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EXHIBIT 3.3
CERTIFICATE OF DESIGNATIONS
of
Series A-2 11% Preferred Stock
of
ADVANCE PARADIGM, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
ADVANCE PARADIGM, INC., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in its Amended and Restated
Certificate of Incorporation (as may be amended from time to time, the
"Certificate of Incorporation"), the Board of Directors of the Corporation (the
"Board of Directors") has duly adopted the following resolutions:
WHEREAS, Article IV of the Certificate of Incorporation authorizes the
issuance by the Corporation, from time to time, of 5,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"), in one or more series
or classes, having such powers, designations, preferences and relative,
participating, optional and other special rights, including voting rights, and
qualifications, limitations and restrictions as the Board of Directors
determines;
WHEREAS, pursuant to Article IV of the Certificate of Incorporation and
in accordance with Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors has adopted the following resolutions creating
a series of its Preferred Stock;
RESOLVED, that a series of authorized Preferred Stock of the
Corporation be, and it hereby is, created and that the powers, designations,
preferences and relative, participating, optional and other special rights,
including voting rights, and qualifications, limitations and restrictions of
such series of Preferred Stock are as follows:
Section 1. Designation and Number.
(a) Such series of Preferred Stock is designated as Series A-2 11%
Preferred Stock (the "Series A-2 Preferred Stock"), and the number of shares
constituting such series is 982,427 shares. A total of 125,000 shares of Series
A-2 Preferred Stock shall be
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initially issued, and 857,427 shares of Series A-2 Preferred Stock shall be
reserved for issuance in accordance with Section 4(a) and may not be issued for
any other purpose.
(b) Shares of Series A-2 Preferred Stock issued and reacquired in any
manner by the Corporation, including by purchase or redemption, shall (upon
compliance with any applicable provisions of DGCL) have the status of authorized
and unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock other than as
Series A-2 Preferred Stock.
Section 2. Definitions. The following terms, as used in this
Certificate of Designations, shall have the following meanings:
"Additional Series A-2 Shares" has the meaning set forth in
Section 4(a)(i).
"Additional Shares of Common Stock" means all shares of Common
Stock issued or sold by the Corporation after the Issue Date, whether
or not subsequently reacquired or retired by the Corporation, other
than shares of Common Stock: (i) issued upon the conversion or exchange
of any series or class of Capital Stock issued and outstanding on the
Issue Date into another series or class of Capital Stock of the
Corporation without any additional consideration to the Corporation by
the holder thereof; (ii) issued upon conversion of any shares of Series
A Preferred Stock or Series B Preferred Stock into any class or series
of Common Stock; (iii) issued upon conversion of any shares of Class B
Common Stock into Regular Common Stock; (iv) issued upon the exercise
of options or warrants that have been issued prior to, and are
outstanding as of, the Issue Date; (v) issued upon exercise of options
granted prior to the 120th day following the Issue Date to employees,
consultants, officers or directors of the Corporation pursuant to any
stock option plan in effect on the Issue Date and consistent with past
practice, but in any event not in excess of 25,000 shares of Common
Stock during such 120-day period; (vi) issued prior to the 120th day
following the Issue Date to customers in the ordinary course of
business consistent with past practice, but in any event not in excess
of 25,000 shares of Common Stock during such 120-day period; (vii)
issued upon exercise of the Senior Subordinated Notes Warrants; and
(viii) issued upon exercise of the Management Options.
"Affiliate" means, with respect to any specified Person, any
other Person which, directly or indirectly, controls, is controlled by
or is under direct or indirect common control with, such specified
Person. Control of any Person shall consist of the power to direct the
management and policies of such Person (whether through the ownership
of voting securities, by contract, as trustee or otherwise) and shall
be deemed to exist upon the ownership of securities entitling the
holder thereof to exercise more than 20% of the voting power in the
election
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of directors of such Person (or other persons or bodies performing
similar functions).
"Board of Directors" has the meaning set forth in the Preamble
hereto.
"Business Day" means any day except Saturday, Sunday and any
day on which banking institutions in New York City, New York generally
are authorized or required by law or other governmental action to be
closed.
"Capital Stock" means (i) all shares, interests,
participations or other equivalents (however designated) of capital
stock of the Corporation, including each class or series of Common
Stock or Preferred Stock, and (ii) any option, warrant or other
arrangement representing the right to purchase or otherwise acquire any
of the foregoing, including any securities convertible or exchangeable
into any of the foregoing.
"Certificate of Incorporation" has the meaning set forth in
the Preamble hereto.
"Change of Control" means the occurrence of either of the
following: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Excluded
Holders, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly,
of more than 40% of the total issued Common Stock or total issued
Voting Stock of the Corporation; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Class A and Class C Directors (together with any new
Class A or Class C Directors whose election by the Board of Directors
or whose nomination for election by the stockholders of the Corporation
was approved by a vote of a majority of the Class A and Class C
Directors then still in office who were either Class A or Class C
Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease to constitute
a majority of the Class A and Class C Directors then in office.
"Class A Directors" means (i) prior to the Restated Charter
Effectiveness, the Directors referred to as "Class A Directors" in the
Stockholders' Agreement, and (ii) following the Restated Charter
Effectiveness, the Directors referred to as "Class A Directors" in the
Restated Certificate of Incorporation.
"Class B Common Stock" means the Class B-1 Common Stock and
the Class B-2 Common Stock.
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"Class B-1 Common Stock" means the Class B-1 Common Stock to
be created as a separate class of Common Stock upon the Restated
Charter Effectiveness pursuant to the Restated Certificate of
Incorporation.
"Class B-1 Directors" means the Directors (i) designated
initially by holders of Series B Preferred Stock pursuant to the Series
B Certificate of Designations and (ii) following the Restated Charter
Effectiveness, elected by holders of Class B-1 Common Stock pursuant to
the Restated Certificate of Incorporation.
"Class B-2 Common Stock" means the Class B-2 Common Stock to
be created as a separate class of Common Stock upon the Restated
Charter Effectiveness pursuant to the Restated Certificate of
Incorporation.
"Class B-2 Directors" has the meaning set forth in Section
10(c).
"Class C Directors" means (i) prior to the Restated Charter
Effectiveness, the Directors referred to as "Class C Directors" in the
Stockholders' Agreement and (ii) following the Restated Charter
Effectiveness, the Directors referred to as "Class C Directors" in the
Restated Certificate of Incorporation.
"Common Stock" means the common stock, par value $0.01 per
share, of the Corporation, whether voting or non-voting, of any series
or class (including Regular Common Stock and, following the Restated
Charter Effectiveness, the Class B Common Stock).
"Conversion" has the meaning set forth in Section 7(a).
"Conversion Date" means the first date on which any
certificates for shares of Series A-2 Preferred Stock are surrendered
by the Electing Holder to the Corporation for conversion into Class B-2
Common Stock.
"Conversion Price" has the meaning set forth in Section 7(b).
"Conversion Ratio" has the meaning set forth in Section 7(b).
"Convertible Securities" means any evidences of indebtedness,
shares (other than shares of Regular Common Stock) or other securities
that, by their terms, are directly or indirectly convertible into or
exchangeable for Additional Shares of Common Stock. For avoidance of
doubt, it is stipulated that the following are not Convertible
Securities: (i) shares of Series A Preferred Stock issued as a dividend
on shares of Series A Preferred Stock; and (ii) shares of Series B
Preferred Stock issued in accordance with the JLL Exchange Agreement.
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"Corporation" has the meaning set forth in the Preamble
hereto.
"Current Market Price" means, as of any date, the average of
the daily Market Prices of the Regular Common Stock for twenty
consecutive trading days immediately preceding such date.
"DGCL" means the General Corporation Law of the State of
Delaware.
"Director" means a member of the Board of Directors.
"Dividend Payment Date" means March 31st, June 30th, September
30th and December 31st of each year, unless such day is not a Business
Day, in which case Dividend Payment Date shall be the next succeeding
Business Day.
"Dividend Period" means (i) the period beginning on the
Dividend Start Date and ending on the first Dividend Payment Date, and
(ii) thereafter, the quarterly periods from (and including) the first
day of a Dividend Period until the end of such period.
"Dividend Rate" means, with respect to any share of Series A-2
Preferred Stock, (i) from (and including) the Dividend Start Date to
(and including) September 30, 2001, a rate per annum equal to 11% of
the Liquidation Preference for such share as of the first day of the
applicable Dividend Period, (ii) from (and including) October 1, 2001
to (and including) March 31, 2002, a rate per annum equal to thirteen
percent (13%) of the Liquidation Preference for such share as of the
first day of the applicable Dividend Period, and (iii) from (and
including) and after April 1, 2002, a rate per annum equal to 16% of
the Liquidation Preference for such share as of the first day of the
applicable Dividend Period.
"Dividend Start Date" means the 120th day following the Issue
Date.
"Electing Holder" has the meaning given in Section 7(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Holders" means (i) the Corporation and its
Subsidiaries, (ii) the Principals and the Related Parties of the
Principals, (iii) the Permitted Transferees, and the Affiliates of
Permitted Transferees, (iv) the holders of shares of Series A-1
Preferred Stock and Series B Preferred Stock on the Issue Date and the
"Permitted Transferees" (as defined in the Series A-1 Certificate of
Designations or the Series B Certificate of Designations, as the case
may be) and the Affiliates of the Persons referred to in this clause
(iv), and (v) any Person permitted or required to receive shares of
Series B Preferred Stock pursuant to the
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Exchange Agreement, the "Permitted Transferees" (as defined in the
Series B Certificate of Designations) of such Persons (assuming that
they are holders of Series B Preferred Stock), and the Affiliates of
the Persons referred to in this clause (v).
"GAAP" means accounting principles and practices generally
accepted from time to time in the United States as in effect on the
Issue Date.
"Holder" means a record holder of shares of Series A-2
Preferred Stock.
"Indebtedness" has the meaning given to such term in the
Senior Subordinated Notes Indenture.
"Issue Date" means the original date of issuance of shares of
Series A-2 Preferred Stock.
"JLL Exchange Agreement" means the Exchange Agreement dated as
of the Issue Date between the Corporation and Joseph Littlejohn & Levy
Fund III, L.P., a Delaware limited partnership, relating to the
exchange of shares of Regular Common Stock into shares of Series B
Preferred Stock, as the same may be amended, supplemented or restated
from time to time.
"Junior Stock" means (i) prior to the Restated Charter
Effectiveness, the securities referred to in clause (i) of Section
3(a), and (ii) following the Restated Charter Effectiveness, the
securities referred to in clause (i) of Section 3(b), in each case
subject to Section 3(c).
"Liquidation Event" means any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation.
"Liquidation Preference" means, for each share of Series A-2
Preferred Stock as of any date, (i) $1,000, plus (ii) in the case of
any accumulated and unpaid dividends or distributions on such share as
of such date payable in Additional Series A-2 Shares, (A) the number of
such Additional Series A-2 Shares times $1,000 plus (B) the amounts
referred to in clauses (iii) and (iv) of this definition for the
accumulated and unpaid dividends thereon, (iii) all accumulated and
unpaid cash dividends and distributions on such share as of such date,
plus (iv) the Market Price of all other accumulated and unpaid
dividends and distributions on such share as of such date (including an
amount equal to a prorated dividend for the period from the last
Dividend Payment Date to the date fixed for redemption, liquidation,
dissolution or winding up, if any).
"Management Options" means options to purchase up to an
aggregate of 1,790,000 shares of Common Stock at an initial exercise
price of $20 per share
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issued to officers and employees on or before the Issue Date. For
purposes of this Certificate of Designations, the Management Options
shall be deemed issued before the Issue Date.
"Mandatory Redemption Obligation" means the Corporation's
redemption obligation set forth in Section 6.
"Mandatory Redemption Price" has the meaning set forth in
Section 6(a).
"Market Price" means: (a) with respect to any security, on any
given day, (i) if such security is listed or authorized for trading on
a national securities exchange, the last sale price of such security,
regular way, on such date, or if no such sale takes place on such date,
the average of the closing bid and asked prices thereof, on such date,
in each case as officially reported on the principal national
securities exchange on which such security is listed or authorized for
trading, (ii) if such security is not listed or authorized for trading
on a national securities exchange but is quoted on the Nasdaq National
Market, (A) the price of the last trade, as reported on the Nasdaq
National Market, not identified as having been reported late to such
system, or (B) if such security is so traded, but no such last trade
information is reported, the average of the last bid and ask prices, as
those prices are reported on the Nasdaq National Market, (iii) if such
security is not listed or authorized for trading on a national
securities exchange or the Nasdaq National Market or any comparable
system but has a nationally recognized existing trading market, the
average of the closing bid and asked prices as furnished by two members
of the National Association of Securities Dealers, Inc. selected from
time to time by the Corporation for that purpose or (iv) if such
security is not listed or authorized for trading on a national
securities exchange or the Nasdaq National Market or any comparable
system and does not have a nationally recognized existing trading
market, the fair value of such security as (A) determined by an
agreement between the Corporation and the Holders of a majority of the
outstanding shares of Series A-2 Preferred Stock or (B) if the
Corporation and such Holders fail to agree, determined jointly by an
independent investment banking firm retained by the Corporation and by
an independent investment banking firm retained by such Holders, or (C)
if the Corporation or such Holders shall fail so to retain an
independent investment banking firm within five Business Days of the
retention of such firm by the Corporation or such Holders, as the case
may be, determined solely by the firm so retained or (D) if the firms
so retained by the Corporation and by such Holders shall be unable to
reach a joint determination within 15 Business Days of the retention of
the last firm so retained, determined by another independent investment
banking firm chosen by the first two such firms; and (b) with respect
to any other asset or property, the fair market value of such asset or
property as (i) determined by an agreement between the Corporation and
the Holders of a majority of the
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outstanding shares of Series A-2 Preferred Stock or (ii) if the
Corporation and such Holders fail to agree, determined jointly by an
independent investment banking firm retained by the Corporation and by
an independent investment banking firm retained by such Holders, or
(iii) if the Corporation or such Holders shall fail so to retain an
independent investment banking firm within five Business Days of the
retention of such firm by the Corporation or such Holders, as the case
may be, determined solely by the firm so retained or (iv) if the firms
so retained by the Corporation and by such Holders shall be unable to
reach a joint determination within 15 Business Days of the retention of
the last firm so retained, determined by another independent investment
banking firm chosen by the first two such firms.
"New Securities" means (a) prior to the Restated Charter
Effectiveness, any Capital Stock issued after the Issue Date, and (b)
after the Restated Charter Effectiveness, any Capital Stock issued
after such effectiveness by the Corporation for cash consideration, in
each case other than (i) Capital Stock issued upon the conversion or
exchange of any series or class of Capital Stock issued and outstanding
on the Issue Date into another series or class of Capital Stock of the
Corporation without any additional consideration to the Corporation by
the holder thereof; (ii) Capital Stock issued upon conversion of any
shares of Series A Preferred Stock or Series B Preferred Stock into any
class or series of Common Stock; (iii) Regular Common Stock issued upon
conversion of Class B Common Stock; (iv) shares of Series A Preferred
Stock issued as a dividend on shares of Series A Preferred Stock; (v)
dividends or distributions payable in shares of Capital Stock effected
in accordance with Section 4(b) or 8(a); (vi) Capital Stock issued upon
the exercise of options or warrants that have been issued prior to, and
are outstanding as of, the Issue Date; (vii) Capital Stock issued to
employees, consultants, officers or directors of the Corporation
pursuant to any stock option plan in effect on the Issue Date and
consistent with past practice or pursuant to a stock option plan
adopted after the Issue Date; (viii) Capital Stock issued to holders of
Series A-1 Preferred Stock or Series B Preferred Stock pursuant to the
exercise by such holders of their preemptive rights contained in the
Series A-1 Certificate of Designations or the Series B Certificate of
Designations, as the case may be; (ix) Capital Stock issued upon
exercise of the Senior Subordinated Notes Warrants; (x) Common Stock
issued upon the exercise of Management Options; (xi) Capital Stock
issued to customers in the ordinary course of business consistent with
past practice, subject to a maximum amount, in any fiscal year of the
Corporation, equal or equivalent to (A) 0.5% of the weighted average
number of issued and outstanding shares of Common Stock during such
fiscal year plus (B) the number of shares permitted under clause (A)
for any fiscal year ending after the Issue Date but not previously
expended; and (xii) shares of Series B Preferred Stock issued in
accordance with the JLL Exchange Agreement.
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"Non-Class B Director" means any Director who is neither a
Class B-1 Director nor a Class B-2 Director.
"Options" means rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common Stock
or Convertible Securities. For avoidance of doubt, it is expressly
stipulated that the following are not Options: (i) any rights, options
or warrants to subscribe for, purchase or otherwise acquire shares of
Common Stock referred to in clause (v) or (vi) of the definition of
Additional Shares of Common Stock; and (ii) any right or option to
acquire shares of Series B Preferred Stock pursuant to the JLL Exchange
Agreement.
"Parity Stock" means (i) prior to the Restated Charter
Effectiveness, the securities referred to in clause (ii) of Section
3(a) and (ii) following the Restated Charter Effectiveness, the
securities referred to in clause (ii) of Section 3(b), in each case
subject to Section 3(c).
"Permitted Transferee" has the meaning set forth in Section
12.
"Person" means any corporation, limited liability company,
partnership, trust, organization, association, other entity or
individual.
"Preemptive Rights Notice" has the meaning given in Section
9(a).
"Preemptive Rights Portion" has the meaning given in Section
9(a).
"Preferred Stock" has the meaning set forth in the Preamble
hereto.
"Principals" has the meaning given to such term in the Senior
Subordinated Notes Indenture.
"Record Date" means, with respect to a dividend payable on
March 31, June 30, September 30 and December 31 of each year, 5:00 p.m.
(Eastern Standard Time) on the preceding March 15, June 15, September
15 and December 15, respectively.
"Redemption Date" has the meaning given in Section 6(b).
"Redemption Notice" has the meaning set forth in Section 6(b).
"Related Parties" has the meaning given to such term in the
Senior Subordinated Notes Indenture.
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"Regular Common Stock" means (i) initially, the class of
Common Stock existing on the Issue Date, and (ii) upon the Restated
Charter Effectiveness, the Class A Common Stock created as a separate
class of Common Stock pursuant to the Restated Certificate of
Incorporation.
"Restated Certificate of Incorporation" means the Second
Amended and Restated Certificate of Incorporation of the Corporation in
the form attached as Exhibit B to the Stockholders' Agreement (as the
same may from time to time be amended (x) prior to the Restated Charter
Effectiveness, pursuant to the Stockholders' Agreement, and (y) after
the Restated Charter Effectiveness, pursuant to such Restated
Certificate of Incorporation and the DGCL), to be submitted for
Stockholder Approval and, following Stockholder Approval, filed
according to the DGCL with the Secretary of State of the State of
Delaware.
"Restated Charter Effectiveness" means the date of the filing
of the Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware in accordance with the DGCL following
Stockholder Approval.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Credit Facility" means the credit facilities evidenced
by, and the loans and borrowings extended to the Corporation pursuant
to the $825 million Senior Credit Agreement, dated on or about the
Issue Date, among the Corporation, as borrower the subsidiary
guarantors parties thereto, the initial lenders, initial issuing bank
and swing line bank named therein, Bank of America, N.A., as Collateral
Agent and Administrative Agent, Bank One, N.A., as Documentation Agent,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Book-Runner,
Lead Arranger and Syndication Agent, and Bank of America Securities
LLC, as Joint Book-Runner and Joint Lead Arranger, and any one or more
deferrals, renewals, extensions, replacements, refinancings or
refundings thereof, or amendments, modifications or supplements thereto
or replacements thereof (including, without limitation, any amendment
increasing the amount that may be borrowed thereunder) and any
agreement providing therefor whether by or with respect to the same or
any other agents, lenders, creditors or group of creditors (or any
combination thereof) and including related notes, guarantee agreements,
security agreements and other instruments executed in connection
therewith.
"Senior Stock" means the securities referred to in clause
(iii) of Section 3(b), subject to Section 3(c).
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"Senior Subordinated Notes" means the Corporation's Senior
Subordinated Notes due 2010 issued on or about the Issue Date in the
initial principal amount of $200,000,000 (the "initial notes") and any
notes registered under the Securities Act that are issued in exchange
for such notes and any deferrals, renewals, extensions, replacements,
refinancings or refundings thereof, or amendments or supplements
thereto or replacements thereof.
"Senior Subordinated Notes Indenture" means the Indenture,
dated as of October 2, 2000, between the Corporation and U.S. Trust of
Texas, N.A., as trustee pursuant to which the Corporation's Senior
Subordinated Notes due 2010 in the initial principal amount of
$200,000,000 are issued, as the same may be amended from time to time.
"Senior Subordinated Notes Warrants" means the warrants to
purchase Regular Common Stock issued on or about the Issue Date to Rite
Aid Corporation. For purposes of this Certificate of Designations, the
Senior Subordinated Notes Warrants shall be deemed to have been issued
before the Issue Date.
"Series A Preferred Stock" means the Series A-1 and Series A-2
Preferred Stock.
"Series A Certificates of Designations" means the Series A-1
Certificate of Designations and this Certificate of Designations.
"Series A-1 Certificate of Designations" means (i) initially,
the Certificate of Designations for the Series A-1 Preferred Stock
filed pursuant to the DGCL with the Secretary of State of the State of
Delaware on or about the Issue Date, and (ii) following the Restated
Charter Effectiveness, Exhibit A to the Restated Certificate of
Incorporation, in each case, as amended, supplemented or restated from
time to time.
"Series A-1 Preferred Stock" means the Preferred Stock
designated by the Board of Directors as Series A-1 11% Preferred Stock
and having the powers, designations, preferences, and the relative,
participating, optional and other special rights and qualifications,
limitations and restrictions set forth in the Series A-1 Certificate of
Designations.
"Series A-2 Preferred Stock" has the meaning set forth in
Section 1.
"Series B Certificate of Designations" means (i) initially the
Certificate of Designations for the Series B Preferred Stock filed
pursuant to the DGCL with the Secretary of State of the State of
Delaware on or about the Issue Date, and (ii) following the Restated
Charter Effectiveness, Exhibit C to the Restated
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Certificate of Incorporation, in each case, as amended, supplemented or
restated from time to time.
"Series B Preferred Stock" means the Preferred Stock
designated by the Board of Directors as Series B Convertible Preferred
Stock and having the powers, designations, preferences, and the
relative, participating, optional and other special rights and
qualifications, limitations and restrictions set forth in the Series B
Certificate of Designations.
"Stockholder Approval" means the approval by the stockholders
of the Corporation of the adoption of the Restated Certificate of
Incorporation and of the authorization and issuance of the Class B
Common Stock to be issued to the Holders and the holders of the Series
A-1 Preferred Stock and Series B Preferred Stock in accordance with the
terms of this Certificate of Designations, the Series A-1 Certificate
of Designations and the Series B Certificate of Designations.
"Stockholders' Agreement" means the Stockholders' Agreement,
dated on or about the Issue Date, among the Corporation, Joseph
Littlejohn & Levy Fund III, L.P., Rite Aid Corporation and the other
Persons named therein, as the same may be amended, supplemented or
restated from time to time.
"Subsidiary" means, with respect to any specified Person: (i)
any corporation, association or other business entity of which more
than 50% of the total voting power of shares of capital stock or other
equity interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by
a Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and (ii) any partnership (A) the sole general
partner or the managing general partner of which is the Person or a
Subsidiary of that Person or (B) the only general partners of which are
the Person or one or more Subsidiaries of that Person (or any
combination thereof).
"Transfer" means any direct or indirect (including, without
limitation, through the transfer of a controlling interest in a
Permitted Transferee) sale, transfer, assignment, grant of
participation interest in, option, pledge, hypothecation, encumbrance
or other disposition.
"Voting Default" has the meaning given to such term in the
Series B Certificate of Designations.
"Voting Stock" means, with respect to any Person, the Capital
Stock of any class or kind ordinarily having the power to vote
generally for the election of directors (or other persons or bodies
performing similar functions) of such Person.
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Section 3. Rank.
(a) Prior to the Restated Charter Effectiveness. Prior to and until the
Restated Charter Effectiveness, the Series A-2 Preferred Stock shall, with
respect to dividends and distributions and upon a Liquidation Event, rank:
(i) senior to (A) all classes or series of Common Stock and
(B) each other class or series of Capital Stock of the Corporation
created after the Issue Date and prior to the Restated Charter
Effectiveness; and
(ii) on a parity with the Series A-1 Preferred Stock and the
Series B Preferred Stock.
(b) Following the Restated Charter Effectiveness. Upon and following
the Restated Charter Effectiveness, the Series A-2 Preferred Stock shall, with
respect to dividends and distributions and upon a Liquidation Event, rank:
(i) senior to all classes or series of Common Stock;
(ii) on a parity with the Series A-1 Preferred Stock;
(iii) junior to each series or class of Preferred Stock
created after the Restated Charter Effectiveness.
(c) The respective definitions of Junior Stock, Parity Stock and Senior
Stock shall also include any options, warrants or other rights exercisable or
exchangeable for or convertible into any of the Junior Stock, Parity Stock or
Senior Stock, as the case may be.
Section 4. Dividends.
(a) Prior to the Restated Charter Effectiveness. Prior to and until the
Restated Charter Effectiveness:
(i) Beginning on the Dividend Start Date, the Holders of
outstanding shares of Series A-2 Preferred Stock shall be entitled to
receive (if and to the extent of surplus legally available therefor),
dividends at the Dividend Rate payable solely in additional shares of
Series A-2 Preferred Stock ("Additional Series A-2 Shares") in
accordance with the terms of this Section 4. Following the Dividend
Start Date, such dividends shall be payable quarterly in arrears on
each Dividend Payment Date for the Dividend Period ending on such
Dividend Payment Date. Dividends on the Series A-2 Preferred Stock
shall accrue (whether or not declared) and be cumulative from (and
including) the first day of each Dividend Period in which dividends may
be payable, and accrued dividends for each Dividend Period shall
accumulate to the extent not paid on the Dividend
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Payment Date for such Dividend Period; provided that dividends on
Additional Series A-2 Shares shall accrue from (and including) the date
such Additional Series A-2 Shares are issued pursuant to this Section
4(a), whether or not in any Dividend Period there shall be surplus of
the Corporation legally available for the payment of such dividends.
Each such dividend shall be payable to the Holders of shares of Series
A-2 Preferred Stock on the corresponding Record Date.
(ii) The amount of dividends payable for each full Dividend
Period for the Series A-2 Preferred Stock shall be computed by dividing
the applicable Dividend Rate by four. The amount of dividends payable
for any period shorter or longer than a full Dividend Period, shall be
computed on the basis of twelve 30-day months and a 360-day year.
Holders of shares of Series A-2 Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends as herein provided. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend
payment on the Series A-2 Preferred Stock that may be in arrears;
except that if dividends are not paid in full on any Dividend Payment
Date, dividends will cumulate as if the unpaid dividends were payable
in cash and the Liquidation Preference had been increased by the amount
of unpaid dividends until paid.
(iii) Dividends on the shares of Series A-2 Preferred Stock
pursuant to this Section 4(a) shall continue to accrue and accumulate
until full cumulative dividends (including an amount equal to a
prorated dividend for the period from the last Dividend Payment Date to
(but not including) the date of the Restated Charter Effectiveness)
have been declared and paid on the Series A-2 Preferred Stock for all
Dividend Periods terminating prior to the date of the Restated Charter
Effectiveness; provided that such dividends shall cease to accrue or
accumulate on (but not including) the date of the Restated Charter
Effectiveness.
(iv) The number of Additional Series A-2 Shares to be issued
as dividends pursuant to this Section 4(a) will equal the cash amount
of the dividend that would have been payable on a share of Series A-2
Preferred Stock if dividends were payable in cash, divided by $1,000,
rounded to the nearest full share, up or down, after taking into
account all shares of Series A-2 Preferred Stock owned by the Holder
thereof, provided that if the resulting fractional share held by such
Holder equals one-half of a share of Series A-2 Preferred Stock, such
fractional share shall be rounded up to the nearest full share.
(v) Accrued dividends for any past Dividend Periods may be
declared and paid on any subsequent Dividend Payment Date or any other
date established by the Board.
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(b) Following the Restated Charter Effectiveness. Upon and following
the Restated Charter Effectiveness, in the event the Corporation at any time or
from time to time makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, any dividend or distribution on shares of
any class or series of Common Stock (other than any dividend or distribution
payable in shares of Common Stock effected in accordance with Section 8(a)),
then and in each such event each Holder shall be entitled to receive the amount
of such dividend or distribution that such Holder would have received had its
shares of Series A-2 Preferred Stock been converted into Class B Common Stock
pursuant to Section 7 immediately prior to the record date for such dividend or
distribution.
(c) Dividends or Distributions on Parity Stock. So long as any shares
of the Series A-2 Preferred Stock are outstanding, (i) no dividend or
distribution may be declared or paid or set apart for payment on any Parity
Stock by the Corporation, directly or indirectly, unless (A) such dividend or
distribution is required by the terms of such Parity Stock pursuant to the
certificate of designations for such Parity Stock (or other instrument pursuant
to which such Parity Stock was created and setting forth the powers,
designations, preferences and other special rights and qualifications,
limitations and restrictions of such Parity Stock) as in effect on the initial
issuance of such Parity Stock, and (B) all accumulated and unpaid dividends and
distributions due to be paid on the Series A-2 Preferred Stock, and any
redemption payments required by Section 6, have been or are contemporaneously
paid or are being paid on a pro rata basis with any such Parity Stock, and (ii)
except as otherwise provided in Section 6(f), no Parity Stock may be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available to a sinking fund for the redemption of any shares of such
stock) by the Corporation directly or indirectly, unless (A) all accumulated and
unpaid dividends and distributions due to be paid on the Series A-2 Preferred
Stock, and any redemption payments required by Section 6, have been or are
contemporaneously paid, and (B) such redemption, purchase or acquisition is
required by the certificate of designations for such Parity Stock (or other
instrument pursuant to which such Parity Stock was created and setting forth the
powers, designations, preferences and other special rights and qualifications,
limitations and restrictions of such Parity Stock) as in effect on the initial
issuance of such Parity Stock.
(d) Dividends or Distributions on Junior Stock. So long as any shares
of Series A-2 Preferred Stock are outstanding, no dividends or other
distribution may be declared or paid or set apart for payment on any Junior
Stock, nor may any Junior Stock be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Corporation, directly
or indirectly, other than (i) a redemption, purchase or other acquisition of
shares of Common Stock made solely pursuant to the terms of an employee
incentive or benefit plan of the Corporation or its Subsidiaries, (ii) dividends
or distributions on shares of Common Stock effected solely in accordance with
Section 4(b)
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or 8(g), and (iii) dividends or distributions made solely in Junior Stock
effected in accordance with Section 8(a).
Section 5. Liquidation Rights.
(a) Upon the occurrence of a Liquidation Event, subject to the rights
of holders of Senior Stock and Parity Stock, each Holder shall be entitled to be
paid, before any distribution is made on any Junior Stock, out of the assets of
the Corporation available for distribution to its stockholders an amount per
share in cash equal to the greater of (i) the Liquidation Preference, as of the
date fixed for the Liquidation Event, for each outstanding share of Series A-2
Preferred Stock held by such Holder and (ii) the amount such Holder would have
received upon such final distribution if all outstanding shares of Series A-2
Preferred Stock had been converted into shares of Common Stock pursuant to
Section 7 (assuming that (A) the Restated Charter Effectiveness has occurred and
(B) all outstanding shares of Series A-1 Preferred Stock and Series B Preferred
Stock had been converted into shares of Common Stock pursuant to the Series A-1
Certificate of Designations and the Series B Certificate of Designations,
respectively, immediately prior to such Liquidation Event).
(b) If the assets distributable in any such Liquidation Event to the
Holders and to the holders of outstanding shares of all Parity Stock are
insufficient to permit the payment to such holders of the full preferential
amounts to which they may be entitled, such assets shall be distributed ratably
among the holders of the outstanding shares of Series A-2 Preferred Stock and
Parity Stock in proportion to the full preferential amount each such holder
would otherwise be entitled to receive.
(c) For purposes of this Section 5, a Liquidation Event shall, at the
election of the Holders of a majority of the outstanding shares of Series A-2
Preferred Stock, voting separately as a single class, include (i) the
consolidation or merger of the Corporation into any other corporation or entity
if the Corporation is not the continuing or surviving corporation or entity of
such consolidation or merger, (ii) the consolidation or merger of any other
corporation or entity into the Corporation with the Corporation being the
continuing or surviving corporation if, in connection with such consolidation or
merger, the shares of Common Stock are changed into or exchanged for stock or
other securities of any other Person or cash or any other property, and (iii)
the transfer by the Corporation of all or substantially all of its properties or
assets to any other corporation or entity (other than to a wholly-owned
Subsidiary of the Corporation if such Subsidiary remains wholly owned by the
Corporation after such transfer or any other transaction or series of
transactions related to such transfer).
(d) After payment of the full preferential amount to which the Holders
are entitled pursuant to this Section 5, the Holders shall not be entitled to
any further
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participation in any distribution of assets of the Corporation, and all rights
of the Holders with respect to their shares of Series A-2 Preferred Stock shall
terminate.
Section 6. Redemption.
(a) Unless the Restated Charter Effectiveness shall have occurred prior
to the occurrence of the event described in clause (i) or (ii) of this Section
6(a), the Corporation shall redeem, to the extent of funds legally available
therefor (determined pursuant to Section 6(e)), in the manner provided for in
this Section 6 all of the then outstanding shares of Series A-2 Preferred Stock
at the Liquidation Preference as of the Redemption Date (the "Mandatory
Redemption Price") on (i) the eleventh anniversary of the Issue Date or (ii) in
the event a Change of Control of the Corporation has occurred, upon receipt of
notice (no later than 30 days following the later of the occurrence of such
Change of Control or public announcement of the occurrence of such Change of
Control) from the Holders of a majority of the outstanding shares of Series A-2
Preferred Stock demanding a redemption of the outstanding shares of Series A-2
Preferred Stock. The Corporation shall pay the Mandatory Redemption Price in
cash. The date for any such redemption (the "Redemption Date") shall be (A) in
the case of a redemption occurring pursuant to clause (i) of this Section 6(a),
the date of the eleventh anniversary of the Issue Date, or if such date is not a
Business Day, the first Business Day following such date, and (B) in the case of
a redemption occurring pursuant to clause (ii) of this Section 6(a), a date to
be fixed by the Corporation that is a Business Day no earlier than 30 days and
no later than 60 days following the notice referred to in clause (ii) of this
Section 6(a).
(b) No later than 20 days and no earlier than 60 days prior to the
Redemption Date, the Corporation shall give written notice (the "Redemption
Notice") to each Holder at such Holder's address as it appears on the stock
books of the Corporation. The Redemption Notice shall state:
(i) whether the redemption is pursuant to clause (i) or (ii)
of Section 6(a);
(ii) the Mandatory Redemption Price;
(iii) Redemption Date; and
(iv) the location (which shall be in New York City, New York)
at which the Holder is to surrender to the Corporation (or its agent),
for redemption, its certificate or certificates representing its shares
of Series A-2 Preferred Stock, and the manner for the surrender of such
certificate or certificates.
(c) Each Holder shall surrender the certificate or certificates
representing its shares of Series A-2 Preferred Stock to the Corporation, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the
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<PAGE> 18
place designated in the Redemption Notice. On the Redemption Date, the
Corporation shall pay, or cause to be paid, the full Mandatory Redemption Price
for the shares so surrendered in cash (i) to the Person whose name appears on
such certificate or certificates as the owner thereof, and, upon such payment,
each surrendered certificate shall be canceled and retired and (ii) if such
certificate is not surrendered by a Holder but the Holder certifies to the
Corporation that the certificate or certificates representing its shares of
Series A-2 Preferred Stock have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such lost, stolen or destroyed
certificates (and, if requested by the Corporation, posts a customary bond
reasonably satisfactory to the Corporation to cover such loss), to such Holder.
(d) Unless the Corporation defaults in the payment of the applicable
Mandatory Redemption Price, dividends on the shares of Series A-2 Preferred
Stock shall cease to accumulate on the Redemption Date, and all rights of the
Holders with respect to their Series A-2 Preferred Stock, other than the right
to receive the Mandatory Redemption Price, shall terminate on the Redemption
Date.
(e) For the purpose of determining whether funds are legally available
for redemption of Series A-2 Preferred Stock pursuant to this Section 6, (i) the
Corporation shall value its assets at the highest amount permissible under
applicable law, (ii) if the redemption is pursuant to clause (ii) of Section
6(a), the Corporation may, at its option, set aside the funds necessary to
prepay, redeem or offer to purchase any Indebtedness of the Corporation or its
Subsidiaries that, by its terms, has to be prepaid or redeemed, or requires that
the Corporation or its Subsidiaries extend to the holders thereof an offer to
purchase such Indebtedness, including the Senior Credit Facility and the Senior
Subordinated Notes, and (iii) the Corporation may, at its option, set aside the
funds necessary to satisfy any dividend, redemption or other obligations with
respect to any Senior Stock or Parity Stock required by the certificate of
designations for such Senior Stock or Parity Stock (or other instrument pursuant
to which such Senior Stock or Parity Stock was created and setting forth the
powers, designations, preferences and other special rights and qualifications,
limitations and restrictions of such Senior Stock or Parity Stock).
(f) If on the Redemption Date funds of the Corporation legally
available therefor are insufficient to pay the Mandatory Redemption Price in
full for all the shares of Series A-2 Preferred Stock, (i) the Corporation shall
use funds to the extent legally available for such purpose, (ii) the Corporation
shall effect the Mandatory Redemption Obligation pro rata according to the
number of shares of Series A-2 Preferred Stock held by each holder and (iii) the
Dividend Rate on any unpaid portion of the Mandatory Redemption Price shall be
increased by 2%. If the Corporation is unable or fails to discharge its
Mandatory Redemption Obligation, the Mandatory Redemption Obligation shall be
discharged as soon as the Corporation is able to discharge the Mandatory
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Redemption Obligation. If and so long as the Mandatory Redemption Obligation is
not fully discharged, the Corporation may not, directly or indirectly, (A)
redeem, purchase, or otherwise acquire any Parity Stock or Junior Stock or
discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Parity Stock or Junior Stock (except in connection
with a redemption, sinking fund or other similar obligation regarding Parity
Stock being satisfied on a pro rata basis) or (B) declare or make any dividend
or distribution in respect of any Junior Stock.
(g) Notwithstanding the foregoing, any Holder may, at any time prior to
the close of business on the Business Day immediately preceding the Redemption
Date, elect to convert, pursuant to Section 7(a), its shares of Series A-2
Preferred Stock into Common Stock in lieu of any redemption of its Series A-2
Preferred Stock. Upon such Conversion, the Holders shall no longer be entitled
to any payment in connection with the redemption for the Series A-2 Preferred
Stock.
(h) The Corporation need not establish any sinking fund for the
Mandatory Redemption Obligation.
Section 7. Conversion.
(a) Conversion Right. At any time following the Restated Charter
Effectiveness, subject to and in compliance with the provisions of this Section
7, any Holder may, at such Holder's election, convert all, but not less than
all, of such Holder's shares of Series A-2 Preferred Stock into shares of Class
B-2 Common Stock (the "Electing Holder"), and upon any such conversion, all
other outstanding shares of Series A-2 Preferred Stock shall automatically
convert into shares of Class B-2 Common Stock (the "Conversion").
Notwithstanding any call for redemption pursuant to Section 6, the right to
convert shares pursuant to this Section 7 shall terminate at the close of
business on the Business Day immediately preceding the Redemption Date, unless
the Corporation defaults in making payment of the Mandatory Redemption Price in
full on the Redemption Date.
(b) Conversion Ratio. The number of shares of Class B-2 Common Stock
deliverable upon Conversion of one share of Series A-2 Preferred Stock, adjusted
as provided in Section 8, is referred to in this Certificate of Designations as
the "Conversion Ratio." The Conversion Ratio, as of any date, shall be an amount
equal to the Liquidation Preference as of such date divided by the Conversion
Price. The "Conversion Price" will initially be $20.00, subject to adjustment
from time to time pursuant to Section 8.
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(c) Conversion Mechanics.
(i) The Electing Holder shall surrender the certificate
representing its shares of Series A-2 Preferred Stock at the principal
office of the Corporation, with a written notice of election to convert
completed and signed.
(ii) On the Conversion Date, all outstanding shares of Series
A-2 Preferred Stock shall be converted automatically without any
further action by the Holders (and whether or not the certificates
representing such shares are surrendered at the office of the
Corporation). The Corporation shall issue certificates representing
shares of Class B-2 Common Stock issuable upon the Conversion upon
surrender of certificates representing the corresponding shares of
Series A-2 Preferred Stock. Unless the shares issuable on Conversion by
the Holder are to be issued in the same name as the name in which such
shares of Series A-2 Preferred Stock are registered, each share
surrendered shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the Holder or the
Holder's duly authorized attorney. The Corporation shall not be
obligated to issue certificates for shares of Class B-2 Common Stock in
any name other than the name or names set forth on the certificates for
the shares of Series A-2 Preferred Stock unless the requirements of the
Stockholders' Agreement relating to the transfer of shares of Series
A-2 Preferred Stock have been complied with or waived by the
Corporation.
(iii) Notwithstanding clause (i) or (ii) of this Section 7(c),
if the Holder of any share or shares of Series A-2 Preferred Stock
certifies to the Corporation that the certificates representing such
share or shares have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation
from any loss incurred by it in connection with such lost, stolen or
destroyed certificates (and, if requested by the Corporation, posts a
customary bond reasonably satisfactory to the Corporation to cover such
loss), then the Corporation shall issue certificates representing the
Class B-2 Common Stock issuable upon the Conversion in the name of such
holder.
(iv) As promptly as practicable after the delivery by the
Holder of the certificates for shares of Series A-2 Preferred Stock (or
in the case of a lost certificate, the certification, the agreement
and, if requested, the posting of the bond described in clause (iii) of
this Section 7(c)), the Corporation shall issue and shall deliver to
such Holder, or, subject to compliance with the provisions Section 12
and the Stockholders' Agreement relating to the transfer of shares of
Series A-2 Preferred Stock, on the Holder's written order to the
Holder's transferee, (A) a certificate or certificates for the whole
number of shares of Class B-2 Common Stock issuable upon the Conversion
of such shares in
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accordance with the provisions of this Section 7, and (B) any cash
adjustment required pursuant to Section 7(f).
(v) The Conversion shall be deemed to have been effected
immediately prior to the close of business on the Conversion Date. The
Person in whose name or names any certificate or certificates for
shares of Class B-2 Common Stock shall be issuable upon such Conversion
shall be deemed to have become the holder of record of the shares of
Class B-2 Common Stock represented thereby at such time on the
Conversion Date and the Conversion shall be into a number of whole
shares of Class B-2 Common Stock equal to the product of the number of
shares of Series A-2 Preferred Stock surrendered multiplied by the
Conversion Ratio in effect on the applicable Conversion Date. All
shares of Class B-2 Common Stock delivered upon conversion of the
Series A-2 Preferred Stock will upon delivery be duly and validly
issued and fully paid and non-assessable, free of all liens, pledges
and other security interests and not subject to any preemptive rights.
As of the effective time of the Conversion, the shares of Series A-2
Preferred Stock so converted will no longer be deemed to be outstanding
and all rights of a holder with respect to such shares so converted
shall immediately terminate except the right to receive the Class B-2
Common Stock and other amounts payable pursuant to this Section 7.
(d) Reservation of Shares; Compliance with Laws. The Corporation
covenants that it will at all times following the Restated Charter Effectiveness
reserve and keep available, free from preemptive rights, such number of its
authorized but unissued shares of Class B-2 Common Stock as shall be required
for the purpose of effecting the Conversion of the Series A-2 Preferred Stock.
Promptly (and in any event no later than two Business Days) following receipt of
Stockholder Approval, the Corporation shall file the Restated Certificate of
Incorporation pursuant to the DGCL with the Secretary of State of the State of
Delaware. Prior to the delivery of any Common Stock that the Corporation is
obligated to deliver upon the Conversion, the Corporation shall comply with all
applicable federal and state laws and regulations which require action to be
taken by the Corporation.
(e) Transfer Taxes, etc. The Corporation will pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Class B-2 Common Stock upon the Conversion, other
than any tax payable in respect of any transfer involved in the issue or
delivery of shares of Class B-2 Common Stock in a name other than that of the
Holder of the Series A-2 Preferred Stock to be converted. The Corporation shall
have the right not to issue or deliver any shares of Class B-2 Common Stock in a
name other than that of the Holder of the Series A-2 Preferred Stock to be
converted unless and until the Person requesting such issue or delivery has paid
to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
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(f) No Fractional Shares. No fractions of shares of Class B-2 Common
Stock shall be required to be issued to a Holder in connection with the
Conversion. In lieu thereof, the Corporation shall pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the Current Market Price per share of Regular Common
Stock on the Conversion Date.
(g) No Impairment. The Corporation will not, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Corporation but will at all times in good faith assist in the carrying out of
all the provisions of this Section 7 and in the taking of all such action as may
be necessary or appropriate following the Restated Charter Effectiveness in
order to protect the conversion rights of the holders of the Series A-2
Preferred Stock against impairment. Without limiting the generality of the
foregoing, following the Restated Charter Effectiveness, the Corporation (i)
will take all such action as may be necessary or appropriate in order that the
Corporation may validly and legally issue fully paid nonassessable shares of
Class B-2 Common Stock on the Conversion, free of all preemptive rights, and
(ii) will not take any action which results in any adjustment of the applicable
Conversion Price if the total number of shares of Class B-2 Common Stock
issuable after the action upon the Conversion of all of the Series A-2 Preferred
Stock will exceed the total number of shares of Class B-2 Common Stock then
authorized by the Corporation's Certificate of Incorporation and available for
the purpose of issue upon such Conversion.
Section 8. Adjustments to Conversion Price.
(a) Adjustment for Stock Dividends, Distributions and Subdivisions. In
the event the Corporation shall declare or pay any dividend or make any other
distribution on the Common Stock payable in shares of Common Stock, or shall
effect a subdivision of the outstanding Common Stock, into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock), then and in each such case the applicable
Conversion Price in effect immediately prior to such stock dividend,
distribution or subdivision shall, concurrently with the effectiveness of such
stock dividend, distribution or subdivision, be proportionately decreased,
subject to the following qualifications: (i) in the event such issuance is
declared but not effected, the applicable Conversion Price shall be readjusted
as if such issuance was not declared; and (ii) no adjustment in the Conversion
Price shall be made in the event the Holders simultaneously receive a dividend
or other distribution of such securities in an amount equal to the amount of
such securities as they would have received had (assuming that the Restated
Charter Effectiveness has occurred) the Series A-2 Preferred Stock been
converted into Class B-2 Common Stock pursuant to Section 7 immediately prior to
such event (or, if applicable, the record date for such event).
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(b) Adjustments for Combinations or Consolidation of Common Stock. In
the event the outstanding Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
then and in each such case the applicable Conversion Price in effect immediately
prior to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
(c) Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In the event the Corporation (i) consolidates with or
merges into any other corporation or entity and is not the continuing or
surviving corporation or entity of such consolidation or merger, (ii) permits
any other corporation or entity to consolidate with or merge into the
Corporation and the Corporation is the continuing or surviving corporation but,
in connection with such consolidation or merger, the shares of Common Stock are
changed into or exchanged for stock or other securities of any other Person or
cash or any other property, or (iii) transfers all or substantially all of its
properties or assets, directly or indirectly, to any other corporation or entity
(other than to a wholly owned Subsidiary of the Corporation if such Subsidiary
remains wholly owned by the Corporation after such transfer or any other
transaction or series of transactions related to such transfer), then, and in
each such event, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Section 8(c), each Holder, upon the
Conversion at any time after the consummation of such consolidation, merger or
transfer, shall be entitled to receive, in lieu of the shares of Common Stock
issuable upon the Conversion prior to such consummation, the stock and other
securities, cash and property to which such Holder would have been entitled upon
such consummation if such Holder (assuming that the Restated Charter
Effectiveness has occurred) had converted its Series A-2 Preferred Stock
pursuant to Section 7 immediately prior to such consummation (or, if applicable,
any record date with respect to such transaction), subject to adjustments
(subsequent to such corporate action) as nearly equivalent as possible to the
adjustments provided for in this Section 8(c). Notwithstanding anything
contained herein to the contrary, (A) the Corporation will not effect any of the
transactions described in the clauses (i) through (iii) of this Section 8
unless, prior to the consummation thereof, each corporation (other than the
Corporation) which may be required to deliver any stock, securities, cash or
property upon the conversion of Series A-2 Preferred Stock shall assume, by
written instrument, a copy of which shall be delivered to each Holder, the
obligation to deliver to such Holder such shares of stock, securities, cash or
property as such holder may be entitled to receive upon such conversion, and (B)
in the event the Holders of a majority of the outstanding shares of Series A-2
Preferred Stock, voting separately as a single class, elect to declare that any
of the transactions described in clauses (i) through (iii) constitute a
Liquidation Event, then the provisions of this Section 8(c) shall not apply to
such transaction and, in lieu thereof, the Holders shall be entitled to the
amounts set forth in Section 5 with respect to such Liquidation Event.
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(d) Adjustments for Reclassification, Exchange and Substitution. If the
Common Stock is changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision, combination or
consolidation of shares, or merger, consolidation or asset sale, provided for in
Sections 8(a), 8(b) and 8(c) or any reclassification resulting from the adoption
of the Restated Certificate of Incorporation), then and in each such case the
applicable Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted such that the Series A-2 Preferred Stock shall be convertible into, in
lieu of the number of shares of Class B-2 Common Stock which the Holders would
otherwise have been entitled to receive (assuming that the Restated Charter
Effectiveness has occurred), a number of shares of such other class or classes
of stock equivalent to the number of shares of Class B-2 Common Stock that would
have been subject to receipt by the Holders upon any Conversion (assuming that
the Restated Charter Effectiveness has occurred) immediately before that change.
No class or series of Common Stock shall be so changed into shares of any other
class or series of stock unless a proportional and equivalent change is made
with respect to all other classes or series of Common Stock. For avoidance of
doubt, it is stipulated that the provisions of this Section 8(d) shall not apply
to any exchange of shares of Common Stock into shares of Series B Preferred
Stock pursuant to the JLL Exchange Agreement.
(e) Adjustment of Conversion Price Upon Issuance of Additional Shares
of Common Stock. In the event the Corporation, at any time after the Issue Date
and prior to the Restated Charter Effectiveness, issues or sells Additional
Shares of Common Stock for a consideration per share less than the Current
Market Price in effect immediately prior to such issuance or sale, then and in
each such event, the applicable Conversion Price shall be reduced, concurrently
with such issue or sale, to a price (calculated to the nearest cent) determined
by multiplying the applicable Conversion Price by a fraction (i) the numerator
of which shall be (A) the number of shares of Common Stock outstanding
immediately prior to such issue or sale, plus (B) the number of shares of Common
Stock which the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common Stock so issued or sold would
purchase at the Current Market Price in effect immediately prior to such
issuance or sale, and (ii) the denominator of which shall be (A) the number of
shares of Common Stock outstanding immediately prior to such issue or sale plus
(B) the number of Additional Shares of Common Stock so issued or sold. The
provisions of this Section 8(e) shall not apply to any issuance or sale of
Additional Shares of Common Stock for which an adjustment is provided under
Section 8(a).
(f) Issue of Securities Deemed Issue of Additional Shares of Common
Stock. In the event (i) the Corporation, at any time after the Issue Date and
prior to the Restated Charter Effectiveness, issues, sells or grants any Options
or Convertible Securities, or shall fix a record date for the determination of
holders of any class of securities entitled to
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receive any such Options or Convertible Securities and (ii) the consideration
per share for the Additional Shares of Common Stock issuable upon the exercise
of such Options, or in the case of Convertible Securities, the conversion or
exchange of such Convertible Securities shall be less than the Current Market
Price in effect immediately prior to such issue, sale or grant, or such record
date, as the case may be, then, and in each such case, (A) the maximum number of
shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provisions contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be issuances of Additional Shares of
Common Stock issued as of the time of such issue, sale or grant or, in case such
a record date shall have been fixed, as of the close of business on such record
date, and (B) the Conversion Price shall be adjusted in accordance with Section
8(e) on the date of and immediately prior to such issue, sale or grant, or the
record date, as the case may be. In any such case in which Additional Shares of
Common Stock are deemed to be issued or sold pursuant to this Section 8(f):
(1) no further adjustment in the applicable Conversion Price
shall be made upon the subsequent issue of Convertible Securities or
Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Corporation, or increase in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the adjustments to the Conversion Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such decrease or
increase becoming effective, be recomputed (and the Conversion Price
shall automatically be adjusted as so recomputed) to reflect such
increase or decrease insofar as it affects such Options or the rights
of conversion or exchange under such Convertible Securities which are
outstanding at such time; and
(3) no readjustment pursuant to the preceding clause (2) shall
have the effect of increasing the applicable Conversion Price to an
amount which exceeds the lower of (A) the applicable Conversion Price
on the original adjustment date and (B) the applicable Conversion Price
that would have resulted from any issuance of Additional Shares of
Common Stock between the original adjustment date and such readjustment
date.
The consideration per share deemed to be received by the Corporation for
Additional Shares of Common Stock relating to Options and Convertible
Securities, shall be
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determined by dividing (x) the total amount, if any, actually received by the
Corporation as consideration for the issue, sale, grant or assumption of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating to such
Options or Convertible Securities without regard to any provision contained
therein for a subsequent adjustment of such consideration) payable to the
Corporation upon the exercise in full of such Options or the conversion or
exchange in full of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise in full of such Options for Convertible
Securities and the conversion or exchange in full of such Convertible
Securities, by (y) the maximum number of Additional Shares of Common Stock (as
set forth in the instruments relating to such Options or Convertible Securities,
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(g) Certain Payments in Lieu of Dividends. In case the Corporation, at
any time on or after the Issue Date and prior to the Restated Charter
Effectiveness, shall, by dividend or otherwise, distribute to all holders of its
Regular Common Stock evidences of its indebtedness or assets (including
securities other than dividends and distributions paid pursuant to Section
8(a)), then the Conversion Price shall be adjusted by multiplying the Conversion
Price then in effect by a fraction (i) the numerator of which shall be (A) the
Current Market Price of a share of Regular Common Stock on the record date fixed
for such distribution minus (B) the Market Value of the portion of the assets or
evidences of indebtedness so distributed applicable to one share of Regular
Common Stock and (ii) the denominator of which shall be the Current Market Price
of a share of Regular Common Stock on the record date fixed for such
distribution.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the applicable Conversion Price pursuant to this
Section 8, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) the consideration received or to be received by the Corporation
for any Additional Shares of Common Stock, or any Options or Convertible
Securities, as the case may be, issued or sold or deemed to have been issued,
(ii) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (iii) the applicable Conversion Price in effect immediately
prior to such issue or sale and as adjusted and readjusted on account thereof.
The Corporation shall, upon the written request at any time of any Holder,
furnish or cause to be furnished to such Holder a like certificate setting forth
(i) the applicable Conversion Price at the time in effect, and showing how it
was calculated, and (ii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon a Conversion. At
the request of the Holders of a majority of the then outstanding Series A-2
Preferred Stock, the Corporation will have the certificates
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referred to in this Section 8(h) prepared and delivered by an internationally
recognized independent accounting firm.
Section 9. Preemptive Rights.
(a) The Corporation shall provide each Holder with a written notice (a
"Preemptive Rights Notice") of any proposed issuance by the Corporation of any
New Securities at least 30 days prior to the proposed issuance date. Such notice
shall specify the price at which the New Securities are to be issued and the
other material terms of the issuance. Each Holder shall be entitled to purchase,
at the price and on the terms at which such New Securities are proposed to be
issued and specified in such Preemptive Rights Notice, such Holder's Preemptive
Rights Portion of such class of the New Securities proposed to be issued.
"Preemptive Rights Portion" means the pro rata portion of New Securities
proposed to be issued by the Corporation, which amount shall, for each Holder,
be based upon the ratio of (i) the number of shares of Class B-2 Common Stock
that such Holder would receive upon the Conversion of its shares of Series A-2
Preferred Stock into Class B-2 Common Stock pursuant to Section 7 immediately
prior to the issuance of the New Securities (assuming that the Restated Charter
Effectiveness had occurred) to (ii) the total number of issued and outstanding
shares of Common Stock immediately prior to the issuance of the New Securities
(assuming (A) that the Restated Charter Effectiveness has occurred and (B) the
conversion of all securities convertible into, and the exercise of all options,
warrants or other arrangements representing the right to purchase or otherwise
acquire, any shares of Common Stock).
(b) A Holder may exercise its rights under this Section 9 by delivering
written notice of its election to purchase New Securities to the Corporation
within 15 days of receipt of the Preemptive Rights Notice. A delivery of such a
written notice (which notice shall specify the amount of New Securities to be
purchased by the Shareholder submitting such notice) by such Holder shall
constitute a binding agreement of such Holder to purchase, at the price and on
the terms specified in the Preemptive Rights Notice, the number of New
Securities specified in such Holder's written notice.
(c) In the case of any issuance of New Securities, the Corporation
shall have 90 days from the date of the Preemptive Rights Notice to consummate
the proposed issuance of any or all of such New Securities which the Holders
have not elected to purchase at the price and upon terms that are not materially
less favorable to the Corporation than those specified in the Preemptive Rights
Notice. At the consummation of such issuance, the Corporation shall issue
certificates representing the New Securities to be purchased by each Holder
exercising preemptive rights pursuant to this Section 9 registered in the name
of such Holder, against payment by such Holder of the purchase price for such
New Securities. If the Corporation proposes to issue such New Securities after
such 90-day period, it shall again comply with the procedures set forth in this
Section 9.
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Section 10. Voting Rights.
(a) The Holders shall not be entitled to any voting rights, except as
hereinafter provided in this Section 10 or as otherwise provided by DGCL or
other applicable law.
(b) The approval of Holders of at least a majority of the then
outstanding shares of Series A-2 Preferred Stock voting or consenting, as the
case may be, separately as a class, shall be required to amend or repeal any
provision of, or add any provision to, this Certificate of Designations.
(c) The Holders voting or consenting, as the case may be, separately as
a single class, shall be entitled to elect Directors (the Directors so elected,
the "Class B-2 Directors") as follows:
(i) On the Issue Date, two individuals designated by the
holders of shares of Series A-2 Preferred Stock shall be elected as
Class B-2 Directors. The Holders shall be entitled to elect, voting or
consenting as a separate class, two Class B-2 Directors until the
second anniversary of the Issue Date which number may only be reduced
pursuant to clause (ii), (iii) or (iv) of this Section 10(c) only after
such second anniversary.
(ii) So long as the number of outstanding shares of Series A-2
Preferred Stock is equal to or greater than 50% of the number of shares
of Series A-2 Preferred Stock issued on the Issue Date (in each case,
as adjusted for stock dividends or distributions and subdivisions,
combinations or consolidations of stock), the Holders shall be entitled
to elect, voting or consenting as a separate class, two Class B-2
Directors.
(iii) So long as the number of outstanding shares of Series
A-2 Preferred Stock is less than 50% but equal to or greater than 10%
of the number of shares of Series A-2 Preferred Stock issued on the
Issue Date (in each case, as adjusted for stock dividends or
distributions and subdivisions, combinations or consolidations of
stock), the Holders shall be entitled to elect, voting or consenting as
a separate class, one Class B-2 Director.
(iv) The Holders shall not be entitled to elect any Director
pursuant to this Section 10(c) after the second anniversary of the
Issue Date when the number of outstanding shares of Series A-2
Preferred Stock is less than 10% of the number of shares of Series A-2
Preferred Stock issued on the Issue Date (in each case, as adjusted for
stock dividends or distributions and subdivisions, combinations or
consolidations of stock).
(v) In addition to the number of Class B-2 Directors provided
in the preceding clauses (ii) and (iii), if at any time a Voting
Default shall have
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occurred, the Holders shall be entitled, voting or consenting as a
separate class, to elect one additional Class B-2 Director.
(vi) Upon any increase or decrease in the total number of
Class B-2 Directors pursuant to this Section 10(c), there shall be a
corresponding and equal increase or decrease in the total number of
Directors.
(vii) So long as the Holders of shares of Series A-2 Preferred
Stock are entitled to elect Class B-2 Directors under this Section
10(d), at any annual meeting of stockholders, or special meeting held
in place thereof, the holders of shares of Series A-2 Preferred Stock,
voting or consenting (as the case may be separately) as a single class,
shall be entitled to elect any Class B-2 Directors due to be elected at
such meeting pursuant to the terms of this Certificate of Designations.
Any vacancy occurring because of the death, disability, resignation or
removal of a Class B-2 Director shall be filled by the vote or consent
of the Holders. A Class B-2 Director may be removed without cause only
by the vote or consent of the Holders of a majority of the outstanding
shares of Series A-2 Preferred Stock.
(d) Upon and following the Restated Charter Effectiveness, the Class
B-2 Directors shall be classified as set forth in Restated Certificate of
Incorporation.
(e) In addition to any other vote required by law, the affirmative vote
of a majority of the Directors that are not employees or officers of the
Corporation or its Subsidiaries shall be required for any decision by the
Corporation regarding the appointment, removal or compensation of the
Corporation's Chief Executive Officer, or any transaction between the
Corporation (or any of its Subsidiaries) and the Corporation's Chief Executive
Officer (or his or her Affiliates).
Section 11. Reports and Notices.
(a) The Corporation will provide the Holders, at the Corporation's
expense, with the following:
(i) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Corporation, and in any event within 45 days thereafter, a consolidated
balance sheet of the Corporation and its Subsidiaries, as of the end of
each such quarterly period, and consolidated statements of income and
sources and applications of funds of the Corporation and its
Subsidiaries for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles in
the United States consistently applied and setting forth in comparative
form the figures for the corresponding periods of the previous fiscal
year, subject to
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changes resulting from year end audit adjustments and the absence of
notes, together with a management's discussion and analysis thereof,
all in reasonable detail and certified by the principal financial or
accounting officer of the Corporation.
(ii) As soon as practicable after the end of each fiscal year
of the Corporation, and in any event within 90 days thereafter, a
consolidated balance sheet of the Corporation and its Subsidiaries, as
at the end of such fiscal year, and consolidated statements of income
and sources and applications of funds of the Corporation and its
Subsidiaries, for such year, prepared in accordance with generally
accepted accounting principles in the United States consistently
applied and setting forth in each case in comparative form the figures
for the previous fiscal year, together with a management's discussion
and analysis thereof, all in reasonable detail and certified with an
unqualified audit opinion by independent public accountants of
recognized national standing selected by the Corporation.
So long as the Corporation is subject to the reporting requirements of the
Exchange Act, the Corporation's obligations to provide the information required
pursuant to clauses (i) and (ii) of this Section 11(a) shall be satisfied by the
filing by the Corporation of its quarterly reports on Form 10-Q and its annual
reports on Form 10-K, respectively, or any successor forms thereto, in
accordance with the Exchange Act.
(b) In the event that at any time after the date hereof, (i) the
Corporation shall adopt a dividend policy, change a previously adopted dividend
policy, or declare a dividend in the absence of, or in conflict with, a dividend
policy or declare any distribution with respect to the Common Stock, or (ii) the
Corporation shall declare any stock split, stock dividend, subdivision,
combination, or similar distribution with respect to the Common Stock,
regardless of the effect of any such event on the outstanding number of shares
of Common Stock (either such event hereinafter being referred to as a
"Notification Event"), then and in such case the Corporation shall cause to be
mailed to the Holders, not later than the earlier of the date public
announcement of the Notification Event is first made or the date ten days prior
to the record date, if any, in connection with such Notification Event, written
notice specifying the nature of such event and the effective date of, or the
date on which the books of the Corporation shall close or a record shall be
taken with respect to, such event. Such notice shall also set forth facts
indicating the effect of such action (to the extent such effect may be known at
the date of such notice) on the Conversion Price and the kind and amount of the
shares of stock or other securities or property issuable or distributable with
respect to the Series A-2 Preferred Stock.
(c) The Corporation shall deliver to the Holders all notices and other
reports delivered to holders of Regular Common Stock, including all notices and
reports required by DGCL or other applicable laws.
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Section 12. Transfer Restrictions. Until the 120th day following the
Issue Date and following the Restated Charter Effectiveness, any transfer of
shares of Series A-2 Preferred Stock by a Holder to a Person other than a
Permitted Transferee shall be null and void and of no force and effect . The
Corporation may, at its discretion, as a condition to the transfer or
registration of transfer of Series A-2 Preferred Stock to a purported Permitted
Transferee, require the furnishing of affidavits or other proof as it deems
reasonably necessary to establish that the proposed transferee is a Permitted
Transferee. The term "Permitted Transferee" of a Holder shall be (i) any
Subsidiary of such Holder, (ii) Rite Aid Corporation, a Delaware corporation,
and any direct or indirect Subsidiary of Rite Aid Corporation, and (iii) any
Person who is an institutional lender acquiring such shares of Series A-2
Preferred Stock or a security interest therein or pledge thereof from any Person
referred to in clause (ii) as security for Indebtedness of such Person referred
to in clause (ii) (including any such acquisition upon foreclosure).
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by David D. Halbert, its Chairman and Chief Executive
Officer, on this 2nd day of October, 2000.
ADVANCE PARADIGM, INC.
By: /s/ David D. Halbert
-------------------------------------------
Name: David D. Halbert
Title: Chairman and Chief Executive Officer
31
