Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report 73 419K
2: EX-3.1 Amended and Restated Certificate of Incorporation 25 103K
3: EX-10.13 Amended and Restated Agreement 21 54K
4: EX-10.14 Revised Facility Agreement 231 790K
5: EX-10.15 Senior Subordinated Loan Agreement 63 141K
6: EX-10.16 Material Contract 6 30K
7: EX-10.17 Management Stock Purchase Agreement 11 46K
8: EX-10.18 Agreement 177 640K
9: EX-10.19 Form of Agreement Evidencing A Grant of Stock 7 31K
Option
10: EX-10.20 Amended & Restated Shareholders Agreement 34 130K
11: EX-10.21 Securities Purchase Agreement 5 15K
12: EX-21.1 Subsidiaries 2 11K
13: EX-27 Financial Data Schedule 2 7K
EX-3.1 — Amended and Restated Certificate of Incorporation
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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE DERBY CYCLE CORPORATION
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ARTICLE ONE
The name of the Corporation is The Derby Cycle Corporation.
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle 19801. The name of its registered agent at
such address is the Corporation Trust Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
Part A. Authorized Shares
The total number of shares of capital stock which the Corporation has
authority to issue is 265,850 shares, consisting of:
(i) 25,000 shares of Preferred Stock, Series A, par value $.01 per
share ("Series A Preferred Stock");
(ii) 3,000 shares of Preferred Stock, Series B, par value $.01 per
share ("Series B Preferred Stock");
(iii) 100 shares of Preferred Stock, Series C, par value $.01 per share
("Series C Preferred Stock");
(iv) 200,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock");
(v) 15,000 shares of Class B Common Stock, par value $.01 per share
("Class B Common Stock");
(vi) 22,750 shares of Class C Common Stock, par value $.01 per share
("Class C Common Stock"; and together with the Class A Common
Stock and the Class B Common Stock, the "Common Stock").
The Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock are referred to collectively as the "Preferred Stock."
The Preferred Stock and the Common Stock are referred to collectively as the
"Shares." The Preferred Stock shall have the rights, preferences and
limitations set forth in Part B. The Common Stock shall have the rights,
preferences and limitations set forth in Part C. The Shares shall have the
Distribution rights and be subject to the general terms set forth in Part D.
Capitalized terms used but not otherwise defined in Part A, Part B, Part C or
Part D of this ARTICLE FOUR are defined in Part E of this ARTICLE FOUR.
Part B. Preferred Stock
Section 1. Dividends.
1A. When and as declared by the Corporation's Board of Directors and
to the extent permitted under the General Corporation Law, the Corporation shall
pay preferential dividends in cash to the holders of Preferred Stock as provided
in this Section 1 and Part D of this ARTICLE FOUR. Dividends on each share of
the Series A Preferred Stock (a "Series A Preferred Share") shall accrue on a
daily basis at the rate of twenty percent (20%) per annum of the sum of the
Liquidation Amount thereof plus all accumulated and unpaid dividends thereon
from and including the date of issuance of such Series A Preferred Share to and
including the first to occur of (i) the date on which the Liquidation Amount of
such Series A Preferred Share (plus all accrued and accumulated but unpaid
dividends thereon) is paid to the holder thereof, (ii) the date on which such
Series A Preferred Share is converted to Class A Common Stock as set forth
herein or (iii) the date on which such Series A Preferred Share is otherwise
acquired by the Corporation. Dividends on each share of the Series B Preferred
Stock (a "Series B Preferred Share") shall accrue on a daily basis at the rate
of nine and three-quarters percent (9.75%) per annum of the sum of the
Liquidation Amount thereof plus all accumulated and unpaid dividends thereon
from and including the date of issuance of such Series B Preferred Share to and
including the first to occur of (i) the date on which the Liquidation Amount of
such Series B Preferred Share (plus all accrued and accumulated but unpaid
dividends thereon) is paid to the holder thereof, (ii) the date on which such
Series B Preferred Share is redeemed as set forth herein or (iii) the date on
which such Series B Preferred Share is otherwise acquired by the Corporation.
Dividends on each share of the Series C Preferred Stock (a "Series C Preferred
Share") shall accrue at the rate of nineteen percent (19%) per annum, compounded
daily, for an annual effective yield of twenty and nine-tenths percent (20.9%)
on the
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sum of the Liquidation Amount thereof plus all accumulated and unpaid dividends
thereon from and including the date of issuance of such Series C Preferred Share
to and including the first to occur of (i) the date on which the Liquidation
Amount of such Series C Preferred Share (plus all accrued and accumulated but
unpaid dividends thereon) is paid to the holder thereof, or (ii) the date on
which such Series C Preferred Share is otherwise acquired by the Corporation.
Dividends on each Series C Preferred Share outstanding from time to time shall
be computed on the basis of a 360-day year, actual days elapsed from the date of
issuance of such Series C Preferred Share. Such dividends shall accrue whether
or not they have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
The date on which the Corporation initially issues any Preferred Share (as
defined below) shall be deemed to be its "date of issuance" regardless of the
number of times transfer of such Preferred Share is made on the stock records
maintained by or for the Corporation and regardless of the number of
certificates which may be issued to evidence such Preferred Share. The Series A
Preferred Shares, the Series B Preferred Shares and the Series C Preferred
Shares are referred to collectively as the "Preferred Shares."
1B. Dividend Reference Dates. To the extent not paid on December 31
of each year, beginning December 31, 1998 (the "Preferred Dividend Reference
Dates"), all dividends which have accrued on each Preferred Share outstanding
during the twelve-month period (or other period in the case of the initial
Preferred Dividend Reference Date) ending upon each such Preferred Dividend
Reference Date shall be accumulated and shall remain accumulated dividends with
respect to such Preferred Share until paid to the holder thereof.
Section 2. Priority of Preferred Stock on Dividends and Redemptions.
2A. Series C Preferred Shares. So long as any accrued but unpaid
dividends on the Series C Preferred Shares remain outstanding, without the prior
written consent of the holders of a majority of the outstanding Series C
Preferred Shares, the Corporation shall not, nor shall it permit any Subsidiary
to, (i) redeem, purchase or otherwise acquire directly or indirectly any Junior
A Securities, nor shall the Corporation directly or indirectly pay or declare
any dividend or make any distribution upon any Junior A Securities (including
any redemptions, purchases or acquisitions pursuant to Section 8 of Part C
hereof) or (ii) issue any equity security with rights equal or superior to the
rights of the Series C Preferred Shares.
2B. Series A Preferred Shares and Series B Preferred Shares. So long
as any accrued but unpaid dividends on the Series A Preferred Shares or the
Series B Preferred Shares remains outstanding, without the prior written consent
of (a) the holders of a majority of the outstanding Series A Preferred Shares
and (b) the holders of a majority of the outstanding Series B Preferred Shares,
the Corporation shall not, nor shall it permit any Subsidiary to, redeem,
purchase or otherwise acquire directly or indirectly any Junior B Securities,
nor shall the Corporation directly or indirectly pay or declare any dividend or
make any distribution upon any Junior B Securities.
Section 3. Voting Rights. The holders of Series A Preferred Stock
shall be entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and except as otherwise provided by law or as provided
herein, the holders of the Series A Preferred Stock shall be entitled to vote on
all matters submitted to the stockholders for a vote together with the holders
of the Class A Common Stock voting together as a single class with each share of
Class A Common
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Stock entitled to one vote per share and each Series A Preferred Share entitled
to 1.5 votes per share. Except as otherwise provided by law or as provided
herein, the holders of Series B Preferred Stock and the Series C Preferred Stock
shall not be entitled to voting rights.
Section 4. Conversion.
4A. At any time (a) prior to the first anniversary of the Closing
Date or (b) in connection with an Approved Sale or a transaction described in
Section 10(b) of the Shareholders' Agreement occurring prior to the date that is
eighteen months after the Closing Date, each holder of Series A Preferred Stock
may convert all or any portion of the Series A Preferred Shares held by such
holder into shares of Class A Common Stock as follows: each Series A Preferred
Share shall be convertible into (i) one-half share of Class A Common Stock and
(ii) the number of shares of Class A Common Stock determined by dividing the
Liquidation Amount of such Series A Preferred Stock as of its date of issuance
by $1,000 (subject to adjustment as provided in Section 7B of this Part B).
4B. At any time in connection with an Initial Public Offering, all
outstanding Series A Preferred Shares (other than Series A Preferred Shares as
to which the holders thereof have exercised their voluntary conversion rights
under Section 4A or 4C of this Part B) shall be converted automatically into
shares of Class A Common Stock or, if the outstanding shares of Class A Common
Stock are converted into another equity security of the Corporation in
connection with such Initial Public Offering (the "IPO Stock"), into shares of
such IPO Stock as follows: each Series A Preferred Share shall be converted
into (i) one-half share of Class A Common Stock (or such number of shares of the
IPO Stock into which one-half share of Class A Common Stock is converted) plus
(ii) such number of shares of Class A Common Stock or IPO Stock (as applicable)
having a Fair Market Value (as of the effective date of the Initial Public
Offering with respect to which such conversion occurs) equal to the Liquidation
Amount (plus all accrued and accumulated but unpaid dividends thereon) of such
Series A Preferred Share.
4C. In connection with an Initial Public Offering occurring prior to
the date that is eighteen months after the Closing Date, each holder of Series A
Preferred Stock may, in lieu of mandatory conversion, pursuant to Section 4B of
this Part B, of the Series A Preferred Shares held by such holder, convert all
or any portion of such Series A Preferred Shares into shares of IPO Stock as
follows: each Series A Preferred Share shall be converted into (i) one-half
share of Class A Common Stock and (ii) the number of shares of Class A Common
Stock determined by dividing the Liquidation Amount of such Series A Preferred
Stock as of its date of issuance by $1,000 (subject to adjustment as provided in
Section 7B of this Part B).
4D. At any time in connection with a transfer of Shares pursuant to
Section 10(a) of the Shareholders' Agreement or an Approved Sale, each holder of
Series A Preferred Stock may convert all or any portion of such Series A
Preferred Shares into shares of Class A Common Stock as follows: each Series A
Preferred Share shall be convertible into (i) one-half share of Class A Common
Stock plus (ii) such number of shares of Class A Common Stock having a Fair
Market Value (as of the close of business on the day on which such conversion is
to occur) equal to the Liquidation Amount (plus all accrued and accumulated but
unpaid dividends thereon) of such Series A Preferred Share.
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4E. At any time in connection with a transfer of Shares pursuant to
Section 10(a) of the Shareholders' Agreement or an Approved Sale, each holder of
Series B Preferred Stock may convert all or any portion of such Series B
Preferred Shares which are to be sold under Section 10(a) of the Shareholders'
Agreement or an Approved Sale into shares of Class A Common Stock as follows:
each Series B Preferred Share shall be convertible into such number of shares of
Class A Common Stock having a Fair Market Value (as of the close of business on
the day on which such conversion is to occur) equal to the Liquidation Amount
(plus all accrued and accumulated but unpaid dividends thereon) of such Series B
Preferred Share.
4F. Except as otherwise provided herein, each conversion of Preferred
Stock pursuant to this Section 4 or Section 5A below shall be deemed to have
been effected as of the close of business on the date on which the certificate
or certificates representing the Preferred Stock to be converted have been
surrendered for conversion at the principal office of the Corporation. At the
time any such conversion has been effected, the rights of the holder of the
Preferred Stock converted as a holder of such Preferred Stock shall cease and if
applicable, the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock are to be issued upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Class A Common Stock represented thereby.
4G. As soon as possible after a conversion pursuant to this Section 4
or Section 5A below has been effected (but in any event within five business
days), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of shares of
Class A Common Stock issuable by reason of such conversion in such name or names
and such denomination or denominations as the converting holder has specified;
and
(b) a certificate representing any Preferred Shares which were
represented by the certificate or certificates delivered to the Corporation in
connection with such conversion but which were not converted.
4H. The issuance of certificates for shares of Class A Common Stock
or Class B Common Stock upon conversion of Preferred Stock pursuant to this
Section 4 or Section 5A below or pursuant to the Exchange Agreements shall be
made without charge to the holders of such Preferred Stock for any issuance tax
in respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Class A Common Stock or
Class B Common Stock. Upon conversion of each share of Preferred Stock pursuant
to this Section 4 or Section 5A below or upon exercise of rights set forth in
the Exchange Agreements, the Corporation shall take all such actions as are
necessary in order to insure that the Class A Common Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable, free
and clear of all taxes, liens, charges and encumbrances with respect to the
issuance thereof.
4I. The Corporation shall assist and cooperate with any holder of
Shares required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of Preferred Shares
hereunder (including, without limitation, making any filings required to be made
by the Corporation).
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4J. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of issuance upon the conversion of the Preferred Stock pursuant to
this Section 4 or Section 5A below, such number of shares of Class A Common
Stock issuable upon the conversion of all outstanding Preferred Shares. All
shares of Class A Common Stock which are so issuable shall, when issued, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Corporation shall take all such actions as may be necessary to
assure that all such shares of Class A Common Stock may be so issued without
violation of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Class A Common Stock
may be listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance). The Corporation shall
not take any action which would cause the number of authorized but unissued
shares of Class A Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon conversion of the Preferred
Stock pursuant to this Section 4 and Section 5A below.
Section 5. Put Rights.
5A. (i) Upon a proposed Sale of the Corporation or (ii) at any time
after the tenth anniversary of the Closing Date, each holder of Series A
Preferred Stock (the "Series A Offering Holder") shall have the right to require
the Corporation to repurchase (the "Series A Put") all or any portion of the
Series A Preferred Shares held by such holder at a price per Series A Preferred
Share equal to the Series A Put Price by delivering a written notice to the
Corporation at the Corporation's principal place of business or at such other
address as the Corporation may, by written notice to all holders of Preferred
Stock, designate, specifying the number of Series A Preferred Shares that such
holder desires that the Corporation repurchase (the "Series A Put Notice"). A
Series A Put Notice relating to a proposed Sale of the Corporation must be
delivered not later than 10 days after the date on which the Corporation
notifies a Series A Offering Holder of a proposed Sale of the Corporation. The
"Series A Put Price" shall mean (x) an amount of cash equal to the Liquidation
Amount (plus all accrued and accumulated but unpaid dividends thereon through
the date of the Put Closing) of each Series A Preferred Share specified by a
Series A Offering Holder in its Series A Put Notice plus (y) one-half share of
Class A Common Stock.
5B. (i) Upon a proposed Sale of the Corporation or (ii) at any time
after the fourth anniversary of the Closing Date, each holder of Series B
Preferred Stock (the "Series B Offering Holder") shall have the right to require
the Corporation to repurchase (the "Series B Put") all or any portion of the
Series B Preferred Shares held by such holder for cash at a price per Series B
Preferred Share equal to the Liquidation Amount (plus all accrued and
accumulated but unpaid dividends thereon through the date of the Put Closing) of
each Series B Preferred Share specified by such Series B Offering Holder (the
"Series B Put Price") to be repurchased by the Corporation in a written notice
delivered to the Corporation at the Corporation's principal place of business or
at such other address as the Corporation may, by written notice to all holders
of Preferred Stock, designate, specifying the number of Series B Preferred
Shares that such holder desires that the Corporation repurchase (the "Series B
Put Notice"). A Series B Put Notice relating to a proposed Sale of the
Corporation must be delivered not later than 10 days after the date on which the
Corporation notifies a Series B Offering Holder of a proposed Sale of the
Corporation.
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5C. Upon a proposed Change of Control each holder of Series C
Preferred Stock (the "Series C Offering Holder") shall have the right to require
the Corporation to repurchase (the "Series C Put") all or any portion of the
Series C Preferred Shares held by such holder at a price per Series C Preferred
Share equal to the Series C Put Price (as defined below) by delivering a written
notice to the Corporation at the Corporation's principal place of business or at
such other address as the Corporation may, by written notice to all holders of
Preferred Stock, designate, specifying the number of Series C Preferred Shares
that such holder desires that the Corporation repurchase (the "Series C Put
Notice," and together with the Series A Put Notice and the Series B Put Notices,
the "Put Notices"). A Series C Put Notice relating to a proposed Change of
Control must be delivered not later than 15 days after the date on which the
Corporation notifies a Series C Offering Holder of a proposed Change of Control.
The "Series C Put Price" shall mean (i) with respect to any Series C Put
occurring on or before February 3, 2003, an amount of cash equal to one hundred
and one percent (101%) of the Liquidation Amount (plus all accrued and
accumulated but unpaid dividends thereon through the date of the Put Closing) of
each Series C Preferred Share specified by a Series C Offering Holder in its
Series C Put Notice and (ii) with respect to any Series C Put occurring after
February 3, 2003, an amount of cash equal to the Liquidation Amount (plus all
accrued and accumulated but unpaid dividends thereon through the date of the Put
Closing) of each Series C Preferred Share specified by a Series C Offering
Holder in its Series C Put Notice. A Series A Offering Holder, a Series B
Offering Holder and a Series C Offering Holder shall be referred to herein as an
"Offering Holder."
5D. The Corporation shall purchase, and the Offering Holder shall
sell, the number of Preferred Shares specified in the Series A Put Notice,
Series B Put Notice or the Series C Put Notice, as the case may be, at a
mutually agreeable place (the "Put Closing") (i) on a date that is not later
than thirty days after the delivery of the Series A Put Notice or the Series B
Put Notice, as the case may be, in the case of the exercise of a put right
pursuant to Section 5A(ii) or 5B(ii), (ii) immediately prior to the consummation
of the Sale of the Corporation in the case of the exercise of a put right
pursuant to Section 5A(i) or 5B(i) or (iii) on the repurchase date specified in
the Change of Control Offer delivered to the holders of the Senior Notes
pursuant to Section 4.08 of the Indentures in the case of the exercise of a put
right pursuant to Section 5C; provided, however, the Corporation shall not be
obligated to purchase any Preferred Shares upon exercise of the rights specified
in Sections 5A(i), 5B(i) and 5C if the related proposed Sale of the Corporation
or Change of Control, as the case may be, is not consummated; and provided
further that if, other than in connection with a Sale of the Corporation or
Change of Control, as the case may be, the Corporation is prohibited by law from
repurchasing any Preferred Shares or if any such repurchase would result in a
default under any Financing Documents, then the Corporation may defer such
repurchase until such prohibitions no longer exist or such default would no
longer occur; and provided further that the holders of Series C Preferred Shares
shall not have any rights pursuant to this Section 5 of Part B of this ARTICLE
FOURTH that are greater than the rights of the holders of the Senior
Subordinated Notes under that certain GSIC Subordination Deed. The Corporation
shall use its commercially reasonable efforts to obtain any consent necessary to
permit such payments. In the event the Corporation is prohibited by law or any
Financing Document from repurchasing all of the Preferred Shares as to which Put
Notices have been given, the Corporation shall repurchase the maximum number of
Preferred Shares which it is permitted to repurchase without violating such laws
or creating a default under such Financing Documents, selected from among the
Preferred Shares held by all Offering Holders pro rata in proportion to the
aggregate Series A Put Price, Series
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B Put Price or Series C Put Price, as the case may be, payable in respect of all
of the Preferred Shares specified in the respective Put Notices of each such
Offering Holder.
5E. At any Put Closing, each Offering Holder shall deliver to the
Corporation certificates representing the Preferred Shares to be repurchased by
the Corporation from such Offering Holder and the Corporation shall deliver to
such Offering Holder:
(a) the Series A Put Price, the Series B Put Price or the Series
C Put Price, as the case may be, for each Preferred Share to be purchased by the
Corporation by cashier's or certified check payable to such Offering Holder or
by wire transfer of immediately available funds to an account designated by such
Offering Holder; and
(b) a certificate representing any Preferred Shares which were
represented by the certificate or certificates delivered to the Corporation in
connection with such Put Closing but which were not purchased at the Put
Closing.
Section 6. Redemptions.
6A. The Corporation may at any time redeem all or any portion of the
Series B Preferred Shares then outstanding. On any such redemption, the
Corporation shall pay a purchase price per Series B Preferred Share equal to the
Series B Put Price as of the date of the redemption. Any redemption of less than
all of the Series B Preferred Shares shall be made pro rata from all holders of
Series B Preferred Shares in proportion to their respective Series B Put Price.
6B. At any time after the fifth anniversary of the Closing Date, the
Corporation may redeem all or any portion of the Series A Preferred Shares then
outstanding. On any such redemption, the Corporation shall pay a purchase price
per Series A Preferred Share equal to the Series A Put Price as of the date of
the redemption. Any redemption of less than all of the Series A Preferred Shares
shall be made pro rata from all holders of Series A Preferred Shares in
proportion to their respective Series A Put Price.
6C. At any time after the first anniversary of the Loan Closing Date,
the Corporation may redeem all or any portion of the Series C Preferred Shares
then outstanding. On any such redemption, the Corporation shall pay a purchase
price per Series C Preferred Share equal to the Liquidation Amount (plus all
accrued and accumulated but unpaid dividends thereon) as of the date of the
redemption plus a premium equal to the percentage set forth in Section 2.5.1.1
of the GSIC Loan Agreement of the Liquidation Amount (plus all accrued and
accumulated but unpaid dividends thereon) of the Series C Preferred Shares then
outstanding. Redemptions of Series C Preferred Shares pursuant to this Section
6C shall be made in connection with and at the same time as a prepayment of the
Senior Subordinated Notes pursuant to Section 2.5 of the GSIC Loan Agreement.
Any redemption of less than all of the Series C Preferred Shares shall be made
pro rata from all holders of Series C Preferred Shares in proportion to the
Liquidation Amount (plus all accrued and accumulated but unpaid dividends
thereon) of the Series C Preferred Shares held by such holders.
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6D. The Corporation shall redeem all of the Series C Preferred Shares
then outstanding on May 31, 2009. The Corporation shall pay a purchase price
per Series C Preferred Share equal to the Liquidation Amount (plus all accrued
and accumulated but unpaid dividends thereon) as of the date of the redemption.
6E. The Corporation shall mail written notice of each redemption of
any Preferred Shares to each record holder thereof and to each record holder of
Class C Common Shares not more than 60 days nor less than 10 days prior to the
date on which such redemption is to be made. In case fewer than the total number
of Preferred Shares represented by any certificate are redeemed, a new
certificate representing the number of unredeemed Preferred Shares of the same
series shall be issued to the holder thereof without cost to such holder within
ten business days after surrender of the certificate representing the redeemed
Preferred Shares.
6F. Any Preferred Shares which are redeemed or otherwise acquired by
the Corporation shall be canceled and shall not be reissued, sold or
transferred.
Section 7. Anti-Dilution Provisions.
7A. Subdivision or Combination of Class A Common Stock. If the
Corporation at any time (i) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) shares of Class A Common Stock into a larger
number of shares or (ii) combines (by reverse stock split or otherwise) shares
of Class A Common Stock into a smaller number of shares, then the Series A
Preferred Shares shall be subdivided or combined, as the case may be, in the
same manner and the Liquidation Amount (and all accrued and accumulated but
unpaid dividends thereon) shall be reduced proportionately or increased
proportionately, as the case may be, in good faith by the Board of Directors of
the Corporation.
7B. Issuance of Shares of Class A Common Stock below Fair Market
Value. In the event that prior to the first anniversary of the Closing Date the
Corporation issues (i) Common Stock for less than its fair market value, or (ii)
rights to acquire Common Stock for an exercise or conversion price less than the
fair market value of the Common Stock to be acquired, in each case as determined
in good faith by the independent auditors of the Corporation, the number of
shares into which each Series A Preferred Share may be converted under clause
(ii) of Sections 4A and 4C hereof shall be adjusted under customary weighted-
average antidilution provisions applicable to convertible instruments of this
type so that the fair market value of the Conversion Element after taking into
account such issuance is the same as prior to such issuance. Any application of
the adjustment required hereunder shall be made by unanimous vote of the Board
of Directors acting in good faith. This Section 7B shall not apply to any
issuances to which Section 7A applies, to any issuances to which the preemptive
rights under Section 12(a) of the Shareholders' Agreement do not apply, to any
issuances of Class B Common Stock pursuant to the Exchange Agreement, to any
issuances of Class A Common Stock pursuant to the exercise of the Redemption
Right, or to any issuance of Class A Common Stock in connection with the
conversion of Class C Common Stock.
Section 8. Other Provisions Applicable to Series C Preferred
Shares. Notwithstanding anything contained herein to the Contrary, the holders
of the Series C Preferred Shares shall be entitled to the rights and privileges
of a Lender (i) set forth in Sections 4, 6.2, 6.3,
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6.4 and 6.10 of the GSIC Loan Agreement and subject to the restrictions set
forth in Sections 6.1, and 6.6 of the GSIC Loan Agreement and (ii) under the
GSIC Stockholders Agreement.
Part C. Common Stock
Except as otherwise provided in this Part C or in Part D of this
ARTICLE FOUR or as otherwise required by applicable law, all shares of Common
Stock shall be identical in all respects and shall entitle the holders thereof
to the same rights and privileges, subject to the same qualifications,
limitations and restrictions.
Section 1. Voting Rights. Except as otherwise required by
applicable law or as provided herein, holders of the Class A Common Stock and
the Class C Common Stock shall be entitled to one vote per share on all matters
to be voted on by the stockholders of the Corporation and shall vote together as
one class with the holders of Series A Preferred Stock, and the holders of Class
B Common Stock shall not be entitled to voting rights.
Section 2. Conversion of Class B Common Stock.
2A. A holder of shares of Class B Common Stock (a "Converting
Holder") acquired as a result of the exercise of rights by another Person under
Section 10(a) of the Shareholders' Agreement to sell the Selling Percentage (as
defined in the Shareholders' Agreement) of Class B Common Stock shall have the
right to convert each share of Class B Common Stock so acquired into Class A
Common Stock in accordance with the provisions of this Section 2A. The
Converting Holder shall receive in exchange for each share of Class B Common
Stock a number of shares of Class A Common Stock having the value equal to the
price paid for such Class B Common Stock by the Converting Holder (which, for
this purpose, shall not exceed the Implied Class B Purchase Price (as defined in
the Shareholders' Agreement) of such stock); the value of a share of Class A
Common Stock for this purpose shall equal the price paid by the Converting
Holder for each share of Class A Common Stock acquired by the Converting Holder
in the transaction in which such Class B Common Stock was acquired. A
Converting Holder may exercise the foregoing conversion right at any time within
six (6) months after such Class B Common Stock is acquired by providing written
notice of such conversion to the Corporation.
2B. Immediately prior to the effectiveness of an Initial Public
Offering, each share of Class B Common Stock shall be converted into such number
of shares of Class A Common Stock determined by dividing (i) the amount that the
holder of such Class B Common Stock would have received had the Company made
liquidation distributions pursuant to Part D of Article Four of the Certificate
of Incorporation in an amount equal to the aggregate fair market value of the
capital stock of the Company immediately prior to the effectiveness of such
Initial Public Offering implied from the price and amount of equity securities
to be sold in the Initial Public Offering by (ii) the price per share to be
received by the Company in the Initial Public Offering (adjusted so as to
eliminate the effect of any stock splits or similar transaction which will occur
in connection with such Initial Public Offering).
2C. Except as otherwise provided herein, each conversion of Class B
Common Stock pursuant to Section 2A or Section 2B hereof shall be deemed to have
been effected as of the
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close of business on the date on which the certificate or certificates
representing the Class B Common Stock to be converted have been surrendered for
conversion at the principal office of the Corporation. At the time any such
conversion has been effected, the rights of the holder of the Class B Common
Stock converted as a holder of Class B Common Stock shall cease and if
applicable, the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock are to be issued upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Class A Common Stock represented thereby.
2D. As soon as possible after a conversion pursuant to Section 2A or
Section 2B hereof has been effected (but in any event within five business
days), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of
shares of Class A Common Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting holder
has specified; and
(b) a certificate representing any shares of Class B Common
Stock which were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not converted.
2E. The issuance of certificates for shares of Class A Common Stock
upon conversion of Class B Common Stock pursuant to Section 2A or Section 2B
hereof shall be made without charge to the holders of such Class B Common Stock
for any issuance tax in respect thereof or other cost incurred by the
Corporation in connection with such conversion and the related issuance of
shares of Class A Common Stock. Upon conversion of each share of Class B Common
Stock pursuant to Section 2A or Section 2B hereof, the Corporation shall take
all such actions as are necessary in order to insure that the Class A Common
Stock issuable with respect to such conversion shall be validly issued, fully
paid and nonassessable, free and clear of all taxes, liens, charges and
encumbrances with respect to the issuance thereof.
2F. The Corporation shall assist and cooperate with any holder of
Shares required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of shares of Class B
Common Stock hereunder (including, without limitation, making any filings
required to be made by the Corporation).
2G. All shares of Class A Common Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens, charges and encumbrances. The Corporation shall take all
such actions as may be necessary to assure that all such shares of Class A
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Class A Common Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the Corporation upon
each such issuance). The Corporation shall not take any action which would
cause the number of authorized but unissued shares of Class A Common Stock to be
less than the number of such shares required to be reserved hereunder for
issuance upon conversion of the Class B Common Stock pursuant to Section 2A and
Section 2B hereof.
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2H. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of issuance upon the conversion of the Class B Common Stock pursuant
to this Section 2, such number of shares of Class A Common Stock issuable upon
the conversion of all outstanding shares of Class B Common Stock. All shares of
Class A Common Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Corporation shall take all such actions as may be necessary to
assure that all such shares of Class A Common Stock may be so issued without
violation of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Class A Common Stock
may be listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance). The Corporation shall
not take any action which would cause the number of authorized but unissued
shares of Class A Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon conversion of the Preferred
Stock pursuant to this Section 2.
Section 3. Dividends on Class C Common Stock.
3A. When and as declared by the Corporation's Board of Directors and
to the extent permitted under the General Corporation Law, the Corporation shall
pay preferential dividends in cash to the holders of Class C Common Stock as
provided in this Section 3A and Part D of this ARTICLE FOUR. Dividends on each
share of the Class C Common Stock (a "Class C Common Share") shall accrue on a
daily basis at the rate of twenty percent (20%) per annum of the sum of the
Liquidation Amount thereof plus all accumulated and unpaid dividends thereon
from and including the date of issuance of such Class C Common Share to and
including the first to occur of (i) the date on which the Liquidation Amount of
such Class C Common Share (plus all accrued and accumulated but unpaid dividends
thereon) is paid to the holder thereof, (ii) the date on which such Class C
Common Share is converted to Class A Common Stock as set forth herein or (iii)
the date on which such Class C Common Share is otherwise acquired by the
Corporation. Such dividends shall accrue whether or not they have been declared
and whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends. The date on which the
Corporation initially issues any Class C Common Share shall be deemed to be the
"date of issuance" of all Class C Common Shares (whether or not such Class C
Common Share was issued on such date) regardless of the number of times transfer
of any Class C Common Share is made on the stock records maintained by or for
the Corporation and regardless of the number of certificates which may be issued
to evidence any Class C Common Share.
3B. Dividend Reference Dates. Dividends on the Class C Common
Shares, if and when declared by the Board of Directors, shall be payable
quarterly in cash on December 31, March 31, June 30, and September 30 of each
year, beginning on December 31, 1999 (each, a "Common Dividend Payment Date").
Dividends shall accrue on such accumulated dividends at the rate or rates
specified in Section 3A and all dividends which have accrued on each Class C
Common Share outstanding during the three-month period (or other period in the
case of the initial Common Dividend Reference Date) ending upon each such Common
Dividend Reference Date shall be accumulated and shall remain accumulated
dividends with respect to such Class C Common Share until paid to the holder
thereof. If and when the Board of Directors declares a dividend on the Class A
Common Stock, holders of Class C Common Shares shall participate in such
dividends on
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a share-by-share basis. Any dividend paid to holders of Class C Common Shares as
a result of a dividend declared on Class A Common Stock shall be credited
against accruing dividends.
Section 4. Priority of Class C Common Stock on Dividends and
Redemptions. So long as any accrued but unpaid dividends on the Class C Common
Shares remains outstanding, without the prior written consent of the holders of
a majority of the outstanding Class C Common Shares, the Corporation shall not,
nor shall it permit any Subsidiary to, redeem, purchase or otherwise acquire
directly or indirectly any Junior B Securities, nor shall the Corporation
directly or indirectly pay or declare any dividend or make any distribution upon
any Junior B Securities.
Section 5. Conversion.
5A. At any time, each holder of Class C Common Stock may convert all
or any portion of the Class C Common Shares held by such holder into shares of
Class A Common Stock as follows: each Class C Common Share shall be convertible
into (i) one share of Class A Common Stock and (ii) the number of shares of
Class A Common Stock determined by dividing the accrued and accumulated but
unpaid dividends on such Class C Common Stock through the date of conversion by
$1,000 (subject to adjustment as provided in Section 7B of this Part C).
5B. Except as otherwise provided herein, each conversion of Class C
Common Stock pursuant to this Section 5 shall be deemed to have been effected as
of the close of business on the date on which the certificate or certificates
representing the Class C Common Stock to be converted have been surrendered for
conversion at the principal office of the Corporation. At the time any such
conversion has been effected, the rights of the holder of the Class C Common
Stock converted as a holder of such Class C Common Stock shall cease and if
applicable, the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock are to be issued upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Class A Common Stock represented thereby.
5C. As soon as possible after a conversion pursuant to this Section 5
has been effected (but in any event within five business days), the Corporation
shall deliver to the converting holder:
(a) a certificate or certificates representing the number of
shares of Class A Common Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting holder
has specified; and
(b) a certificate representing any Class C Common Shares which
were represented by the certificate or certificates delivered to the Corporation
in connection with such conversion but which were not converted.
5D. The issuance of certificates for shares of Class A Common Stock
upon conversion of Class C Common Stock pursuant to this Section 5 shall be made
without charge to the holders of such Class C Common Stock for any issuance tax
in respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Class A Common Stock.
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5E. The Corporation shall assist and cooperate with any holder of
Class C Common Shares required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of Class C
Common Shares hereunder (including, without limitation, making any filings
required to be made by the Corporation).
5F. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of issuance upon the conversion of the Class C Common Stock pursuant
to this Section 5, such number of shares of Class A Common Stock issuable upon
the conversion of all outstanding Class C Common Shares. All shares of Class A
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Corporation shall take all such actions as may be necessary to assure that
all such shares of Class A Common Stock may be so issued without violation of
any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Class A Common Stock may be
listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance). The Corporation shall
not take any action which would cause the number of authorized but unissued
shares of Class A Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon conversion of the Class C
Common Stock pursuant to this Section 5.
Section 6. Mandatory Redemption of Class C Common Stock.
6A. The Corporation shall redeem all of the Class C Common Shares
then outstanding on May 31, 2009. The Corporation shall pay a purchase price
per Class C Common Share equal to the Liquidation Amount (plus all accrued and
accumulated but unpaid dividends thereon) of such Class C Common Share as of the
date of the redemption.
6B. At any time after August 3, 2000, the Corporation may redeem
all or any portion of the Class C Common Shares then outstanding. On any such
redemption, the Corporation shall pay a purchase price per Class C Common Shares
equal to the product of (i) the Class C Common Redemption Premium and (ii) the
Liquidation Amount (plus all accrued and accumulated but unpaid dividends
thereon) of such Class C Common Share as of the Class C Redemption Date (as
defined below). Redemptions made pursuant to this Section 6B shall apply only
to the Class C Common Shares that are outstanding on the Class C Redemption
Date. Any redemption of less than all of the Class C Common Shares shall be
made pro rata from all holders of Class C Common Shares in proportion to the
Liquidation Amount of the Class C Common Shares held by such holders.
6C. The Corporation shall mail written notice of each redemption of
any Class C Common Shares to each record holder thereof not more than 60 days
nor less than 10 days prior to the date on which such redemption is to be made
(the "Class C Redemption Date"). In case fewer than the total number of Class C
Common Shares represented by any certificate are redeemed, a new certificate
representing the number of unredeemed Class C Common Shares shall be issued to
the holder thereof without cost to such holder within ten business days after
surrender of the certificate representing the redeemed Class C Common Shares.
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6D. Any Class C Common Shares which are redeemed or otherwise
acquired by the Corporation shall be canceled and shall not be reissued, sold or
transferred.
Section 7. Anti-Dilution Provisions.
7A. Subdivision or Combination of Class A Common Stock. If the
Corporation at any time (i) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) shares of Class A Common Stock into a larger
number of shares or (ii) combines (by reverse stock split or otherwise) shares
of Class A Common Stock into a smaller number of shares, then the Class C Common
Shares shall be subdivided or combined, as the case may be, in the same manner
and the Liquidation Amount (and all accrued and accumulated but unpaid dividends
thereon) shall be reduced proportionately or increased proportionately, as the
case may be, in good faith by the Board of Directors of the Corporation.
7B. Issuance of Shares of Class A Common Stock below Fair Market
Value. If the Corporation issues (i) Common Stock for less than its fair market
value, or (ii) rights to acquire Common Stock for an exercise or conversion
price less than the fair market value of the Common Stock to be acquired, in
each case as determined in good faith by the independent auditors of the
Corporation, the number of shares into which each Class C Common Share may be
converted under clause (ii) of Sections 5A and 5C hereof shall be adjusted under
customary weighted-average antidilution provisions applicable to convertible
instruments of this type so that the fair market value of the Conversion Element
after taking into account such issuance is the same as prior to such issuance.
Any application of the adjustment required hereunder shall be made by unanimous
vote of the Board of Directors acting in good faith. This Section 7B shall not
apply to any issuances to which Section 7A applies, to any issuances to which
the preemptive rights under Section 12(a) of the Shareholders' Agreement do not
apply, to any issuances of Class B Common Stock pursuant to the Exchange
Agreement, or to any issuances of Class A Common Stock pursuant to the exercise
of the Redemption Right, or any issuance of Class A Common Stock in connection
with the conversion of Class C Common Stock.
Section 8. Put Rights.
8A. Upon a proposed Sale of the Corporation each holder of Class C
Common Stock (the "Class C Offering Holder") shall have the right to require the
Corporation to repurchase (the "Class C Put") all or any portion of the Class C
Common Shares held by such holder at a price per Class C Common Share equal to
the Class C Put Price by delivering a written notice to the Corporation at the
Corporation's principal place of business or at such other address as the
Corporation may, by written notice to all holders of Class C Common Stock,
designate, specifying the number of Class C Common Shares that such holder
desires that the Corporation repurchase (the "Class C Put Notice"). A Class C
Put Notice relating to a proposed Sale of the Corporation must be delivered not
later than 10 days after the date on which the Corporation notifies a Class C
Offering Holder of a proposed Sale of the Corporation. The "Class C Put Price"
shall mean an amount of cash equal to the Liquidation Amount (plus all accrued
and accumulated but unpaid dividends thereon through the date of the Class C Put
Closing) of each Class C Common Share specified by a Class C Offering Holder in
its Class C Put Notice.
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8B. The Corporation shall purchase, and the Class C Offering Holder
shall sell, the number of Class C Common Shares specified in the Class C Put
Notice at a mutually agreeable place (the "Class C Put Closing") on the
repurchase date specified in the Change of Control Offer delivered to the
holders of the Senior Notes pursuant to Section 4.08 of the Indentures in the
case of the exercise of the Class C Put; provided, however, the Corporation
shall not be obligated to purchase any Class C Common Shares upon exercise of
the rights specified in Sections 8A if the related proposed Sale of the
Corporation is not consummated; and provided further that if, other than in
connection with a Sale of the Corporation, the Corporation is prohibited by law
from repurchasing any Class C Common Shares or if any such repurchase would
result in a default under any Financing Documents, then the Corporation may
defer such repurchase until such prohibitions no longer exist or such default
would no longer occur. The Corporation shall use its commercially reasonable
efforts to obtain any consent necessary to permit such payments. In the event
the Corporation is prohibited by law or any Financing Document from repurchasing
all of the Class C Common Shares as to which Put Notices have been given, the
Corporation shall repurchase the maximum number of Class C Common Shares which
it is permitted to repurchase without violating such laws or creating a default
under such Financing Documents, selected from among the Class C Common Shares
held by all Class C Offering Holders pro rata in proportion to the aggregate
Class C Put Price, payable in respect of all of the Class C Common Shares
specified in the respective Class C Put Notices of each such Class C Offering
Holder.
8C. At any Class C Put Closing, each Class C Offering Holder shall
deliver to the Corporation certificates representing the Class C Common Shares
to be repurchased by the Corporation from such Class C Offering Holder and the
Corporation shall deliver to such Class C Offering Holder:
(a) the Class C Put Price for each Class C Common Share to be
purchased by the Corporation by cashier's or certified check payable to such
Class C Offering Holder or by wire transfer of immediately available funds to an
account designated by such Class C Offering Holder; and
(b) a certificate representing any Class C Common Shares which
were represented by the certificate or certificates delivered to the Corporation
in connection with such Class C Put Closing but which were not purchased at the
Class C Put Closing.
Part D. Distribution Rights and General Terms
Section 1. Distributions. At the time of each Distribution, such
Distribution shall be made to the holders of Shares in the following priority:
1A. The holders of Series C Preferred Stock shall be entitled to
receive the entirety of such Distribution (ratably among such holders based upon
the aggregate amount of accrued and accumulated but unpaid dividends on the
Series C Preferred Shares held by each such holder as of the time of such
Distribution) up to an amount equal to the aggregate accrued and accumulated but
unpaid dividends on the outstanding shares of Series C Preferred Stock as of the
time of such Distribution, and no Distribution or any portion thereof shall be
made under Sections 1B, 1C, 1D or 1E below until the entire amount of accrued
and accumulated but unpaid dividends on the
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outstanding shares of Series C Preferred Stock as of the time of such
Distribution has been paid in full.
1B. After the aggregate accrued and accumulated but unpaid dividends
on the outstanding Series C Preferred Shares has been paid in full pursuant to
Section 1A above, the holders of Series C Preferred Stock shall be entitled to
receive all or a portion of any Distribution (ratably among such holders based
upon the aggregate amount of Liquidation Amount of the Series C Preferred Shares
held by each such holder as of the time of the Distribution) equal to the
aggregate Liquidation Amount of the outstanding Series C Preferred Shares as of
the time of such Distribution less amounts previously paid under this Section
1B, if any. No Distribution or any portion thereof shall be made under Sections
1C, 1D or 1E below until the entire amount of the Liquidation Amount of the
outstanding Series C Preferred Shares as of the time of such Distribution has
been paid in full.
1C. After the amounts required to be paid pursuant to Sections 1A and
1B above have been paid in full, the holders of Series A Preferred Stock, Series
B Preferred Stock and Class C Common Stock, together as a group, shall be
entitled to receive the entirety of such Distribution (ratably among such
holders based upon the aggregate amount of accrued and accumulated but unpaid
dividends on the Series A Preferred Shares, the Series B Preferred Shares and
the Class C Common Shares held by each such holder as of the time of such
Distribution) up to an amount equal to the aggregate accrued and accumulated but
unpaid dividends on the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock and Class C Common Stock, respectively, as of the time of such
Distribution, and no Distribution or any portion thereof shall be made under
Sections 1D or 1E below until the entire amount of accrued and accumulated but
unpaid dividends on the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock and Class C Common Stock, respectively, as of the time of such
Distribution has been paid in full.
1D. After the amounts required to be paid pursuant to Sections 1A,
1B and 1C above have been paid in full, the holders of Series A Preferred Stock,
Series B Preferred Stock and Class C Common Stock, together as a group, shall be
entitled to receive all or a portion of any Distribution (ratably among such
holders based upon the aggregate Liquidation Amount of the Series A Preferred
Shares, the Series B Preferred Shares and the Class C Common Shares, as the case
may be, held by each such holder as of the time of the Distribution) equal to
the aggregate Liquidation Amount of the outstanding Series A Preferred Shares,
Series B Preferred Shares and Class C Common Shares, as the case may be, as of
the time of such Distribution (with the holders of Series A Preferred Shares
entitled to receive the aggregate Liquidation Amount of such Series A Preferred
Shares, the holders of the Series B Preferred Shares entitled to receive the
aggregate Liquidation Amount of such Series B Preferred Shares and the holders
of the Class C Common Shares entitled to receive the aggregate Liquidation
Amount of such Class C Common Shares, less, in each case, amounts previously
paid in respect of such Shares under this Section 1D, if any). No Distribution
or any portion thereof shall be made under Section 1E below until the entire the
Liquidation Amount of the outstanding Series A Preferred Shares, Series B
Preferred Shares and Class C Common Shares, respectively, as of the time of such
Distribution has been paid in full.
1E. After the amounts required to be paid pursuant to Sections 1A,
1B, 1C and 1D above have been paid in full, the remainder of a Distribution (if
any) shall be distributed as follows:
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(a) first, 100% to the holders of the outstanding Class A Common Stock and
the holders of the Series A Preferred Stock (ratably among such holders
based on the Unpaid Acquisition Cost of each such holder until such
time as each such holder shall have received its Unpaid Acquisition
Costs);
(b) second, 100% to the holders of the outstanding Class B Common Stock
(ratably among such holders based on the number of shares of Class B
Common Stock held by each such holder) until such time as each such
holder shall have received $1,000 (subject to adjustment by the Board
of Directors of the Corporation for stock splits, stock dividends,
reverse stock splits and other similar transactions) for each share of
Class B Common Stock held by such holder less any amounts previously
distributed under this clause (b);
(c) third, 100% to the holders of the outstanding Class A Common Stock and
the holders of the Series A Preferred Stock (ratably among such holders
based on the number of shares of Deemed Common Stock, respectively,
represented by the shares held by each such holder) until such time as
each such holder shall have received an IRR equal to 25% in respect of
all of the shares of Class A Common Stock and Series A Preferred Shares
held by such holder;
(d) fourth, 100% to the holders of the outstanding Class B Common Stock
(ratably among such holders based on the number of shares of Class B
Common Stock held by each such holder) until such time as each such
holder shall have received an IRR equal to 20% in respect of all of the
shares of Class B Common Stock held by such holder on the date of
determination; and
(e) fifth, 100% to the holders of the outstanding Common Stock and Series A
Preferred Stock (ratably among such holders based on the number of
shares of Deemed Common Stock, respectively, represented by the shares
held by each such holder).
Notwithstanding the foregoing, in the event that the holders of Class C Common
Shares would be entitled to receive distributions on the Class A Common Shares
that such Class C Common Shares are convertible into in an amount greater than
the distributions such holders are entitled to receive in respect of such Class
C Common Shares, then for the purposes of this Part D, all of the issued and
outstanding Class C Common Shares shall be deemed to be converted to Class A
Common Shares in accordance with the provisions of Section 5 of Part C of this
ARTICLE FOURTH, and the holders thereof shall be entitled to receive
distributions pursuant to Section 1E above in lieu of and not in addition to the
distributions such holders of the Class C Common Shares would otherwise receive
pursuant to Sections 1C and 1D above.
Section 2. Stock Splits and Stock Dividends. The Corporation
shall not in any manner subdivide (by stock split, stock dividend, merger,
consolidation or otherwise) or combine (by reverse stock split, stock dividend,
merger, consolidation or otherwise) any of the outstanding shares of Class A
Common Stock unless all shares of Class A Common Stock, are to be
proportionately subdivided or combined. The Corporation shall not in any manner
subdivide (by stock split, stock dividend, merger, consolidation or otherwise)
or combine (by reverse stock split,
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stock dividend, merger, consolidation or otherwise) any of the outstanding
Series A unless all shares of Class A Common Stock, are to be proportionately
subdivided or combined. All such subdivisions and combinations of Common Stock
shall be payable to the holders of Class A Common Stock only in Class A Common
Stock. All subdivisions and combinations of Preferred Stock shall be payable to
the holders of Series A Preferred Stock only in Series A Preferred Stock. In no
event shall a stock split or stock dividend constitute a payment of Liquidation
Amount (or accrued but unpaid dividends thereon).
Section 3. Registration of Transfer. The Corporation shall keep
at its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of Shares. Upon the surrender of
any certificate representing shares of any class of Shares at such place, the
Corporation shall, at the request of the registered holder of such certificate,
execute and deliver a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares of such class represented by
the surrendered certificate, and the Corporation forthwith shall cancel such
surrendered certificate. Each such new certificate will be registered in such
name and will represent such number of shares of such class as is requested by
the holder of the surrendered certificate and shall be substantially identical
in form to the surrendered certificate. The issuance of new certificates shall
be made without charge to the holders of the surrendered certificates for any
issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such issuance.
Section 4. Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of any class of Shares, and in the
case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate, and with respect to Preferred Stock, dividends shall accrue on the
Preferred Stock represented by such new certificate from the date to which
dividends have been fully paid on such lost, stolen, destroyed or mutilated
certificate.
Section 5. Notices. Except as otherwise expressly provided
hereunder, all notices referred to herein shall be in writing and shall be
delivered by registered or certified mail, return receipt requested and postage
prepaid, or by reputable overnight courier service, charges prepaid, and shall
be deemed to have been given when so mailed or sent (i) to the Corporation, at
its principal executive offices and (ii) to any stockholder, at such holder's
address as it appears in the stock records of the Corporation (unless otherwise
indicated by any such holder).
Section 6. Amendment and Waiver. No amendment or waiver of any
provision of this ARTICLE FOUR shall be effective without the prior written
consent of the holders of a majority of the then outstanding Shares with voting
power voting as a single class; provided that no amendment as to any terms or
provisions of, or for the benefit of, any class or series of Shares that
adversely affects the powers, preferences or special rights of such class or
series of Shares shall be
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effective without the prior consent of the holders of a majority of the then
outstanding shares of such affected class or series of Shares, voting as a
single class; provided further, that no amendment which treats holders of the
same class or series differently shall be effective without the prior consent of
the holders of a majority of the then outstanding shares of each such group
within the class or series which is treated differently, each voting as a
separate class; and, provided further, that no amendment of the terms or
provisions of any class or series of Shares which adversely affects the powers,
preferences or special rights of any other class or series of Shares (not
including any such effects resulting solely from the issuance of a new class or
series of Shares) shall be effective without the prior consent of the holders of
a majority of the then outstanding shares of such affected class or series of
Shares, voting as a single class.
Part E. Definitions.
"Approved Sale" shall have the same meaning as in the Shareholders'
Agreement.
"Change of Control" shall have the same meaning as in the GSIC Loan
Agreement.
"Change of Control Offer" shall have the same meaning as in the
Indentures.
"Class C Common Redemption Premium" means the percentage set forth
below for any redemption of Class C Common Shares pursuant to Section 6B of Part
C of this ARTICLE FOURTH during the 12-month periods indicated below:
12-Months Period Percentage
---------------- ----------
August 3, 2000 through August 3, 2001........ 103%
August 4, 2001 through August 4, 2002........ 102%
August 5, 2002 through August 5, 2003........ 101%
After August 5, 2003......................... 100%
"Closing Date" means the date on which the closing of the transactions
contemplated by the Recapitalization Agreement occurs.
"Conversion Element" means (a) the right to convert Series A Preferred
Shares under clause (ii) of Section 4A of Part B of this ARTICLE FOUR or under
clause (ii) of Section 4C of Part B of this ARTICLE FOUR or (b) the right to
convert Class C Common Shares under Section 5A of Part C of this ARTICLE FOUR.
"Corporation" means The Derby Cycle Corporation.
"Deemed Common Stock" has the meaning given such term in the
Shareholders' Agreement.
"Distribution" means each distribution made by the Corporation to
holders of Shares, whether in cash, property, or securities of the Corporation
and whether by dividend, liquidating distributions or otherwise; provided that
none of the following shall be a Distribution: (a) any
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redemption or repurchase by the Corporation of any Shares pursuant to Section 4
or Section 5 of Part B of this ARTICLE FOUR, (b) any redemption or repurchase by
the Corporation of any Shares pursuant to Section 8 of Part C of this ARTICLE
FOUR, or (c) any recapitalization or exchange of any Shares, or any subdivision
(by stock split, stock dividend or otherwise) or any combination (by reverse
stock split, stock dividend or otherwise) of any outstanding Shares.
"DM Indenture" means the Indenture dated as of May 14, 1998 by and
among the Borrower, Lyon and IBJ Schroder Bank and Trust Company, as Trustee
governing the 9 3/8% Senior Notes due May 14, 2008 in an original principal
amount equal to DM 110,000,000 issued by Borrower and Lyon Investments B.V.
"Dollar Indenture" means the Indenture dated as of May 14, 1998 by and
among the Borrower, Lyon and IBJ Schroder Bank and Trust Company, as Trustee
governing the 10% Senior Notes due May 14, 2008 in original principal amount
equal to US $100,000,000 issued by the Borrower and Lyon Investments B.V.
"Exchange Agreements" means the Exchange Agreements as defined in the
Recapitalization Agreement.
"Fair Market Value" means (1) with respect to a conversion pursuant to
Section 4B of Part B of this ARTICLE FOUR, in the event of an Initial Public
Offering in which equity securities of the Corporation are offered and sold to
the public pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), the price per share at which the
IPO Stock is offered to the public in the Initial Public Offering, (2) with
respect to an Initial Public Offering other than as described in clause (1)
above, the last sale price of the IPO Stock prior to the close of business on
the date of determination on the principal national securities exchange where
the IPO Stock is traded or, if not traded on a national securities exchange, the
average of the highest bid and lowest asked prices for the IPO Stock on the
NASDAQ National Market (if the IPO Stock is listed on the NASDAQ National
Market) or another automated quotation system (if the IPO Stock is not listed on
the NASDAQ National Market) on the date of determination (or if such date is not
a trading day, the last trading day prior to the date of determination), and (3)
with respect to a conversion pursuant to Section 4D or Section 4E of Part B of
this ARTICLE FOUR, the price per share of Class A Common Stock to be sold
pursuant to the provision of Section 10(a) of the Shareholders' Agreement or the
Approved Sale, as the case may be.
"Financing Documents" has the meaning given such term in the
Recapitalization Agreement.
"General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended from time to time.
"GSIC Loan Agreement" means that certain Senior Subordinated Loan
Agreement dated as of February 3, 1999 by and between the Corporation and the
Vencap Holdings (1992) Ptd Ltd.
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"GSIC Stockholders Agreement" shall have the same meaning as the term
"Stockholders' Agreement" as such term is defined in the GSIC Loan Agreement.
"GSIC Subordination Deed" shall have the same meaning as the term
"Subordination Deed" as such term is defined in the GSIC Loan Agreement.
"Indentures" means, collectively, the DM Indenture and the Dollar
Indenture.
"Initial Public Offering" means a public offering and sale of the
Corporation's common equity securities, other than in connection with a business
combination with or acquisition of any other Person (unless, upon consummation
of such business combination or acquisition, the holders of Series A Preferred
Stock are eligible to sell to the public at least 25% of the Deemed Common Stock
then held by them pursuant to sales within nine months after the effective date
of such business combination or acquisition, pursuant to Rule 144 under such
Securities Act), representing not less than 25% of the outstanding capital stock
of the Corporation on a fully diluted basis (i) pursuant to an effective
registration statement under the Securities Act of 1933, as amended, if
immediately thereafter the Corporation has publicly held equity securities
listed on a national securities exchange or the NASD automated quotation system
or (ii) made on any recognized stock exchange in any country which is a member
of the Organization of Economic Cooperation and Development. An Initial Public
Offering shall also be deemed to occur on the date on which the holders of
Series A Preferred Stock have the right to sell a number of shares of Common
Stock pursuant to registration statements effective under the Securities Act
which equals at least 25% of the Deemed Common Stock owned by such holders
immediately after the first sale of Common Stock to the public pursuant to an
effective registration statement under the Securities Act (after eliminating the
effect of any subsequent stock split, subdivision or combination of stock or
stock dividends in respect of such Common Stock).
"IRR" means, with respect to any Share, the annual interest rate
(compounded annually) which when used to calculate the net present value as of
the Closing Date of all Payment Inflows received by a holder of such Share in
respect of such Share as of the date of determination causes the difference
between such net present value and all Payment Outflows made in respect of such
Share as of such date of determination to equal zero. The IRR shall be
determined by the Company's regular outside accounting firm.
"Junior A Securities" means the Class A Common Stock, the Class B
Common Stock, the Class C Common Stock, the Series A Preferred Stock, the Series
B Preferred Stock and any other capital stock or other equity securities of the
Corporation, other than the Series C Preferred Stock.
"Junior B Securities" means the Class A Common Stock, the Class B
Common Stock and any other capital stock or other equity securities of the
Corporation, other than the Class C Common Stock and the Preferred Stock.
"Lender" shall have the same meaning as in the GSIC Loan Agreement.
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"Liquidation Amount" means (a) with respect to any Series A Preferred
Share as of any particular date an amount equal to $1,000, (b) with respect to
any Series B Preferred Share as of any particular date an equal to $1,000, (c)
with respect to any Series C Preferred Share as of any particular date an amount
equal to $1,000, and (d) with respect to any Class C Common Share as of any
particular date an amount equal to $1,000.
"Loan Closing Date" shall mean the Closing Date as such term is
defined in the GSIC Loan Agreement.
"Payment Inflows" means, with respect to any Share and as of the date
of determination, the sum of (i) all payments of cash and cash equivalents made
by the Corporation prior to and through and including such date of determination
in respect of such Share (excluding, for this purpose, any payments made
pursuant to Sections 1C or 1D of Part D of this Article FOUR) and (ii) the fair
market value (determined in good faith by the independent auditors of the
Corporation) of any property (other than cash or cash equivalents and Qualified
Company Securities) distributed by the Corporation prior to and through and
including such date of determination in respect of such Share (excluding, for
this purpose, any property distributed pursuant to Sections 1C or 1D of Part D
of this Article FOUR).
"Payment Outflows" means, with respect to any Share, the purchase
price paid in cash or cash equivalents in respect of such Share (for this
purpose, the cash purchase price paid in respect of (i) any share of Class A
Common Stock issued on or prior to the Closing Date or upon conversion of Class
C Common Stock, (ii) any share of Class A Common Stock issued upon conversion of
a Series A Preferred Share under clause (ii) of Section 4A or clause (ii) of
Section 4C of Part B hereof, (iii) any share of Class A Common Stock issuable
under clause (i) of Sections 4A, 4B, 4C and 4D of Part B hereof, shall be deemed
to be $1,000 per share and (iv) any share of Class A Common Stock or Class B
Common Stock issued in exchange for a Senior RIC Share shall be deemed to be
$1,000 per share (subject, in each case, to adjustment by the Board of Directors
of the Corporation for stock splits, stock dividends, reverse stock splits and
other similar transactions)).
"Person" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization or a governmental entity
or any department, agency or political subdivision thereof.
"Qualified Company Securities" means securities of the Company
received as a result of (i) conversions of securities provided for in this
Certificate of Incorporation, (ii) adjustments under Sections 7A or 7B of Part B
and Sections 7A or 7B of Part C of ARTICLE FOUR hereof, and (iii) stock
dividends, stock splits, combinations, subdivision, or reclassifications and
similar distributions of Common Stock which apply to all holders of the class of
Common Stock receiving such distributions.
"Recapitalization Agreement" means that certain Recapitalization
Agreement entered into by and among the Corporation, Derby International
Corporation S.A. (a societe anonyme under Luxembourg law), DC Cycle, L.L.C. (a
Delaware limited liability company), Derby Finance S.a.r.l
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(a Luxembourg corporation) and Perseus Cycle, L.L.C. (a Delaware limited
liability company) as of March 11, 1998, as amended.
"Redemption Right" has the meaning given such term in the Shareholders
Agreement.
"Sale of the Corporation" means any transaction or series of
transactions pursuant to which any Person or Persons acquires (i) capital stock
of the Corporation possessing voting power under normal circumstances to elect a
majority of the Corporation's Board of Directors (whether by merger,
consolidation or sale or transfer of the Corporation's capital stock) or (ii)
all or substantially all of the Corporation's assets determined on a
consolidated basis; provided that a Sale of the Corporation shall not be deemed
to occur unless it will result in a "Change of Control" as that term is defined
in that certain Indenture dated May 14, 1998, entered into among the Company,
Lyon Investments B.V. and IBJ Schroder Bank and Trust Company, as Trustee.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Notes" means, collectively, (i) the 9 3/8% Senior Notes due
May 14, 2008 in an original principal amount equal to DM 110,000,000 governed by
the DM Indenture and (ii) the 10% Senior Notes due May 14, 2008 in an original
principal amount equal to US $100,000,000 governed by the Dollar Indenture.
"Senior RIC Share" has the meaning assigned to such term in the
Exchange Agreement.
"Senior Subordinated Notes" shall have the same meaning as in the GSIC
Loan Agreement.
"Shareholders' Agreement means that certain shareholders' agreement
dated May 14, 1998, by and between the Corporation, DC Cycle, L.L.C., Derby
Finance S.a.r.l and Perseus Cycle, L.L.C., as amended.
"Subsidiary" means any corporation of which a majority of the shares
of outstanding capital stock possessing the voting power (under ordinary
circumstances) in electing the Board of Directors are, at the time as of which
any determination is being made, owned by the Corporation either directly or
indirectly.
"Unpaid Acquisition Costs" in the case of a holder of shares of Class
A Common Stock and/or Series A Preferred Shares and as of the date of any
Distribution shall mean (a) the sum of (i) $1,000 for each share of Class A
Common Stock outstanding on the Closing Date or issued pursuant to the Exchange
Agreements or issued upon the conversion of Class C Common Stock, and the amount
paid for each share of Class A Common Stock issued after the Closing Date (other
than shares referred to in clause (iii) of this definition) which is held by
such holder on such date (regardless of when acquired), (ii) $500 for each
Series A Preferred Share outstanding on the Closing Date and one-half of the
fair market value (as determined in good faith by the independent auditors of
the Corporation) of a share of Class A Common Stock for and as of each Series A
Preferred Share issued after the Closing Date which is held by such holder on
such date and (iii) with respect to a
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share of Class A Common Stock held by such holder on such date and acquired by
such holder pursuant to clause (ii) of Section 4B and Section 4D of Part B of
this ARTICLE FOUR, the aggregate Liquidation Amount of the Series A Preferred
Shares converted into such shares of Class A Common Stock (plus all accrued and
accumulated but unpaid dividends thereon) as of the date of conversion less (b)
all amounts distributed to such holder (including amounts distributed to any
predecessor holders of such shares of Class A Common Stock or Series A Preferred
Shares) prior to such date under clause (a) of Section 1E of Part D of this
ARTICLE FOUR.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter or repeal the by-laws of the Corporation.
ARTICLE SEVEN
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the by-laws
of the Corporation. Election of directors need not be by written ballot unless
the by-laws of the Corporation so provide.
ARTICLE EIGHT
To the fullest extent permitted by the General Corporation Law, a director
of this Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for a breach of fiduciary duty as a director. Any repeal
or modification of this ARTICLE EIGHT shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE NINE
The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law.
ARTICLE TEN
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subjected to this
reservation.
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Dates Referenced Herein and Documents Incorporated by Reference
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