<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
---------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES ACT OF 1934
COMMISSION FILE NUMBER 0-19946
LINCARE HOLDINGS INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 51-0331330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19337 US 19 NORTH, SUITE 500, 33764
CLEARWATER, FL (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (813) 530-7700
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 12 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT JULY 31, 1998
----- -----------------------------
<S> <C>
Common Stock, $0.01 par value............................... 58,077,932 shares
</TABLE>
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<PAGE> 2
LINCARE HOLDINGS INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets....................... 3
Condensed consolidated statements of operations............. 4
Condensed consolidated statements of cash flows............. 5
Notes to condensed consolidated financial statements........ 6
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition.......................... 7
Item 3 Quantitative and Qualitative Disclosure Regarding Market
Risk........................................................ 9
PART II. OTHER INFORMATION
Item 1 Legal Proceedings........................................... 9
Item 2 Changes in Securities....................................... 10
Item 3 Defaults Upon Senior Securities............................. 10
Item 4 Submission of Matters to a Vote of the Security Holders..... 10
Item 6 Exhibits and Reports on Form 8-K............................ 10
SIGNATURE........................................................... 11
</TABLE>
2
<PAGE> 3
LINCARE HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,980 $ 4,078
Accounts and notes receivable............................. 75,464 68,383
Income tax receivable..................................... 10,352 2,530
Inventories............................................... 1,818 1,542
Prepaid expenses.......................................... 595 516
-------- --------
Total current assets.............................. 94,209 77,049
-------- --------
Property and equipment...................................... 212,561 181,438
Less: accumulated depreciation.............................. 89,532 73,148
-------- --------
Net property and equipment........................ 123,029 108,290
-------- --------
Other assets:
Goodwill.................................................. 279,575 245,600
Intangible assets......................................... 5,296 5,262
Covenants not to compete.................................. 2,315 2,869
Other..................................................... 1,283 1,318
-------- --------
Total other assets................................ 288,469 255,049
-------- --------
Total assets................................. $505,707 $440,388
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term obligations............. $ 11,044 $ 8,580
Accounts payable.......................................... 16,990 14,390
Accrued expenses:
Compensation and benefits.............................. 10,087 8,781
Other.................................................. 4,648 3,192
-------- --------
Total current liabilities......................... 42,769 34,943
-------- --------
Long-term obligations, excluding current installments....... 8,439 4,602
Deferred income taxes....................................... 10,537 6,861
Minority interest........................................... 800 915
Stockholders' equity:
Common stock.............................................. 582 574
Additional paid-in capital................................ 122,970 110,714
Retained earnings......................................... 320,681 281,779
Less: treasury stock...................................... 1,071 --
-------- --------
Total stockholders' equity........................ 443,162 393,067
-------- --------
Total liabilities and stockholders' equity... $505,707 $440,388
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
LINCARE HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
------------------------------- -------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
(IN THOUSANDS EXCEPT SHARE AND (IN THOUSANDS EXCEPT SHARE AND
PER SHARE DATA) PER SHARE DATA)
<S> <C> <C> <C> <C>
Net revenues............................ $ 119,518 $ 108,702 $ 231,422 $ 209,714
------------ ------------ ------------ ------------
Costs and expenses:
Costs of goods and services........... 18,681 16,527 36,700 31,944
Operating expenses.................... 27,643 22,966 54,283 44,506
Selling, general and administrative
expenses........................... 26,647 21,879 52,119 42,349
Bad debt expense...................... 1,434 1,092 2,777 2,097
Depreciation expense.................. 8,565 6,620 16,575 12,935
Amortization expense.................. 2,966 3,623 5,951 7,063
------------ ------------ ------------ ------------
85,936 72,707 168,405 140,894
------------ ------------ ------------ ------------
Operating income.............. 33,582 35,995 63,017 68,820
------------ ------------ ------------ ------------
Other income (expense):
Interest income....................... 159 39 284 67
Interest expense...................... (129) (475) (216) (701)
Net loss on disposal of property and
equipment.......................... (23) (40) (34) (59)
------------ ------------ ------------ ------------
7 (476) 34 (693)
------------ ------------ ------------ ------------
Income before income taxes.... 33,589 35,519 63,051 68,127
Income taxes............................ 12,865 13,676 24,149 26,229
------------ ------------ ------------ ------------
Net income.................... $ 20,724 $ 21,843 $ 38,902 $ 41,898
============ ============ ============ ============
Income per common share.................
Basic................................. $ 0.36 $ 0.39 $ 0.67 $ 0.74
============ ============ ============ ============
Diluted............................... $ 0.35 $ 0.37 $ 0.66 $ 0.72
============ ============ ============ ============
Weighted average number of common shares
outstanding........................... 57,960,693 56,715,444 57,771,955 56,656,420
============ ============ ============ ============
Weighted average number of common shares
and common share equivalents
outstanding........................... 59,365,322 58,362,052 59,392,340 58,269,818
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
LINCARE HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
------------------------
JUNE 30, JUNE 30,
1998 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash from operations........................................ $ 63,599 $ 52,602
Investing activities:
Proceeds from sale of property and equipment.............. 68 102
Capital expenditures...................................... (29,865) (24,901)
Decrease in other assets.................................. 35 35
Business acquisitions, net of cash acquired............... (34,784) (45,094)
-------- --------
(64,546) (69,858)
-------- --------
Financing activities:
Proceeds from long-term obligations....................... 18,000 53,000
Payment of long-term obligations.......................... (19,887) (35,949)
Decrease in minority interest............................. (253) (244)
Proceeds from issuance of common stock.................... 6,060 1,493
Payment to acquire treasury stock......................... (1,071) --
-------- --------
2,849 18,300
-------- --------
Increase in cash............................................ 1,902 1,044
Cash and cash equivalents, beginning of period.............. 4,078 1,541
-------- --------
Cash and cash equivalents, end of period.................... $ 5,980 $ 2,585
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
LINCARE HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheet as of June 30, 1998,
the condensed consolidated statements of operations for the three months ended
June 30, 1998 and 1997 and for the six months ended June 30, 1998 and 1997 and
the condensed consolidated statements of cash flows for the six months ended
June 30, 1998 and 1997 are unaudited. In the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of operations for the interim periods presented have
been reflected herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the entire year. The
accompanying condensed consolidated balance sheet as of December 31, 1997 is
derived from the Lincare Holdings Inc. (the "Company") audited balance sheet as
of that date.
NOTE 2 -- BUSINESS COMBINATIONS
During the six months ended June 30, 1998 the Company acquired, in
unrelated acquisitions, the stock of nine companies and certain assets of six
companies. Each acquisition was accounted for as a purchase. The results of the
acquired companies are included in the accompanying consolidated statements of
operations since the respective date of acquisition.
The aggregate cost of these acquisitions was as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Cash (including cash acquired of $546)...................... $35,330
Deferred acquisition obligations............................ 8,109
Assumption of liabilities................................... 155
-------
$43,594
=======
</TABLE>
The aggregate purchase price was allocated as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 2,294
Property and equipment...................................... 1,551
Intangible assets........................................... 1,992
Goodwill.................................................... 37,757
-------
$43,594
=======
</TABLE>
Unaudited pro forma supplemental information on the results of operations
for the six months ended June 30, 1998 and June 30, 1997 are provided below and
reflect the acquisitions as if they had been combined at the beginning of each
respective period.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
------------------------
1998 1997
--------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net revenues................................................ $246,499 $218,418
======== ========
Net income.................................................. $ 41,735 $ 43,517
======== ========
Income per common share
Basic..................................................... $ .72 $ .77
======== ========
Diluted................................................... $ .70 $ .75
======== ========
</TABLE>
The unaudited pro forma financial information is not necessarily indicative
of either the results of operations that would have occurred had the
transactions been effected at the beginning of the respective preceding periods
or of future results of operations of the combined companies.
6
<PAGE> 7
LINCARE HOLDINGS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
The following table sets forth for the periods indicated a summary of the
Company's net revenues by source:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
-------------------- ------------------------
1998 1997 1998 1997
-------- -------- ---------- ----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Oxygen and other respiratory therapy.... $107,157 $ 96,772 $207,145 $188,222
Home medical equipment and other........ 12,361 11,930 24,277 21,492
-------- -------- -------- --------
Total......................... $119,518 $108,702 $231,422 $209,714
======== ======== ======== ========
</TABLE>
On August 5, 1997, the Balanced Budget Act of 1997 ("BBA") was signed into
law. The legislation, among other things, reduces Medicare expenditures by $115
billion over five years. The BBA reduces Medicare payment amounts for oxygen and
oxygen equipment furnished after January 1, 1998, to 75 percent of the fee
schedule amounts in effect during 1997. Payment amounts for oxygen and oxygen
equipment furnished after January 1, 1999, and each subsequent year are reduced
to 70 percent of the fee schedule amounts in effect during 1997.
The BBA freezes the Consumer Price Index (U.S. urban average) update for
covered items of durable medical equipment for each of the years 1998 through
2002 while limiting fees for parenteral and enteral nutrients, supplies and
equipment to 1995 reasonable charge levels over the same period. The BBA reduces
payment amounts for covered drugs and biologicals to 95 percent of the average
wholesale price of such covered items for each of the years 1998 through 2002.
The BBA authorizes the Department of Health and Human Services to conduct
up to five competitive bidding demonstration projects for the acquisition of
durable medical equipment and requires that one such project be established for
oxygen and oxygen equipment. Each demonstration project is to be operated over a
three-year period and is to be conducted in not more than three competitive
acquisition areas. The BBA also includes provisions designated to reduce health
care fraud and abuse including a surety bond requirement for durable medical
equipment providers.
On August 10, 1993, Congress passed the Omnibus Reconciliation Act of 1993
("OBRA 93"). The OBRA 93 legislation provided for a consumer price index update,
effective January 1, 1997, of approximately 2.8% on Medicare products and
services. There was no impact from OBRA 93 in 1998.
Net revenues for the three months ended June 30, 1998 increased by
$10,816,000 (or 10.0%) compared with the three months ended June 30, 1997, and
for the six months ended June 30, 1998 increased 21,708,000 (or 10.3%) compared
with the six months ended June 30, 1997. The price cuts attributable to the BBA
reduced the Company's revenues by approximately $17,085,000 and $32,538,000 for
the three and six months ended June 30, 1998. (see table)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, PERCENTAGE ENDED JUNE 30, PERCENTAGE
--------------------- INCREASE ------------------- INCREASE
1998 1997 (DECREASE) 1998 1997 (DECREASE)
--------- --------- ---------- -------- -------- ----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues -- before price cuts..... $136,603 $108,702 25.7 $263,960 $209,714 25.8
Effect of price cuts.............. (17,085) -- (15.7) (32,538) -- (15.5)
-------- -------- ----- -------- -------- -----
Actual revenues................... $119,518 $108,702 10.0 $231,422 $209,714 10.3
======== ======== ===== ======== ======== =====
</TABLE>
Excluding the effect on the Company's revenues from the Medicare price
reductions, internally generated growth increased revenues by approximately
$17,575,000 (or 16.2%) for the three months ended June 30, 1998 and $32,546,000
(or 15.5%) for the six months ended June 30, 1998.
7
<PAGE> 8
Excluding the effect on the Company's revenues from the Medicare price
reductions, growth due to acquisitions increased revenues by approximately
$10,326,000 (or 9.5%) for the three months ended June 30, 1998 and $21,700,000
(or 10.3%) for the six months ended June 30, 1998.
The revenue price cuts attributed to the BBA affected the relationship of
costs and expenses expressed as a percentage of net revenues. (see table)
<TABLE>
<CAPTION>
EXPRESSED AS A PERCENTAGE OF NET REVENUES
-------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------------------- --------------------------------------
RESULTS RESULTS
EXCLUDING EXCLUDING
ACTUAL IMPACT OF BBA ACTUAL ACTUAL IMPACT OF BBA ACTUAL
RESULTS PRICE CUTS RESULTS RESULTS PRICE CUTS RESULTS
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1998 1997 1998 1998 1997
--------- -------------- --------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Costs of goods and
services.............. 15.6% 13.7% 15.2% 15.9% 13.9% 15.2%
Operating expense....... 23.1% 20.2% 21.1% 23.5% 20.6% 21.2%
Selling, general and
administrative
expense............... 22.3% 19.5% 20.1% 22.5% 19.7% 20.2%
</TABLE>
Costs of goods and services as a percentage of net revenues was 15.6% for
the three months ended June 30, 1998 compared with 15.2% for the three months
ended June 30, 1997. Costs of goods and services as a percentage of net revenues
were 15.9% for the six months ended June 30, 1998 compared with 15.2% for the
six months ended June 30, 1997. Absent the effect of the BBA price cuts, cost of
goods as a percentage of net revenues was 13.7% for the three months ended June
30, 1998 and 13.9% for the six months ended June 30, 1998. This improvement is
attributed primarily to the maturity of the Company's respiratory pharmacy
operations which commenced operations in the fourth quarter of 1996 as well as
increased revenues from rental of capital equipment.
Operating expenses as a percentage of net revenues were 23.1% for the three
months ended June 30, 1998 as compared to 21.1% for the three months ended June
30, 1997. Operating expenses as a percentage of net revenues were 23.5% for the
six months ended June 30, 1998 compared with 21.2% for the six months ended June
30, 1997. Adjusted to remove the effect of the BBA price cuts, operating
expenses as a percentage of net revenues were 20.2% for the three months ended
June 30, 1998 and 20.6% for the six months ended June 30, 1998. This improvement
was primarily due to the Company's successful integration of acquired businesses
into its existing locations.
Selling, general and administrative expenses as a percentage of net
revenues were 22.3% for the three months ended June 30, 1998 compared with 20.1%
for the three months ended June 30, 1997. Selling, general and administrative
expenses as a percentage of net revenues were 22.5% for the six months ended
June 30, 1998 compared with 20.2% for the six months ended June 30, 1997.
Expressed as a percentage of net revenues before the price cuts attributed to
the BBA, selling, general and administrative expenses were 19.5% for the three
months ended June 30, 1998 and 19.7% for the six months ended June 30, 1998. The
company has been able to maintain a cost structure that, with increases in net
revenues, allows the Company to spread its overhead across a larger base of
revenue, resulting in improvements in operating income.
Amortization expense for the three months ended June 30, 1998 decreased to
$2,966,000 compared with $3,623,000 for the three month period ending June 30,
1997. Amortization expense for the six months ended June 30, 1998 decreased to
$5,951,000 compared with $7,063,000 for the six month period ended June 30,
1997. The decrease is attributable to the impairment writedown of certain
customer list intangible assets in the fourth quarter of 1997.
Operating income for the three and six months ended June 30, 1998 decreased
to $33,582,000 and $63,017,000, respectively, compared with $35,995,000 and
$68,820,000 for the three and six months ended June 30, 1997. These decreases
are due to the impact of the revenue price cuts attributable to the BBA.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities was $63,599,000 for the six
months ended June 30, 1998 compared with $52,602,000 for the six months ended
June 30, 1997. The increase in cash from operating activities is primarily
attributed to improved management of working capital. Accounts receivable
increased $4,202,000 for the six months ended June 30, 1998 compared with an
increase of $6,665,000 for the six months ended June 30, 1997. Accounts payable
increased $2,600,000 for the six months ended June 30, 1998 compared with a
decrease of $5,102,000 for the six months ended June 30, 1997.
Net cash used in investing and financing activities was $61,697,000 for the
six months ended June 30, 1998 compared with $51,558,000 for the six months
ended June 30, 1997. First and second quarter activity included the Company's
investment of $34,784,000 in business acquisitions, investment in capital
equipment of $29,865,000, proceeds of $18,000,000 from long-term obligations,
payments of $19,887,000 related to long-term obligations, and proceeds from
common stock issued of $6,060,000 related to the exercise of employee stock
options.
Effective May 14, 1998, the Board of Directors declared a two-for-one stock
split in the form of a 100% stock dividend, which was paid on May 29, 1998 to
stockholders of record on May 15, 1998. In connection with the stock split, the
Company increased the number of shares of Common Stock authorized from 50
million to 200 million, which increase was approved by the stockholders of the
Company at the Annual Meeting held in May, 1998. The par value of the additional
28,988,216 shares of Common Stock issued by reason of the stock split was
credited to Common Stock and a like amount charged to paid-in-capital. All share
and per share data included in the Company's condensed consolidated financial
statements has been adjusted for all periods presented to reflect the stock
split.
QUANTITATIVE AND QUALITATIVE DISCLOSURE REGARDING MARKET RISK
The Company has no derivative securities as of June 30, 1998. The Company
is exposed to changes in interest rates as a result of its bank credit facility
which is based on the London Interbank Offered Rate.
A 10% increase in interest rates related to the Company's bank credit
facility would not have a material effect on the Company's earnings over the
next fiscal year.
FORWARD LOOKING STATEMENTS
Statements contained in this Form 10-Q that are not based on historical
facts are forward looking statements, subject to uncertainties and risks,
including, but not limited to, the constantly changing healthcare environment,
potential reductions in reimbursement by government and third party payors for
the Company's products and services, the demand for Company's products and
services, economic and competitive conditions, the availability of appropriate
acquisition candidates and the successful completion of acquisitions, access to
borrowed and/or equity capital on favorable terms, and other risks detailed in
the Company's Securities and Exchange Commission filings.
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
The Company has received subpoenas from the U.S. Attorney's Office in
Sacramento, California requesting various documents including (i) documents
relating to the provision of home oxygen therapy to beneficiaries of certain
federally funded healthcare programs during 1995 and 1996 by five Lincare
locations in California and Oregon; (ii) documents concerning certain marketing
programs and practices for oxygen and other therapies, and certain policies and
procedures, in place at five Lincare locations in California and Oregon from
1995 to present; and (iii) certain information regarding compliance with the
billing and documentation requirements of various federally funded health care
programs by ten Lincare locations in California and Oregon from 1995 to present.
9
<PAGE> 10
The federal government has not served the Company with a complaint nor has
it disclosed the basis for its inquiries to the Company. The Company is
cooperating with the government's request for information. Due to its
preliminary nature, the duration or outcome of this matter cannot be predicted
with any degree of certainty.
Items 2-3 Not applicable.
Item 4 Submission of Matters to a Vote of the Security Holders.
The Annual Meeting of Shareholders of the Company was held on May 11, 1998.
The following matters were voted on at the Annual Meeting, with the number of
votes cast for, against or withheld, in each case, as applicable, indicated next
to each such matter:
1. Election of directors:
<TABLE>
<CAPTION>
FOR WITHHELD
---------- --------
<S> <C> <C>
J. T. Kelly................................................. 25,527,022 81,163
J. P. Byrnes................................................ 25,526,922 81,263
A. M. Paul.................................................. 25,527,022 81,163
C. B. Black................................................. 25,527,022 81,163
F. T. Cary.................................................. 25,526,422 81,763
T. O. Pyle.................................................. 25,527,022 81,163
W. F. Miller, III........................................... 25,527,022 81,163
</TABLE>
2. Ratification of the selection of KPMG Peat Marwick LLP as the
Company's independent accountants for the fiscal year ending December 31,
1998:
For: 25,602,124 Against: 2,086 Abstain: 3,975
3. Approval of the Company's Employee Stock Purchase Plan:
For: 25,178,215 Against: 402,545 Abstain: 27,425
4. Approval of the Company's 1998 Stock Plan:
For: 21,091,152 Against: 4,489,775 Abstain: 27,258
5. Approval of the Company's Amended and Restated Certificate of
Incorporation:
For: 14,850,270 Against: 6,175,353 Abstain: 71,925
Broker Non-Vote: 4,949,451
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------- ------------
<C> <C> <S> <C>
3.1 -- Amended and Restated Certificate of Incorporation of Lincare
Holdings Inc................................................
3.1.1 -- Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of Lincare Holdings Inc........
27.0 -- Financial Data Schedule (for SEC Use Only)..................
</TABLE>
(b) The Company did not file a Current Report on Form 8-K during the six
months ended June 30, 1998.
10
<PAGE> 11
SIGNATURE
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.
Lincare Holdings Inc.
--------------------------------------
Registrant
/s/ PAUL G. GABOS
--------------------------------------
Paul G. Gabos
Secretary, Chief Financial Officer
and Principal Accounting Officer
August 12, 1998
11
<PAGE> 1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
LC ACQUISITION CORPORATION
LC ACQUISITION 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 LC ACQUISITION
CORPORATION. The Corporation was originally incorporated under the same name,
and the original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of Delaware on November 2, 1990.
2. This Amended and Restated Certificate of
Incorporation restates and integrates and further amends the provisions of the
Certificate of Incorporation of the Corporation as heretofore amended and
restated and was duly adopted by written consent of a majority of the
stockholders of the Corporation, after first having been declared advisable by
the Board of Directors of the Corporation, all in accordance with the provisions
of Sections 242 and 245 of the Delaware General Corporation Law.
3. The amendments to the Certificate of Incorporation of
the Corporation effected by this Certificate are to (i) change the name of the
Corporation from LC ACQUISITION CORPORATION to LINCARE HOLDINGS INC. and (ii)
change the authorized capital stock of the Corporation from 5,121,104 shares,
consisting of 106,104 shares of Preferred Stock, $1 par value, 15,000 shares of
Series B Convertible Preferred Stock, $1 par value, and 5,000,000 shares of
Common Stock, $.01 par value, to 55,000,000 shares, consisting of 5,000,000
shares of Preferred Stock, $1 par value (including 105,762 shares of Preferred
Stock designated herein as Series A Preferred Stock and 15,000 shares of
Preferred Stock designated herein as Series B Convertible Preferred Stock), and
50,000,000 shares of Common Stock, $.01 par value.
4. The capital of the Corporation will not be reduced
under, or by reason of, any amendments in this Amended and Restated Certificate
of Incorporation of the Corporation.
<PAGE> 2
5. The text of the Certificate of Incorporation of the
Corporation, as heretofore amended and restated, is hereby restated and further
amended to read in its entirety as follows:
"FIRST: The name of the Corporation is
LINCARE HOLDINGS INC.
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1013 Centre Road, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is Corporation Service Company.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have the authority to issue is 55,000,000 shares,
consisting of 5,000,000 shares of Preferred Stock, $1 par value (including
105,762 shares of Preferred Stock designated herein as Series A Preferred Stock
and 15,000 shares of Preferred Stock designated herein as Series B Convertible
Preferred Stock) (hereinafter called "Preferred Stock") and 50,000,000 shares of
Common Stock, $.01 par value (herein called "Common Stock"). All
cross-references in each subdivision of this Article FOURTH refer to other
paragraphs in such subdivision unless otherwise indicated.
The following is a statement of the powers, preferences and
rights, and the qualifications, limitations or restrictions thereof, in respect
of each class of stock of the Corporation:
I.
PREFERRED STOCK
1. The Preferred Stock may be issued from time to time
in one or more series of any number of shares, provided that the aggregate
number of shares issued and not cancelled of any and all such series shall not
exceed the total number of shares of Preferred Stock hereinabove authorized.
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<PAGE> 3
2. Authority is hereby vested in the Board of Directors
from time to time to authorize the issue of one or more series of Preferred
Stock and, in connection with the creation of such series, to fix by resolution
or resolutions providing for the issue of shares thereof the designations,
powers, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof, of such
series in respect of the matters set forth as follows:
i) The maximum number of shares to constitute such
series and the distinctive designation thereof and the stated value
thereof if different than the par value thereof;
ii) Whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so,
the terms of such voting rights;
iii) The dividend rate, if any, on the shares of such
series, the conditions and dates upon which such dividends shall be
payable, the preference or relation which such dividends shall bear to
the dividends payable on any other class or classes or on any other
series of capital stock, and whether such dividend shall be cumulative
or non-cumulative;
iv) Whether the shares of such series shall be subject to
redemption by the Company, and, if made subject to redemption, the
times, prices and other terms and conditions of such redemption;
v) The rights of the holders of shares of such series
upon the liquidation, dissolution or winding up of the Company;
vi) Whether or not the shares of such series shall be
subject to the operation of a retirement or sinking fund, and, if so,
the extent to and manner in which any such retirement or sinking fund
shall be applied to the purchase or redemption of the shares of such
series for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof;
vii) Whether or not the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any other
class or classes, or of any other series of the
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<PAGE> 4
same class, and if so convertible or exchangeable, the price or prices
or the rate or rates of conversion or exchange and the method, if any,
of adjusting the same;
viii) The limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the
payment of dividends or the making of other distributions on, and upon
the purchase, redemption or other acquisition by the Company of, the
Common Stock or any other class or classes of stock of the Company
ranking junior to the shares of such series either as to dividends or
upon liquidation;
ix) The conditions or restrictions, if any, upon the
creation of indebtedness of the Company or upon the issue of any
additional stock (including additional shares of such series or of any
other series or of any other class) ranking on a parity with or prior
to the shares of such series as to dividends or distribution of assets
on liquidation, dissolution or winding up; and
x) Any other preference and relative, participating,
optional or other special rights, and the qualifications, limitations
or restrictions thereof, as shall not be inconsistent with this Article
FOURTH.
3. Subject to the powers, preferences and rights, and
the qualifications, limitations and restrictions thereof, with respect to the
Preferred Stock, as set forth herein in this Article FOURTH, there shall be
designated a series of Preferred Stock to be known as Series A Preferred Stock
(hereinafter referred to as "Series A Preferred Stock") consisting of 105,762
shares of Preferred Stock and a series of Preferred Stock to be known as Series
B Convertible Preferred Stock (hereinafter referred to as "Series B Convertible
Preferred Stock") consisting of 15,000 shares of Preferred Stock. The
designations, powers, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations and restrictions of the
Series A Preferred Stock and the Series B Convertible Preferred Stock, are as
follows:
A. SERIES A PREFERRED STOCK
1. Dividends. The holders of the Series A Preferred
Stock shall be entitled to receive, to the extent and in the manner
provided in paragraphs 2 and 3 below in the event of redemption and
liquidation, respectively, out of
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<PAGE> 5
funds legally available for such purpose, cash dividends at the rate of
$8.00 per share per annum, and no more. Dividends on the Series A
Preferred Stock shall be cumulative and shall accrue from the date of
issue of the Series A Preferred Stock.
In no event, so long as any Series A Preferred Stock shall
remain outstanding, shall any dividend whatsoever be declared or paid
upon, nor shall any distribution be made upon, any Series B Convertible
Preferred Stock or Common Stock, other than a dividend or distribution
payable in shares of Common Stock, nor (without the written consent of
the holders of 66-2/3% of the outstanding Series A Preferred Stock)
shall any shares of Series B Convertible Preferred Stock or Common
Stock be purchased or redeemed by the Corporation (other than a
repurchase of shares of Common Stock from employees of the Corporation
following termination of their employment), nor shall any moneys be
paid to or made available for a sinking fund for the purchase or
redemption of any Series B Convertible Preferred Stock or Common Stock,
unless in each instance any arrearage in the mandatory redemption of
the Series A Preferred Stock shall have been made good.
2. Redemption. The shares of Series A Preferred Stock
shall be redeemable as follows:
2A. Mandatory Redemption. The Corporation shall redeem
(in the manner and with the effect provided in sub-paragraphs 2C
through 2E below) all shares of Series A Preferred Stock which shall
then remain outstanding on the first to occur of the following events:
(1) November 30, 1995;
(2) the consolidation or merger of the
Corporation with or into any other corporation (other than a
merger in which the Corporation is the surviving corporation
and which will not result in more than 50% of the capital
stock of the Corporation outstanding immediately after the
effective date of such merger being owned of record or
beneficially by persons other than the holders of such capital
stock immediately prior to such merger);
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<PAGE> 6
(3) the sale of all or substantially all of the
properties and assets of the Corporation as an entirety to any
other person; or
(4) except for the Corporation's initial public
offering, the consummation of an underwritten public offering
on a firm commitment basis pursuant to an effective
registration statement under the Securities Act of 1933,
covering the offer and sale of Common Stock for the account of
the Corporation in which the aggregate net proceeds to the
Corporation equal at least $15,000,000.
2B. Optional Redemptions. The Corporation may redeem at
any time (in the manner and with the effect provided in subparagraphs
2C through 2E below), any whole number of shares of Series A Preferred
Stock. Any date on which the Corporation elects to redeem shares of
Series A Preferred Stock as provided in this subparagraph 2B and each
date on which the Corporation shall be required to redeem shares of
Series A Preferred Stock as provided in subparagraph 2A above, shall be
referred to as a "Redemption Date".
2C. Redemption Price. The Series A Preferred Stock to be
redeemed on a Redemption Date shall be redeemed by paying for each
share in cash an amount (such amount being herein sometimes referred to
as the "Redemption Price") equal to (i) $100 per share (the "Base
Amount"), plus (ii) an amount equal to dividends at the rate of $8.00
per share per annum, as provided for in paragraph 1 above, from the
date of issuance of such Series A Preferred Stock to such Redemption
Date (the "Additional Amount"), provided, however, that if on any such
Redemption Date the "Common Share Amount", as hereinafter defined,
shall be equal to or greater than the amount set forth in the table
below, approximately adjusted for stock splits and dividends and stock
combinations effected subsequent to December 17, 1991 (prorated on a
monthly basis to the last day of the preceding calendar month if the
date of such redemption shall be other than November 30):
<TABLE>
<CAPTION>
Date Common Share Amount
---- -------------------
<S> <C>
November 30, 1990 $0.5000
1991 0.6758
1992 0.8657
1993 1.0707
1994 1.2921
1995 1.5313
</TABLE>
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<PAGE> 7
the Redemption Price shall be solely the Base Amount and no part of the
Additional Amount shall be payable. For purposes of this subparagraph
2C and paragraph 3, the term "Common Share Amount" in respect of any
redemption or any liquidation, dissolution or winding up, whether
voluntary or involuntary, of the Corporation shall mean the value of
one share of outstanding Common Stock as of the date of such event,
which amount, (x) in the case of redemption pursuant to clause (1), (2)
or (3) of subparagraph 2A or pursuant to subparagraph 2B, shall be the
fair market value thereof (computed as if the Redemption Price were
solely the Base Amount), (y) in the case of redemption pursuant to
clause (4) of subparagraph 2A, shall be the price to the public in the
underwritten public offering referred to therein, and (z) in the case
of such liquidation, dissolution or winding up, shall be the amount
available for distribution to holders of Common Stock (determined as if
the Liquidation Price, as defined in paragraph 3, were solely the Base
Amount). Not less than 30 days before any Redemption Date, written
notice shall be given by mail, postage prepaid to the holders of record
of the Series A Preferred Stock to be redeemed, such notice to be
addressed to each such stockholder at his post office address as shown
by the records of the Corporation, specifying the number of shares to
be redeemed, the subparagraph or subparagraphs of this paragraph 2
pursuant to which such redemption shall be made, the Redemption Price
and the place and date of such redemption, which date shall not be a
day on which banks in The City of New York are required or authorized
to close. If such notice of redemption shall have been duly given and
if on or before such Redemption Date the funds necessary for redemption
shall have been set aside so as to be and continue to be available
therefor, then, notwithstanding that any certificate for shares of
Series A Preferred Stock to be redeemed shall not have been surrendered
for cancellation, after the close of business on such Redemption Date,
the shares so called for redemption shall no longer be deemed
outstanding, the dividends thereon shall cease to accrue, and all
rights with respect to such shares shall forthwith after the close of
business on the Redemption Date, cease, except only the right of the
holders thereof to receive, upon presentation of the certificate
representing shares so called for
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<PAGE> 8
redemption, the Redemption Price therefor, without interest thereon.
2D. Redeemed or Otherwise Acquired Shares to Be Retired.
Any shares of Series A Preferred Stock redeemed pursuant to this
paragraph 2 or otherwise acquired by the Corporation in any manner
whatsoever shall be permanently retired and shall not under any
circumstances be reissued, and the Corporation may from time to time
take such appropriate corporate action as may be necessary to reduce
the number of authorized shares of Series A Preferred stock
accordingly.
2E. Shares to Be Redeemed. In case of the redemption, for
any reason, of only apart of the outstanding shares of the Series A
Preferred Stock on a Redemption Date, all shares of Series A Preferred
Stock to be redeemed shall be selected pro rata, and there shall be so
redeemed from each registered holder in whole shares, as nearly as
practicable to the nearest share, that proportion of all of the shares
to be redeemed which the number of shares held of record by such holder
bears to the total number of shares of Series A Preferred Stock at the
time outstanding. Any shares of Series A Preferred Stock not redeemed
on November 30, 1995 for any reason shall be redeemed as soon
thereafter as possible and in the manner in which shares are otherwise
redeemed on a Redemption Date.
3. Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
holders of the shares of Series A Preferred Stock shall be entitled,
before any distribution or payment is made upon any Series B
Convertible Preferred stock or Common Stock, to be paid an amount (such
amount being sometimes referred to in this subdivision I as the
"Liquidation Price") equal to (i) the Base Amount, plus (ii) the
Additional Amount, provided, however, that if on the date of such
liquidation, dissolution or winding up, the Common Share Amount
(determined as provided in paragraph 2C) shall be equal to or greater
than the amount set forth in the table in subparagraph 2C above
(prorated on a monthly basis to the last day of the preceding calendar
month if the date of such liquidation, dissolution or winding up shall
be other than November 30), the Liquidation Price shall be solely the
Base Amount, and no part of the Additional Amount shall be payable in
respect
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<PAGE> 9
of such liquidation, dissolution or winding up. If upon such
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the
holders of Series A Preferred Stock shall be insufficient to permit
payment to such holders of the preferential amount to which they are
respectively entitled, then the entire assets of the Corporation to be
so distributed shall be distributed ratably among the holders of Series
A Preferred Stock. Upon any such liquidation, dissolution or winding up
of the Corporation, after the holders of Series A Preferred Stock shall
have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the
holders of the Series B Convertible Preferred Stock and to the holders
of Common Stock as their interests may appear. Written notice of such
liquidation, dissolution or winding up, stating a payment date, the
amount of the Liquidation Price and the place where said Liquidation
Price shall be payable, shall be given may mail, postage prepaid, not
less than 30 days prior to the payment date stated therein, to the
holders of record of Series A Preferred Stock, such notice to be
addressed to each such holder at his post office address as shown by
the records of the Corporation. 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 substantially all of
its assets, shall be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of the provisions of this
paragraph 3, such transactions being subject to the provisions of
paragraph 2 above.
4. Voting Rights. The holders of Series A Preferred
Stock shall have no right to vote for the election of directors of the
Corporation or on any other matter unless a vote of such class of stock
is required by the General Corporation Law of the State of Delaware or
this Amended and Restated Certificate of Incorporation.
5. Restrictions. At any time when shares of Series A
Preferred Stock are outstanding, except where the vote or written
consent of the holders of a grater number of shares of the Corporation
is required by law or by this Amended and Restated Certificate of
Incorporation, and in addition to any other vote required by law,
without the prior consent of the holders of 66-2/3% of the outstanding
Series A Preferred stock, given in person or by proxy, either in
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<PAGE> 10
writing or at a special meeting called for that purpose, at which
meeting the holders of the shares of such Series A Preferred Stock
shall vote together as a class:
5A. The Corporation will not create or authorize the
creation of any additional class or series of shares unless the same
ranks junior to the Series A Preferred Stock both as to dividends and
as to the distribution of assets on liquidation or increase the
authorized amount of the Series A Preferred Stock or increase the
authorized amount of any additional class or series of shares unless
the same ranks junior to the Series A Preferred Stock both as to
dividends and as to the distribution of assets on liquidation or create
or authorize any obligation or security convertible into shares of
Series A Preferred Stock or into shares of any other class or series
unless the same rank junior to the Series A Preferred Stock both as to
dividends and as to the distribution of assets on liquidation, whether
any such creation or authorization or increase shall be by means of
amendment of the Amended and Restated Certificate of Incorporation,
merger, consolidation or otherwise, and
5B. The Corporation will not amend, alter or repeal the
Corporation's Amended and Restated Certificate of Incorporation or
By-laws in any manner, or file any directors' resolutions pursuant to
Section 151(g) of the General Corporation Law of the State of Delaware
containing any provision, in either case, which adversely affects the
respective preferences, qualifications, special or relative rights or
privileges of the Series A Preferred Stock or which in any manner
adversely affects the Series A Preferred Stock or the holders thereof.
B. SERIES B CONVERTIBLE PREFERRED STOCK
1. Dividends. The holders of Series B Convertible
Preferred Stock shall be entitled to receive, unless otherwise
prohibited by the terms of the Series A Preferred Stock, when and as
cash dividends are declared by the Board of Directors of the
Corporation upon the Common Stock, out of funds legally available for
such purpose, cash dividends at the rate declared upon the Common Stock
as if said Series B Convertible Preferred Stock had been converted to
Common Stock.
In no event, so long as any Series B Convertible Preferred
Stock shall remain outstanding, shall any
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<PAGE> 11
dividend whatsoever be declared or paid upon, nor shall any
distribution be made upon, any Common Stock, other than a dividend or
distribution payable in shares of Common Stock, nor shall any shares of
Common Stock be purchased or redeemed by the Corporation (other than a
repurchase of shares of Common Stock from employees of the Corporation
following termination of their employment), nor shall any moneys be
paid to or made available for a sinking fund for the purchase or
redemption of any Common Stock, without the written consent of the
holders of 66-2/3% of the outstanding Series B Convertible Preferred
Stock and unless in each instance any arrearage in the mandatory
redemption of the Series B Convertible Preferred Stock shall have been
made good.
2. Redemption. The shares of Series B Convertible
Preferred Stock shall be redeemable as follows:
2A. Mandatory Redemption. The Corporation shall redeem on
November 30, 2000 (in the manner and with the effect provided in
subparagraphs 2C through 2E below) all shares of Series B Convertible
Preferred Stock which shall then remain outstanding. Notwithstanding
the foregoing, the Corporation shall not be required to and shall not
redeem shares of Series B Convertible Preferred Stock on such date
unless all of the Series A Preferred Stock shall theretofore have been
redeemed. Except as set forth in this paragraph 2, the Series B
Convertible Preferred Stock shall not be redeemable.
2B. Optional Redemptions. The Corporation may redeem at
any time on or after November 30, 1997 (in the manner and with the
effect provided in subparagraphs 2C through 2E below), any whole number
of shares of Series B Convertible Preferred Stock. Any date on which
the Corporation elects to redeem shares of Series B Convertible
Preferred Stock as provide in this subparagraph 2B and each date on
which the Corporation shall be required to redeem shares of Series B
Convertible Preferred Stock as provided in subparagraph 2A above, shall
be referred to as a "Redemption Date".
2C. Redemption Price. The Series B Convertible Preferred
Stock to be redeemed on a Redemption Date shall be redeemed upon notice
given as hereinafter provided, by paying for each share in cash the sum
of $100, plus an amount per share equal to any declared but unpaid
dividends thereon to such Redemption Date, such amounts being
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<PAGE> 12
sometimes referred to as the "Redemption Price". Not less than 30 days
before any Redemption Date, written notice shall be given by mail,
postage prepaid, to the holders of records of the Series B Convertible
Preferred Stock to be redeemed, such notice to contain a statement of
or reference to the conversion right set forth in paragraph 4 and to be
addressed to each such holder at his post office address as shown by
the records of the Corporation, specifying the number of shares to be
redeemed, the subparagraph or subparagraphs of this paragraph 2
pursuant to which such redemption shall be made, the Redemption Price
and the place and date of such redemption, which date shall not be a
day on which banks in The City of New York are required or authorized
to close. If such notice of redemption shall have been duly given and
if on or before such Redemption Date the funds necessary for redemption
shall have been set aside so as to be and continue to be available
therefor, then, notwithstanding that any certificate for shares of
Series B Convertible Preferred Stock to be redeemed shall not have been
surrendered for cancellation, after the close of business on such
Redemption Date, the shares so called for redemption shall no longer be
deemed outstanding, the dividends thereon shall cease to accrue, and
all rights with respect to such shares, including, without limitation,
the conversion right set forth in paragraph 4 and the rights, if any,
to receive notice and vote, shall forthwith after the close of business
on the Redemption Date, cease, except only the right of the holders
thereof to receive, upon presentation of the certificate representing
shares so called for redemption, the Redemption Price therefor, without
interest thereon.
2D. Redeemed, Converted or Otherwise Acquired Shares to
Be Retired. Any shares of Series B Convertible Preferred Stock redeemed
pursuant to this paragraph 2 or converted into Common Stock pursuant to
paragraph 4 below or otherwise acquired by the Corporation in any
manner whatsoever shall be permanently retired and shall not under any
circumstances be reissued; and the Corporation may from time to time
take such appropriate corporate action as may be necessary to reduce
the number of authorized shares of Series B Convertible Preferred Stock
accordingly.
2E. Shares to Be Redeemed. In case of redemption of only
a part of the outstanding shares of Series B Convertible Preferred
Stock, all shares of Series B
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<PAGE> 13
Convertible Preferred Stock to be redeemed shall be selected pro rata,
and there shall be so redeemed from each registered holder in whole
shares, as nearly as practicable to the nearest share, the proportion
of all the shares to be redeemed which the number of shares held of
records by such holder bears to the total number of shares of Series B
Convertible Preferred Stock at the time outstanding. Any shares of
Series B Convertible Preferred Stock not redeemed on November 30, 2000
for any reason shall be redeemed as soon thereafter as possible, but
not before all of the Series A Preferred Stock shall have been
redeemed, and such redemption shall be in the manner in which shares
are otherwise redeemed on a Redemption Date.
3. Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
holders of the shares of Series B Convertible Preferred Stock shall be
entitled, after all preferential amounts shall have been paid with
respect to the Series A Preferred Stock, but before any distribution or
payment is made upon any Common Stock, to be paid an amount equal to
$100 per share plus an amount equal to any declared but unpaid
dividends thereon to such date of liquidation, dissolution or winding
up, and the holders of Series B Convertible Preferred Stock shall not
be entitled to any further payment, such amounts being sometime
referred to in this subdivision II as the "Liquidation Payments". If
upon such liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets of the Corporation to be
distributed among the holders of Series B Convertible Preferred Stock
shall be insufficient to permit payment to the holders of Series B
Convertible Preferred Stock of the Liquidation Payments, then the
entire assets of the Corporation to be distributed (after all
preferential amounts (including without limitation accrued dividends)
shall have been paid with respect to the Series A Preferred stock)
shall be distributed ratably among the holders of Series B Convertible
Preferred Stock. Upon any such liquidation, dissolution or winding up
of the Corporation, after the holders of the Series A Preferred Stock
and Series B Convertible Preferred Stock shall have been paid in full
the amounts to which they shall be entitled, the remaining net assets
of the Corporation may be distributed to the holders of Common Stock.
Written notice of such liquidation, dissolution or winding up, stating
a payment date, the amount of Liquidation Payments and the place
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<PAGE> 14
where said Liquidation Payments shall be payable, a statement of or
reference to the conversion right set forth in paragraph 4, shall be
given by mail, postages prepaid, not less than 30 days prior to the
payment date stated therein, to the holders of record of Series B
Convertible Preferred Stock, such notice to be addressed to each such
holder at his post office address as shown by the records of the
Corporation. 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, shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of any of the provisions of this
paragraph 3.
4. Conversion.
4A. Conversion of Series B Convertible Preferred Stock
Into Common Stock. Subject to the provisions of paragraphs 2 and 3
hereof regarding redemption and liquidation, and subject to the terms
and conditions of this paragraph 4, the holder of any share or shares
of Series B Convertible Preferred Stock shall have the right, at its
option at any time, to convert any such shares of Series B Convertible
Preferred Stock (except that (i) in respect of any such shares which
shall have been called for redemption such shares which shall have been
called for redemption such right shall terminate at the close of
business on the last full business day next preceding the day fixed for
redemption unless the Corporation shall default in the payment of the
redemption price and (ii) upon any liquidation of the Corporation the
right of conversion shall terminate at the close of business on the
last full business day next preceding the date fixed for payment of the
amount distributable on the Series B Convertible Preferred Stock) into
such number of fully paid and nonassessable whole shares of Common
Stock as is obtained by multiplying the number of shares of Series B
Convertible Preferred Stock so to be converted by $100 and dividing the
result by the conversion price of $7.26 per share or, in case an
adjustment of such price has taken place pursuant to the further
provisions of this paragraph 4, then by the conversion price as last
adjusted and in effect at the date any share or shares of Series B
Convertible Preferred Stock are surrendered for conversion (such price
or such price as last adjusted, as the case may be, being referred to
as the "Conversion Price"). Such
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<PAGE> 15
rights of conversion shall be exercised by the holder thereof by giving
written notice that the holder elects to convert a stated number of
shares of such Series B Convertible Preferred Stock into Common Stock,
and by surrender of a certificate or certificates for the Series B
convertible Preferred Stock so to be converted to the Corporation at
its principal office (or such other office or agency of the Corporation
as the Corporation may designate by notice in writing to the holder or
holders of the Series B Convertible Preferred Stock) at any time during
its usual business hours on the date set forth in such notice, together
with a statement of the name or names (with address) in which the
certificate or certificates for shares of Common Stock shall be issued.
4B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in
subparagraph 4A and surrender of the certificate or certificates for
the share or shares of Series B Convertible Preferred Stock to be
converted, the Corporation shall issue and deliver, or cause to be
issued and delivered, to the holder, registered in such name or names
as such holder may direct, a certificate or certificates for the number
of whole shares of Common Stock, issuable upon the conversion of such
share or shares thereof. To the extent permitted by law, such
conversion shall be deemed to have been effected and the Conversion
Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation
and the certificate or certificates for such share or shares shall have
been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares as such holder shall cease, and the
person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby.
4C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series B
Convertible Preferred Stock into Common Stock and no payment or
adjustment shall be made upon any conversion on account of any cash
dividends on the shares of Series B Convertible Preferred Stock
surrendered for conversion or the shares of Common Stock issued upon
such conversion. In case the number of shares of Series B Convertible
Preferred
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<PAGE> 16
Stock represented by the certificate or certificates surrendered
pursuant to subparagraph 4A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the
holder thereof, at the expense of the Corporation, a new certificate or
certificates for the number of shares of Series B Convertible Preferred
Stock represented by the certificate or certificates surrendered which
are not to be converted. If any fractional interest in a share of
Common Stock would, except for the provisions of the first sentence of
this subparagraph 4C, be deliverable upon any such conversion, the
Corporation, in lieu of delivering the fractional share thereof, shall
pay to the holder surrendering Series B Convertible Preferred Stock for
conversion an amount in cash equal to the current market price of such
fractional interest as determined by the Board of Directors of the
Corporation.
4D. Adjustment of Price Upon Issuance of Common Stock.
Except as provided in subparagraph 4F hereof, if and whenever the
Corporation shall issue or sell, or is in accordance with subparagraphs
4D(1) through 4D(7) 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 shall be
reduced to an amount equal to the aggregate consideration received, or
deemed to have been received pursuant to subparagraphs 4D(1) through
4D(7), by the Corporation upon such issue or sale, or deemed issuance
or sale, divided by the number of shares so issued or sold or deemed to
be so issued or sold. For purposes of this subparagraph 4D, the
following subparagraphs 4D(1) to 4D(7), shall also be applicable:
4D(1). Issuance of Rights or Options. In case at any time
the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock
or securities convertible into or exchangeable for Common Stock (such
rights or options being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible
Securities") whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon the
16
<PAGE> 17
exercise of such Options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) 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 upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(ii) 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)shall be less than the Conversion Price in effect immediately
prior to the time of the granting of such Options, then the total
maximum number of shares 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 shall be deemed to have been issued for such price per share as
of the date of granting of such Options and thereafter shall be deemed
to be outstanding. Except as otherwise provided in subparagraph 4D(3),
no adjustment of the Conversion Price shall be made upon the actual
issue of such Options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
4D(2). Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by
dividing (i) to 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
(ii) the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities) shall be
less than the Conversion Price in effect immediately prior to the time
of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
17
<PAGE> 18
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph 4D(3) below, no
adjustment of the Conversion Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any Option to purchase any such
Convertible Securities for which adjustments of the Conversion Price
have been or are to be made pursuant to other provisions of this
subparagraph 4D, no further adjustment of the Conversion Price shall be
made by reason of such issue or sale.
4D(3). Change in Option Price or Conversion Rate. If (i) the
purchase price provided for in any Option referred to in subparagraph
4D(1), (ii) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subparagraph 4D(1) or 4D(2) or (iii) the rate at which any Convertible
Securities referred to in subparagraph 4D(1) or 4D(2) are convertible
into or exchangeable for Common Stock shall change at any time (in each
case other than under or by reason of provisions designed to protect
against dilution), then the Conversion Price in effect at the time of
such event shall, as required, forthwith be readjusted to such
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 conversion rate, as
the case may be, at the time initially granted, issued or sold; and on
the expiration of any such Option or the termination of any such right
to convert or exchange such Convertible Securities, the Conversion
Price then in effect hereunder shall, as required, forthwith be
increased 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, and the Common Stock
issuable thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any such Option referred to in
subparagraph 4D(1) or the rate at which any Convertible Securities
referred to in subparagraph 4D(1) 4D(2) are convertible into or
exchangeable for Common Stock shall be
18
<PAGE> 19
reduced at any time under or by reason of provisions with respect
thereto designed to protect against dilution, then, in case of the
delivery of Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities, the
Conversion Price then in effect hereunder shall, as required, forthwith
be adjusted to such respective amount as would have been obtained had
such Option or Convertible Securities never been issued as to such
Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as a result
of such adjustment the Conversion Price then in effect hereunder is
thereby reduced.
4D(4). Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock, Options or Convertible Securities,
any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration, and the
Conversion Price shall be reduced as if the Corporation had subdivided
its outstanding shares of Common Stock into a greater number of shares,
as provided in subparagraph 4E hereof.
4D(5). Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation, without
deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in
connection therewith. The amount of consideration deemed to be received
by the Corporation pursuant to the foregoing provisions of this
subparagraph 4D(5) upon any issuance and/or sale of shares of Common
Stock, Options or Convertible Securities, pursuant to an established
19
<PAGE> 20
compensation plan of the Corporation, to directors, officers or
employees of the Corporation in connection with their employment shall
be increased by the amount of any tax benefit realized by the
Corporation as a result of such issuance and/or sale, the amount of
such tax benefit being the amount by which the Federal and/or state
income or other tax liability of the Corporation shall be reduced by
reason of any deduction or credit in respect of such issuance and/or
sale. In case any Options shall be issued in connection with the issue
and sale of other securities of the Corporation, together comprising
one integral transaction in which no specific consideration is
allocated to such Options by the Corporation, such Options shall be
deemed to have been issued without consideration, and the Conversion
Price shall be reduced as if the Corporation had subdivided its
outstanding shares of Common Stock into a greater number of shares, as
provided in subparagraph 4E hereof.
4D(6). Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall 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 the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
4D(7). 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 considered an issue or sale of Common Stock for the
purposes of this subparagraph 4D.
4E. Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock
dividend; recapitalization or otherwise) its outstanding shares of
Common Stock into a greater number of shares, then the Conversion Price
in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Corporation shall be combined (by reverse
20
<PAGE> 21
stock split or otherwise) into a smaller number of shares, then the
Conversion Price in effect immediately prior to such combination shall
be proportionately increased.
4F. Certain Issues of Common Stock Excepted. Anything
herein to the contrary notwithstanding, the Corporation shall not be
required to make any adjustment of the Conversion Price upon the
occurrence of any of the following events: (i) the issuance of Common
Stock upon conversion of outstanding shares of Series B Convertible
Preferred Stock, (ii) the issuance of options to employees, officers
and directors of the Corporation pursuant to any stock option plan of
the Corporation approved by the Board of Directors, and (iii) the
issuance of Common Stock upon the exercise of the options permitted to
be issued pursuant to clause (ii) above.
4G. Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of
the capital stock of the Corporation or any consolidation or merger of
the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be
effected in such a way (including, without limitation, by way of
consolidation or merger) that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provisions (in form reasonably satisfactory to the holders of at least
a majority of the outstanding shares of Series B Convertible Preferred
Stock) shall be made whereby each holder of a share or shares of Series
B Convertible Preferred Stock shall thereafter have the right to
receive, upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock of the Corporation
immediately theretofore receivable upon the conversion of such share or
shares of Series B Convertible Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal
to said number of shares of such stock immediately theretofore so
receivable, and in any such case appropriate provision shall be made
with respect to the rights and interests of such holder to the end that
the provisions hereof (including without limitation provisions for
adjustments of the Conversion Price) shall thereafter be applicable, as
nearly as
21
<PAGE> 22
practicable, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights
(including, if necessary to effect the adjustments contemplated herein,
an immediate adjustment, by reason of such reorganization,
reclassification, consolidation, merger or sale, of the Conversion
Price to the value for the Common Stock reflected by the terms of such
reorganization, reclassification, consolidation, merger or sale if the
value so reflected is less than the Conversion Price in effect
immediately prior to such reorganization, reclassification,
consolidation, merger or sale). In the event of a merger or
consolidation of the Corporation as a result of which a greater or
lesser number of shares of common stock of the surviving corporation is
issuable to holders of Common Stock of the Corporation outstanding
immediately prior to such merger or consolidation, the Conversion Price
in effect immediately prior to such merger or consolidation shall be
adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock of the
Corporation. The Corporation will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument (in form reasonably satisfactory to the
holders of at least a majority of the outstanding shares of Series B
Convertible Preferred Stock) executed and mailed or delivered to each
holder of shares of Series B Convertible Preferred Stock at the last
address of such holder appearing on the books of the Corporation, the
obligation to deliver to such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder
may be entitled to receive.
4H. Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give
written notice thereof, by first class mail, postage prepaid, addressed
to each holder of shares of Series B Convertible Preferred Stock at the
address of such holder as shown on the books of the Corporation, which
notice shall state the Conversion Price resulting from such adjustment,
setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
22
<PAGE> 23
4I. Other Notices. In case at any time:
(1) the Corporation shall declare any cash dividend upon
its Common Stock;
(2) the Corporation shall declare any dividend upon its
Common Stock payable in stock or make any dividend or other
distribution (other than regular cash dividends) to the holders of its
Common Stock;
(3) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights;
(4) there shall be any capital reorganization, or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to, another corporation;
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation; or
(6) the Corporation shall take any action that would
result in an automatic conversion of the Series B Convertible Preferred
Stock pursuant to paragraph 4J;
then, in any one or more of said cases, the Corporation shall give, by
first class mail, postage prepaid, addressed to each holder of any
shares of Series B Convertible Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days'
prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of
any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least 20 days' prior written
notice of the date when the same shall take place, and (c) in the case
of any event which would result in an automatic conversion of the
Series B Convertible Preferred Stock pursuant to subparagraph 4J, at
last 20 days' prior written notice of the date on which the same is
expected to be completed.
23
<PAGE> 24
Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled
thereto, and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as
the case may be.
4J. Automatic Conversion. In the event that, at any time
while any of the Series B Convertible Preferred Stock shall be
outstanding, the Corporation shall consummate an underwritten public
offering on a firm commitment basis pursuant to an effective
registration statement under the Securities Act of 1933, covering the
offer and sale of Common Stock (i) at a per share price to the public
equal to not less than $10.00 per share of Common Stock, appropriately
adjusted for stock splits and dividends and stock combinations, and
(ii) providing aggregate net proceeds to the Corporation equal at least
$15,000,000, then all outstanding shares of Series B Convertible
Preferred Stock shall, automatically and without further action on the
part of the holders of the Series B Convertible Preferred Stock, be
converted into shares of Common Stock in accordance with the terms of
this paragraph 4 with the same effect as if the certificates evidencing
such shares had been surrendered for conversion, such conversion to be
effective simultaneously with the closing of such public offering;
provided, however, that certificates evidencing the shares of common
Stock issuable upon such conversion shall not be issued except on
surrender of the certificates for the shares of the Series B
Convertible Preferred Stock so converted.
4K. Stock to Be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock or
its treasury shares, solely for the purpose of issue upon the
conversion of the Series B Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series B
Convertible Preferred Stock. The Corporation covenants that all shares
of Common Stock which shall be so issued shall be duly and validly
issued and fully paid and non-
24
<PAGE> 25
assessable and free from all taxes, liens and charges with respect to
the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time
take all such action as may be requisite to assure that the par value
per share of the Common Stock is at all times equal to or less than the
effective Conversion Price. The Corporation will take all such action
as may be necessary to assure that all such shares of Common Stock may
be so issued without violation of any applicable law or regulation, or
of any requirements of any national securities exchange upon which the
Common Stock of the Corporation may be listed. The Corporation will not
take any action which results in any adjustment of the Conversion Price
if the total number of shares of Common Stock issued and issuable after
such action upon conversion of the Series B Convertible Preferred Stock
would exceed the total number of shares of Common Stock of such class
then authorized by this Amended and Restated Certificate of
Incorporation.
4L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversions of the Series B Convertible Preferred
Stock shall be made without charge to the holders of such Series B
Convertible Preferred Stock for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of
the holder of the Series B Convertible Preferred Stock which is being
converted.
4M. Closing of Books. The Corporation will at no time
close its transfer books against the transfer of any Series B
Convertible Preferred Stock or of any shares of Common Stock issued or
issuable upon the conversion of any shares of Series B Convertible
Preferred Stock in any manner which interferes with the timely
conversion of such Series B Convertible Preferred Stock.
4N. Definition of Common Stock. As used in this paragraph
4, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.01 par value, as constituted on December 17,
1991, and shall also include any capital stock of any class of the
Corporation thereafter authorized which shall not be limited to a fixed
sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends or in the
25
<PAGE> 26
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares
of Common Stock receivable upon conversion of shares of the Series B
Convertible Preferred Stock of the Corporation, or in case of any
reorganization or reclassification of the outstanding shares thereof,
the stock, securities or assets provided for in subparagraph 4G, shall
include only shares designated as Common Stock of the Corporation on
December 17, 1991.
5. Voting Rights. The holders of Series B Convertible
Preferred Stock and Common Stock shall vote together as a class for the
election of all the directors of the Corporation and, except as
otherwise provided by law and this Amended and Restated Certificate of
Incorporation, on all other matters to be voted on by the stockholders
of the Corporation on the following basis: (1) each holder of Series B
Convertible Preferred Stock shall be entitled to one vote for each
share of Common Stock which would be issuable to such holder upon the
conversion of all the shares of Series B Convertible Preferred Stock so
held on the record date for the determination of stock holders entitled
to vote, and (2) each holder of Common Stock shall be entitled to one
vote per share.
6. Restrictions. At any time when shares of Series B
Convertible Preferred Stock are outstanding, except where the vote or
written consent of the holders of a greater number of shares of the
Corporation is required by law or by this Amended and Restated
Certificate of Incorporation, and in addition to any other vote
required by law, without the prior consent of the holders of 66-2/3% of
the outstanding Series B Convertible Preferred Stock, given in person
or by proxy, either in writing or at a special meeting called for that
purpose, at which meeting the holders of the shares of such Series B
Convertible Preferred Stock shall vote together as a class;
6A. The Corporation will not create or authorize the
creation of any additional class or series of shares unless the same
ranks junior to the Series B Convertible Preferred Stock both as to
dividends and as to the distribution of assets on liquidation or
increase the authorized amount of the Series B Convertible Preferred
Stock or increase the authorized amount of any additional class or
series of shares unless the same ranks junior to the Series B
Convertible Preferred Stock both as to dividends and as to
26
<PAGE> 27
the distribution of assets on liquidation or create or authorize any
obligation or security convertible into shares of Series B Convertible
Preferred Stock or into shares of any other class or series unless the
same rank junior to the Convertible Preferred Stock both as to
dividends and as to the distribution of assets on liquidation, whether
any such creation or authorization or increase shall be by means of
amendment of the Amended and Restated Certificate of Incorporation,
merger, consolidation or otherwise, and
6B. The Corporation will not amend, alter or repeal the
Corporation's Amended Restated Certificate of Incorporation or By-laws
in any manner, or file any directors' resolutions pursuant to Section
151(g) of the Delaware General Corporation Law, containing any
provision, in either case, which adversely affects the respective
preferences, qualifications, special or relative rights or privileges
of the Series B Convertible Preferred Stock or the Common Stock or
which in any manner adversely affects the Series B Convertible
Preferred Stock or the Common Stock or the holders thereof.
II.
COMMON STOCK
1. Voting Rights. Except as otherwise provided by law,
the voting rights of the Common Stock shall be governed by paragraph 5
of subdivision I.3.B. of this Article FOURTH.
2. Dividends. Subject to the prior rights of the holders
of Preferred Stock as stated and expressed herein or as may be stated
and expressed pursuant hereto, dividends may be paid on the Common
Stock as and when declared out of any funds legally available therefor.
3. Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to holders of Preferred
Stock of the full amount to which they shall be entitled as stated and
expressed herein or as may be stated and expressed pursuant hereto, the
holders of Common Stock shall be entitled, to the exclusion of the
holders of Preferred Stock, to share ratably according to the number of
shares of Common Stock held by
27
<PAGE> 28
them in all remaining assets of the Corporation available for
distribution to its stockholders.
III.
OTHER PROVISIONS
No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any class
or series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock or any class or series, but,
subject to the provisions of subparagraph 4K of subdivision I.3.B. of
this Article FOURTH, any such unissued stock, additional authorized
issue of shares of any class or series of stock or securities
convertible into or exchangeable for stock, or carrying any right to
purchase stock, may be issued and disposed of pursuant to resolution of
the Board of Directors to such persons, firms, corporations or
associations, whether such holders or others, and upon such terms as
may be deemed advisable by the Board of Directors in the exercise of
its sole discretion.
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Certificate of Incorporation; and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed by law; and all
rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons
28
<PAGE> 29
whomsoever by and pursuant to this Amended and Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the right reserved in this Article.
SEVENTH: No person shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which the director derived an improper
personal benefit."
29
<PAGE> 30
IN WITNESS WHEREOF, LC ACQUISITION CORPORATION has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
Howard R. Deutsch, its Executive Vice President, who hereby acknowledges under
penalties of perjury that the facts here in stated are true and that this
certificate is his act and deed, and attested by James M. Emanuel, its
Secretary, this 17th day of December 1991.
LC ACQUISITION CORPORATION
By: /s/ Howard R. Deutsch
--------------------------
Executive Vice President
[CORPORATE SEAL]
Attest:
BY: /s/ James M. Emanuel
------------------------
Secretary
30
<PAGE> 1
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
LINCARE HOLDINGS INC.
Lincare Holdings Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, hereby certifies as follows:
FIRST: That the Board of Directors of the Corporation, by unanimous
written consent adopted on April 15, 1998, duly adopted resolutions setting
forth a proposed amendment to the Amended and Restated Certificate of
Incorporation of the Corporation, declaring said amendment to be advisable and
directing that said amendment be considered for approval by the stockholders of
the Corporation at the next Annual Meeting of Stockholders or any adjournments
thereof (the "Annual Meeting"). The resolutions setting forth the proposed
amendment are as follows:
RESOLVED, that there is hereby adopted an amendment to the
Corporation's Amended and Restated Certificate of Incorporation
pursuant to which the authorized capital stock of the Corporation shall
be increased from 55,000,000 shares, consisting of 50,000,000 shares of
common stock, par value $0.01, and 5,000,000 shares of preferred stock,
par value $1.00, to 205,000,000 shares, consisting of 200,000,000
shares of common stock, par value $0.01, and 5,000,000 shares of
preferred stock, par value $1.00; and be it further
RESOLVED, that in connection with such increase, the first
sentence of the first paragraph of Article Fourth of the Corporation's
Amended and Restated Certificate of Incorporation shall be deleted in
its entirety and the following substituted in lieu thereof:
FOURTH: The total number of shares of all classes of
stock which the Corporation shall have the authority to issue
is two hundred five million (205,000,000) shares, consisting
of two
<PAGE> 2
hundred million (200,000,000) shares of Common Stock, $0.01
par value (herein called the "Common Stock"), and five million
(5,000,000) shares of Preferred Stock, $1.00 par value
(including any shares of Preferred Stock designated herein as
a particular series of Preferred Stock)(hereinafter referred
to as "Preferred Stock").
SECOND: That at the Annual Meeting, which was duly called and held, a
majority of the outstanding capital stock of the Corporation was voted by the
holders thereof, in person or by proxy, in favor of the proposed amendment to
the Amended and Restated Certificate of Incorporation of the Corporation.
THIRD: That said amendment is duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Lincare Holdings Inc. has caused this
Certificate of Amendment of Amended and Restated Certificate of Incorporation to
be signed by John P. Byrnes, its President and Chief Executive Officer, this
14th day of May, 1998.
By: /s/ John P. Byrnes
---------------------------------
John P. Byrnes
President & Chief Executive
Officer
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LINCARE HOLDINGS INC. FOR THE YEAR ENDED JUNE 30, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 5,980
<SECURITIES> 0
<RECEIVABLES> 83,943
<ALLOWANCES> 8,479
<INVENTORY> 1,818
<CURRENT-ASSETS> 94,209
<PP&E> 212,561
<DEPRECIATION> 89,532
<TOTAL-ASSETS> 505,707
<CURRENT-LIABILITIES> 42,769
<BONDS> 0
0
0
<COMMON> 582
<OTHER-SE> 442,580
<TOTAL-LIABILITY-AND-EQUITY> 505,707
<SALES> 231,422
<TOTAL-REVENUES> 231,422
<CGS> 36,700
<TOTAL-COSTS> 36,700
<OTHER-EXPENSES> 131,705
<LOSS-PROVISION> 2,777
<INTEREST-EXPENSE> 216
<INCOME-PRETAX> 63,051
<INCOME-TAX> 24,149
<INCOME-CONTINUING> 38,902
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,902
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.66
</TABLE>
