<PAGE>
As filed with the Securities and Exchange Commission on October 25, 1996.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
UNC INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 54-1078297
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
175 Admiral Cochrane Drive
Annapolis, Maryland 21401
(410) 266-7333
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Robert L. Pevenstein
Senior Vice President and Chief Financial Officer
UNC Incorporated
175 Admiral Cochrane Drive
Annapolis, Maryland 21401
(410) 266-7333
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
John B. Frisch, Esquire
Miles & Stockbridge,
a Professional Corporation
10 Light Street
Baltimore, Maryland 21202
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Each Class of to be Price Per Offering Registration
Securities to be Registered Registered Unit(1) Price Fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series B Senior Cumulative 250,000 $100 $25,000,000 $8,621
Convertible Preferred
Stock, par value $1.00
per share
Series C Senior Cumulative 250,000 $100 $25,000,000 $8,621
Preferred Stock, par
value $1.00 per share
Common Stock, par value 3,571,429 -- -- --
$.20 per share/(2)(3)/
================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457 of Regulation C under the Securities Act of 1933.
(2) Such number represents the number of shares of Common Stock as are
initially issuable upon conversion of the Series B Preferred Stock (as
defined) and, pursuant to Rule 416 under the Securities Act of 1933, such
indeterminate number of shares of Common Stock as may be issued from time
to time upon the conversion of the Series B Preferred Stock (as defined) by
reason of adjustment of the conversion price upon the occurrence of certain
contingencies as outlined in the Prospectus.
(3) Includes Series A Junior Participating Preferred Stock related to the
shares of Common Stock.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 25, 1996
PROSPECTUS
UNC INCORPORATED
Series B Senior Cumulative
Convertible Preferred Stock
Series C Senior Cumulative
Preferred Stock
Common Stock
This Prospectus relates to the resale of up to 250,000 shares of the
Series B Senior Cumulative Convertible Preferred Stock, par value $1.00 per
share (the "Series B Preferred Stock"), 250,000 shares of the Series C Senior
Cumulative Preferred Stock, par value $1.00 per share (the "Series C Preferred
Stock"), that may be paid from time to time as a dividend on such shares of
Series B Preferred Stock and 3,571,429 shares of the common stock, par value
$.20 per share (the "Common Stock"), issuable upon conversion of such shares of
Series B Preferred Stock of UNC Incorporated, a Delaware corporation ("UNC" or
the "Company"). The Company originally issued and sold 250,000 shares of the
Series B Preferred Stock pursuant to an Amended and Restated Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of May 30, 1996, by and
among the Company and the Purchasers signatory thereto, in a transaction exempt
from the registration requirements of the Securities Act of 1933 (the
"Securities Act") to persons reasonably believed by the Company to be
"accredited investors," as such term is defined by Rule 501(a) under the
Securities Act.
A share of the Series B Preferred Stock may be converted at the option
of the holder thereof into the number of fully paid and non-assessable shares of
Common Stock obtained by dividing $100 (the price per share at which the Series
B Preferred Stock was issued originally by the Company) by the initial
conversion price of $7.00. The conversion price of the Series B Preferred Stock
is subject to certain adjustments, including a one time five percent reduction
if the Company declares a PIK Dividend (as defined below) after the third
anniversary of the issuance of the Series B Preferred Stock. Holders of the
Series B Preferred Stock are entitled to receive cumulative dividends at an
annual rate of $8.50 per share to be paid pro rata to such holders, quarterly,
in arrears, subject to adjustment in the case of PIK Dividends paid after the
third anniversary of the date of issuance of the Series B Preferred Stock. If
the Company is not subject to any contractual restriction prohibiting the
payment of dividends in cash, dividends will be paid in cash. If any such
contractual restriction exists, dividends may be paid on the Series B Preferred
Stock by issuing fully paid and non-assessable shares of the Series C Preferred
Stock, which shall be valued at $100 per share (a "PIK Dividend"), for the
purpose of paying such dividend or in some combination of cash and a PIK
Dividend. Accordingly, up to 250,000 shares of the Series B Preferred Stock,
the shares of the Series C Preferred Stock that may be paid from time to time as
a PIK Dividend on the Series B Preferred Stock, and the shares of the Common
Stock issuable upon the conversion of the Series B Preferred Stock (the
"Conversion Shares") may be offered and sold from time to time by the holders
named herein or by their permitted transferees, pledgees, donees, or their
successors (the "Selling Holders") pursuant to this Prospectus.
<PAGE>
The Series B Preferred Stock, the Series C Preferred Stock and the
Conversion Shares may be sold by the Selling Holders from time to time directly
to purchasers. The Selling Holders will receive all of the net proceeds from
the sale of the Series B Preferred Stock, the Series C Preferred Stock and the
Conversion Shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Series B Preferred Stock, the
Series C Preferred Stock and the Conversion Shares. The Company is responsible
for payment of all other expenses in connection with the performance by the
Company of its obligations under the terms and provisions of the Stock Purchase
Agreement.
The Selling Holders and any broker-dealers, agents or underwriters
that participate in the distribution of the Series B Preferred Stock, the Series
C Preferred Stock or the Conversion Shares may be deemed to be "underwriters,"
as such term is defined under Section 2(11) of the Securities Act, and any
commission or profit received by them in connection with the resale of the
Series B Preferred Stock, the Series C Preferred Stock or the Conversion Shares
may be deemed to be underwriting commissions or discounts under the Securities
Act.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS RELEVANT TO THE SERIES B PREFERRED STOCK, THE SERIES C PREFERRED
STOCK AND THE CONVERSION SHARES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is October 25, 1996.
INFORMATION CONTAINED HEREBY IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th
Floor, New York, New York 10048, and copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
site on the World Wide Web, the address of which is http://www.sec.gov., that
contains reports, proxy and information statements and other information
regarding issuers, such as the Company, that file electronically with the
Commission. Such reports, proxy statements and other information concerning the
Company also may be inspected at the offices of the New York Stock Exchange.
The Company has filed with the Commission a Registration Statement on
Form S-3 (hereinafter, together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the
securities covered by this Prospectus. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information pertaining to the Company and the securities covered by this
Prospectus, reference is made to the Registration Statement that is on file at
the offices of the Commission and may be obtained upon payment of the fee
prescribed by the Commission, may be examined without charge at the offices of
the Commission or may be obtained from the Commission's site on the World Wide
Web. Statements contained in this Prospectus as to the contents of any documents
referred to are not necessarily complete, and in each such instance, are
qualified in all respects by reference to the applicable documents filed with
the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
following documents filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996;
(c) the Company's Current Reports on Form 8-K dated February 7, 1996,
May 7, 1996, June 11, 1996 and August 12, 1996; and
(d) the Company's Registration Statement on the Form 8-A related to the
Common Stock filed with the Commission pursuant to Section 12 of the Exchange
Act, and any amendment or report filed for the purpose of updating such
descriptions.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of securities hereunder shall be deemed to be
incorporated herein by reference and to be a part hereof from the respective
dates of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document that also is or
is deemed
-3-
<PAGE>
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, to each person
to whom a copy of this Prospectus is delivered, upon written or oral request
of such person, a copy of any or all of the documents incorporated by reference
herein, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to UNC Incorporated, 175 Admiral Cochrane Drive,
Annapolis, Maryland 21401-7394, Attention: Treasurer, telephone number:
(410) 266-7333.
THE COMPANY
The Company is a leading supplier of products and services to the aviation
industry. The Company's primary business is the provision of services to the
aviation aftermarket. These operations include the overhaul and repair of
aircraft engines and accessories, the repair and remanufacturing of engine
components, and the provision of training and maintenance services to the United
States and foreign military. Also, part of the Company's revenues are derived
from manufacturing engine and airframe parts for original equipment
manufacturers ("OEMs").
On May 30, 1996, the Company acquired (the "Acquisition") substantially all
of the assets and assumed certain liabilities of Garrett Aviation Services
("Garrett"), a leading provider of aviation services to the worldwide business
aviation aftermarket. Garrett provides a full range of overhaul services to
business aviation and regional airline customers, including complete engine and
airframe repair and overhaul capabilities, full interior and exterior
refurbishments, new aircraft completions, avionics installation and spare parts
distribution. Garrett specializes in providing aircraft, engine and avionics
aftermarket services to aircraft powered by AlliedSignal turbofan engines, which
are the leading engine type for the business jet aviation market.
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, the following information should be considered carefully by
potential purchasers in evaluating the Company and its business before making an
investment in the securities offered hereunder:
Absence of Public Market
No trading market exists for the Series B Preferred Stock or the Series C
Preferred Stock and there can be no assurance regarding the future development
of such a market for the Series B Preferred Stock or the Series C Preferred
Stock or the ability of holders of the Series B Preferred Stock or Series C
Preferred Stock to sell their Series B Preferred Stock or Series C Preferred
Stock or the price at which such holders may be able to sell their Series B
Preferred Stock or Series C Preferred Stock. If such a market were to develop,
future trading prices will depend on many factors, including, among other
things, the operating results of the Company and the market for similar
securities.
Leverage
As of September 30, 1996, the Company's consolidated indebtedness was $385.4
million and its ratio of total debt to total capitalization was 74% and the
Company had the ability to borrow up to an additional $5.8 million under an
Amended and Restated Credit Agreement, dated as of May 22, 1996 (the "Revolving
Credit Facility"), among the Company, the financial institutions who are parties
thereto as lenders and First Union Commercial Corporation ("First Union") as
agent for the lenders and First Union National Bank of North Carolina as the
issuing bank for letters of credit issued thereunder. Subject to certain
restrictions contained in the Revolving Credit Facility and the Indenture
governing the Company's 11% Senior Subordinated Notes due June 1, 2006, the
Company and its subsidiaries may incur additional indebtedness in the future.
In addition, the
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<PAGE>
Company anticipates a short-term need to access working capital relating to the
Acquisition, which may require the incurrence of additional indebtedness through
borrowings of available amounts under the Revolving Credit Facility. Although
the Acquisition is expected to increase and diversify the Company's cash flow
from operations, the aggregate amount of Company indebtedness has been increased
significantly as a result of the Acquisition. Increased leverage will, among
other things, require the dedication of additional portions of cash flow to make
interest and principal payments and may increase the Company's vulnerability in
the event that a downturn in its business were to occur.
Benefits from the Acquisition
Management expects to realize certain cost savings as a result of the
Acquisition. Additional cost savings and other business synergies are
anticipated to occur over the next three years. While the Company believes that
it can improve the profitability of the operations of Garrett and the Company on
a combined basis given the cost savings and operating synergies the Company
expects to achieve, there can be no assurance that the Company will be able to
realize the cost savings which the Company believes it can achieve or other
expected cost savings and operating synergies following the Acquisition.
Realization of such operating and economic efficiencies could also be affected
by a number of factors beyond the Company's control, such as general economic
conditions, increased operating costs, the response of competitors or customers,
regulatory developments and delays in implementation.
AlliedSignal Agreements
The Company has succeeded to all of Garrett's rights and obligations under
the terms of an operating agreement between Garrett and AlliedSignal Inc.
("AlliedSignal"). The Company believes that the operating agreement will
provide the Company with significant advantages. However, the AlliedSignal
operating agreement may be terminated by AlliedSignal, among other reasons,
following a material decrease in customer satisfaction relating to Garrett's
services which has a material adverse effect on AlliedSignal's aviation business
or following a significant loss in market share by Garrett which continues
beyond a specified level for four consecutive quarters. A significant change
in, or loss of, the operating agreement could have a material adverse effect on
the Company's results of operations.
AlliedSignal and the Company have entered into a separate agreement pursuant
to which AlliedSignal has agreed to provide the Company with $15.0 million in
annual orders for the repair of AlliedSignal parts and components through
December 31, 1997. The Agreement also provides that the parties will hold
business discussions concerning all elements of the relationship among the
Company, Garrett and AlliedSignal in the near future. While the Company has no
reason to believe that these discussions will not proceed favorably, there can
be no assurance that AlliedSignal's obligation to provide the Company with
orders for parts and component repairs will be extended beyond December 31, 1997
or that it will be extended on terms as favorable to the Company as those
presently in effect.
Commercial Airline Industry
The Company's manufacturing operations are driven in part by the demand for
new aircraft from the commercial airline industry. As a result, a portion of
the Company's business is directly dependent upon the conditions in that
industry which are highly cyclical and competitive. The commercial airline
industry in the United States is currently experiencing an economic turn around.
In the prior five years, the industry had suffered a severe down turn which had
resulted in record losses and the cancellation and delay of orders for new
aircraft, which impacted the Company's OEM manufacturing operations. The recent
up turn in the industry is causing increased demand for new aircraft to meet the
increasing demands for air travel. Due to the volatility of the airline
industry, there can be no assurance that the recent profitability of the airline
industry will continue or that the airlines will maintain or increase
expenditures for new aircraft. In addition, the airline industry is undergoing
a process of consolidation. Such consolidation could result in a reduction of
future aircraft orders as overlapping routes are eliminated and airlines seek
greater economies through higher aircraft utilization.
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<PAGE>
Defense Spending Levels
Many of the Company's Aviation Services Division's contracts are funded by
the operations and maintenance ("O&M") budget of the United States Department of
Defense. The O&M budget has remained stable over the last four years and is
projected to remain relatively flat through the end of the decade, despite a
decline in the Department of Defense's overall budget. The Company believes
that more maintenance work under the O&M budget will be outsourced in the future
to lower cost, private sector suppliers, such as the Company, to meet ongoing
Department of Defense budget pressures in other budget areas, such as new or
modernized weapons assistance. There can be no assurance, however, that the
Department of Defense will outsource significant amounts of additional work to
entities such as the Company or that federal budgetary pressures will not
adversely affect the Company.
Litigation and Contingencies
The Company is involved in a variety of legal proceedings and environmental
matters. Although the Company presently believes that the resolution of these
matters will not have a material adverse impact on the operating results,
liquidity or financial condition of the Company, there can be no assurance as to
the final resolution of these matters.
Payment of Dividends and Redemption
The payment of cash dividends on the Company's Common Stock, the Series B
Preferred Stock and the Series C Preferred Stock as well as the redemption of
the Company's Common Stock, the Series B Preferred Stock and the Series C
Preferred Stock is limited by the terms and provisions of the indenture pursuant
to which the Company's 11% Senior Subordinated Notes Due 2006 were issued (the
"Senior Subordinated Indenture") and the indenture pursuant to which the
Company's 9-1/8% Senior Notes Due 2003 were issued (the "Senior Indenture" and,
together with the Senior Subordinated Indenture, the "Indentures") as well as
the Company's Revolving Credit Facility. While the Company is presently able to
pay cash dividends on the Series B Preferred Stock under the terms of those
Indentures, there can be no assurance that (i) the Company will continue to be
able to pay cash dividends on Series B Preferred Stock, (ii) the Company will be
able to pay cash dividends on any shares of Series C Preferred Stock it may
issue from time to time, or (iii) the Company will be able to redeem its shares
of Series B and Series C Preferred Stock in the future. Also, the Company does
not currently contemplate paying any dividends on its Common Stock in the
foreseeable future and, accordingly, purchasers of shares of the Company's
Common Stock should not expect to receive any dividends on such shares. See
"Description of Capital Stock--Agreements Limiting the Company's Ability to Pay
Dividends and to Redeem its Capital Stock."
USE OF PROCEEDS
The Selling Holders will receive all of the net proceeds from the resales of
the Series B Preferred Stock, the Series C Preferred Stock and the Conversion
Shares, and the Company will not receive any of the proceeds from such sales.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
For the fiscal years ended December 31, 1992, 1993 and 1995, the Company's
ratios of earnings to combined fixed charges and preferred dividends were 1.86,
1.46 and 1.11, respectively. For the quarters ended June 30, 1996, the
Company's ratio of earnings to combined fixed charges and preferred dividends
was 1.19. For the fiscal years ended December 31, 1991 and 1994, the Company's
earnings were insufficient to cover combined fixed charges and preferred
dividends by $26.6 million and $81.7 million, respectively.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The description of certain powers, preferences and rights of the Company's
Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock set forth below does not purport to be complete and is qualified
in its entirety by reference to the Company's Certificate of Incorporation,
including the Certificates of Designation of the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock and the related Rights
Agreement and the Stock Purchase Agreement, each of which is incorporated by
reference in the Registration Statement of which this Prospectus is a part.
General
The Company's authorized capital consists of 50,000,000 shares of Common
Stock and 12,000,000 shares of preferred stock, par value $1.00 per share (the
"Preferred Stock"). The Company has designated and authorized 250,000 shares of
its Preferred Stock as Series B Preferred Stock and 250,000 shares of its
Preferred Stock as Series C Preferred Stock, which rank with respect to dividend
rights, liquidation rights, winding up and dissolution on parity with one
another and prior to any other equity securities of the Company, including any
other series of Preferred Stock, whether currently authorized or hereafter
created. The Company has also designated and authorized 250,000 shares of its
Preferred Stock as Series A Preferred Stock. Shares of the Company's Series A
Preferred Stock may be issued from time to time pursuant to rights which cover
the shares of the Company's Common Stock and Series B Preferred Stock as more
fully described below. See "Description of Capital Stock--Rights Agreement--
Series A Preferred Stock." As of September 30, 1996, there were issued and
outstanding 18,252,568 shares of Common Stock and 250,000 shares of the Series B
Preferred Stock.
Agreements Limiting the Company's Ability to Pay Dividends and to Redeem its
Capital Stock
The Senior Subordinated Indenture. Pursuant to the Senior Subordinated
Indenture, the Company will not, and will not permit any of its subsidiaries to,
directly or indirectly, among other things, declare or pay any dividend or make
any distribution on account of the Company's capital stock (including the Common
Stock, the Series B Preferred Stock and the Series C Preferred Stock) or make
certain other restricted payments (collectively, the "Restricted Payments"),
other than dividends or distributions payable in Equity Interests (as
hereinafter defined) of the Company, if at the time of such Restricted Payment:
(i) a Default or Event of Default (as defined) shall have occurred and be
continuing or shall occur as a consequence thereof; or (ii) the Company shall
not be able to incur at least $1.00 of additional indebtedness (as defined)
pursuant to limitations on additional indebtedness covenants set forth in the
Senior Subordinated Indenture; or (iii) such Restricted Payment, together with
the aggregate of all Restricted Payments made after May 30, 1996 exceeds the sum
of (x) 50% of the amount of the Consolidated Net Income (as defined) of the
Company for the period (taken as one accounting period) from the beginning of
the first fiscal quarter immediately after May 30, 1996 to the end of the
Company's most recently ended quarter at the time of such Restricted Payment
(or, if Consolidated Net Income for such period is negative, 100% of such
accumulated amount) plus (y) 100% of the aggregate net cash payments received by
the Company from the issue or sale after the date of the applicable Indenture of
capital stock of the Company (other than certain types of securities, including
the Series B Preferred Stock) or any Indebtedness (as defined) or other security
convertible into or exercisable for any such capital stock (other than certain
securities) that has been so converted or exercised, the sum of (x) and (y)
hereafter referred to as the "Earned Amount." "Equity Interests" means capital
stock, or other equity interests or warrants, options or other rights to
acquire, or that are measured in relation to, capital stock or other equity
interests (but excluding any debt security that is convertible into, or
exchangeable for, capital stock).
Notwithstanding the foregoing, the requirement that the Company be able to
incur at least $1.00 of additional Indebtedness pursuant to the limitation on
additional Indebtedness provisions in the Senior Subordinated Indenture will not
apply to the Company's ability to make Restricted Payments in the form of
dividends on the Series B Preferred Stock and the Series C Preferred Stock.
Moreover, notwithstanding anything to the contrary, the Senior Subordinated
Indenture does not prohibit the payment of cash dividends on the Series B
Preferred Stock or the Series C Preferred Stock in an aggregate amount not to
exceed $2,125,000
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in any fiscal year; provided, however, that such restrictions will become
applicable as of the end of the fiscal quarter during which the Earned Amount
first equals $10 million.
The Senior Indenture. The Senior Indenture contains a restricted payment
covenant that is substantially similar to the restricted payment covenant set
forth in the Senior Subordinated Indenture. The Senior Indenture includes the
express permission to pay up to $2,125,000 in dividends on the Series B
Preferred Stock and the Series C Preferred Stock in the aggregate during any
fiscal year until the Earned Amount first equals $10 million. Unlike the Senior
Subordinated Indenture, however, the Senior Indenture provides that (i) the
period (taken as one accounting period) in which the Company's Consolidated Net
Income (or if Consolidated Net Income for such period is negative, 100% of such
accumulated amount) and proceeds from the sale of certain types of capital stock
is to be measured for purposes of calculating the Earned Amount, commences July
15, 1993, and (ii) the proceeds realized from the Company's issuance of Series B
Preferred Stock are included for purposes of calculating the Earned Amount.
Further, unlike the provisions of the Senior Subordinated Indenture, the Senior
Indenture does require that, after the Earned Amount first equals $10 million,
the Company must be able to incur at least $1.00 of additional Indebtedness
pursuant to the limitation on additional Indebtedness in order to pay cash
dividends on Series B Preferred Stock and Series C Preferred Stock.
Because the express permission to pay up to $2,125,000 in dividends on the
Series B Preferred Stock or Series C Preferred Stock in the aggregate during any
fiscal year terminates at the end of the fiscal quarter during which the Earned
Amount first equals $10 million, the Company may be prohibited from paying cash
dividends on the Series B Preferred Stock and the Series C Preferred Stock
thereafter if it is unable to satisfy the conditions to declaring and paying
such dividends contained in the Indentures.
Revolving Credit Facility. The Company's Revolving Credit Facility contains
provisions which prohibit the Company from declaring or paying any cash
dividends upon any of its capital stock (including the Company's Common Stock,
Series B Preferred Stock and Series C Preferred Stock) or from redeeming or
otherwise acquiring any such shares of its capital stock. The Revolving Credit
Facility provides that as long as no defaults exist under the Revolving Credit
Facility, the Company may redeem or acquire its capital stock from its
shareholders provided that the aggregate amount paid by the Company in
connection with any such redemptions shall not exceed $500,000 in the aggregate
during the time that the Revolving Credit Facility is in effect. Further,
provided there are no defaults or events of default in existence under the
Revolving Credit Facility after giving effect to the payment of such dividends,
the Company may pay up to $2,125,000 in the aggregate in dividends on Series B
Preferred Stock and Series C Preferred Stock in any fiscal year.
The Revolving Credit Facility contains numerous covenants and agreements the
breach of which would constitute an event of default, including the financial
covenants summarized below. The Revolving Credit Facility provides that the
Company will not permit:
1. Tangible net worth at the end of any fiscal quarter to be less than
the following amounts during the following periods:
Minimum Tangible
Fiscal Period Net Worth
------------- ----------------
09/30/96 to 12/30/96 $(58,000,000)
12/31/96 to 12/30/97 $(58,000,000)
12/31/97 to 12/30/98 $(38,500,000)
12/31/98 to 12/30/99 $ 12,500,000
12/31/99 and thereafter $ 50,000,000
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2. The ratio of Total Debt to Operating Cash Flow (for the four fiscal
quarter period then ending), measured at the end of each fiscal
quarter, to exceed the following amounts during the following periods:
Fiscal Period Ratio
------------- -----
09/30/96 to 12/30/96 9.5 to 1
12/31/96 to 03/30/97 7.0 to 1
03/31/97 to 06/29/97 6.0 to 1
06/30/97 and thereafter 5.0 to 1
3. The ratio of (a) Operating Cash Flow less capital expenditures that are
not financed to (b) total debt service plus payments under capital
leases (measured at the end of the fiscal quarter and calculated on a
rolling four fiscal quarters basis) to be less than the following
amounts during the following periods:
Fiscal Period Ratio
------------- -----
09/30/96 to 12/30/96 1.00 to 1
12/31/96 to 03/30/97 1.05 to 1
03/31/97 and thereafter 1.10 to 1
In the event the Company breaches any of the foregoing financial covenants or
otherwise is in default under the Revolving Credit Facility, the Company would
not be able to pay dividends (other than certain stock dividends) on any class
of equity securities, including the Series B Preferred Stock and the Series C
Preferred Stock.
If the Company is prevented from paying cash dividends on the Series B
Preferred Stock by reason of the provisions contained in the Indentures or the
Revolving Credit Facility, dividends on the Series B Preferred Stock would be
paid in shares of Series C Preferred Stock, as more fully described below.
Common Stock
All shares of Common Stock currently outstanding are, and the shares of
Common Stock offered hereby will be, fully paid and nonassessable, not subject
to redemption, and without pre-emptive or other right to subscribe for or
purchase any proportionate part of any new or additional issues of stock of any
class or of securities convertible into stock of any class other than with
respect to those rights arising from the Rights Agreement described below. The
holders of shares of Common Stock are entitled, subject to liquidation
preferences in favor of holders of the Series B Preferred Stock and the Series C
Preferred Stock and any person who hereafter may become the holder of any shares
of any other series of Preferred Stock, to share ratably in the assets of the
Company available for distribution in the event of liquidation. The shares of
Common Stock do not have cumulative voting rights. Subject to such rights to
vote as are granted by law and the Company's Certificate of Incorporation to the
holders of the Series B Preferred Stock and the holders of the Series C
Preferred Stock to vote as a class with respect to certain matters, holders of
shares of Common Stock have the exclusive right to vote on all matters submitted
to the shareholders for a vote, and in exercising such voting rights such
holders are entitled to one vote for each share held.
Subject to the payment of dividends on the Series B Preferred Stock,
the Series C Preferred Stock and on any other series of Preferred Stock having
preferred dividend rights, holders of shares of Common Stock are entitled to
share ratably in all dividends declared on the Common Stock by the Board of
Directors out of funds legally available therefor; provided, however, whenever
any share of the Series C Preferred Stock is issued and outstanding, the Company
may not (i) make or pay any cash dividends, distributions or other cash
payments of
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any type on or with respect to any Junior Security (as hereinafter defined) or
(ii) redeem for cash (in whole or in part) any Junior Security. Future
dividends necessarily will depend upon the Company's earnings, financial
condition and other factors, including compliance with the terms and conditions
of the Indentures, the Revolving Credit Facility and other credit agreements to
which the Company may be a party, and the payment of dividends on the
outstanding shares of Series B Preferred Stock and any Series C Preferred Stock
that may be issued. In the event that dividends on the shares of Series B
Preferred Stock or Series C Preferred Stock are in arrears, thereafter and until
all accrued but unpaid dividends on the shares of Series B Preferred Stock or
Series C Preferred Stock shall have been paid in full the Company may not
declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration, any shares of Common Stock. As
noted above, the Company does not currently contemplate paying any dividends on
its Common Stock in the foreseeable future and, accordingly, purchasers of
shares of the Company's Common Stock should not expect to receive any dividends
on such shares.
Series B Preferred Stock
Rank. The Series B Preferred Stock shall, with respect to dividends and the
distribution of assets on liquidation, rank (a) on a parity with the Series C
Preferred Stock, and (b) prior to the Common Stock, every other class of stock
of the Company hereafter created and any series of Preferred Stock other than
the Series C Preferred Stock. The Common Stock and each other class and series
of equity securities other than the Series B Preferred Stock and the Series C
Preferred Stock are hereinafter collectively referred to as the "Junior
Securities."
Dividends. Holders of the Series B Preferred Stock are entitled to receive,
when and as declared by the Board of Directors, out of funds legally available
therefor, cumulative dividends at an annual rate of $8.50 per share to be paid
pro rata to such holders, quarterly, in arrears, such payments to be made on the
last business day of each calendar quarter (each of such dates being a "Dividend
Payment Date"). Such dividends shall be paid to the holders of record at the
close of business on the date that is 10 business days before the Dividend
Payment Date. Each of such quarterly dividends (whether payable in cash or in
stock) shall be fully cumulative and shall accrue (whether or not declared),
without interest, from the date of issuance.
Dividends may be paid in cash or shares of the Series C Preferred Stock or
both, at the option of the Company, except that if the Company is not a party to
a Restrictive Agreement (i.e., an agreement which by its terms restricts the
payment of dividends in cash) dividends will be paid in cash. If dividends are
paid by issuing shares of the Series C Preferred Stock, such shares shall be
valued at $100.00 per share for the purpose of paying such dividend. If the
Company pays a PIK Dividend at any time after the third anniversary of the
issuance of the Series B Preferred Stock, the annual dividend rate will
increase, in the case of PIK Dividends, to $9.50 per share. If the Company pays
a PIK Dividend at any time after the fourth anniversary of the date of issuance,
the annual dividend rate will increase, in the case of PIK Dividends, to $10.50
per share. If the Company pays a PIK Dividend at any time after the fifth
anniversary of the date of issuance, the annual dividend rate will increase, in
the case of PIK Dividends, to $11.00 per share. Notwithstanding the foregoing,
dividend payments, or any portion thereof, paid in cash will be at the annual
rate of $8.50 per share.
No full cash dividends shall be declared or paid or set apart for payment on
the Series C Preferred Stock for any period unless full cumulative cash
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Series
B Preferred Stock for all dividend payment periods terminating on or prior to
the date of payment of such dividends. If any cash dividends are not paid in
full, as aforesaid, upon the shares of Series B Preferred Stock and the Series C
Preferred Stock, all cash dividends declared upon shares of the Series B
Preferred Stock and the Series C Preferred Stock shall be declared pro rata so
that the amount of cash dividends declared per share on the Series B Preferred
Stock and the Series C Preferred Stock shall in all cases bear to each other the
same ratio that accrued cash dividends per share on the Series B Preferred Stock
and the Series C Preferred Stock bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on the Series B Preferred Stock which may be in arrears.
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<PAGE>
As noted above, the Company is currently a party to various Indentures and a
Revolving Credit Facility which contain provisions limiting substantially the
Company's ability to pay dividends on Series B Preferred Stock. Accordingly,
there can be no assurance that the Company will be able to pay cash dividends on
its outstanding shares of Series B Preferred Stock in the future.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the
holders of the Series B Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Company available for distribution to its
shareholders an amount in cash equal to $100.00 for each share outstanding, plus
an amount in cash equal to all accrued but unpaid dividends thereon to the date
fixed for liquidation, dissolution or winding up, before any payment shall be
made or any assets distributed to the holders of any Junior Securities. If the
assets of the Company are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of the Series B Preferred Stock and
the Series C Preferred Stock, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which would
be payable on such distribution if the amounts to which the holders of
outstanding shares of the Series B Preferred Stock and the Series C Preferred
Stock are entitled were paid in full.
Neither the voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property or assets of the Company or the consolidation or
merger of the Company with one or more other corporations shall be deemed to be
a liquidation, dissolution or winding up, voluntary or involuntary, unless such
voluntary sale, conveyance, lease, exchange or transfer shall be in connection
with a dissolution or winding up of the business of the Company.
Redemption. Commencing after the Effective Date (as defined below), the
Company at its option may redeem, to the extent funds are legally available
therefor, the Series B Preferred Stock, at any time in whole or from time to
time in part, at the per share redemption price equal to $100.00 plus all
accrued and unpaid dividends thereon to the date fixed for redemption, without
interest (the "Redemption Price"). "Effective Date" shall mean, the last day of
any 90 consecutive calendar day period that occurs after the fourth anniversary
of the Date of Issuance in which the last reported sales price regular way for
the Common Stock of the Company on the New York Stock Exchange (or any other
national securities exchange or NASDAQ on which the Common Stock is listed or
quoted) on all trading days in that period is at least equal to 200% of the
Conversion Price. The Company may not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming all outstanding shares of
the Series C Preferred Stock.
Unless the Company is prohibited by the terms of any restrictive agreement
from redeeming any shares of the Series B Preferred Stock, in the event of any
Change in Control (as defined below) with respect to the Company, each holder of
the Series B Preferred Stock may, from time to time, require the Company to, and
the Company shall, redeem any number of the shares of the Series B Preferred
Stock held by it for the Redemption Price upon 30 days prior written notice.
"Change in Control" means (A) any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
which will result in the Company's shareholders immediately prior to such
transaction not holding (by virtue of such shares or securities issued solely
with respect thereto) at least 50% of the voting power of the surviving or
continuing entity, (B) a sale of all or substantially all of the assets of the
Company, unless the Company's shareholders immediately prior to such sale will,
as a result of such sale, hold (by virtue of securities issued as consideration
for the Company's sale) at least 50% of the voting power of the purchasing
entity, or (C) during any period of two consecutive years, individuals who at
the beginning of such period constitute the entire Board of Directors of the
Company shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's shareholders, of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
Notwithstanding the foregoing, unless the full cumulative dividends on all
outstanding shares of the Series B Preferred Stock shall have been paid or
contemporaneously are declared and paid for all past dividend periods, none of
the shares of the Series B Preferred Stock may be redeemed unless all
outstanding shares of
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<PAGE>
the Series B Preferred Stock are simultaneously redeemed, and the Company shall
not purchase or otherwise acquire (except pursuant to the procedure for
redemption as discussed below) any shares of Series B Preferred Stock; provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of the Series B Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of the Series B
Preferred Stock.
As noted above, the Company is currently a party to various Indentures and a
Revolving Credit Facility which contain provisions limiting the Company's
ability to redeem Series B Preferred Stock. Accordingly, there can be no
assurance that the Company will be able to redeem its outstanding shares of
Series B Preferred Stock in the future.
Procedure for Redemption. In the event that fewer than all the outstanding
shares of the Series B Preferred Stock are to be redeemed, the number of shares
to be redeemed shall be determined by the Board of Directors and the shares to
be redeemed shall be determined by lot or pro rata as may be determined by the
Board of Directors.
In the event the Company shall redeem shares of the Series B Preferred
Stock, notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the date of
redemption (the "Redemption Date"), to each holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Company; provided, however, that no failure to mail such notice or any
defect therein shall affect the validity of the proceeding for the redemption of
any shares of the Series B Preferred Stock to be redeemed except as to the
holder to whom the Company has failed to mail said notice or except as to the
holder whose notice was defective. Each such notice shall state: (i) the
Redemption Date; (ii) the number of shares of the Series B Preferred Stock to be
redeemed and, if less than all the shares held by such holder are to be redeemed
from such holder, the number of shares to be redeemed from such holder; (iii)
the Redemption Price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such Redemption
Date.
Upon proper notice of redemption, from and after the Redemption Date (unless
default shall be made by the Company in providing money for the payment of the
Redemption Price of the shares called for redemption) dividends on the shares of
the Series B Preferred Stock so called for redemption shall cease to accrue, and
said shares will no longer be deemed to be outstanding and shall have the status
of authorized but unissued shares of Preferred Stock, unclassified as to series,
and shall not be reissued as shares of the Series B Preferred Stock, and all
rights of the holders thereof as shareholders of the Company with respect to
said shares (except the right to receive from the Company the Redemption Price)
will cease. Upon surrender in accordance with such notice of the certificates
for any shares so redeemed (properly indorsed or assigned for transfer, if the
Board of Directors of the Company shall so require and the notice shall so
state), such shares shall be redeemed by the Company at the Redemption Price.
In case fewer than all the shares represented by any such certificate are
redeemed, a new certificate will be issued representing the unredeemed shares
without cost to the holder thereof.
Conversion. Unless previously redeemed by the Company, the holders of the
shares of the Series B Preferred Stock will have the right, at such holders'
option, at any time and from time to time, to convert such shares into fully
paid and non-assessable shares of Common Stock of the Company. The number of
shares of the Common Stock issuable upon conversion of each share of the Series
B Preferred Stock shall be equal to $100.00 divided by the Conversion Price (as
hereinafter defined) in effect at the time of conversion. The price at which
shares of Common Stock shall be delivered upon conversion (the "Conversion
Price") is currently $7.00, subject to certain adjustments. The right to
convert shares called for redemption will terminate at the close of business on
the date fixed for such redemption unless the Company defaults in making payment
of the amount payable upon such redemption.
The holders of shares of the Series B Preferred Stock at the close of
business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend
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<PAGE>
Payment Date notwithstanding the conversion thereof or the Company's default in
payment of the dividend due on such Dividend Payment Date. However, shares of
Series B Preferred Stock surrendered for conversion during the period between
the close of business on any dividend payment record date and the opening of
business on the corresponding Dividend Payment Date must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of shares of Series B Preferred Stock on a
dividend payment record date who (or whose transferee) surrenders any of such
shares for conversion into shares of the Common Stock on a Dividend Payment Date
will receive the dividend payable by the Company on such shares of the Series B
Preferred Stock on such date, and the converting holder need not include payment
in the amount of such dividend upon surrender of shares of the Series B
Preferred Stock for conversion. Except as provided above, the Company shall
make no payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of the Common Stock issued upon
such conversion.
In order to exercise the conversion privilege, the holders of each share of
the Series B Preferred Stock to be converted must surrender the certificate
representing such share at the office of the transfer agent for the Series B
Preferred Stock, appointed for such purpose by the Company, with the notice of
election to convert on the back of said certificate completed and signed.
Unless the shares of the Common Stock issuable on conversion are to be issued in
the same name in which such share of the Series B Preferred Stock is registered,
each share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Company, duly executed by the holder or
such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax. As promptly as practicable after the surrender of the
certificates for shares of the Series B Preferred Stock, the Company shall issue
and shall deliver at such office to such holder, or on his written order, a
certificate or certificates for the number of full shares of the Conversion
Shares.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of the
Series B Preferred Stock shall have been surrendered and such notice is received
by the Company, and the person or persons in whose name or names any certificate
or certificates for shares of the Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date, unless the stock transfer
books of the Company shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at the
close of business on the next succeeding day on which such stock transfer books
are open, and such notice is received by the Company. All shares of the Common
Stock delivered upon conversion of the Series B Preferred Stock will upon
delivery be duly and validly issued and fully paid and non-assessable, free of
all liens and charges and not subject to any preemptive rights.
The Conversion Price in effect at any time and the number and kind of
securities issuable upon the conversion of each share of Series B Preferred
Stock shall be subject to adjustment from time to time upon the happening of
certain events or actions taken by the Company, as follows: (i) upon the
Company's payment of a PIK Dividend after the third anniversary of the date of
issuance of the Series B Preferred Stock, the Conversion Price will be reduced
by 5%, provided that such a reduction in the Conversion Price may be made only
once; (ii) the Company's payment of a dividend distribution on its Common Stock
in shares of its Common Stock, subdivision of its outstanding Common Stock,
combination of its outstanding Common Stock into a smaller number of shares, or
issuance of any shares by reclassification of its Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation); (iii) the Company's issuance of rights
or warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock (or securities convertible into Common Stock)
at a price per share (or having a conversion price per share) less than the
Conversion Price in effect on the record date with respect to such issuance;
(iv) the Company's distribution to all holders of its Common Stock shares of
stock other than Common Stock or evidences of its indebtedness or assets
(excluding cash dividends or distributions out of retained earnings and
dividends or distributions referred to in paragraph (ii) above); (v) with
certain exceptions, the Company's issuance of shares of its Common Stock for a
consideration per share of Common Stock less than the Conversion Price in effect
on the date the Company fixes or has fixed the offering, conversion, exchange or
exercise price of such additional shares; (vi) the Company's issuance of any
securities convertible into or exchangeable for its Common Stock for a
consideration per share of Common Stock initially
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<PAGE>
deliverable upon conversion or exchange of such securities less than the
Conversion Price in effect on the issuance date of such securities; or (vii) the
Company's participation in a consolidation, merger or combination with another
corporation (other than with a wholly-owned subsidiary of the Company and other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of the Common Stock) or in case of any sale or transfer
of all or substantially all of the assets of the Company, as a result of which
holders of the Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, or any share exchange whereby the Common Stock is converted
into other securities or property of the Company, then as a condition to the
consummation of such transaction, lawful and adequate provision will be made so
that the holder of each share of the Series B Preferred Stock then outstanding
shall have the right, with respect to such shares of Series B Preferred Stock,
to receive stock, other securities or property or assets (including cash) or any
combination thereof, having a value equal to the value of the stock, other
securities, property and assets (including cash) which such holder would have
been entitled to receive upon such consolidation, merger, combination, sale or
transfer, or exchange, if such holder had held the Common Stock issuable upon
the conversion of such shares of Series B Preferred Stock immediately prior to
such consolidation, merger, combination, sale or transfer, or exchange.
No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least $.10 in such price,
provided, however, that any adjustments not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
Voting. There are no voting rights granted to holders of the Series B
Preferred Stock other than those expressly required by law and as described
below. Whenever dividends are in arrears and remain unpaid for six or more
dividend payment dates, the holders of the Series B Preferred Stock will have
the exclusive right to appoint one additional director to the board of directors
of the Company to serve until all accrued but unpaid dividends have been paid in
full. In addition, and whether or not dividends are in arrears, the affirmative
vote of the holders of a majority of the Series B Preferred Stock, voting as a
class, are required in order for the Company to (i) create, authorize or issue
any shares of any class of senior or parity dividend or liquidation stock or
having class voting rights except as required by the General Corporation Law of
the State of Delaware or voting rights in excess of one vote per share, (ii)
amend, alter or repeal any provision of the Certificate of Incorporation of the
Company if such amendment, alteration or repeal has a material adverse affect on
the rights of the Series B Preferred Stock, or (iii) declare any reverse stock
dividend with regard to the Series B Preferred Stock or otherwise reduce the
number of outstanding shares of the Series B Preferred Stock except as permitted
by the Certificate of Incorporation of the Company; provided that the
affirmative vote of the holders of two-thirds of the shares of the Series B
Preferred Stock is required to amend, alter or repeal any provision of the
Certificate of Incorporation of the Company that would adversely affect the
rights of the Series B Preferred Stock holders with respect to dividends,
liquidation, conversion or voting. In all cases where the holders of the
Series B Preferred Stock exercise a right to vote, each share thereof is
entitled to one vote.
A special meeting of holders of the Series B Preferred Stock (or a request
for a vote by written consent without a meeting) to approve or disapprove any
action of the Company on which the holders of the Series B Preferred Stock are
entitled to vote as a separate class may be called by the Secretary of the
Company or by the holder(s) of 25% or more of the outstanding shares of the
Series B Preferred Stock on written notice to the address of each holder thereof
as it appears on the records of the Company deposited in the U.S. mail, all
charges prepaid, at least 10 but no more than 60 days prior to the applicable
vote. The record date for determination of the holders of the Series B
Preferred Stock entitled to vote by written consent or at a meeting shall be set
by the Company's Board of Directors, and only holders who are holding of record
on the stock register of the Company on that date will be entitled to
participate in such vote. At any time at which any share of the Series B
Preferred Stock has been issued and is outstanding, no proposal for the Company
to take any action described above shall be adopted, nor shall the Company be
authorized to take any such action, unless the holders of at least two-thirds of
the outstanding shares of the Series B Preferred Stock voting as a separate
class vote in favor of such proposal.
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Copies of all notices sent to the holders of Common Stock will be
simultaneously sent to each holder of the Series B Preferred Stock. No consent
of the holders of the Series B Preferred Stock, except to the extent such
holders are entitled to vote together with the holders of the Preferred Stock or
Common Stock, shall be required for (i) the creation, authorization or issuance
of any indebtedness of any kind of the Company, (ii) the creation, authorization
or issuance of any other class of stock of the Company subordinate as to
dividends and upon liquidation to the Series B Preferred Stock, (iii) any
increase or decrease in the amount of authorized Common Stock or Preferred Stock
or any increase, decrease or change in the par value thereof, or (iv) any
increase in the amount of the Series C Preferred Stock for the purpose of paying
dividends in shares of Series C Preferred Stock as provided herein, and none of
the foregoing shall be deemed to affect adversely the powers, special rights or
preferences of holders of the Series B Preferred Stock.
Board Representation. Pursuant to the terms of the Stock Purchase
Agreement, the Company is obligated to take all action necessary to cause one
person nominated by the Purchasers holding a majority of the Series B Preferred
Stock to be nominated for election to the Board of Directors of the Company and
to recommend the Purchasers' nominee in the same manner as all other nominees of
the Company, provided that the Company shall have the right to reject certain
nominees of the Purchasers. The foregoing obligation of the Company will be in
effect only for so long as the original Purchasers of the Series B Preferred
Stock hold shares of the Series B Preferred Stock or Conversion Shares
representing 10% of the shares of the Company's Common Stock issued and
outstanding after giving effect to the pro forma conversion of all outstanding
Series B Preferred Stock.
Series C Preferred Stock
Rank. The Series C Preferred Stock shall, with respect to dividends and the
distribution of assets on liquidation, rank (a) on a parity with the Series B
Preferred Stock, and (b) prior to the Junior Securities.
Dividends. The holders of the shares of Series C Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds legally available for the payment of dividends, cumulative dividends at
the annual rate of $8.50 per share in equal quarterly payments on the last
business day of each calendar quarter (each of such dates being a "Dividend
Payment Date"), commencing with the last day of the calendar quarter in which
the shares of Series C Preferred Stock are issued, in preference to dividends on
the Junior Securities (as defined). Such dividends shall be paid to the holders
of record at the close of business on the date which is 10 business days prior
to the Dividend Payment Date. Each of such quarterly dividends shall be fully
cumulative and shall accrue (whether or not declared), without interest, from
the Date of Issuance. Any dividend payments due with respect to the Series C
Preferred Stock on any Dividend Payment Date shall be made in cash. All such
dividends paid with regard to shares of Series C Preferred Stock shall be paid
pro rata to the holders entitled thereto.
No full cash dividends shall be declared or paid or set apart for payment on
the Series B Preferred Stock for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series C
Preferred Stock for all dividend payment periods terminating on or prior to the
date of payment of such dividends. If any cash dividends are not paid in full
upon the shares of the Series C Preferred Stock and the Series B Preferred
Stock, all cash dividends declared upon shares of the Series C Preferred Stock
and the Series B Preferred Stock shall be declared pro rata so that the amount
of cash dividends declared per share on the Series C Preferred Stock and the
Series B Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the Series C Preferred Stock and Series B
Preferred Stock bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Series C Preferred Stock which may be in arrears.
Whenever dividends or distributions payable on the Series C Preferred Stock
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Preferred Stock
outstanding shall have been paid in full, the Company shall not (A) declare or
pay dividends,
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or make any other distributions, on any Junior Securities (either as to
dividends or upon liquidation, dissolution or winding up); or (B) redeem or
purchase or otherwise acquire for consideration shares of any Junior Securities
(either as to dividends or upon liquidation, dissolution or winding up),
provided that the Company may at any time redeem, purchase or otherwise acquire
shares of any such Junior Securities in exchange for shares of any other Junior
Securities. Subject to the foregoing, the Board of Directors of the Company may
declare, and the Company may pay or set apart for payment, dividends and other
distributions on any of the Junior Securities, and may purchase or otherwise
redeem any of the Junior Securities or any warrants, rights or options
exercisable for or convertible into any of the Junior Securities, and the
holders of the shares of Series C Preferred Stock shall not be entitled to share
therein.
As noted above, the Company is currently a party to various Indentures and a
Revolving Credit Facility which contain provisions limiting substantially the
Company's ability to pay dividends on Series C Preferred Stock. Accordingly,
there can be no assurance that the Company will be able to pay cash dividends on
any shares of Series C Preferred Stock it may issue from time to time in the
future.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the
holders of shares of the Series C Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders an amount in cash equal to $100.00 for each share
outstanding, plus an amount in cash equal to all accrued but unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding up, before any
payment shall be made or any assets distributed to the holders of any of the
Junior Securities. If the assets of the Company are not sufficient to pay in
full the liquidation payments payable to the holders of outstanding shares of
the Series C Preferred Stock and the Series B Preferred Stock, then the holders
of all such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution if the
amounts to which the holders of outstanding shares of the Series C Preferred
Stock and the Series B Preferred Stock are entitled were paid in full. The
liquidation payment with respect to each fractional share of the Series C
Preferred Stock outstanding or accrued but unpaid shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each outstanding
share of the Series C Preferred Stock.
For the purposes of the liquidation preferences, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Company or the consolidation or merger of the Company with one or more other
corporations shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, unless such voluntary sale, conveyance, lease,
exchange or transfer shall be in connection with a dissolution or winding up of
the business of the Company.
Redemption. The Company at its option may redeem, to the extent funds are
legally available therefor, the Series C Preferred Stock, at any time in whole
or from time to time in part, at the per share redemption price equal to $100.00
plus all accrued and unpaid dividends thereon to the date fixed for redemption,
without interest (the "Redemption Price"). The Company may not optionally
redeem the Series B Preferred Stock, in whole or in part, without first
redeeming all outstanding shares of the Series C Preferred Stock at the
Redemption Price.
Unless the Company is prohibited by the terms of any restrictive agreement
from redeeming any shares of the Series C Preferred Stock, in the event of any
Change in Control (as defined) with respect to the Company, each holder of the
Series C Preferred Stock may, from time to time, require the Company to, and the
Company shall, redeem any number of the shares of Series C Preferred Stock held
by it for the Redemption Price upon 30 days prior written notice.
Notwithstanding the foregoing, unless the full cumulative dividends on all
outstanding shares of the Series C Preferred Stock shall have been paid or
contemporaneously are declared and paid for all past dividend periods, none of
the shares of the Series C Preferred Stock shall be redeemed unless all
outstanding shares of the Series C Preferred Stock are simultaneously redeemed,
and the Company shall not purchase or otherwise
-16-
<PAGE>
acquire (except as provided in the Certificate of Incorporation of the Company)
any shares of the Series C Preferred Stock; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of the Series
C Preferred Stock pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of the Series C Preferred Stock.
As noted above, the Company is currently a party to various Indentures and a
Revolving Credit Facility which contain provisions limiting the Company's
ability to pay dividends on Series C Preferred Stock. Accordingly, there can be
no assurance that the Company will be able continue to pay cash dividends on any
shares of Series C Preferred Stock it may issue from time to time in the future.
Procedure for Redemption. In the event that fewer than all the outstanding
shares of the Series C Preferred Stock are to be redeemed, the number of shares
to be redeemed shall be determined by the Board of Directors of the Company and
the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
In the event the Company shall redeem shares of the Series C Preferred
Stock, notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the date of
redemption (the "Redemption Date"), to each holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Company; provided, however, that no failure to mail such notice or any
defect therein shall affect the validity of the proceeding for the redemption of
any shares of the Series C Preferred Stock to be redeemed except as to the
holder to whom the Company has failed to mail said notice or except as to the
holder whose notice was defective. Each such notice shall state: (i) the
Redemption Date; (ii) the number of shares of the Series C Preferred Stock to be
redeemed and, if less than all the shares held by such holder are to be redeemed
from such holder, the number of shares to be redeemed from such holder; (iii)
the Redemption Price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such Redemption
Date.
Upon proper notice duly given, from and after the Redemption Date (unless
default shall be made by the Company in providing money for the payment of the
Redemption Price of the shares called for redemption) dividends on the shares of
the Series C Preferred Stock so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding and shall have the
status of authorized but unissued shares of Preferred Stock, unclassified as to
series, and shall not be reissued as shares of the Series C Preferred Stock
(unless reissued as a stock dividend on the Series C Preferred Stock or Series B
Preferred Stock), and all rights of the holders thereof as shareholders of the
Company with respect to said shares (except the right to receive from the
Company the Redemption Price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Company shall so require
and the notice shall so state), such shares shall be redeemed by the Company at
the Redemption Price. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
Voting Rights. The holders of record of shares of Series C Preferred Stock
are not entitled to any voting rights except as provided in the Certificate of
Incorporation of the Company or except as expressly required by applicable law.
So long as any shares of the Series C Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series C Preferred Stock,
voting as a class (i) create, authorize or issue any shares of any other class
of senior or parity dividend stock or senior or parity liquidation stock or
having class voting rights except as required by the General Corporation Law of
the State of Delaware or voting rights in excess of one vote per share, (ii)
amend, alter or repeal, whether by merger, consolidation or otherwise, the
Company's Certificate of Incorporation if the amendment, alteration or repeal
materially and adversely affects the powers, preferences or special rights of
the Series C Preferred Stock, or (iii) declare any reverse stock dividend with
respect to the Series C Preferred Stock or otherwise reduce the number of
outstanding shares of the Series C Preferred Stock other than in accordance with
the Certificate of Incorporation of the Company; provided, however, that the
-17-
<PAGE>
approval of not less than two-thirds of the outstanding shares of the Series C
Preferred Stock, voting as a class, shall be required to amend, alter, or repeal
any of the provisions of the Certificate of Incorporation of the Company that
would adversely affect the dividend provisions, liquidation rights, conversion
terms, or voting rights of the Series C Preferred Stock or the holders thereof.
A special meeting of holders of the Series C Preferred Stock (or a request
for a vote by written consent without a meeting) to approve or disapprove any
action of the Company on which the holders of the Series C Preferred Stock are
entitled to vote as a separate class by law or pursuant to the Certificate of
Incorporation of the Company may be called by the Secretary of the Corporation
or by the holders of 25% or more of the outstanding shares of the Series C
Preferred Stock on written notice to the address of each holder thereof as it
appears on the records of the Company deposited in the U.S. mail, all charges
prepaid, at least 10 but no more than 60 days prior to the applicable vote. The
record date for determination of the holders of the Series C Preferred Stock
entitled to vote by written consent or at a meeting shall be set by the
Company's Board of Directors, and only holders who are holding of record on the
stock register of the Company on that date will be entitled to participate in
such vote. At any time at which any share of Series C Preferred Stock has been
issued and is outstanding, no proposal for the Company to take any action as
described herein shall be adopted, nor shall the Company be authorized to take
any such action, unless the holders of at least two-thirds of the outstanding
shares of the Series C Preferred Stock voting as a separate class vote in favor
of such proposal.
Copies of all notices sent to the holders of the Common Stock shall be
simultaneously sent to each holder of the Series C Preferred Stock. In
exercising the voting rights, each share of Series C Preferred Stock shall have
one vote per share.
The Certificate of Designation relating to the Series C Preferred Stock
provides that no consent of the holders of the Series C Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of the
Series B Preferred Stock or Common Stock, shall be required for (i) the
creation, authorization or issuance of any indebtedness of any kind of the
Company, (ii) the creation, authorization or issuance of any other class of
stock of the Corporation subordinate as to dividends and upon liquidation to the
Series C Preferred Stock, or (iii) any increase or decrease in the amount of
authorized Common Stock or Series B Preferred Stock or any increase, decrease or
change in the par value thereof, and none of the foregoing shall be deemed to
affect adversely the powers, special rights or preferences of holders of the
Series C Preferred Stock.
Business Combinations. In case the Company is a participant in a
consolidation, merger or combination with another corporation (other than with a
wholly-owned subsidiary of the Company and other than a merger which does not
result in any reclassification, conversion, exchange or cancellation of the
Common Stock) or in case of any sale or transfer of all or substantially all of
the assets of the Company, as a result of which holders of the Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or any
share exchange whereby the Common Stock is converted into other securities or
property of the Company, then as a condition to the consummation of such
transaction, lawful and adequate provision shall be made so that the holder of
each share of Series C Preferred Stock then outstanding shall have the right to
receive stock, other securities or property or assets (including cash) or any
combination thereof, having a value equal to the product of (a) the quotient
obtained by dividing (x) $100 plus all accrued and unpaid dividends, whether or
not declared, on the Series C Preferred Stock by (y) the then existing
Conversion Price for the Series B Preferred Stock (as adjusted to give effect to
such transaction), and (b) the value of the stock, other securities, property
and assets (including cash) which each holder of one share of Common Stock is
entitled to receive upon such consolidation, merger, combination, sale or
transfer, or exchange.
Rights Agreement--Series A Preferred Stock
The Company has a Rights Agreement pursuant to which, under certain
conditions, each shareholder has share purchase rights for each outstanding
share of Common Stock of the Company. The Company has reserved
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<PAGE>
250,000 shares of Series A Preferred Stock for possible issuance upon exercise
of the rights. The purpose of the Rights Agreement is to deter coercive or
unfair takeover tactics and to prevent a potential purchaser from gaining
control of the Company without offering a fair price to all of the Company's
shareholders.
Under the Rights Agreement, each outstanding share of the Company's Common
Stock includes a preferred share purchase right (a "Right") expiring on October
19, 1997. Each share of Series B Preferred Stock also includes that number of
Rights to which it would be entitled upon conversion into shares of Common
Stock. Each Right entitles the registered holder to purchase a unit consisting
of one one-hundredth of a share of Series A Preferred Stock for $50 per unit,
which price is subject to adjustment. The Rights cannot be exercised unless
certain events occur that might lead to a concentration in ownership of Common
Stock. At that time, the Rights may be exercised for the number of shares of
Common Stock having a market value of twice the exercise price of the Right.
Under certain conditions, the Rights also become exercisable into that number of
shares of common stock of a purchaser having a market value of twice the
exercise price of the Right. The Rights are not exercisable until such time as
they are no longer redeemable by the Company. The Company will generally be
entitled to redeem the Rights, at $.01 per right, any time before a 20% position
in the outstanding shares of the Common Stock of the Company is acquired, or the
right to obtain such position in the Company is acquired.
SELLING SECURITY HOLDERS
The Series B Preferred Stock was originally issued by the Company in
transactions exempt from the registration requirements of the Securities Act.
The Selling Holders, which term includes their transferees, pledgees, donees or
their successors, may from time to time offer and sell pursuant to this
Prospectus any or all of the Series B Preferred Stock, the Series C Preferred
Stock or the Conversion Shares.
The following table sets forth, as of October 25, 1996, with respect to the
Selling Holders, the respective amounts of the Series B Preferred Stock
beneficially owned by each Selling Holder that may be offered pursuant to this
Prospectus and the number of Conversion Shares that are issuable upon conversion
of the Series B Preferred Stock held by such Selling Holder. Such information
has been obtained from the Selling Holders. None of the Selling Holders has, or
within the past three years had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates, except
as noted below. Because the Selling Holders may offer all or some of the Series
B Preferred Stock and the Series C Preferred Stock or some or all of the
Conversion Shares pursuant to this Prospectus, no estimate can be given as to
the amount of the Series B Preferred Stock, Series C Preferred Stock or the
Conversion Shares that will be held by the Selling Holders upon the termination
of any such sales. In addition, the Selling Holders identified below may have
sold, transferred or otherwise disposed of all or a portion of their Series B
Preferred Stock, Series C Preferred Stock or Conversion Shares since October 25,
1996 in transactions exempt from the registration requirements of the Securities
Act.
Mr. John W. Gildea currently serves on the Board of Directors of the
Company. As noted above, the Company is obligated pursuant to the terms and
provisions of the Stock Purchase Agreement to cause one person nominated by the
Purchasers holding a majority of the Series B Preferred Stock to be nominated
for election to the Board of Directors of the Company and to recommend the
Purchasers' nominee in the same manner as all other nominees of the Company.
Mr. Gildea was nominated to the Board of Directors of the Company in accordance
with the foregoing.
Bridge Partners, L.P. is a Delaware limited partnership ("Bridge Partners"),
the sole general partner of which is Carson Street Partners, Inc., a Delaware
corporation ("Carson Street Partners"). Mr. Gildea is the Chairman of the Board
of Directors, Chief Executive Officer, President and the majority stockholder of
Carson Street Partners. Mr. Gildea is also a limited partner in Bridge
Partners. Network Fund III, Ltd. ("Network Fund III") is a Cayman Islands
exempt company. Mr. Gildea is the Chairman of the Board of Directors, Chief
Executive Officer, President and the majority stockholder of Gildea Management
Company, a Delaware corporation ("GMC"), which corporation has investment
authority respecting the investments made by Network
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<PAGE>
Fund III by virtue of an Investment Advisory Agreement, dated February 26, 1996,
between GMC and Network Fund III.
Mr. William P. O'Donnell is an officer, director and a minority stockholder
of Carson Street Partners and GMC. Mr. O'Donnell is also a limited partner in
Bridge Partners.
Pursuant to an Amended and Restated Agreement of Limited Partnership of
Bridge Partners, Carson Street Partners is generally entitled to receive 11% of
all net realized gains on Bridge Partners' investments, which investments
include the Series B Preferred Stock held by Bridge Partners and the Conversion
Shares.
Pursuant to a Consultant Agreement dated May 16, 1996 between the General
Chemical Group Inc. Master Pension Trust (the "GCG Pension Trust") and
Iron City Capital LLC, a Delaware limited liability company of which Mr. Gildea
is a director, officer and the controlling member and Mr. O'Donnell is an
officer, director and the remaining minority member ("Iron City LLC"), Iron City
LLC and the GCG Pension Trust have agreed that Iron City LLC may, but shall not
be obligated to, provide investment consultant services to the GCG Pension Trust
in connection with the shares of Series B Preferred Stock held by the GCG
Pension Trust (the "GCG Pension Trust Shares"). The GCG Pension Trust
Consultant Agreement provides, among other things, that the GCG Pension Trust
shall pay to Iron City LLC 20% of the pre-tax net gain on the sale of the GCG
Pension Trust Shares.
Pursuant to a Consultant Agreement dated May 15, 1996 between EURISTECH
S.A., a French corporation ("EURISTECH"), and Iron City LLC, Iron City LLC and
EURISTECH have agreed that Iron City LLC may, but shall not be obligated to,
provide investment consultant services to EURISTECH in connection with the
shares of Series B Preferred Stock held by EURISTECH (the "EURISTECH Shares").
The EURISTECH Consultant Agreement provides, among other things, the EURISTECH
shall pay to Iron City LLC 20% of the pre-tax net gain on the sale of the
EURISTECH Shares as well as a 1% annual fee on the EURISTECH Shares.
<TABLE>
<CAPTION>
Number of Series B
Selling Holder/(1)/ Preferred Stock Conversion Shares/(2)/
- ------------------- ------------------ ----------------------
<S> <C> <C>
Bridge Partners, L.P. 146,000 2,085,714
Network Fund III, Ltd. 54,000 771,428
John W. Gildea 10,000 142,857
William P. O'Donnell 1,000 14,285
Pequod Investments, L.P. 4,000 57,142
EURISTECH S.A. 15,000 214,285
Mellon Bank, N.A., as Trustee for 20,000 285,714
the General Chemical Group Inc. ------- ---------
Master Pension Trust
Total: 250,000 3,571,425
------- ---------
</TABLE>
/(1)/ As of October 25, 1996, none of the Selling Holders beneficially owns any
Series C Preferred Stock.
/(2)/ Estimated based upon the current exercise price. Upon conversion, the
Selling Holder will receive cash from the Company in lieu of any fractional
interest of the Common Stock.
-20-
<PAGE>
PLAN OF DISTRIBUTION
The Series B Preferred Stock, the Series C Preferred Stock and the
Conversion Shares may be sold from time to time to purchasers directly by the
Selling Holders. Alternatively, the Selling Holders may from time to time offer
the Series B Preferred Stock, the Series C Preferred Stock and the Conversion
Shares to or through underwriters, broker-dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Holders or the purchasers of the Series B Preferred Stock, the
Series C Preferred Stock or the Conversion Shares for whom they may act as
agents. The Selling Holders and any underwriters, broker-dealers or agents that
participate in the distribution of the Series B Preferred Stock, the Series C
Preferred Stock or the Conversion Shares may be deemed to be "underwriters," as
such term is defined in Section 2(11) of the Securities Act and any profit on
the sale of the Series B Preferred Stock, the Series C Preferred Stock or the
Conversion Shares by them and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker-dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Series B Preferred Stock, the Series C Preferred Stock and the
Conversion Shares may be sold by the Selling Holders from time to time, in one
or more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
Such prices will be determined by the Selling Holders. The sale of the Series B
Preferred Stock, the Series C Preferred Stock and the Conversion Shares may be
effected in transactions (i) on any national securities exchange or quotation
service on which the Series B Preferred Stock, the Series C Preferred Stock or
the Conversion Shares may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such exchanges
or in the over-the-counter market or (iv) through the writing of options. At the
time a particular offering of the Series B Preferred Stock, the Series C
Preferred Stock or the Conversion Shares is made, if required, a prospectus
supplement will be distributed that will set forth the names of the Selling
Holders, the aggregate number of the Series B Preferred Stock, the Series C
Preferred Stock and the Conversion Shares, the number of such securities owned
prior to and after the completion of any such offering, and, to the extent
required, the terms of the offering, including the name or names of any
underwriters, broker-dealers or agents, any discounts, commissions and other
terms constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Series B Preferred Stock, Series C Preferred Stock and the Conversion Shares
will be offered or sold in such jurisdictions only through registered or
licensed broker-dealers. In addition, in certain jurisdictions, the Series B
Preferred Stock, Series C Preferred Stock and the Conversion Shares may not be
offered or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied therewith.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Series B Preferred Stock, Series C Preferred
Stock and the Conversion Shares may be limited in its ability to engage in
market activities with respect to such Series B Preferred Stock, Series C
Preferred Stock and Conversion Shares. In addition, without limitation on the
foregoing, each Selling Holder will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales by the Selling Holders of any of the
Series B Preferred Stock, Series C Preferred Stock and the Conversion Shares.
All of the foregoing may affect the marketability of the Series B Preferred
Stock, Series C Preferred Stock and the Conversion Shares.
All expenses of the registration of the Series B Preferred Stock, Series C
Preferred Stock and the Conversion Shares will be paid by the Company,
including, without limitation, Commission filing fees and expenses of compliance
with state securities laws; provided, however, that the Selling Holders will pay
all underwriting discounts and selling commissions, if any. The Selling Holders
will be indemnified by the Company against certain liabilities, including
certain liabilities under the Securities Act, or will be entitled to
contribution
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<PAGE>
in connection therewith. The Company will be indemnified by the Selling Holders
against certain liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith.
LEGAL MATTERS
The validity of the Series B Preferred Stock, the Series C Preferred Stock
and the Conversion Shares will be passed upon for the Company by Miles &
Stockbridge, a Professional Corporation, 10 Light Street, Baltimore, Maryland
21202.
EXPERTS
The consolidated balance sheets of the Company and its subsidiaries as of
December 31, 1995 and 1994, and the consolidated statements of earnings, cash
flows, and changes in shareholders' equity for each of the two years in the
periods ended December 31, 1995 and 1994 and the statements of earnings and cash
flows of certain of the hangar facilities of AlliedSignal Engines-Hangar
Operations, a division of AlliedSignal, for the six month period ended June 30,
1994 and the year ended December 31, 1993, have been incorporated by reference
herein in reliance on the reports of Coopers & Lybrand L.L.P., independent
public accountants, given on the authority of that firm as experts in accounting
and auditing.
The consolidated statements of earnings, changes in stockholders' equity and
cash flows of the Company and its subsidiaries for the year ended December 31,
1993 have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, upon the
authority of said firm as experts in accounting and auditing. Following
discussions between KPMG Peat Marwick LLP and representatives of the Company,
the parties determined that KPMG Peat Marwick LLP would cease to serve as the
Company's auditors effective February 22, 1994. The Company's audit committee
was advised of these discussions and approved of this action. In connection with
the audit of the Company's consolidated financial statements for each of the
fiscal years ended December 31, 1993 and 1992 and in the subsequent interim
period through February 22, 1994, there were no disagreements between the
Company and KPMG Peat Marwick LLP on any matter of accounting principles or
practices, financial statement disclosures or auditing scope or procedures,
which disagreements, if not resolved to KPMG Peat Marwick's satisfaction, would
have caused them to make reference in connection with their opinion to the
subject matter of the disagreement. The audit report of KPMG Peat Marwick LLP
on the consolidated financial statements of the Company and its subsidiaries as
of and for the years ended December 31, 1993 and 1992 did not contain any
adverse opinion or disclaimer of opinion, nor was it qualified or modified as
to uncertainty, audit scope or accounting principles, except that, as required
with respect to changes in accounting principles, the 1993 audit report made
reference to the Company's adoption in 1993 of the provisions of the Financial
Accounting Standards Board's Statement on Financial Accounting Standards
No. 109, Accounting for Income Taxes.
The consolidated financial statements of Garrett Aviation Services and its
subsidiary as of December 31, 1995 and 1994, and for the year ended December 31,
1995 and the period July 1, 1994 to December 31, 1994 incorporated by reference
herein have been audited by Ernst & Young LLP, independent auditors. Such
consolidated financial statements have been incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
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<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any of its agents. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstances create any implication
that there has been no change in the affairs of the Company since the date as of
which information is given in this Prospectus. This Prospectus does not
constitute an offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such solicitation.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
AVAILABLE INFORMATION ..................................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ......................... 3
THE COMPANY ............................................................... 4
RISK FACTORS .............................................................. 4
USE OF PROCEEDS ........................................................... 6
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS .................................. 6
DESCRIPTION OF CAPITAL STOCK .............................................. 7
SELLING SECURITY HOLDERS .................................................. 19
PLAN OF DISTRIBUTION ...................................................... 21
LEGAL MATTERS ............................................................. 22
EXPERTS ................................................................... 22
</TABLE>
[LOGO OF UNC APPEARS HERE]
UNC INCORPORATED
SERIES B SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK
SERIES C SENIOR
CUMULATIVE PREFERRED STOCK
COMMON STOCK
------------------
PROSPECTUS
------------------
Dated October 25, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses expected to be incurred in
connection with the offering described in this Registration Statement. There
are no underwriting discounts or commissions in connection with the offering
described in this Registration Statement. All amounts are estimated except the
Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.. $17,242
Legal fees and expenses.............................. 7,500
Accounting fees and expenses......................... 5,000
Transfer Agents' fees................................ -0-
Printing and engraving fees and expenses............. -0-
Miscellaneous........................................ 5,000
-------
$34,742
</TABLE>
Item 15. Indemnification of Directors and Officers.
The General Corporation Law of the State of Delaware authorizes Delaware
corporations to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
The General Corporation Law of the State of Delaware also authorizes a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit is brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnify for such
expenses which the Court of Chancery or such other court shall deem proper.
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding discussed in the foregoing paragraphs, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred in connection
therewith.
<PAGE>
The registrant's Certificate of Incorporation does not limit the extent of
the indemnity provided by the General Corporation Law of the State of Delaware.
The Amended and Restated Bylaws of the registrant permit indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware, and the registrant's directors and
officers are covered by certain insurance policies maintained by the registrant.
Item 16. Exhibits.
4.1 Certificate of Incorporation as amended by Certificate of
Designation of Series A Preferred Stock, of the Company (filed as
Exhibit 4-H to the Company's Registration Statement No. 33-13762
and incorporated herein by reference).
4.2 Form of Certificate of Designations of Series A Junior
Participating Preferred Stock of Company (filed as Exhibit A to
the Company's Form 8-A dated October 8, 1987, and incorporated
herein by reference).
4.3 Certificate of the Designation, Powers, Preferences and Rights of
the Series B Senior Cumulative Convertible Preferred Stock.
4.4 Certificate of the Designation, Powers, Preferences and Rights of
the Series C Senior Cumulative Preferred Stock.
4.5 Amended and Restated Bylaws of the Company (filed as Exhibit 3-C
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 - File No. 1-7795 and incorporated herein by
reference).
4.6 Amended and Restated Stock Purchase Agreement dated as of May 30,
1996, by and among the Company and the Purchasers signatory
thereto.
4.7 Rights Agreement, dated as of September 25, 1987, between the
Company and Manufacturers Hanover Trust Company (filed as
Exhibit 1 to the Company's Form 8-A dated October 9, 1987 and
incorporated herein by reference); First Amendment to Rights
Agreement, dated as of May, 1996, by and between the Company and
Chemical Bank.
4.8 Indenture, dated as of May 1, 1986, between the Company and
Maryland National Bank, Trustee, relating to the Company's 7 1/2%
Convertible Subordinated Debentures due 2006 (filed as Exhibit 4-
A to the Company's Registration Statement No. 33-5136 and
incorporated herein by reference).
4.9 First Supplemental Indenture, dated as of April 26, 1987, between
the Company and Maryland National Bank, Trustee (supplementing
the Indenture, dated May 1, 1986, between the Company and
Maryland National Bank, Trustee, relating to the Company's 7 1/2%
Convertible Subordinated Debentures due 2006) (filed as Exhibit
4-J to the Company's Registration Statement No. 33-13762 and
incorporated herein by reference).
4.10 Indenture, dated as of July 15, 1993, between the Company and
Continental Bank, National Association, Trustee, relating to the
Company's 9 1/8% Senior Notes due 2003 (filed as Exhibit 4-B to
the Company's Quarterly Report on Form 10-Q for the quarters
ended June 30, 1993-File No. 1-7795 and incorporated herein by
reference).
4.11 First Supplemental Indenture, dated as of August 14, 1993,
between the Company and Continental Bank, National Association,
Trustee (supplementing the Indenture, dated July 15, 1993,
between the Company and Continental Bank, National Association,
II-2
<PAGE>
Trustee, relating to the Company's 9 1/8% Senior Notes due 2003)
(filed as Exhibit 4.5 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995-File No. 1-7795 and
incorporated herein by reference).
4.12 Second Supplemental Indenture, dated as of November 5, 1993,
between the Company and Continental Bank, National Association,
Trustee (supplementing the Indenture, dated July 15, 1993,
between the Company and Continental Bank, National Association,
Trustee, relating to the Registrant's 9 1/8% Senior Notes due
2003) (filed as Exhibit 4.6 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995-File
No. 1-7795 and incorporated herein by reference).
4.13 Third Supplemental Indenture, dated as of May 15, 1996, among UNC
Incorporated, UNC Johnson Technology, Inc., UNC Parts Company,
the other corporations identified as Guarantors therein and
Chemical Bank, as Trustee (filed as Exhibit 4.11 to the Company's
Registration Statement on Form S-3, No. 333-6389 and incorporated
herein by reference).
4.14 Fourth Supplemental Indenture, dated as of May 30, 1996, among
UNC Incorporated, the corporations identified as Guarantors
therein and Chemical Bank, as Trustee (filed as Exhibit 4.12 to
the Company's Registration Statement on Form S-8, No. 333-6389
and incorporated herein by reference).
4.15 Indenture dated as of May 30, 1996, among UNC Incorporated, the
other corporations identified therein as Guarantors and The Bank
of New York, as Trustee (relating to the Company's 11% Senior
Subordinated Notes due 2006) (filed as Exhibit 4.13 to the
Company's Registration Statement on Form S-8, No. 333-6389 and
incorporated herein by reference).
5 Opinion of Miles & Stockbridge, a Professional Corporation.
12 Statement of Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (filed as Exhibit 12 to the
Company's Registration Statement on Form S-4, No. 333-9959 and
incorporated herein by reference).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of Ernst & Young LLP.
23.5 Consent of Miles & Stockbridge, a Professional Corporation
(included in Exhibit 5).
24 Power of Attorney.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
II-3
<PAGE>
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Annapolis, State of Maryland, the 25th day of
October, 1996.
UNC INCORPORATED
By:/s/ Robert L. Pevenstein
-----------------------------
Robert L. Pevenstein,
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman of the Board, October 25, 1996
* President, Chief Executive
- --------------------------- Officer and Director
Dan A. Colussy
* Senior Vice President and October 25, 1996
- --------------------------- Chief Financial Officer
Robert L. Pevenstein
* Director October 25, 1996
- ---------------------------
Berl Bernhard
* Director October 25, 1996
- ---------------------------
Beverly B. Byron
* Director October 25, 1996
- ---------------------------
John K. Castle
* Director October 25, 1996
- ---------------------------
John W. Gildea
* Director October 25, 1996
- ---------------------------
Freeman A. Hrabowski, III
</TABLE>
II-5
<PAGE>
* Director October 25, 1996
- ---------------------------
George V. McGowan
* Director October 25, 1996
- ---------------------------
Jack Mosely
* Director October 25, 1996
- ---------------------------
Lawrence A. Skantze
By: /s/ Richard H. Lange
---------------------------------
Richard H. Lange,
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Item Page No.
- ----------- ---- --------
<S> <C> <C>
4.3 Certificate of the Designation, Powers, Preferences
and Rights of the Series B Senior Cumulative
Convertible Preferred Stock.
4.4 Certificate of the Designation, Powers, Preferences
and Rights of the Series C Senior Cumulative Preferred
Stock.
4.6 Amended and Restated Stock Purchase Agreement
dated as of May 30, 1996, by and among the
Company and the Purchasers signatory thereto.
4.7 First Amendment to Rights Agreement, dated as of
May, 1996, by and between the Company and Chemical Bank.
5 Opinion of Miles & Stockbridge, a Professional
Corporation.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of Ernst & Young LLP.
23.5 Consent of Miles & Stockbridge, a Professional
Corporation (included in Exhibit 5).
24 Power of Attorney.
</TABLE>
<PAGE>
Exhibit 4.3
UNC INCORPORATED
CERTIFICATE OF THE DESIGNATION, POWERS,
PREFERENCES AND RIGHTS OF THE SERIES B SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The following resolutions were duly adopted by the Board of Directors
of UNC Incorporated, a Delaware corporation (the "Corporation"), pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, on September 29, 1995 at a meeting of the Board of Directors at which
there was at all times present and acting a quorum of the Board of Directors of
the Corporation:
WHEREAS, the Board of Directors of the Corporation is authorized,
within the limitations and restrictions stated in the Certificate of
Incorporation, to fix by resolution or resolutions the designation of each
series of Preferred Stock and the powers, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including, without limiting the generality of the
foregoing, such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution or resolutions
of the Board of Directors under the General Corporation Law of the State of
Delaware; and
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to authorize and fix the
terms of a series of such Preferred Stock and the number of shares constituting
such series:
NOW, THEREFORE, BE IT RESOLVED:
(1) Designation and Number of Shares. The designation of said series
--------------------------------
of Preferred Stock, par value $1.00 per share (the "Series Preferred Stock"),
authorized by this resolution shall be "Series B Senior Cumulative Convertible
Preferred Stock" (the "Series B Preferred Stock"). The number of shares of
Series B Preferred Stock authorized hereby shall be 250,000 and no more, except
as provided herein.
(2) Rank. The Series B Preferred Stock shall, with respect to
----
dividend rights and rights on liquidation, winding up and dissolution, rank (a)
on a parity with the Series C Senior Cumulative Preferred Stock, par value $1.00
per share (the "Series C Preferred Stock"), and (b) prior to any other equity
securities of the Corporation, whether currently authorized or
<PAGE>
hereafter created, including any other series of Series Preferred Stock and the
Common Stock, par value $.20 per share, of the Corporation (the "Common Stock",
all of such equity securities of the Corporation to which the Series B Preferred
Stock ranks prior, including any other series of Series Preferred Stock and the
Common Stock, are referred to herein collectively as the "Junior Securities").
(3) Dividends. (a) (i) The holders of the shares of Series B
---------
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate (subject to adjustment as set forth in
subparagraph (iv) below) of $8.50 per share in equal quarterly payments on the
last business day of each calendar quarter (each of such dates being a "Dividend
Payment Date"), commencing with the last day of the calendar quarter in which
the shares of Series B Preferred Stock are issued, in preference to dividends on
the Junior Securities. Such dividends shall be paid to the holders of record at
the close of business on the date which is ten (10) business days prior to the
Dividend Payment Date. Each of such quarterly dividends (whether payable in
cash or in stock) shall be fully cumulative and shall accrue (whether or not
declared), without interest, from the Date of Issuance. Subject to subparagraph
(iii) below, any dividend payments due with respect to the Series B Preferred
Stock on any Dividend Payment Date shall be made by issuing fully paid and non-
assessable shares of Series C Preferred Stock, valued as set forth below (a "PIK
Dividend"); provided, however, that in lieu of issuing shares of Series C
Preferred Stock, dividends may be paid, in the sole discretion of the
Corporation, in cash or any combination of cash and Series C Preferred Stock.
The issuance of such shares or the issuance of such shares together with payment
of cash in lieu of the issuance of any shares shall constitute full payment of
such dividend.
(ii) Shares of Series C Preferred Stock used for the purpose of
paying dividends on the Series B Preferred Stock will be valued at $100.00 per
share.
(iii) In the event that the Corporation is no longer a party to any
Restrictive Agreement (as defined below) prohibiting the payment of cash
dividends on the Series B Preferred Stock, dividend payments with respect to the
Series B Preferred Stock shall be made in cash. "Restrictive Agreement" shall
mean any agreement to which the Corporation is a party on the date hereof
(including as modified, amended, extended, refinanced or replaced) which by its
terms restricts the Corporation's ability to (A) pay dividends in cash with
respect to the Series B Preferred Stock or (B) redeem the Series B Preferred
Stock, excluding any such agreement which has been substantially assigned to a
party which is not a party thereto on the date hereof.
(iv) In the event that the Corporation shall make a PIK Dividend at
any time after the third anniversary of the date of issuance of the Series B
Preferred Stock (the "Date of Issuance"), the annual rate of PIK Dividends
payable thereafter with respect to the Series B Preferred Stock shall be
increased to $9.50 per share. In the event that the Corporation shall make a PIK
Dividend at any time after the fourth anniversary of the Date of Issuance, the
annual rate of PIK Dividends payable thereafter with respect to the Series B
Shares shall be increased to $10.50 per share. In the event that the Corporation
shall make a PIK Dividend at any time
-2-
<PAGE>
after the fifth anniversary of the Date of Issuance, the annual rate of PIK
Dividends payable thereafter with respect to the Series B Preferred Stock shall
be increased to $11.00 a share. Any adjustment to the annual rate of PIK
Dividends payable with respect to the Series B Preferred Stock pursuant to this
subparagraph (iv) shall be effective after the date of the applicable PIK
Dividend and the dividend payment in fully paid non-assessable shares of Series
C Preferred Stock with respect to the next following date of PIK Dividend shall
be adjusted to reflect the applicable increased annual rate. Dividend payments,
or any portion thereof, with respect to the Series B Preferred Stock to be paid
in cash will be at annual rate of $8.50 per share.
(b) All dividends paid with respect to shares of Series B Preferred
Stock pursuant to paragraph (3)(a) shall be paid pro rata to the holders
entitled thereto.
(c) No full cash dividends shall be declared or paid or set apart for
payment on the Series C Preferred Stock for any period unless full cumulative
cash dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on the
Series B Preferred Stock for all dividend payment periods terminating on or
prior to the date of payment of such full cumulative dividends. If any cash
dividends are not paid in full, as aforesaid, upon the shares of Series B
Preferred Stock and the Series C Preferred Stock, all cash dividends declared
upon shares of Series B Preferred Stock and the Series C Preferred Stock shall
be declared pro rata so that the amount of cash dividends declared per share on
the Series B Preferred Stock and the Series C Preferred Stock shall in all cases
bear to each other the same ratio that accrued cash dividends per share on the
Series B Preferred Stock and the Series C Preferred Stock bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series B Preferred Stock which may be in
arrears.
(d) (i) Whenever dividends or distributions payable on the Series B
Preferred Stock as provided in this Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions,
on any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up); or
(B) redeem or purchase or otherwise acquire for consideration
shares of any Junior Securities (either as to dividends or upon
liquidation, dissolution or winding up), provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such Junior
Securities in exchange for shares of any other Junior Securities.
(ii) Subject to the foregoing provisions of this Section 3, the Board
of Directors may declare, and the Corporation may pay or set apart for payment,
dividends and other distributions on any of the Junior Securities, and may
purchase or otherwise redeem any
-3-
<PAGE>
of the Junior Securities or any warrants, rights or options exercisable for or
convertible into any of the Junior Securities, and the holders of the shares of
Series B Preferred Stock shall not be entitled to share therein.
(4) Liquidation Preference. (a) In the event of any voluntary or
----------------------
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series B Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to $100.00 for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of the Junior Securities. If the assets of the Corporation are not sufficient
to pay in full the liquidation payments payable to the holders of outstanding
shares of Series B Preferred Stock and Series C Preferred Stock, then the
holders of all such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution if the
amounts to which the holders of outstanding shares of Series B Preferred Stock
and Series C Preferred Stock are entitled were paid in full.
(b) The liquidation payment with respect to each fractional share of
Series B Preferred Stock outstanding or accrued but unpaid shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series B Preferred Stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation or the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
lease, exchange or transfer shall be in connection with a dissolution or winding
up of the business of the Corporation.
(5) Redemption. (a) Commencing after the Effective Date (as defined
----------
below), the Corporation at its option may redeem, to the extent funds are
legally available therefor, the Series B Preferred Stock, at any time in whole
or from time to time in part, at the per share redemption price equal to $100.00
plus all accrued and unpaid dividends thereon to the date fixed for redemption,
without interest (the "Redemption Price"). "Effective Date" shall mean, the
last day of any ninety (90) consecutive calendar day period that occurs after
the fourth anniversary of the Date of Issuance in which the last reported sales
price regular way for the Common Stock of the Corporation on the New York Stock
Exchange (or any other national securities exchange or NASDAQ on which the
Common Stock is listed or quoted) on all trading days in that period is at least
equal to 200% of the Conversion Price (as defined in Section 7).
(b) The Corporation shall not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming, all outstanding shares of
Series C Preferred Stock at the Redemption Price for the Series C Preferred
Stock.
-4-
<PAGE>
(c) Unless the Corporation is prohibited by the terms of any
Restrictive Agreement from redeeming any shares of Series B Preferred Stock, in
the event of any Change in Control (as defined below) with respect to the
Corporation, each holder of the Series B Preferred Stock may, from time to time,
require the Corporation to, and the Corporation shall, redeem any number of the
shares of Series B Preferred Stock held by it for the Redemption Price upon
thirty (30) days prior written notice. "Change in Control" shall mean (A) any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation) which will result in the
Corporation's stockholders immediately prior to such transaction not holding (by
virtue of such shares or securities issued solely with respect thereto) at least
fifty percent (50%) of the voting power of the surviving or continuing entity,
(B) a sale of all or substantially all of the assets of the Corporation, unless
the Corporation's stockholders immediately prior to such sale will, as a result
of such sale, hold (by virtue of securities issued as consideration for the
Corporation's sale) at least fifty percent (50%) of the voting power of the
purchasing entity, or (C) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Corporation's stockholders, of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
(d) Shares of Series B Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued shares of the class of
Series Preferred Stock, undesignated as to series, and may be redesignated and
reissued as part of any series of the Series Preferred Stock, par value $1.00
per share, of the Corporation; provided, however, that no such issued and
reacquired shares of Series B Preferred Stock shall be reissued or sold as
Series B Preferred Stock.
(e) Notwithstanding the foregoing provisions of this Section 5, unless
the full cumulative dividends on all outstanding shares of Series B Preferred
Stock shall have been paid or contemporaneously are declared and paid for all
past dividend periods, none of the shares of Series B Preferred Stock shall be
redeemed unless all outstanding shares of Series B Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire (except pursuant to Section 6 hereof) any shares of Series B Preferred
Stock; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Series B Preferred Stock pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series B Preferred Stock.
(6) Procedure for Redemption. (a) In the event that fewer than all
------------------------
the outstanding shares of Series B Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
-5-
<PAGE>
(b) In the event the Corporation shall redeem shares of Series B
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty (60)
days prior to the date of redemption (the "Redemption Date"), to each holder of
record of the shares to be redeemed at such holder's address as the same appears
on the stock register of the Corporation; provided, however, that no failure to
mail such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series B Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to mail said
notice or except as to the holder whose notice was defective. Each such notice
shall state: (i) the Redemption Date; (ii) the number of shares of Series B
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed from such holder, the number of shares to be redeemed
from such holder; (iii) the Redemption Price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on such Redemption Date.
(c) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption) dividends on the shares of Series B Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, unclassified as to series, and shall not be reissued as shares
of Series B Preferred Stock, and all rights of the holders thereof as
stockholders of the Corporation with respect to said shares (except the right to
receive from the Corporation the Redemption Price) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the Redemption Price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
(7) Conversion. (a) Subject to and upon compliance with the
----------
provisions of this Section 7, unless previously redeemed by the Corporation, the
holders of shares of Series B Preferred Stock shall have the right, at such
holders' option, at any time and from time to time, to convert such shares into
fully paid and non-assessable shares of Common Stock of the Corporation. The
number of shares of Common Stock issuable upon conversion of each share of
Series B Preferred Stock shall be equal to $100.00 divided by the Conversion
Price (as hereinafter defined) in effect at the time of conversion, determined
as hereinafter provided. The price at which shares of Common Stock shall be
delivered upon conversion (the "Conversion Price") shall initially be $7.00
(subject to the adjustments set out in this Section 7). The right to convert
shares called for redemption pursuant to this Section 7 shall terminate at the
close of business on the date fixed for such redemption unless the Corporation
shall default in making payment of the amount payable upon such redemption.
-6-
<PAGE>
(b) The holders of shares of Series B Preferred Stock at the close of
business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof or the Corporation's default in payment
of the dividend due on such Dividend Payment Date. However, shares of Series B
Preferred Stock surrendered for conversion during the period between the close
of business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date must be accompanied by payment of an
amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of shares of Series B Preferred Stock on a dividend payment
record date who (or whose transferee) surrenders any of such shares for
conversion into shares of Common Stock on a Dividend Payment Date will receive
the dividend payable by the Corporation on such shares of Series B Preferred
Stock on such date, and the converting holder need not include payment in the
amount of such dividend upon surrender of shares of Series B Preferred Stock for
conversion. Except as provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of Common Stock issued upon such conversion.
(c) (i) In order to exercise the conversion privilege, the holders
of each share of Series B Preferred Stock to be converted shall surrender the
certificate representing such share at the office of the transfer agent for the
Series B Preferred Stock, appointed for such purpose by the Corporation, with
the Notice of Election to Convert on the back of said certificate completed and
signed. Unless the shares of Common Stock issuable on conversion are to be
issued in the same name in which such share of Series B Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender of the
certificates for shares of Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable upon the conversion of such shares in accordance with
the provisions of this Section 7, and any fractional interest in respect of a
share of Common Stock arising upon such conversion shall be settled as provided
in paragraph (d) of this Section 7.
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of Series B Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby at such time on such
date, unless the stock transfer books of the Corporation shall be closed on that
date, in which event such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such stock transfer books are open, and such notice received by the
Corporation. All shares of Common Stock delivered upon conversion of
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the Series B Preferred Stock will upon delivery be duly and validly issued and
fully paid and non-assessable, free of all liens and charges and not subject to
any preemptive rights.
(d) The Conversion Price in effect at any time and the number and kind
of securities issuable upon the conversion of each share of Series B Preferred
Stock shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
(i) In the event that the Corporation shall make a PIK Dividend
pursuant to Section 3 hereof after the third anniversary of the Date
of Issuance, then the Conversion Price shall be reduced by five
percent (5%); provided that a reduction in the Conversion Price
pursuant to this subparagraph (i) shall be made only once.
(ii) In case the Corporation shall hereafter (A) pay a dividend
or make a distribution on its Common Stock in shares of its Common
Stock, (B) subdivide its outstanding Common Stock, (C) combine its
outstanding Common Stock into a smaller number of shares, or (D) issue
any shares by reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Corporation is the continuing corporation), the Conversion Price
in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder
of any share of Series B Preferred Stock converted after such date
shall be entitled to receive the aggregate number and kind of shares
of Common Stock which, if such share of Series B Preferred Stock had
been converted immediately prior to such record date or effective
date, he would have owned upon such conversion and been entitled to
receive upon such dividend, distribution, subdivision, combination or
reclassification.
(iii) In case the Corporation shall hereafter issue rights or
warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below)
to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Conversion Price in effect
on the record date with respect to such issuance, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on
such record date plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at the Conversion
Price in effect immediately prior to the date of such issuance, and of
which the denominator shall be the number of shares of Common Stock
outstanding on the record date for determination of the Stockholders
entitled to
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receive such rights or warrants plus the number of additional shares
of Common Stock offered for subscription or purchase (or into which
the convertible securities so offered are then convertible). Such
adjustment shall be made successively whenever such rights or warrants
are issued and shall become effective immediately prior to the date of
such issuance; and to the extent that shares of Common Stock are not
delivered (or securities convertible into Common Stock are not
delivered) after the expiration of such rights or warrants, the
Conversion Price shall be readjusted to the Conversion Price which
would then be in effect had the adjustments made upon the issuance of
such rights or warrants been made upon the basis of delivery of only
the number of shares of Common Stock (or securities convertible into
Common Stock) actually delivered.
(iv) In case the Corporation shall hereafter distribute to all
holders of its Common Stock shares of stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends or
distributions out of retained earnings and dividends or distributions
referred to in subparagraph (ii) above) or rights or warrants
(excluding those referred to in subparagraph (iii) above), then in
each such case the Conversion Price in effect thereafter shall be
determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction, of which the
numerator shall be the total number of outstanding shares of Common
Stock multiplied by the Conversion Price in effect immediately prior
to the date of such distribution, less the then fair market value (as
determined in good faith by the Corporation's Board of Directors,
irrespective of the accounting treatment thereof, whose determination
shall be described in a certified Board Resolution) of said shares of
stock, assets or evidences of indebtedness so distributed or of such
rights or warrants, and of which the denominator shall be the total
number of outstanding shares of Common Stock multiplied by the
Conversion Price in effect immediately prior to the date of such
distribution. Such adjustments shall be made whenever any such
distribution is made and shall become effective immediately prior to
the date of such distribution.
(v) In case the Corporation shall hereafter issue shares of its
Common Stock (excluding shares issued (A) in any of the transactions
described in subparagraph (ii) above, (B) upon conversion or exchange
of securities convertible into or exchangeable for Common Stock, or
upon conversion of rights or warrants issued to the holders of Common
Stock, for which an adjustment has already been made pursuant to
subparagraph (iii) above, (C) by grant to or upon exercise of options
granted or to be granted to employees or directors pursuant to any
employee benefit plan or program of the Corporation or any of its
subsidiaries in existence on the Date of Issuance or subsequently
approved by the Corporation's stockholders, (D) upon conversion of
shares of Series B Preferred Stock, (E) to shareholders of any
corporation which merges into the Corporation or a subsidiary of the
Corporation in proportion to their stockholdings of such
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<PAGE>
corporation immediately prior to such merger, upon such merger, (F) in
a bona fide public offering pursuant to a firm commitment
underwriting, or (G) pursuant to any stockholders rights plan of the
Corporation) for a consideration per share of Common Stock less than
the Conversion Price in effect on the date the Corporation fixes or
has fixed the offering, conversion, exchange or exercise price of such
additional shares, the Conversion Price shall be adjusted so that it
shall equal the price determined by multiplying the Conversion Price
in effect immediately prior thereto by a fraction, of which the
numerator shall be the total number of shares of Common Stock
outstanding immediately prior to the issuance of such additional
shares plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided in subparagraph (vii)
below) for the issuance of such additional shares would purchase at
the Conversion Price in effect on the date the Corporation fixes or
has fixed the offering, conversion, exchange or exercise price of such
additional shares, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made successively
whenever such an issuance is made and shall become effective
immediately prior to the date of such issuance.
(vi) In case the Corporation shall hereafter issue any securities
convertible into or exchangeable for its Common Stock (excluding
securities issued (A) in transactions described in subparagraphs (iii)
and (iv) above or (B) pursuant to any stockholders rights plan of the
Corporation) for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities (determined
as provided in subparagraph (vii) below) less than the Conversion
Price in effect on the issuance date of such securities, the
Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the date of such issuance by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common
Stock which the aggregate consideration received (determined as
provided in subparagraph (vii) below) for such securities would
purchase at the Conversion Price prior to any adjustment pursuant
hereto, and of which the denominator shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the
maximum number of shares of Common Stock of the Corporation
deliverable upon conversion of or in exchange for such securities at
the initial conversion or exchange price or rate. Such adjustment
shall be made successively whenever such an issuance is made and shall
become effective immediately prior to date of issuance of such
securities.
(vii) For purposes of any computation respecting consideration
received pursuant to subparagraphs (v) and (vi) above, the following
shall apply:
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(A) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Corporation for any
underwriting of the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of
the Corporation (irrespective of the accounting treatment thereof),
whose determination shall be conclusive and described in a certified
Board Resolution; and
(C) in the case of the issuance of securities convertible
into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Corporation for the issuance of such
securities plus the additional minimum consideration, if any, to be
received by the Corporation upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (A) and (B) of this subparagraph (vii)).
(viii) In case the Corporation is a participant in a
consolidation, merger or combination with another corporation (other
than with a wholly-owned subsidiary of the Corporation and other than
a merger which does not result in any reclassification, conversion,
exchange or cancellation of the Common Stock) or in case of any sale
or transfer of all or substantially all of the assets of the
Corporation, as a result of which holders of the Common Stock shall be
entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock,
or any share exchange whereby the Common Stock is converted into other
securities or property of the Corporation, then as a condition to the
consummation of such transaction, lawful and adequate provision shall
be made so that the holder of each share of Series B Preferred Stock
then outstanding shall have the right, with respect to such shares of
Series B Preferred Stock, to receive stock, other securities or
property or assets (including cash) or any combination thereof, having
a value equal to the value of the stock, other securities, property
and assets (including cash) which such holder would have been entitled
to receive upon such consolidation, merger, combination, sale or
transfer, or exchange, if such holder had held the Common Stock
issuable upon the conversion of such shares of Series B Preferred
Stock immediately prior to such consolidation, merger, combination,
sale or transfer, or exchange.
(ix) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least ten cents
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<PAGE>
($0.10) in such price; provided, however, that any adjustments not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this paragraph 7(d)
shall be made to the nearest cent or to the nearest one-thousandth of
a share, as the case may be.
(x) Anything in this paragraph 7(d) to the contrary
notwithstanding, the Corporation shall be entitled, but shall not be
required, to make such changes in the Conversion Price, in addition to
those required by this paragraph 7(d), as it in its discretion shall
determine to be advisable in order that any dividend or distribution
in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants
to purchase Common Stock or distribution of shares of stock other than
Common Stock, evidences of indebtedness or assets (other than
distributions in cash out of retained earnings) referred to
hereinabove in this paragraph 7(d), hereafter made by the Corporation
to the holders of the Series B Preferred Stock shall not be taxable to
them.
(xi) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly cause a notice setting forth
the adjusted Conversion Price and adjusted number of shares issuable
upon conversion of each share of Series B Preferred Stock to be mailed
to the holders, at their last addresses appearing in the Series B
Preferred Stock share register. The certificate setting forth the
computation shall be signed by the chief financial officer of the
Corporation.
(xii) In the event that at any time, as a result of any
adjustment made pursuant to paragraph (a) above, the holder of any
share of Series B Preferred Stock thereafter shall become entitled to
receive any shares of the Corporation, other than Common Stock,
thereafter the number of such other shares so receivable upon
conversion of any share of Series B Preferred Stock shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock contained in subparagraphs (i) to (ix) inclusive, above.
(e) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purposes of effecting conversions
of the Series B Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Series B Preferred
Stock not theretofore converted. For purposes of this paragraph (e), the number
of shares of Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder.
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<PAGE>
(f) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 7 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(8) Voting Rights. The holders of record of shares of Series B
-------------
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 8 or as otherwise provided by law.
(a) Whenever dividends are in arrears and remain unpaid for six (6) or
more Dividend Payment Dates, the holders of the then outstanding Series B
Preferred Stock, voting as a class, shall have the exclusive right to appoint
one additional director to the Board of Directors of the Corporation (in
addition to any rights to appoint or have nominated any director pursuant to any
contractual agreement between the Corporation and any holders of the Series B
Preferred Stock) until such time as all accrued and unpaid dividends shall have
been paid in full, at which time the term of office of such director shall
terminate.
(b) So long as any shares of Series B Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of Series B Preferred Stock,
voting as a class (i) create, authorize or issue any shares of any other class
of senior or parity dividend stock or senior or parity liquidation stock or
having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series B Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series B Preferred Stock or otherwise reduce the
number of outstanding shares of Series B Preferred Stock other than pursuant to
Section 4, 5 or 7 hereof; provided, however, that the approval of not less than
two-thirds of the outstanding shares of Series B Preferred Stock, voting as a
class, shall be required to amend, alter, or repeal any of the provisions of the
Certificate of Incorporation of the Corporation that would adversely affect the
dividend provisions, liquidation rights, conversion terms, or voting rights of
the Series B Preferred Stock or the holders thereof.
(c) A special meeting of holders of the Series B Preferred Stock (or a
request for a vote by written consent without a meeting) to approve or
disapprove any action of the Corporation on which the holders of the Series B
Preferred Stock are entitled to vote as a separate class by law or pursuant to
this Section 8 may be called by the Secretary of the Corporation or by the
holder(s) of twenty-five percent (25%) or more of the outstanding shares of
Series B Preferred Stock on written notice to the address of each holder thereof
as it appears on the records of the Corporation deposited in the U.S. mail, all
charges prepaid, at least ten
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<PAGE>
(10) but no more than sixty (60) days prior to the applicable vote. The record
date for determination of the holders of the Series B Preferred Stock entitled
to vote by written consent or at a meeting shall be set by the Corporation's
Board of Directors, and only holders who are holding of record on the stock book
of the Corporation on that date will be entitled to participate in such vote.
At any time at which any share of Series B Preferred Stock has been issued and
is outstanding, no proposal for the Corporation to take any action described in
paragraph (b) shall be adopted, nor shall the Corporation be authorized to take
any such action, unless the holders of at least two-thirds of the outstanding
shares of Series B Preferred Stock voting as a separate class vote in favor of
such proposal.
(d) Copies of all notices sent to the holders of Common Stock shall be
simultaneously sent to each holder of the Series B Preferred Stock.
(e) In exercising the voting rights set forth in this Section 8, each
share of Series B Preferred Stock shall have one vote per share.
(f) No consent of the holders of the Series B Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of the
Series Preferred Stock or Common Stock, shall be required for (i) the creation,
authorization or issuance of any indebtedness of any kind of the Corporation,
(ii) the creation, authorization or issuance of any other class of stock of the
Corporation subordinate as to dividends and upon liquidation to the Series B
Preferred Stock, (iii) any increase or decrease in the amount of authorized
Common Stock or Series Preferred Stock or any increase, decrease or change in
the par value thereof, or (iv) any increase in the amount of the Series C
Preferred Stock for the purpose of paying dividends in shares of Series C
Preferred Stock as provided herein, and none of the foregoing shall be deemed to
affect adversely the powers, special rights or preferences of holders of the
Series B Preferred Stock.
IN WITNESS WHEREOF, UNC Incorporated caused this certificate to be
signed by its Chairman of the Board and Chief Executive Officer and attested by
its Secretary this 5th day of October, 1995.
UNC INCORPORATED
By:
-----------------------------------
Dan A. Colussy
Chairman of the Board and
Chief Executive Officer
ATTEST:
- ----------------------------
Secretary
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October 22, 1996 9:52pm
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<PAGE>
Exhibit 4.4
UNC INCORPORATED
CERTIFICATE OF THE DESIGNATION, POWERS,
PREFERENCES AND RIGHTS OF THE SERIES C SENIOR CUMULATIVE
PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The following resolutions were duly adopted by the Board of Directors of
UNC Incorporated, a Delaware corporation (the "Corporation"), pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, on September 29, 1995 at a meeting of the Board of Directors at which
there was at all times present and acting a quorum of the Board of Directors of
the Corporation:
WHEREAS, the Board of Directors of the Corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation, to
fix by resolution or resolutions the designation of each series of Preferred
Stock and the powers, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof,
including, without limiting the generality of the foregoing, such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution or resolutions of the Board of Directors
under the General Corporation Law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of such Preferred Stock and the number of shares constituting such
series:
NOW, THEREFORE, BE IT RESOLVED:
(1) Designation and Number of Shares. The designation of said series
--------------------------------
of Preferred Stock, par value $1.00 per share (the "Series Preferred Stock"),
authorized by this resolution shall be "Series C Senior Cumulative Preferred
Stock" (the "Series C Preferred Stock"). The number of shares of Series C
Preferred Stock authorized hereby shall be 250,000 and no more, except as
provided herein.
(2) Rank. The Series C Preferred Stock shall, with respect to
----
dividend rights and rights on liquidation, winding up and dissolution, rank (a)
on a parity with the Series B Senior Cumulative Preferred Stock, par value $1.00
per share (the "Series B Preferred Stock"), and (b) prior to any other equity
securities of the Corporation, whether currently authorized or
<PAGE>
hereafter created, including any other series of Series Preferred Stock and the
Common Stock, par value $.20 per share, of the Corporation (the "Common Stock",
all of such equity securities of the Corporation to which the Series C Preferred
Stock ranks prior, including any other series of Series Preferred Stock and the
Common Stock, are referred to herein collectively as the "Junior Securities").
(3) Dividends. (a) The holders of the shares of Series C Preferred
---------
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate of $8.50 per share in equal quarterly
payments on the last business day of each calendar quarter (each of such dates
being a "Dividend Payment Date"), commencing with the last day of the calendar
quarter in which the shares of Series C Preferred Stock are issued, in
preference to dividends on the Junior Securities. Such dividends shall be paid
to the holders of record at the close of business on the date which is ten (10)
business days prior to the Dividend Payment Date. Each of such quarterly
dividends shall be fully cumulative and shall accrue (whether or not declared),
without interest, from the Date of Issuance. Any dividend payments due with
respect to the Series C Preferred Stock on any Dividend Payment Date shall be
made in cash.
(b) All dividends paid with respect to shares of Series C Preferred
Stock pursuant to paragraph (3)(a) hereof shall be paid pro rata to the holders
entitled thereto.
(c) No full cash dividends shall be declared or paid or set apart for
payment on the Series B Preferred Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Series
C Preferred Stock for all dividend payment periods terminating on or prior to
the date of payment of such full cumulative dividends. If any cash dividends
are not paid in full, as aforesaid, upon the shares of Series C Preferred Stock
and Series B Preferred Stock, all cash dividends declared upon shares of Series
C Preferred Stock and Series B Preferred Stock shall be declared pro rata so
that the amount of cash dividends declared per share on the Series C Preferred
Stock and Series B Preferred Stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the Series C Preferred Stock and
Series B Preferred Stock bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series C Preferred Stock which may be in arrears.
(d) (i) Whenever dividends or distributions payable on the Series C
Preferred Stock as provided in this Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions, on
any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up); or
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<PAGE>
(B) redeem or purchase or otherwise acquire for consideration
shares of any Junior Securities (either as to dividends or upon
liquidation, dissolution or winding up), provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such Junior
Securities in exchange for shares of any other Junior Securities.
(ii) Subject to the foregoing provisions of this Section 3, the Board
of Directors may declare, and the Corporation may pay or set apart for payment,
dividends and other distributions on any of the Junior Securities, and may
purchase or otherwise redeem any of the Junior Securities or any warrants,
rights or options exercisable for or convertible into any of the Junior
Securities, and the holders of the shares of Series C Preferred Stock shall not
be entitled to share therein.
(4) Liquidation Preference. (a) In the event of any voluntary or
----------------------
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series C Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to $100.00 for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of the Junior Securities. If the assets of the Corporation are not sufficient
to pay in full the liquidation payments payable to the holders of outstanding
shares of Series C Preferred Stock and Series B Preferred Stock, then the
holders of all such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution if the
amounts to which the holders of outstanding shares of Series C Preferred Stock
and Series B Preferred Stock are entitled were paid in full.
(b) The liquidation payment with respect to each fractional share of
Series C Preferred Stock outstanding or accrued but unpaid shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series C Preferred Stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation or the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
lease, exchange or transfer shall be in connection with a dissolution or winding
up of the business of the Corporation.
(5) Redemption. (a) The Corporation at its option may redeem, to the
----------
extent funds are legally available therefor, the Series C Preferred Stock, at
any time in whole or from time to time in part, at the per share redemption
price equal to $100.00 plus all accrued and unpaid dividends thereon to the date
fixed for redemption, without interest (the "Redemption Price").
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<PAGE>
(b) The Corporation shall not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming all outstanding shares of
Series C Preferred Stock at the Redemption Price.
(c) Unless the Corporation is prohibited by the terms of any
Restrictive Agreement (as defined below) from redeeming any shares of Series C
Preferred Stock, in the event of any Change in Control (as defined below) with
respect to the Corporation, each holder of the Series C Preferred Stock may,
from time to time, require the Corporation to, and the Corporation shall, redeem
any number of the shares of Series C Preferred Stock held by it for the
Redemption Price upon thirty (30) days prior written notice. "Restrictive
Agreement" shall mean any agreement to which the Corporation is a party on the
date hereof (including, as modified, amended, extended, refinanced or replaced)
which by its terms restricts the Corporation's ability to (A) pay dividends in
cash with respect to the Series C Preferred Stock or (B) redeem the Series C
Preferred Stock, excluding any such agreement which has been substantially
assigned to a party which is not a party thereto on the date hereof. "Change in
Control" shall mean (A) any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
which will result in the Corporation's stockholders immediately prior to such
transaction not holding (by virtue of such shares or securities issued solely
with respect thereto) at least fifty percent (50%) of the voting power of the
surviving or continuing entity, (B) a sale of all or substantially all of the
assets of the Corporation, unless the Corporation's stockholders immediately
prior to such sale will, as a result of such sale, hold (by virtue of securities
issued as consideration for the Corporation's sale) at least fifty percent (50%)
of the voting power of the purchasing entity, or (C) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period.
(d) Shares of Series C Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued shares of the class of
Series Preferred Stock, undesignated as to series, and may be redesignated and
reissued as part of any series of the Series Preferred Stock, par value $1.00
per share, of the Corporation; provided, however, that no such issued and
reacquired shares of Series C Preferred Stock shall be reissued or sold as
Series C Preferred Stock.
(e) Notwithstanding the foregoing provisions of this Section 5, unless
the full cumulative dividends on all outstanding shares of Series C Preferred
Stock shall have been paid or contemporaneously are declared and paid for all
past dividend periods, none of the shares of Series C Preferred Stock shall be
redeemed unless all outstanding shares of Series C Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire (except pursuant to Section 6 hereof) any shares of Series C Preferred
Stock; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Series C Preferred
-4-
<PAGE>
Stock pursuant to a purchase or exchange offer made on the same terms to holders
of all outstanding shares of Series C Preferred Stock.
(6) Procedure for Redemption. (a) In the event that fewer than all
------------------------
the outstanding shares of Series C Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
(b) In the event the Corporation shall redeem shares of Series C
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty (60)
days prior to the date of redemption (the "Redemption Date"), to each holder of
record of the shares to be redeemed at such holder's address as the same appears
on the stock register of the Corporation; provided, however, that no failure to
mail such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series C Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to mail said
notice or except as to the holder whose notice was defective. Each such notice
shall state: (i) the Redemption Date; (ii) the number of shares of Series C
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed from such holder, the number of shares to be redeemed
from such holder; (iii) the Redemption Price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on such Redemption Date.
(c) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption) dividends on the shares of Series C Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, unclassified as to series, and shall not be reissued as shares
of Series C Preferred Stock (unless reissued as a stock dividend on Series C
Preferred Stock or Series B Preferred Stock), and all rights of the holders
thereof as stockholders of the Corporation with respect to said shares (except
the right to receive from the Corporation the Redemption Price) shall cease.
Upon surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the Redemption Price
aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(7) Voting Rights. The holders of record of shares of Series C
-------------
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 7 or as otherwise provided by law.
-5-
<PAGE>
(b) So long as any shares of Series C Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of Series C Preferred Stock,
voting as a class (i) create, authorize or issue any shares of any other class
of senior or parity dividend stock or senior or parity liquidation stock or
having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series C Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series C Preferred Stock or otherwise reduce the
number of outstanding shares of Series C Preferred Stock other than pursuant to
Section 4 or 5 hereof; provided, however, that the approval of not less than
two-thirds of the outstanding shares of Series C Preferred Stock, voting as a
class, shall be required to amend, alter, or repeal any of the provisions of the
Certificate of Incorporation of the Corporation that would adversely affect the
dividend provisions, liquidation rights, conversion terms, or voting rights of
the Series C Preferred Stock or the holders thereof.
(c) A special meeting of holders of the Series C Preferred Stock (or a
request for a vote by written consent without a meeting) to approve or
disapprove any action of the Corporation on which the holders of the Series C
Preferred Stock are entitled to vote as a separate class by law or pursuant to
this Section 7 may be called by the Secretary of the Corporation or by the
holder(s) of twenty-five percent (25%) or more of the outstanding shares of
Series C Preferred Stock on written notice to the address of each holder thereof
as it appears on the records of the Corporation deposited in the U.S. mail, all
charges prepaid, at least ten (10) but no more than sixty (60) days prior to the
applicable vote. The record date for determination of the holders of the Series
C Preferred Stock entitled to vote by written consent or at a meeting shall be
set by the Corporation's Board of Directors, and only holders who are holding of
record on the stock book of the Corporation on that date will be entitled to
participate in such vote. At any time at which any share of Series C Preferred
Stock has been issued and is outstanding, no proposal for the Corporation to
take any action described in this paragraph (b) shall be adopted, nor shall the
Corporation be authorized to take any such action, unless the holders of at
least two-thirds of the outstanding shares of Series C Preferred Stock voting as
a separate class vote in favor of such proposal.
(d) Copies of all notices sent to the holders of Common Stock shall be
simultaneously sent to each holder of the Series C Preferred Stock.
(e) In exercising the voting rights set forth in this Section 7, each
share of Series C Preferred Stock shall have one vote per share.
(f) No consent of the holders of the Series C Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of the
Series B Preferred Stock
-6-
<PAGE>
or Common Stock, shall be required for (i) the creation, authorization or
issuance of any indebtedness of any kind of the Corporation, (ii) the creation,
authorization or issuance of any other class of stock of the Corporation
subordinate as to dividends and upon liquidation to the Series C Preferred
Stock, or (iii) any increase or decrease in the amount of authorized Common
Stock or Series B Preferred Stock or any increase, decrease or change in the par
value thereof, and none of the foregoing shall be deemed to affect adversely
the powers, special rights or preferences of holders of the Series C Preferred
Stock.
(8) Business Combinations. In case the Corporation is a participant in a
---------------------
consolidation, merger or combination with another corporation (other than with a
wholly-owned subsidiary of the Corporation and other than a merger which does
not result in any reclassification, conversion, exchange or cancellation of the
Common Stock) or in case of any sale or transfer of all or substantially all of
the assets of the Corporation, as a result of which holders of the Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or any
share exchange whereby the Common Stock is converted into other securities or
property of the Corporation, then as a condition to the consummation of such
transaction, lawful and adequate provision shall be made so that the holder of
each share of Series C Preferred Stock then outstanding shall have the right,
with respect to such shares of Series B Preferred Stock, to receive stock, other
securities or property or assets (including cash) or any combination thereof,
having a value equal to the product of (a) the quotient obtained by dividing
(x) $100 plus all accrued and unpaid dividends, whether or not declared, on the
Series C Preferred Stock by (y) the then Existing Conversion Price for the
Series B Preferred Stock (as adjusted to give effect to such transaction), and
(b) the value of the stock, other securities, property and assets (including
cash) which each holder of one share of Common Stock is entitled to receive upon
such consolidation, merger, combination, sale or transfer, or exchange.
IN WITNESS WHEREOF, UNC Incorporated has caused this certificate to be
signed by its Chairman of the Board and Chief Executive Officer and attested by
its Secretary this 5th day of October, 1995.
UNC INCORPORATED
By:
--------------------------------
Dan A. Colussy
Chairman of the Board and
Chief Executive Officer
ATTEST:
- ----------------------------
Secretary
-7-
<PAGE>
Exhibit 4.6
================================================================================
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
by and among
UNC INCORPORATED
AND
THE PURCHASERS SIGNATORY HERETO
Dated as of May 30, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. PURCHASE AND SALE.................................................... 1
-----------------
1.1 Acquisition Shares.............................................. 1
------------------
1.2 Firm Shares..................................................... 2
-----------
1.3 Terms of Series B Preferred Stock and Series C Preferred Stock.. 2
--------------------------------------------------------------
1.4 Purchase Price.................................................. 2
--------------
1.5 Closing......................................................... 2
-------
1.6 Commitment and Funding Fees..................................... 3
---------------------------
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 3
---------------------------------------------
2.1 Corporate Organization and Good Standing........................ 3
----------------------------------------
2.2 Authorization................................................... 4
-------------
2.3 Consents and Approvals; No Violations........................... 4
-------------------------------------
2.4 Capital Stock................................................... 4
-------------
2.5 Good Title...................................................... 5
----------
2.6 Subsidiaries.................................................... 5
------------
2.7 Offering of Shares.............................................. 5
------------------
2.8 SEC Reports; Financial Information.............................. 6
----------------------------------
2.9 Absence of Certain Changes or Events............................ 6
------------------------------------
2.10 Legal Proceedings, etc.......................................... 7
2.11 Title to Properties, Absence of Liens and Encumbrances, etc..... 7
2.12 Contracts and Commitments, etc.................................. 7
2.13 Compliance with Applicable Law.................................. 7
2.14 Investment Company Act of 1940.................................. 8
2.15 Public Utility Holding Company Act of 1935, etc................. 8
2.16 No Brokers...................................................... 8
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................... 8
3.1 Authorization................................................... 8
3.2 Consents and Approvals; No Violations........................... 8
3.3 No Brokers...................................................... 9
3.4 Investment Intent; Related Matters.............................. 9
3.5 Ownership of Company Capital Stock.............................. 9
4. COVENANTS............................................................ 9
4.1 Conduct of the Business of the Company Prior to the Outside
Date.......................................................... 9
4.2 Confidentiality................................................. 10
4.3 Public Announcements............................................ 11
4.4 Best Efforts.................................................... 11
4.5 Shareholder Rights Plan......................................... 11
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
5. CONDITIONS PRECEDENT TO THE PURCHASERS' OBLIGATIONS............................... 11
5.1 Representations and Warranties of the Company True; Performance by the
Company...................................................................... 12
5.2 Litigation Affecting Closing................................................. 12
5.3 Approvals and Consents....................................................... 12
5.4 Opinions of Counsel to the Company........................................... 12
5.5 The Shares................................................................... 14
5.6 No Material Adverse Change................................................... 14
5.7 No Adverse Events Under Shareholder Rights Plan.............................. 14
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AT THE CLOSING............. 14
6.1 Representations and Warranties of the Purchasers True; Performance by
the Purchasers............................................................... 14
6.2 The Purchase Price........................................................... 15
6.3 Opinion of Counsel to the Purchaser.......................................... 15
6.4 Litigation Affecting Closing................................................. 15
6.5 Approvals and Consents....................................................... 15
7. REGISTRATION RIGHTS............................................................... 16
7.1 Restrictive Legend........................................................... 16
7.2 Required Registrations....................................................... 16
7.3 "Piggy-Back" Registrations................................................... 17
7.4 Registration Procedures...................................................... 18
7.5 Indemnification; Contribution................................................ 19
8. EXPENSES.......................................................................... 21
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITIES....................................................................... 21
10. CERTAIN AGREEMENTS................................................................ 23
10.1 Standstill.................................................................. 23
10.2 Agreement Respecting Board Representation................................... 24
10.3 No redemptions or cash payments............................................. 25
11. NOTICES, ETC...................................................................... 25
12. GENERAL........................................................................... 26
12.1 Amendment and Waiver........................................................ 26
12.2 Assignment.................................................................. 26
12.3 Governing Law............................................................... 27
12.4 Counterparts................................................................ 27
12.5 Headings.................................................................... 27
12.6 Severability................................................................ 27
12.7 Termination................................................................. 27
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
12.8 Effect of Amended and Restated Agreement Which Shall Terminate as of
the Date Hereof............................................................. 27
</TABLE>
SCHEDULES
SCHEDULE 1 Names of Purchasers
SCHEDULE 2 Names of Original Purchasers
SCHEDULE 3 Acceptable Acquisition
EXHIBITS
Exhibit A Series B Certificate of Designation
Exhibit B Series C Certificate of Designation
-iii-
<PAGE>
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT dated as of May 30,
1996, by and among UNC Incorporated, a Delaware corporation (the "Company"), and
the persons set forth on Schedule 1 hereto (the "Purchasers").
W I T N E S S E T H:
--------------------
WHEREAS, the Company is a party to that certain Stock Purchase
Agreement (the "Original Agreement") currently in effect between the Company and
certain purchasers (the "Original Purchasers") set forth on Schedule 1 thereto,
pursuant to which the Original Purchasers were to purchase from the Company up
to 250,000 shares of a newly created series of Preferred Stock of the Company,
upon the terms and subject to the conditions set forth therein; and
WHEREAS, with the exception of Pequod Investments, L.P., each of the
Original Purchasers wishes to assign its rights, interests and obligations in,
to and under the Original Agreement to a Purchaser pursuant to those certain
Assignment and Assumption Agreements dated as of May 30, 1996 (the
"Assignments"); and
WHEREAS, the Company has consented to the Assignments and wishes to
replace the Original Purchasers with the Purchasers by amending and restating
the Original Agreement to provide for such Purchasers.
NOW, THEREFORE, the Company and the Purchasers hereby agree as
follows:
1. PURCHASE AND SALE.
-----------------
1.1 Acquisition Shares. Upon the terms and subject to the conditions
------------------
set forth herein, if the Company shall consummate one or more acquisitions of a
business or entity meeting the terms and conditions set forth on Schedule 3
hereto (an "Acceptable Acquisition") on or prior to the Outside Date (as
hereinafter defined), the Company shall have the option (the "Company Option")
to sell to the Purchasers, and each of the Purchasers agrees, severally and not
jointly, to the extent that the Company exercises the Company Option, to
purchase from the Company, on any Closing Date (as hereinafter defined) the
number of shares (collectively, the "Acquisition Shares") of the Company's
Series B Senior Cumulative Convertible Preferred Stock, par value $1.00 per
share (the "Series B Preferred Stock"), set forth opposite the name of each such
Purchaser on Schedule 1 hereto under the column "Acquisition Shares." The
Company Option may be exercised by the Company upon written notice delivered to
each of the Purchasers at least 20 days prior to any Closing Date. The Company
Option may be exercised by the Company, in whole or in part, provided, however,
that the Company Option may only be exercised by the Company for a minimum of
50,000 Acquisition Shares in the aggregate and in integral multiples of 10,000
Acquisition Shares in the aggregate. Any sales of Acquisition Shares by the
Company pursuant to a partial exercise of the Company Option by the Company
shall be made to the Purchasers pro rata in proportion to the number of
Acquisition Shares set forth opposite the name of each Purchaser on Schedule 1
hereto. The Purchasers hereby
<PAGE>
acknowledge receipt of the required notice by the Company of exercise of the
Company Option as to all of the Acquisition Shares.
1.2 Firm Shares. Upon the terms and subject to the conditions set
-----------
forth herein, the Purchasers shall have the option (the "Purchasers' Option") to
purchase from the Company, and the Company agrees to sell to the Purchasers, to
the extent that the Purchasers exercise the Purchasers' Option, on the Outside
Date a number of shares (collectively, the "Firm Shares" and, together with the
Acquisition Shares, the "Shares") of Series B Preferred Stock equal to the
positive difference, if any, between (a) 100,000 and (b) the aggregate number of
Acquisition Shares sold by the Company to the Purchasers on or prior to the
Outside Date. The Purchasers' Option may be exercised by the Purchasers, in
whole or in part, provided, however, that the Purchasers' Option may only be
exercised by the Purchasers for a minimum of 10,000 Firm Shares in the aggregate
and in integral multiples of 10,000 Firm Shares in the aggregate. Any purchase
of Firm Shares by the Purchasers pursuant to a partial exercise of the
Purchasers' Option by the Purchasers shall be made by the Purchasers exercising
the Purchasers' Option pro rata in proportion to the number of Acquisition
Shares set forth opposite the name of each Purchaser on Schedule 1 hereto. The
Purchasers' Option may be exercised by the Purchasers upon twenty days prior
written notice delivered to the Company on or prior to May 31, 1996.
1.3 Terms of Series B Preferred Stock and Series C Preferred Stock.
--------------------------------------------------------------
The Series B Preferred Stock shall have such designations, preferences,
qualifications, voting rights, limitations, restrictions and relative rights as
set forth in the Certificate of Designation, Preferences and Rights attached
hereto as Exhibit A (the "Series B Certificate of Designation"). The Series C
Senior Cumulative Preferred Stock, par value $1.00 per share (the "Series C
Preferred Stock"), of the Company issuable as dividends on the Series B
Preferred Stock shall have such designations, preferences, qualifications,
voting rights, limitations, restrictions and relative rights as set forth in the
Certificate of Designation, Preferences and Rights attached hereto as Exhibit B
(the "Series C Certificate of Designation" and, together with the Series B
Certificate of Designation, the "Certificates of Designation").
1.4 Purchase Price. The purchase price for the Shares shall be $100
--------------
per Share (the "Purchase Price").
1.5 Closing. Upon the terms and subject to the conditions set forth
-------
herein, the closing (the "Closing") of the purchase and sale of (a) if the
Purchasers' Option is exercised by the Purchasers, any Firm Shares, and (b) if
the Company Option is exercised by the Company, any Acquisition Shares, shall
take place at the offices of Coudert Brothers, 1114 Avenue of the Americas, New
York, New York 10036, at 10:00 a.m., New York time, on (i) with respect to any
Acquisition Shares, the date of closing of the Acceptable Acquisition, and (ii)
with respect to the Firm Shares, the Outside Date, or on such other date and at
such other time and place as the parties hereto may agree (the "Closing Date").
As used in this agreement the term "Outside Date" shall mean the later of (i)
May 31, 1996 or (ii) the date on which the twenty day notice period with respect
to the last Company Option notice or Purchasers' Option notice delivered on or
prior to May 31, 1996 expires. In no event shall the Outside Date be later than
May 31, 1996. The Purchasers agree that any Closing with respect to the
purchase and sale of Acquisition Shares shall occur and the Company Option may
be exercised by the Company
- 2 -
<PAGE>
(subject to the notice provisions set forth in Section 1.1 hereof) in a manner
such that the Company receives the proceeds from the sale of the Acquisition
Shares as to which the Company Option is exercised immediately prior to or
simultaneous with the Company's consummation of the Acceptable Acquisition. At
any Closing, the Company shall deliver to each of the Purchasers certificates
representing the number of Shares to be sold to each such Purchaser hereunder
and each such Purchaser shall deliver to the Company by wire transfer of
immediately available funds an amount equal to the Purchase Price for such
Shares. Such Shares shall be delivered to the Purchasers free and clear of all
liens, security interests, options, charges, beneficial interests, claims and
encumbrances of every kind (and free and clear of any agreement to create any of
the foregoing), except for restrictions on transfer imposed by this Agreement
and restrictions on transfer arising under applicable securities laws.
1.6 Commitment and Funding Fees. Simultaneously with the execution
---------------------------
of this Agreement, the Company shall pay Network III Holdings, LDC or its
designee ("Network III") a commitment fee in an amount equal to $1.00 multiplied
by the aggregate number of Acquisition Shares set forth opposite the names of
all of the Purchasers on Schedule 1 hereto. At any Closing, the Company shall
pay to Network III an amount equal to $1.75 multiplied by the aggregate number
of Shares purchased by all of the Purchasers at that Closing. In the event that
the Company does not exercise the Option as to all Acquisition Shares and the
Company shall, within one year of the Outside Date, consummate the sale of any
of its equity securities having terms similar to the Series B Preferred Stock
and on terms similar to the terms set forth herein, the Company shall pay to
Network III upon consummation of the sale of such equity securities an amount
equal to $2.00 multiplied by the difference between (a) the aggregate number of
Acquisition Shares set forth opposite the names of all of the Purchasers on
Schedule 1 hereto and (b) the aggregate number of Shares sold by the Company to
all Purchasers on or prior to the Outside Date.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
---------------------------------------------
represents, warrants and agrees with each of the Purchasers as follows:
2.1 Corporate Organization and Good Standing. The Company and each
----------------------------------------
Subsidiary (as defined in Section 2.6 hereof) is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has full corporate power and authority to conduct its business
as now being conducted and to own or lease the assets and properties it now owns
or holds under lease. The Company and each Subsidiary is duly qualified or
licensed to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or the
character of the assets and properties owned or leased by it makes such
qualification necessary, except for such jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a material
adverse effect on the business, financial condition, operations, properties,
assets or liabilities (collectively, the "Business") of the Company and its
Subsidiaries taken as a whole. The Company has delivered to the Purchaser
complete and correct copies of its Certificate of Incorporation and By-Laws, the
Certificate of Incorporation and By-Laws of each Subsidiary, the Certificates of
Designation and all resolutions of the Board of Directors of the Company
relating to this Agreement or the transactions contemplated hereby (certified as
correct in each
- 3 -
<PAGE>
case by the Company's Secretary or an Assistant Secretary), in each case as in
effect on the date hereof.
2.2 Authorization. The Company has full right, power and authority
-------------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Board of Directors of the Company has duly approved
this Agreement and has duly authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding agreement of the Company
enforceable in accordance with its terms. The issuance, sale and delivery of
(a) the Shares, (b) the shares of Series C Preferred Stock, issuable as
dividends on the Shares pursuant to the Series B Certificate of Designation (the
"Dividend Shares"), and (c) the shares of Common Stock, par value $.20 per
share, of the Company (including the associated stock purchase rights, the
"Common Stock") issuable upon conversion of the Shares (the "Conversion Shares")
have been duly authorized by all requisite corporate action on the part of the
Company and, when issued and delivered as provided in this Agreement and the
Certificates of Designation, will be validly issued, fully paid and non-
assessable. The Dividend Shares and Conversion Shares have been, and at all
times prior to the issuance thereof in accordance with the Certificates of
Designation, will be, duly reserved for issuance.
2.3 Consents and Approvals; No Violations. The execution, delivery
-------------------------------------
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) violate any provision of the Certificate of
Incorporation or By-Laws of the Company or any Subsidiary; (ii) assuming that
all required approvals are obtained under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, violate any statute, ordinance, rule, regulation,
order or decree of any court or of any public, governmental or regulatory body,
agency or authority applicable to the Company or any Subsidiary or by which any
of their respective properties or assets may be bound; (iii) except for any
required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
require any filing, declaration or registration with, or permit, consent or
approval of, or the giving of any notice to, any public, governmental or
regulatory body, agency or authority; or (iv) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
or other evidence of indebtedness, indenture, license, franchise, permit,
agreement or other instrument or obligation to which the Company or any
Subsidiary is a party, or by which any of them or any of their respective
properties or assets may be bound, excluding from the foregoing clause (iv)
violations, breaches and defaults which would not have a material adverse effect
on the Business of the Company and the Subsidiaries taken as a whole.
2.4 Capital Stock. The Company's authorized capital stock consists
-------------
of 50,000,000 shares of Common Stock, 17,861,981 shares of which are issued and
outstanding and 700,000 shares of which are held in treasury on the date hereof,
and 12,000,000 shares of preferred stock (which includes 250,000 shares of
Series A Junior Participating Preferred Stock), no shares of which are issued
and outstanding on the date hereof. All of the issued and outstanding shares of
the Company's capital stock and of each Subsidiary's capital stock have been
duly authorized and validly issued and are fully paid and non-assessable. Other
than approximately 2,346,000 shares of Common Stock reserved for issuance under
employee benefit plans, shares of Common
- 4 -
<PAGE>
Stock reserved for issuance pursuant to the conversion of the Company's 7-1/2%
Convertible Subordinated Debentures Due 2006, up to 625,000 shares of Common
Stock reserved for issuance to senior executives of Garrett Aviation Services
("Management Compensation Shares") and 250,000 shares of Series A Junior
Participating Preferred Stock reserved for issuance under the Shareholder Rights
Plan, as of the date of this Agreement there are no existing options, warrants,
calls, commitments or agreements of any character to which the Company or any
Subsidiary is a party or by which it is bound calling for the issuance or sale
of shares of its respective capital stock or securities convertible into or
exchangeable for shares of such capital stock. As of the date of this Agreement
neither the Company nor any Subsidiary is a party to or otherwise bound by any
agreement, instrument or commitment for the purchase or repurchase of capital
stock of the Company or any Subsidiary or entitled to the benefit of any option,
right of first refusal or other elective privilege to purchase capital stock of
the Company or any Subsidiary. Neither the Company nor any Subsidiary owns,
directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity other than, in the case of the Company and its
Subsidiaries, equity interests in the Subsidiaries.
2.5 Good Title. Upon payment of the Purchase Price by each of the
----------
Purchasers, the Company will deliver to each of the Purchasers good and valid
title to the Shares, and upon the issuance of the Dividend Shares and the
Conversion Shares, the Company will deliver to each of the Purchasers good and
valid title to the Dividend Shares and the Conversion Shares, in each case, free
and clear of all liens, security interests, options, charges, beneficial
interests, claims and encumbrances of every kind (and any agreement to create
any of the foregoing), except for restrictions on transfer imposed by this
Agreement and restrictions on transfer arising under applicable securities laws.
2.6 Subsidiaries. The Company has no direct or indirect subsidiaries
------------
other than those entities listed on Schedule 2.6 hereto (each a "Subsidiary" and
collectively the "Subsidiaries"). All outstanding shares of capital stock of
the Subsidiaries owned by the Company are owned, directly or indirectly, by the
Company free and clear of all liens, security interests, options, beneficial
interests, claims and encumbrances of every kind (and any agreement to create
any of the foregoing). No subsidiary is in default in the performance,
observation or fulfillment of its Certificate of Incorporation or its By-laws.
Except with respect to ordinary course intercompany transactions between or
among the Company and various Subsidiaries and except for obligations of the
Subsidiaries with respect to obligations arising with respect to the Company's
9-1/8% Senior Notes due 2003, the Company's Senior Subordinates Notes due 2006
and the Company's secured Revolving Credit Facility from various Lenders with
First Union Commercial Corporation, as Agent, dated May 30, 1995 (the "Senior
Credit Facility"), neither the Company nor any Subsidiary is subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan, capital contribution or otherwise) in any entity.
2.7 Offering of Shares. Neither the Company nor any person acting on
------------------
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares under
the Securities Act of 1933 (the "Securities Act") and the rules and
- 5 -
<PAGE>
regulations of the Securities and Exchange Commission (the "SEC") thereunder)
which might subject the offering, issuance or sale of the Shares, the Conversion
Shares or the Dividend Shares to the registration requirements of Section 5 of
the Securities Act or to any similar provision of any applicable state blue sky
law.
2.8 SEC Reports; Financial Information. The Company has heretofore
----------------------------------
furnished each of the Purchasers with the following information: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995; (ii) the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995; (iii) the Company's
proxy statement for the Company's 1995 Annual Meeting of Stockholders; and (iv)
any other reports or registration statements filed by the Company with the SEC
since December 31, 1993. As of their respective dates, such reports and
statements (including any amendments or supplements thereto) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All of the financial
statements contained in the reports referred to above have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods indicated (subject, in the case of the unaudited interim
statements, to normal year-end audit adjustments). The financial statements in
the reports referred to above present fairly in all material respects the
financial position, results of operations and the related changes in financial
position as at the dates and for the periods indicated. Except for liabilities
or obligations, which were incurred in the ordinary course of business and
consistent with past practice, since June 30, 1995, neither the Company nor any
Subsidiary has incurred any liabilities or obligations which are material to the
Business of the Company and the Subsidiaries taken as a whole.
2.9 Absence of Certain Changes or Events. Since June 30, 1995, there
------------------------------------
has not been, occurred or arisen: (i) any event or development which has had or
is reasonably likely to have a material adverse effect on the Business of the
Company and the Subsidiaries taken as a whole; (ii) any change in any accounting
principle or practice of the Company or any Subsidiary; (iii) any damage,
destruction or loss, whether covered by insurance or not, materially adversely
affecting the Business of the Company and the Subsidiaries taken as a whole;
(iv) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) in respect of the capital
stock of the Company or any issuance or sale of any capital stock of the Company
or any Subsidiary or any redemption, purchase or other acquisition of any shares
of capital stock of the Company or any Subsidiary by the Company or any
Subsidiary or any split, combination or reclassification of shares of capital
stock of the Company or any Subsidiary declared or made by the Company or any
Subsidiary; (v) any capital expenditures or commitments by the Company or any
Subsidiary for additions to property or equipment which in the aggregate exceed
$5,000,000 for all such companies taken together or any new borrowings by the
Company or any Subsidiary (other than in the ordinary course of business or
pursuant to the Senior Credit Facility); (vi) any transaction other than in the
ordinary course of business, other than the acquisition by the Company of
Garrett Aviation Services and the issuance by the Company of its Senior
Subordinated Notes due 2006; (vii) any Shares Acquisition Date or Distribution
Date (as defined in the Rights Agreement, dated as of September 25, 1987,
between the Company and Manufacturers Hanover Trust Company (the "Shareholder
Rights Plan")) or any other event causing the Rights issued thereunder to become
- 6 -
<PAGE>
exercisable; and (viii) any agreement, whether in writing or otherwise, to take
any action described in this Section 2.9.
2.10 Legal Proceedings, etc. There are no suits, actions, claims,
-----------------------
proceedings or investigations pending or, to the best knowledge of the Company,
threatened against, relating to or involving the Company or any Subsidiary or
any properties or rights of the Company or any Subsidiary, before any court,
arbitrator or administrative or governmental body, United States or foreign,
which is reasonably likely, either individually or in the aggregate, to have a
material adverse effect on the Business of the Company and the Subsidiaries
taken as a whole. There are no such suits, actions, claims, proceedings or
investigations pending or, to the best knowledge of the Company, threatened
challenging the validity or propriety of the transactions contemplated by this
Agreement. Neither the Company nor any Subsidiary is subject to any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator or, to the best knowledge of
the Company, any governmental restriction applicable to the Company or any
Subsidiary, which is reasonably likely to have a material adverse effect on the
Business of the Company and the Subsidiaries taken as a whole.
2.11 Title to Properties, Absence of Liens and Encumbrances, etc.
------------------------------------------------------------
Each of the Company and each of its Subsidiaries has good, valid and marketable
title to or, in the case of leases and licenses, valid and subsisting leasehold
interests or licenses in, all of its assets and property, of whatever kind
(whether real or personal, tangible or intangible), free and clear of all
mortgages, liens, security interests, options, pledges, claims, charges,
beneficial interests and encumbrances of every kind (and any agreement to create
any of the foregoing) other than liens for taxes not delinquent, liens arising
in the ordinary course of business and liens arising under the Senior Credit
Facility.
2.12 Contracts and Commitments, etc. As of the date of this
-------------------------------
Agreement, neither the Company nor any Subsidiary is a party to or bound by any
contract (including leases), agreement, instrument, arrangement or understanding
which is not disclosed in the Company's SEC reports referred to in Section 2.8
hereof and which is material to the Business of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any Subsidiary is in violation of or
in default in respect of (nor have any events occurred which with notice or
lapse of time or both would constitute violations of or defaults in respect of)
any contract (including leases), agreement, instrument, arrangement or
understanding to which it is a party or by which it is bound and, to the best
knowledge of the Company, there are no facts or circumstances which would
reasonably indicate that the Company or any Subsidiary will be or may be in
violation of or in default in respect of (or with notice or lapse of time or
both would be in violation of or in default in respect of) any such contract,
agreement, instrument, arrangement or understanding subsequent to the date
hereof, except in all cases for such violations and defaults (and events which,
with notice or lapse of time or both, would constitute violations or defaults)
which in the aggregate would not have a material adverse effect on the Business
of the Company and its Subsidiaries taken as a whole.
2.13 Compliance with Applicable Law. The Company and each Subsidiary
------------------------------
currently holds, and is in compliance with the terms of, all licenses, permits
and authorizations necessary
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<PAGE>
for the lawful conduct of their respective businesses, and has complied with,
and, to the best of its knowledge, neither the Company nor any Subsidiary is in
violation of, or in default in any respect under, the applicable statutes,
ordinances, rules, regulations, orders or decrees of all federal, state, local
and foreign governmental bodies, agencies and authorities having, asserting or
claiming jurisdiction over it or over any part of its operations or assets,
except for such violations and defaults which in the aggregate would not have a
material adverse effect on the Business of the Company and its Subsidiaries.
2.14 Investment Company Act of 1940. Neither the Company nor any
------------------------------
Subsidiary is an investment company within the meaning of the Investment Company
Act of 1940, as amended.
2.15 Public Utility Holding Company Act of 1935, etc. Neither the
------------------------------------------------
Company nor any Subsidiary is a public utility holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended, nor is
the Company or any Subsidiary a public utility subject to regulation as such by
any federal or state authority.
2.16 No Brokers. All negotiations relating to this Agreement and the
----------
sale contemplated hereby have been carried on by the Company with the Purchasers
without the intervention of any other person and there exists no basis for any
valid claim against the Company or against any of the Purchasers for a brokerage
commission, finder's fee or other like payment.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
------------------------------------------------
Purchasers, severally and not jointly, represents, warrants and agrees with the
Company, as to itself, as follows:
3.1 Authorization. Each of the Purchasers has full right, power and
-------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby has been duly
authorized by each of the Purchasers. This Agreement constitutes the legal,
valid and binding agreement of each of the Purchasers enforceable in accordance
with its terms.
3.2 Consents and Approvals; No Violations. The execution, delivery
-------------------------------------
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) violate any provision of the constitutive
documents, if applicable, of any of the Purchasers; (ii) assuming that all
required approvals are obtained under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, violate any statute, ordinance, rule, regulation,
order or decree of any court or of any public, governmental or regulatory body,
agency or authority applicable to any of the Purchasers or by which any of their
respective properties or assets may be bound; (iii) except for any required
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, require
any filing, declaration or registration with, or permit, consent or approval of,
or the giving of any notice to, any public, governmental or regulatory body,
agency or authority; or (iv) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, or other evidence of
- 8 -
<PAGE>
indebtedness, indenture, license, franchise, permit, agreement or other
instrument or obligation to which any of the Purchasers is a party, or by which
any of them or any of their respective properties or assets may be bound,
excluding from the foregoing clause (iv) violations, breaches and defaults which
would not have a material adverse effect on such Purchaser.
3.3 No Brokers. All negotiations relating to this Agreement and the
----------
transactions contemplated hereby have been carried on without the intervention
of any other person and there exists no basis for any valid claim against the
Company or any of the Purchasers for a brokerage commission, finder's fee or
other like payment.
3.4 Investment Intent; Related Matters. (a) The Purchaser
----------------------------------
acknowledges that the Shares have not been registered under the Securities Act
or any state securities act. The Purchaser represents that the Shares are being
acquired for investment and without any present view toward distribution thereof
in violation of the Securities Act or any state securities act and the Purchaser
will not sell or otherwise dispose of the Shares except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
state securities act and the rules and regulations under such acts.
(b) Each Purchaser is, and on the Closing Date will be, an
"accredited investor," as such term is defined in Regulation D under the
Securities Act. Each Purchaser possesses such knowledge and experience in
business matters that it is capable of evaluating the merits and risks of its
purchase of the Shares. Each Purchaser acknowledges that it has reviewed such
information about the Company as it deems necessary to evaluate the merits and
risks of its investment in the Shares; provided, however, that such review of
such information shall not be deemed to impair or in any way affect the
Purchasers' ability to rely on the representations and warranties, covenants and
other agreements contained herein.
3.5 Ownership of Company Capital Stock. The Purchasers do not
----------------------------------
presently have any direct or indirect legal or beneficial ownership interest in
any capital stock of the Company, any securities convertible into capital stock
of the Company or any rights to acquire any capital stock of the Company or any
securities convertible into capital stock of the Company (other than as set
forth herein). Immediately following the Closing Date, the Purchasers will not
have any direct or indirect legal or beneficial ownership interest in any
capital stock of the Company, or securities convertible into capital stock of
the Company, or have any rights with respect to the acquisition of any capital
stock of the Company or securities convertible into capital stock of the Company
other than the Shares, the Dividend Shares and the Conversion Shares.
4. COVENANTS.
---------
4.1 Conduct of the Business of the Company Prior to the Outside Date.
----------------------------------------------------------------
During the period commencing on the date hereof and continuing until the Outside
Date, the Company agrees that:
(a) The Company and each Subsidiary will carry on its business
in, and only in, the usual, regular and ordinary course and consistent with past
practice and, to the extent consistent with such business, use all reasonable
efforts to preserve intact its present business
- 9 -
<PAGE>
organizations, keep substantially available the services of its present
management and preserve its relationships with material customers, suppliers and
others having material business dealings with it.
(b) Except for issuances of up to 2,515,000 shares of Common Stock
pursuant to the terms of employee benefit plans as in effect on the date hereof,
shares of Common Stock issued pursuant to the conversion of the Company's 7-1/2%
Convertible Subordinated Debentures Due 2006 and Series A Junior Participating
Preferred Stock, up to 625,000 Management Compensation Shares or Common Stock
pursuant to the terms of the Shareholder Rights Plan, the Company will not
declare, pay or set aside for payment any dividends on or make other
distributions in respect of its capital stock. Neither the Company nor any
Subsidiary will amend its Certificate of Incorporation or By-Laws as in effect
on the date hereof.
(c) Except for issuances of up to 2,515,000 shares of Common Stock
pursuant to the terms of employee benefit plans as in effect on the date hereof,
shares of Common Stock issued pursuant to the conversion of the Company's 7-1/2%
Convertible Subordinated Debentures Due 2006 and Series A Junior Participating
Preferred Stock, up to 625,000 Management Compensation Shares or Common Stock
pursuant to the terms of the Shareholder Rights Plan, neither the Company nor
any Subsidiary will, directly or indirectly, issue, grant or sell, or authorize
or propose the issuance of, or split, combine, reclassify or redeem, purchase or
otherwise acquire or propose the purchase of, any shares of any class of the
capital stock of the Company or any Subsidiary or issue any securities
convertible into, or rights to subscribe to, or warrants or options to acquire,
or enter into any arrangement or contract with respect to the issuance of, any
such shares or other convertible securities, or make any other changes in its
equity capital structure.
(d) The Company will not knowingly and intentionally (i) breach any of
the terms or provisions of this Agreement, or (ii) cause any of the
representations or warranties of the Company contained herein to be or become
untrue in any material respect.
(e) The Company will, and will cause each Subsidiary, upon reasonable
request by any of the Purchasers, to provide the Purchasers and their respective
accountants, counsel and other authorized representatives full access, during
reasonable business hours and under reasonable circumstances, to any and all
premises, properties, contracts, commitments, books, records and other
information (including tax returns filed and those in preparation) of the
Company and each Subsidiary.
4.2 Confidentiality. The Purchasers will, and will instruct their
---------------
employees and agents to, hold in strict confidence, all Confidential Information
(as hereinafter defined), and will not disclose the same to any person without
the prior consent of the Company, unless compelled to disclose any such
Confidential Information by judicial or administrative process or, in the
opinion of their counsel, by other requirements of law. If this Agreement is
terminated, the Purchasers will promptly return to the Company or destroy all
documents (including all copies thereof) furnished by the Company and received
by the Purchasers containing such Confidential Information. For purposes
hereof, "Confidential Information" shall mean all information of any kind
concerning the Company, wherever obtained, except information (i) ascertainable
or
- 10 -
<PAGE>
obtained from the public or publicly available information, (ii) received from a
third party not known to the Purchasers to be under an obligation to the Company
to keep such information confidential, (iii) which is or becomes known to the
public (other than through a breach of this Agreement), (iv) which the
Purchasers can demonstrate was in their possession prior to disclosure thereof
to the Purchasers in connection with this Agreement, or (v) which the Purchasers
can demonstrate was independently developed by them.
4.3 Public Announcements. The Company, on the one hand, and the
--------------------
Purchasers, on the other hand, agree to consult promptly with each other prior
to issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or by obligations pursuant to any listing agreement with
any national securities exchange.
4.4 Best Efforts. Upon the terms and subject to the conditions
------------
hereof, each of the parties hereto agrees to use its reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and shall use its reasonable efforts promptly to
obtain all waivers, permits, consents and approvals and to effect all
registrations, filings and notices with or to third parties or governmental or
public bodies or authorities which are necessary or desirable in connection with
the transactions contemplated by this Agreement. Nothing contained in this
Section 4.4 shall require any party to pay any money to any third party other
than filing fees or similar costs or expenses that may be required or imposed by
governmental authorities.
4.5 Shareholder Rights Plan. The Company will take all such action
-----------------------
as may be necessary to ensure that each of the Purchasers and all of the
Purchasers together shall not constitute an "Acquiring Person" under the
Shareholder Rights Plan by reason of their acquisition of the Shares, the
Dividend Shares and the Conversion Shares. The Board of Directors of the
Company has determined that, consistent with the objectives of the Shareholder
Rights Plan, the Purchasers should not be considered "Acquiring Persons" under
the Shareholder Rights Plan with respect to their acquisition of the Shares, the
Dividend Shares and the Conversion Shares and the transactions contemplated by
the terms of this Agreement. The Board of Directors of the Company will take
reasonable steps to amend the Shareholder Rights Plan in order to: (i) confirm,
if necessary, that the Purchaser(s) shall not be Acquiring Persons by reason of
their acquisition of the Shares, the Dividend Shares and the Conversion Shares
and (ii) to ensure that, in the event that rights distributed under the
Shareholder Rights Plan become exercisable, each Purchaser will be provided,
with respect to their Shares, with substantially the same rights that they would
have had if such Shares had theretofore been converted into shares of the
Company's Common Stock (the "Shareholder Rights Plan Amendment"). Such
Shareholder Rights Plan Amendment shall be in a form reasonably satisfactory to
the Purchasers.
5. CONDITIONS PRECEDENT TO THE PURCHASERS' OBLIGATIONS. The
---------------------------------------------------
obligations of each of the Purchasers under this Agreement to purchase any
Shares on any Closing Date shall be subject to the satisfaction, or waiver in
writing (it being understood that any waiver of a condition with respect to any
Closing Date shall also constitute a waiver with
- 11 -
<PAGE>
respect to any remedy that a Purchaser may otherwise have with respect to the
matter or condition that is the subject of the waiver with respect to Shares
purchased on such Closing Date but not as to any other purchase of Shares
occurring prior or subsequent to such Closing Date), of the following conditions
on the Closing Date.
5.1 Representations and Warranties of the Company True; Performance
---------------------------------------------------------------
by the Company. The representations and warranties of the Company contained in
- --------------
this Agreement shall each be true and correct in all material respects as of the
Closing Date and, except for representations and warranties which speak of a
specified date, with the same effect as though made on and as of that date. The
Company shall have performed and complied in all material respects with all
agreements and conditions required by this Agreement and the transactions
contemplated hereby to be performed or complied with by the Company before or at
the Closing Date. The Purchasers shall have been furnished with such
certificates of officers of the Company, dated the Closing Date, as the
Purchasers may reasonably request, certifying to the fulfillment of the
foregoing conditions.
5.2 Litigation Affecting Closing. On the Closing Date, no suit,
----------------------------
action or other proceeding shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit the
consummation or implementation of this Agreement or the transactions
contemplated hereby, or to obtain damages or other relief in connection with
this Agreement or the transactions contemplated hereby, and on the Closing Date,
no governmental investigation that might result in any such suit, action or
proceeding shall be pending or, based on a communication from a governmental
official, threatened.
5.3 Approvals and Consents. (a) All consents, approvals or
----------------------
authorizations of regulatory authorities having jurisdiction over the Company's
or any Subsidiary's business relating to the Company's or any Subsidiary's
business as it is currently conducted or in connection with the consummation of
the transactions contemplated hereby shall have been obtained in final and
definitive form and shall be in full force and effect.
(b) All additional consents, approvals or authorizations required
for the consummation of the transactions contemplated hereby or to preserve for
the Company and its Subsidiaries, and to maintain in full force and effect, all
material contracts, leases, instruments and other agreements to which the
Company and its Subsidiaries are a party or by which any of their respective
property or assets are bound, shall have been obtained and shall be in full
force and effect.
5.4 Opinions of Counsel to the Company. The Purchasers shall have
----------------------------------
been furnished with an opinion, dated the Closing Date, of Miles & Stockbridge,
a professional corporation, special counsel to the Company, satisfactory to the
Purchasers, substantially in the following form:
(a) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding agreement
of the Company;
- 12 -
<PAGE>
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, will not result in any
violation of, or constitute a default under, and will not be in conflict with,
any terms of the Company's Certificate of Incorporation or By-Laws, in each case
as amended to date, or to the knowledge of such counsel, the terms of any
mortgage, note, bond, evidence of indebtedness, indenture, contract, lease or
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of its assets or properties may be subject;
(c) Upon payment of the Purchase Price for the Shares, the Company
will deliver to the Purchaser good and valid title to the Shares free and clear
of any liens, security interests, options, charges, beneficial interests, claims
and encumbrances of any kind (and any agreement to create any of the foregoing)
except for restrictions on transfer created pursuant to the terms of this
Agreement and applicable securities laws;
(d) The Shares have been duly and validly authorized and issued and
are fully paid and non-assessable, such Shares constitute all of the issued and
outstanding shares of the Series B Preferred Stock, and such Shares are entitled
to all of the rights and preferences set forth in the Certificate of
Designation. The Dividend Shares and the Conversion Shares, when issued in
accordance with the terms of the Certificates of Designation, will be duly and
validly authorized and issued, fully paid and non-assessable;
(e) No consents, approvals, authorizations and orders of any public,
governmental or regulatory body, agency or authority and, to the knowledge of
such counsel, of any other party (except such as shall have been obtained) are
necessary for the due authorization, execution and delivery by the Company of
this Agreement and the valid sale and delivery of the Shares to be sold by the
Company hereunder;
(f) The Company has taken all action, legal or otherwise, necessary to
authorize the issuance of and reserve the Dividend Shares and the Conversion
Shares;
(g) The Company and each of the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its jurisdiction of incorporation and has full corporate power to own its
property and carry on its business as currently conducted;
(h) To the knowledge of such counsel, there are no actions, suits,
proceedings or investigations pending or, so far as is known to such counsel
after inquiry of the officers of the Company, threatened against the Company or
any of the Subsidiaries which (i) question or challenge the validity of this
Agreement or any action to be taken hereunder or thereunder or (ii) singly or in
the aggregate could reasonably be expected to materially and adversely affect
the Business of the Company and the Subsidiaries taken as a whole;
(i) The issuance, sale and delivery of the Shares, the Dividend Shares
and the Conversion Shares under the circumstances contemplated by this Agreement
are exempted transactions under the registration provisions of the Securities
Act and all applicable state
- 13 -
<PAGE>
securities laws, and do not require the registration of the Shares, the Dividend
Shares or the Conversion Shares thereunder; and
(j) The Company is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
In giving the above opinions, such counsel may assume the genuineness of the
signatures of the officers of the Company and may rely, as to factual matters,
without independent check or verification, upon the representations and
warranties made in this Agreement, the documents delivered in connection
herewith and certificates of the officers of the Company. Miles & Stockbridge
may also rely upon opinions given or expressed by Richard H. Lange, Esquire,
General Counsel to the Company, provided that such firm has no reason to believe
that it is unreasonable to so rely on such opinions and provided further that
counsel for the Purchasers consent to such reliance (which consent shall not be
unreasonably withheld).
5.5 The Shares. The Company shall issue and deliver to the
----------
Purchasers certificates representing the Shares registered in the name of the
Purchasers.
5.6 No Material Adverse Change. Prior to any Closing Date, there
--------------------------
shall be no material adverse change in the Business of the Company, and the
Company shall have delivered to the Purchaser a certificate, dated the Closing
Date, to such effect.
5.7 No Adverse Events Under Shareholder Rights Plan. The Shareholder
-----------------------------------------------
Rights Plan Amendment shall have become effective or the Company and the
Purchasers shall have agreed to other satisfactory arrangements with respect to
the Shareholders Rights Plan. No "Shares Acquisition Date" or "Distribution
Date" (as defined in the Shareholder Rights Plan) or any other event causing the
Rights issued under the Shareholder Rights Plan to become exercisable shall have
occurred and there shall have been no amendment or modification to the
Shareholder Rights Plan other than the Shareholder Rights Plan Amendment.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AT THE
-------------------------------------------------------------
CLOSING. The obligations of the Company under this Agreement to sell the Firm
- -------
Shares and the Acquisition Shares on any Closing Date shall be subject to the
satisfaction, or waiver in writing (it being understood that any waiver of a
condition with respect to any Closing Date shall also constitute a waiver with
respect to any remedy that the Company may otherwise have with respect to the
matter or condition that is the subject of the waiver with respect to Shares
acquired on such Closing Date but not as to any other sale of Shares occurring
prior or subsequent to such Closing Date), of the following conditions on the
Closing Date:
6.1 Representations and Warranties of the Purchasers True;
------------------------------------------------------
Performance by the Purchasers. The representations and warranties of the
- -----------------------------
Purchasers contained in this Agreement shall each be true and correct in all
material respects as of the Closing Date, with the same effect as though made on
and as of that date. The Purchasers shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
- 14 -
<PAGE>
and the transactions contemplated hereby to be performed or complied with by the
Purchasers before or at the Closing Date.
6.2 The Purchase Price. Each of the Purchasers shall have delivered
------------------
to the Company by wire transfer of immediately available funds an amount equal
to the Purchase Price for the Firm Shares and the Acquisition Shares to be
purchased by such Purchaser.
6.3 Opinion of Counsel to the Purchaser. The Company shall have been
-----------------------------------
furnished with an opinion, dated the Closing Date, of Coudert Brothers, special
counsel for the Purchasers, satisfactory to the Company, substantially in the
following form:
(a) Upon execution and delivery, this Agreement shall constitute
the legal, valid and binding obligations of the Purchasers;
(b) The execution and delivery of this Agreement by the
Purchasers and the consummation of the transactions contemplated hereby do not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any of the constitutive documents of any of the
Purchasers or to the knowledge of such counsel any mortgage, note, bond or other
evidence of indebtedness or indenture, contract, lease or other agreement known
to such counsel to which any of the Purchasers is a party;
(c) To the knowledge of such counsel, there are no actions,
suits, proceedings or investigations pending or threatened against the
Purchasers which question or challenge the validity of this Agreement or the
purchase by the Purchasers of the Shares hereunder; and
(d) No consents, approvals, authorizations and orders of any
public, governmental or regulatory body, agency or authority (except such as
shall have been obtained) are necessary for the due authorization, execution and
delivery by the Purchasers of this Agreement and the purchase of the Shares to
be purchased by the Purchasers hereunder;
In giving the above opinions, such counsel may assume the genuineness of the
signatures of the Purchasers and their officers or other authorized
representatives and may rely, as to factual matters, without independent check
or verification, upon the representations and warranties made in this Agreement,
the documents delivered in connection herewith and certificates of the
Purchasers and their officers or other authorized representatives.
6.4 Litigation Affecting Closing. On the Closing Date, no suit,
----------------------------
action or other proceeding shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit the
consummation or implementation of this Agreement or the transactions
contemplated hereby, or to obtain damages or other relief in connection with
this Agreement or the transactions contemplated hereby, and on the Closing Date,
no governmental investigation that might result in any such suit, action or
proceeding shall be pending or, based on a communication from a governmental
official, threatened.
6.5 Approvals and Consents. (a) All consents, approvals or
----------------------
authorizations of regulatory authorities having jurisdiction over the Company's
or any Subsidiary's business
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<PAGE>
relating to the Company's or any Subsidiary's business as it is currently
conducted or in connection with the consummation of the transactions
contemplated hereby shall have been obtained in final and definitive form and
shall be in full force and effect.
(b) All additional consents, approvals or authorizations
required for the consummation of the transactions contemplated hereby or to
preserve for the Company and its Subsidiaries, and to maintain in full force and
effect, all material contracts, leases, instruments and other agreements to
which the Company and its Subsidiaries are a party or by which any of their
respective properties or assets are bound, shall have been obtained and shall be
in full force and effect.
7. REGISTRATION RIGHTS.
-------------------
7.1 Restrictive Legend. Each certificate representing the Shares,
------------------
the Dividend Shares and the Conversion Shares shall bear legends substantially
in the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT PERTAINING THERETO UNDER SAID ACT AND
COMPLIANCE WITH APPLICABLE STATE LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND COMPLIANCE ARE
NOT REQUIRED.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS, INCLUDING RESTRICTIONS ON TRANSFERABILITY. THE
COMPANY WILL FURNISH ANY STOCKHOLDER UPON REQUEST AND WITHOUT CHARGE A
STATEMENT OF THE RESTRICTIONS ON TRANSFERABILITY WHICH ARE CONTAINED
IN A STOCK PURCHASE AGREEMENT BY AND AMONG THE COMPANY AND PURCHASERS
SIGNATORY THERETO. THE TERMS CONTAINED IN THAT STOCK PURCHASE
AGREEMENT ARE BINDING UPON TRANSFEREES AND PURCHASERS OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IN CERTAIN CIRCUMSTANCES.
7.2 Required Registrations. If at any time the Company shall be
----------------------
requested by any of the Purchasers (or the successors and assigns of any of the
Purchasers, who for purposes of this Section 7 shall be deemed to be included
within the term Purchaser) who holds, or upon the conversion of Shares held by
the Purchaser would hold, in the aggregate, at least the number of Conversion
Shares that would be issuable upon the conversion of 50% of the Shares held in
the aggregate by the Purchasers (including the Dividend Shares), to effect the
registration under the Securities Act of the Shares, the Dividend Shares or the
Conversion Shares, the Company shall notify in writing all Purchasers of the
receipt of the registration request within 10 days of said receipt and shall use
its reasonable efforts promptly to effect the registration under the
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<PAGE>
Securities Act of such Shares, Dividend Shares and Conversion Shares as were
covered by the original request or as may be requested to be registered in one
or more writings delivered to the Company within 30 days after the giving of
notice by the Company to all Purchasers, for disposition in accordance with the
intended method or methods of disposition specified by the Purchaser requesting
registration of such Shares, Dividend Shares and Conversion Shares, as well as
to effect any notification, registration or qualification under any state
securities laws which shall be reasonably necessary to permit the sale of such
Shares, Dividend Shares and Conversion Shares. The registration statement filed
by the Company with the SEC for the registration of such Shares, Dividend Shares
and Conversion Shares shall be kept effective for such period as may be
requested in the registration request, including any period then permitted under
Rule 415 under the Securities Act (it being understood that in no case, however,
shall the Company be required to keep any registration hereunder effective for a
period of more than two years in the aggregate, not including any period in
which sales of Shares, Dividend Shares or Conversion Shares cannot be made
thereunder). Any obligation of the Company to register Shares, Dividend Shares
or Conversion Shares shall be deemed satisfied when a registration statement
covering the Shares, Dividend Shares and the Conversion Shares shall be declared
effective and shall have remained effective for the period specified above. All
expenses of any registration and offering under this paragraph (including,
without limitation, registration fees and fees and disbursements of the
Company's counsel) shall be borne by the Company, except that the Company shall
not bear underwriting discounts or commissions attributable to Shares, Dividend
Shares or Conversion Shares, fees and expenses of any separate counsel for the
Purchasers selling Shares, Dividend Shares or Conversion Shares or any related
transfer taxes. The Company shall only be required to file two registration
statements covering the Shares, Dividend Shares or Conversion Shares pursuant to
the terms of this Section 7.2.
7.3 "Piggy-Back" Registrations. If at any time the Company shall
--------------------------
determine to register any of its Common Stock or securities convertible into
Common Stock under the Securities Act, whether in connection with a public
offering by the Company, a public offering by shareholders, or both, including,
without limitation, by means of any shelf registration pursuant to Rule 415
under the Securities Act or any similar rule or regulation, but other than a
registration to implement an employee benefit or dividend reinvestment plan, the
Company shall promptly give written notice thereof to the Purchasers who shall
be registered holders of Shares or Conversion Shares and shall use its
reasonable efforts to effect the registration under the Securities Act of such
Conversion Shares as may be requested in a writing delivered to the Company
within 30 days after such notice by the Purchasers as well as to include such
Conversion Shares in any notifications, registrations or qualifications under
any state securities laws which shall be made or obtained with respect to the
securities being registered by the Company; provided, however, that (a) any
-------- -------
distribution of Conversion Shares pursuant to such registration shall be managed
by the investment banking firm, if any, managing the distribution of the
securities being offered by the Company on the same terms as all other
securities to be registered, and (b) the Company shall not be required under
this Section 7.3 to include Conversion Shares in any registration of securities
if the Company shall have been advised by the investment banking firm managing
the offering of the securities proposed to be registered by the Company or
others that the inclusion of Conversion Shares in such offering would
substantially interfere with the orderly sale of such securities which the
Company or others propose to register; provided, however, that in making any
determination under this
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<PAGE>
subparagraph (b) as to the inclusion of the Conversion Shares in any such
offering, (i) a first priority shall be given to the registration of 1,750,000
Conversion Shares, (ii) thereafter, a second priority shall be given to all
remaining Conversion Shares over any other securities as to which the Company
has granted or may in the future grant registration rights that were (or will
be) issued by the Company in any merger transaction or similar business
combination transaction and (iii) with respect to circumstances not addressed in
clauses (i) and (ii), Conversion Shares shall be registered on a pro-rata basis
with any other securities as to which the Company has granted or may in the
future grant registration rights. All expenses of any registration and offering
of Conversion Shares pursuant to this Section 7.3 (including, without
limitation, registration fees and fees and disbursements of the Company's
counsel) shall be borne by the Company, except that the Company shall not bear
underwriting discounts or commissions attributable to Conversion Shares, the
fees of any separate counsel for the holders of Conversion Shares or related
transfer taxes.
7.4 Registration Procedures. (a) In connection with any registration
-----------------------
pursuant to Sections 7.2 or Section 7.3 hereof, the Company will prepare and
file with the SEC, a registration statement, and any amendments and supplements
thereto, on any form for which the Company then qualifies or which counsel for
the Company shall deem appropriate, and use its reasonable efforts to cause such
registration statement to become effective; provided that before filing with the
--------
SEC a registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to counsel selected by the Purchasers
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and (ii) notify the Purchasers of any
stop order issued or threatened by the SEC and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
The Company will also (i) promptly notify each Purchaser of the effectiveness of
such registration statement, (ii) furnish to each Purchaser such number of
copies of such registration statement, and each amendment and supplement
thereto, the prospectus included in such registration statement and such other
documents as such Purchaser may reasonably request; (iii) use its reasonable
efforts to register or qualify such securities to be registered under such other
securities or blue sky laws of such jurisdictions as any Purchaser reasonably
requests; (iv) use its reasonable efforts to cause all such securities to be
registered to be listed on each securities exchange on which similar securities
issued by the Company are then listed, and to provide a transfer agent and
registrar for such securities to be registered no later than the effective date
of such registration statement; (v) enter in to such customary agreements
(including an underwriting agreement in customary form) and take all such other
actions as the Purchasers or the underwriters retained by the Purchasers, if
any, reasonably request in order to expedite or facilitate the disposition of
such securities to be registered, including customary indemnification; and (vi)
otherwise use its reasonable efforts to comply with all applicable rules and
regulations of the SEC. The terms of this Section 7.4 shall not require the
Company to qualify as a foreign corporation or as a dealer in securities or to
execute or file any general consent to service of process under the laws of any
such jurisdiction where it is not so subject.
(b) The Company shall be entitled to postpone, for up to 60 days, the
filing of any registration statement otherwise required to be prepared and filed
by it pursuant to this Agreement if, at the time it receives a request, the
Company would be required to prepare any financial statements other than those
it customarily prepares or the Company determines in its
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<PAGE>
reasonable business judgment that such registration and offering would interfere
with any material financing, acquisition, corporate reorganization or other
material corporate transaction or development involving the Company and the
Company promptly gives the Purchaser written notice of such determination. If
the Company shall so postpone the filing of a registration statement, the
Purchaser shall have the right to withdraw the request by giving written notice
to the Company within 30 days after the receipt of the notice of postponement
and, in the event of such withdrawal, the request which was withdrawn shall not
be deemed to have been made.
(c) In connection with any effective registration statement filed
pursuant to this Agreement, the Company will immediately notify each Purchaser
participating in the distribution to which such registration statement relates
of the happening of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and will promptly prepare and furnish to each such Purchaser a
supplement or amendment to such prospectus so that such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing. Notwithstanding the
foregoing, if the Company determines in its reasonable business judgment that an
amendment or supplement to any such prospectus would interfere with any material
financing, acquisition, corporate reorganization, or other material corporate
transaction or development involving the Company, the Company may delay the
preparation and filing of such amendment or supplement for a period of up to 60
days in order to complete or make a public announcement with respect to such
material transaction or development (it being understood that the Company shall
be obligated to extend the period of time it is required to maintain in effect
any such registration statement to take into account the period of time that the
Purchasers are unable to offer or sell Shares, Dividend Shares or Conversion
Shares by reason of this Section 7.4(c)).
(d) In the event that the Company conducts an underwritten public
offering of Common Stock or securities convertible into Common Stock during the
term of this Agreement, the Purchasers covenant and agree that, except for sales
of Shares, Dividend Shares or Common Shares pursuant to such underwritten public
offering, they shall not offer or sell any of the Shares, Dividend Shares or
Conversion Shares for a period of 120 days following the date on which the
Company's underwritten public offering is consummated. Except for sales of
Shares, Dividend Shares or Common Shares pursuant to such underwritten public
offering, the Purchasers shall be obligated to perform the covenants contained
in this Section 7.4(d) irrespective of whether or not some or all of the
Purchasers' Shares, Dividend Shares or Conversion Shares are included in the
underwritten public offering or are then included in a registration statement
that has been filed pursuant to Section 7.2 of this Agreement (it being
understood that the Company shall be obligated to extend the period of time it
is required to maintain in effect any registration statement that has been filed
pursuant to Section 7.2 of this Agreement at the time an underwritten public
offering is consummated to take into account the period of time that the
Purchasers are unable to offer or sell Shares, Dividend Shares or Conversion
Shares by reason of this Section 7.4(d)).
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<PAGE>
7.5 Indemnification; Contribution. (a) Indemnification by the Company.
----------------------------- ------------------------------
In connection with each registration effected by the Company pursuant to this
Agreement, the Company agrees to indemnify and hold harmless each holder of
Shares, Dividend Shares and Conversion Shares participating therein (a "Selling
Shareholder"), its officers, directors, agents and Affiliates (as hereinafter
defined) and each underwriter of Shares, Dividend Shares and Conversion Shares
(an "Underwriter") registered and each person who controls any Underwriter
within the meaning of Section 15 of the Securities Act against any and all
losses, claims, damages or liabilities to which any of them may be subject under
the Securities Act or any other statute or the common law, and to reimburse them
for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such Shares, Dividend Shares and
Conversion Shares, or any post-effective amendment thereof, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, if used prior to the effective date of such registration
statement or contained in the prospectus (as amended or supplemented if the
Company shall have filed with the SEC any amendment thereof or supplement
thereto), if used within the period during which the Company is required to keep
the registration statement to which such prospectus relates current pursuant to
the terms of this Agreement, or the omission or alleged omission to state
therein (if so used) a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the indemnification agreement contained in
-------- -------
this subparagraph (a) shall not apply to such losses, claims, damages,
liabilities or actions arising out of, or based upon, any such untrue statement
or alleged untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by such Selling Shareholders or
such Underwriter specifically for inclusion in the registration statement or any
preliminary prospectus or prospectus contained in the registration statement or
any such amendment thereof or supplement thereto.
(b) Indemnification By Selling Shareholders and Underwriters. Each
--------------------------------------------------------
request that registration be effected by the Company pursuant to this Agreement
(and each notice of any Purchaser to the effect that such holder wishes to join
in any such request) shall be accompanied by an agreement of each party making
such request, and shall be accompanied or followed by an agreement of each
Underwriter, to indemnify and hold harmless, which indemnity, as to the
Purchasers, shall be several and not joint and in proportion to the offering
price of the securities sold by each of the Purchasers, in the same manner and
to the same extent as set forth in subparagraph (a) of this Section 7.5, the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, the directors of the Company or any such
person and those officers of the Company who shall have signed any such
registration statement with respect to any statement in or omission from such
registration statement or any post-effective amendment thereof or any
preliminary prospectus (as amended or as supplemented, if amended or
supplemented as aforesaid) contained in such registration statement, if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by any such holder or
underwriter specifically
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<PAGE>
for inclusion in such registration statement or any preliminary prospectus or
prospectus contained in such registration statement or any such amendment
thereof or supplement thereto.
(c) If the indemnification provided for in this Section 7.5 is
unavailable other than in accordance with its terms to an indemnified party
under subparagraph (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages, liabilities or actions referred to in
subparagraph (a) or (b) above in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the Selling
Shareholders and Underwriters on the other from the offering of the Shares,
Dividend Shares or Conversion Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Selling Shareholders and Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Selling
Shareholders and Underwriters participating in the offering on the other shall
be deemed to be in the same proportion as (i) the total net proceeds from the
offering (before deducting expenses) received by the Company bear to (ii) the
total net proceeds from the offering (before deducting expenses) received by the
Selling Shareholders and the total underwriting discounts and commissions
received by the Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters or by the
Selling Shareholders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages, liabilities or actions referred to above in this subparagraph
(c) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subparagraph (c). Notwithstanding
the provisions of this subparagraph (c), no Selling Shareholder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares, Dividend Shares and Conversion Shares sold by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Selling Shareholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Selling Shareholders in this subparagraph (c) to contribute
are several in proportion to the respective number of Shares, Dividend Shares
and Conversion Shares sold by them and not joint.
8. EXPENSES. Each of the parties hereto will pay its own legal fees and
--------
other expenses relating to the transactions contemplated by this Agreement;
provided, however, that the Company agrees to pay to the Purchasers their
reasonable legal fees and up to $10,000 of other expenses incurred by the
Purchasers in connection with the negotiation and execution of this Agreement.
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<PAGE>
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITIES. (a) The
-------------------------------------------------------
representations and warranties included or provided for in this Agreement shall
survive for a period of two years from the Closing Date; provided that such
survival shall continue during the pendency of any suit, action, claim or other
proceeding brought in respect of such representations and warranties prior to
the termination of such two-year period; and provided, further, that the
representations and warranties contained in Section 2.5 shall survive the
Closing indefinitely. The Company agrees to indemnify, defend and hold harmless
the Purchasers, their respective permitted successors and assigns and the
respective affiliates (as defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such Purchasers and such respective permitted successors and
assigns (collectively, the "Purchaser Indemnified Parties") from and against and
in respect of any demand, action, damage, deficiency, liability, loss, cost or
expense (including, without limitation, reasonable counsel fees incurred in
litigation or otherwise) to the Purchaser Indemnified Parties arising out of any
breach of representation or warranty or nonfulfillment by it of any agreement or
covenant contained herein (collectively "Purchaser Indemnified Party Losses");
provided, however, that the Company's indemnification obligations under this
Section 9(a) shall arise only in the event that the accumulated amount of all
Purchaser Indemnified Party Losses, in the aggregate, shall exceed $100,000. If
the accumulated amount of all Purchaser Indemnified Party Losses in the
aggregate exceeds $100,000, the Company shall then be liable on a dollar for
dollar basis for the full amount of all Purchaser Indemnified Party Losses. The
Purchasers and the Purchaser Indemnified Parties shall not be entitled to
indemnification with respect to any claim under the foregoing provisions of this
Section 9 as to which notice shall not have been given by a Purchaser
Indemnified Party to the Company within two years of the date of occurrence of
the events giving rise to such claim, or, with respect to indemnification for
claims arising out of the breach of the representations and warranties contained
in Section 2.5, within two years from the date of discovery of the breach by the
Purchaser Indemnified Parties.
(b) Each of the Purchasers agrees to indemnify, defend and hold
harmless the Company from and against and in respect of any demand, action,
damage, deficiency, liability, loss, cost or expense (including, without
limitation, reasonable counsel fees incurred in litigation or otherwise) to the
Company arising out of any material breach of any representation or warranty or
nonfulfillment by such Purchaser of any agreement or covenant contained herein
(collectively "Company Losses"); provided, however, that each Purchaser's
indemnification obligations under this Section 9(b) shall arise only in the
event that the accumulated amount of all Company Losses attributable to all
Purchasers shall exceed $100,000 in the aggregate. If the accumulated amount of
all Company Losses in the aggregate exceeds $100,000 each Purchaser shall then
be liable on a dollar-for-dollar basis for the full amount of all Company Losses
attributable to such Purchaser. The Company shall not be entitled to
indemnification with respect to any claim under the foregoing provision of this
Section 9 as to which notice shall not have been given by the Company to such
Purchaser within two years of the date of the occurrence of the event giving
rise to such claim.
(c) Promptly after receipt by an indemnified party under this
Agreement of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under Section 7.5 or Section 9 hereof, notify the
indemnifying party in writing of the claim or the commencement of that action.
If any such claim or action shall be brought against an indemnified party, and
it shall
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notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under Section 7.5 or Section 9 hereof for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation; provided,
--------
however, that the Purchasers shall have the right to employ counsel to represent
- -------
jointly the Purchasers and their respective controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may
be sought by the Purchasers against the Company under Section 7.5 hereof if, in
the reasonable judgment of the Purchasers, it is advisable for the Purchasers
and such controlling persons to be jointly represented by separate counsel, and
in that event the fees and expenses of such separate counsel shall be paid by
the Company.
10. CERTAIN AGREEMENTS.
------------------
10.1 Standstill. (a) For so long as a Purchaser shall hold Shares and/or
----------
Conversion Shares, such Purchaser will not (i) acquire, or make any offer to
acquire or announce any intention to acquire, additional ownership (including
beneficial ownership) of any of the shares of the voting securities of the
Company, or other securities of the Company convertible into voting securities,
or the right or option to acquire any such securities, except for the Shares,
the Dividend Shares and the Conversion Shares, (ii) participate in any "group,"
as that term is defined in Section 13(d)(3) of the Exchange Act, with respect to
the voting securities of the Company, other than any group comprised of the
Purchasers and their respective affiliates, (iii) make or in any way
participate, directly or indirectly, in any material respect in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
SEC), whether before or after the formal commencement of any such solicitation,
or any solicitation of shareholder written consents, in opposition to, or
designed to influence the management of the Company, (iv) execute any written
consent or initiate any shareholder proposal for action by shareholders, (v)
except as provided in the Certificates of Designation seek to place more than
one representative on the Board of Directors of the Company, seek the removal of
any member of the Board of Directors of the Company, or seek to have called any
meeting of the stockholders of the Company, (vi) otherwise act, alone or in
concert with others, to seek to control or influence in any material respect the
management, Board of Directors or policies of the Company or any of its
Subsidiaries, (vii) request, the Company (or its directors, officers, employees
or agents) to amend or waive any provision of this Section 10.1(a), (viii)
knowingly and intentionally sell or otherwise transfer Shares or Conversion
Shares representing in the aggregate beneficial ownership of 5% or more of the
then outstanding Common Stock to any person, entity or "group", as that term is
defined in Section 13(d)(3) of the Exchange Act, (ix) knowingly and
intentionally sell or otherwise transfer any Shares or Conversion Shares to any
person, entity or "group", as that term is defined in Section 13(d)(3) of the
Exchange Act, as to which person, entity or group the Purchasers have received
notice from the Company of such person, entity or group's intention to seek to
take, assist or participate in any of the actions set forth in clauses (iii)
through (vi) above, and (x) assist, participate in, encourage or solicit in any
material respect any effort or attempt by any other person or group to do or
seek to do any of
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<PAGE>
the foregoing. Notwithstanding anything in this Section 10.1(a) to the
contrary, the Purchasers shall have the right to (i) make or effect open-market
sales of any Shares or Conversion Shares through a broker-dealer, without any
duty of inquiry as to the identity of any purchaser of Shares or Conversion
Shares (in the absence of actual knowledge that the purchaser of Shares or
Conversion Shares in the open market from the Purchasers is a person, entity or
group of the type specified in clause (ix) above) and (ii) make or effect
transfers to their affiliates, other persons with respect to whom the Purchaser
has investment authority with respect to any Shares or Conversion Shares to be
transferred to any such person or any person under common investment management
with such Purchaser and other Purchasers and their Permitted Transferees
(collectively, "Permitted Transferees"). Without limiting the foregoing, the
term "Permitted Transferees" shall include any general or limited partner of
Bridge Partners, L.P. or any of their respective affiliates or any persons with
respect to whom any such general or limited partner or affiliate has investment
authority with respect to any Shares or Conversion Shares to be transferred to
such person or any person under common investment management with, or having
investment authority over, such general or limited partner or affiliate.
(b) During the period in which the Purchasers shall hold Shares and/or
Conversion Shares which represent, in the aggregate, 5% of the shares of the
Company's Common Stock issued and outstanding after giving effect to the pro
forma conversion of all outstanding shares into Conversion Shares and ending on
the date on which a Change in Control occurs, each Purchaser covenants and
agrees that he shall not sell, transfer or dispose, in any three-month period,
in the aggregate, Shares or Conversion Shares which, when aggregated with any
sale, transfer or disposal of Shares or Conversion Shares of any other Purchaser
during any such three month period, represent beneficial ownership of more than
the greater of (i) 1,000,000 shares of the Common Stock then issued and
outstanding, or (ii) the volume of Shares and Conversion Shares saleable under
Rule 144(e) promulgated under the Securities Act. The Purchasers shall have the
right to make or effect sales, transfers or other dispositions to their
Permitted Transferees and to other Purchasers and their Permitted Transferees,
without regard to the limitations set forth in this Section 10.1(b), subject to
compliance with all applicable securities laws.
10.2 Agreement Respecting Board Representation. From and after the
-----------------------------------------
exercise of the Company Option by the Company and the purchase of the
Acquisition Shares by the Purchasers (but only for so long as the Purchasers
shall hold Shares and/or Conversion Shares which represent, in the aggregate,
10% of the shares of the Company's Common Stock issued and outstanding after
giving effect to the pro forma conversion of all outstanding Shares into
Conversion Shares), the Company shall take all action necessary, including,
without limitation, increasing the number of directors constituting the entire
Board of Directors of the Company, to cause one person (the "Purchasers'
Nominee") nominated by the Purchasers holding a majority of the Conversion
Shares issued or issuable upon conversion of the Shares to be nominated for
election to the Board of Directors of the Company, at any regular or special
meeting of stockholders of the Company called for the purpose of filling
positions on the Board of Directors of the Company, or in any written consent
executed in lieu of such a meeting of stockholders, and to recommend the
Purchasers' Nominee for election to the Board of Directors in the same manner as
all other nominees of the Company for election as director. Not fewer than 20
days after receipt of a written notice from the Company requesting such
information,
-24-
<PAGE>
the Purchasers shall notify the Secretary of the Company of the identity of the
Purchasers' Nominee and provide such information concerning the Purchasers'
Nominee as may be required by Regulation 14A under the Exchange Act. The
Company shall have the right to reject any particular Purchasers' Nominee if the
Company determines in its reasonable business judgement that the election as a
director of such Purchasers' Nominee would materially impair the Company's
reputation in the business and financial community. Consistent with the
foregoing, the Company will advise the Purchasers promptly of the non-approval
of any proposed nominee so that an alternative can be selected by the
Purchasers. In the event of non-approval, the Purchasers and the Company's
Organization Committee will meet and use their best efforts to agree upon an
acceptable nominee. It is hereby agreed by the Company that John W. Gildea
shall be an acceptable nominee. If, prior to his election to the Board of
Directors of the Company, the Purchasers' Nominee shall, be unable or unwilling
to serve as a director of the Company, the Purchasers who nominated such
Purchasers' Nominee shall be entitled to nominate a replacement who (subject to
the procedures set forth in the preceding sentences with respect to unacceptable
nominees) shall then be the Purchasers' Nominee for purposes of this Section
10.2. If, following election to the Board of Directors of the Company, any
Purchasers' Nominee shall resign or be removed or be unable to serve for any
reason prior to the expiration of his term as a director of the Company, the
Purchasers who nominated such Purchasers' Nominee shall within 30 days of such
event, notify the Board of Directors of the Company in writing of a replacement
Purchasers' Nominee and the Board of Directors of the Company shall take all
action necessary (subject to the procedures set forth herein with respect to
unacceptable nominees) to cause such replacement Purchasers' Nominee to be
elected or appointed to fill the unexpired term of such Purchasers' Nominee and
to recommend the replacement Purchasers' Nominee for election to the Board of
Directors in the same manner as all other nominees of the Company for election
as director at any subsequent annual or special meeting of shareholders or
pursuant to any written consent in lieu of such a meeting. For purposes of this
Section 10.2, the term Purchasers shall refer to the Purchasers' signatory
hereto, persons with respect to whom a Purchaser signatory has investment
authority with respect to any Shares transferred to any such person and any
other person which is under common investment management with any Purchaser
signatory.
10.3 No redemptions or cash payments. The Company hereby covenants and
-------------------------------
agrees that, whenever any share of the Series C Preferred Stock is issued and
outstanding, it shall not (i) make or pay any cash dividends, distributions or
other cash payments of any type on or with respect to any Junior Security (as
hereinafter defined) or (ii) redeem for cash (in whole or in part) any Junior
Security. For purposes of this agreement, the term "Junior Security" shall mean
any security constituting part of a class of equity securities of the Company or
any of its Subsidiaries, other than the Series B and Series C Preferred Stock.
11. NOTICES, ETC. All notices, requests, demands or other communications
------------
hereunder shall be in writing and shall be deemed to have been duly given when
delivered upon receipt or if mailed:
-25-
<PAGE>
If to the Company, to:
UNC Incorporated
175 Admiral Cochrane Drive
Annapolis, Maryland 21401
Attention: Richard H. Lange
General Counsel
with a copy to:
John B. Frisch, Esq.
Miles & Stockbridge,
A Professional Corporation
10 Light Street
Baltimore, Maryland 21202
If to the Purchasers, to:
Gildea Management Company, L.P.
115 East Putnam Avenue
Greenwich, CT 06830
Attention: Mr. William P. O'Donnell
with a copy to:
Thomas J. Drago, Esq.
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036
12. GENERAL.
-------
12.1 Amendment and Waiver. Neither this Agreement nor any term hereof may
--------------------
be changed, waived, amended or terminated orally, but only by written act of the
Purchasers and the Company (or, in respect of a waiver, the waiving party or
parties).
12.2 Assignment. This Agreement shall bind and inure to the benefit of the
----------
parties hereto and their respective successors and legal representatives, but
shall not be assignable by any party without the written consent of the other
party; provided, however, that the rights and obligations of any Purchaser may
be assigned to one or more of its affiliates or other persons or entities with
respect to whom such Purchaser has investment authority with respect to any
Shares transferred to such affiliate or other person or entity or which is under
common investment management with any Purchaser, if such affiliate or other
person or entity agrees in writing to be bound by all of the terms and
conditions of this Agreement. The terms of this Agreement, including, without
limitation, Section 9 and Section 10.1 hereof, shall be binding upon any person
or entity who acquires Shares, Dividend Shares or Conversion Shares from a
-26-
<PAGE>
Purchaser hereunder unless such Shares are acquired at least three years from
the date such Shares were issued, in an underwritten public offering or in
unsolicited broker's transactions effected in compliance with all of the terms
and provisions of Rule 144 under the Securities Act.
12.3 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York without regard to the
conflicts of law provisions thereof.
12.4 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be an original, but all of which, when taken together, shall
constitute one and the same instrument.
12.5 Headings. The section and paragraph headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning and interpretation of this Agreement.
12.6 Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
12.7 Termination. Anything herein to the contrary notwithstanding, this
-----------
Agreement may be terminated by either the Purchasers or the Company, upon
written notice to the other, if the Closing of the purchase and sale of any
Shares shall not have occurred on or prior to the Outside Date. This Agreement
may also be terminated by mutual consent of the Purchasers and the Company.
After termination, the Purchasers and the Company shall have no liability or
further obligation to the other under this Agreement, other than their
respective obligations under Sections 1.6, 4.2, 4.3, 8, 9, 10 and Section 12
hereof.
12.8 Effect of Amended and Restated Agreement. This Amended and Restated
----------------------------------------
Stock Purchase Agreement amends and replaces in its entirety the Original
Agreement and all references herein to this Agreement shall refer to this
Amended and Restated Agreement and all references made to the Original Agreement
in any instrument or document shall, without more, be deemed to refer to this
Amended and Restated Stock Purchase Agreement.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
UNC INCORPORATED
By /s/ Gregory M. Bubb
----------------------------------------------------
Name: Gregory M. Bubb
Title: Vice President and Treasurer
PURCHASERS
NETWORK FUND III, LTD.
By: /s/ John W. Gildea
----------------------------------------------------
Name: John Gildea
Title: President
/s/ John W. Gildea
-------------------------------------------------------
John W. Gildea
/s/ William P. O'Donnell
-------------------------------------------------------
William P. O'Donnell
EURISTECH S.A.
By: /s/ P. LaMotte
---------------------------------------------------
Name: P. LaMotte
Title:
-28-
<PAGE>
MELLON BANK, N.A., AS TRUSTEE FOR THE
GENERAL CHEMICAL GROUP INC.
MASTER PENSION TRUST
By: /s/ Allan M. Seaman
--------------------------------------------------
Name: Allan Seaman
Title:
BRIDGE PARTNERS, L.P.
By: /s/ William P. O'Donnell
--------------------------------------------------
Name: William O'Donnell
Title:
PEQUOD INVESTMENTS, L.P.
By: /s/ Jonathan Gallen
--------------------------------------------------
Name: Jonathan Gallen
Title: Managing Member, Pequod LLC
General Partner, Pequod Investments, L.P.
-29-
<PAGE>
SCHEDULE 1
----------
Name of Purchaser Acquisition Shares
- ----------------- ------------------
<TABLE>
<CAPTION>
<S> <C>
Network Fund III, Ltd. 59,000
John W. Gildea 10,000
William P. O'Donnell 1,000
EURISTECH S.A. 15,000
Mellon Bank, N.A., as Trustee for the
General Chemical Group Inc. Master Pension Trust 20,000
Bridge Partners, L.P. 141,000
Pequod Investments, L.P. 4,000
-------
Total 250,000
=======
</TABLE>
<PAGE>
SCHEDULE 2
----------
Network III Holdings, LDC
Gildea Investment Company
Iron City Partners Inc.
Ariel Fund Ltd.
Pequod Investments, L.P.
<PAGE>
SCHEDULE 3
----------
For purposes of this Agreement, an "Acceptable Acquisition" shall mean an
acquisition or series of related acquisitions by the Company of a corporation or
other entity (or its assets, businesses or divisions) whose principal business
or businesses is supplying products and services to the aviation industry of a
nature similar to, or complementary with, the Company's currently existing lines
of business. An Acceptable Acquisition must (a) be approved by the Board of
Directors of the Company and the company to be acquired and, if required, the
stockholders of the Company and the company to be acquired and any third parties
or governmental bodies, agencies and authorities whose approval is required; (b)
not violate any statute, ordinance, rule, regulation, order or decree of any
court or federal, state, local or foreign governmental body, agency or
authority; (c) not violate or result in a default in respect of any contract,
lease, agreement, instrument, arrangement or understanding to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (d) not violate any of the constitutive documents of the
Company or any of its Subsidiaries; and (e) not result in a breach of, or
default under, any of the representations and warranties, covenants and other
agreements and terms of this Agreement.
<PAGE>
EXHIBIT A
---------
Series B Certificate of Designation
-----------------------------------
<PAGE>
UNC INCORPORATED
CERTIFICATE OF THE DESIGNATION, POWERS,
PREFERENCES AND RIGHTS OF THE SERIES B SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The following resolutions were duly adopted by the Board of Directors
of UNC Incorporated, a Delaware corporation (the "Corporation"), pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, on September 29, 1995 at a meeting of the Board of Directors at which
there was at all times present and acting a quorum of the Board of Directors of
the Corporation:
WHEREAS, the Board of Directors of the Corporation is authorized,
within the limitations and restrictions stated in the Certificate of
Incorporation, to fix by resolution or resolutions the designation of each
series of Preferred Stock and the powers, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including, without limiting the generality of the
foregoing, such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution or resolutions
of the Board of Directors under the General Corporation Law of the State of
Delaware; and
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to authorize and fix the
terms of a series of such Preferred Stock and the number of shares constituting
such series:
NOW, THEREFORE, BE IT RESOLVED:
(1) Designation and Number of Shares. The designation of said series
--------------------------------
of Preferred Stock, par value $1.00 per share (the "Series Preferred Stock"),
authorized by this resolution shall be "Series B Senior Cumulative Convertible
Preferred Stock" (the "Series B Preferred Stock"). The number of shares of
Series B Preferred Stock authorized hereby shall be 250,000 and no more, except
as provided herein.
(2) Rank. The Series B Preferred Stock shall, with respect to
----
dividend rights and rights on liquidation, winding up and dissolution, rank (a)
on a parity with the Series C Senior Cumulative Preferred Stock, par value $1.00
per share (the "Series C Preferred Stock"), and (b) prior to any other equity
securities of the Corporation, whether currently authorized or hereafter
created, including any other series of Series Preferred Stock and the Common
Stock, par value $.20 per share, of the Corporation (the "Common Stock", all of
such equity securities
<PAGE>
of the Corporation to which the Series B Preferred Stock ranks prior, including
any other series of Series Preferred Stock and the Common Stock, are referred to
herein collectively as the "Junior Securities").
(3) Dividends. (a) (i) The holders of the shares of Series B
---------
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate (subject to adjustment as set forth in
subparagraph (iv) below) of $8.50 per share in equal quarterly payments on the
last business day of each calendar quarter (each of such dates being a "Dividend
Payment Date"), commencing with the last day of the calendar quarter in which
the shares of Series B Preferred Stock are issued, in preference to dividends on
the Junior Securities. Such dividends shall be paid to the holders of record at
the close of business on the date which is ten (10) business days prior to the
Dividend Payment Date. Each of such quarterly dividends (whether payable in
cash or in stock) shall be fully cumulative and shall accrue (whether or not
declared), without interest, from the Date of Issuance. Subject to subparagraph
(iii) below, any dividend payments due with respect to the Series B Preferred
Stock on any Dividend Payment Date shall be made by issuing fully paid and non-
assessable shares of Series C Preferred Stock, valued as set forth below (a "PIK
Dividend"); provided, however, that in lieu of issuing shares of Series C
Preferred Stock, dividends may be paid, in the sole discretion of the
Corporation, in cash or any combination of cash and Series C Preferred Stock.
The issuance of such shares or the issuance of such shares together with payment
of cash in lieu of the issuance of any shares shall constitute full payment of
such dividend.
(ii) Shares of Series C Preferred Stock used for the purpose of
paying dividends on the Series B Preferred Stock will be valued at $100.00 per
share.
(iii) In the event that the Corporation is no longer a party to any
Restrictive Agreement (as defined below) prohibiting the payment of cash
dividends on the Series B Preferred Stock, dividend payments with respect to the
Series B Preferred Stock shall be made in cash. "Restrictive Agreement" shall
mean any agreement to which the Corporation is a party on the date hereof
(including as modified, amended, extended, refinanced or replaced) which by its
terms restricts the Corporation's ability to (A) pay dividends in cash with
respect to the Series B Preferred Stock or (B) redeem the Series B Preferred
Stock, excluding any such agreement which has been substantially assigned to a
party which is not a party thereto on the date hereof.
(iv) In the event that the Corporation shall make a PIK Dividend at
any time after the third anniversary of the date of issuance of the Series B
Preferred Stock (the "Date of Issuance"), the annual rate of PIK Dividends
payable thereafter with respect to the Series B Preferred Stock shall be
increased to $9.50 per share. In the event that the Corporation shall make a
PIK Dividend at any time after the fourth anniversary of the Date of Issuance,
the annual rate of PIK Dividends payable thereafter with respect to the Series B
Shares shall be increased to $10.50 per share. In the event that the
Corporation shall make a PIK Dividend at any time after the fifth anniversary of
the Date of Issuance, the annual rate of PIK Dividends payable thereafter with
respect to the Series B Preferred Stock shall be increased to $11.00 a share.
Any adjustment to the annual rate of PIK Dividends payable with respect to the
Series B Preferred Stock pursuant to this subparagraph (iv) shall be effective
after the date of the applicable PIK Dividend and the dividend payment in fully
paid non-assessable shares of Series C Preferred
-2-
<PAGE>
Stock with respect to the next following date of PIK Dividend shall be adjusted
to reflect the applicable increased annual rate. Dividend payments, or any
portion thereof, with respect to the Series B Preferred Stock to be paid in cash
will be at annual rate of $8.50 per share.
(b) All dividends paid with respect to shares of Series B Preferred
Stock pursuant to paragraph (3)(a) shall be paid pro rata to the holders
entitled thereto.
(c) No full cash dividends shall be declared or paid or set apart for
payment on the Series C Preferred Stock for any period unless full cumulative
cash dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on the
Series B Preferred Stock for all dividend payment periods terminating on or
prior to the date of payment of such full cumulative dividends. If any cash
dividends are not paid in full, as aforesaid, upon the shares of Series B
Preferred Stock and the Series C Preferred Stock, all cash dividends declared
upon shares of Series B Preferred Stock and the Series C Preferred Stock shall
be declared pro rata so that the amount of cash dividends declared per share on
the Series B Preferred Stock and the Series C Preferred Stock shall in all cases
bear to each other the same ratio that accrued cash dividends per share on the
Series B Preferred Stock and the Series C Preferred Stock bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series B Preferred Stock which may be in
arrears.
(d) (i) Whenever dividends or distributions payable on the Series B
Preferred Stock as provided in this Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions, on
any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up); or
(B) redeem or purchase or otherwise acquire for consideration
shares of any Junior Securities (either as to dividends or upon
liquidation, dissolution or winding up), provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such Junior
Securities in exchange for shares of any other Junior Securities.
(ii) Subject to the foregoing provisions of this Section 3, the Board
of Directors may declare, and the Corporation may pay or set apart for payment,
dividends and other distributions on any of the Junior Securities, and may
purchase or otherwise redeem any of the Junior Securities or any warrants,
rights or options exercisable for or convertible into any of the Junior
Securities, and the holders of the shares of Series B Preferred Stock shall not
be entitled to share therein.
(4) Liquidation Preference. (a) In the event of any voluntary or
----------------------
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series B Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to $100.00 for
-3-
<PAGE>
each share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of the Junior Securities. If the assets of the Corporation are not sufficient
to pay in full the liquidation payments payable to the holders of outstanding
shares of Series B Preferred Stock and Series C Preferred Stock, then the
holders of all such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution if the
amounts to which the holders of outstanding shares of Series B Preferred Stock
and Series C Preferred Stock are entitled were paid in full.
(b) The liquidation payment with respect to each fractional share of
Series B Preferred Stock outstanding or accrued but unpaid shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series B Preferred Stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation or the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
lease, exchange or transfer shall be in connection with a dissolution or winding
up of the business of the Corporation.
(5) Redemption. (a) Commencing after the Effective Date (as defined
----------
below), the Corporation at its option may redeem, to the extent funds are
legally available therefor, the Series B Preferred Stock, at any time in whole
or from time to time in part, at the per share redemption price equal to $100.00
plus all accrued and unpaid dividends thereon to the date fixed for redemption,
without interest (the "Redemption Price"). "Effective Date" shall mean, the
last day of any ninety (90) consecutive calendar day period that occurs after
the fourth anniversary of the Date of Issuance in which the last reported sales
price regular way for the Common Stock of the Corporation on the New York Stock
Exchange (or any other national securities exchange or NASDAQ on which the
Common Stock is listed or quoted) on all trading days in that period is at least
equal to 200% of the Conversion Price (as defined in Section 7).
(b) The Corporation shall not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming, all outstanding shares of
Series C Preferred Stock at the Redemption Price for the Series C Preferred
Stock.
(c) Unless the Corporation is prohibited by the terms of any
Restrictive Agreement from redeeming any shares of Series B Preferred Stock, in
the event of any Change in Control (as defined below) with respect to the
Corporation, each holder of the Series B Preferred Stock may, from time to time,
require the Corporation to, and the Corporation shall, redeem any number of the
shares of Series B Preferred Stock held by it for the Redemption Price upon
thirty (30) days prior written notice. "Change in Control" shall mean (A) any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation) which will result in the
Corporation's stockholders immediately prior to such transaction not holding (by
virtue of such shares or securities issued solely with respect thereto) at least
fifty percent (50%) of the voting power of the surviving or continuing entity,
-4-
<PAGE>
(B) a sale of all or substantially all of the assets of the Corporation, unless
the Corporation's stockholders immediately prior to such sale will, as a result
of such sale, hold (by virtue of securities issued as consideration for the
Corporation's sale) at least fifty percent (50%) of the voting power of the
purchasing entity, or (C) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Corporation's stockholders, of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
(d) Shares of Series B Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued shares of the class of
Series Preferred Stock, undesignated as to series, and may be redesignated and
reissued as part of any series of the Series Preferred Stock, par value $1.00
per share, of the Corporation; provided, however, that no such issued and
reacquired shares of Series B Preferred Stock shall be reissued or sold as
Series B Preferred Stock.
(e) Notwithstanding the foregoing provisions of this Section 5, unless
the full cumulative dividends on all outstanding shares of Series B Preferred
Stock shall have been paid or contemporaneously are declared and paid for all
past dividend periods, none of the shares of Series B Preferred Stock shall be
redeemed unless all outstanding shares of Series B Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire (except pursuant to Section 6 hereof) any shares of Series B Preferred
Stock; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Series B Preferred Stock pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series B Preferred Stock.
(6) Procedure for Redemption. (a) In the event that fewer than all
------------------------
the outstanding shares of Series B Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
(b) In the event the Corporation shall redeem shares of Series B
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty (60)
days prior to the date of redemption (the "Redemption Date"), to each holder of
record of the shares to be redeemed at such holder's address as the same appears
on the stock register of the Corporation; provided, however, that no failure to
mail such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series B Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to mail said
notice or except as to the holder whose notice was defective. Each such notice
shall state: (i) the Redemption Date; (ii) the number of shares of Series B
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed from such holder, the number of shares to be redeemed
from such holder; (iii) the Redemption Price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on such Redemption Date.
-5-
<PAGE>
(c) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption) dividends on the shares of Series B Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, unclassified as to series, and shall not be reissued as shares
of Series B Preferred Stock, and all rights of the holders thereof as
stockholders of the Corporation with respect to said shares (except the right to
receive from the Corporation the Redemption Price) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the Redemption Price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
(7) Conversion. (a) Subject to and upon compliance with the
----------
provisions of this Section 7, unless previously redeemed by the Corporation, the
holders of shares of Series B Preferred Stock shall have the right, at such
holders' option, at any time and from time to time, to convert such shares into
fully paid and non-assessable shares of Common Stock of the Corporation. The
number of shares of Common Stock issuable upon conversion of each share of
Series B Preferred Stock shall be equal to $100.00 divided by the Conversion
Price (as hereinafter defined) in effect at the time of conversion, determined
as hereinafter provided. The price at which shares of Common Stock shall be
delivered upon conversion (the "Conversion Price") shall initially be $7.00
(subject to the adjustments set out in this Section 7). The right to convert
shares called for redemption pursuant to this Section 7 shall terminate at the
close of business on the date fixed for such redemption unless the Corporation
shall default in making payment of the amount payable upon such redemption.
(b) The holders of shares of Series B Preferred Stock at the close of
business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof or the Corporation's default in payment
of the dividend due on such Dividend Payment Date. However, shares of Series B
Preferred Stock surrendered for conversion during the period between the close
of business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date must be accompanied by payment of an
amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of shares of Series B Preferred Stock on a dividend payment
record date who (or whose transferee) surrenders any of such shares for
conversion into shares of Common Stock on a Dividend Payment Date will receive
the dividend payable by the Corporation on such shares of Series B Preferred
Stock on such date, and the converting holder need not include payment in the
amount of such dividend upon surrender of shares of Series B Preferred Stock for
conversion. Except as provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of Common Stock issued upon such conversion.
(c) (i) In order to exercise the conversion privilege, the holders
of each share of Series B Preferred Stock to be converted shall surrender the
certificate representing such
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<PAGE>
share at the office of the transfer agent for the Series B Preferred Stock,
appointed for such purpose by the Corporation, with the Notice of Election to
Convert on the back of said certificate completed and signed. Unless the shares
of Common Stock issuable on conversion are to be issued in the same name in
which such share of Series B Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax.
(ii) As promptly as practicable after the surrender of the
certificates for shares of Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable upon the conversion of such shares in accordance with
the provisions of this Section 7, and any fractional interest in respect of a
share of Common Stock arising upon such conversion shall be settled as provided
in paragraph (d) of this Section 7.
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of Series B Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby at such time on such
date, unless the stock transfer books of the Corporation shall be closed on that
date, in which event such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such stock transfer books are open, and such notice received by the
Corporation. All shares of Common Stock delivered upon conversion of the Series
B Preferred Stock will upon delivery be duly and validly issued and fully paid
and non-assessable, free of all liens and charges and not subject to any
preemptive rights.
(d) The Conversion Price in effect at any time and the number and
kind of securities issuable upon the conversion of each share of Series B
Preferred Stock shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(i) In the event that the Corporation shall make a PIK
Dividend pursuant to Section 3 hereof after the third anniversary of
the Date of Issuance, then the Conversion Price shall be reduced by
five percent (5%); provided that a reduction in the Conversion Price
pursuant to this subparagraph (i) shall be made only once.
(ii) In case the Corporation shall hereafter (A) pay a
dividend or make a distribution on its Common Stock in shares of its
Common Stock, (B) subdivide its outstanding Common Stock, (C) combine
its outstanding Common Stock into a smaller number of shares, or (D)
issue any shares by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or merger
in which the Corporation is the continuing corporation), the
Conversion Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so
that the holder of any share
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<PAGE>
of Series B Preferred Stock converted after such date shall be
entitled to receive the aggregate number and kind of shares of Common
Stock which, if such share of Series B Preferred Stock had been
converted immediately prior to such record date or effective date, he
would have owned upon such conversion and been entitled to receive
upon such dividend, distribution, subdivision, combination or
reclassification.
(iii) In case the Corporation shall hereafter issue rights or
warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below)
to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Conversion Price in effect
on the record date with respect to such issuance, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on
such record date plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at the Conversion
Price in effect immediately prior to the date of such issuance, and of
which the denominator shall be the number of shares of Common Stock
outstanding on the record date for determination of the Stockholders
entitled to receive such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase
(or into which the convertible securities so offered are then
convertible). Such adjustment shall be made successively whenever
such rights or warrants are issued and shall become effective
immediately prior to the date of such issuance; and to the extent that
shares of Common Stock are not delivered (or securities convertible
into Common Stock are not delivered) after the expiration of such
rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered.
(iv) In case the Corporation shall hereafter distribute to all
holders of its Common Stock shares of stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends or
distributions out of retained earnings and dividends or distributions
referred to in subparagraph (ii) above) or rights or warrants
(excluding those referred to in subparagraph (iii) above), then in
each such case the Conversion Price in effect thereafter shall be
determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction, of which the
numerator shall be the total number of outstanding shares of Common
Stock multiplied by the Conversion Price in effect immediately prior
to the date of such distribution, less the then fair market value (as
determined in good faith by the Corporation's Board of Directors,
irrespective of the accounting treatment thereof, whose determination
shall be described in a certified Board Resolution) of said shares of
stock, assets or evidences of
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<PAGE>
indebtedness so distributed or of such rights or warrants, and of
which the denominator shall be the total number of outstanding shares
of Common Stock multiplied by the Conversion Price in effect
immediately prior to the date of such distribution. Such adjustments
shall be made whenever any such distribution is made and shall become
effective immediately prior to the date of such distribution.
(v) In case the Corporation shall hereafter issue shares of its
Common Stock (excluding shares issued (A) in any of the transactions
described in subparagraph (ii) above, (B) upon conversion or exchange
of securities convertible into or exchangeable for Common Stock, or
upon conversion of rights or warrants issued to the holders of Common
Stock, for which an adjustment has already been made pursuant to
subparagraph (iii) above, (C) by grant to or upon exercise of options
granted or to be granted to employees or directors pursuant to any
employee benefit plan or program of the Corporation or any of its
subsidiaries in existence on the Date of Issuance or subsequently
approved by the Corporation's stockholders, (D) upon conversion of
shares of Series B Preferred Stock, (E) to shareholders of any
corporation which merges into the Corporation or a subsidiary of the
Corporation in proportion to their stockholdings of such corporation
immediately prior to such merger, upon such merger, (F) in a bona fide
public offering pursuant to a firm commitment underwriting, or (G)
pursuant to any stockholders rights plan of the Corporation) for a
consideration per share of Common Stock less than the Conversion Price
in effect on the date the Corporation fixes or has fixed the offering,
conversion, exchange or exercise price of such additional shares, the
Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior thereto by a fraction, of which the numerator shall be the total
number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares plus the number of shares of Common
Stock which the aggregate consideration received (determined as
provided in subparagraph (vii) below) for the issuance of such
additional shares would purchase at the Conversion Price in effect on
the date the Corporation fixes or has fixed the offering, conversion,
exchange or exercise price of such additional shares, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is
made and shall become effective immediately prior to the date of such
issuance.
(vi) In case the Corporation shall hereafter issue any
securities convertible into or exchangeable for its Common Stock
(excluding securities issued (A) in transactions described in
subparagraphs (iii) and (iv) above or (B) pursuant to any stockholders
rights plan of the Corporation) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities (determined as provided in subparagraph (vii) below) less
than the Conversion Price in effect on the issuance date of such
securities, the Conversion Price shall be adjusted so that it shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of such issuance by
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<PAGE>
a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock which the aggregate consideration
received (determined as provided in subparagraph (vii) below) for such
securities would purchase at the Conversion Price prior to any
adjustment pursuant hereto, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately prior to such
issuance plus the maximum number of shares of Common Stock of the
Corporation deliverable upon conversion of or in exchange for such
securities at the initial conversion or exchange price or rate. Such
adjustment shall be made successively whenever such an issuance is
made and shall become effective immediately prior to date of issuance
of such securities.
(vii) For purposes of any computation respecting consideration
received pursuant to subparagraphs (v) and (vi) above, the following
shall apply:
(A) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Corporation for any
underwriting of the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of
the Corporation (irrespective of the accounting treatment thereof),
whose determination shall be conclusive and described in a certified
Board Resolution; and
(C) in the case of the issuance of securities convertible
into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Corporation for the issuance of such
securities plus the additional minimum consideration, if any, to be
received by the Corporation upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (A) and (B) of this subparagraph (vii)).
(viii) In case the Corporation is a participant in a
consolidation, merger or combination with another corporation (other
than with a wholly-owned subsidiary of the Corporation and other than
a merger which does not result in any reclassification, conversion,
exchange or cancellation of the Common Stock) or in case of any sale
or transfer of all or substantially all of the assets of the
Corporation, as a result of which holders of the Common Stock shall be
entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock,
or any share exchange whereby the Common Stock is converted into other
securities or property of the Corporation, then as a condition to the
consummation of such transaction, lawful and adequate provision shall
be made so that the holder of each share of Series
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<PAGE>
B Preferred Stock then outstanding shall have the right, with respect
to such shares of Series B Preferred Stock, to receive stock, other
securities or property or assets (including cash) or any combination
thereof, having a value equal to the value of the stock, other
securities, property and assets (including cash) which such holder
would have been entitled to receive upon such consolidation, merger,
combination, sale or transfer, or exchange, if such holder had held
the Common Stock issuable upon the conversion of such shares of Series
B Preferred Stock immediately prior to such consolidation, merger,
combination, sale or transfer, or exchange.
(ix) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least ten cents ($0.10) in such price; provided, however, that any
adjustments not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under
this paragraph 7(d) shall be made to the nearest cent or to the
nearest one-thousandth of a share, as the case may be.
(x) Anything in this paragraph 7(d) to the contrary
notwithstanding, the Corporation shall be entitled, but shall not be
required, to make such changes in the Conversion Price, in addition to
those required by this paragraph 7(d), as it in its discretion shall
determine to be advisable in order that any dividend or distribution
in shares of Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights or warrants
to purchase Common Stock or distribution of shares of stock other than
Common Stock, evidences of indebtedness or assets (other than
distributions in cash out of retained earnings) referred to
hereinabove in this paragraph 7(d), hereafter made by the Corporation
to the holders of the Series B Preferred Stock shall not be taxable to
them.
(xi) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly cause a notice setting forth
the adjusted Conversion Price and adjusted number of shares issuable
upon conversion of each share of Series B Preferred Stock to be mailed
to the holders, at their last addresses appearing in the Series B
Preferred Stock share register. The certificate setting forth the
computation shall be signed by the chief financial officer of the
Corporation.
(xii) In the event that at any time, as a result of any
adjustment made pursuant to paragraph (a) above, the holder of any
share of Series B Preferred Stock thereafter shall become entitled to
receive any shares of the Corporation, other than Common Stock,
thereafter the number of such other shares so receivable upon
conversion of any share of Series B Preferred Stock shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock contained in subparagraphs (i) to (ix) inclusive, above.
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<PAGE>
(e) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purposes of effecting conversions
of the Series B Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Series B Preferred
Stock not theretofore converted. For purposes of this paragraph (e), the number
of shares of Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder.
(f) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 7 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(8) Voting Rights. The holders of record of shares of Series B
-------------
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 8 or as otherwise provided by law.
(a) Whenever dividends are in arrears and remain unpaid for six (6) or
more Dividend Payment Dates, the holders of the then outstanding Series B
Preferred Stock, voting as a class, shall have the exclusive right to appoint
one additional director to the Board of Directors of the Corporation (in
addition to any rights to appoint or have nominated any director pursuant to any
contractual agreement between the Corporation and any holders of the Series B
Preferred Stock) until such time as all accrued and unpaid dividends shall have
been paid in full, at which time the term of office of such director shall
terminate.
(b) So long as any shares of Series B Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of Series B Preferred Stock,
voting as a class (i) create, authorize or issue any shares of any other class
of senior or parity dividend stock or senior or parity liquidation stock or
having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series B Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series B Preferred Stock or otherwise reduce the
number of outstanding shares of Series B Preferred Stock other than pursuant to
Section 4, 5 or 7 hereof; provided, however, that the approval of not less than
two-thirds of the outstanding shares of Series B Preferred Stock, voting as a
class, shall be required to amend, alter, or repeal any of the provisions of the
Certificate of Incorporation of the Corporation that would adversely affect the
dividend provisions, liquidation rights, conversion terms, or voting rights of
the Series B Preferred Stock or the holders thereof.
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<PAGE>
(f) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 7 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(8) Voting Rights. The holders of record of shares of Series B
-------------
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 8 or, except as expressly required by applicable law.
(a) Whenever dividends are in arrears and remain unpaid for six (6) or
more Dividend Payment Dates, the holders of the then outstanding Series B
Preferred Stock, voting as a class, shall have the exclusive right to appoint
one additional director to the Board of Directors of the Corporation (in
addition to any rights to appoint or have nominated any director pursuant to any
contractual agreement between the Corporation and any holders of the Series B
Preferred Stock) until such time as all accrued and unpaid dividends shall have
been paid in full, at which time the term of office of such director shall
terminate.
(b) So long as any shares of Series B Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of Series B Preferred Stock,
voting as a class (i) create, authorize or issue any shares of any other class
of senior or parity dividend stock or senior or parity liquidation stock or
having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series B Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series B Preferred Stock or otherwise reduce the
number of outstanding shares of Series B Preferred Stock other than pursuant to
Section 4, 5 or 7 hereof; provided, however, that the approval of not less than
two-thirds of the outstanding shares of Series B Preferred Stock, voting as a
class, shall be required to amend, alter, or repeal any of the provisions of the
Certificate of Incorporation of the Corporation that would adversely affect the
dividend provisions, liquidation rights, conversion terms, or voting rights of
the Series B Preferred Stock or the holders thereof.
(c) A special meeting of holders of the Series B Preferred Stock (or a
request for a vote by written consent without a meeting) to approve or
disapprove any action of the Corporation on which the holders of the Series B
Preferred Stock are entitled to vote as a separate class by law or pursuant to
this Section 8 may be called by the Secretary of the Corporation or by the
holder(s) of twenty-five percent (25%) or more of the outstanding shares of
Series B Preferred Stock on written notice to the address of each holder thereof
as it appears on the records of the Corporation deposited in the U.S. mail, all
charges prepaid, at least ten (10) but no more than sixty (60) days prior to the
applicable vote. The record date for determination of the holders of the Series
B Preferred Stock entitled to vote by written consent or at a meeting shall be
set by the Corporation's Board of Directors, and only holders who are
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<PAGE>
holding of record on the stock book of the Corporation on that date will be
entitled to participate in such vote. At any time at which any share of Series
B Preferred Stock has been issued and is outstanding, no proposal for the
Corporation to take any action described in paragraph (b) shall be adopted, nor
shall the Corporation be authorized to take any such action, unless the holders
of at least two-thirds of the outstanding shares of Series B Preferred Stock
voting as a separate class vote in favor of such proposal.
(d) Copies of all notices sent to the holders of Common Stock shall be
simultaneously sent to each holder of the Series B Preferred Stock.
(e) In exercising the voting rights set forth in this Section 8, each
share of Series B Preferred Stock shall have one vote per share.
(f) No consent of the holders of the Series B Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of the
Series Preferred Stock or Common Stock, shall be required for (i) the creation,
authorization or issuance of any indebtedness of any kind of the Corporation,
(ii) the creation, authorization or issuance of any other class of stock of the
Corporation subordinate as to dividends and upon liquidation to the Series B
Preferred Stock, (iii) any increase or decrease in the amount of authorized
Common Stock or Series Preferred Stock or any increase, decrease or change in
the par value thereof, or (iv) any increase in the amount of the Series C
Preferred Stock for the purpose of paying dividends in shares of Series C
Preferred Stock as provided herein, and none of the foregoing shall be deemed to
affect adversely the powers, special rights or preferences of holders of the
Series B Preferred Stock.
IN WITNESS WHEREOF, UNC Incorporated caused this certificate to be
signed by its Chairman of the Board and Chief Executive Officer and attested by
its Secretary this 5th day of October, 1995.
UNC INCORPORATED
By:
-------------------------------
Dan A. Colussy
Chairman of the Board and
Chief Executive Officer
ATTEST:
- ---------------------------
Secretary
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<PAGE>
EXHIBIT B
---------
Series C Certificate of Designation
-----------------------------------
<PAGE>
UNC INCORPORATED
CERTIFICATE OF THE DESIGNATION, POWERS,
PREFERENCES AND RIGHTS OF THE SERIES C SENIOR CUMULATIVE
PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The following resolutions were duly adopted by the Board of Directors
of UNC Incorporated, a Delaware corporation (the "Corporation"), pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, on September 29, 1995 at a meeting of the Board of Directors at which
there was at all times present and acting a quorum of the Board of Directors of
the Corporation:
WHEREAS, the Board of Directors of the Corporation is authorized,
within the limitations and restrictions stated in the Certificate of
Incorporation, to fix by resolution or resolutions the designation of each
series of Preferred Stock and the powers, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including, without limiting the generality of the
foregoing, such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution or resolutions
of the Board of Directors under the General Corporation Law of the State of
Delaware; and
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to authorize and fix the
terms of a series of such Preferred Stock and the number of shares constituting
such series:
NOW, THEREFORE, BE IT RESOLVED:
(1) Designation and Number of Shares. The designation of said series
--------------------------------
of Preferred Stock, par value $1.00 per share (the "Series Preferred Stock"),
authorized by this resolution shall be "Series C Senior Cumulative Preferred
Stock" (the "Series C Preferred Stock"). The number of shares of Series C
Preferred Stock authorized hereby shall be 250,000 and no more, except as
provided herein.
(2) Rank. The Series C Preferred Stock shall, with respect to
----
dividend rights and rights on liquidation, winding up and dissolution, rank (a)
on a parity with the Series B Senior Cumulative Preferred Stock, par value $1.00
per share (the "Series B Preferred Stock"), and (b) prior to any other equity
securities of the Corporation, whether currently authorized or hereafter
created, including any other series of Series Preferred Stock and the Common
Stock, par value $.20 per share, of the Corporation (the "Common Stock", all of
such equity securities
<PAGE>
of the Corporation to which the Series C Preferred Stock ranks prior, including
any other series of Series Preferred Stock and the Common Stock, are referred to
herein collectively as the "Junior Securities").
(3) Dividends. (a) The holders of the shares of Series C Preferred
---------
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate of $8.50 per share in equal quarterly
payments on the last business day of each calendar quarter (each of such dates
being a "Dividend Payment Date"), commencing with the last day of the calendar
quarter in which the shares of Series C Preferred Stock are issued, in
preference to dividends on the Junior Securities. Such dividends shall be paid
to the holders of record at the close of business on the date which is ten (10)
business days prior to the Dividend Payment Date. Each of such quarterly
dividends shall be fully cumulative and shall accrue (whether or not declared),
without interest, from the Date of Issuance. Any dividend payments due with
respect to the Series C Preferred Stock on any Dividend Payment Date shall be
made in cash.
(b) All dividends paid with respect to shares of Series C Preferred
Stock pursuant to paragraph (3)(a) hereof shall be paid pro rata to the holders
entitled thereto.
(c) No full cash dividends shall be declared or paid or set apart for
payment on the Series B Preferred Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Series
C Preferred Stock for all dividend payment periods terminating on or prior to
the date of payment of such full cumulative dividends. If any cash dividends
are not paid in full, as aforesaid, upon the shares of Series C Preferred Stock
and Series B Preferred Stock, all cash dividends declared upon shares of Series
C Preferred Stock and Series B Preferred Stock shall be declared pro rata so
that the amount of cash dividends declared per share on the Series C Preferred
Stock and Series B Preferred Stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the Series C Preferred Stock and
Series B Preferred Stock bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series C Preferred Stock which may be in arrears.
(d) (i) Whenever dividends or distributions payable on the Series C
Preferred Stock as provided in this Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions, on
any Junior Securities (either as to dividends or upon liquidation,
dissolution or winding up); or
(B) redeem or purchase or otherwise acquire for consideration
shares of any Junior Securities (either as to dividends or upon
liquidation, dissolution or winding up), provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such Junior
Securities in exchange for shares of any other Junior Securities.
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<PAGE>
(ii) Subject to the foregoing provisions of this Section 3, the Board
of Directors may declare, and the Corporation may pay or set apart for payment,
dividends and other distributions on any of the Junior Securities, and may
purchase or otherwise redeem any of the Junior Securities or any warrants,
rights or options exercisable for or convertible into any of the Junior
Securities, and the holders of the shares of Series C Preferred Stock shall not
be entitled to share therein.
(4) Liquidation Preference. (a) In the event of any voluntary or
----------------------
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series C Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to $100.00 for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of the Junior Securities. If the assets of the Corporation are not sufficient
to pay in full the liquidation payments payable to the holders of outstanding
shares of Series C Preferred Stock and Series B Preferred Stock, then the
holders of all such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution if the
amounts to which the holders of outstanding shares of Series C Preferred Stock
and Series B Preferred Stock are entitled were paid in full.
(b) The liquidation payment with respect to each fractional share of
Series C Preferred Stock outstanding or accrued but unpaid shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series C Preferred Stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation or the consolidation or merger of the Corporation with one or
more other corporations shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, unless such voluntary sale, conveyance,
lease, exchange or transfer shall be in connection with a dissolution or winding
up of the business of the Corporation.
(5) Redemption. (a) The Corporation at its option may redeem, to the
----------
extent funds are legally available therefor, the Series C Preferred Stock, at
any time in whole or from time to time in part, at the per share redemption
price equal to $100.00 plus all accrued and unpaid dividends thereon to the date
fixed for redemption, without interest (the "Redemption Price").
(b) The Corporation shall not optionally redeem the Series B Preferred
Stock, in whole or in part, without first redeeming all outstanding shares of
Series C Preferred Stock at the Redemption Price.
(c) Unless the Corporation is prohibited by the terms of any
Restrictive Agreement (as defined below) from redeeming any shares of Series C
Preferred Stock, in the event of any Change in Control (as defined below) with
respect to the Corporation, each holder of the Series C Preferred Stock may,
from time to time, require the Corporation to, and the
-3-
<PAGE>
Corporation shall, redeem any number of the shares of Series C Preferred Stock
held by it for the Redemption Price upon thirty (30) days prior written notice.
"Restrictive Agreement" shall mean any agreement to which the Corporation is a
party on the date hereof (including, as modified, amended, extended, refinanced
or replaced) which by its terms restricts the Corporation's ability to (A) pay
dividends in cash with respect to the Series C Preferred Stock or (B) redeem the
Series C Preferred Stock, excluding any such agreement which has been
substantially assigned to a party which is not a party thereto on the date
hereof. "Change in Control" shall mean (A) any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) which will result in the Corporation's stockholders immediately
prior to such transaction not holding (by virtue of such shares or securities
issued solely with respect thereto) at least fifty percent (50%) of the voting
power of the surviving or continuing entity, (B) a sale of all or substantially
all of the assets of the Corporation, unless the Corporation's stockholders
immediately prior to such sale will, as a result of such sale, hold (by virtue
of securities issued as consideration for the Corporation's sale) at least fifty
percent (50%) of the voting power of the purchasing entity, or (C) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Corporation's stockholders, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(d) Shares of Series C Preferred Stock which have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued shares of the class of
Series Preferred Stock, undesignated as to series, and may be redesignated and
reissued as part of any series of the Series Preferred Stock, par value $1.00
per share, of the Corporation; provided, however, that no such issued and
reacquired shares of Series C Preferred Stock shall be reissued or sold as
Series C Preferred Stock.
(e) Notwithstanding the foregoing provisions of this Section 5, unless
the full cumulative dividends on all outstanding shares of Series C Preferred
Stock shall have been paid or contemporaneously are declared and paid for all
past dividend periods, none of the shares of Series C Preferred Stock shall be
redeemed unless all outstanding shares of Series C Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire (except pursuant to Section 6 hereof) any shares of Series C Preferred
Stock; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Series C Preferred Stock pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series C Preferred Stock.
(6) Procedure for Redemption. (a) In the event that fewer than all
------------------------
the outstanding shares of Series C Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
(b) In the event the Corporation shall redeem shares of Series C
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty (60)
days prior to the date of redemption (the
-4-
<PAGE>
Stock pursuant to a purchase or exchange offer made on the same terms to holders
of all outstanding shares of Series C Preferred Stock.
(6) Procedure for Redemption. (a) In the event that fewer than all
------------------------
the outstanding shares of Series C Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors.
(b) In the event the Corporation shall redeem shares of Series C
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more than sixty (60)
days prior to the date of redemption (the "Redemption Date"), to each holder of
record of the shares to be redeemed at such holder's address as the same appears
on the stock register of the Corporation; provided, however, that no failure to
mail such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series C Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to mail said
notice or except as to the holder whose notice was defective. Each such notice
shall state: (i) the Redemption Date; (ii) the number of shares of Series C
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed from such holder, the number of shares to be redeemed
from such holder; (iii) the Redemption Price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on such Redemption Date.
(c) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption) dividends on the shares of Series C Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, unclassified as to series, and shall not be reissued as shares
of Series C Preferred Stock (unless reissued as a stock dividend on Series C
Preferred Stock or Series B Preferred Stock), and all rights of the holders
thereof as stockholders of the Corporation with respect to said shares (except
the right to receive from the Corporation the Redemption Price) shall cease.
Upon surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the Redemption Price
aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(7) Voting Rights. The holders of record of shares of Series C
-------------
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 7 or as otherwise provided by law.
-5-
<PAGE>
(b) So long as any shares of Series C Preferred Stock are outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of Series C Preferred Stock,
voting as a class (i) create, authorize or issue any shares of any other class
of senior or parity dividend stock or senior or parity liquidation stock or
having class voting rights except as required by the Delaware General
Corporation Law or voting rights in excess of one vote per share, (ii) amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Corporation's Certificate of Incorporation if the amendment, alteration or
repeal materially and adversely affects the powers, preferences or special
rights of the Series C Preferred Stock, or (iii) declare any reverse stock
dividend with respect to the Series C Preferred Stock or otherwise reduce the
number of outstanding shares of Series C Preferred Stock other than pursuant to
Section 4 or 5 hereof; provided, however, that the approval of not less than
two-thirds of the outstanding shares of Series C Preferred Stock, voting as a
class, shall be required to amend, alter, or repeal any of the provisions of the
Certificate of Incorporation of the Corporation that would adversely affect the
dividend provisions, liquidation rights, conversion terms, or voting rights of
the Series C Preferred Stock or the holders thereof.
(c) A special meeting of holders of the Series C Preferred Stock (or a
request for a vote by written consent without a meeting) to approve or
disapprove any action of the Corporation on which the holders of the Series C
Preferred Stock are entitled to vote as a separate class by law or pursuant to
this Section 7 may be called by the Secretary of the Corporation or by the
holder(s) of twenty-five percent (25%) or more of the outstanding shares of
Series C Preferred Stock on written notice to the address of each holder thereof
as it appears on the records of the Corporation deposited in the U.S. mail, all
charges prepaid, at least ten (10) but no more than sixty (60) days prior to the
applicable vote. The record date for determination of the holders of the Series
C Preferred Stock entitled to vote by written consent or at a meeting shall be
set by the Corporation's Board of Directors, and only holders who are holding of
record on the stock book of the Corporation on that date will be entitled to
participate in such vote. At any time at which any share of Series C Preferred
Stock has been issued and is outstanding, no proposal for the Corporation to
take any action described in this paragraph (b) shall be adopted, nor shall the
Corporation be authorized to take any such action, unless the holders of at
least two-thirds of the outstanding shares of Series C Preferred Stock voting as
a separate class vote in favor of such proposal.
(d) Copies of all notices sent to the holders of Common Stock shall be
simultaneously sent to each holder of the Series C Preferred Stock.
(e) In exercising the voting rights set forth in this Section 7, each
share of Series C Preferred Stock shall have one vote per share.
(f) No consent of the holders of the Series C Preferred Stock, except
to the extent such holders are entitled to vote together with the holders of the
Series B Preferred Stock or Common Stock, shall be required for (i) the
creation, authorization or issuance of any indebtedness of any kind of the
Corporation, (ii) the creation, authorization or issuance of any other class of
stock of the Corporation subordinate as to dividends and upon liquidation to the
-6-
<PAGE>
Series C Preferred Stock, or (iii) any increase or decrease in the amount of
authorized Common Stock or Series B Preferred Stock or any increase, decrease or
change in the par value thereof, and none of the foregoing shall be deemed to
affect adversely the powers, special rights or preferences of holders of the
Series C Preferred Stock.
(8) Business Combinations. In case the Corporation is a participant in a
---------------------
consolidation, merger or combination with another corporation (other than with a
wholly-owned subsidiary of the Corporation and other than a merger which does
not result in any reclassification, conversion, exchange or cancellation of the
Common Stock) or in case of any sale or transfer of all or substantially all of
the assets of the Corporation, as a result of which holders of the Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or any
share exchange whereby the Common Stock is converted into other securities or
property of the Corporation, then as a condition to the consummation of such
transaction, lawful and adequate provision shall be made so that the holder of
each share of Series C Preferred Stock then outstanding shall have the right,
with respect to such shares of Series B Preferred Stock, to receive stock, other
securities or property or assets (including cash) or any combination thereof,
having a value equal to the product of (a) the quotient obtained by dividing (x)
$100 plus all accrued and unpaid dividends, whether or not declared, on the
Series C Preferred Stock by (y) the then Existing Conversion Price for the
Series B Preferred Stock (as adjusted to give effect to such transaction), and
(b) the value of the stock, other securities, property and assets (including
cash) which each holder of one share of Common Stock is entitled to receive upon
such consolidation, merger, combination, sale or transfer, or exchange.
IN WITNESS WHEREOF, UNC Incorporated has caused this certificate to be
signed by its Chairman of the Board and Chief Executive Officer and attested by
its Secretary this 5th day of October, 1995.
UNC INCORPORATED
By:
----------------------------
Dan A. Colussy
Chairman of the Board and
Chief Executive Officer
ATTEST:
- ------------------------
Secretary
-7-
<PAGE>
EXHIBIT 4.7
FIRST AMENDMENT TO RIGHTS AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of May ___, 1996,
by and between UNC Incorporated, a Delaware corporation (the "Company"), and
Chemical Bank, as successor to Manufacturers Hanover Trust Company (the "Rights
Agent").
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement, dated as of September 25, 1987 (the "Rights Agreement"), setting
forth the terms of the Rights (as defined in the Rights Agreement);
WHEREAS, by filing the Certificate of the Designation, Powers,
Preferences and Rights of the Series B Cumulative Convertible Preferred Stock
with the Secretary of State of the State of Delaware on October 24, 1995, the
Company created a new series of preferred stock designated as Series B Senior
Cumulative Convertible Preferred Stock, par value $1.00 per share ("Series B
Preferred Shares"), shares of which may be converted into the Company's Common
Shares (as defined in the Rights Agreement);
WHEREAS, the Company entered into a Stock Purchase Agreement, dated as
of October 4, 1995, between the Company and the Purchasers set forth therein,
whereby the Company and the Purchasers granted options to the other with regard
to the Series B Preferred Shares;
WHEREAS, the Board of Directors of the Company has determined it is
appropriate that, consistent with the terms of the Rights Agreement, the
Purchasers not be considered "Acquiring Persons" under the Rights Agreement with
respect to their acquisition of the Series B Preferred Shares or the Common
Shares issuable upon conversion of the Series B Preferred Shares;
WHEREAS, the Company intends that each holder of shares of Series B
Preferred Shares have Rights equivalent to the Rights such holder would have as
the holder of the number of the Company's Common Shares issuable upon conversion
of the Series B Preferred Shares owned by that holder;
WHEREAS, the Company and the Rights Agent may, from time to time,
supplement or amend the Rights Agreement pursuant to the provisions of Section
26 of the Rights Agreement; and
WHEREAS, all acts and things necessary to make this First Amendment
Agreement a valid, legal and binding instrument of the Company and the Rights
Agent have been duly done, performed and fulfilled and the execution and
delivery hereof by each of the Company and the Rights Agent have been in all
respects duly authorized by the Company and the Rights Agent, respectively.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby
<PAGE>
acknowledged, the Company and the Rights Agent hereby agree as follows:
1. The Rights Agreement is hereby amended by inserting the following
after the phrase "(as such terms are hereinafter defined)" in the 13th line of
the recital paragraph:
and, in accordance with paragraph (d) of Section 3 hereof, the
issuance of a number of Rights with respect to each share of the
Company's Series B Senior Cumulative Convertible Preferred Stock, par
value $1.00 per share ("Series B Preferred Shares"), that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date
which number shall be equal to the number of shares of the Company's
Common Stock into which such share of the Series B Preferred Shares is
convertible.
2. The Rights Agreement is hereby amended by inserting the following
sentence at the end of Section 1(a) of the Rights Agreement:
The term "Acquiring Person" shall not mean or include any of the
Persons who are parties as signatories to a Stock Purchase Agreement,
dated as of October 4, 1995, by and among the Company and such
signatories, or who are "Permitted Transferees" (as that term is
defined in Section 10.1 of that Stock Purchase Agreement), solely by
reason of the purchase by such Persons of Series B Preferred Shares or
Common Shares issuable upon conversion of Series B Preferred Shares;
provided, however, that such exclusion from the definition of
-------- -------
"Acquiring Person" shall not be given effect if any such Person
breaches the terms of Section 10.1 of that Stock Purchase Agreement.
3. The Rights Agreement is hereby amended by inserting a new
paragraph (d) at the end of Section 3 as follows:
(d) Each holder of shares of Series B Preferred Shares shall have
under this Agreement all of the rights, and shall be subject under
this Agreement to all of the restrictions, of a holder of that number
of Common Shares into which that holder's Series B Preferred Shares
are from time to time convertible and the Rights in respect of the
Series B Preferred Shares shall be evidenced and transferred as though
the certificates evidencing those Series B Preferred Shares were
Common Share certificates. Certificates for Series B Preferred Shares
which become outstanding prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the
same legend as is set forth in the preceding paragraph (c).
- 2 -
<PAGE>
4. The term "Agreement" as used in the Rights Agreement shall be deemed to
refer to the Rights Agreement as amended hereby.
5. This First Amendment to Rights Agreement may be executed in two or
more counterparts and each of such counterparts shall for all purposes be deemed
to be an original and all such counterparts shall together constitute but one in
the same instrument. Terms not defined herein shall, unless the context
otherwise requires, have the meanings assigned to such terms in the Rights
Agreement.
6. In all respects not inconsistent with the terms and provisions of this
First Amendment to Rights Agreement, the Rights Agreement is hereby ratified and
confirmed. In executing and delivering this First Amendment to Rights Agreement,
the Rights Agent shall be entitled to all of the privileges and immunities
afforded to the Rights Agent under the terms and conditions of the Rights
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the date first written above.
ATTEST: UNC INCORPORATED
______________________________ By:___________________________(SEAL)
Name: Name:
Title: Title:
ATTEST: CHEMICAL BANK
______________________________ By:___________________________(SEAL)
Name: Name:
Title: Title:
- 3 -
<PAGE>
EXHIBIT 5
[Letterhead of Miles & Stockbridge]
October 25, 1996
UNC Incorporated
175 Admiral Cochrane Drive
Annapolis, Maryland 21401
Gentlemen:
In connection with the registration statement (the "Registration
Statement") on Form S-3 filed with the Securities and Exchange Commission (the
"Commission") for the resale under the Securities Act of 1933 (the "Securities
Act") of the Series B Senior Cumulative Convertible Preferred Stock, par value
$1.00 per share (the "Series B Preferred Stock"), the Series C Senior Cumulative
Preferred Stock, par value $1.00 per share (the "Series C Preferred Stock"),
that may be paid from time to time as a dividend on such shares of Series B
Preferred Stock and the common stock, par value $.20 per share (the "Common
Stock"), of UNC Incorporated (the "Company") issuable upon conversion of the
Series B Preferred Stock (the "Conversion Shares"), we have examined such
corporate records, certificates and documents as we deemed necessary for the
purpose of rendering this opinion.
Based on the foregoing, we are of the opinion that (i) the Series B
Preferred Stock has been duly and validly issued and is fully paid and
non-assessable, (ii) the Series C Preferred Stock, when issued in accordance
with the Company's Certificate of Incorporation, its Bylaws, as amended, and
certain resolutions adopted by the Board of Directors of the Company and related
to the valid declaration of such Series C Preferred Stock as a dividend under
the General Corporation Law of the State of Delaware, will, when so issued, be
legally issued, fully paid and non-assessable, and (iii) the Conversion Shares,
when issued in accordance with the Company's Certificate of Incorporation, as
amended, will, when so issued, be legally issued, fully paid and non-assessable.
For purposes of the opinion expressed in clause (iii) above, we have assumed
that the Company will have sufficient shares of Common Stock authorized and
unissued in its Certificate of Incorporation in order to satisfy the Company's
obligation to issue such shares.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not
<PAGE>
UNC Incorporated
October 25, 1996
Page 2
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations promulgated
thereunder by the Commission.
Very truly yours,
Miles & Stockbridge,
a Professional Corporation
By: /s/ John B. Frisch
-------------------------------------
Principal
<PAGE>
EXHIBIT 23.1
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors and Shareholders
UNC Incorporated:
We consent to the incorporation by reference in the registration statement of
UNC Incorporated on Form S-3 (File No. 333-_______) of our report dated February
26, 1996, on our audits of the consolidated financial statements of UNC
Incorporated and subsidiaries as of December 31, 1995 and 1994, and for the
years then ended, which report also appears in the December 31, 1995 Annual
Report on Form 10-K of UNC Incorporated. We also consent to the reference to
our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Washington, D.C.
October 25, 1996
<PAGE>
EXHIBIT 23.2
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors and Shareholders
UNC Incorporated:
We consent to the incorporation by reference in the registration statement of
UNC Incorporated on Form S-3 (File No. 333-_______) of our report dated July 26,
1996, on our audits of the statements of earnings and cash flows of certain of
the Hangar facilities (as described in Note 1 to the financial statements) of
AlliedSignal Engines - Hanger Operations, a division of AlliedSignal Inc., for
the six month period ended June 30, 1994 and the year ended December 31, 1993.
We also consent to the reference to our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Washington, D.C.
October 25, 1996
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
UNC Incorporated:
We consent to the incorporation by reference in the registration statement on
Form S-3 (Reg. No. 333- ) of UNC Incorporated of our report dated February
9, 1994, relating to the consolidated statements of earnings, changes in
shareholders' equity and cash flows for the year ended December 31, 1993, which
report appears in the December 31, 1995 Annual Report on Form 10-K of UNC
Incorporated and its subsidiaries, incorporated by reference herein, and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Washington, D.C.
October 25, 1996
<PAGE>
EXHIBIT 23.4
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 1, 1996, with respect to the consolidated
financial statements of Garrett Aviation Services and subsidiary included in the
Current Report on Form 8-K of UNC Incorporated, incorporated by reference in the
Registration Statement of UNC Incorporated (Form S-3) pertaining to the Series B
Senior Cumulative Convertible Preferred Stock, the Series C Senior Cumulative
Preferred Stock and the Common Stock.
ERNST & YOUNG LLP
Phoenix, Arizona
October 25, 1996
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned Directors of UNC Incorporated (the "Corporation") each hereby
constitutes and appoints Richard H. Lange and Robert L. Pevenstein, and each of
them, with power of substitution, our true and lawful attorneys with full power
to sign for us, in our names and in the capacities indicated below, a
registration statement on Form S-3 (or other applicable form), and all
amendments thereto (including post-effective amendments), for the purpose of
registering under the Securities Act of 1933 (i) up to 250,000 shares of the
outstanding Series B Senior Cumulative Convertible Preferred Stock of the
Corporation (the "Series B Preferred Stock"), (ii) all of the shares of the
Corporation's Common Stock which may be issued from time to time by the
Corporation upon the conversion of the Series B Preferred Stock, and (iii) all
of the shares of the Corporations's Series C Senior Cumulative Preferred Stock
which may be issued from time to time by the Corporation in connection with the
payment of dividends on the Series B Preferred Stock.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berl Bernhard Director September 27, 1996
- -----------------------------
Berl Bernhard
/s/ Beverly Byron Director September 27, 1996
- -----------------------------
Beverly Byron
/s/ John K. Castle Director September 27, 1996
- -----------------------------
John K. Castle
/s/ John W. Gildes Director September 27, 1996
- -----------------------------
John W. Gildes
/s/ Freeman A. Hrabowski, III Director September 27, 1996
- -----------------------------
Freeman A. Hrabowski, III
</TABLE>
1
<PAGE>
Signature Title Date
--------- ----- ----
/s/ George V. McGowan Director September 27, 1996
- -----------------------
George V. McGowan
/s/ Jack Moseley Director September 27, 1996
- -----------------------
Jack Moseley
/s/ Lawrence A. Skantze Director September 27, 1996
- -----------------------
Lawrence A. Skantze
2
