<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended September 30, 1999
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
------- -------
Commission file number 1-10638
-------
CAMBREX CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2476135
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073
--------------------------------------------------------
(Address of principal executive offices)
(201) 804-3000
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
As of November 1, 1999, there were 24,603,685 shares outstanding of
the registrant's Common Stock, $.10 par value.
<PAGE> 2
CAMBREX CORPORATION AND SUBSIDIARIES
FORM 10-Q
For The Quarter Ended September 30,1999
Table of Contents
<TABLE>
<CAPTION>
Page No.
--------
Part I Financial information
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets as of
September 30, 1999 and December 31, 1998 2
Condensed consolidated income statements
for the three months and nine months ended
September 30, 1999 and 1998 3
Condensed consolidated statements of comprehensive
income for the three months and nine months ended
September 30, 1999 and 1998 4
Condensed consolidated statements of cash flows
for the nine months ended September 30, 1999 and 1998 5
Notes to condensed consolidated financial statements 6 - 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 21
Part II Other information
Item 4. Matters Submitted to a Vote of Securities Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
Exhibit 27 - Financial Data Schedule 24
</TABLE>
<PAGE> 3
Part 1 - FINANCIAL INFORMATION
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................... $ 30,759 $ 48,527
Trade receivables, net.................................................. 74,274 56,964
Inventories, net........................................................ 100,708 100,245
Deferred tax assets..................................................... 11,759 11,759
Other current assets.................................................... 13,217 14,031
-------- --------
Total current assets................................................ 230,717 231,526
Property, plant and equipment, net........................................... 287,186 255,016
Intangible assets, net....................................................... 153,203 126,995
Other non-current assets..................................................... 8,567 3,517
-------- --------
Total assets........................................................ $679,673 $617,054
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities................................ $ 72,806 $ 63,467
Income taxes payable.................................................... 5,895 8,733
Short-term debt......................................................... 1,191 3,029
------- --------
Total current liabilities........................................... 79,892 75,229
Long-term debt............................................................... 226,996 191,372
Deferred tax liabilities..................................................... 54,167 52,183
Other noncurrent liabilities................................................. 20,589 21,010
------- --------
Total liabilities................................................... 381,644 339,794
------- -------
Stockholders' equity:
Common stock, $.10 par value; issued 26,682,049 and
26,573,324 shares at respective dates............................... 2,665 2,655
Additional paid-in capital.............................................. 165,418 163,525
Retained earnings....................................................... 162,041 132,471
Treasury stock, at cost; 2,099,239 and 2,081,099
shares at respective dates........................................... (10,232) (9,841)
Accumulated other comprehensive income/(loss)........................... (21,863) (11,550)
-------- ---------
Total stockholders' equity.......................................... 298,029 277,260
------- -------
Total liabilities and stockholders' equity.......................... $679,673 $617,054
======= =======
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE> 4
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
(in thousands, except per-share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross sales.................................... $118,602 $104,423 $359,763 $334,366
Commissions, freight and allowances....... 1,709 1,837 5,224 5,255
--------- --------- -------- --------
Net sales...................................... 116,893 102,586 354,539 329,111
Other revenues............................ 557 5,364 2,965 15,945
--------- --------- -------- --------
NET REVENUES................................... 117,450 107,950 357,504 345,056
Cost of goods sold............................. 78,216 69,111 234,908 219,446
--------- --------- -------- --------
GROSS PROFIT................................... 39,234 38,839 122,596 125,610
Operating expenses:
Selling, general and administrative....... 18,301 18,556 57,598 56,560
Research and development.................. 3,842 3,307 10,742 10,502
Restructuring charge...................... - 1,400 - 1,400
--------- --------- -------- --------
Total operating expenses................ 22,143 23,263 68,340 68,462
OPERATING PROFIT............................... 17,091 15,576 54,256 57,148
Other expenses:
Interest expense, net..................... 2,678 2,209 6,904 7,879
Other expense, net........................ 189 364 358 206
--------- --------- -------- --------
Income before income taxes..................... 14,224 13,003 46,994 49,063
Provision for income taxes................ 4,551 4,152 15,216 20,183
--------- --------- -------- --------
NET INCOME..................................... $ 9,673 $ 8,851 $ 31,778 $ 28,880
========= ========= ======== ========
Weighted average shares outstanding:
Basic..................................... 24,583 24,288 24,560 24,119
Effect of dilutive stock options.......... 1,071 1,195 962 1,258
--------- --------- -------- --------
Diluted................................... 25,654 25,483 25,522 25,377
Earnings per share of common stock and
common stock equivalents:
Basic..................................... $ 0.39 $ 0.36 $ 1.29 $ 1.20
========= ========= ======== ========
Diluted................................... $ 0.38 $ 0.35 $ 1.25 $ 1.14
========= ========= ======== ========
Cash dividends paid per share.................. $ 0.03 $ 0.03 $ 0.09 $ 0.08
========= ========= ======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE> 5
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income.......................................... $ 9,673 $ 8,851 $ 31,778 $ 28,880
Other comprehensive income:
Foreign currency translation adjustments*...... 6,589 7,112 (10,313) 8,160
-------- -------- -------- --------
Comprehensive income................................ $ 16,262 $ 15,963 $ 21,465 $ 37,040
======== ======== ======== ========
</TABLE>
- ---------
* The Company does not provide for U.S. income taxes on foreign currency
translation adjustments because it does not provide for such taxes on
undistributed earnings of foreign subsidiaries.
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE> 6
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................................. $ 31,778 $ 28,880
Depreciation and amortization........................................... 31,910 30,192
Deferred income tax provision........................................... 296 5,863
Changes in assets and liabilities (net of assets and liabilities acquired):
Receivables, net.................................................... (8,654) (13,377)
Inventories......................................................... 6,783 (11,431)
Prepaid expenses and other current assets........................... (1,109) (1,818)
Accounts payable and accrued liabilities............................ 9,044 7,798
Income taxes payable................................................ (2,077) 4,174
Other noncurrent assets and liabilities............................. (4,367) 1,591
--------- ---------
Net cash provided by operating activities........................... 63,604 51,872
--------- ---------
Cash flows from investing activities:
Capital expenditures.................................................... (25,617) (30,596)
Acquisition of businesses (net of cash acquired)........................ (75,338) (15,199)
Other investing activities.............................................. (170) 1,923
--------- ---------
Net cash used in investing activities............................... (101,125) (43,872)
--------- ---------
Cash flows from financing activities:
Dividends............................................................... (2,208) (1,927)
Net decrease in short-term debt......................................... (1,496) (1,528)
Long-term debt activity (including current portion):
Borrowings.......................................................... 44,500 34,100
Repayments.......................................................... (14,363) (29,124)
Proceeds from the issuance of common stock.............................. 1,958 5,238
Purchase of treasury stock.............................................. (446) (218)
--------- ---------
Net cash provided by financing activities........................... 27,945 6,541
--------- ---------
Effect of exchange rate changes on cash...................................... (8,192) 5,154
--------- ---------
Net (decrease) increase in cash and cash equivalents......................... (17,768) 19,695
Cash and cash equivalents at beginning of period............................. 48,527 21,469
--------- ---------
Cash and cash equivalents at end of period................................... $ 30,759 $ 41,164
========= =========
Supplemental disclosure:
Interest paid (net of capitalized interest)............................. $ 7,581 $ 10,182
Income taxes paid....................................................... $ 13,424 $ 12,548
Depreciation expense.................................................... $ 25,206 $ 23,102
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE> 7
CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per-share amounts)
(1) BASIS OF PRESENTATION
Unless otherwise indicated by the context, "Cambrex" or the "Company"
means Cambrex Corporation and subsidiaries.
The accompanying unaudited Condensed Consolidated Financial Statements
have been prepared from the records of the Company. In the opinion of
management, the financial statements include all adjustments necessary for a
fair presentation of financial position and results of operations in conformity
with generally accepted accounting principles. These interim financial
statements should be read in conjunction with the financial statements for the
year ended December 31, 1998.
The results of operations for the three and nine months ended September
30, 1999 are not necessarily indicative of the results to be expected for the
full year.
(2) INVENTORIES
Inventories at September 30, 1999 and December 31, 1998 consist of the
following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
-------- --------
<S> <C> <C>
Finished goods................... $ 40,192 $ 54,264
Work in process.................. 27,125 20,177
Raw materials.................... 27,919 20,105
Fuel oil and supplies............ 5,472 5,699
-------- --------
Total....................... $100,708 $100,245
======== ========
</TABLE>
(3) ACQUISITIONS
On July 12, 1999, Cambrex completed the acquisition of FMC Corporation's
BioProducts business, which has been renamed BioWhittaker Molecular Applications
("BMA"). The business, which serves the life sciences industry, is the world's
largest manufacturer of electrophoresis media based on the polymer agatose. The
transaction includes two operating facilities located in Rockland, Maine and
Copenhagen, Denmark. Cambrex paid approximately $38,000 for the business, of
which $31,000 was financed through the Company's revolving credit agreement and
$7,000 through the Company's cash reserves.
6
<PAGE> 8
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) ACQUISITIONS (CONTINUED)
On March 12, 1999, Cambrex completed the acquisition of Irotec
Laboratories Ltd. ("Irotec"), a supplier of active pharmaceutical ingredients
(APIs) located in Cork, Ireland. Cambrex paid approximately $35,000 for the
business, net of cash acquired, which was financed through the Company's cash
reserves.
On January 4, 1999, the Company acquired Poietic Technologies, Inc.
("Poietics"), the leading supplier of normal human cells of hematopoietic
origin. The Company paid $2,500 cash and will pay future consideration based on
the performance of the business.
The above acquisitions have been accounted for by the purchase method of
accounting and accordingly the results of operations of the acquisitions are
included in the accompanying consolidated financial statements from the date of
the acquisition. Assets acquired and liabilities assumed have been recorded at
their estimated fair values, and are subject to adjustment when additional
information concerning asset and liability valuations are finalized.
The proforma information for the above acquisitions has not been
included in these financial statements, as it was deemed to be immaterial, both
individually and collectively.
For the three and nine months ended September 30, 1999, the above
acquisitions increased gross sales by $11,011 and $18,418, respectively,
operating profit by $1,000 and $2,180, respectively, net income by ($168) and
$415, respectively, and earnings per share by ($0.01) and $0.01, respectively.
(4) COMMITMENTS
On August 11, 1999, the Company completed a marketing, development
and media supply agreement with Osiris Therapeutics, Inc. covering adult stem
cells, the progenitors of structural and connective tissues. The Company's
BioWhittaker subsidiary will manufacture and market adult stem cell products for
the life science research market through an exclusive worldwide license from
Osiris. BioWhittaker will also become the exclusive supplier of culture media to
Osiris for the production of human adult stem cells in therapeutic applications.
The two companies will share development costs and Osiris will receive royalties
on sales of research reagents. Cambrex also purchased $5,000 of Osiris Common
Stock, which represents approximately 5% ownershipinterest in the Company, and
has agreed to purchase an additional $2,000 of Common Stock coincident with an
Osiris initial public offering. Cambrex also received preemptive rights to
maintain its equity position in subsequent rounds of financing. The $5,000 paid
for Osiris Common Stock is included in Other Non-current Assets.
On March 19, 1999, Cambrex announced that it had entered into a put
option and call option pertaining to the stock of Conti BPC NV ("Conti"), a
manufacturer and supplier of pharmaceutical intermediates and active
pharmaceutical ingredients located in Landen, Belgium. Cambrex granted a put
option for the stock of Conti that may be exercised from March 1, 2001 to March
1, 2002 to the seller. Simultaneously, Cambrex was granted a call option with
terms similar to the put option by the seller. The purchase price for Conti in
the put and call option is approximately $5,000, subject to future working
capital adjustments.
7
<PAGE> 9
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) INCOME TAXES
The provision for income taxes of September 30, 1999 resulted in an
effective rate of 32% versus 41% at September 30, 1998. The decrease is mainly
due to the effect of the Italian Substitute Tax Election, which was recorded in
the second quarter of 1998. This election caused the provision for income tax to
increase by $3,420 in 1998, but allows previously non-deductible goodwill of
Cambrex's Italian subsidiary, Profarmaco, S.r.l., to be deducted and will result
in a total future tax benefit in the years 1999 to 2004 of approximately $8,000.
Excluding the Italian Substitute Tax, the effective tax rate would have been 35%
in 1998.
(6) LONG-TERM DEBT
Long-term debt at September 30, 1999 and December 31, 1998 consists of
the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------- ---------
<S> <C> <C>
Bank credit facilities........... $ 220,500 $ 190,000
Other............................ 6,946 1,950
--------- ---------
Subtotal.................... 227,446 191,950
Less: current portion........... 450 578
--------- ---------
Total....................... $ 226,996 $ 191,372
========= =========
</TABLE>
The Company met all the bank covenants for the first nine months of
1999.
8
<PAGE> 10
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) SEGMENT INFORMATION
Following is a summary of business segment information for the following
dates:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross Sales:
------------
Human Health............................... $ 55,851 $ 45,211 $170,561 $148,374
Biotechnology.............................. 23,924 16,504 58,896 48,506
Animal Health/Agriculture.................. 10,019 11,985 41,541 42,157
Specialty Business......................... 28,808 30,723 88,765 95,329
-------- -------- -------- --------
$118,602 $104,423 $359,763 $334,366
======= ======= ======= =======
Gross Profit:
-------------
Human Health............................... $ 17,597 $ 22,052 $ 62,680 $ 71,322
Biotechnology.............................. 12,126 7,907 29,279 23,705
Animal Health/Agriculture.................. 2,075 2,331 8,479 9,214
Specialty Business......................... 7,436 6,549 22,158 21,369
-------- -------- -------- --------
$ 39,234 $ 38,839 $122,596 $125,610
======== ======= ======= =======
Net Income:
-----------
Biotechnology.............................. $ 1,216 $ (3) $ 1,477 $ 1,505
Human Health, Animal Health/
Agriculture & Specialty Business........ 8,457 8,854 30,301 27,375
-------- -------- -------- --------
$ 9,673 $ 8,851 $ 31,778 $ 28,880
======== ======= ======= =======
Capital Spending:
-----------------
Biotechnology.............................. $ 446 $ 1,697 $ 1,399 $ 2,901
Human Health, Animal Health/
Agriculture & Specialty Business........ 10,869 11,588 24,218 27,695
-------- -------- -------- --------
$ 11,315 $ 13,285 $ 25,617 $ 30,596
======== ======= ======= =======
Depreciation:
-------------
Biotechnology.............................. $ 1,045 $ 480 $ 1,883 $ 1,357
Human Health, Animal Health/
Agriculture & Specialty Business........ 8,149 7,349 23,323 21,745
-------- -------- -------- --------
$ 9,194 $ 7,829 $ 25,206 $ 23,102
======== ======= ======= =======
Amortization:
-------------
Biotechnology.............................. $ 1,371 $ 1,108 $ 3,644 $ 3,306
Human Health, Animal Health/
Agriculture & Specialty Business........ 1,108 1,194 3,060 3,784
-------- -------- -------- --------
$ 2,479 $ 2,302 $ 6,704 $ 7,090
======== ======== ======== ========
September 30, December 31,
1999 1998
-------- --------
Total Assets:
--------------------
Biotechnology.............................. $ 196,045 $154,082
Human Health, Animal Health/
Agriculture & Specialty Business........ 483,628 462,972
-------- --------
$679,673 $617,054
======== ========
</TABLE>
9
<PAGE> 11
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) CONTINGENCIES
The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary course
of its business activities.
Environmental
In connection with laws and regulations pertaining to the protection of
the environment, the Company is a party to several environmental remediation
investigations and cleanups and, along with other companies, has been named a
"potentially responsible party" for certain waste disposal sites (Superfund
sites). Each of these matters is subject to various uncertainties, and it is
possible that some of these matters will be decided unfavorably against the
Company. The Company had accruals, included in current accrued liabilities and
other noncurrent liabilities, of $3,500 at September 30, 1999, and $4,800 at
December 31, 1998, for costs associated with the study and remediation of
Superfund sites and the Company's current and former operating sites for matters
that are probable and reasonably estimable. The Company reversed accruals of
approximately $1,000 in 1999 and $800 in 1998, as a result of revised estimates.
After reviewing information currently available, management believes any amounts
paid in excess of the accrued liabilities will not have a material effect on its
financial position or results of operations. However, these matters, if resolved
in a manner different from the estimates, could have a material adverse effect
on financial condition, operating results and cash flows when resolved in a
future reporting period.
Litigation
The Company and its subsidiary Profarmaco S.r.l. ("Profarmaco") were
named as defendants in a proceeding instituted by the Federal Trade Commission
("FTC") on December 21, 1998, in the United States District Court for the
District of Columbia. The complaint alleges that exclusive license agreements
which Profarmaco entered into with Mylan Laboratories, Inc. ("Mylan") covering
the drug master files for (and, therefore, the right to buy and use) two active
pharmaceutical ingredients ("APIs"), lorazepam and clorazepate, were part of an
effort on Mylan's part to restrict competition in the supply of lorazepam and
clorazepate and to increase the price charged for these products when Mylan sold
them as generic pharmaceuticals. The complaint further alleges that these
agreements violate the Federal Trade Commission Act, and that Mylan, Cambrex,
Profarmaco, and Gyma Laboratories of America, Inc., Profarmaco's distributor in
the United States, engaged in an unlawful restraint of trade and conspired to
monopolize and attempted to monopolize the markets for the generic
pharmaceuticals incorporating the APIs. The FTC seeks a permanent injunction and
other relief, including disgorgement of the profits generated through the
licensing arrangements, which the FTC alleges to be in excess of $120,000 for
all defendants. In accordance with the license agreement, the Company received
royalties of approximately $19,300 for the year ended December 31, 1998. The
third quarter 1998 included $4,400 in royalty income from Mylan. The royalty
arrangements under the agreement have concluded, however, and the Company sold
these products on a non-exclusive basis in 1999.
10
<PAGE> 12
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) CONTINGENCIES (CONTINUED)
A lawsuit making similar allegations against the Company and Profarmaco,
and seeking injunctive relief and treble damages, has been filed by the
Attorneys General of 31 states and the District of Columbia in the United States
District Court for the District of Columbia on behalf of those states and
persons in those states who were purchasers of the generic pharmaceuticals. The
Company and Profarmaco have also been named in purported class action complaints
brought by private plaintiffs in various state courts on behalf of purchasers of
lorazepam and clorazepate in generic form, making allegations essentially
similar to those raised in the FTC's complaint and seeking various forms of
relief including treble damages.
The Company believes that its licensing arrangements with Mylan are in
accordance with regulatory requirements and will vigorously defend the FTC's
actions and various other lawsuits and class actions. However, the Company and
Mylan have terminated the exclusive licenses to the drug master files. The
future royalty arrangements under the agreements have concluded as of December
31, 1998. In entering these licensing arrangements, the Company elected not to
raise the price of its products and had no control or influence over the pricing
of the final generic product forms by Mylan.
On May 14, 1998, the Company's Nepera subsidiary, a manufacturer and
seller of niacinamide (Vitamin B3), received a Federal Grand Jury subpoena for
the production of documents relating to the pricing and possible customer
allocation with regard to that product. The Company understands that the
subpoena was issued as part of the Federal Government's ongoing antitrust
investigation into various business practices in the vitamin industry generally.
The Company and Nepera have been cooperating fully with the government's
investigation.
Nepera has been named as a defendant, along with several other
companies, in two civil actions brought on behalf of alleged purchasers of
Vitamin B3. One action, entitled Cox v. F. Hoffman-LaRoche, Ltd., et al., which
was filed in the United States District Court for the Southern District of
Mississippi on behalf of a purported class of indirect purchasers of vitamins
(including Vitamin B3), vitamin premixes and other vitamin products in 15 states
and the District of Columbia, seeks injunctive relief under the federal
antitrust laws and unspecified damages under the antitrust laws of various
states. This action has been transferred to the United States District Court for
the District of Columbia (the "D.C. federal court"). Nepera is also named as a
defendant, but has not been served with a summons and complaint, in a second
action, entitled Shaklee Corporation v. Lonza Inc., et al., which is also
pending in the D.C. federal court, which was brought on behalf of a purported
class of direct purchasers of Vitamin B3. This action seeks injunctive relief
and damages in an unspecified amount for alleged violations of Section 1 of the
Sherman Act.
While it is not possible to predict with certainty the outcome of the
FTC action and various other lawsuits and class actions, it is the opinion of
management that the ultimate resolution of these proceedings should not have a
material adverse effect on the Company's results of operations, cash flows and
financial position. These matters, if resolved in an unfavorable manner, could
have a material effect on the operating results and cash flows when resolved in
a future reporting period.
11
<PAGE> 13
CAMBREX CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(in thousands, except per-share amounts)
RESULTS OF OPERATIONS
COMPARISON OF THIRD QUARTER 1999 VERSUS THIRD QUARTER 1998
The results for the third quarter of 1999 were above the same period a year ago
due to increased sales in the Human Health and Biotechnology Segments, as well
as lower administrative expenses. The effective tax rate for the quarter ended
September 1999 was 32%, which was the same in the third quarter 1998.
The following tables show the gross sales of the Company's four segments, in
dollars and as a percentage of the Company's total gross sales for the quarters
ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
Quarter Ended September 30,
---------------------------
1999 1998
---- ----
$ % $ %
- - - -
<S> <C> <C> <C> <C>
Human Health.................................................. $ 55,851 47.1% $ 45,211 43.3%
Biotechnology................................................. 23,924 20.2 16,504 15.8
Animal Health/Agriculture..................................... 10,019 8.4 11,985 11.5
Specialty Business............................................ 28,808 24.3 30,723 29.4
-------- ------ -------- ----
Total gross sales ...................................... $118,602 100.0% $104,423 100.0%
======== ====== ======== ====
</TABLE>
The following table shows the gross profit of the Company's four product
segments for the third quarter 1999 and 1998.
<TABLE>
<CAPTION>
Gross Gross Gross
Sales Profit $ Profit %
------ -------- --------
1999
- ----
<S> <C> <C> <C>
Human Health.................................................. $ 55,851 $ 17,597 31.5%
Biotechnology................................................. 23,924 12,126 50.7
Animal Health/Agriculture..................................... 10,019 2,075 20.7
Specialty Business............................................ 28,808 7,436 25.8
-------- -------- -----
Total................................................... $118,602 $ 39,234 33.1%
======== ======== =====
Gross Gross Gross
Sales Profit $ Profit %
----- -------- --------
1998
- ----
<S> <C> <C> <C>
Human Health.................................................. $ 45,211 $ 22,052 48.8%
Biotechnology................................................. 16,504 7,907 47.9
Animal Health/Agriculture..................................... 11,985 2,331 19.4
Specialty Business............................................ 30,723 6,549 21.3
-------- -------- -----
Total................................................... $104,423 $ 38,839 37.2%
======== ======== =====
</TABLE>
12
<PAGE> 14
RESULTS OF OPERATIONS (CONTINUED)
Gross sales in the third quarter 1999 increased 13.6% to $118,602 from $104,423
in the third quarter 1998. Sales in the Human Health and Biotechnology product
segments increased compared to the third quarter 1998 and more than offset the
decreases in the Animal Health/Agricultural and Specialty Business segments.
The foreign currency translation adjustments increased by $6,589, reducing the
negative balance to $21,863. This improvement is attributable to exchange rate
fluctuations in the Italian lira, Swedish Krona and Pound Sterling against the
U.S. dollar in the third quarter 1999. The exchange rate increased from 1,878
lira to the dollar at June 30, 1999 to 1,818 lira to the dollar at September 30,
1999, an improvement of 3%; from 8.50 Krona to the dollar at June 30, 1999 to
8.20 Krona to the dollar at September 30, 1999, an improvement of 4%; from .634
Pound Sterling to the dollar at June 30, 1999 to .607 Pound Sterling to the
dollar at September 30, 1999, an improvement of 4%.
The Human Health Segment gross sales of $55,851 were $10,640 (24%) above the
third quarter 1998. Gross sales were above the prior year due to increased
demand for generic pharmaceuticals used in gastro-intestinal, cardiovascular and
central nervous system preparations, as well as new products and sales generated
by our acquisition of Irotec in Ireland. Irotec sales were $5,252 in the third
quarter. Partially offsetting these increases was the absence of sales of an
advanced intermediate used in the manufacture of a drug for AIDS treatment,
which had $1,400 in sales in the third quarter 1998.
The Biotechnology Segment gross sales of $23,924 were $7,420 (45%) above the
third quarter 1998 from increased shipments of cell culture and endotoxin
detection products, and the acquisition of BioWhittaker Molecular Applications,
Inc. (formerly the BioProducts business of FMC Corporation) with sales of
$5,432.
The Animal Health/Agriculture Segment gross sales of $10,019 in the third
quarter 1999 were $1,966 (16%) below the third quarter 1998. The third quarter
decrease was mainly due to reduced sales of Vitamin B3 to the animal feed
markets. Prices for Vitamin B3 were also down compared to last year. Animal
Health product sales were lower due to slower exports made by a major customer
caused by the economic slowdown in Pacific Rim countries. Agricultural
Intermediates improved over the third quarter 1998 due to new applications by a
customer for crop protection.
The Specialty Business Segment gross sales of $28,808 decreased $1,915 (6%)
below the third quarter 1998 reflecting lower sales of polymers due to timing of
production campaigns, and to reduced sales of specialty castor oils based on a
decision not to sell into the low margin resale oil markets.
Export sales from U.S. businesses of $20,080 in the third quarter 1999 increased
32% from the third quarter 1998. International sales from our European
operations totaled $47,954 for the third quarter of 1999 as compared with
$35,955 in 1998, an increase of 33%.
13
<PAGE> 15
RESULTS OF OPERATIONS (CONTINUED)
The gross profit in the third quarter 1999 was $39,234 compared to $38,839 in
1998. Third quarter 1998 included $4,400 of royalty income. This royalty income
ended in December 1998 with the termination of the exclusive portion of the
License Agreement with Mylan Laboratories. The gross margin was 33.1% in the
third quarter 1999 versus 37.2% in 1998 (without the royalty income the gross
margin in 1998 was 33.0%). The gross margin percent for the Human Health Segment
was reduced due to no royalty income in 1999 versus the $4,400 in 1998. The
Human Health Segment was also impacted by start-up and validation costs for the
new large scale cGMP (Current Good Manufacturing Practices) plant in Ireland,
and the absence of sales of an advanced intermediate used in the manufacture of
a drug for AIDS.
The third quarter 1998 included $4,400 in royalty income from Mylan Laboratories
for the use of intellectual property related to three pharmaceutical
ingredients. The royalty arrangements under the agreements have concluded. The
Company has sold these products on a non-exclusive basis in the third quarter
1999.
Selling, general and administrative expenses as a percentage of gross sales was
15.4% in the third quarter 1999, down from 19.1% in the third quarter 1998. The
third quarter 1998 included a $1,400 restructuring charge not repeated in 1999.
Research and development expenses of $3,841 were 3.2% of gross sales in the
third quarter 1999, and represented a 16% increase from 1998. This increase was
due to research costs resulting from the acquisition of BioWhittaker Molecular
Applications.
The operating profit in the third quarter 1999 was $17,091, compared to $15,576
in 1998. The third quarter 1998 operating profit included $4,400 in royalty
income. Excluding the royalty payments, 1998 operating income was $11,176 for
the third quarter.
Net interest expense of $2,678 in the third quarter 1999 reflected an increase
of $469 from 1998 as the result of the additional financing by the Company for
the acquisitions in the second and third quarters of 1999. The average interest
rate was 6.1% in the third quarter 1999 versus 6.5% in 1998.
Other expense of $189 for the third quarter 1999 was $175 lower than the $364 in
other expense in 1998. The third quarter 1998 included costs associated with the
disposal of obsolete fixed assets.
The provision for income taxes for the third quarter 1999 resulted in an
effective rate of 32.0% which was at the same level as the third quarter 1998.
The Company's net income for the third quarter 1999 increased 9.3% to $9,673
compared with a net income of $8,851 in the third quarter 1998.
14
<PAGE> 16
COMPARISON OF FIRST NINE MONTHS OF 1999 VERSUS FIRST NINE MONTHS OF 1998
Results in the first nine months of 1999 were above the comparable 1998 period
due to the increase in sales in the Human Health and Biotechnology product
Segments, lower administrative expenses, lower interest costs and a reduced tax
rate.
Gross sales increased by $25,397 (8%) in 1999 to $359,763 compared to the same
period a year ago. The effect of foreign currency exchange rates negatively
impacted sales by $1,567 in the first nine months of 1999 versus 1998.
The following table shows the gross sales of the Company's four segments in
dollars and as a percentage of the Company's total gross sales for the first
nine months of 1999 and 1998.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
---- ----
$ % $ %
- - - -
<S> <C> <C> <C> <C>
Human Health.................................................. $170,561 47.4% $148,374 44.4%
Biotechnology................................................. 58,896 16.4 48,506 14.5
Animal Health/Agriculture..................................... 41,541 11.5 42,157 12.6
Specialty Business............................................ 88,765 24.7 95,329 28.5
-------- ------ -------- ------
Total gross sales ...................................... $359,763 100.0% $334,366 100.0%
======= ====== ======= ======
</TABLE>
The following table shows the gross profit of the Company's four product
segments for the nine months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
Gross Gross Gross
Sales Profit $ Profit %
------ -------- --------
1999
- ----
<S> <C> <C> <C>
Human Health.................................................. $170,561 $ 62,680 36.7%
Biotechnology................................................. 58,896 29,279 49.7
Animal Health/Agriculture..................................... 41,541 8,479 20.4
Specialty Business............................................ 88,765 22,158 25.0
-------- ------- ----
Total................................................... $359,763 $122,596 34.1%
======= ======= =====
Gross Gross Gross
Sales Profit $ Profit %
----- -------- --------
1998
- ----
<S> <C> <C> <C>
Human Health.................................................. $148,374 $ 71,322 48.1%
Biotechnology................................................. 48,506 23,705 48.9
Animal Health/Agriculture..................................... 42,157 9,214 21.9
Specialty Business............................................ 95,329 21,369 22.4
-------- ------ ----
Total................................................... $334,366 $125,610 37.6%
======= ======= =====
</TABLE>
15
<PAGE> 17
RESULTS OF OPERATIONS (CONTINUED)
Gross sales in the first nine months of 1999 increased 8% to $359,763 from
$334,366 in the first nine months of 1998. Sales in the Human Health and
Biotechnology product segments increased compared to the first nine months of
1998 and more than offset the decreases in the Animal Health/Agriculture and
Specialty Business segments.
The foreign currency translation adjustments decreased by $10,313 to a negative
$21,863 from December 31, 1998. This decrease is attributable primarily to
significant exchange rate fluctuations in the Italian lira against the U.S.
dollar in the first nine months of 1999. The exchange rate declined from 1,649
lira to the dollar at December 31, 1998 to 1,818 lira to the dollar at September
30, 1999, a decline of 9%. There were also fluctuations in the Italian lira
between average rates and month end rates in the first nine months of 1999 which
had an effect on the foreign currency translation adjustment.
The Human Health Segment gross sales of $170,561 were $22,187 (15%) above the
first nine months of 1998 due primarily to generic pharmaceuticals used in
gastro-intestinal, central nervous system, and cardiovascular preparations, new
products, and sales generated by the acquisition of Irotec in Ireland in March
1999 of $11,994. This Segment has been adversely affected by no sales of an
advanced intermediate used in the production of a protease inhibitor for the
treatment of AIDS, which had $7,600 in sales in the first nine months of 1998.
The Biotechnology Segment gross sales of $58,896 were $10,390 (21%) above the
first nine months of 1998 due to increased shipments of cell culture and
endotoxin detection products and the acquisition of BioWhittaker Molecular
Applications, Inc. (formerly the BioProducts business of FMC Corporation), with
sales of $5,432.
The Animal Health/Agriculture Segment gross sales of $41,541 were $616 (1%)
below the nine months of 1998. This decrease was mainly due to reduced shipments
of Vitamin B3 to the animal feed markets and lower prices compared to last year.
Animal Health product sales have been affected by slower exports made by a major
customer caused by the continued economic slowdown in Pacific Rim countries.
Offsetting these decreases were sales of Agricultural Intermediates for new
applications by a customer for use in crop protection.
The Specialty Business Segment gross sales of $88,765 were $6,564 (7%) below the
first nine months of 1998 due to reduced demand for castor oil based polymer and
telecommunications products and the Company's decision not to sell into low
margin resale markets. Encapsulants used in telecommunications have increased
due to orders from new customers.
Export sales from U.S. businesses of $51,514 in the first nine months of 1999
compared to $46,518 in 1998. International sales from our European operations
totaled $147,178 for the first nine months of 1999 compared to $122,299 in 1998.
Total gross profit of $122,596 was $3,014 below 1998 due mainly to the effect of
royalty income of $13,900 in the first nine months of 1998. The gross margin for
the first nine months of 1999 was 34.1% versus 37.6% in 1998. Excluding the
royalty income, the gross margin in 1998 was 33.4%.
16
<PAGE> 18
RESULTS OF OPERATIONS (CONTINUED)
Selling, general and administrative and research and development expenses as a
percentage of gross sales was 19.0% in the first nine months of 1999, down from
20.5% in 1998. The decrease is mainly due to reduced administrative costs at the
corporate group due to a restructuring charge of $1,400 in the third quarter
1998, and a reorganization at some of the specialty chemical sites which was
started in 1998. Increases in marketing and sales were due to additional
promotional and compensation expenses attributed to upgrading biotechnology
marketing efforts in the U.S. and Europe.
The average interest rate was 6.0% in the first nine months of 1999 versus 6.5%
in 1998.
The provision for income taxes for the first nine months resulted in an
effective rate of 32.4% versus 34.2% in 1998 (excluding the Italian Tax
Election).
The first nine months of 1998 included a one-time charge of $3,420 in income
taxes for the Italian Tax Election. This election allows previously
non-deductible goodwill of Cambrex's Italian subsidiary, Profarmaco, S.r.l., to
be deducted. This one-time charge will have a total future tax benefit in the
years 1999 to 2004 of approximately $8,000.
The Company's net income for the first nine months of 1999 increased 10% to
$31,778 compared with a net income of $28,880 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1999, the Company generated cash
flows from operations totaling $63,604, an increase of $11,732 over the same
period a year ago. This increase in cash flows is due primarily to increased
revenues, as well as a reduction in inventory. The decrease in the cash balance
for the nine months 1999 was $17,768, primarily due to the acquisitions of
Irotec and BioWhittaker Molecular Applications.
Capital expenditures were $25,617 in the first nine months of 1999 as compared
to $30,596 in the nine months of 1998. Part of the funds were used for new
production capabilities in Bayonne, NJ, and the start of construction of a new
Niacinimide (Vitamin B3) plant which is expected to lower operating/production
costs.
During the first nine months of 1999, the Company paid cash dividends of $0.09
per share.
The Company's primary market risk relates to exposure to foreign currency
exchange rate fluctuations on transactions entered into by our international
operations which are primarily denominated in the U.S. dollar, Swedish krona and
Italian lira. The Company currently uses foreign currency forward exchange
contracts to mitigate the effect of short-term foreign exchange rate movements
on the Company's operating results. The net notional amount of these contracts
is $33,740 which the Company estimates to be approximately 46% of the foreign
currency exposure during the period covered resulting in a deferred currency
gain of $48 at September 30, 1999.
17
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
In January 1999, Cambrex acquired Poietic Technologies, Inc. for $2,500 cash and
in March 1999, the Company purchased Irotec Laboratories Ltd. for approximately
$34,000, which was financed through the Company's cash reserves. In July 1999,
the Company completed the acquisition of FMC Corporation's Bio Products business
for approximately $38,000, of which $31,000 was financed through the Company's
revolving credit agreement and $7,000 through the Company's cash reserves.
In August 1999, the Company entered into a supply agreement with Osiris
Therapeutics, Inc. in which the Company purchased $5,000 of Osiris common stock
in exchange for becoming the exclusive supplier of culture media to Osiris.
Management believes that existing sources of capital, together with cash flows
from operations, will be sufficient to meet foreseeable cash flow requirements.
18
<PAGE> 20
YEAR 2000 UPDATE
The ability of computers, software or any equipment utilizing micro-processors
to properly recognize and process data information at the turn of the century is
commonly referred to as a Year 2000 ("Y2K") compliance issue. To minimize the
risk of unplanned interruptions, the Company is using a multi-step approach in
conducting its year 2000 project. These steps are as follows:
HARDWARE/SOFTWARE INVENTORY AND ASSESSMENT: Documenting the hardware
and software used by Cambrex and assigning a impact level to the
business, if the item fails due to Y2K related problems.
HARDWARE/SOFTWARE VERIFICATION AND VALIDATION: Documenting the
compliance status of hardware and software used by Cambrex and
performing tests to validate compliance for critical systems.
SUPPLIER/CUSTOMER VERIFICATION: Surveying suppliers and customers on
their Y2K compliance readiness and assessing their responses and
taking corrective action.
IMPLEMENTATION AND TESTING: Remediation of systems found not to be
Y2K compliant. Most Cambrex systems are purchased third party
packages and therefore are typically upgraded, replaced or retired.
CONTINGENCY PLANS: Development of plans to perform alternate
activities or steps for critical systems or for systems that will not
be Y2K compliant by January 1, 2000.
An estimate of completion for these steps is as follows:
<TABLE>
<CAPTION>
----------------------------------
Actual Plan
--------------- -----------------
9/99 12/99
--------------- -----------------
<S> <C> <C>
Hardware/Software Inventory and
Assessment..................................... 100% 100%
Hardware/Software Verification and
Validation..................................... 100% 100%
Supplier/Customer Verification...................... 99% 100%
Implementation and Testing.......................... 95% 100%
Contingency Plans................................... 90% 100%
</TABLE>
The Company approaches its Y2K compliance issue by categorizing its dependencies
into two sections: Internal systems (Information Technology ("IT") systems and
Non-IT systems), and External systems of suppliers and customers. Generally,
internal systems identified as non-Y2K compliant will be replaced or modified
(reprogrammed, upgraded, etc.). Many of the internal non-compliant systems were
targeted for replacement for reasons other than Y2K issues as the benefits of
newer technology had already created an economic business case for action.
Replacement solution costs will be capitalized as permitted by applicable
accounting standards whereas the cost of modification solutions will generally
be expensed as repairs. External systems will be monitored with the cooperation
of our suppliers and customers.
19
<PAGE> 21
YEAR 2000 UPDATE (CONTINUED)
Internal Systems
a) IT systems - These systems include internal applications software such as
finance, manufacturing (purchasing, product costing, production reporting,
maintenance, and planning and scheduling) and logistics (distribution planning
and customer order entry). All internal IT systems have been inventoried and
assessed and remediated where necessary for Y2K compliance and are now being
tested. The Company anticipates its internal IT will be Y2K compliant by the end
of 1999.
b) Non-IT systems - These systems are used for process monitoring and control,
laboratory measurement and analysis, waste treatment control, and in other plant
operations. These systems include embedded chip technology such as programmable
logic controllers and related hardware/software; and personal computers and
related software. All internal non-IT systems have been inventoried and assessed
for Y2K compliance and critical systems which require modification will be
remediated by the end of 1999.
External systems
External systems include systems of customers and suppliers. The Company
believes it understands the extent to which it is vulnerable to the Y2K issues
of its customers and suppliers. The Company has identified and contacted third
parties whose systems would have a significant negative impact on operations if
not Y2K compliant. The Company has completed its assessment and expects to have
developed requisite action plans with respect to these findings by the end of
1999.
The Company will continue to develop contingency plans during the fourth quarter
of 1999 for all critical systems and key suppliers in the event an internal or
external system, that is believed to be compliant, fails.
The dates on which the Company plans to complete any necessary Y2K modifications
are based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, third-party modification plans and other factors. The Company
believes its most reasonably likely worst case scenario in the event of the
failure to correct a material Y2K compliance problem, internal or external,
could result in an interruption in, or a failure of, certain normal business
activities or operations. While management is not aware of such problems, such
failures, if they occur, could have a material adverse impact on the operations
of the Company. The Company believes that with the implementation of a new
business systems and completion of the Y2K project as scheduled, the possibility
of significant interruptions of normal operations will be reduced.
20
<PAGE> 22
YEAR 2000 UPDATE (CONTINUED)
The Company expects the costs directly associated with its Y2K efforts to
approximate $8,500 of which approximately $8,200 has been spent to date. The
cost estimates do not include additional costs that may be incurred as a result
of the failure of third parties to become Y2K compliant or costs to implement
any contingency plans.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements. Investors should be aware of
factors that could cause Cambrex actual results to vary materially from those
projected in the forward-looking statements. These factors include, but are not
limited to, global economic trends; competitive pricing or product development
activities; markets, alliances, and geographic expansions developing differently
than anticipated; government legislation and/or regulation (particularly on
environmental issues); and technology, manufacturing and legal issues; and the
factors disclosed in the Year 2000 Update.
21
<PAGE> 23
PART II - OTHER INFORMATION
CAMBREX CORPORATION AND SUBSIDIARIES
ITEM 4. MATTERS SUBMITTED TO A VOTE OF SECURITIES HOLDERS.
Refer to form 10-Q for the quarterly period ended March 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) The exhibits filed as part of this report are listed below.
Exhibit No. Description
----------- -----------
3 Amended Articles of Incorporation
27 Financial Data Schedule.
b) Reports on Form 8-K
The registrant filed no reports on Form 8-K during the second
quarter of the year ended September 30, 1999.
22
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMBREX CORPORATION
By /s/ Douglas Macmillan
--------------------------------
Douglas MacMillan
Vice President
(On behalf of the Registrant and
as the Registrant's Principal
Financial Officer)
Date: November 12, 1999
23
<PAGE> 1
Restated Certificate of Incorporation
of
Cambrex Corporation
Cambrex Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Cambrex Corporation. The
Corporation was originally incorporated under the name "CasChem Group, Inc.".
The date of filing its original Certificate of Incorporation with the Secretary
of State is October 11, 1983.
2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of the
Corporation by amending ARTICLES SIXTH and EIGHTH thereof.
3. The text of the Certificate of Incorporation of the Corporation,
as amended, or supplemented heretofore is further amended hereby to read as
herein set forth in full:
FIRST: The name of the Corporation is:
Cambrex Corporation
SECOND: The address of its registered office in the State of
Delaware is No. 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations
<PAGE> 2
may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 26,263,835 shares, consisting of
400,000 shares of Class A 8.25% Cumulative Preferred Stock, par value $.10 per
share (the "Class A Preferred"), 40,597 share of Class B 8.25% Cumulative
Convertible Preferred Stock, par value $.l0 per share (the "Class B Preferred"),
19,403 shares of Class C Convertible Preferred Stock, par value $.l0 per share
(the "Class C Preferred"), 73,089 shares of Class D 8% Convertible Preferred
Stock, par value $.l0 per share (the "Class D Preferred"), 5,000,000 share of
Series Preferred Stock, par value $.l0 per share (the "Series Preferred Stock"),
730,746 shares of Nonvoting Common Stock, par value $.l0 per share (the
"Nonvoting Common"), and 20,000,000 share of Common Stock, par value $.l0 per
share (the "Voting Common") . The Class B Preferred and the Class C Preferred
are referred to herein collectively as the "1981 Convertible Preferred Stock";
the 1981 Convertible Preferred Stock and the Class A Preferred are referred to
herein collectively as the "1981 Preferred Stock"; the 1981 Preferred Stock and
the Class D Preferred are referred to herein collectively as the "Preferred
Stock"; and the Voting Common and the Nonvoting Common are referred to herein
collectively as the "Common Stock". A share of Preferred Stock will be referred
to herein as a "Share". The Voting Common is also referred to herein as the
"Class A Common" and the Non-voting Common is also referred to herein as the
"Class B Common". Unless otherwise provided, other capitalized terms used in
Section A of this Article FOURTH are defined in subdivision VI thereof, other
capitalized terms used in Section C of this Article FOURTH are defined in
subdivision VIII thereof and definitions set forth in any Section of this
Article FOURTH apply only to capitalized terms used in such Section. All
cross-references in each Section of this Article FOURTH refer to other parts,
paragraphs and subdivisions in such Section unless otherwise indicated.
The following is a statement of the designations, and the powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, in respect of each class of stock of the Corporation:
-2-
<PAGE> 3
SECTION A. 1981 PREFERRED STOCK
I. Terms Applicable Only to Class A
Preferred and Class B Preferred.
1. Dividends.
1A. General Obligation. When and as declared by the board of
directors of the Corporation and to the extent permitted under applicable law,
the Corporation will pay preferential dividends to the holders of the Class A
Preferred and the Class B Preferred as provided in this part 1. Except as
otherwise provided herein, dividends on each Share of Class A Preferred will
accrue cumulatively on a daily basis at the rate of 8.25% per annum of the
Liquidation Value thereof from and including the first day after the end of the
calendar quarter next preceding the date of issuance of such Share to and
including the date on which the Redemption Price of such Share is paid.
Dividends on each Share of Class B Preferred will accrue cumulatively on a daily
basis at the rate of 8.25% per annum of the Purchase Price thereof from and
including the first day after the end of the calendar quarter next preceding the
date of issuance of such Share to and including the date on which the Redemption
Price of such Share is paid or the date on which such Share is converted.
Dividends on the Class A Preferred and the Class B Preferred will accrue whether
or not they have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payments of dividends.
The date on which the Corporation initially issues any Share will be deemed to
be its "date of issuance" regardless of the number of times transfer of such
Share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
Share. Notwithstanding the foregoing, the payment of any dividend accrued on the
Class A Preferred or the Class B Preferred shall be subject to the provisions of
Section C, subdivision VII.2C. hereof.
1B. Dividend Reference Dates. To the extent not paid on each March
31, June 30, September 30 and December 31, beginning December 31, 1983 (the
"Dividend Reference Dates"), all dividends which have accrued on each Share of
Class A Preferred outstanding during the three-month period (or other period in
the case of the initial Dividend Reference Date) ending upon any such Dividend
Reference Date will be added to the Liquidation Value of such Share and will
remain a part thereof until such dividends are paid. All dividends which have
accrued on each Share of Class B Preferred outstanding during the three-month
period (or other period in the case of
-3-
<PAGE> 4
the initial Dividend Reference Date) ending upon any Dividend Reference Date
will become payable on such Dividend Reference Date to the extent declared by
the Corporation's board of directors.
1C. Distribution of Partial Dividend Payments. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Class A Preferred or the Class B Preferred, such payment will be
distributed among the holders of such class so that an equal amount will be paid
with respect to each outstanding Share.
2. Redemptions.
2A. Class A Scheduled Redemptions. The Corporation will redeem
200,000 Shares of Class A Preferred (or such lesser number then outstanding) on
December 31 of each year, commencing in 1989 and ending in 1990 (the "Class A
Scheduled Redemption Dates"), at a price per Share equal to the Redemption Price
thereof.
2B. Class A Optional Redemptions. The Corporation may at any time
redeem all or any portion of the Class A Preferred then outstanding at a price
per Share equal to the Redemption Price. No redemption of Class A Preferred
pursuant to this subdivision may be made for less than 50,000 Shares (or such
lesser number of Shares then outstanding), and redemptions made pursuant to this
subdivision will not relieve the Corporation of its obligation to redeem Shares
on the Class A Scheduled Redemption Dates.
2C. Class B Scheduled Redemptions. The Corporation will redeem
20,299 Shares of Class B Preferred (or such lesser number then outstanding) on
December 31 of each year, commencing in 1991 and ending in 1992 (the "Class B
Scheduled Redemption Dates"), at a price per Share equal to the Redemption Price
thereof; provided that the Shares of Class B Preferred to be redeemed pursuant
to this subdivision will be subject to the right of offset set forth in
subdivision 1B of subdivision IV and, to the extent the right of offset is
exercised, the Corporation's redemption obligation will be reduced.
2D. No Redemption During Certain Class D Preferred Events of
Noncompliance. Anything herein contained to the contrary notwithstanding, the
making by the Corporation of any payment in respect of redemption of any Shares
of 1981 Preferred Stock shall be subject to the provisions of Section C,
subdivision VII.2C. hereof.
-4-
<PAGE> 5
3. Voting Rights. Except as provided herein or as otherwise provided
by law, the Class A Preferred and the Class B Preferred will have no voting
rights.
II. Terms Applicable to All Classes of 1981 Preferred Stock.
1. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation, each holder of 1981 Preferred Stock will be entitled to be
paid, before any distribution or payment is made upon any Junior Securities of
the Corporation, an amount in cash equal to the aggregate Liquidation Value of
all Shares held by such holder, and the holders of 1981 Preferred Stock will
not be entitled to any further payment; provided, however, except as provided in
Section C, subdivision V.2., no payment upon any liquidation, dissolution or
winding up of the Corporation may be made with respect to any 1981 Preferred
Stock unless each holder of Class D Preferred shall have received payment in
cash of an amount equal to the aggregate Liquidation Value of the shares of
Class D Preferred held by such holder. The Corporation will mail written notice
of such liquidation, dissolution or winding up, not less than 60 days prior to
the payment date stated therein, to each record holder of 1981 Preferred Stock.
Neither the consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this part 1.
2. General Terms of Redemptions.
2A. Redemption Price. For each Share of 1981 Preferred Stock which
is to be redeemed, the Corporation will be obligated on the Redemption Date to
pay to the holder thereof (upon surrender by such holder at the Corporation's
principal office of the certificate representing such Share) an amount in cash
equal to the respective Liquidation Value of such Share (the "Redemption
Price"). If the funds of the Corporation legally available for redemption of
Shares of any class of 1981 Preferred Stock on any Redemption Date are
insufficient to redeem the total number of Shares of such class to be redeemed
on such date, those funds which are legally available will be used to redeem the
maximum possible number of Shares pro rata among the holders of the Shares to be
redeemed based upon the aggregate Liquidation Value of the Shares to be
redeemed. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of Shares of such class, such funds will
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immediately be used to redeem the balance of the Shares which the Corporation
has become obligated to redeem on any Redemption Date but which it has not
redeemed.
2B. Notice of Redemption. The Corporation will mail written notice
of each redemption of any class or classes of 1981 Preferred Stock to each
record holder of such class or classes, not more than 60 nor less than 30 days
prior to the date on which such redemption is to be made. Upon mailing any
notice of redemption which relates to a redemption at the Corporation's option,
the Corporation will become obligated to redeem the total number of Shares
specified in such notice at the time of redemption specified therein. In case
fewer than the total number of Shares represented by any certificate are
redeemed, a new certificate representing the number of unredeemed Shares will be
issued to the holder thereof without cost to such holder promptly upon surrender
of the certificate representing the redeemed Shares.
2C. Determination of the Number of Each Holder's Shares to be
Redeemed. Except as otherwise provided in subdivision IV, the number of Shares
of a particular class of 1981 Preferred Stock to be redeemed from each holder
thereof in redemptions hereunder will be the number of whole Shares determined,
as nearly as practicable to the nearest Share, by multiplying the total number
of Shares of such class to be redeemed times a fraction, the numerator of which
will be the total number of Shares of such class then held by such holder and
the denominator of which will be the total number of Shares of such class then
outstanding.
2D. Dividends After Redemption Date. No Share of 1981 Preferred
Stock is entitled to any dividends accruing after its Redemption Date. On such
Redemption Date all rights of the holder of such Share will cease, and such
Share will not be deemed to be outstanding.
2E. Redeemed or Otherwise Acquired Shares. Any Shares of 1981
Preferred Stock which are redeemed or otherwise acquired by the Corporation will
be cancelled and will not be reissued, sold or transferred.
2F. Other Redemptions or Acquisitions. Neither the Corporation nor
any Subsidiary will redeem or otherwise acquire any 1981 Preferred Stock, except
as expressly authorized herein or pursuant to a purchase offer made to all
holders of the Class A Preferred or the 1981 Convertible Preferred Stock, as the
case may be, pro rata based upon the
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<PAGE> 7
aggregate Liquidation Value of the Shares of such class or classes of 1981
Preferred Stock held by each such holder.
2G. Accrued Dividends Must be Paid Prior to Any Redemption. The
Corporation may not redeem any Shares of a particular class of 1981 Preferred
Stock, unless all dividends accrued on the outstanding Shares of such class of
1981 Preferred Stock through the immediately preceding Dividend Reference Date
have been paid in full.
3. Events of Noncompliance.
3A. Definition. An Event of Noncompliance will be deemed to have
occurred if:
(i) the Corporation fails to pay on any Dividend Reference Date the
full amount of dividends then accrued on the Class A Preferred or the
Class B Preferred, whether or not such payment is legally permissible;
(ii) the Corporation fails to make any redemption payment with
respect to the 1981 Preferred Stock which it is obligated to make, whether
or not such payment is legally permissible;
(iii) the Corporation breaches or otherwise fails to perform or
observe any other covenant or agreement with respect to the 1981.
Preferred Stock set forth in this Article FOURTH or in the Exchange
Agreement;
(iv) any material representation or warranty contained in the
Exchange Agreement or required to be furnished to any transferor of 1981
Preferred Stock pursuant to the Exchange Agreement on or before the date
of issuance of the 1981 Preferred Stock is false or misleading in any
material respect on the date made or furnished;
(v) any written information furnished by the Corporation or any
Subsidiary to any holder of 1981 Preferred Stock pursuant to the Exchange
Agreement after the date of issuance of the 1981 Preferred Stock is, to
the Corporation's or such Subsidiary's knowledge after due inquiry, false
or misleading in any material respect on the date made or furnished;
(vi) the Corporation or any Material Subsidiary makes an assignment
for the benefit of credi-
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<PAGE> 8
tors or admits in writing its inability to pay its debts generally as they
become due; or an order, judgment or decree is entered adjudicating the
Corporation or any Material Subsidiary bankrupt or insolvent under the
Bankruptcy Code or the Corporation or any Material Subsidiary is a
debtor-in-possession under the Bankruptcy Code; or any order for relief
with respect to the Corporation or any Material Subsidiary is entered
under the Bankruptcy Code; or the Corporation or any Material Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Corporation or any Material
Subsidiary or of any substantial part of the assets of the Corporation or
any Material Subsidiary, or commences any proceeding (other than a
proceeding for the voluntary liquidation and dissolution of a Material
Subsidiary) relating to the Corporation or any Material Subsidiary under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction; or any such
petition or application is filed, or any such proceeding is commenced,
against the Corporation or any Material Subsidiary and either (a) the
Corporation or any such Material Subsidiary by any act indicates its
approval thereof, consent thereto or acquiesence therein or (b) such
petition, application or proceeding is not dismissed within 60 days;
(vii) a judgment in excess of $500,000 is rendered against the
Corporation or any Material Subsidiary and, within 60 days after entry
thereof, such judgment is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay,
such judgment is not discharged; or
(viii) the Corporation or any Material Subsidiary defaults in the
performance of any obligation, if the effect of such default is to cause
an amount exceeding $500,000 to become due prior to its stated maturity,
or to permit the holder or holders of such obligation to cause an amount
exceeding $500,000 to become due prior to its stated maturity.
An Event of Noncompliance will not be deemed to have occurred with respect to
the matters described in subparagraph 3A(iii) or 3A(iv) if the Corporation
establishes that (a) in the case
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<PAGE> 9
of subparagraph 3A(iii), the particular Event of Noncompliance has not been
caused by knowing or purposeful conduct by the Corporation or any Subsidiary and
the Corporation has exercised, and continues to exercise, best efforts
expeditiously to cure the Event of Noncompliance (if cure is possible), (b) in
the case of subparagraph 3A(iv), the particular Event of Noncompliance has not
been caused by a knowing or willful misstatement or misrepresentation on the
part of the Corporation, (c) in the case of both such subparagraphs, the Event
of Noncompliance is not material to the Corporation's financial condition,
operations, assets or business prospects, and (d) in the case of both such
subparagraphs, the Event of Noncompliance is not material to any holder's
investment in the 1981 Preferred Stock.
3B. Consequences of Certain Events of Noncompliance.
(i) If an Event of Noncompliance of the type described in
subparagraph 3A(iii) has occurred and continued for a period of 30 days or
any other Event of Noncompliance has occurred, the dividend rate on the
Class A Preferred will increase immediately by an increment of 1/2
percentage point. Thereafter, until such time as no Event of Noncompliance
exists, the dividend rate on the Class A Preferred will increase
automatically at the end of each succeeding 90-day period by an additional
increment of 1/2 percentage point (but in no event will the dividend rate
exceed 10.25%). Any increase of the dividend rate resulting from the
operation of this subdivision will terminate as of the close of business
on the date on which no Event of Noncompliance exists, subject to
subsequent increases pursuant to this subdivision.
(ii) If Events of Noncompliance exist for an aggregate of 365 days
(whether or not such days are successive), the Conversion Price of the
1981 Convertible Preferred Stock will be reduced immediately by 10% of the
Conversion Price in effect immediately prior to such adjustment.
Notwithstanding the foregoing, if no Events of Noncompliance exist for a
period of 365 successive days, previous days in which Events of
Noncompliance existed will not be counted in determining such adjustment.
In no event will the Conversion Price adjustment be rescinded, and in no
event will there be more than one Conversion Price adjustment pursuant to
this subdivision.
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<PAGE> 10
(iii) If an Event of Noncompliance exists, each holder of 1981
Preferred Stock will also have any other rights which such holder may have
been afforded under any contract or agreement at any time and any other
rights which such holder may have pursuant to applicable law.
III. Priority of 1981 Preferred Stock.
1. Class A Preferred Priority in Liquidation. Upon any liquidation,
dissolution or winding up of the Corporation, if the assets of the Corporation
to be distributed among the holders of 1981 Preferred Stock are insufficient to
permit payment to such holders of the aggregate amount which they are entitled
to be paid, then the assets of the Corporation to be distributed to such holders
will be distributed (i) first to the holders of Class D Preferred pursuant to
Section C, subdivision V.1., (ii) second, to the holders of Class A Preferred,
until such holders are paid the aggregate amount which they are entitled to be
paid, or, if the assets to be distributed are insufficient for such purpose, the
entire assets to be distributed will be distributed ratably among such holders
based upon the aggregate Liquidation Value of Class A Preferred held by each
such holder, and (iii) third, the balance (if any) will be distributed ratably
among the holders of 1981 Convertible Preferred Stock based upon the aggregate
Liquidation Value of the 1981 Convertible Preferred Stock held by each such
holder; provided, however, the priority established by clauses (i) and (ii)
shall be subject to Section C, subdivision V.2.
2. Class A Preferred Priority on Dividends, Redemptions, etc. So
long as any Class A Preferred remains outstanding, neither the Corporation nor
any Subsidiary will redeem, purchase or otherwise acquire any 1981 Convertible
Preferred Stock or any Junior Securities (except in connection with conversions
thereof), nor will the Corporation declare or pay any dividend or make any
distribution upon any 1981 Convertible Preferred Stock or any Junior Securities
of the Corporation, if immediately after such redemption, purchase, acquisition,
dividend or distribution any Event of Noncompliance of the type described in
subdivision 3A(i) or 3A(ii) of subdivision II would exist with respect to the
Class A Preferred.
3. Class B Preferred Priority on Dividends, Redemptions, etc. So
long as any Class B Preferred remains outstanding, neither the Corporation nor
any Subsidiary will redeem, purchase or otherwise acquire any Class C Preferred
or any Junior Securities (except in connection with conver-
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<PAGE> 11
sions thereof), nor will the Corporation declare or pay any dividend or make any
other distribution upon any Class C Preferred or any Junior Securities of the
Corporation, if immediately after such redemption, purchase, acquisition,
dividend or distribution any Event of Noncompliance of the type described in
subdivision 3A(i) or 3A(ii) of subdivision II would exist with respect to the
Class B Preferred.
IV. Terms Applicable Only to 1981 Convertible Preferred Stock.
lA. Optional Redemption. The Corporation may redeem all or any
portion of the 1981 Convertible Preferred Stock after the earlier of (i) the
date of closing with the underwriters of the first firm commitment underwriting
of Common Stock, whether for the account of the Corporation or for others,
having a gross price per share equal to at least 150% of the Conversion Price in
effect on such date and an aggregate price to the public for the Common Stock
which, when added to the aggregate price to the public of any similar prior
registered offerings with gross purchase prices per share of Common Stock equal
to at least 150% of the respective Conversion Prices in effect on the respective
dates of such sales, shall equal at least $5,000,000, or (ii) the date on which
the Corporation shall have received gross proceeds from the sale of Common Stock
for its account for a gross purchase price per share equal to at least 200% of
the Conversion Price in effect on the date of such sale, which proceeds, when
added to the proceeds of any other such sale or sales of Common Stock for gross
purchase prices per share equal to at least 200% of the respective Conversion
Prices at the respective dates of sale, shall equal at least $5,000,000;
provided that no more than one redemption pursuant to clause (i) or (ii) may be
made in any twelve-month period and no 1981 Convertible Preferred Stock may be
redeemed pursuant to clause (ii) prior to December 31, 1986. All redemptions of
1981 Convertible Preferred Stock pursuant to this subdivision will be made pro
rata among the Class B Preferred and the Class C Preferred based upon the the
aggregate Liquidation Value of the Shares then outstanding. For the purposes of
the foregoing clause (ii), the sale by the Corporation of any stock or
securities convertible into or exchangeable for Common Stock (such convertible
or exchangeable stock or securities being called "Convertible Securities" in
this subdivision) shall be deemed to be the sale of Common Stock on the date
upon which such Convertible Securities are converted into or exchanged for
Common Stock, and the gross proceeds received by the Corporation upon the sale
of such Convertible Securities plus the amount of any additional consideration
paid to the Corporation upon the
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<PAGE> 12
conversion or exchange thereof shall be deemed to be gross proceeds received
from such sale of Common Stock. No redemptions of 1981 Convertible Preferred
Stock pursuant to this subdivision may be made for less than 5,000 Shares (or
such lesser number of Shares then outstanding), and redemptions made pursuant to
this subdivision will not relieve the Corporation of its obligation to redeem
Shares on the Class B Scheduled Redemption Dates pursuant to subdivision 2C of
subdivision I.
1B. Right of Offset. Upon the receipt of any notice of redemption
under this part 1 or under subdivision 2C of subdivision I, any holder of 1981
Convertible Preferred Stock or Class B Preferred, as the case may be, will have
the right (exercisable by notifying the Corporation at least two days prior to
the date specified for redemption in the redemption notice) to reduce the number
of Shares of the particular class to be redeemed from such holder at such time
by a number of Shares not exceeding the sum of the number of Offset Shares of
such class of 1981 Convertible Preferred Stock held by such holder at the time
of such redemption; provided that in the case of the final Class B Scheduled
Redemption or a redemption at the Corporation's option in which all outstanding
1981 Convertible Preferred Stock will be redeemed, a holder of 1981 Convertible
Preferred Stock or Class B Preferred, as the case may be, may apply Offset
Shares to reduce the number of Shares to be redeemed from such holder in such
redemption only to the extent such holder converts or has converted the Shares
which are to be redeemed at such time. Each holder of 1981 Convertible Preferred
Stock or Class B Preferred, as the case may be, will be deemed to so apply a
number of Offset Shares equal to the excess (if any) of the number of Shares of
the particular class of 1981 Convertible Preferred Stock to be redeemed from
such holder in any redemption over the number of Shares of such class held by
such holder as of the time of such redemption.
1C. Determination of the Number of Each Holder's Shares to be
Redeemed. The number of Shares of a particular class of 1981 Convertible
Preferred Stock to be redeemed from each holder thereof in redemptions by the
Corporation under this part 1 and subdivision 2C of subdivision I will be the
number of whole Shares, as nearly as practicable to the nearest Share,
determined by multiplying the total number of Shares of the particular class of
1981 Convertible Preferred Stock to be redeemed times a fraction, the numerator
of which will be the total number of Shares and Offset Shares of such class then
held by such holder and the denominator of which will be the total number of
Shares and Offset Shares of such
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<PAGE> 13
class then outstanding; provided that the number of Shares so determined to be
redeemed from any holder will be reduced by the number of Offset Shares such
holder applies to such redemption.
2. Conversions.
2A. Conversion Procedure.
(i) At any time up to two days prior to the Redemption Date of any
Share, any holder of 1981 Convertible Preferred Stock may convert all or
any portion of such holder's Shares of 1981 Convertible Preferred Stock
into a number of shares of the Conversion Stock computed by multiplying
the number of Shares to be converted by $83.75 and dividing the result by
the Conversion Price then in effect. For purposes of this subdivision,
"Conversion Stock" means the Non-Voting Common in the case of Class B
Preferred and the Voting Common in the case of Class C Preferred.
(ii) Each conversion of 1981 Convertible Preferred Stock will be
deemed to have been effected as of the close of business on the date on
which the certificate or certificates representing the 1981 Convertible
Preferred Stock to be converted have been surrendered at the principal
office of the Corporation. At such time as such conversion has been
effected, the rights of the holder of such 1981 Convertible Preferred
Stock as such holder will cease and the Person or Persons in whose name or
names any certificate or certificates for shares of Conversion Stock are
to be issued upon such conversion will be deemed to have become the holder
or holders of record of the shares of Conversion Stock represented
thereby.
(iii) As soon as possible after the conversion has been effected,
the Corporation will deliver to the converting holder:
(a) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in
such name or names and such denomination or denominations as the
converting holder has specified;
(b) payment in an amount equal to all accrued dividends with
respect to each Share of Class B Preferred converted, which have not
been paid prior thereto, plus the amount payable under
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<PAGE> 14
subparagraph (v) below with respect to such conversion; and
(c) a certificate representing any Shares of 1981 Convertible
Preferred Stock which were represented by the certificate or
certificates delivered to the Corporation in connection with such
conversion but which were not converted.
(iv) If for any reason the Corporation is unable to pay any accrued
dividends on the Class B Preferred being converted, the Corporation will
pay such dividends to the converting holder as soon thereafter as funds of
the Corporation are legally available for such payment. At the request of
any such converting holder, the Corporation will provide such holder with
written evidence of its obligation to such holder.
(v) If any fractional interest in a share of Conversion Stock would,
except for the provisions of this subparagraph (v), be deliverable upon
any conversion, the Corporation, in lieu of delivering the fractional
share therefor, will pay an amount equal to the Market Price of such
fractional interest as of the date of conversion; provided that if for any
reason the Corporation is unable to pay the Market Price of any such
fractional interest, the Corporation will issue such fractional share upon
the conversion.
(vi) The issuance of certificates for shares of Conversion Stock
upon conversion of 1981 Convertible Preferred Stock will be made without
charge to the holders of such 1981 Convertible Preferred Stock for any
issuance tax in respect thereof or other cost incurred by the Corporation
in connection with such conversion and the related issuance of shares of
Conversion Stock.
(vii) The Corporation will not close its books against the transfer
of 1981 Convertible Preferred Stock or of Conversion Stock issued or
issuable upon conversion of 1981 Convertible Preferred Stock in any manner
which interferes with the timely conversion of 1981 Convertible Preferred
Stock.
(viii) If the shares of Non-Voting Common issuable by reason of such
conversion of Class B Preferred are convertible into or exchangeable for
any other stock or securities of the Corporation (including, without
limitation, Class A Common), the Corporation will, at the converting
holder's option, upon surrender of the
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<PAGE> 15
shares to be converted by such holder as provided above together with any
notice or payment required to effect such conversion or exchange of
Non-Voting Common, deliver to such holder, or as otherwise specified by
such holder, a certificate or certificates representing the stock or
securities into which the shares of Non-Voting Common issuable by reason
of such conversion are so convertible or exchangeable, registered in such
name or names and in such denomination or denominations as such holder has
specified.
2B. Conversion Price.
(i) The initial Conversion Price for the 1981 Convertible Preferred
Stock will be $83.75. In order to prevent dilution of the conversion
rights granted under this subdivision, the Conversion Price will be
subject to adjustment from time to time pursuant to this part 2.
(ii) If and whenever the Corporation issues or sells, or in
accordance with subdivision 2C is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or
sale, then forthwith upon such issue or sale, the Conversion Price will
be reduced to the Conversion Price determined by dividing (A) an amount
equal to the sum of (x) the product derived by multiplying the Conversion
Price immediately prior to such issue or sale times the number of shares
of Common Stock Deemed Outstanding immediately prior to such issue or
sale, plus (y) the consideration, if any, received by the Corporation upon
such issue or sale, by (B) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale; provided that no such
adjustment in the Conversion Price will be made in connection with the
issuance of (including the issuance of rights and options to purchase) up
to an aggregate of 8,000 shares of Class A Common to key employees of the
Corporation and its Subsidiaries.
2C. Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under subdivision 2B, the following
will be applicable:
(i) Issuance of Rights or Options. If the Corporation in any manner
grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for
Common Stock (such rights or
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<PAGE> 16
options being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities") and the
price per share for which Common Stock is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities is
less than the Conversion Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of share of
Common Stock issuable upon the exercise of such Options or upon conversion
or exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options will be deemed to be
outstanding and to have been issued and sold by the Corporation for such
price per share. For purposes of this subdivision, the "price per share
for which Common Stock is issuable" will be determined by dividing (A) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon the
exercise of all such Options, plus in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of
such Options. Except as otherwise provided in subdivision 2C(iii), no
adjustment of the Conversion Price will be made when Convertible
Securities are actually issued upon the exercise of such Options or when
Common Stock is actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in any
manner issues or sells any Convertible Securities and the price per share
for which Common Stock is issuable upon such conversion or exchange is
less than the Conversion Price in effect immediately prior to the time of
such issue or sale, then the maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities
will be deemed
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<PAGE> 17
to be outstanding and to have been issued and sold by the Corporation for
such price per share. For the purposes of this subdivision, the "price per
share for which Common Stock is issuable" will be determined by dividing
(A) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable
to the Corporation upon the conversion or exchange thereof, by (B) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. Except as
otherwise provided in subdivision 2C(iii), no further adjustment of the
Conversion Price will be made when Common Stock is actually issued upon
the conversion or exchange of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustments of the Conversion Price had been or are to
be made pursuant to other provisions of this part 2, no further adjustment
of the Conversion Price will be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Options, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time (other than under or by
reason of provisions designed to protect against dilution of the type set
forth in this part 2 and which have no more favorable effect on the
holders of such Options or Convertible Securities than this part 2 would
have if this part 2 were included in such Options or Convertible
Securities), the Conversion Price in effect at the time of such change
will be readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time initially
granted, issued or sold. If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the conversion
or exchange of any Convertible Securities, or the rate at which any
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<PAGE> 18
Convertible Securities are convertible into or exchangeable for Common
Stock, is reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution of the type set forth
herein and which have no more favorable effect on the holders of such
Options or Convertible Securities than the provisions hereof would have if
the provisions hereof were included in such Options or Convertible
Securities, then in the case of the delivery of Common Stock upon the
exercise of any such Options or other conversion or exchange of any such
Convertible Securities, the Conversion Price then in effect hereunder will
forthwith be adjusted to such respective amount as would have been
obtained had such Option or Convertible Security never been issued as to
such Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered, but only if as a result of such
adjustment the Conversion Price then in effect hereunder would be reduced.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities without the
exercise of such Option or right, the Conversion Price then in effect
hereunder will be adjusted to the Conversion Price which would have been
in effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be
deemed to be the net amount received by the Corporation therefor. In case
any Common Stock, Options or Convertible Securities are issued or sold for
a consideration other than cash, the amount of the consideration other
than cash received by the Corporation will be the fair value of such
consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Corporation will be
the Market Price thereof as of the date of receipt. In case any Common
Stock,
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<PAGE> 19
Options or Convertible Securities are issued in connection with any merger
in which the Corporation is the surviving corporation, the amount of
consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair value of any consideration other than cash and
securities will be determined jointly by the Corporation and the holders
of a majority of the outstanding 1981 Convertible Preferred Stock (based
upon the aggregate Liquidation Value thereof). If such parties are unable
to reach agreement, the fair value of such consideration will be
determined by appraisers jointly selected by the Corporation and the
holders of a majority of the outstanding 1981 Convertible Preferred Stock
(based upon the aggregate Liquidation Value thereof).
(vi) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the
Option will be deemed to have been issued without consideration.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or
for the account of the Corporation or any Subsidiary, and the disposition
of any shares so owned or held will be considered an issue or sale of
Common Stock.
(viii) Record Date. If the Corporation takes a record of the holders
of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date will be deemed to
be the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or upon the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
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2D. Subdivision or Combination of Common Stock. If the Corporation
at any time subdivides (by any stock split, stock dividend or otherwise) one or
more classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced, and if the Corporation at any time combines (by
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately increased.
2E. Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization, reclassification, consolidation, merger or any
sale of all or substantially all of the Corporation's assets to another Person
(collectively any "Organic Change") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the 1981 Convertible Preferred Stock then outstanding, based upon the aggregate
Liquidation Value thereof) will be made whereby each of the holders of 1981
Convertible Preferred Stock will thereafter have the right to acquire and
receive in lieu of shares of Conversion Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's 1981 Convertible Preferred
Stock, such shares of stock, securities or assets as may be issuable or payable
with respect to or in exchange for the number of shares of Conversion Stock
immediately theretofore acquirable and receivable upon conversion of the 1981
Convertible Preferred Stock had such Organic Change not taken place. In any such
case, appropriate provision will be made with respect to such holder's rights
and interests to the end that the provisions of this part 2 and parts 3 and 4
will thereafter be applicable in relation to any shares of stock, securities or
assets thereafter deliverable upon the conversion of 1981 Convertible Preferred
Stock (including, in the case of any such consolidation, merger or sale in which
the successor corporation or purchasing corporation is other than the
Corporation, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale if
the value so reflected is less than the Conversion Price in effect immediately
prior to such consolidation, merger or sale). The Corporation will not effect
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor corporation (if other
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than the Corporation) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument (in form reasonably
satisfactory to the holders of a majority of the 1981 Convertible Preferred
Stock then outstanding, based upon the aggregate Liquidation Value thereof), the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
2F. Certain Events. If any event occurs of the type contemplated by
the provisions of this part 2 but not expressly provided for by such provisions,
then the board of directors of the Corporation will make an appropriate
adjustment in the Conversion Price so as to protect the rights of the holders of
1981 Convertible Preferred Stock; provided that no such adjustment will increase
the Conversion Price as otherwise determined pursuant to this part 2 or decrease
the number of shares of Conversion Stock issuable upon conversion of each share
of 1981 Convertible Preferred Stock.
2G. Notices.
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation will send written notice thereof to all holders of 1981
Convertible Preferred Stock.
(ii) The Corporation will send written notice to all holders of 1981
Convertible Preferred Stock at least 20 days prior to the date on which
the Corporation closes its books or takes a record (a) with respect to any
dividend or distribution upon Common Stock, (b) with respect to any pro
rata subscription offer to holders of Common Stock or (c) for determining
rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii) The Corporation will also give to the holders of 1981
Convertible Preferred Stock at least 20 days prior written notice of the
date on which any Organic Change, dissolution or liquidation will take
place.
2H. Mandatory Conversions of Class C Preferred. Notwithstanding
anything to the contrary contained in this Article FOURTH, at such time as there
is no longer any Class B Preferred outstanding, or at such time as the
outstanding Class D Preferred shall be converted pursuant to subdivision VIII.13
of Section C hereof, all outstanding Shares of Class C Preferred (if any) will,
without any action on the part of
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the Corporation or the holders thereof, be immediately converted into shares of
Voting Common in accordance with the terms of this part 2, and thereafter no
Shares of Class C Preferred will be deemed outstanding and any holder of a
certificate of Shares of Class C Preferred will be deemed to be the holder of
the number of shares of Voting Common into which the Shares of Class C Preferred
represented by such certificate were converted pursuant to this subdivision 2H.
2I. Mandatory Conversions of Class B Preferred. Notwithstanding
anything to the contrary contained in this Article FOURTH, at such time as the
outstanding Class D Preferred shall be converted pursuant to subdivision VIII.13
of Section C hereof, all outstanding Shares of Class B Preferred (if any) will,
without any action on the part of the Corporation or the holders thereof, be
immediately converted into shares of Non-Voting Common in accordance with the
terms of this part 2, and thereafter no Shares of Class B Preferred will be
deemed outstanding and any holder of a certificate of Shares of Class B
Preferred will be deemed to be the holder of the number of shares of Non-Voting
Common into which the Shares of Class B Preferred represented by such
certificate were converted pursuant to this subdivision 2I.
3. Liquidating Dividends. If the Corporation declares a dividend
upon the Common Stock payable other than in shares of Common Stock or other than
out of earnings or earned surplus (determined in accordance with generally
accepted accounting principles, consistently applied) (a "Liquidating
Dividend"), then the Corporation will pay to the holders of 1981 Convertible
Preferred Stock at the time of payment of a Liquidating Dividend an amount equal
to the aggregate value of all Liquidating Dividends which would have been paid
on the Conversion Stock had such 1981 Convertible Preferred Stock been converted
immediately prior to the date on which a record is taken for such Liquidating
Dividend, or, if no record is taken, the date as of which the record holders of
Common Stock entitled to such dividends are to be determined. For purposes of
this part 3, a dividend other than in cash will not be considered payable out of
earnings or earned surplus regardless of whether or not earnings or earned
surplus are charged an amount equal to the fair value of such dividend.
4. Purchase Rights. If at any time the Corporation grants, issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of
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1981 Convertible Preferred Stock will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Conversion Stock acquirable upon conversion of such holder's 1981 Convertible
Preferred Stock immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights; provided that if the Purchase
Rights involve voting securities, the Corporation will make available to each
holder of Class B Preferred, at such holder's request, Purchase Rights involving
non-voting securities which are otherwise identical to the Purchase Rights
involving voting securities and which non-voting securities are convertible into
such voting securities on the same terms as Class B Common is convertible into
Class A Common.
V. Terms Applicable Only to Class C Preferred.
1. Dividends. When and as any dividend or distribution is declared
or paid by the Corporation on Common Stock, whether payable in cash, property,
securities or rights to acquire securities (except for dividends payable in
shares of Common Stock or securities convertible into, or rights to acquire,
shares of Common Stock and except for Purchase Rights which the holders of Class
C Preferred are entitled to acquire pursuant to part 4 of subdivision IV), the
holders of Class C Preferred will be entitled to participate with the holders of
Common Stock in such dividend or distribution as set forth in this part 1;
provided, however, that the Corporation may pay no dividend and make no
distribution on the Class C Preferred (except for the Purchase Rights which the
holders of Class C Preferred are entitled to acquire pursuant to part 4,
subdivision IV) unless it first shall have paid all dividends and made all
distributions then due on the Class D Preferred; provided further, that the
payment of any dividend on the Class C Preferred shall be subject to Section C,
subdivision VII.2C. hereof. At the time such dividend or distribution is payable
to the holders of Common Stock, the Corporation will pay to each holder of Class
C Preferred such holder's share of such dividend or distribution equal to the
amount of the dividend or distribution per share of Common Stock payable at such
time multiplied by the number of shares of Voting Common obtainable upon
conversion of such holder's Class C Preferred.
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2. Voting Rights. Except as otherwise provided by law, the Class C
Preferred will be entitled to vote with the Class A Common and Class D
Preferred, voting together as a single class, on all matters to be voted on by
the Corporation's stockholders, with each Share of Class C Preferred entitled to
the number of votes equal to the number of shares of Voting Common obtainable
upon conversion of such Share of Class C Preferred. Under no circumstances,
however, shall holders of the Class C Preferred, in their capacity as such, have
the right to participate in the class vote of any other class of securities,
including but not limited to the vote of the holders of Class D Preferred to
elect directors pursuant to Section C, subdivision IV.
VI. Miscellaneous.
1. Registration of Transfer. The Corporation will keep at its
principal office a register for the registration of 1981 Preferred Stock. Upon
the surrender of any certificate representing 1981 Preferred Stock at such
place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor, representing in the aggregate
the number of shares represented by the surrendered certificate. Each such new
certificate will be registered in such name and will represent such number of
shares as is requested by the holder of the surrendered certificate and will be
substantially identical in form to the surrendered certificate, and (if
applicable) dividends will accrue on the 1981 Preferred Stock represented by
such new certificate from the date to which dividends have been fully paid on
such 1981 Preferred Stock represented by the surrendered certificate.
2. Replacement. Upon receipt of evidence reasonably satisfactory to
the Corporation (an affidavit of the registered holder will be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more Shares of 1981 Preferred Stock, and in the case of any
such loss, theft or destruction, upon receipt of loss bond or other indemnity
reasonably satisfactory to the Corporation (provided that if the holder is an
institution its own agreement will be satisfactory), the Corporation will (at
its expense) execute and deliver in lieu of such certificate a new certificate
representing the number of shares represented by such lost, stolen, destroyed or
mutilated certificate, and (if applicable) dividends will accrue on the 1981
Preferred Stock represented by such new certificate from the date to which
dividends have been fully
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paid on such 1981 Preferred Stock represented by the lost, stolen, destroyed or
mutilated certificate.
3. Definitions.
"Bankruptcy Code" means the federal bankruptcy code, as amended, or
any similar federal law then in force.
"Common Stock" means, for purposes of subdivision IV, collectively,
the Class A Common, the Class B Common and any capital stock of any class of the
Corporation hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to part 2 of
subdivision IV, plus the shares of Common Stock obtainable upon conversion of
the Class B Preferred and the Class C Preferred outstanding at such time.
"Junior Securities" means any equity securities of any kind (but not
including any debt securities convertible into equity securities) which the
Corporation or any Subsidiary at any time issues or is authorized to issue other
than the Preferred Stock.
"Liquidation Value" of any Share of Class A Preferred as of any
particular date will be equal to the sum of $10 plus any unpaid dividends on
such Share added to the Liquidation Value of such Share on any Dividend
Reference Date and not thereafter paid; and, in the event of any liquidation,
dissolution or winding up of the Corporation or the redemption of such Share,
unpaid dividends on such Share will be added to the Liquidation Value of such
Share on the payment date in any liquidation, dissolution or winding up or on
the Redemption Date, as the case may be, accrued to the close of business on
such payment date or Redemption Date.
"Liquidation Value" of any Share of Class B Preferred as of any
particular date will be equal to the sum of $83.75; provided that in the event
of any liquidation, dissolution or winding up of the Corporation or the
redemption of any such Share, unpaid dividends on such Share will be added to
the Liquidation Value of such Share on the payment date in any liquidation,
dissolution or winding up or on the
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Redemption Date, as the case may be, accrued to the close of business on such
payment date or Redemption Date.
"Liquidation Value" of any Share of Class C Preferred as of any
particular date will be $83.75.
"Market Price" of any security means the average of the closing
prices of such security's sales on all securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the high and low bid
and asked prices on such day in the domestic over-the-counter market as reported
by the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which "Market Price" is being determined and the 20 consecutive
business days prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the "Market Price" will be the fair value thereof determined jointly by
the Corporation and the holders of a majority of the 1981 Convertible Preferred
Stock (based upon the aggregate Liquidation Value thereof). If such parties are
unable to reach agreement, such fair value will be determined by appraisers
jointly selected by the Corporation and the holders of a majority of the 1981
Convertible Preferred Stock (based upon the aggregate Liquidation Value
thereof).
"Material Subsidiary" means any Subsidiary with respect to which the
Corporation has directly or indirectly invested, loaned, advanced or guaranteed
the obligations of, an aggregate amount exceeding $500,000.
"Non-Voting Common" means shares of the Corporation's authorized but
unissued Class B Common; provided that if there is a change such that the
securities issuable upon conversion of the Class B Preferred are issued by an
entity other than the Corporation or there is a change in the class of
securities so issuable then the term "Non-Voting Common" will mean one share of
the security issuable upon conversion of the Class B Preferred if such security
is issuable in shares, or will mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
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"Offset Share": a holder of 1981 Convertible Preferred Stock will be
deemed to hold one Offset Share for each Share converted by such holder pursuant
to this Article FOURTH at any time prior to such Share's Redemption Date and for
each Share otherwise acquired by the Corporation from such holder other than in
a redemption, and an Offset Share will cease to be an Offset Share when it is
applied to reduce the number of Shares to be redeemed in any Redemption. When
any holder transfers any portion of such holder's outstanding Shares to any
other Person, the transferor will be deemed to have transferred to the
transferee an equal portion of the transferor's Offset Shares, unless the
parties to such transaction otherwise agree in a writing deposited with the
secretary of the Corporation at the time of such transfer.
"Person" means an individual, a partnership, a corporation, a trust,
a joint venture, an unincorporated organization and a government or any
department or agency thereof.
"Exchange Agreement" means the Exchange Agreement by and among the
Corporation and certain persons, pursuant to which such persons acquired the
Class A Preferred, the Class B Preferred and the Class C Preferred, as such
agreement may from time to time be amended in accordance with its terms.
"Purchase Price" of the Class B Preferred equals $83.75 per Share.
"Redemption Date" as to any Share means the date specified in the
notice of any redemption at the Corporation's option or the applicable date
specified herein in the case of any other redemption; provided that no such date
will be a Redemption Date unless the applicable Redemption Price is actually
paid in full on such date, and if not so paid in full, the Redemption Date will
be the date on which such Redemption Price is fully paid. If the notice of
redemption has been duly given and if on or before the date specified in such
notice the funds necessary for such redemption have been reserved and set aside
by the Corporation so as to be and continue to be available therefor, then,
notwithstanding that any certificate for Shares so called for redemption has not
been surrendered for cancellation, after the close of business on such date of
redemption, the Shares so called for redemption will no longer be deemed
outstanding, the dividends thereon shall cease to accrue, and all rights with
respect to Shares so called for redemption, including the rights, if any, to
receive notice and to vote, will forthwith after the close of business on such
redemption date cease,
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except only the right of the holders thereof to receive the amount payable upon
redemption thereof, without interest.
"Subsidiary" means any corporation of which the shares of stock
having a majority of the general voting power in electing the board of directors
are, at the time as of which any determination is being made, owned by the
Corporation either directly or indirectly through Subsidiaries.
"Voting Common" means shares of the Corporation's authorized but
unissued Class A Common; provided that if there is a change such that the
securities issuable upon conversion of the Class C Preferred are issued by an
entity other than the Corporation or there is a change in the class of
securities so issuable then the term "Voting Common" will mean one share of the
security issuable upon conversion of the Class C Preferred if such security is
issuable in shares, or will mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
4. Amendment and Waiver. No amendment, modification or waiver will
be binding or effective with respect to any provision of (i) subdivision I
without the prior written consent of the holders of a majority of the Class A
Preferred and Class B Preferred outstanding at the time such action is taken,
(ii) parts 1 or 2 of subdivision III without the prior written consent of the
holders of a majority of the Class A Preferred Outstanding at the time such
action is taken, (iii) part 3 of subdivision III without the prior written
consent of the holders of a majority of the Class B Preferred outstanding at the
time such action is taken, (iv) subdivision IV without the prior written consent
of the holders of a majority of the 1981 Convertible Preferred Stock outstanding
at the time such action is taken, (v) subdivision V without the prior written
consent of the holders of a majority of the Class C Preferred outstanding at the
time such action is taken, or (vi) subdivision II or VI without the prior
written consent of the holders of a majority of the 1981 Preferred Stock
outstanding at the time such action is taken; provided that no such action will
change (a) the rate at which or the manner in which dividends on the Class A
Preferred or the Class B Preferred accrue or the times at which such dividends
become payable without the prior written consent of the holders of at least 90%
of the Class A Preferred and the Class B Preferred then outstanding, (b) the
amount payable on redemption of the 1981 Preferred Stock or the times at which
redemption of 1981 Preferred Stock is to take place without the prior written
consent of the holders of at Least 90% of the 19B1 Preferred Stock then
outstanding, (c) the Conversion Price of the 1981 Convertible Preferred Stock or
the number
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of shares or the class of stock into which the 1981 Convertible Preferred Stock
is convertible without the prior written consent of the holders of at least 90%
of the 1981 Convertible Preferred Stock then outstanding, or (d) the percentage
required to approve any change described in clauses (a), (b) and (c) above
without the prior written consent of the holders of at least 90% of the Class A
Preferred and the Class B Preferred (in the case of (a)), the 1981 Preferred
Stock (in the case of (b)) or the 1981 Convertible Preferred Stock (in the case
of (c)) then outstanding. For purposes of this part 4, the consent of the
holders of the requisite percentage of 1981 Preferred Stock or any class or
classes thereof will be determined upon the basis of the aggregate Liquidation
Value of the class or classes of 1981 Preferred Stock in question.
5. Generally Accepted Accounting Principles. When any accounting
determination or calculation is required to be made hereunder, such
determination or calculation (unless otherwise provided) will be made in
accordance with generally accepted accounting principles, consistently applied,
except that if because of a change in generally accepted accounting principles
the Corporation would have to alter a previously utilized accounting method or
policy in order to remain in compliance with generally accepted accounting
principles, such determination or calculation will continue to be made in
accordance with the Corporation's previous accounting methods and policies
unless the Corporation has obtained the prior written consent of the holders of
a majority of the 1981 Preferred Stock then outstanding (based upon the
aggregate Liquidation Value thereof).
6. Notices. All notices referred to herein, except as otherwise
expressly provided, will be made by registered or certified mail, return receipt
requested, postage prepaid, and will be deemed to have been given when so
mailed.
SECTION B. COMMON STOCK
Except as otherwise provided herein, all shares of Class A Common
and Class B Common will be identical and will entitle the holders thereof to the
same rights and privileges.
1. Voting Rights. Except as otherwise required by law, the Class A
Common will be entitled to one vote per share on all matters to be voted on by
the Corporation's stockholders and will vote as a single class on all such
matters together with the Class C Preferred and Class D
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Preferred as provided herein and the holders of Class B Common will have no
right to vote on any matters to be voted on by the Corporation's stockholders.
Under no circumstances, however, shall holders of the Class A Common, in their
capacity as such, have the right to participate in the class vote of any other
class of securities, including but not limited to the vote of the holders of
Class D Preferred to elect, as a class, directors, as provided in Section C,
subdivision IV. Subject to any required consent of the holders of any class or
classes of the Preferred Stock then outstanding, the authorized amount of shares
of Class A Common may, without a separate class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
2. Dividends. When and as dividends are declared thereon, whether
payable in cash, property or securities of the Corporation, the holders of Class
A Common and the holders of Class B Common will be entitled to share equally,
share for share, in such dividends; provided that if dividends are declared
which are payable in shares of Class A Common or Class B Common, dividends will
be declared which are payable at the same rate on both classes of stock, and the
dividends payable in shares of Class A Common will be payable to holders of
Class A Common and the dividends payable in shares of Class B Common will be
payable to holders of Class B Common. No dividend on any share of Common Stock
may be declared or paid, however, unless all dividends due on the 1981
Preferred Stock shall have been paid and unless all dividends due on the Class D
Preferred shall have been provided for as set forth in Section C, subdivision
II.1; provided, however, dividends payable in shares of Common Stock or
securities convertible into or rights to acquire Common Stock may be paid.
3. Conversion.
3A. of Class B Common. Each record holder of Class B Common is
entitled at any time to convert any or all of the shares of such holder's Class
B Common into the same number of shares of Class A Common; provided that no
holder of Class B Common is entitled to convert any share or shares of Class B
Common to the extent that, as a result of such conversion, such holder or its
affiliates would directly or indirectly own, control or have power to vote a
greater quantity of securities of any kind issued by the Corporation than such
holder and its affiliates are permitted to own, control or have power to vote
under any law or under any regulation, rule or other requirement of any
governmental
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authority at any time applicable to such holder and its affiliates.
3B. Conversion Procedure.
(i) Each conversion of shares of Class B Common into shares of Class
A Common will be effected by the surrender of the certificate or
certificates representing the shares to be converted at the principal
office of the Corporation at any time during normal business hours,
together with a written notice by the holder of such Class B Common
stating that such holder desires to convert the shares, or a stated number
of the shares, of Class B Common represented by such certificate or
certificates into Class A Common and that upon such conversion such holder
and its affiliates will not directly or indirectly own, control or have
the power to vote a greater quantity of securities of any kind issued by
the Corporation than such holder and its affiliates are permitted to own,
control or have the power to vote under any applicable law, regulation,
rule or other governmental requirement (and such statement will obligate
the Corporation to issue such Class A Common). Such conversion will be
deemed to have been effected as of the close of business on the date on
which such certificate or certificates have been surrendered and such
notice has been received, and at such time the rights of the holder of the
converted Class B Common as such holder will cease and the person or
persons in whose name or names the certificate or certificates for shares
of Class A Common are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the shares of Class A
Common represented thereby.
(ii) Promptly after such surrender and the receipt of such written
notice, the Corporation will issue and deliver in accordance with the
surrendering holder's instructions (a) the certificate or certificates for
the Class A Common issuable upon such conversion and (b) a certificate
representing any Class B Common which was represented by the certificate
or certificates delivered to the Corporation in connection with such
conversion but which was not converted.
(iii) If the Corporation in any manner subdivides or combines the
outstanding shares of one class of Common Stock, the outstanding shares of
the other class of Common Stock will be proportionately subdivided or
combined.
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(iv) The issuance of certificates for Class A Common upon conversion
of Class B Common will be made without charge to the holders of such
shares for any issuance tax in respect thereof or other cost incurred by
the Corporation in connection with such conversion and the related
issuance of Class A Common.
(v) The Corporation will not close its books against the transfer of
Class B Common or of Class A Common issued or issuable upon conversion of
Class B Common in any manner which would interfere with the timely
conversion of Class B Common.
4. Registration of Transfer. The Corporation will keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender of
any certificate representing shares of any class of Common Stock at such place,
the Corporation will, at the request of the registered holder of such
certificate, execute and deliver a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares of such class
represented by the surrendered certificate, and the Corporation forthwith will
cancel such surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of shares of such class
as is requested by the holder of the surrendered certificate and will be
substantially identical in form to the surrendered certificate. The issuance of
new certificates will be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost incurred by
the Corporation in connection with such issuance.
5. Replacement. Upon receipt of evidence reasonably satisfactory to
the Corporation (an affidavit of the registered holder will be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of any class of Common Stock, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution its own agreement will be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Corporation will (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the number of shares of such class represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
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SECTION C. CLASS D PREFERRED STOCK
I. Issuance in Series and Limitations as to Variations Between Series:
1. Designation and Number of Shares. The Class D Preferred shall be
issuable in two series, designated and comprising the numbers of Shares, as
follows:
(i) Class D 8% Convertible Preferred Stock-Series 1, par value $.10
per share (the "Class D-1 Preferred") comprised of 45,681 Shares and no
more; and
(ii) Class D 8% Convertible Preferred Stock-Series 2, par value $.10
per share (the "Class D-2 Preferred") comprised of 27,408 Shares and no
more;
2. Issuance of Class D-2 Preferred. Shares of Class D-2 Preferred shall be
deemed to be and shall be automatically issued upon the occurrence of the Second
Closing under the Note and Stock Purchase Agreements in discharge of the
obligations under the Short-Term Promissory Notes-Series 1 at the rate of one
share of Class D-2 Preferred for each $210 principal amount of such Notes, as
provided in each such Short-Term Promissory Note-Series 1 and in the Note and
Stock Purchase Agreements.
3. Limitations as to Variations. The Class D-1 preferred and the Class D-2
Preferred (collectively referred to as the "Class D Preferred") shall rank
equally with each other and shall be identical in all respects, except as
provided in subdivision VIII.1A. below with respect to initial Conversion Price
and except with respect to date of issue.
II. Dividends.
1. General Obligation. When and as the first cash dividend, if any, is
declared or paid by the board of directors of the Corporation on Common Stock in
each calendar year, the board of directors shall declare and the Corporation
shall pay a dividend at the rate of 8% per annum of the Liquidation Value of the
Class D Preferred to the holders thereof as provided in this part II; provided,
however, if dividends as declared on the Common Stock and on the Class D
Preferred are not permitted under applicable law, dividends declared on the
Common Stock shall be reduced so that dividends on the Class D Preferred may be
paid. Each such dividend on the Class D Preferred shall be due and payable no
later than the date on which the dividend on the
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Common Stock giving rise to such dividend on the Class D preferred is payable
(whether or not the board of directors of the Corporation have declared a
dividend on the Class D Preferred); provided, however, that no more than one
such 8% dividend shall be paid in any calendar year irrespective of the number
of cash dividends which may be declared in such year.
2. Distribution of Partial Dividend Payments. If at any time the
Corporation pays less than the total amount of dividends then due and payable
with respect to the Class D Preferred, such payment will be distributed among
the holders of such class so that an equal amount will be paid with respect to
each outstanding Share. No dividend due on the Class C Preferred may be paid
until all amounts then due on the Class D Preferred shall have been paid (except
for the Purchase Rights which the holders of Class C Preferred are entitled to
acquire pursuant to part 4 of subdivision IV of Section A). No dividend due on
the Common Stock may be paid until all amounts then due on the Class D
Preferred, as well as any amounts that initially would become due on the Class
D Preferred upon the payment to holders of Common Stock, shall have been paid,
provided, however, dividends payable in shares of Common Stock or securities
convertible into or rights to acquire Common Stock may be paid.
III. Voting Rights.
Except as otherwise provided by law, the Class D Preferred will be
entitled to vote with the Class A Common and Class C Preferred, voting together
as a single class, on all matters to be voted on by the Corporation's
stockholders, with each Share of Class D Preferred entitled to the number of
votes equal to the number of shares of Voting Common obtainable upon conversion
of such Share of Class D Preferred, calculated as of the date of the record date
for each vote. In addition, the Class D Preferred shall be entitled to vote as a
class on matters as to which they are entitled to a class vote under applicable
law; provided further that the rights of the Class D Preferred as a class may
not be diminished in any way without the approval of 51% of the shares of Class
D Preferred.
IV. Class D Directors.
In addition to such voting rights as are described in subdivision
III, so long as (i) the Corporation shall not have any class of Common Stock
registered under Section 12 of the securities Exchange Act of 1934 and (ii) the
total number of votes to which the holders of the Class C Preferred then
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outstanding shall be entitled exceeds 17% of the total number of votes which may
be cast generally for the election of Directors, then the holders of the Class D
Preferred outstanding shall have the right, as a class, to nominate, elect and
maintain in office two Directors to the board of directors of the Corporation;
provided, however, that if at any time the board of directors shall be or shall
be authorized to be composed of more than 10 directors the holders of the Class
D Preferred outstanding shall have the right, as a class, to nominate and elect
a number of additional Directors no greater than necessary to bring the
percentage of authorized Directors chosen by the holders of the Class D
Preferred pursuant to this subdivision IV to at least 20%. The term of office of
any Director elected pursuant to the preceding sentence shall not extend beyond
the first to occur of the events specified in clauses (i) and (ii) of such
preceding sentence. In any election of directors pursuant to this subdivision IV
(and not in an election of directors generally), each holder of Class D
Preferred shall be entitled to as many votes as shall equal (x) the number of
votes which (except for the provision as to voting set forth in this sentence)
such holder would be entitled to cast for the election of directors generally
with respect to the shares of Class D Preferred held by such holder multiplied
by (y) the number of directors to be elected pursuant to this subdivision IV,
and such holder may cast the resulting number of votes for a single director or
distribute them among the number of directors to be voted for, or for any two or
more of such directors as the holder may see fit.
V. Liquidation.
1. Upon any liquidation, dissolution or winding up of the
Corporation, each holder of Class D Preferred will be entitled to be paid,
before any distribution or payment is made upon the 1981 Preferred Stock or any
Junior Securities, an amount in cash equal to the aggregate Liquidation Value of
all Shares held by such holder, and the holders of Class D Preferred will not be
entitled to any further payment. If the net assets of the Corporation shall be
insufficient to permit the payment to holders of all outstanding shares of all
classes of Preferred Stock of the full amounts to which they are entitled, then
the assets of the Corporation shall be distributed (i) first to the holders of
the Class D Preferred, until such holders are paid the aggregate amount which
they are entitled to be paid, or, if the assets to be distributed are
insufficient for such purpose, the entire assets to be distributed will be
distributed ratably among such holders based upon the aggregate Liquidation
Value of
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the Class D Preferred held by each such holder, and (ii) second, the balance (if
any) will be distributed among the holders of all outstanding shares of
Preferred Stock other than the Class D Preferred in accordance with the
provisions of Section A hereof. The Corporation will mail written notice of such
liquidation, dissolution or winding up, not less than 60 days prior to the
payment date stated therein, to each record holder of Class D Preferred. Neither
the consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this subdivision V.
2. Notwithstanding the foregoing, if at any time any Class D
Preferred shall have been outstanding for at least three years, is registered
under Section 12 of the Securities Exchange Act of 1934, and the Class A Common
or other security into which the Class D Preferred shall be convertible has
traded on a national securities exchange or NASDAQ on each of 20 consecutive
days at a price per share of at least 170% of the then-applicable Conversion
Price, then the Class D Preferred shall from such time be pari passu with the
Class A Preferred with respect to liquidation preferences, and the rights of
holders of shares of Class D Preferred with respect to liquidation shall be the
same as if such shares were shares of Class A Preferred.
VI. Redemptions
1. Scheduled Redemptions.
1A. The Corporation will redeem 25% of the original total number of
Shares of Class D Preferred issued on the First Closing Date, each of the
Delayed First Closing Dates, if any, and the Second Closing Date, if any, or
such lesser number then outstanding on June 30 of each year, commencing in 1995
and ending in 1998 (the "Class D Scheduled Redemption Dates") at a price per
share equal to the Redemption Price as defined in subdivision VI.3A.
1B. If any Shares of Class D Preferred are converted pursuant to
subdivision VIII other than in a situation described in the immediately
following sentence, the number of Shares of Class D Preferred thereafter to be
redeemed pursuant to subdivision VI.1A. on each subsequent Class D Scheduled
Redemption Date shall be reduced in the same proportion as the number of Shares
of Class D Preferred outstanding immediately prior to such conversion is reduced
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by the conversion pursuant to subdivision VIII. If a notice of redemption
pursuant to subdivision VI.3B. has been given and thereafter any Share or Shares
of Class D Preferred to which such notice relates shall have been converted into
Common Stock pursuant to Section VIII prior to the Redemption Date to which such
notice relates, such Share or Shares shall, for the purposes of subdivision
VI.1A. hereof, be deemed to have been redeemed to the extent so converted.
2. Optional Redemptions. The Corporation may not redeem at its option any
Shares of Class D Preferred prior to June 30, 1990. The Corporation may, at any
time on or after June 30, 1990, at its option, upon notice as provided in
subdivision VI.3B., on the date specified in such notice, redeem as a whole, but
not in part, all of the shares of Class D Preferred then outstanding at the
following prices per Share (expressed as a percentage of the Redemption Price,
as defined in subdivision VI.3A.), together with due and payable but unpaid
dividends, if any, to the Redemption Date (as defined in subdivision VI.33.):
Redemption to be made
during the 12-month
period beginning June 30 Percentage
------------------------ ----------
1990 140%
1991 130
1992 120
1993 110
1994 105
1995 105
1996 105
thereafter 100
3. General Terms of Scheduled and 0ptional Redemptions.
3A. Redemption Price. For each Share of Class D Preferred which is
to be redeemed, the Corporation will be obligated on the Redemption Date to pay
to the holder thereof an amount in cash equal to the respective Liquidation
Value of such Share (the "Redemption Price"). If the funds of the Corporation
legally available for redemption of Shares of the Class D Preferred on any
Redemption Date are insufficient to redeem the total number of Shares to be
redeemed on such date, those funds which are legally available will be used to
redeem the maximum possible number of Shares pro rata among the holders of the
Shares to be redeemed and the amount equal to the Redemption Price of the Shares
that have not been redeemed because of such insufficiency of funds shall remain
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due and payable and shall be deemed to increase at a rate of 15% per annum until
such Shares have been redeemed. At any time thereafter when additional funds of
the Corporation are legally available for the redemption of Shares of Class D
Preferred, such funds will immediately be used to redeem the balance of the
Shares which the Corporation has become obligated to redeem on any Redemption
Date but which it has not redeemed including the deemed increase in Redemption
Price set forth in the last preceding sentence. No dividends may be paid on the
Common Stock so long as there remains due and payable any amount with respect to
the Class D Preferred, provided, however, dividends payable in shares of Common
Stock or securities convertible into or rights to acquire Common Stock may be
paid.
3B. Notice of Redemption. The Corporation will mail written notice
of each redemption of Class D Preferred to each record holder of Class D
Preferred not more than 60 days nor less than 30 days prior to the date on which
such redemption is to be made (the "Redemption Date"), in each case specifying
such date, the aggregate number of Shares to be redeemed on such date, the
number of Shares held by such holder to be redeemed on such date, the Redemption
Price and the dividend due and payable, if any, applicable to such redemption.
Each such notice shall be accompanied by an Officers' Certificate certifying
that the conditions of subdivision VI.1 or VI.2 have been fulfilled in
connection with such redemption and specifying the particulars of such
fulfillment. Upon mailing any notice of redemption which relates to a redemption
at the Corporation's option, the Corporation will become obligated to redeem all
of the Shares of Class D Preferred then outstanding. In the event of a scheduled
redemption, if fewer than the total number of Shares represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed Shares will be issued to the holder thereof without cost to such
holder promptly upon the surrender of the certificate representing the redeemed
Shares.
3C. Determination of the Number of Each Holder's Shares to be
Redeemed Pursuant to Scheduled Redemptions. The number of Shares of Class D
Preferred to be redeemed from each holder thereof in scheduled redemptions
hereunder will be the number of whole Shares, as nearly as practicable to the
nearest Share, determined by multiplying the total number of Shares of Class D
Preferred to be redeemed times a fraction, the numerator of which will be the
total number of Shares of Class D Preferred then held by such holder and the
denominator of which will be the total number of Shares of Class D Preferred
then outstanding, provided, however on the
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last Class D Scheduled Redemption Date, all shares of Class D Preferred shall be
redeemed.
3D. Certain Consequences of Redemption. If the notice of redemption
has been duly given and if and only if on or before the date specified in such
notice the funds necessary for such redemption have been reserved and set aside
by the Corporation so as to be and continue to be available therefor, then,
notwithstanding that any certificate for Shares so called for redemption has not
been surrendered for cancellation, after the close of business on such date of
redemption, the Shares so called for redemption will no longer be deemed
outstanding, and all rights with respect to Shares so called for redemption,
including the rights, if any, to receive notice and to vote, will forthwith
after the close of business on such redemption date cease, except only the right
of the holders thereof to receive the amount payable upon redemption thereof,
without interest.
3E. Redeemed or Otherwise Acquired Shares. Any Shares of Class D
Preferred which are redeemed or otherwise acquired by the Corporation will be
cancelled and will not be reissued, sold or transferred.
3F. Other Redemptions or Acquisitions. Neither the Corporation nor
any Subsidiary will, redeem or otherwise acquire any Class D Preferred, except
as expressly authorized herein or pursuant to a purchase offer made to all
holders of Class D Preferred, pro rata, based upon the number of Shares held by
each holder, but no such purchase shall modify the mandatory redemption
obligations under subdivision VI.1A.
VII. Events of Noncompliance.
1. Definition.
1A. An Event of Noncompliance will be deemed to have occurred if:
(i) the Corporation fails to pay on any date the full amount of
dividends then due and payable on the Class D preferred, whether or not such
payment is legally permissible or the Corporation fails to make any redemption
payment with respect to the Class D Preferred which it is obligated to make,
whether or not such payment is legally permissible;
(ii) the Corporation breaches or otherwise fails to perform or
otherwise observe any covenant or agreement set forth in Section 12.12 of the
Note and Stock Purchase Agreements or the Corporation fails to make any
prepayment which
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it is obligated to make as set forth in Section 10 of the Note and Stock
purchase Agreements;
(iii) the Corporation breaches or otherwise fails to perform or
otherwise observe any covenant or agreement set forth in Sections 12.1, 12.2,
12.4, 12.7(a) and (b) insofar as subsections 12.7(a) and (b) relate to the
Corporation or CasChem, of the Note and Stock Purchase Agreements or the
Corporation or CasChem fails to preserve and keep in full force and effect its
corporate existence;
(iv) the Corporation breaches or otherwise fails to perform or
observe any other covenant or agreement set forth in this Section C of this
Restated Certificate of Incorporation, in the Note and Stock Purchase
Agreements, in the Notes or in the Registration Rights Agreement;
(v) any material representation or warranty contained in the Note
and Stock Purchase Agreements or required to be furnished to any Purchaser of
Class D Preferred pursuant to the Note and Stock Purchase Agreements on or
before the date of issuance of the Class D Preferred is false or misleading in
any material respect on the date made or furnished;
(vi) any written information furnished by the Corporation or any
Subsidiary to any holder of Class D Preferred pursuant to the Note and Stock
Purchase Agreements after the date of issuance of the Class D Preferred is, to
the Corporation's or such Subsidiary's knowledge after due inquiry, false or
misleading in any material respect on the date made or furnished;
(vii) the Corporation or any Subsidiary makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they becomes due; or an order, judgment or decree is entered
adjudicating the Corporation or any Subsidiary bankrupt or insolvent under the
Bankruptcy Code or the Corporation or any Subsidiary is a debtor-in-possession
under the Bankruptcy Code; or any order for relief with respect to the
Corporation or any Subsidiary is entered under the Bankruptcy Code; or the
Corporation or any Subsidiary petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Corporation
or any Subsidiary or of any substantial part of the assets of the Corporation or
any Subsidiary, or commences any proceeding (other than a proceeding for the
voluntary liquidation and dissolution of a Subsidiary) relating to the
Corporation or any Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency,
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readjustment of debt, dissolution or liquidation law of any jurisdiction; or any
such petition or application is filed, or any such proceeding is commenced,
against the Corporation or any Subsidiary and either (a) the Corporation or any
such Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein or (b) such petition, application or proceeding is not
dismissed within 60 days;
(viii) a judgment in excess of $500,000 is rendered against the
Corporation or any Subsidiary and, within 60 days after entry thereof, such
judgment is not discharges or execution thereof stayed pending appeal, or within
60 days after the expiration of any such stay, such judgment is not discharged;
or
(ix) the Corporation or any Subsidiary defaults in the performance
of any obligation, if the effect of such default is to cause an amount exceeding
$500,000 to become due prior to its stated maturity, or to permit the holder or
holders of such obligation to cause an amount exceeding $500,000 to become due
prior to its stated maturity.
1B. An Event of Noncompliance will not be deemed to have occurred
with respect to the matters described in subdivision VII.1A.(iv) or VII.1A.(v)
if the Corporation establishes that (a) in the case of subdivision VII.1A.(iv),
the particular Event of Noncompliance has not been caused by knowing or
purposeful conduct by the Corporation or any Subsidiary and the Corporation has
exercised, and continues to exercise, best efforts expeditiously to cure the
Event of Noncompliance (if cure is possible), (b) in the case of subdivision
VII.1A.(v), the particular Event of Noncompliance has not been caused by a
knowing or willful misstatement or misrepresentation on the part of the
Corporation, (c) in the case of both such subdivisions, the Event of
Noncompliance is not material to the Corporation's financial condition,
operations, assets, or business prospects, and (d) in the case of both such
subdivisions, the Event of Noncompliance is not material to any holder's
investment in the Class D Preferred.
2. Consequence of Certain Events of Noncompliance.
2A. If an Event of Noncompliance of the type described in
subdivision VII.1A.(ii), (iii) or (iv) has occurred and continued for a period
of 30 days or any other Event of Noncompliance has occurred, the dividend rate
on the Class D Preferred will increase immediately by an increment of 0.5% per
annum and dividends shall automatically accrue and shall cumulatively accrue.
Thereafter, until such time
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as no Event of Noncompliance exists, the dividend rate on the Class D Preferred
will increase automatically at the end of each succeeding 90-day period by an
additional increment of 0.5% per annum (but in no event will the dividend rate
exceed 10% per annum). Any increase of the dividend rate resulting from the
operation of this subdivision will terminate as of the close of business on the
date on which no Event of Noncompliance exists, subject to subsequent increases
pursuant to this subdivision provided, however, dividends shall continue to
accrue automatically (at 8% per annum) and shall cumulatively accrue until 12
months after such Event of Noncompliance shall have been removed and all unpaid
dividends due and payable shall have been paid.
2B. If Events of Noncompliance exist for an aggregate of 365 days
(whether or not such days are successive), the Conversion Price of the Class D
Preferred will be reduced immediately by 10% of the Conversion Price in effect
immediately prior to such adjustment. Notwithstanding the foregoing, if no
Events of Noncompliance exist for a period of 365 successive days, previous days
in which Events of Noncompliance existed will not be counted in determining such
adjustment. In no event will the Conversion Price adjustment be rescinded, and
in no event will there be more than one Conversion Price adjustment pursuant to
this subdivision.
2C. So long as an Event of Noncompliance of the type described in
subdivision VII.1A.(i), (ii) or (iii) has occurred and is continuing, no
dividends on the 1981 Preferred Stock shall be declared (except for dividends
payable in shares of Common Stock or securities convertible into or rights to
acquire Common Stock) and the Corporation shall not redeem any shares of 1981
Preferred Stock. So long as an Event of Noncompliance of the type described in
subdivision VII.1A.(i) or (ii) has occurred and is continuing, or dividends on
the 1981 Preferred Stock shall be paid (except for dividends payable in shares
of Common Stock or securities convertible into rights to acquire Common Stock).
If, prior to the payment of a dividend on the 1981 Preferred Stock, an Event of
Noncompliance of the type described in subdivision VII.1A.(iii) has occurred,
and if such dividend, on the 1981 Preferred Stock had been declared pursuant to
the terms and conditions of the 1981 Preferred Stock and such dividend is
payable within 30 days of such declaration, such dividend may be paid provided
that such payment is made within 30 days of such declaration. In addition, so
long as the Corporation breaches or otherwise fails to perform or observe those
provisions of Section 3.1 or 3.2 of the Registration Rights Agreement requiring
the Corporation to file registration statements, governing the number of
registration rights
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granted, or otherwise requiring the Corporation to include in a registration
statement the Common Stock issuable on conversion of Class D Preferred, the
Corporation shall not redeem any shares of 1981 Preferred Stock.
2D. If an Event of Noncompliance exists, each holder of Class D
Preferred will also have any other rights which such holder may have been
afforded under any contract or agreement at any time and any other rights which
such holder may have pursuant to applicable law.
VIII. Conversions.
1. Conversion Procedure.
1A. At any time up to two days prior to the Redemption Date of any
Share of Class D Preferred, the holder thereof may convert all or any portion of
such holder's Shares of Class D Preferred into a number of shares of the Class A
Common computed by multiplying the number of Shares to be converted by $165 if
no Class D-2 Preferred have been issued, or by $210 if the Class D-2 Preferred
have been issued pursuant to the terms of the Note and Stock Purchase
Agreements, and dividing the result by the Conversion Price then in effect;
provided, however, that no Class D-1 Preferred may be converted until the
earlier of the date of issuance of the Class D-2 Preferred and the Cosan
Termination Date.
1B. Each conversion of Class D Preferred will be deemed to have been
effected as of the close of business on the date on which the certificate or
certificates representing the Class D Preferred to be converted have been
surrendered at the principal office of the Corporation. At such time as such
conversion has been effected, the rights of such holder of such Class D
Preferred as such holder will cease and the Person or Persons in whose name or
names any certificate or certificates for shares of Class A Common are to be
issued upon such conversion will be deemed to have become the holder or holders
of record of the shares of Class A Common represented thereby; provided,
however, a conversion of Class D Preferred within 10 days after the receipt by a
holder of notice of a declaration by the board of directors of the Corporation
of a cash dividend on Common Stock will be deemed to have been effected one day
prior to the record date for such cash dividend on Common Stock, provided,
further that the Class D Preferred so deemed to have been converted shall not be
entitled to any dividend on such Class D Preferred resulting from the
declaration or payment of such cash dividend on the Common Stock.
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1C. As soon as possible after a conversion has been effected, the
Corporation will deliver to the converting holder:
(a) a certificate or certificates representing the number of shares
of Class A Common issuable by reason of such conversion in such name or
names and such denomination or denominations as the converting holder has
specified;
(b) payment in an amount equal to all due and payable dividends with
respect to each Share of Class D Preferred converted, which have not been
paid prior thereto, plus the amount payable under subdivision VIII.1E.
below with respect to such conversion; and
(c) a certificate representing any Shares of Class D Preferred which
were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not
converted.
1D. If for any reason the Corporation is unable to pay any due and
payable dividends on the Class D Preferred being converted, the Corporation will
pay such dividends plus an amount equal to 15% per annum of such unpaid
dividends, calculated from the date on which payment was due and payable to the
date of payment, to the converting holder as soon thereafter as funds of the
Corporation are legally available for such payment. At the request of any such
converting holder, the Corporation will provide such holder with written
evidence of its obligation to such holder. No dividends may be paid on the
Common Stock so long as there remain due and payable any dividends or interest
with respect to the Class D Preferred, provided, however, dividends payable in
shares of Common Stock or securities convertible into or rights t6 acquire
Common Stock may be paid.
1E. If any fractional interest in a share of Common Stock would,
except for the provisions of this subdivision VIII.1E., be deliverable upon any
conversion, the Corporation, in lieu of delivering the fractional share
therefor, will pay an amount equal to the Conversion Price of such fractional
interest as of the date of conversion; provided that if for any reason the
Corporation is unable to pay the Conversion Price of any such fractional
interest, the Corporation will issue such fractional share upon the conversion.
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1F. The issuance of certificates for shares of Common Stock upon
conversion of Class D Preferred will be made without charge to the holders of
such Class D preferred for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of shares of Common Stock.
1G. The Corporation will not close its books against the transfer of
Class D Preferred or of Common Stock issued or issuable upon conversion of Class
D Preferred in any manner which interferes with the timely conversion of Class D
Preferred.
2. Conversion Price. The Conversion Price for the Class D-1 Preferred
shall initially be $165, and shall be adjusted at the date the Class D-2
Preferred shall have been issued by the Corporation, at which time the
Conversion Price for the Class D-1 Preferred shall become $210; if no Class D-2
Preferred shall have been issued by the Corporation on or before December 31,
1985 (or such later date as indicated in writing by the holders of at least 50%
in principal amount of the Short-Term Promissory Notes, as defined below), such
adjustment to the Class D-1 Preferred shall no longer be applicable. The
Conversion Price for the Class D-2 Preferred shall initially be $210. In order
to prevent dilution of the conversion rights granted under this subdivision, the
Conversion Price of Class D Preferred will be subject to adjustment from time to
time pursuant to this subdivision VIII.
3. Adjustment of Conversion Price for Diluting Issues, etc.
3A. Formula Adjustments.
(i) Issuance of Additional Shares of Common Stock. In case the
Corporation shall at any time or from time to time after the date of the
issuance of the Class D-1 Preferred issue or sell, or be deemed under any
provision of this subdivision VIII to have issued or sold, any additional shares
of Common Stock (except for issuances excluded pursuant to subdivision VIII.3H.)
whether or not subsequently reacquired or retired by the Corporation, without
consideration or for a consideration per share which shall be less than the
Conversion Price in effect immediately prior to such issue or sale, then and in
each such case; the Conversion Price in effect immediately prior to such issue
or sale shall be reduced, effective concurrently with such issue or sale,
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to a price (calculated to the nearest cent) determined by dividing,
(a) an amount equal to the sum of (1) the aggregate number of shares
of Common Stock outstanding immediately prior to such issue and sale,
including, without duplication, those deemed to have been issued under any
provision of subdivision VIII, and including, without duplication, the
shares of Common Stock into which the Class B Preferred and Class C
Preferred may be converted, multiplied by the then existing Conversion
Price, and (2) the consideration, if any, received by the Corporation upon
such issue or sale, by
(b) the aggregate number of shares of Common Stock of all classes
outstanding immediately after such issue or sale, including, without
duplication, those deemed to have been issued under any provision of
subdivision VIII and including, without duplication, the shares of Common
Stock into which the Class B Preferred and Class C Preferred may be
converted.
For all purposes of this clause VIII.3A.(i), the provisions of the following
subdivisions VIII.3B. through VIII.3G. shall be applicable.
(ii) Liquidating Dividends. If Group declares a dividend upon the
Common Stock payable other than in shares of Common Stock or other than out of
earnings or earned surplus (determined in accordance with GAAP, consistently
applied) (a "Liquidating Dividend"), then Group will pay to the holders of Class
D Preferred at the time of payment of a Liquidating Dividend an amount equal. to
the aggregate value of all Liquidating Dividends which would have been paid on
the Common Stock issuable on conversion of Class D Preferred had such Class D
Preferred been converted immediately prior to the date on which a record is
taken for such Liquidating Dividend, or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined. For purposes of this subsection (ii), a dividend other than in cash
will not be considered payable out of earnings or earned surplus regardless of
whether or not earnings or earned surplus are charged an amount equal to the
fair value of such dividend.
3B. Options. In case at any time or from time to time the
Corporation shall (whether directly or by assumption in a merger or otherwise)
grant, issue or sell any Options,
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whether or not such Options are immediately exercisable, then the maximum number
of shares of Common Stock issuable upon the exercise of such Options (or
issuable upon the conversion of any Convertible Securities issuable pursuant to
such Options), without regard to any provision for subsequent adjustment of such
number, shall be deemed to be outstanding and to have been issued immediately
after the opening of business on the date of the grant of such Options.
3C. Convertible Securities. In case at any time or from time to time
the Corporation shall (whether directly or by assumption in a merger or
otherwise) issue or sell any Convertible Securities (other than any Convertible
Security issued pursuant to an Option and the shares of Common Stock issuable
upon the conversion of which have been or are to be deemed issued pursuant to
subdivision VIII.3B.), whether or not such Convertible Securities are
immediately convertible or exchangeable into Common Stock, then the maximum
number of shares of Common Stock issuable upon the conversion or exchange of
such Convertible Securities without regard to any provision for subsequent
adjustment of such number shall be deemed to be outstanding and to have been
issued immediately after the opening of business on the date of the issuance or
sale of such Convertible Securities.
3D. Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities without the exercise of such
Option or right, the Conversion Price then in effect hereunder will be adjusted
to the Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
3E. Stock Dividends, Subdivisions, etc. In case at any time or from
time to time after the date of the issuance of the Class D Preferred the
Corporation shall (i) declare or pay any dividend or make any other distribution
upon any capital stock of the Corporation which is payable in Common Stock or
Convertible Securities, or (ii) effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock),
then, in any such event, the total number of additional shares of Common Stock,
or (in the case of any such dividend or distribution payable in Convertible
Securities) Convertible Securities issuable in payment of such dividend or
distribution or to give effect to such sub-
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division shall be deemed to have been issued immediately after the close of
business on the record date (or other date) for the determination of holders of
any class of securities in connection with such dividend, distribution, or
subdivision.
3F. Determination of Consideration.
(i) Cash Consideration. In case of the issuance of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash received by
the Corporation for such shares (or, if such shares of Common Stock are offered
by the Corporation for subscription, the subscription price, or, if such shares
of Common Stock are sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) after deducting
therefrom (in cases other than issuances involving an underwritten public
offering or a shelf registration on customary terms); any expenses incurred in
connection therewith other than any compensation or discount in the sale,
underwriting or purchase thereof by underwriters or dealers or others performing
similar services. The consideration for shares of Common Stock deemed to have
been issued under subdivision (ii) or (iii) of this subdivision shall be deemed
to have been received by the Corporation at the time such shares of Common Stock
are deemed to have been issued.
(ii) Consideration other than Cash. In case of the issuance
(otherwise than as a dividend or other distribution on any class of capital
stock of the Corporation or upon conversion or exchange of any Convertible
Securities or upon any exercise of any Options) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be the fair value thereof as
determined by the board of directors of the Corporation, irrespective of the
accounting treatment thereof. The reclassification of securities other than
Common Stock into securities including Common Stock shall be deemed to involve
the issuance for a consideration other than cash of such Common Stock on the
date fixed for the determination of security holders entitled to receive such
Common Stock.
(iii) Option and Convertible Securities. In case of the issuance of
shares of Common Stock deemed to occur under subdivisions (3B) or (3C) with
respect to the conversion or exchange of any Convertible Securities (other than
Notes or Class D Preferred) or the exercise of any Options of the Corporation,
the amount of the consideration received by
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the Corporation for such shares of Common Stock shall be deemed to be the total
of (a) the amount of the consideration, if any, received by the Corporation upon
the issuance of such Convertible Securities or the grant of such Options, as the
case may be, plus (b) the minimum amount of the consideration, if any, other
than the consideration received for such Convertible Securities or Options,
received or deemed to be received by the Corporation (except on adjustment of
interest or dividends) upon such conversion, exchange or exercise without regard
to any provision for adjustment of such consideration. In determining the amount
of the consideration received by the Corporation upon the issuance of such
Convertible Securities or the grant of such Options, as the case may be, (x)
except as otherwise provided in the following clauses (y) and (z), the amount of
the consideration in cash and other than cash shall be determined pursuant to
subdivisions VIII.3F(i). and VIII.3F(ii). (in each case as if all references
therein to "shares of Common Stock", "shares" or "Common Stock" were references
to such Convertible Securities or Options), (y) any such Convertible Securities
or Options issued by way of dividend or other distribution on any class of
capital stock of the Corporation shall be deemed to have been issued without
consideration, and (z) if securities of the same class or series of a class as
such Convertible Securities or Options were issued or granted for different
amounts of consideration, or if some were issued for no consideration, then the
amount of the consideration received by the Corporation upon the issuance or
grant of each of the securities of such class or series, as the case may be,
shall be deemed to be the mean average amount of the consideration received by
the Corporation upon the issuance of all the securities of such class or series,
as the case may be. Any Convertible Securities issued or any Option granted as a
dividend or other distribution on any class of capital stock of the Corporation
shall be deemed to have been issued or granted immediately after the opening of
business on the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution and without consideration.
(iv) Stock Dividends, etc. In case shares of Common Stock are deemed
to have been issued pursuant to subdivision VIII.3E., relating to stock
dividends and subdivisions, such shares shall be deemed to have been issued
without consideration.
3G. Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any such shares shall be
consid-
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ered an issue or sale of Common Stock for the purposes of this subdivision
VIII.3.
3H. Certain Issues Excepted. Anything in this subdivision VIII to
the contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Conversion Price in respect of any of the following (without
duplication):
(i) the issuance, exchange or transfer of the Notes or the issuance
of Common Stock upon conversion of the Notes;
(ii) the issuance, exchange or transfer of the Class D Preferred or
the issuance of Common Stock upon conversion of the Class D Preferred;
(iii) shares of Common Stock previously deemed to have been issued
pursuant to subdivision VIII.3B. or VIII.3C.;
(iv) the issuance of up to 8,000 shares of Common Stock in
connection with the employment of any Person by the Corporation or any
Subsidiary including the issuance of options or rights with respect
thereto; and
(v) the issuance of shares of Common Stock, and other securities
upon the conversion of the Corporation's Class B Common, Class B Preferred
and Class C Preferred in accordance with the terms in existence and
applicable to such conversion on the date hereof.
3I. Determination of Consideration Under Certain Circumstances.
Anything herein to the contrary notwithstanding, in case at any time after the
date hereof the Corporation shall issue any shares of Common Stock or
Convertible Securities, or any rights or options to purchase any such Common
Stock or Convertible Securities, in connection with the acquisition by the
Corporation or a Subsidiary of the stock or assets of any other corporation or
the merger of any other corporation into the Corporation or a Subsidiary (or the
merger of a Subsidiary into another corporation which thereby becomes a
Subsidiary) under circumstances where on the date of the issuance of such shares
of Common Stock or Convertible Securities or such rights or options the
consideration per share received for such Common Stock or deemed to have been
received for the Common Stock into which such Convertible Securities or such
rights or options are
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convertible is less than an amount equal to the then Conversion Price, but on
the date the number of shares of Common Stock or Convertible Securities (or in
the case of Convertible Securities other than stock, the aggregate principal
amount of Convertible Securities) or the number of such rights or options (or
the terms by which such number shall be determined) was approved by the Board of
the Corporation (as evidenced by a resolution thereof) the consideration
received per share for such Common Stock or deemed to have been received for the
Common Stock into which such Convertible Securities or such rights or options
are convertible or for which they are exercisable would not have been less than
an amount equal to the Conversion Price thereof, such shares of Common Stock
shall not be deemed to have been issued for less than an amount equal to the
Conversion Price.
4. Other Securities.
In case any Other Securities shall be issued or shall become subject
to issue upon the conversion or exchange of any stock (or Other Securities) of
the Corporation (or any issuer of Other Securities or any other Person referred
to in subdivision VIII.5.) or to subscription, purchase or other acquisition
pursuant to any Convertible Securities or Options issued by the Corporation (or
any other issuer or Person) for a consideration such as to dilute the conversion
rights of the holder, of the Class D Preferred, the computations, adjustments
and readjustments provided for in this subdivision VIII with respect to the
Conversion Price shall be made as nearly as possible in the manner so provided
and applied to determine the amount of Other Securities from time to time
receivable upon the conversion of the Class D Preferred, so as to protect the
holders of the Class D Preferred against the effects of such dilution.
5. Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
etc.
5A. General Provisions. In case at any time the Corporation shall be
a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock) in which the previously outstanding Common
Stock shall be changed into or exchanged for different securities of the
Corporation, common stock or other securities of another corporation or
interests in a non-corporate entity or other property (including cash) or any
combination of any of the foregoing (each such transaction being hereinafter
referred to as a "Transaction", the date of
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the consummation of the Transaction being hereinafter referred to as the
"Consummation Date"), the Corporation (in the case of a recapitalization of the
Common Stock) or such other corporation or entity (in each other case) being
hereinafter referred to as the "Acquiring Company", and the common stock (or
equivalent equity interests) of the Acquiring Company being hereinafter referred
to as the "Acquirer's Common Stock"), then, as a condition to the consummation
of the Transaction, lawful and adequate provisions shall be made so that, upon
the basis and the terms and in the manner provided in subdivision VIII, each
holder of Shares of Class D Preferred, upon the conversion thereof at any time
after the consummation of the Transaction, shall be entitled to receive, in lieu
of the Stock or Other Securities issuable upon such conversion prior to such
consummation, the stock and other securities, cash and property to which such
holder would have been entitled upon the consummation of the Transaction if such
holder had converted such Shares of Class D Preferred immediately prior thereto
(subject to adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustments provided for in this subdivision
VIII).
5B. Marketable Stock. The Corporation will not enter into or be a
party to any Transaction following the consummation of which any holder of
Shares of Class D Preferred would be entitled in accordance with the foregoing
provisions of this subdivision VIII.5. to receive Acquirer's Common Stock or
other securities of the Acquiring Company upon conversion of such Shares of
Class D Preferred unless, immediately following the consummation thereof on the
Consummation Date, all of the following requirements are fulfilled as to the
Acquiring Company:
(i) its common stock is listed on the New York Stock Exchange or the
American Stock Exchange and such common stock continues to meet the
requirements for listing thereon, and
(ii) it is required to file, and in each of its three fiscal years
immediately preceding the Consummation Date has filed, reports with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
5C. Assumption of Obligations. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the Corporation will not
effect any transaction unless, prior to the consummation thereof, each
corporation or entity (other than the Corporation) which may be required to
deliver any stock, securities, cash or property upon the
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conversion of any Shares of Class D Preferred as provided herein shall assume,
by written instrument delivered to the holder of such Shares of Class D
Preferred, the obligation to deliver to such holder such shares of stock,
securities, cash or property as, in accordance with the foregoing provisions,
such holder may be entitled to receive, and such corporation or entity shall
have similarly delivered to such holder an opinion of counsel for such
corporation or entity, which counsel shall be reasonably satisfactory to such
holder, stating that such Shares of Class D Preferred shall thereafter continue
in full force and effect and the terms hereof (including, without limitation,
all of the provisions of subdivision VIII shall be applicable to the stock,
securities, cash or property which such corporation or entity may be required to
deliver upon the exercise hereof.
6. Adjustments for Combinations, etc.
In case the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, the Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
7. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as provided in subdivision
VIII, the Corporation shall promptly (and, in any event, not later than the
thirtieth day following the occurrence of the event requiring such adjustment)
compute the adjusted Conversion Price in accordance with subdivision VIII and
shall prepare a report setting forth such adjustment and showing in detail the
method of calculation and the facts upon which such adjustment is based,
including a statement of (i) the consideration received or to be received by the
Corporation for any additional shares of Common Stock issued or sold or deemed
to have been issued, (ii) the number of shares of Common Stock outstanding or
deemed to be outstanding, and (iii) the Conversion Price in effect immediately
prior to such issue or sale and as adjusted on account therefor and, upon the
request of any holder of the Shares of Class D Preferred, shall cause certified
public accountants of recognized national standing (which may be the regular
auditors of the Corporation) selected by the Corporation to verify such
computation and report, if not previously verified at the request of any holder.
The Corporation will promptly (and, in any event, not later than such thirtieth
day) furnish a
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copy of each such report and such verification to the holder of any Shares of
Class D Preferred, and will, upon the written request at any reasonable time of
the holder of any Shares of Class D Preferred, furnish to such holder a like
report setting forth the Conversion Price at the time in effect and showing how
it was calculated. The Corporation will also keep copies of all such reports and
such verifications at its principal office, and will cause the same to be
available for inspection at such office during normal business hours by the
holder of any Shares of Class D Preferred or any prospective purchaser of any
Note designated by the holder of such Shares of Class D Preferred.
8. Notice of Certain Corporate Action.
In case:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of
its earned surplus or at an annualized rate in excess of 120% of the
annualized rate of the last cash dividend theretofore paid; or
(ii) the Corporation shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding shares of
Common Stock), any capital reorganization of the Corporation or of any
consolidation or merger to which the Corporation is a party, or of the
sale or transfer of all or substantially all of the assets of the
Corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
the Corporation shall at least 10 business days prior to the applicable record
date hereinafter specified give to each holder of any Shares of Class D
Preferred an Officers' Certificate stating (a) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, rights or warrants are
to be
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determined, or (b) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, recapitalization, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
9. Other Dilutive Events.
In case any event shall occur as to which the other provisions of
subdivision VIII are not strictly applicable but in respect of which the failure
to make any adjustment would not in the opinion of any holders of at least 20%
in the aggregate of the number of shares of Class D Preferred the time
outstanding or in the opinion of the Corporation fairly protect the conversion
rights granted by subdivision VIII in accordance with the essential intent and
principles hereof, then, in each such case, upon the written request of such
holder or holders or on its own motion, the Corporation shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular auditors of the Corporation), which shall give their opinion
as to the adjustment, if any, on a basis consistent with the essential intent
and principles established in subdivision VIII, necessary to preserve, without
dilution, such conversion rights. Upon receipt of such opinion, the Corporation
will promptly mail a copy thereof to the holder of any Shares of Class D
Preferred and shall make the adjustments or increases described therein.
10. No Dilution or Impairment.
The Corporation will not, by amendment of this Certificate of
Incorporation or through any consolidation, merger, reorganization, transfer of
assets, 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 Corporation, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights granted by subdivision VIII against dilution or other
impairment. Without limiting the generality of the foregoing, the Corporation
(i) will not permit the par value of any shares of stock at the time receivable
upon the conversion of any Shares of Class D Preferred to exceed the Conversion
Price then in effect,
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(ii) will take all such action as may be necessary or appropriate in order that
the Corporation may validly and legally issue fully paid and nonassessable
shares of Stock upon any conversion of the Class D Preferred, (iii) will not
take any action which results in any adjustment of the Conversion Price if the
total number of shares of Common Stock (or Other Securities) issuable after the
action upon the conversion of all of the Shares of Class D Preferred would
exceed the total number of shares of Common Stock (or Other Securities) then
authorized by the Corporation's certificate of incorporation and available for
the purpose of issue upon such exercise, and (iv) except as provided herein will
not issue any capital stock of any class which is preferred or pari passu as to
dividends or as to the distribution of assets upon voluntary or involuntary
dissolution, liquidation or winding up.
11. De Minimis Adjustments of Conversion Price; Optional Reductions.
Notwithstanding any other provision of subdivision VIII to the
contrary, no single adjustment in the Conversion Price otherwise required
hereunder shall be required unless such adjustment would require an increase or
decrease of at least 1/2 of 1% in such price; provided, however, that any
adjustments which by reason of this subdivision VIII.11 are not required to be
made shall be carried forward and shall be taken into account in any subsequent
adjustment and shall be taken into account upon the conversion of any Shares of
Class D Preferred; and provided, further, that adjustments shall be required and
made in accordance with the provisions of subdivision VIII (other than this
subdivision 11) not later than such time as may be required in order to preserve
the tax-free nature of a distribution to the holders of Common Stock. Anything
in subdivision VIII to the contrary notwithstanding, the Corporation shall be
entitled to make such reductions in the Conversion Price, in addition to those
otherwise required by subdivision VIII, as it in its sole discretion shall
determine to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock hereafter made by the
Corporation to its stockholders shall not be taxable.
12. Continuing Obligation of the Corporation.
The Corporation will, at the time of conversion of any Shares of
Class D Preferred in full or in part, upon the request of any holder thereof,
acknowledge in writing its continuing obligation to afford such holder any
rights (in-
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cluding, without limitation, any right of registration of the shares of Stock or
Other Securities issued upon such conversion) to which such holder shall
continue to be entitled after such conversion in accordance with the provisions
of this Certificate of Incorporation; provided, however, that if any such holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Corporation to afford to such holder all such
rights.
13. Mandatory Conversions of Class D Preferred.
Notwithstanding anything to the contrary contained in this Section
C, at such time as (i) the Corporation shall have participated in a public
offering or offerings of the Common Stock, in which the aggregate price to the
public of the securities sold shall have been at least $10,000,000, (ii) the
Common Stock was sold to the public at the most recent such offering at a price
exceeding the Conversion Price then in effect by not less than 50%, and (iii)
the outstanding shares of Class B Preferred and Class C Preferred, if any, are
subject to mandatory conversion upon conversion of the Class D Preferred
pursuant to this subdivision VIII.13, then all outstanding Shares of Class D
Preferred, if any, will, without any action on the part of the Corporation or
the holders thereof, be immediately converted into shares of Class A Common in
accordance with the terms of this Section C, and thereafter no Shares of Class D
Preferred will be outstanding and any holder of a certificate of Shares of Class
D Preferred will be deemed to be the holder of the number of Shares of Class A
Common into which the Shares of Class D Preferred represented by such
certificate were converted pursuant to this subdivision VIII.13.
IX. Transfer, Exchange and Replacement of Certificates for Class D Preferred.
1. The Corporation will, keep at its principal office a register for
the registration of Class D Preferred. Upon surrender at such office of any
certificate representing Shares of Class D Preferred for conversion or for
registration of exchange or (subject to compliance with the applicable
provisions of the Registration Rights Agreement) transfer, the Corporation will
issue, at its expense, one or more new certificates, in such denomination or
denominations as may be requested, for the same aggregate number of Shares
represented by the certificate so surrendered and registered as such holder may
request; provided, however, that no such transfer shall be in violation of the
Securities Act of 1933, as amended. Any certificate representing any Shares of
Class
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D Preferred surrendered for registration or transfer shall be duly endorsed, or
accompanied by a written instrument of transfer duly executed by the holder of
such certificate or his attorney duly authorized in writing.
2. The Corporation will pay all costs of all deliveries of
certificates representing any Shares of Class D Preferred from the office of the
holder thereof to the office of the Corporation to be surrendered pursuant to
this subdivision IX.2. (including the cost of insurance against loss or theft in
an amount satisfactory to such holder) upon any exchange provided for herein.
Upon receipt of evidence reasonably satisfactory to the Corporation of the
ownership of and the loss, theft, destruction or mutilation of any certificate
representing any shares of Class D Preferred and, in the case of such loss,
theft, destruction or mutilation of any certificate representing any Shares of
Class D Preferred, upon delivery of an indemnity bond in such reasonable amount
as the Corporation may determine (or in the case of any Shares of Class D
Preferred held by the original owner or its nominee, of an unsecured indemnity
agreement from such owner or nominee holding such Shares), or in the case of any
such mutilation, upon the surrender of such certificate for cancellation at the
principal office of the Corporation, the Corporation, at its expense, will
execute and deliver, in lieu thereof, a new certificate of like tenor and for an
equal number of Shares of Class C Preferred.
X. Definitions.
"Class D Scheduled Redemption Dates" has the meaning assigned in
subdivision VI.1A.
"Convertible Securities" means any evidence of indebtedness, shares
of capital stock (other than Class A Common) or other securities directly or
indirectly convertible into or exchangeable for Class A Common or any stock into
which such Class A Common shall have been changed or any stock resulting from
any capital reorganization or reclassification of such Class A Common.
"Conversion Price" of any Share of Class D Preferred means the sum
of $210 (or $165 if no Class D-2 Preferred shall have been issued) as adjusted
by the provisions of subdivision VIII of this Section C.
"Cosan Purchase Certificate" means the Certificate substantially in
the form of Exhibit H to the Note and Stock Purchase Agreements.
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"Delayed First Closing Dates" means, collectively, each date upon
which shares of Class D-1 Preferred shall have been issued pursuant to the Note
and Stock Purchase Agreements subsequent to the First Closing Date.
"Escrow Agreement" means the Escrow Agreement as defined in the Note
and Stock Purchase Agreements.
"Event of Noncompliance" has the meaning assigned in subdivision
VII.
"First Closing Date" means the initial date upon which shares of
Class D-1 Preferred shall have been issued pursuant to the Note and Stock
Purchase Agreements.
"GAAP" means generally accepted accounting principles as set forth
in the opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such opinions and statements of such other entities as
shall be approved by a significant segment of the accounting profession.
"Junior Securities" has the meaning assigned in subdivision VI.3. of
Section A hereof.
"Liquidating Dividend" has the meaning assigned in subdivision
VIII.3A.(ii).
"Liquidation Value" as to any Share of Class D Preferred as of any
particular date will be equal to the sum of $210 plus any due and payable but
unpaid dividends on such Share.
"NASDAQ" means the NASDAQ interdealer quotation system maintained by
the National Association of Securities Dealers, Inc., or any successor composite
reporting service.
"Note and Stock Purchase Agreements" means the Note and Stock
Purchase Agreements between the Corporation, and each of a group of investors
and in connection with which the Corporation adopted this Restated Certificate
of Incorporation and agreed to issue the Class D Preferred.
"Notes" means the 9% Convertible Subordinated Notes due June 30,
1997, issued by the Corporation pursuant to the Note and Stock Purchase
Agreements.
"Officers' Certificate" means a certificate executed on behalf of
the Corporation by the Chairman of the
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Board of Directors (if an officer) or its President or one of its Vice
Presidents and its Vice President-Finance or Treasurer or one of its Assistant
Treasurers.
"Options" means rights, options or warrants to subscribe for,
purchase or otherwise acquire either Class A Common or Convertible Securities.
"Other Securities" means any stock (other than Common Stock) and
other securities of the Corporation or any other person (corporate or otherwise)
which the holders of the Class D Preferred at any time shall be entitled to
receive, or shall have received, upon the conversion of the Class D Preferred,
in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common
Stock or such other securities pursuant to the Note and Stock Purchase
Agreements.
"Redemption Date" has the meaning assigned in subdivision VI.3B.
"Redemption Price" has the meaning assigned in subdivision VI.3A.
"Registration Rights Agreement" means the Registration Rights
Agreement contemplated by the Note and Stock Purchase Agreements between the
Corporation and the initial purchasers of Class D Preferred or securities
convertible into Class D Preferred.
"Second Closing" has the meaning assigned in the Note and Stock
Purchase Agreements.
"Short-Term Promissory Notes" and "Short-Term Promissory
Notes-Series 1" have the meanings assigned in the Note and Stock Purchase
Agreements.
"Subsidiary" has the meaning assigned in the Note and Stock Purchase
Agreements.
XI. Notices.
All notices referred to herein, except as otherwise provided, will
be made by registered or certified mail, return receipt requested, postage
prepaid, and will be deemed to have been given when so mailed.
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SECTION D. SERIES PREFERRED STOCK
The Series Preferred Stock may be issued from time to time by the
Board of Directors as shares of one or more series. Subject to the provisions
hereof and the limitations prescribed by law, the Board of Directors is
expressly authorized, prior to issuance, by adopting resolutions providing for
the issuance of, or providing for a change in the number of, shares of any
particular series and, if and to the extent from time to time required by law,
by filing a certificate pursuant to the General Corporation Law (or other law
hereafter in effect relating to the same or substantially similar subject
matter), to establish or change the number of shares to be included in each
such series and to fix the designation and relative powers, preferences and
rights and the qualifications and limitations or restrictions thereof relating
to the shares of each such series. The authority of the Board of Directors with
respect to each series shall include, but not be limited to, determination of
the following:
(a) the distinctive serial designation of such series and the
number of shares constituting such series (provided that the
aggregate number of shares constituting all series of Series
Preferred Stock shall not exceed Five Million (5,000,000));
(b) the annual dividend rate on shares of such series, whether
dividends shall be cumulative and, if so, from which date or dates;
(c) whether the shares of such series shall be redeemable and,
if so, the terms and conditions of such redemption, including the
date or dates upon and after which such shares shall be redeemable,
and the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption
dates;
(d) the obligation, if any, of the Corporation to retire
shares of such series pursuant to a sinking fund;
(e) whether shares of such series shall be convertible into,
or exchangeable for, shares of stock of any other class or classes
and, if so, the terms and conditions of such conversion or exchange,
including the price or prices or the rate or rates of conversion or
exchange and the terms of adjustment, if any;
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(f) whether the shares of such series shall have voting
rights, in addition to the voting rights provided by law, and, if
so, the terms of such voting rights;
(g) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation; and
(n) any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof relating to such
series.
The shares of Series Preferred Stock of any one series shall be
identical with each other in all respects except as to the dates from and after
which dividends thereon shall cumulate, if cumulative.
The number of authorized shares of Series Preferred Stock may be
increased or decreased by the affirmative vote of the holders of a majority of
the stock of the Corporation entitled to vote without the separate vote of
holders of Series Preferred Stock as a class.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: (a) Except as otherwise fixed by or pursuant to the
provisions of Article FOURTH hereof relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect additional directors under specified
circumstances, the number of the directors of the Corporation shall be fixed
from time to time by or pursuant to the By-Laws of the Corporation. The
directors, other than those who may be elected by the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, as shall be provided in the manner specified in the By-Laws of the
Corporation, one class to hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1988, another class to hold office
initially for a term expiring at the annual meeting of stockholders in 1989, and
another class to hold office initially for a term expiring at the annual meeting
of stockholders to be held in 1990, with the members of each class to hold
office until the successors are elected and qualified. At each annual meeting of
the stockholders of the Corporation, the
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<PAGE> 63
successors of the class of directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the annual meeting of stockholders
held in the third year following the year of their election.
(b) Advance notice of stockholder nominations for the election
of directors shall be given in the manner provided in the By-Laws of
the Corporation.
(c) Except as otherwise provided for or fixed by or pursuant
to the provisions of Article FOURTH hereof relating to the rights of
the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect
directors under specified circumstances, newly created directorships
resulting from any increase in the number of directors and any
vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be
filled solely by the affirmative vote of a majority of the directors
or the sole director then remaining in office, even though less than
a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the
new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. If the
number of directors is changed, any increase or decrease shall be
apportioned among the classes by the Board of Directors so as to
maintain the number of directors in each class as nearly equal as
possible. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
(d) Subject to the rights of any class or series of stock
having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any
director may be removed from office, but only for cause and only by
the affirmative vote of the holders of at least two-thirds of the
combined voting power of the then outstanding shares of stock
entitled to vote generally in the election of directors, voting
together as a single class.
(e) Any action required or permitted to be taken by the
stockholders of the Corporation must be
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<PAGE> 64
effected at a duly called annual or special meeting of such holders
and may not be effected by any consent in writing by such holders.
Except as otherwise required by law and subject to the rights of the
holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation, special meetings
of stockholders of the Corporation may be called only by the
Chairman of the Board or President or the Board of Directors
pursuant to a resolution approved by a majority of the entire Board
of Directors or as otherwise provided in the By-Laws of the
Corporation.
(f) In furtherance and not in the limitation of the powers
conferred by statute, the Board of Directors is expressly authorized
to make, alter, amend or repeal the By-Laws of the Corporation, but
the stockholders may adopt additional By-Laws and may amend or
repeal By-Laws whether or not adopted by them provided that the
affirmative vote of the holders of at least two-thirds of the
combined voting power of the then outstanding shares of stock
entitled to vote generally in the election of directors, voting
together as a single class, is required for any such adoption of
additional By-Laws, amendment or repeal.
(g) Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that a lesser percentage may be specified by law, the
Certificate of Incorporation or the By-Laws of the Corporation), the
affirmative vote of the holders of at least two-thirds of the voting
power of all the shares of the Corporation entitled to vote
generally in the election of directors, voting together as a single
class, shall be required to alter, amend or repeal this Article
SIXTH or to adopt any provision inconsistent herewith.
SEVENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provisions contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors in the By-Laws of the Corporation. Elections of directors
need not be by written ballot unless the By-Laws of the Corporation so provide.
EIGHTH: The Corporation shall, to the fullest extent authorized by
Section 145 of the General Corporation Law of the
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<PAGE> 65
State of Delaware, as the same exists or may hereafter be amended (but in the
case of any such amendment, other than one mandating lesser indemnification,
only to the extent that such amendment permits the Corporation to provide
broader indemnification than said law permitted the Corporation to provide prior
to such amendment) indemnify all persons whom it may indemnify pursuant thereto.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
TENTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of such director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which such director derived
any improper personal benefit.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
4. This Restated Certificate of Incorporation was duly adopted at a
special meeting of the stockholders by the stockholders entitled to vote
thereon, in accordance with the applicable provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Cambrex Corporation has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by Cyril
C. Baldwin, Jr., its President, and attested by Irving Needleman, its Secretary,
this 16th day of September, 1987.
CAMBREX CORPORATION
By /s/ Cyril C. Baldwin, Jr.
-------------------------
Vice President
ATTEST:
By /s/ Irving Needleman
--------------------
Secretary
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<PAGE> 66
CERTIFICATE OF RETIREMENT OF STOCK
CAMBREX CORPORATION, a corporation organized and existing under The
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Cambrex
Corporation, a resolution was duly adopted retiring shares of the capital stock
of said corporation, which were issued but not outstanding, to the extent
hereinafter set forth, and which retired shares had capital applied in
connection with their acquisition.
SECOND: The shares of capital stock of the corporation, which are
retired, are identified as being Four Hundred Thousand (400,000) shares of the
Class A 8.25% Cumulative Preferred Stock with a par value of ten cents ($0.10)
per share.
THIRD: That the Restated Certificate of Incorporation of the
corporation prohibits the reissue of the shares of Class A 8.25% Cumulative
Preferred Stock when so retired and that the shares so retired constitute all
the authorized shares of Class A 8.25% Cumulative Preferred Stock, and pursuant
to the provisions of section 243 of the General Corporation Law of the State of
Delaware, upon the effective date of the filing of
<PAGE> 67
this certificate as therein provided, the Restated Certificate of Incorporation
of said corporation shall be amended so as to effect a reduction in the
authorized number of shares of the corporation by the elimination therefrom of
all reference to said Class A 8.25% Cumulative Preferred Stock, comprising Four
Hundred Thousand (400,000) shares of the par value of ten cents ($0.10) each.
IN WITNESS WHEREOF, said Cambrex Corporation has caused this
certificate to be signed by John P. Lynch, its Vice President, and attested by
Irving Needleman, its secretary, this 27th day of October, 1987.
CAMBREX CORPORATION
By /s/ John P. Lynch
-------------------
Vice President
ATTEST:
By /s/ Irving Needleman
--------------------
Secretary
2
<PAGE> 68
CERTIFICATE OF RETIREMENT OF STOCK
CAMBREX CORPORATION, a corporation organized and existing under The
General Corporation Law of the state of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Cambrex
Corporation, a resolution was duly adopted retiring shares of the capital stock
of said corporation, which were issued but not outstanding, to the extent
hereinafter set forth, and which retired shares had no capital applied to their
acquisition.
SECOND: The shares of capital stock of the corporation, which are
retired, are identified as being Forty Thousand Five Hundred Ninety-Seven
(40,597) shares of the Class B 8.25% Cumulative Convertible Preferred Stock with
a par value of ten cents ($0.10) per share.
THIRD: That the Restated Certificate of Incorporation of the
corporation prohibits the reissue of the shares of Class B 8.25% Cumulative
Convertible Preferred Stock when so retired and that the shares so retired
constitute all the authorized shares of Class B 8.25% Cumulative Convertible
Preferred Stock; and pursuant to the provisions of section 243 of the General
Corporation Law of the State of Delaware, upon
<PAGE> 69
the effective date of the filing of this certificate as therein provided, the
Restated Certificate of Incorporation of said corporation shall be amended so as
to effect a reduction in the authorized number of shares of the corporation by
the elimination therefrom of all reference to said Class B 8.25% Cumulative
Convertible Preferred Stock, comprising Forty Thousand Five Hundred Ninety-Seven
(40,597) shares of the par value of ten cents ($0.10) each.
IN WITNESS WHEREOF, said Cambrex Corporation has caused this
certificate to be signed by John P. Lynch, its Vice President, and attested by
Irving Needleman, its secretary, this 27th day of October, 1987.
CAMBREX CORPORATION
By /s/ John P. Lynch
-------------------
Vice President
ATTEST:
By /s/ Irving Needleman
--------------------
Secretary
-2-
<PAGE> 70
CERTIFICATE OF RETIREMENT OF STOCK
CAMBREX CORPORATION, a corporation organized and existing under The
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Cambrex
Corporation, a resolution was duly adopted retiring shares of the capital stock
of said corporation, which were issued but not outstanding, to the extent
hereinafter set forth, and which retired shares had no capital applied to their
acquisition.
SECOND: The shares of capital stock of the corporation, which are
retired, are identified as being Nineteen Thousand Four Hundred Three (19,403)
shares of the Class C Convertible Preferred Stock with a par value of ten cents
($0.10) per share.
THIRD: That the Restated Certificate of Incorporation of the
corporation prohibits the reissue of the shares of Class C Convertible Preferred
Stock when so retired and that the shares so retired constitute all the
authorized shares of Class C Convertible Preferred Stocks and pursuant to the
provisions of section 243 of the General Corporation Law of the
<PAGE> 71
State of Delaware, upon the effective date of the filing of this certificate as
therein provided, the Restated Certificate of Incorporation of said corporation
shall be amended so as to effect a reduction in the authorized number of shares
of the corporation by the elimination therefrom of all reference to said Class C
Convertible Preferred Stock, comprising Nineteen Thousand Four Hundred Three
(19,403) shares of the par value of ten cents ($0.10) each.
IN WITNESS WHEREOF, said Cambrex Corporation has caused this
certificate to be signed by John P. Lynch, its Vice President, and attested by
Irving Needleman, its secretary, this 27th day of October, 1987.
CAMBREX CORPORATION
By /s/ John P. Lynch
-------------------
Vice President
ATTEST:
By /s/ Irving Needleman
--------------------
Secretary
-2-
<PAGE> 72
CERTIFICATE OF RETIREMENT OF STOCK
CAMBREX CORPORATION, a corporation organized and existing under The
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Cambrex
Corporation, a resolution was duly adopted retiring shares of the capital stock
of said corporation, which were issued but not outstanding, to the extent
hereinafter set forth, and which retired shares had no capital applied to their
acquisition.
SECOND: The shares of capital stock of the corporation, which are
retired, are identified as being Seventy-Three Thousand Eighty-Nine (73,089)
shares of the Class D Convertible Preferred Stock with a par value of ten cents
($0.10) per share.
THIRD: That the Restated Certificate of Incorporation of the
corporation prohibits the reissue of the shares of Class D Convertible Preferred
Stock when so retired and that the shares so retired constitute all the
authorized shares of Class D Convertible Preferred Stock; and pursuant to the
provisions of section 243 of the General Corporation Law of the State of
Delaware, upon the effective date of the filing of
<PAGE> 73
this certificate as therein provided, the Restated Certificate of Incorporation
of said corporation shall be amended so as to effect a reduction in the
authorized number of shares of the corporation by the elimination therefrom of
all reference to said Class D Convertible Preferred Stock, comprising
Seventy-Three Thousand Eighty-Nine (73,089) shares of the par value of ten cents
($0.10) each.
IN WITNESS WHEREOF, said Cambrex Corporation has caused this
certificate to be signed by John P. Lynch, its Vice President, and attested by
Irving Needleman, its secretary, this 27th day of October, 1987.
CAMBREX CORPORATION
By /s/ John P. Lynch
-------------------
Vice President
ATTEST:
By /s/ Irving Needleman
--------------------
Secretary
-2-
<PAGE> 74
CERTIFICATE OF DESIGNATION OF SERIES E JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK
Par Value $1.00 Per Share
of
CAMBREX CORPORATION
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, Steven M. Klosk, Vice President - Administration, and Peter B.
Thauer, Esq., Vice President - Law and Environment, General Counsel and
Secretary, of Cambrex Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation, as amended, the
said Board of Directors on May 23, 1996, by the affirmative vote of at least a
majority of the members of the Board of Directors, adopted the following
resolution creating a series of one hundred thousand (100,000) shares of Series
E Junior Participating Cumulative Preferred Stock, par value $1.00 per share:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Restated
Certificate of Incorporation (the "Restated Certificate"), a series of Series
Preferred Stock of the Corporation be, and it hereby
<PAGE> 75
is, created, and that the designation and amount thereof and the voting powers,
preferences and relative participating, optional and other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as Series E Junior
Participating Cumulative Preferred Stock, par value $1.00 per share (the "Junior
Preferred Stock") and the number of shares constituting such series shall be one
hundred thousand (100,000). Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of preferred stock (or any similar stock) ranking prior and superior to
the Junior Preferred Stock with respect to dividends, the holders of
shares of Junior Preferred Stock, in preference to the holders of Common
Stock, and of any other junior stock which may be outstanding, shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Junior Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $2.50 per share ($10.00 per annum), or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend
2
<PAGE> 76
Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction at a share of
Junior Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a Subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
to which holders of Shares of Junior Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $2.50 per share ($10.00 per annum) on the Junior Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Junior Preferred Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends or such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Junior
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly
3
<PAGE> 77
Dividend Payment Date. Accrued but unpaid dividends shall accumulate but
shall not bear interest. Dividends paid on the shares of Junior Preferred
Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders
of shares of Junior Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights.
The holders of shares of Junior Preferred Stock shall have the
following voting rights.
(A) Subject to the provisions for adjustment as hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder
thereof to 100 votes (and each one one-hundredth of a share of Junior
Preferred Stock shall entitle the holder thereof to one vote) on all
matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
classification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of Junior Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Restated
Certificate, in any other certificate of designation creating a series of
preferred stock or any similar stock, or by law, the holders of shares of
Junior Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall
vote to-
4
<PAGE> 78
gether as one class on all matters submitted to a vote at stockholders of
the Corporation.
(C) If at any time the Corporation shall not have declared and paid
all accrued and unpaid dividends on the Junior Preferred Stock as provided
in Section 2 hereof for four consecutive Quarterly Dividend Payment Dates,
then, in addition to any voting rights provided for in paragraphs (A) and
(B), the holders of the Junior Preferred Stock shall have the exclusive
right, voting separately as class, to elect two directors on the Board of
Directors of the Corporation (such directors, the "Preferred Directors").
The right of the holders of the Junior Preferred Stock to elect the
Preferred Directors shall continue until all such accrued and unpaid
dividends shall have been paid. At such time, the terms of any of the
Preferred Directors shall terminate. At any time when the holders of the
Junior Preferred Stock shall have thus become entitled to elect Preferred
Directors, a special meeting of shareholders shall be called for the
purpose of electing such Preferred Directors, to be held within 30 days
after the right of the holders of the Junior Preferred Stock to elect such
Preferred Directors shall arise, upon notice given in the manner provided
by law or the by-laws of the Corporation for giving notice of a special
meeting of shareholders (provided, however, that such a special meeting
shall not be called if the annual meeting of shareholders is to convene
within said 30 days). At any such special meeting or at any annual meeting
at which the holders of the Junior Preferred Stock shall be entitled to
elect Preferred Directors, the holders of a majority of the then
outstanding Junior Preferred Stock present in person or by proxy shall be
sufficient to constitute a quorum for the election of such directors. The
persons elected by the holders of the Junior Preferred Stock at any
meeting in accordance with the terms of the preceding sentence shall
become directors on the date of such election.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not;
5
<PAGE> 79
(i) declare or pay dividends or, make any other distributions on any
shares or stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding-up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Junior Preferred Stock
except dividends paid ratably on the Junior Preferred Stock, and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Junior Preferred Stock,
provided that the corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding-up) to the Junior Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Junior Preferred Stock, or any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding-up) with the
Junior Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series classes, shall determine
in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
6
<PAGE> 80
Section 5. Reacquired Shares.
Any shares of Junior Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever, shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Series Preferred Stock,
without designation as to series, and may be reissued as part of a new series of
Series Preferred Stock to be created by resolution or resolutions of the Board
of Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Restated Certificate, in any other certificate of designation
creating a series of preferred stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding-Up.
Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, no distribution shall be made (A) to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding-up) to the Junior Preferred Stock unless prior thereto,
the holders of shares of Junior Preferred Stock shall have received the higher
of (i) $10.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
or (ii) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock; nor shall any distribution be made (B) to
the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding-up. In the
event the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior Preferred Stock are
entitled immediately prior to such event under the provision in clause (A) of
the preceding sentence shall be
7
<PAGE> 81
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, or otherwise changed, then in any such case each share of Junior
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption.
The shares of Junior Preferred Stock shall not be redeemable.
Section 9. Rank.
Unless otherwise provided in the Restated Certificate or a
certificate of designation relating to a subsequent series of preferred stock of
the Corporation, the Junior Preferred Stock shall rank junior to all other
series of the Corporation's preferred stock as to the payment of dividends and
the distribution of assets on liquidation,
8
<PAGE> 82
dissolution or winding-up, and senior to the Common Stock of the Corporation.
Section 10. Amendment.
The Restated Certificate, as amended and restated, shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Junior Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Junior Preferred Stock, voting together as a single
series.
Section 11. Fractional Shares.
Junior Preferred Stock may be issued in fractions of a share (in one
one-hundredths (1/100) of a share and integral multiples thereof) which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Junior Preferred Stock.
9
<PAGE> 83
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its Vice President and attested by its Secretary
this fifth day of June, 1996.
/s/ Steven M. Klosk
-------------------------------
Vice President - Administration
ATTEST:
/s/ Peter E. Thauer
- -------------------------
Vice President - Law and
Environment, General
Counsel and Secretary
10
<PAGE> 84
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CAMBREX CORPORATION
Pursuant to Section 242 of the General Corporation
Law of the State of Delaware
CAMBREX CORPORATION (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"General Corporation Law"), hereby certifies as follows:
FIRST: That the Board of Directors of the Corporation, at a meeting
of its members, duly adopted a resolution setting forth the following proposed
amendment to the Certificate of Incorporation of the Corporation and declaring
such amendment to be advisable.
1. The Certificate of Incorporation of the Corporation is hereby
amended by the amendment of the first paragraph of ARTICLE FOURTH thereof to
read in its entirety as follows:
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 66,263,835 shares,
consisting of 400,000 shares of Class A 8.25% Cumulative Preferred Stock,
par value $.10 per share (the "Class A Preferred"), 40,597 shares of Class
B 8.25% Cumulative Convertible Preferred Stock, par value $.10 per share
(the "Class B Preferred"), 19,403 shares of Class C Convertible Preferred
Stock,
<PAGE> 85
par value $.10 per share (the "Class C Preferred"), 73,089 shares of Class
D 8% Convertible Preferred Stock, par value $.10 per share (the "Class D
Preferred"), 5,000,000 shares of Series Preferred Stock, par value $.10
per share (the "Series Preferred Stock"), 730,746 shares of Nonvoting
Common Stock, par value $.10 per share (the "Nonvoting Common"), and
60,000,000 shares of Common Stock, par value $.10 per share (the "Voting
Common"). The Class B Preferred and the Class C Preferred are referred to
herein collectively as the "1981 Convertible Preferred Stock"; the 1981
Convertible Preferred Stock and the Class A Preferred are referred to
herein collectively as the "Preferred Stock"; the 1981 Preferred Stock and
the Class D Preferred are referred to herein collectively as the
"Preferred Stock"; and the Voting Common and the Nonvoting Common are
referred to herein collectively as the "Common Stock". A share of
Preferred Stock will be referred to herein as a "Share". The Voting Common
is also referred to herein as the "Class A Common" and the Non-voting
Common is also referred to herein as the "Class B Common". Unless
otherwise provided, other capitalized terms used in Section A of this
Article FOURTH are defined in subdivision VI thereof, other capitalized
terms used in Section C of this Article FOURTH are defined in subdivision
VIII thereof and definitions set forth in any Section of this Article
FOURTH apply only to capitalized terms used in such Section. All
cross-references in each Section of this Article FOURTH refer to other
parts, paragraphs and subdivisions in such Section unless otherwise
indicated.
SECOND: That at a special meeting and vote of the stockholders of
the Corporation called and held in accordance with Section 222 of the General
Corporation Law on April 28, 1998, a majority of the outstanding stock entitled
to vote thereon has voted in favor of the foregoing amendment.
THIRD: The Amendment to the Certificate of Incorporation of the
Corporation set forth in paragraph FIRST above was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law.
2
<PAGE> 86
IN WITNESS WHEREOF, I, the undersigned Steven M. Klosk, being the
Executive Vice President - Administration, for the purpose of amending the
Certificate of Incorporation of the Corporation pursuant to Section 242 of the
General Corporation Law of the State of Delaware, do make and file this
Certificate, hereby declaring and certifying that the facts herein stated are
true, and accordingly have hereunto set my hand, this 30th day of October, 1999.
[Corporate Seal]
/s/ Steven M. Klosk
--------------------------
Executive Vice President
Administration
ATTEST:
/s/ Peter E. Thauer
- -----------------------------
Vice President
General Counsel and Secretary
3
<PAGE> 87
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATION
OF
CAMBREX CORPORATION
Pursuant to Section 103(f) of the General Corporation
Law of the State of Delaware
We, Steven M. Klosk, Executive Vice President - Administration, and Peter
E. Thauer, Esq, Vice President - Law and Environment, General Counsel and
Secretary, of Cambrex Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
1 That the heading of the Certificate of Designation of Series E
Junior Participating Cumulative Preferred Stock of the Corporation, filed June
12, 1996 (the "Certificate of Designation"), is hereby corrected by changing the
par value of such series of Preferred Stock designated therein to ten cents
($.10) per share and shall read in its entirety us follows:
"CERTIFICATE OF DESIGNATION OF SERIES E JUNIOR PARTICIPATING
CUMULATIVE PREFERRED STOCK Par Value $.10 Per Share".
2. That the first paragraph of the Certificate of Designation is
hereby corrected to conform with the correction described in paragraph 1 above
and shall read in its entirety as follows:
"That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the Corporation, as amended,
the said Board of Directors on May 23, 1996, by the affirmative vote of at
least a majority of the members of the Board of Directors, adopted the
following resolution creating
<PAGE> 88
a series of one hundred thousand (100,000) shares of Series E Junior
Participating Cumulative Preferred Stock, par value $.10 per share:".
3. That Section 1 of the Certificate of Designation is hereby
corrected to conform with the correction described in paragraph 1 above to read
in its entirety as follows:
"Section 1. Designation and Amount.
The shares of such series shall be designated as Series E Junior
Participating Cumulative Preferred Stock, par value $.10 per share (the
"Junior Preferred Stock") and the number of shares constituting such
series shall be one hundred thousand (100,000). Such number of shares may
be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Junior
Preferred Stock to a number less than the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the
Corporation convertible into Junior Preferred Stock."
2
<PAGE> 89
IN WITNESS WHEREOF, this Certificate of Correction is executed on behalf
of the Corporation by its Executive Vice President and attested by its Secretary
this 30th day of October, 1999.
/s/ Steven M. Klosk
-----------------------------------------
Executive Vice President - Administration
ATTEST:
/s/ Peter E. Thauer
- ------------------------
Vice President - Law and
Environment, General
Counsel and Secretary
3
<PAGE> 90
CERTIFICATE OF DESIGNATION OF SERIES E JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK
Par Value $.10 Per Share
of
CAMBREX CORPORATION
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, Steven M. Klosk, Executive Vice President - Administration, and Peter
E. Thauer, Esq, Vice President - Law and Environment, General Counsel and
Secretary, of Cambrex Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY.
That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the Corporation, as amended, the
said Board of Directors, by the affirmative vote of at least a majority of the
members of the Board of Directors, increased the number of designated shares of
Series E Junior Participating Cumulative Preferred Stock, par value $.10 per
share, to three hundred thousand (300,000)
<PAGE> 91
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its Vice President and attested by its Secretary this 30th
day of October, 1999.
/s/ Steven M. Klosk
------------------------------
Executive Vice President -
Administration
ATTEST:
/s/ Peter E. Thauer
- ------------------------
Vice President - Law and
Environment, General
Counsel and Secretary
2
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<ARTICLE> 5
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 30,759
<SECURITIES> 0
<RECEIVABLES> 75,332
<ALLOWANCES> 1,058
<INVENTORY> 100,708
<CURRENT-ASSETS> 230,717
<PP&E> 472,696
<DEPRECIATION> 185,510
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 679,673
<SALES> 354,539
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<CGS> 234,908
<TOTAL-COSTS> 68,340
<OTHER-EXPENSES> 358
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<INCOME-PRETAX> 46,994
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