have authority to issue is 70,000,000 shares, divided
into two (2) classes consisting of 40,000,000 shares of Preferred Stock,
par value $0.01 per share ("Preferred Stock"); and 30,000,000 shares of
Common Stock, par value $0.01 per share ("Common Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative
rights granted to or imposed upon the shares of each such class:
a. Issue in Series. Preferred Stock may be issued from time to time
in one or more series, each such series to have the terms stated
herein and in the resolution of the Board of Directors of the
Corporation providing for its issue. All shares of any one series
of Preferred Stock will be identical, but shares of different
series of Preferred Stock need not be identical or rank equally
except insofar as provided by law or herein.
b. Creation of Series. The Board of Directors will have authority by
resolution to cause to be created one or more series of Preferred
Stock, and to determine and fix with respect to each series prior
to the issuance of any shares of the series to which such
resolution relates:
(i) The distinctive designation of the series and the number of
shares which will constitute the series, which number may be
increased or decreased (but not below the number of shares
then outstanding) from time to time by action of the Board
of Directors;
(ii) The dividend rate and the times of payment of dividends on
the shares of the series, whether dividends will be
cumulative, and if so, from what date or dates;
(iii) The price or prices at which, and the terms and conditions
on which, the shares of the series may be redeemed at the
option of the Corporation;
(iv) Whether or not the shares of the series will be entitled to
the benefit of a retirement or sinking fund to be applied to
the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and
provisions relative to the operation thereof;
(v) Whether or not the shares of the series will be convertible
into, or exchangeable for, any other shares of stock of the
Corporation or other securities, and if so convertible or
exchangeable, the conversion price or prices, or the rates
of exchange, and any adjustments thereof, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(vi) The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
(vii) Whether or not the shares of the series will have priority
over or be on a parity with or be junior to the shares of
any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of
shares of any other series or class having priority over or
being on a parity with the shares of such series in any
respect, or restricting the payment of dividends on or the
making of other distributions in respect of shares of any
other series or class ranking junior to the shares of the
series as to dividends or assets, or restricting the
purchase or redemption of the shares of any such junior
series or class, and the terms of any such restriction;
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(viii) Whether the series will have voting rights, in addition to
any voting rights provided by law, and, if so, the terms of
such voting rights; and
(ix) Any other preferences, qualifications, privileges, options
and other relative or special rights and limitations of that
series.
c. Dividends. Holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of
funds legally available for the payment thereof, dividends at the
rates fixed by the Board of Directors for the respective series,
and no more, before any dividends shall be declared and paid, or
set apart for payment, on Common Stock with respect to the same
dividend period.
d. Preference on Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, holders of each series of Preferred Stock will be
entitled to receive the amount fixed for such series plus, in the
case of any series on which dividends will have been determined
by the Board of Directors to be cumulative, an amount equal to
all dividends accumulated and unpaid thereon to the date of final
distribution whether or not earned or declared before any
distribution shall be paid, or set aside for payment, to holders
of Common Stock. If the assets of the Corporation are not
sufficient to pay such amounts in full, holders of all shares of
Preferred Stock will participate in the distribution of assets
ratably in proportion to the full amounts to which they are
entitled or in such order or priority, if any, as will have been
fixed in the resolution or resolutions providing for the issue of
the series of Preferred Stock. Neither the merger nor
consolidation of the Corporation into or with any other
corporation, nor a sale, transfer or lease of all or part of its
assets, will be deemed a liquidation, dissolution or winding up
of the corporation within the meaning of this paragraph except to
the extent specifically provided for herein.
e. Redemption. The Corporation, at the option of the Board of
Directors, may redeem all or part of the shares of any series of
Preferred Stock on the terms and conditions fixed for such
series.
f. Voting Rights. Except as otherwise required by law, as otherwise
provided herein or as otherwise determined by the Board of
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Directors as to the shares of any series of Preferred Stock prior
to the issuance of any such shares, the holders of Preferred
Stock shall have no voting rights and shall not be entitled to
any notice of meeting of stockholders.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment as of this 27th day of May, 1998.
MQ Acquisition Corporation
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx, President
4
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS FOR
SERIES A 13.0% CUMULATIVE COMPOUNDING PREFERRED STOCK
OF
MQ Acquisition Corporation
MQ Acquisition Corporation, a Delaware corporation (hereinafter called the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that, pursuant to Article 4 of the Certificate of Incorporation
(which authorizes the creation and issuance of shares of Preferred Stock on such
terms as are determined by the Board of Directors), the Board of Directors
hereby fixes the designations and preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the following series of Preferred Stock:
A. Series A Preferred Stock.
1. Designation of Series. The designation of the series of Preferred
Stock authorized by this resolution shall be "Series A 13.0% Cumulative
Compounding Preferred Stock" ("Series A Preferred Stock") consisting of
10,000,000 shares. The par value of Series A Preferred Stock shall be $.01 per
share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series A Preferred Stock shall
rank (a) senior to the Common Stock of the Corporation, par value $.01 per share
("Common Stock"), the Series B Preferred Stock (defined in paragraph B below),
the Series C Preferred Stock (defined in paragraph B below), and each other
class of capital stock or class or series of preferred stock issued by the
Corporation after the date hereof the terms of which specifically provide that
such class or series shall rank junior to the Series A Preferred Stock as to
dividend distributions or distributions upon the liquidation, winding up and
dissolution of the Corporation (collectively referred to as "Series A Junior
Securities"), (b) on a parity with each other class of capital stock or class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which do not specifically provide that they rank junior to Series A
Preferred Stock or senior to Series A Preferred Stock as to dividend
distributions or distributions upon liquidation, winding up and dissolution of
the Corporation (collectively referred to as " Series A Parity Securities"), and
(c) junior to each other class of capital stock or other class or series of
preferred stock issued by the Corporation that by its terms is senior to the
Series A Preferred Stock with respect to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series A Senior Securities").
3. Dividends.
(a) Each Holder of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cash dividends on each share of Series A Preferred
Stock at a rate equal to $1.30 per share per annum. All dividends shall be
cumulative, whether or not earned or declared, and shall accrue on a daily basis
from the date of issuance of Series A Preferred Stock, and shall be payable
semi-annually in arrears on each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of such Series A Preferred
Stock. Each dividend on Series A Preferred Stock shall be payable to the Holders
of record of Series A Preferred Stock as they appear on the stock register of
the Corporation on such record date as may be fixed by the Board of Directors,
which record date shall not be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to accrue in respect of
shares of Series A Preferred Stock on the date of their repurchase by the
Corporation unless the Corporation shall have failed to pay the relevant
repurchase price on the date fixed for repurchase. Notwithstanding anything to
the contrary set forth above, unless and until such dividends are declared by
the Board of Directors, there shall be no obligation to pay such dividends;
provided, that such dividends shall continue to cumulate and shall be added to
the Liquidation Preference (as provided in Paragraph A4(a) below) at the time of
repurchase as provided herein if not earlier declared and paid. Accrued
dividends on the Series A Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall thereafter accrue
additional dividends ("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.0% per annum.
(b) All dividends paid with respect to shares of Series A Preferred
Stock pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders
entitled thereto.
(c) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption pursuant to paragraph
A(5)(a) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the Holders of record on any date as may be fixed by
the Board of Directors, which date is not more than 60 days prior to the payment
of such dividends.
(d) As long as any Series A Preferred Stock is outstanding, no
dividends shall be declared by the Board of Directors or paid or funds set apart
for the payment of dividends or other distributions on any Series A Parity
Securities for any period, and no Series A Parity Securities may be repurchased,
redeemed or otherwise acquired, nor may funds be set apart for such payment
(other than dividends, other distributions, redemptions, repurchases or
acquisitions payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities in connection therewith),
unless (i) full Accumulated Dividends have been paid or set apart for such
payment on the Series A Preferred Stock and Series A Parity Securities for all
Dividend Periods terminating on or prior to the date of payment of such
dividends or distributions on, or such repurchase or redemption of, such Series
A Parity Securities (the "Series A Parity Payment Date") and (ii) any such
dividends are declared and paid pro rata so
2
that the amounts of any dividends declared and paid per share on outstanding
Series A Preferred Stock and each other share of Series A Parity Securities will
in all cases bear to each other the same ratio that accrued and unpaid dividends
(including any Accumulated Dividends) per share of outstanding Series A
Preferred Stock and such other outstanding shares of Series A Parity Securities
bear to each other.
(e) The Holders shall be entitled to receive the dividends provided
for in paragraph A(3)(a) hereof in preference to and in priority over any
dividends upon any of the Series A Junior Securities. Such dividends on the
Series A Preferred Stock shall be cumulative, whether or not earned or declared,
so that if at any time full Accumulated Dividends on all shares of Series A
Preferred Stock then outstanding for all Dividend Periods then elapsed have not
been paid or set aside for payment, the amount of such unpaid dividends shall be
paid before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any shares of Series A
Junior Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared or
set apart for payment on any Series A Junior Securities (the date of any such
actions to be referred to as the "Series A Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series A Junior Securities from a holder thereof who is,
or was, a director or employee of the Corporation (or an affiliate of the
Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series A
Junior Securities payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities in connection therewith.
(f) Dividends payable on Series A Preferred Stock for any period less
than one year shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and the actual number of days elapsed in the period for
which such dividends are payable.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to $10.00 per share, plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and unpaid thereon, including
Additional Dividends, to the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is made on any Series A Junior
Securities. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all amounts available for
payments with respect to Series A Preferred Stock and all other Series A Parity
Securities would not result in payment in full of Series A Preferred Stock and
such other Series A Parity Securities, the Holders and holders of Series A
Parity Securities shall share equally and ratably in any distribution of assets
of the Corporation in proportion to the full liquidation preference to which
each is entitled. After payment in full pursuant to this paragraph A(4)(a), the
Holders shall not be entitled to any further participation in any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
3
(b) For the purposes of this paragraph A(4), neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation, merger or other business combination of
the Corporation with one or more corporations (whether or not the Corporation is
the surviving corporation) shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
5. Redemption.
(a) Optional Redemption.
(i) The Corporation may, at its option, redeem at any time or from
time to time, from any source of funds legally available therefor, in whole or
in part, in the manner provided in paragraph A(5)(c) hereof, any or all of the
shares of Series A Preferred Stock, at a redemption prices set forth below, plus
an amount equal to full cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Additional Dividends, to the Redemption
Date (as defined in paragraph B). The redemption price for redemptions pursuant
to this paragraph 5(a) are as follows:
Redemption Price
Redemption Date Per Share
--------------- ----------------
on or before December 31, 1999 $11.00
on or after January 1, 2000 $10.50
but before January 1, 2002
on or after January 1, 2002 $10.00
(ii) No partial redemption of Series A Preferred Stock pursuant to
paragraph A(5)(a) hereof may be authorized or made unless prior thereto, full
accrued and unpaid dividends thereon for all Dividend Periods terminating on or
prior to the Redemption Date and an amount equal to a prorated dividend thereon
for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date have been or immediately prior to the
Redemption Notice are declared and paid in cash or are declared and there has
been a sum set apart sufficient for such cash payment on the Redemption Date.
(iii) In the event of a redemption pursuant to paragraph A(5)(a)
hereof of only a portion of the then outstanding shares of Series A Preferred
Stock, the Corporation shall effect such redemption pro rata according to the
number of shares held by each Holder of Series A Preferred Stock.
(b) Mandatory Redemption. All outstanding shares of the Series A
Preferred Stock shall be redeemed from funds legally available therefor on
December 31, 2011
4
(the "Mandatory Redemption Date"), at a price per share equal to the Liquidation
Preference on such Mandatory Redemption Date.
(c) Procedures for Redemption.
(i) At least 30 days and not more than 60 days prior to the date
fixed for any redemption of Series A Preferred Stock, written notice (the
"Redemption Notice") shall be given by first class mail, postage prepaid, to
each Holder of record of Series A Preferred Stock on the record date fixed for
such redemption of Series A Preferred Stock at such Holder's address as set
forth on the stock register of the Corporation on such record date; provided
that no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of Series A Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective. In addition to any information required by law or by the
applicable rules of any exchange upon which shares of Series A Preferred Stock
may be listed or admitted to trading, the Redemption Notice shall state:
(A) the redemption price;
(B) whether all or less than all of the outstanding shares of
Series A Preferred Stock redeemable thereunder are to be redeemed and the
aggregate number of shares of Series A Preferred Stock being redeemed;
(C) the number of shares of Series A Preferred Stock held, as of
the appropriate record date, by the Holder that the Corporation intends to
redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Corporation, at the
place or places where certificates for shares of Series A Preferred Stock are to
be surrendered for redemption, in the manner and at the price designated, his,
her or its certificate or certificates representing the shares of Series A
Preferred Stock to be redeemed; and
(F) that dividends on the shares of Series A Preferred Stock to
be redeemed shall cease to accumulate on such Redemption Date unless the
Corporation defaults in the payment of the redemption price.
(ii) Each Holder shall surrender the certificate or certificates
representing such shares of Series A Preferred Stock being so redeemed to the
Corporation, duly endorsed, in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full redemption price for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
5
(iii) If a Redemption Notice has been mailed in accordance with
paragraph A(5)(c) above, unless the Corporation defaults in the payment in full
of the redemption price, then, notwithstanding that the certificates evidencing
any shares of Series A Preferred Stock so called for redemption shall not have
been surrendered, (x) on the Redemption Date, the shares represented thereby so
called for redemption shall be deemed no longer outstanding and shall have the
status of authorized but unissued shares of Preferred Stock, undesignated as to
series, (y) dividends with respect to the shares so called for redemption shall
cease to accrue after the Redemption Date and (z) all rights with respect to the
shares so called for redemption or subject to conversion shall forthwith after
such date cease and terminate, except for the right of the holders to receive
the funds, if any, payable pursuant to this paragraph 5 without interest upon
surrender of their certificates therefor.
(d) Deposit of Funds. The Corporation's obligation to deliver funds in
accordance with this paragraph (5) shall be deemed fulfilled if, on or before a
Redemption Date, the Corporation shall deposit, with a bank or trust
Corporation, or an affiliate of a bank or trust Corporation such funds as are
required to be delivered by the Corporation pursuant to this paragraph (5) upon
the occurrence of the related redemption consideration sufficient to pay all
accrued and unpaid dividends on the shares to be redeemed, in trust for the
account of the Holders of the shares to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and authority
to such bank or trust Corporation that such shares and funds be delivered upon
redemption of the shares of Series A Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time to
time. Upon surrender of the certificates pursuant to paragraph A(5)(c)(ii), each
Holder shall thereupon be entitled to any funds payable pursuant to this
paragraph 5 following such surrender and following the date of such redemption.
6. Voting Rights.
(a) The Holders shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the shareholders of the Corporation,
except as otherwise required by Delaware law or this Certificate of Designation
except that, without the written consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock or the vote of the holders of a
majority of the outstanding shares of Series A Preferred Stock at a meeting of
the holders of Series A Preferred Stock called for such purpose, the Corporation
shall not (a) create, authorize or issue any other class or series of stock
entitled to a preference prior to Series A Preferred Stock upon any dividend or
distribution or any liquidation, distribution of assets, dissolution or winding
up of the Corporation, or (b) amend, alter or repeal any provision of the
Corporation's Certificate of Incorporation so as to materially adversely affect
the relative rights and preferences of the Series A Preferred Stock.
(b) Without limiting the generality of the foregoing, in no event shall
the Holders be entitled to vote (individually or as a class) on any merger or
consolidation involving the Corporation, any sale of all or substantially all of
the assets of the Corporation or any similar transaction.
6
(c) In any case in which the Holders shall be entitled to vote pursuant
to paragraph A(6)(a) above, each Holder shall be entitled to one vote for each
share of Series A Preferred Stock held unless otherwise required by applicable
law.
7. Conversion or Exchange. The Holders shall not have any rights hereunder
to convert such shares into or exchange such shares for shares of any other
class or classes or of any other series of any class or classes of Capital Stock
of the Corporation.
8. Reissuance of Series A Preferred Stock. Shares of Series A Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series A Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
9. Business Day. If any payment shall be required by the terms hereof to be
made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
10. No Preemptive Rights. No Holder will possess any preemptive rights to
subscribe for or acquire any unissued shares of Capital Stock of the Corporation
(whether now or hereafter authorized) or securities of the Corporation
convertible into or carrying a right to subscribe to or acquire shares of
Capital Stock of the Corporation.
11. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series A Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
B. Definitions. As used in this Resolution, the following terms shall have
the following meanings (with terms defined in the singular having comparable
meanings when used in the plural and vice versa), unless the context otherwise
requires:
"Accumulated Dividends" means (i) with respect to any share of Series A
Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series A Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
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"Additional Dividends" has the meaning given to such term in paragraph
A(3)(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in paragraph A(2)
"Dividend Payment Date" means June 30th and December 31st of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter, each
Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series A Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in paragraph
A(4)(a).
"Mandatory Redemption Date" has the meaning given to such term in paragraph
A(5)(b).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock Corporation, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred Stock, means the
date on which such shares of Preferred Stock are redeemed by the Corporation
pursuant to paragraph A(5).
"Redemption Notice" has the meaning given to such term in paragraph
A(5)(c).
8
"Series A Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series A Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series A Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series A Parity Securities" has the meaning given to such term in
paragraph A(2).
"Semi-Annual Dividend Period" means the annual period commencing on each
January 1st and July 1st and ending on each Dividend Payment Date, respectively.
"Series A Preferred Stock" has the meaning given to such term in paragraph
A(1).
"Series A Senior Securities" has the meaning given to such term in
paragraph A(2).
"Series B Preferred Stock" means the Series B 13.25% Cumulative Compounding
Perpetual Preferred Stock of the Corporation.
"Series C Preferred Stock" means the Series C 13.5% Cumulative Compounding
Preferred Stock of the Corporation.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed
this Certificate of Designation as of the 27th day of May, 1998.
MQ ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx, President
9
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS FOR
SERIES B 13.25% CUMULATIVE COMPOUNDING PERPETUAL PREFERRED STOCK
OF
MQ Acquisition Corporation
MQ Acquisition Corporation, a Delaware corporation (hereinafter called the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that, pursuant to Article 4 of the Certificate of Incorporation
(which authorizes the creation and issuance of shares of Preferred Stock on such
terms as are determined by the Board of Directors), the Board of Directors
hereby fixes the designations and preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the following series of Preferred Stock:
A. Series B Preferred Stock.
1. Designation of Series. The designation of the series of Preferred
Stock authorized by this resolution shall be "Series B 13.25% Cumulative
Compounding Perpetual Preferred Stock" ("Series B Preferred Stock") consisting
of 5,000,000 shares. The par value of Series B Preferred Stock shall be $.01 per
share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series B Preferred Stock shall
rank (a) senior to the Common Stock of the Corporation, par value $.01 per share
("Common Stock"), the Series C Preferred Stock (defined in paragraph B below),
and each other class of capital stock or class or series of preferred stock
issued by the Corporation after the date hereof the terms of which specifically
provide that such class or series shall rank junior to the Series B Preferred
Stock as to dividend distributions or distributions upon the liquidation,
winding up and dissolution of the Corporation (collectively referred to as
"Series B Junior Securities"), (b) on a parity with each other class of capital
stock or class or series of preferred stock issued by the Corporation after the
date hereof the terms of which specifically provide that such class or series
shall rank neither senior nor junior to the Series B Preferred Stock as to
dividend distributions or distributions upon liquidation, winding up and
dissolution of the Corporation (collectively referred to as " Series B Parity
Securities"), and (c) junior to (i) the Series A Preferred Stock, (ii) each
other class of capital stock or other class or series of preferred stock issued
by the Corporation that by its terms is senior to the Series B Preferred Stock
with respect to dividend distributions or distributions upon the liquidation,
winding up and dissolution of the Corporation and (iii) each other class of
capital stock or class or series of preferred stock issued by the Corporation
after the date hereof
the terms of which do not specifically provide that they rank junior to Series B
Preferred Stock or senior to Series B Preferred Stock as to dividend
distributions or distributions upon liquidation, winding up and dissolution of
the Corporation (collectively referred to as "Series B Senior Securities").
3. Dividends.
(a) Each Holder of Series B Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cash dividends on each share of Series B Preferred
Stock at a rate equal to $1.325 per share per annum. All dividends shall be
cumulative, whether or not earned or declared, and shall accrue on a daily basis
from the date of issuance of Series B Preferred Stock, and shall be payable
semi-annually in arrears on each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of such Series B Preferred
Stock. Each dividend on Series B Preferred Stock shall be payable to the Holders
of record of Series B Preferred Stock as they appear on the stock register of
the Corporation on such record date as may be fixed by the Board of Directors,
which record date shall not be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to accrue in respect of
shares of Series B Preferred Stock on the date of their repurchase by the
Corporation unless the Corporation shall have failed to pay the relevant
repurchase price on the date fixed for repurchase. Notwithstanding anything to
the contrary set forth above, unless and until such dividends are declared by
the Board of Directors, there shall be no obligation to pay such dividends;
provided, that such dividends shall continue to cumulate and shall be added to
the Liquidation Preference (as provided in paragraph A4(a) below) at the time of
repurchase as provided herein if not earlier declared and paid. Accrued
dividends on the Series B Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall thereafter accrue
additional dividends ("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.25% per annum.
(b) All dividends paid with respect to shares of Series B Preferred
Stock pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders
entitled thereto.
(c) Dividends on account of arrears for any past Dividend Period may
be declared and paid at any time, without reference to any regular Dividend
Payment Date, to the Holders of record on any date as may be fixed by the Board
of Directors, which date is not more than 60 days prior to the payment of such
dividends.
(d) As long as any Series B Preferred Stock is outstanding, no
dividends shall be declared by the Board of Directors or paid or funds set apart
for the payment of dividends or other distributions on any Series B Parity
Securities for any period, and no Series B Parity Securities may be repurchased,
redeemed or otherwise acquired, nor may funds be set apart for such payment
(other than dividends, other distributions, redemptions, repurchases or
acquisitions payable in Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities in connection therewith),
unless (i) full Accumulated Dividends have been paid or set apart for such
payment on the Series B Preferred Stock and Series B Parity Securities for all
Dividend Periods terminating on or prior to the date of payment of such
- 2 -
dividends or distributions on, or such repurchase or redemption of, such Series
B Parity Securities (the "Series B Parity Payment Date") and (ii) any such
dividends are declared and paid pro rata so that the amounts of any dividends
declared and paid per share on outstanding Series B Preferred Stock and each
other share of Series B Parity Securities will in all cases bear to each other
the same ratio that accrued and unpaid dividends (including any Accumulated
Dividends) per share of outstanding Series B Preferred Stock and such other
outstanding shares of Series B Parity Securities bear to each other.
(e) The Holders shall be entitled to receive the dividends provided
for in paragraph A(3)(a) hereof in preference to and in priority over any
dividends upon any of the Series B Junior Securities. Such dividends on the
Series B Preferred Stock shall be cumulative, whether or not earned or declared,
so that if at any time full Accumulated Dividends on all shares of Series B
Preferred Stock then outstanding for all Dividend Periods then elapsed have not
been paid or set aside for payment, the amount of such unpaid dividends shall be
paid before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any shares of Series B
Junior Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared or
set apart for payment on any Series B Junior Securities (the date of any such
actions to be referred to as the "Series B Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series B Junior Securities from a holder thereof who is,
or was, a director or employee of the Corporation (or an affiliate of the
Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series B
Junior Securities payable in Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities in connection therewith.
(f) Dividends payable on Series B Preferred Stock for any period less
than one year shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and the actual number of days elapsed in the period for
which such dividends are payable.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all 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 $10.00 per share, plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and unpaid thereon, including
Additional Dividends, to the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is made on any Series B Junior
Securities. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all amounts available for
payments with respect to Series B Preferred Stock and all other Series B Parity
Securities would not result in payment in full of Series B Preferred Stock and
such other Series B Parity Securities, the Holders and holders of Series B
Parity Securities shall share equally and ratably in any distribution of assets
of the Corporation in proportion to the full liquidation preference to which
each is entitled. After payment in full pursuant to this paragraph A(4)(a), the
- 3 -
Holders shall not be entitled to any further participation in any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of this paragraph A(4), neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation, merger or other business combination of
the Corporation with one or more corporations (whether or not the Corporation is
the surviving corporation) shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
5. Redemption. The Company shall not have the right nor the power to,
and the Holders shall not have the right to require the Company to, redeem any
shares of Series B Preferred Stock. Notwithstanding the foregoing, this
Paragraph A(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series B Preferred Stock held
by such Holder.
6. Voting Rights.
(a) The Holders shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the shareholders of the
Corporation, except as otherwise required by Delaware law or this Certificate of
Designation except that, without the written consent of the holders of a
majority of the outstanding shares of Series B Preferred Stock or the vote of
the holders of a majority of the outstanding shares of Series B Preferred Stock
at a meeting of the holders of Series B Preferred Stock called for such purpose,
the Corporation shall not (a) create, authorize or issue any other class or
series of stock entitled to a preference prior to Series B Preferred Stock upon
any dividend or distribution or any liquidation, distribution of assets,
dissolution or winding up of the Corporation, or (b) amend, alter or repeal any
provision of the Corporation's Certificate of Incorporation so as to materially
adversely affect the relative rights and preferences of the Series B Preferred
Stock.
(b) Without limiting the generality of the foregoing, in no event
shall the Holders be entitled to vote (individually or as a class) on any merger
or consolidation involving the Corporation, any sale of all or substantially all
of the assets of the Corporation or any similar transaction.
(c) In any case in which the Holders shall be entitled to vote
pursuant to paragraph A(6)(a) above, each Holder shall be entitled to one vote
for each share of Series B Preferred Stock held unless otherwise required by
applicable law.
7. Conversion or Exchange. The Holders shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
8. Reissuance of Series B Preferred Stock. Shares of Series B Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of
- 4 -
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors or as part
of any other series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in any resolution or resolutions adopted by
the Board of Directors providing for the issuance of any series of Preferred
Stock; except that the Corporation may reissue shares of Series B Preferred
Stock which are reacquired by the Corporation from a Holder who is, or was, an
employee or director of the Corporation (or its affiliates).
9. Business Day. If any payment shall be required by the terms hereof to
be made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
10. No Preemptive Rights. No Holder will possess any preemptive rights
to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
11. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series B Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
B. Definitions. As used in this Resolution, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of Series B
Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series B Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Additional Dividends" has the meaning given to such term in paragraph
A(3)(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
- 5 -
"Common Stock" shall have the meaning given to such term in paragraph
A(2)
"Dividend Payment Date" means June 30th and December 31st of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series B Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in paragraph
4(a).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock Corporation, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Semi-Annual Dividend Period" means the annual period commencing on each
January 1st and July 1st and ending on each Dividend Payment Date, respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative
Compounding Preferred Stock of the Corporation.
"Series B Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series B Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series B Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series B Parity Securities" has the meaning given to such term in
paragraph A(2).
"Series B Preferred Stock" has the meaning given to such term in
paragraph A(1).
- 6 -
"Series B Senior Securities" has the meaning given to such term in
paragraph A(2).
"Series C Preferred Stock" means the Series C 13.5% Cumulative
Compounding Preferred Stock of the Corporation.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have
executed this Certificate of Designation as of the 27th day of May, 1998.
MQ ACQUISITION CORPORATION
By: \s\ Xxxxx X. Xxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxx, President
- 7 -
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS FOR
SERIES C 13.5% CUMULATIVE COMPOUNDING PREFERRED STOCK
OF
MQ Acquisition Corporation
MQ Acquisition Corporation, a Delaware corporation (hereinafter called the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that, pursuant to Article 4 of the Certificate of Incorporation
(which authorizes the creation and issuance of shares of Preferred Stock on such
terms as are determined by the Board of Directors), the Board of Directors
hereby fixes the designations and preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the following series of Preferred Stock:
A. Series C Preferred Stock.
1. Designation of Series. The designation of the series of Preferred Stock
authorized by this resolution shall be "Series C 13.5% Cumulative Compounding
Preferred Stock" ("Series C Preferred Stock") consisting of 5,000,000 shares.
The par value of Series C Preferred Stock shall be $.01 per share.
2. Rank. With respect to dividend rights and rights on liquidation, winding
up and dissolution of the Corporation, Series C Preferred Stock shall rank (a)
senior to the Common Stock of the Corporation, par value $.01 per share ("Common
Stock"), and each other class of capital stock or class or series of preferred
stock issued by the Corporation after the date hereof the terms of which
specifically provide that such class or series shall rank junior to the Series C
Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up and dissolution of the Corporation (collectively
referred to as "Series C Junior Securities"), (b) on a parity with each other
class of capital stock or class or series of preferred stock issued by the
Corporation after the date hereof the terms of which specifically provide that
such class or series shall rank neither senior nor junior to the Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series C Parity Securities"), and (c) junior to (i) the Series A Preferred Stock
(defined in Paragraph B), (ii) the Series B Preferred Stock (defined in
Paragraph B), (iii) each other class of capital stock or other class or series
of preferred stock issued by the Corporation that by its terms is senior to the
Series C Preferred Stock with respect to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation and (iv)
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which do not specifically
provide that they rank junior to Series C Preferred Stock or senior to Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as
"Series C Senior Securities").
3. Dividends.
(a) Each Holder of Series C Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors, out of funds legally
available therefor, cash dividends on each share of Series C Preferred Stock at
a rate equal to $1.35 per share per annum. All dividends shall be cumulative,
whether or not earned or declared, and shall accrue on a daily basis from the
date of issuance of Series C Preferred Stock, and shall be payable semi-annually
in arrears on each Dividend Payment Date, commencing on the second Dividend
Payment Date after the date of issuance of such Series C Preferred Stock. Each
dividend on Series C Preferred Stock shall be payable to the Holders of record
of Series C Preferred Stock as they appear on the stock register of the
Corporation on such record date as may be fixed by the Board of Directors, which
record date shall not be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to accrue in respect of
shares of Series C Preferred Stock on the date of their repurchase by the
Corporation unless the Corporation shall have failed to pay the relevant
repurchase price on the date fixed for repurchase. Notwithstanding anything to
the contrary set forth above, unless and until such dividends are declared by
the Board of Directors, there shall be no obligation to pay such dividends;
provided, that such dividends shall continue to cumulate and shall be added to
the Liquidation Preference (as provided in paragraph A4(a) below) at the time of
repurchase as provided herein if not earlier declared and paid. Accrued
dividends on the Series C Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall thereafter accrue
additional dividends ("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.5% per annum.
(b) All dividends paid with respect to shares of Series C Preferred Stock
pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders entitled
thereto.
(c) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption pursuant to paragraph
A(5)(a) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the Holders of record on any date as may be fixed by
the Board of Directors, which date is not more than 60 days prior to the payment
of such dividends.
(d) As long as any Series C Preferred Stock is outstanding, no dividends
shall be declared by the Board of Directors or paid or funds set apart for the
payment of dividends or other distributions on any Series C Parity Securities
for any period, and no Series C Parity Securities may be repurchased, redeemed
or otherwise acquired, nor may funds be set apart for such payment (other than
dividends, other distributions, redemptions, repurchases or acquisitions payable
in Series C Junior Securities and cash in lieu of fractional shares of such
Series C Junior Securities in connection therewith), unless (i) full Accumulated
Dividends have been paid or set apart for such payment on the Series C Preferred
2
Stock and Series C Parity Securities for all Dividend Periods terminating on or
prior to the date of payment of such dividends or distributions on, or such
repurchase or redemption of, such Series C Parity Securities (the "Series C
Parity Payment Date") and (ii) any such dividends are declared and paid pro rata
so that the amounts of any dividends declared and paid per share on outstanding
Series C Preferred Stock and each other share of Series C Parity Securities will
in all cases bear to each other the same ratio that accrued and unpaid dividends
(including any Accumulated Dividends) per share of outstanding Series C
Preferred Stock and such other outstanding shares of Series C Parity Securities
bear to each other.
(e) The Holders shall be entitled to receive the dividends provided for in
paragraph A(3)(a) hereof in preference to and in priority over any dividends
upon any of the Series C Junior Securities. Such dividends on the Series C
Preferred Stock shall be cumulative, whether or not earned or declared, so that
if at any time full Accumulated Dividends on all shares of Series C Preferred
Stock then outstanding for all Dividend Periods then elapsed have not been paid
or set aside for payment, the amount of such unpaid dividends shall be paid
before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any shares of Series C
Junior Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared or
set apart for payment on any Series C Junior Securities (the date of any such
actions to be referred to as the "Series C Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series C Junior Securities from a holder thereof who is,
or was, a director or employee of the Corporation (or an affiliate of the
Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series C
Junior Securities payable in Series C Junior Securities and cash in lieu of
fractional shares of such Series C Junior Securities in connection therewith.
(f) Dividends payable on Series C Preferred Stock for any period less than
one year shall be computed on the basis of a 360-day year consisting of twelve
30-day months and the actual number of days elapsed in the period for which such
dividends are payable.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the Holders of all 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 $10.00 per share, plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and unpaid thereon, including
Additional Dividends, to the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is made on any Series C Junior
Securities. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all amounts available for
payments with respect to Series C Preferred Stock and all other Series C Parity
Securities would not result in payment in full of Series C Preferred Stock and
such other Series C Parity Securities, the Holders and holders of Series C
Parity Securities shall share equally and ratably in any distribution of assets
3
of the Corporation in proportion to the full liquidation preference to which
each is entitled. After payment in full pursuant to this paragraph A(4)(a), the
Holders shall not be entitled to any further participation in any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of this paragraph A(4), neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with one or more corporations (whether or not the Corporation is the
surviving corporation) shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
5. Redemption.
(a) Optional Redemption.
(i) The Corporation may, at its option, redeem at any time or
from time to time, from any source of funds legally available
therefor, in whole or in part, in the manner provided in paragraph
A(5)(c) hereof, any or all of the shares of Series C Preferred Stock,
at a redemption price of $10.00 per share, plus an amount equal to
full cumulative dividends (whether or not earned or declared) accrued
and unpaid thereon, including Additional Dividends, to the Redemption
Date (as defined in paragraph B).
(ii) No partial redemption of Series C Preferred Stock pursuant
to paragraph A(5)(a) hereof may be authorized or made unless prior
thereto, full accrued and unpaid dividends thereon for all Dividend
Periods terminating on or prior to the Redemption Date and an amount
equal to a prorated dividend thereon for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the
Redemption Date have been or immediately prior to the Redemption
Notice are declared and paid in cash or are declared and there has
been a sum set apart sufficient for such cash payment on the
Redemption Date.
(iii) In the event of a redemption pursuant to paragraph A(5)(a)
hereof of only a portion of the then outstanding shares of Series C
Preferred Stock, the Corporation shall effect such redemption pro rata
according to the number of shares held by each Holder of Series C
Preferred Stock.
(b) Mandatory Redemption. All outstanding shares of the Series C Preferred
Stock shall be redeemed from funds legally available therefor on December 31,
2012 (the "Mandatory Redemption Date"), at a price per share equal to the
Liquidation Preference on such Mandatory Redemption Date.
(c) Procedures for Redemption.
(i) At least 30 days and not more than 60 days prior to the date
fixed for any redemption of Series C Preferred Stock, written notice
(the "Redemption Notice") shall be given by first class mail, postage
prepaid, to each Holder of record of Series C Preferred Stock on the
record date fixed for such redemption of Series C Preferred Stock at
4
such Holder's address as set forth on the stock register of the
Corporation on such record date; provided that no failure to give such
notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Series C Preferred Stock
to be redeemed except as to the Holder or Holders to whom the
Corporation has failed to give said notice or except as to the Holder
or Holders whose notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which
shares of Series C Preferred Stock may be listed or admitted to
trading, the Redemption Notice shall state:
(A) the redemption price;
(B) whether all or less than all of the outstanding shares
of Series C Preferred Stock redeemable thereunder are to be
redeemed and the aggregate number of shares of Series C Preferred
Stock being redeemed;
(C) the number of shares of Series C Preferred Stock held,
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Corporation, at
the place or places where certificates for shares of Series C
Preferred Stock are to be surrendered for redemption, in the
manner and at the price designated, his, her or its certificate
or certificates representing the shares of Series C Preferred
Stock to be redeemed; and
(F) that dividends on the shares of Series C Preferred Stock
to be redeemed shall cease to accumulate on such Redemption Date
unless the Corporation defaults in the payment of the redemption
price.
(ii) Each Holder shall surrender the certificate or certificates
representing such shares of Series C Preferred Stock being so redeemed to
the Corporation, duly endorsed, in the manner and at the place designated
in the Redemption Notice, and on the Redemption Date the full redemption
price for such shares shall be payable in cash to the Person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares.
(iii) If a Redemption Notice has been mailed in accordance with
paragraph A(5)(c) above, unless the Corporation defaults in the payment in
full of the redemption price, then, notwithstanding that the certificates
evidencing any shares of Series C Preferred Stock so called for redemption
shall not have been surrendered, (x) on the Redemption Date, the shares
represented thereby so called for redemption shall be deemed no longer
outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, undesignated as to series, (y) dividends with respect to
the shares so called for redemption shall cease to accrue after the
Redemption Date and (z) all rights with respect to the shares so called for
5
redemption or subject to conversion shall forthwith after such date cease
and terminate, except for the right of the holders to receive the funds, if
any, payable pursuant to this paragraph 5 without interest upon surrender
of their certificates therefor.
(d) Deposit of Funds. The Corporation's obligation to deliver funds in
accordance with this paragraph (5) shall be deemed fulfilled if, on or before a
Redemption Date, the Corporation shall deposit, with a bank or trust
Corporation, or an affiliate of a bank or trust Corporation such funds as are
required to be delivered by the Corporation pursuant to this paragraph (5) upon
the occurrence of the related redemption consideration sufficient to pay all
accrued and unpaid dividends on the shares to be redeemed, in trust for the
account of the Holders of the shares to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and authority
to such bank or trust Corporation that such shares and funds be delivered upon
redemption of the shares of Series C Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time to
time. Upon surrender of the certificates pursuant to paragraph A(5)(c)(ii), each
Holder shall thereupon be entitled to any funds payable pursuant to this
paragraph 5 following such surrender and following the date of such redemption.
6. Voting Rights.
(a) The Holders shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the shareholders of the Corporation,
except as otherwise required by Delaware law or this Certificate of Designation
except that, without the written consent of the holders of a majority of the
outstanding shares of Series C Preferred Stock or the vote of the holders of a
majority of the outstanding shares of Series C Preferred Stock at a meeting of
the holders of Series C Preferred Stock called for such purpose, the Corporation
shall not (a) create, authorize or issue any other class or series of stock
entitled to a preference prior to Series C Preferred Stock upon any dividend or
distribution or any liquidation, distribution of assets, dissolution or winding
up of the Corporation, or (b) amend, alter or repeal any provision of the
Corporation's Certificate of Incorporation so as to materially adversely affect
the relative rights and preferences of the Series C Preferred Stock.
(b) Without limiting the generality of the foregoing, in no event shall the
Holders be entitled to vote (individually or as a class) on any merger or
consolidation involving the Corporation, any sale of all or substantially all of
the assets of the Corporation or any similar transaction.
(c) In any case in which the Holders shall be entitled to vote pursuant to
paragraph A(6)(a) above, each Holder shall be entitled to one vote for each
share of Series C Preferred Stock held unless otherwise required by applicable
law.
7. Conversion or Exchange. The Holders shall not have any rights hereunder
to convert such shares into or exchange such shares for shares of any other
class or classes or of any other series of any class or classes of Capital Stock
of the Corporation.
6
8. Reissuance of Series C Preferred Stock. Shares of Series C Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series C Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
9. Business Day. If any payment shall be required by the terms hereof to be
made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
10. No Preemptive Rights. No Holder will possess any preemptive rights to
subscribe for or acquire any unissued shares of Capital Stock of the Corporation
(whether now or hereafter authorized) or securities of the Corporation
convertible into or carrying a right to subscribe to or acquire shares of
Capital Stock of the Corporation.
11. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series C Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
B. Definitions. As used in this Resolution, the following terms shall have
the following meanings (with terms defined in the singular having comparable
meanings when used in the plural and vice versa), unless the context otherwise
requires:
"Accumulated Dividends" means (i) with respect to any share of Series C
Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series C Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Additional Dividends" has the meaning given to such term in paragraph
A(3)(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
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"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in paragraph A(2)
"Dividend Payment Date" means June 30th and December 31st of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter, each
Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series C Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in paragraph
A(4)(a).
"Mandatory Redemption Date" has the meaning given to such term in paragraph
A(5)(b).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock Corporation, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred Stock, means the
date on which such shares of Preferred Stock are redeemed by the Corporation
pursuant to paragraph A(5).
"Redemption Notice" has the meaning given to such term in paragraph
A(5)(c).
"Semi-Annual Dividend Period" means the annual period commencing on each
January 1st and July 1st and ending on each Dividend Payment Date, respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative Compounding
Preferred Stock of the Corporation.
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"Series B Preferred Stock" means the Series B 13.25% Cumulative Compounding
Preferred Stock of the Corporation.
"Series C Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series C Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series C Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series C Parity Securities" has the meaning given to such term in
paragraph A(2).
"Series C Preferred Stock" has the meaning given to such term in paragraph
A(1).
"Series C Senior Securities" has the meaning given to such term in
paragraph A(2).
IN WITNESS WHEREOF, the undersigned officer of the Corporation had executed
this Certificate of Designation as of the 27th day of May, 1998.
MQ ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxx, President
9
EXHIBIT A-2
BYLAWS
OF
MQ ACQUISITION CORPORATION
ARTICLE I
STOCKHOLDERS
1.1 Meetings.
1.1.1 Place. Meetings of the stockholders shall be held at such place as
may be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the
election of directors and for other business shall be held on such date and at
such time as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be called
at any time by the president, or the board of directors, or the holders of a
majority of the outstanding shares of stock of the Company entitled to vote at
the meeting.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the
certificate of incorporation or by law, every stockholder shall have the right
at every meeting of stockholders to one vote for every share standing in the
name of such stockholder on the books of the Company which is entitled to vote
at such meeting. Every stockholder may vote either in person or by proxy.
ARTICLE II
DIRECTORS
2.1 Number and Term. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors shall be held at such place
as may be designated by the board or in the notice of the meeting.
2.2.2 Regular Meetings. Regular meetings of the board of directors shall be
held at such times as the board may designate. Notice of regular meetings need
not be given.
2.2.3 Special Meetings. Special meetings of the board may be called by
direction of the president or any two members of the board on three days' notice
to each director, either personally or by mail, telegram or facsimile
transmission.
2.2.4 Quorum. A majority of all the directors in office shall constitute a
quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate of
incorporation or by law, the vote of a majority of the directors present at any
meeting at which a quorum is present shall constitute the act of the board of
directors.
2.2.6 Committees. The board of directors may, by resolution adopted by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board. Unless otherwise provided herein, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
Except as otherwise provided herein, in the certificate of incorporation or by
law, any such committee shall have and may exercise the powers of the full board
of directors to the extent provided in the resolution of the board directing the
committee.
2
ARTICLE III
OFFICERS
3.1 Election. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
3.2 Authority, Duties and Compensation. The officers shall have such authority,
perform such duties and serve for such compensation as may be determined by
resolution of the board of directors. Except as otherwise provided by board
resolution, (i) the president shall be the chief executive officer of the
Company, shall have general supervision over the business and operations of the
Company, may perform any act and execute any instrument for the conduct of such
business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii) any vice president, or vice presidents in
the order determined by the board, shall in the absence of the president have
the authority and perform the duties of the president.
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority
3
vote of a quorum consisting of directors not parties to such proceeding may, and
on request of any person seeking indemnification or advance of expenses shall be
required to, determine in each case whether the applicable standards in any
applicable statute have been met, or such determination shall be made by
independent legal counsel if such quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of disinterested directors so directs,
provided that, if there has been a change in control of the Company between the
time of the action or failure to act giving rise to the claim for
indemnification or advance of expenses and the time such claim is made, at the
option of the person seeking indemnification or advance of expenses, the
permissibility of indemnification or advance of expenses shall be determined by
independent legal counsel. The reasonable expenses of any director or officer in
prosecuting a successful claim for indemnification, and the fees and expenses of
any special legal counsel engaged to determine permissibility of indemnification
or advance of expenses, shall be borne by the Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6 Insurance and Other Indemnification. The board of directors shall have the
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
4
ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby shall be
made on the books of the Company only by the registered holder or by duly
authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special meeting
of the board of directors by vote of a majority of all directors in office or at
any annual or special meeting of stockholders by vote of holders of a majority
of the outstanding stock entitled to vote. Notice of any such annual or special
meeting of stockholders shall set forth the proposed change or a summary
thereof.
5
EXHIBIT A-3
CERTIFICATE OF INCORPORATION
OF
MEDIQ INCORPORATED
1. Name. The name of the Corporation is MEDIQ Incorporated.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Delaware is 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, in the County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware and to possess and exercise all of the
powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital.
A. The aggregate number of shares of stock which the Corporation shall
have authority to issue is 70,000,000 shares, divided into two (2) classes
consisting of 40,000,000 shares of Preferred Stock, par value $0.01 per share
("Preferred Stock"); and 30,000,000 shares of Common Stock, par value $0.01 per
share ("Common Stock").
B. The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class:
i. Issue in Series. Preferred Stock may be issued from time to time
in one or more series, each such series to have the terms stated herein and in
the resolution of the Board of Directors of the Corporation providing for its
issue. All shares of any one series of Preferred Stock will be identical, but
shares of different series of Preferred Stock need not be identical or rank
equally except insofar as provided by law or herein.
ii. Creation of Series. The Board of Directors will have authority by
resolution to cause to be created one or more series of Preferred Stock, and to
determine and fix with respect to each series prior to the issuance of any
shares of the series to which such resolution relates:
a. The distinctive designation of the series and the number of
shares which will constitute the series, which number may be
increased or decreased (but not below the number of shares
then outstanding) from time to time by action of the Board
of Directors;
b. The dividend rate and the times of payment of dividends on
the shares of the series, whether dividends will be
cumulative, and if so, from what date or dates;
c. The price or prices at which, and the terms and conditions
on which, the shares of the series may be redeemed at the
option of the Corporation;
d. Whether or not the shares of the series will be entitled to
the benefit of a retirement or sinking fund to be applied to
the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and
provisions relative to the operation thereof;
e. Whether or not the shares of the series will be convertible
into, or exchangeable for, any other shares of stock of the
Corporation or other securities, and if so convertible or
exchangeable, the conversion price or prices, or the rates
of exchange, and any adjustments thereof, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
f. The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
g. Whether or not the shares of the series will have priority
over or be on a parity with or be junior to the shares of
any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of
shares of any other series or class having priority over or
being on a parity with the shares of such series in any
respect, or restricting the payment of dividends on or the
making of other distributions in respect of shares of any
other series or class ranking junior to the shares of the
series as to dividends or assets, or restricting the
purchase or redemption of the shares of any such junior
series or class, and the terms of any such restriction;
h. Whether the series will have voting rights, in addition to
any voting rights provided by law, and, if so, the terms of
such voting rights; and
2
i. Any other preferences, qualifications, privileges, options
and other relative or special rights and limitations of that
series.
iii. Dividends. Holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for the payment thereof, dividends at the rates fixed by the Board of
Directors for the respective series, and no more, before any dividends shall be
declared and paid, or set apart for payment, on Common Stock with respect to the
same dividend period.
iv. Preference on Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, holders
of each series of Preferred Stock will be entitled to receive the amount fixed
for such series plus, in the case of any series on which dividends will have
been determined by the Board of Directors to be cumulative, an amount equal to
all dividends accumulated and unpaid thereon to the date of final distribution
whether or not earned or declared before any distribution shall be paid, or set
aside for payment, to holders of Common Stock. If the assets of the Corporation
are not sufficient to pay such amounts in full, holders of all shares of
Preferred Stock will participate in the distribution of assets ratably in
proportion to the full amounts to which they are entitled or in such order or
priority, if any, as will have been fixed in the resolution or resolutions
providing for the issue of the series of Preferred Stock. Neither the merger nor
consolidation of the Corporation into or with any other corporation, nor a sale,
transfer or lease of all or part of its assets, will be deemed a liquidation,
dissolution or winding up of the corporation within the meaning of this
paragraph except to the extent specifically provided for herein.
v. Redemption. The Corporation, at the option of the Board of
Directors, may redeem all or part of the shares of any series of Preferred Stock
on the terms and conditions fixed for such series.
vi. Voting Rights. Except as otherwise required by law, as otherwise
provided herein or as otherwise determined by the Board of Directors as to the
shares of any series of Preferred Stock prior to the issuance of any such
shares, the holders of Preferred Stock shall have no voting rights and shall not
be entitled to any notice of meeting of stockholders.
C. Series A Preferred Stock.
i. Designation of Series. There shall be 10,000,000 shares of
Preferred Stock designated as "Series A 13.0% Cumulative Compounding Preferred
Stock" ("Series A Preferred Stock"). The par value of Series A Preferred Stock
shall be $.01 per share.
ii. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series A Preferred Stock shall
rank (a) senior to the Common Stock of the Corporation, par value $.01 per share
("Common Stock"), the Series B Preferred Stock (defined in paragraph 4.C.xii.
below), the Series C Preferred Stock (defined in
3
paragraph 4.C.xii. below), and each other class of capital stock or class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to the Series A Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series A Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which do not specifically
provide that they rank junior to Series A Preferred Stock or senior to Series A
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series A Parity Securities"), and (c) junior to each other class of capital
stock or other class or series of preferred stock issued by the Corporation that
by its terms is senior to the Series A Preferred Stock with respect to dividend
distributions or distributions upon the liquidation, winding up and dissolution
of the Corporation (collectively referred to as "Series A Senior Securities").
iii. Dividends.
a. Each Holder of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors,
out of funds legally available therefor, cash dividends on
each share of Series A Preferred Stock at a rate equal to
$1.30 per share per annum. All dividends shall be
cumulative, whether or not earned or declared, and shall
accrue on a daily basis from the date of issuance of Series
A Preferred Stock, and shall be payable semi-annually in
arrears on each Dividend Payment Date, commencing on the
second Dividend Payment Date after the date of issuance of
such Series A Preferred Stock. Each dividend on Series A
Preferred Stock shall be payable to the Holders of record of
Series A Preferred Stock as they appear on the stock
register of the Corporation on such record date as may be
fixed by the Board of Directors, which record date shall not
be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to
accrue in respect of shares of Series A Preferred Stock on
the date of their repurchase by the Corporation unless the
Corporation shall have failed to pay the relevant repurchase
price on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and until
such dividends are declared by the Board of Directors, there
shall be no obligation to pay such dividends; provided, that
such dividends shall continue to cumulate and shall be added
to the Liquidation Preference (as provided in Paragraph
4.C.iv.a. below) at the time of repurchase as provided
herein if not earlier declared and paid. Accrued dividends
on the
4
Series A Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall
thereafter accrue additional dividends ("Additional
Dividends") in respect thereof, compounded annually, at the
rate of 13.0% per annum.
b. All dividends paid with respect to shares of Series A
Preferred Stock pursuant to paragraph 4.C.iii.a. shall be
paid pro rata to the Holders entitled thereto.
c. Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption
pursuant to paragraph 4.C.v.a. may be declared and paid at
any time, without reference to any regular Dividend Payment
Date, to the Holders of record on any date as may be fixed
by the Board of Directors, which date is not more than 60
days prior to the payment of such dividends.
d. As long as any Series A Preferred Stock is outstanding, no
dividends shall be declared by the Board of Directors or
paid or funds set apart for the payment of dividends or
other distributions on any Series A Parity Securities for
any period, and no Series A Parity Securities may be
repurchased, redeemed or otherwise acquired, nor may funds
be set apart for such payment (other than dividends, other
distributions, redemptions, repurchases or acquisitions
payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities in
connection therewith), unless (i) full Accumulated Dividends
have been paid or set apart for such payment on the Series A
Preferred Stock and Series A Parity Securities for all
Dividend Periods terminating on or prior to the date of
payment of such dividends or distributions on, or such
repurchase or redemption of, such Series A Parity Securities
(the "Series A Parity Payment Date") and (ii) any such
dividends are declared and paid pro rata so that the amounts
of any dividends declared and paid per share on outstanding
Series A Preferred Stock and each other share of Series A
Parity Securities will in all cases bear to each other the
same ratio that accrued and unpaid dividends (including any
Accumulated Dividends) per share of outstanding Series A
Preferred Stock and such other outstanding shares of Series
A Parity Securities bear to each other.
5
e. The Holders shall be entitled to receive the dividends
provided for in paragraph 4.C.iii.a. hereof in preference to
and in priority over any dividends upon any of the Series A
Junior Securities. Such dividends on the Series A Preferred
Stock shall be cumulative, whether or not earned or
declared, so that if at any time full Accumulated Dividends
on all shares of Series A Preferred Stock then outstanding
for all Dividend Periods then elapsed have not been paid or
set aside for payment, the amount of such unpaid dividends
shall be paid before any sum shall be set aside for or
applied by the Corporation to the purchase, redemption or
other acquisition for value of any shares of Series A Junior
Securities (either pursuant to any applicable sinking fund
requirement or otherwise) or any dividend or other
distribution shall be paid or declared or set apart for
payment on any Series A Junior Securities (the date of any
such actions to be referred to as the "Series A Junior
Payment Date"); provided, however, that the foregoing shall
not (i) prohibit the Corporation from repurchasing shares of
Series A Junior Securities from a holder thereof who is, or
was, a director or employee of the Corporation (or an
affiliate of the Corporation) and (ii) prohibit the
Corporation from making dividends, other distributions,
redemptions, repurchases or acquisitions in respect of
Series A Junior Securities payable in Series A Junior
Securities and cash in lieu of fractional shares of such
Series A Junior Securities in connection therewith.
f. Dividends payable on Series A Preferred Stock for any period
less than one year shall be computed on the basis of a
360-day year consisting of twelve 30-day months and the
actual number of days elapsed in the period for which such
dividends are payable.
iv. Liquidation Preference.
a. Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the Holders of all shares
of Series A Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount in
cash equal to $10.00 per share, plus an amount equal to full
cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Additional
6
Dividends, to the date of final distribution (the
"Liquidation Preference") and no more, before any
distribution is made on any Series A Junior Securities. If
upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the application of all
amounts available for payments with respect to Series A
Preferred Stock and all other Series A Parity Securities
would not result in payment in full of Series A Preferred
Stock and such other Series A Parity Securities, the Holders
and holders of Series A Parity Securities shall share
equally and ratably in any distribution of assets of the
Corporation in proportion to the full liquidation preference
to which each is entitled. After payment in full pursuant to
this paragraph 4.C.iv.a., the Holders shall not be entitled
to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation.
b. For the purposes of this paragraph 4.C.iv., neither the
voluntary sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business
combination of the Corporation with one or more corporations
(whether or not the Corporation is the surviving
corporation) shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation.
v. Redemption.
a. Optional Redemption.
(1) The Corporation may, at its option, redeem at any time
or from time to time, from any source of funds legally
available therefor, in whole or in part, in the manner
provided in paragraph 4.C.v.c. hereof, any or all of the
shares of Series A Preferred Stock, at a redemption
prices set forth below, plus an amount equal to full
cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Additional
Dividends, to the Redemption Date (as defined in
paragraph 4.C.xii.). The redemption price for
redemptions pursuant to this paragraph 4.C.v.a. are as
follows:
7
Redemption Price
Redemption Date Per Share
--------------- ----------------
on or before December 31, 1999 $11.00
on or after January 1, 2000 $10.50
but before January 1, 2002
on or after January 1, 2002 $10.00
(2) No partial redemption of Series A Preferred Stock
pursuant to paragraph 4.C.v.a. hereof may be authorized
or made unless prior thereto, full accrued and unpaid
dividends thereon for all Dividend Periods terminating
on or prior to the Redemption Date and an amount equal
to a prorated dividend thereon for the period from the
Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date have been or
immediately prior to the Redemption Notice are declared
and paid in cash or are declared and there has been a
sum set apart sufficient for such cash payment on the
Redemption Date.
(3) In the event of a redemption pursuant to paragraph
4.C.v.a. hereof of only a portion of the then
outstanding shares of Series A Preferred Stock, the
Corporation shall effect such redemption pro rata
according to the number of shares held by each Holder of
Series A Preferred Stock.
b. Mandatory Redemption. All outstanding shares of the Series A
Preferred Stock shall be redeemed from funds legally
available therefor on December 31, 2011 (the "Mandatory
Redemption Date"), at a price per share equal to the
Liquidation Preference on such Mandatory Redemption Date.
c. Procedures for Redemption.
(1) At least 30 days and not more than 60 days prior to the
date fixed for any redemption of Series A
8
Preferred Stock, written notice (the "Redemption
Notice") shall be given by first class mail, postage
prepaid, to each Holder of record of Series A Preferred
Stock on the record date fixed for such redemption of
Series A Preferred Stock at such Holder's address as set
forth on the stock register of the Corporation on such
record date; provided that no failure to give such
notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any
shares of Series A Preferred Stock to be redeemed except
as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or
Holders whose notice was defective. In addition to any
information required by law or by the applicable rules
of any exchange upon which shares of Series A Preferred
Stock may be listed or admitted to trading, the
Redemption Notice shall state:
(A) the redemption price;
(B) whether all or less than all of the outstanding
shares of Series A Preferred Stock redeemable thereunder are to be redeemed and
the aggregate number of shares of Series A Preferred Stock being redeemed;
(C) the number of shares of Series A Preferred Stock
held, as of the appropriate record date, by the Holder that the Corporation
intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Corporation,
at the place or places where certificates for shares of Series A Preferred Stock
are to be surrendered for redemption, in the manner and at the price designated,
his, her or its certificate or certificates representing the shares of Series A
Preferred Stock to be redeemed; and
(F) that dividends on the shares of Series A Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Corporation defaults in the payment of the redemption price.
(2) Each Holder shall surrender the certificate or
certificates representing such shares of Series A
Preferred Stock being so redeemed to the Corporation,
duly endorsed, in the manner and at the place designated
in the Redemption Notice, and on the Redemption Date the
full redemption price for
9
such shares shall be payable in cash to the Person whose
name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be
canceled and retired. In the event that less than all of
the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing
the unredeemed shares.
(3) If a Redemption Notice has been mailed in accordance
with paragraph 4.C.v.e. above, unless the Corporation
defaults in the payment in full of the redemption price,
then, notwithstanding that the certificates evidencing
any shares of Series A Preferred Stock so called for
redemption shall not have been surrendered, (x) on the
Redemption Date, the shares represented thereby so
called for redemption shall be deemed no longer
outstanding and shall have the status of authorized but
unissued shares of Preferred Stock, undesignated as to
series, (y) dividends with respect to the shares so
called for redemption shall cease to accrue after the
Redemption Date and (z) all rights with respect to the
shares so called for redemption or subject to conversion
shall forthwith after such date cease and terminate,
except for the right of the holders to receive the
funds, if any, payable pursuant to this paragraph 5
without interest upon surrender of their certificates
therefor.
d. Deposit of Funds. The Corporation's obligation to deliver
funds in accordance with this paragraph v. shall be deemed
fulfilled if, on or before a Redemption Date, the
Corporation shall deposit, with a bank or trust Corporation,
or an affiliate of a bank or trust Corporation such funds as
are required to be delivered by the Corporation pursuant to
this paragraph v. upon the occurrence of the related
redemption consideration sufficient to pay all accrued and
unpaid dividends on the shares to be redeemed, in trust for
the account of the Holders of the shares to be redeemed (and
so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or trust
Corporation that such shares and funds be delivered upon
redemption of the shares of Series A Preferred Stock so
10
called for redemption. Any interest accrued on such funds
shall be paid to the Corporation from time to time. Upon
surrender of the certificates pursuant to paragraph
4.C.v.c.(2), each Holder shall thereupon be entitled to any
funds payable pursuant to this paragraph v. following such
surrender and following the date of such redemption.
vi. Voting Rights.
a. The Holders shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the
shareholders of the Corporation, except as otherwise
required by Delaware law or this Certificate of Designation
except that, without the written consent of the holders of a
majority of the outstanding shares of Series A Preferred
Stock or the vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock at a meeting
of the holders of Series A Preferred Stock called for such
purpose, the Corporation shall not (a) create, authorize or
issue any other class or series of stock entitled to a
preference prior to Series A Preferred Stock upon any
dividend or distribution or any liquidation, distribution of
assets, dissolution or winding up of the Corporation, or (b)
amend, alter or repeal any provision of the Corporation's
Certificate of Incorporation so as to materially adversely
affect the relative rights and preferences of the Series A
Preferred Stock.
b. Without limiting the generality of the foregoing, in no
event shall the Holders be entitled to vote (individually or
as a class) on any merger or consolidation involving the
Corporation, any sale of all or substantially all of the
assets of the Corporation or any similar transaction.
c. In any case in which the Holders shall be entitled to vote
pursuant to paragraph 4.C.vi.a. above, each Holder shall be
entitled to one vote for each share of Series A Preferred
Stock held unless otherwise required by applicable law.
vii. Conversion or Exchange. The Holders shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
11
viii. Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series A Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
ix. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
x. No Preemptive Rights. No Holder will possess any preemptive rights
to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
xi. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series A Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
xii. Definitions. As used in this Section 4.C., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of Series
A Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series A Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Additional Dividends" has the meaning given to such term in
paragraph 4.C.iii.a.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banking institutions in New York City are authorized by law
or executive order to close.
12
"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in paragraph
4.C.ii.
"Dividend Payment Date" means June 30th and December 31st of each
year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series A Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in
paragraph 4.C.iv.a.
"Mandatory Redemption Date" has the meaning given to such term in
paragraph 4.C.v.b.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock Corporation,
trust, unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred Stock,
means the date on which such shares of Preferred Stock are redeemed by the
Corporation pursuant to paragraph 4.C.v.
"Redemption Notice" has the meaning given to such term in paragraph
4.C.v.c.
"Series A Junior Payment Date" has the meaning given to such term in
4.C.iii.c.
13
"Series A Junior Securities" has the meaning given to such term in
paragraph 4.C.ii.
"Series A Parity Payment Date" has the meaning given to such term in
4.C.iii.d.
"Series A Parity Securities" has the meaning given to such term in
paragraph 4.C.ii.
"Semi-Annual Dividend Period" means the annual period commencing on
each January 1st and July 1st and ending on each Dividend Payment Date,
respectively.
"Series A Preferred Stock" has the meaning given to such term in
paragraph 4.C.i.
"Series A Senior Securities" has the meaning given to such term in
paragraph 4.C.ii.
"Series B Preferred Stock" means the Series B 13.25% Cumulative
Compounding Perpetual Preferred Stock of the Corporation as more fully described
in Section 4.D.
"Series C Preferred Stock" means the Series C 13.5% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.E.
D. Series B Preferred Stock.
i. Designation of Series. There shall be 5,000,000 shares of
Preferred Stock designated as "Series B 13.25% Cumulative Compounding Perpetual
Preferred Stock" ("Series B Preferred Stock"). The par value of Series B
Preferred Stock shall be $.01 per share.
ii. Rank. With respect to dividend rights and rights on
liquidation, winding up and dissolution of the Corporation, Series B Preferred
Stock shall rank (a) senior to the Common Stock of the Corporation, par value
$.01 per share ("Common Stock"), the Series C Preferred Stock (defined in
paragraph 4.D.xii. below), and each other class of capital stock or class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to the Series B Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series B Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which specifically provide
that such class or series shall rank neither senior nor junior to the Series B
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series B Parity Securities"), and (c) junior to (i) the Series A Preferred
Stock, (ii) each
14
other class of capital stock or other class or series of preferred stock issued
by the Corporation that by its terms is senior to the Series B Preferred Stock
with respect to dividend distributions or distributions upon the liquidation,
winding up and dissolution of the Corporation and (iii) each other class of
capital stock or class or series of preferred stock issued by the Corporation
after the date hereof the terms of which do not specifically provide that they
rank junior to Series B Preferred Stock or senior to Series B Preferred Stock as
to dividend distributions or distributions upon liquidation, winding up and
dissolution of the Corporation (collectively referred to as "Series B Senior
Securities").
iii. Dividends.
a. Each Holder of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available
therefor, cash dividends on each share of Series B
Preferred Stock at a rate equal to $1.325 per share per
annum. All dividends shall be cumulative, whether or
not earned or declared, and shall accrue on a daily
basis from the date of issuance of Series B Preferred
Stock, and shall be payable semi-annually in arrears on
each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of
such Series B Preferred Stock. Each dividend on Series
B Preferred Stock shall be payable to the Holders of
record of Series B Preferred Stock as they appear on
the stock register of the Corporation on such record
date as may be fixed by the Board of Directors, which
record date shall not be less than 10 nor more than 60
days prior to the applicable Dividend Payment Date.
Dividends shall cease to accrue in respect of shares of
Series B Preferred Stock on the date of their
repurchase by the Corporation unless the Corporation
shall have failed to pay the relevant repurchase price
on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and
until such dividends are declared by the Board of
Directors, there shall be no obligation to pay such
dividends; provided, that such dividends shall continue
to cumulate and shall be added to the Liquidation
Preference (as provided in paragraph 4.D.iv.a. below)
at the time of repurchase as provided herein if not
earlier declared and paid. Accrued dividends on the
Series B Preferred Stock if not paid on the first or
any subsequent Dividend Payment Date following accrual
shall thereafter accrue additional dividends
("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.25% per annum.
15
b. All dividends paid with respect to shares of Series B
Preferred Stock pursuant to paragraph 4.D.iii.a. shall
be paid pro rata to the Holders entitled thereto.
c. Dividends on account of arrears for any past Dividend
Period may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to the
Holders of record on any date as may be fixed by the
Board of Directors, which date is not more than 60 days
prior to the payment of such dividends.
d. As long as any Series B Preferred Stock is outstanding,
no dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of
dividends or other distributions on any Series B Parity
Securities for any period, and no Series B Parity
Securities may be repurchased, redeemed or otherwise
acquired, nor may funds be set apart for such payment
(other than dividends, other distributions,
redemptions, repurchases or acquisitions payable in
Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities in
connection therewith), unless (i) full Accumulated
Dividends have been paid or set apart for such payment
on the Series B Preferred Stock and Series B Parity
Securities for all Dividend Periods terminating on or
prior to the date of payment of such dividends or
distributions on, or such repurchase or redemption of,
such Series B Parity Securities (the "Series B Parity
Payment Date") and (ii) any such dividends are declared
and paid pro rata so that the amounts of any dividends
declared and paid per share on outstanding Series B
Preferred Stock and each other share of Series B Parity
Securities will in all cases bear to each other the
same ratio that accrued and unpaid dividends (including
any Accumulated Dividends) per share of outstanding
Series B Preferred Stock and such other outstanding
shares of Series B Parity Securities bear to each
other.
e. The Holders shall be entitled to receive the dividends
provided for in paragraph 4.D.iii.a. hereof in
preference to and in priority over any dividends upon
any of the Series B Junior Securities. Such dividends
on the Series B Preferred Stock shall be cumulative,
whether or not earned or declared, so that if at any
time full Accumulated Dividends on all shares of Series
B Preferred Stock then outstanding
16
for all Dividend Periods then elapsed have not been
paid or set aside for payment, the amount of such
unpaid dividends shall be paid before any sum shall be
set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of
any shares of Series B Junior Securities (either
pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall
be paid or declared or set apart for payment on any
Series B Junior Securities (the date of any such
actions to be referred to as the "Series B Junior
Payment Date"); provided, however, that the foregoing
shall not (i) prohibit the Corporation from
repurchasing shares of Series B Junior Securities from
a holder thereof who is, or was, a director or employee
of the Corporation (or an affiliate of the Corporation)
and (ii) prohibit the Corporation from making
dividends, other distributions, redemptions,
repurchases or acquisitions in respect of Series B
Junior Securities payable in Series B Junior Securities
and cash in lieu of fractional shares of such Series B
Junior Securities in connection therewith.
f. Dividends payable on Series B Preferred Stock for any
period less than one year shall be computed on the
basis of a 360-day year consisting of twelve 30-day
months and the actual number of days elapsed in the
period for which such dividends are payable.
iv. Liquidation Preference.
a. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the
Holders of all 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 $10.00 per
share, plus an amount equal to full cumulative
dividends (whether or not earned or declared) accrued
and unpaid thereon, including Additional Dividends, to
the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is
made on any Series B Junior Securities. If upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all
amounts available for payments with respect to Series B
Preferred Stock and all other Series B Parity
Securities would not result in payment in full of
17
Series B Preferred Stock and such other Series B Parity
Securities, the Holders and holders of Series B Parity
Securities shall share equally and ratably in any
distribution of assets of the Corporation in proportion
to the full liquidation preference to which each is
entitled. After payment in full pursuant to this
paragraph 4.D.iv.a., the Holders shall not be entitled
to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation.
b. For the purposes of this paragraph 4.D.iv., neither the
voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Corporation nor the
consolidation, merger or other business combination of
the Corporation with one or more corporations (whether
or not the Corporation is the surviving corporation)
shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation.
v. Redemption. The Company shall not have the right nor the power
to, and the Holders shall not have the right to require the Company to, redeem
any shares of Series B Preferred Stock. Notwithstanding the foregoing, this
Paragraph 4.D.v. shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series B Preferred Stock held
by such Holder.
vi. Voting Rights.
a. The Holders shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by
the shareholders of the Corporation, except as
otherwise required by Delaware law or this Certificate
of Designation except that, without the written consent
of the holders of a majority of the outstanding shares
of Series B Preferred Stock or the vote of the holders
of a majority of the outstanding shares of Series B
Preferred Stock at a meeting of the holders of Series B
Preferred Stock called for such purpose, the
Corporation shall not (a) create, authorize or issue
any other class or series of stock entitled to a
preference prior to Series B Preferred Stock upon any
dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of
the Corporation, or (b) amend, alter or repeal any
provision of the Corporation's Certificate of
Incorporation so as to materially adversely
18
affect the relative rights and preferences of the
Series B Preferred Stock.
b. Without limiting the generality of the foregoing, in no
event shall the Holders be entitled to vote
(individually or as a class) on any merger or
consolidation involving the Corporation, any sale of
all or substantially all of the assets of the
Corporation or any similar transaction.
c. In any case in which the Holders shall be entitled to
vote pursuant to paragraph 4.D.vi.a. above, each Holder
shall be entitled to one vote for each share of Series
B Preferred Stock held unless otherwise required by
applicable law.
vii. Conversion or Exchange. The Holders shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
viii. Reissuance of Series B Preferred Stock. Shares of Series B
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series B Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
ix. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
x. No Preemptive Rights. No Holder will possess any preemptive
rights to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
xi. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series B Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
19
xii. Definitions. As used in this Section 4.D., the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of
Series B Preferred Stock, the dividends that have accrued on such share as of
such specific date for Dividend Periods ending on or prior to such date and that
have not previously been paid in cash, and (ii) with respect to any Series B
Parity Security, the dividends that have accrued and are due on such security as
of such specific date.
"Additional Dividends" has the meaning given to such term in
paragraph 4.D.iii.a.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banking institutions in New York City are authorized by
law or executive order to close.
"Capital Stock" means any and all shares, interests,
participations, rights, or other equivalents (however designated) of corporate
stock including, without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in
paragraph 4.D.ii.
"Dividend Payment Date" means June 30th and December 31st of each
year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series B Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on
the Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in
paragraph 4.D.iv.a.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock Corporation,
trust, unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
20
"Preferred Stock" means the Preferred Stock of the Corporation.
"Semi-Annual Dividend Period" means the annual period commencing
on each January 1st and July 1st and ending on each Dividend Payment Date,
respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.C.
"Series B Junior Payment Date" has the meaning given to such term
in 4.D.iii.e.
"Series B Junior Securities" has the meaning given to such term in
paragraph 4.D.ii.
"Series B Parity Payment Date" has the meaning given to such term
in 4.D.iii.d.
"Series B Parity Securities" has the meaning given to such term in
paragraph 4.D.ii.
"Series B Preferred Stock" has the meaning given to such term in
paragraph 4.D.i..
"Series B Senior Securities" has the meaning given to such term in
paragraph 4.D.ii.
"Series C Preferred Stock" means the Series C 13.5% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.E.
E. Series C Preferred Stock.
i. Designation of Series. There shall be 5,000,000 shares of
Preferred Stock designated as "Series C 13.5% Cumulative Compounding Preferred
Stock" ("Series C Preferred Stock"). The par value of Series C Preferred Stock
shall be $.01 per share.
ii. Rank. With respect to dividend rights and rights on
liquidation, winding up and dissolution of the Corporation, Series C Preferred
Stock shall rank (a) senior to the Common Stock of the Corporation, par value
$.01 per share ("Common Stock"), and each other class of capital stock or class
or series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to the Series C Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series C Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the
21
Corporation after the date hereof the terms of which specifically provide that
such class or series shall rank neither senior nor junior to the Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series C Parity Securities"), and (c) junior to (i) the Series A Preferred Stock
(defined in Paragraph 4.E.xii.), (ii) the Series B Preferred Stock (defined in
Paragraph 4.E.xii.), (iii) each other class of capital stock or other class or
series of preferred stock issued by the Corporation that by its terms is senior
to the Series C Preferred Stock with respect to dividend distributions or
distributions upon the liquidation, winding up and dissolution of the
Corporation and (iv) each other class of capital stock or class or series of
preferred stock issued by the Corporation after the date hereof the terms of
which do not specifically provide that they rank junior to Series C Preferred
Stock or senior to Series C Preferred Stock as to dividend distributions or
distributions upon liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series C Senior Securities").
iii. Dividends.
a. Each Holder of Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available
therefor, cash dividends on each share of Series C
Preferred Stock at a rate equal to $1.35 per share per
annum. All dividends shall be cumulative, whether or
not earned or declared, and shall accrue on a daily
basis from the date of issuance of Series C Preferred
Stock, and shall be payable semi-annually in arrears on
each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of
such Series C Preferred Stock. Each dividend on Series
C Preferred Stock shall be payable to the Holders of
record of Series C Preferred Stock as they appear on
the stock register of the Corporation on such record
date as may be fixed by the Board of Directors, which
record date shall not be less than 10 nor more than 60
days prior to the applicable Dividend Payment Date.
Dividends shall cease to accrue in respect of shares of
Series C Preferred Stock on the date of their
repurchase by the Corporation unless the Corporation
shall have failed to pay the relevant repurchase price
on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and
until such dividends are declared by the Board of
Directors, there shall be no obligation to pay such
dividends; provided, that such dividends shall continue
to cumulate and shall be added to the Liquidation
Preference (as provided in paragraph 4.E.iv.a. below)
at the time of repurchase as provided herein if not
earlier declared and paid. Accrued dividends on the
22
Series C Preferred Stock if not paid on the first or
any subsequent Dividend Payment Date following accrual
shall thereafter accrue additional dividends
("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.5% per annum.
b. All dividends paid with respect to shares of Series C
Preferred Stock pursuant to paragraph 4.E.iii.a. shall
be paid pro rata to the Holders entitled thereto.
c. Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional
redemption pursuant to paragraph 4.X.x.x. xxx be
declared and paid at any time, without reference to any
regular Dividend Payment Date, to the Holders of record
on any date as may be fixed by the Board of Directors,
which date is not more than 60 days prior to the
payment of such dividends.
d. As long as any Series C Preferred Stock is outstanding,
no dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of
dividends or other distributions on any Series C Parity
Securities for any period, and no Series C Parity
Securities may be repurchased, redeemed or otherwise
acquired, nor may funds be set apart for such payment
(other than dividends, other distributions,
redemptions, repurchases or acquisitions payable in
Series C Junior Securities and cash in lieu of
fractional shares of such Series C Junior Securities in
connection therewith), unless (i) full Accumulated
Dividends have been paid or set apart for such payment
on the Series C Preferred Stock and Series C Parity
Securities for all Dividend Periods terminating on or
prior to the date of payment of such dividends or
distributions on, or such repurchase or redemption of,
such Series C Parity Securities (the "Series C Parity
Payment Date") and (ii) any such dividends are declared
and paid pro rata so that the amounts of any dividends
declared and paid per share on outstanding Series C
Preferred Stock and each other share of Series C Parity
Securities will in all cases bear to each other the
same ratio that accrued and unpaid dividends (including
any Accumulated Dividends) per share of outstanding
Series C Preferred Stock and such other outstanding
shares of Series C Parity Securities bear to each
other.
23
e. The Holders shall be entitled to receive the dividends
provided for in paragraph 4.E.iii.a. hereof in
preference to and in priority over any dividends upon
any of the Series C Junior Securities. Such dividends
on the Series C Preferred Stock shall be cumulative,
whether or not earned or declared, so that if at any
time full Accumulated Dividends on all shares of Series
C Preferred Stock then outstanding for all Dividend
Periods then elapsed have not been paid or set aside
for payment, the amount of such unpaid dividends shall
be paid before any sum shall be set aside for or
applied by the Corporation to the purchase, redemption
or other acquisition for value of any shares of Series
C Junior Securities (either pursuant to any applicable
sinking fund requirement or otherwise) or any dividend
or other distribution shall be paid or declared or set
apart for payment on any Series C Junior Securities
(the date of any such actions to be referred to as the
"Series C Junior Payment Date"); provided, however,
that the foregoing shall not (i) prohibit the
Corporation from repurchasing shares of Series C Junior
Securities from a holder thereof who is, or was, a
director or employee of the Corporation (or an
affiliate of the Corporation) and (ii) prohibit the
Corporation from making dividends, other distributions,
redemptions, repurchases or acquisitions in respect of
Series C Junior Securities payable in Series C Junior
Securities and cash in lieu of fractional shares of
such Series C Junior Securities in connection
therewith.
f. Dividends payable on Series C Preferred Stock for any
period less than one year shall be computed on the
basis of a 360-day year consisting of twelve 30-day
months and the actual number of days elapsed in the
period for which such dividends are payable.
iv. Liquidation Preference.
a. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the
Holders of all 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 $10.00 per
share, plus an amount equal to full cumulative
dividends (whether or not earned or declared) accrued
and unpaid thereon, including Additional Dividends, to
24
the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is
made on any Series C Junior Securities. If upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all
amounts available for payments with respect to Series C
Preferred Stock and all other Series C Parity
Securities would not result in payment in full of
Series C Preferred Stock and such other Series C Parity
Securities, the Holders and holders of Series C Parity
Securities shall share equally and ratably in any
distribution of assets of the Corporation in proportion
to the full liquidation preference to which each is
entitled. After payment in full pursuant to this
paragraph 4.E.iv.a., the Holders shall not be entitled
to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation.
b. For the purposes of this paragraph 4.E.iv., neither the
voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Corporation nor the
consolidation, merger or other business combination of
the Corporation with one or more corporations (whether
or not the Corporation is the surviving corporation)
shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation.
v. Redemption.
a. Optional Redemption.
(1) The Corporation may, at its option, redeem at any
time or from time to time, from any source of funds
legally available therefor, in whole or in part, in
the manner provided in paragraph 4.E.v.c. hereof,
any or all of the shares of Series C Preferred
Stock, at a redemption price of $10.00 per share,
plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and
unpaid thereon, including Additional Dividends, to
the Redemption Date (as defined in paragraph B).
(2) No partial redemption of Series C Preferred Stock
pursuant to paragraph 4.E.v.a. hereof may be
25
authorized or made unless prior thereto, full
accrued and unpaid dividends thereon for all
Dividend Periods terminating on or prior to the
Redemption Date and an amount equal to a prorated
dividend thereon for the period from the Dividend
Payment Date immediately prior to the Redemption
Date to the Redemption Date have been or
immediately prior to the Redemption Notice are
declared and paid in cash or are declared and there
has been a sum set apart sufficient for such cash
payment on the Redemption Date.
(3) In the event of a redemption pursuant to paragraph
4.E.v.a. hereof of only a portion of the then
outstanding shares of Series C Preferred Stock, the
Corporation shall effect such redemption pro rata
according to the number of shares held by each
Holder of Series C Preferred Stock.
b. Mandatory Redemption. All outstanding shares of the
Series C Preferred Stock shall be redeemed from funds
legally available therefor on December 31, 2012 (the
"Mandatory Redemption Date"), at a price per share
equal to the Liquidation Preference on such Mandatory
Redemption Date.
c. Procedures for Redemption.
(1) At least 30 days and not more than 60 days prior to
the date fixed for any redemption of Series C
Preferred Stock, written notice (the "Redemption
Notice") shall be given by first class mail,
postage prepaid, to each Holder of record of Series
C Preferred Stock on the record date fixed for such
redemption of Series C Preferred Stock at such
Holder's address as set forth on the stock register
of the Corporation on such record date; provided
that no failure to give such notice nor any
deficiency therein shall affect the validity of the
procedure for the redemption of any shares of
Series C Preferred Stock to be redeemed except as
to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the
Holder or Holders whose notice was defective. In
addition to any information required by law or by
26
the applicable rules of any exchange upon which
shares of Series C Preferred Stock may be listed or
admitted to trading, the Redemption Notice shall
state:
(A) the redemption price;
(B) whether all or less than all of the outstanding
shares of Series C Preferred Stock redeemable thereunder are to be redeemed and
the aggregate number of shares of Series C Preferred Stock being redeemed;
(C) the number of shares of Series C Preferred
Stock held, as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the
Corporation, at the place or places where certificates for shares of Series C
Preferred Stock are to be surrendered for redemption, in the manner and at the
price designated, his, her or its certificate or certificates representing the
shares of Series C Preferred Stock to be redeemed; and
(F) that dividends on the shares of Series C Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Corporation defaults in the payment of the redemption price.
(2) Each Holder shall surrender the certificate or
certificates representing such shares of Series C
Preferred Stock being so redeemed to the
Corporation, duly endorsed, in the manner and at
the place designated in the Redemption Notice, and
on the Redemption Date the full redemption price
for such shares shall be payable in cash to the
Person whose name appears on such certificate or
certificates as the owner thereof, and each
surrendered certificate shall be canceled and
retired. In the event that less than all of the
shares represented by any such certificate are
redeemed, a new certificate shall be issued
representing the unredeemed shares.
(3) If a Redemption Notice has been mailed in
accordance with paragraph 4.E.v.c. above, unless
the Corporation defaults in the payment in full of
27
the redemption price, then, notwithstanding that
the certificates evidencing any shares of Series C
Preferred Stock so called for redemption shall not
have been surrendered, (x) on the Redemption Date,
the shares represented thereby so called for
redemption shall be deemed no longer outstanding
and shall have the status of authorized but
unissued shares of Preferred Stock, undesignated as
to series, (y) dividends with respect to the shares
so called for redemption shall cease to accrue
after the Redemption Date and (z) all rights with
respect to the shares so called for redemption or
subject to conversion shall forthwith after such
date cease and terminate, except for the right of
the holders to receive the funds, if any, payable
pursuant to this paragraph 5 without interest upon
surrender of their certificates therefor.
d. Deposit of Funds. The Corporation's obligation to
deliver funds in accordance with this paragraph v.
shall be deemed fulfilled if, on or before a Redemption
Date, the Corporation shall deposit, with a bank or
trust Corporation, or an affiliate of a bank or trust
Corporation such funds as are required to be delivered
by the Corporation pursuant to this paragraph v. upon
the occurrence of the related redemption consideration
sufficient to pay all accrued and unpaid dividends on
the shares to be redeemed, in trust for the account of
the Holders of the shares to be redeemed (and so as to
be and continue to be available therefor), with
irrevocable instructions and authority to such bank or
trust Corporation that such shares and funds be
delivered upon redemption of the shares of Series C
Preferred Stock so called for redemption. Any interest
accrued on such funds shall be paid to the Corporation
from time to time. Upon surrender of the certificates
pursuant to paragraph 4.E.v.c.(2), each Holder shall
thereupon be entitled to any funds payable pursuant to
this paragraph v. following such surrender and
following the date of such redemption.
vi. Voting Rights.
a. The Holders shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by
the shareholders of the Corporation, except as
28
otherwise required by Delaware law or this Certificate
of Designation except that, without the written consent
of the holders of a majority of the outstanding shares
of Series C Preferred Stock or the vote of the holders
of a majority of the outstanding shares of Series C
Preferred Stock at a meeting of the holders of Series C
Preferred Stock called for such purpose, the
Corporation shall not (a) create, authorize or issue
any other class or series of stock entitled to a
preference prior to Series C Preferred Stock upon any
dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of
the Corporation, or (b) amend, alter or repeal any
provision of the Corporation's Certificate of
Incorporation so as to materially adversely affect the
relative rights and preferences of the Series C
Preferred Stock.
b. Without limiting the generality of the foregoing, in no
event shall the Holders be entitled to vote
(individually or as a class) on any merger or
consolidation involving the Corporation, any sale of
all or substantially all of the assets of the
Corporation or any similar transaction.
c. In any case in which the Holders shall be entitled to
vote pursuant to paragraph 4.E.vi.a. above, each Holder
shall be entitled to one vote for each share of Series
C Preferred Stock held unless otherwise required by
applicable law.
vii. Conversion or Exchange. The Holders shall not have any
rights hereunder to convert such shares into or exchange such shares for shares
of any other class or classes or of any other series of any class or classes of
Capital Stock of the Corporation.
viii. Reissuance of Series C Preferred Stock. Shares of Series C
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series C Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
29
ix. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
x. No Preemptive Rights. No Holder will possess any preemptive
rights to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
xi. Prohibitions and Restrictions Imposed by Senior Securities
and Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series C Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
xii. Definitions. As used in this Section 4.E., the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of
Series C Preferred Stock, the dividends that have accrued on such share as of
such specific date for Dividend Periods ending on or prior to such date and that
have not previously been paid in cash, and (ii) with respect to any Series C
Parity Security, the dividends that have accrued and are due on such security as
of such specific date.
"Additional Dividends" has the meaning given to such term in
paragraph 4.E.iii.a.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banking institutions in New York City are authorized by
law or executive order to close.
"Capital Stock" means any and all shares, interests,
participations, rights, or other equivalents (however designated) of corporate
stock including, without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in
paragraph 4.E.ii.
"Dividend Payment Date" means June 30th and December 31st of
each year.
30
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series C Preferred Stock.
"Initial Dividend Period" means the dividend period commencing
on the Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in
paragraph 4.E.iv.a.
"Mandatory Redemption Date" has the meaning given to such term
in paragraph 4.E.v.b.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock Corporation,
trust, unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred
Stock, means the date on which such shares of Preferred Stock are redeemed by
the Corporation pursuant to paragraph 4.E.v.
"Redemption Notice" has the meaning given to such term in
paragraph 4.E.v.c.
"Semi-Annual Dividend Period" means the annual period commencing
on each January 1st and July 1st and ending on each Dividend Payment Date,
respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.C.
"Series B Preferred Stock" means the Series B 13.25% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.D.
"Series C Junior Payment Date" has the meaning given to such
term in 4.E.iii.e.
31
"Series C Junior Securities" has the meaning given to such term
in paragraph 4.E.ii.
"Series C Parity Payment Date" has the meaning given to such
term in 4.E.iii.d.
"Series C Parity Securities" has the meaning given to such term
in paragraph 4.E.ii.
"Series C Preferred Stock" has the meaning given to such term in
paragraph 4.E.i.
"Series C Senior Securities" has the meaning given to such term
in paragraph 4.E.ii.
5. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
6. Elections of Directors. Elections of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
7. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
8. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Section 8 shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
9. Incorporator. The name and address of the Incorporator is: Xxx X. Pim,
Jr., 0000 Xxxx Xxxxx Xxxxxxxx, Xxxxxxxxxxxx, XX 00000.
32
EXHIBIT A-4
BYLAWS
OF
MEDIQ INCORPORATED
ARTICLE I
STOCKHOLDERS
1.1 Meetings.
1.1.1 Place. Meetings of the stockholders shall be held at such place as may
be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the election
of directors and for other business shall be held on such date and at such time
as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be called
at any time by the president, or the board of directors, or the holders of a
majority of the outstanding shares of stock of the Company entitled to vote at
the meeting.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the certificate
of incorporation or by law, every stockholder shall have the right at every
meeting of stockholders to one vote for every share standing in the name of such
stockholder on the books of the Company which is entitled to vote at such
meeting. Every stockholder may vote either in person or by proxy.
ARTICLE II
DIRECTORS
2.1 Number and Term. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors shall be held at such place
as may be designated by the board or in the notice of the meeting.
2.2.2 Regular Meetings. Regular meetings of the board of directors shall be
held at such times as the board may designate. Notice of regular meetings need
not be given.
2.2.3 Special Meetings. Special meetings of the board may be called by
direction of the president or any two members of the board on three days' notice
to each director, either personally or by mail, telegram or facsimile
transmission.
2.2.4 Quorum. A majority of all the directors in office shall constitute a
quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate of
incorporation or by law, the vote of a majority of the directors present at any
meeting at which a quorum is present shall constitute the act of the board of
directors.
2.2.6 Committees. The board of directors may, by resolution adopted by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board. Unless otherwise provided herein, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
Except as otherwise provided herein, in the certificate of incorporation or by
law, any such committee shall have and may exercise the powers of the full board
of directors to the extent provided in the resolution of the board directing the
committee.
- 2 -
ARTICLE III
OFFICERS
3.1 Election. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
3.2 Authority, Duties and Compensation. The officers shall have such authority,
perform such duties and serve for such compensation as may be determined by
resolution of the board of directors. Except as otherwise provided by board
resolution, (i) the president shall be the chief executive officer of the
Company, shall have general supervision over the business and operations of the
Company, may perform any act and execute any instrument for the conduct of such
business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii) any vice president, or vice presidents in
the order determined by the board, shall in the absence of the president have
the authority and perform the duties of the president.
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority
- 3 -
vote of a quorum consisting of directors not parties to such proceeding may, and
on request of any person seeking indemnification or advance of expenses shall be
required to, determine in each case whether the applicable standards in any
applicable statute have been met, or such determination shall be made by
independent legal counsel if such quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of disinterested directors so directs,
provided that, if there has been a change in control of the Company between the
time of the action or failure to act giving rise to the claim for
indemnification or advance of expenses and the time such claim is made, at the
option of the person seeking indemnification or advance of expenses, the
permissibility of indemnification or advance of expenses shall be determined by
independent legal counsel. The reasonable expenses of any director or officer in
prosecuting a successful claim for indemnification, and the fees and expenses of
any special legal counsel engaged to determine permissibility of indemnification
or advance of expenses, shall be borne by the Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6 Insurance and Other Indemnification. The board of directors shall have the
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
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ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby
shall be made on the books of the Company only by the registered holder or by
duly authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special
meeting of the board of directors by vote of a majority of all directors in
office or at any annual or special meeting of stockholders by vote of holders of
a majority of the outstanding stock entitled to vote. Notice of any such annual
or special meeting of stockholders shall set forth the proposed change or a
summary thereof.
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