UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)*
ProMedCo Management Company
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(Name of Issuer)
Common Stock (Par Value $ 0.01 Per Share)
- ---------------------------------------------------------------------------
(Title of Class of Securities)
74342L 10 5
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(CUSIP Number)
Robert C. Schwenkel, Esq. David J. Greenwald, Esq.
Fried, Frank, Harris, Shriver & Jacobson Goldman, Sachs & Co.
One New York Plaza 85 Broad Street
New York, NY 10004 New York, NY 10004
(212) 859-8000 (212) 902-1000
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(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications)
May 5, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box |_|.
*The remainder of this cover page will be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page will not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but will be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GOLDMAN, SACHS & CO.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 1,253,335
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
1,253,335
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,253,335
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
14 TYPE OF REPORTING PERSON
BD-PN-IA
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
THE GOLDMAN SACHS GROUP, INC.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 1,253,335
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
1,253,335
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,253,335
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
14 TYPE OF REPORTING PERSON
HC-CO
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS CAPITAL PARTNERS III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 928,994
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
928,994
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
928,994
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.1%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS ADVISORS III, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 1,184,385
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
1,184,385
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,184,385
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS CAPITAL PARTNERS III OFFSHORE, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 255,391
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
255,391
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
255,391
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS CAPITAL PARTNERS III GERMANY CIVIL LAW PARTNERSHIP
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 42,888
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
42,888
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
42,888
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GOLDMAN, SACHS & CO. oHG
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 42,888
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
42,888
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
42,888
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
STONE STREET FUND 2000, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 22,727
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
22,727
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,727
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
STONE STREET 2000, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 22,727
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
22,727
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,727
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
This Amendment No.1 ("Amendment") is being filed by GS Capital
Partners III, L.P. ("GS Capital III"), GS Capital Partners III Offshore,
L.P. ("GS Offshore"), GS Capital Partners III Germany Civil Law Partnership
("GS Germany"), Stone Street Fund 2000, L.P. (together with its
predecessor, Stone Street Fund 2000, L.L.C., "Stone 2000"), GS Advisors
III, L.L.C. ("GS Advisors"), Goldman, Sachs & Co. oHG ("GS oHG"), Stone
Street 2000, L.L.C ("Stone L.L.C."), Goldman, Sachs & Co. ("Goldman
Sachs"), and The Goldman Sachs Group, Inc. ("GS Group" and, together with
GS Capital III, GS Offshore, GS Germany, Stone 2000, GS Advisors, GS oHG,
Stone L.L.C. and Goldman Sachs, the "Filing Persons"). This Amendment
amends and supplements the Schedule 13D filed on behalf of the Filing
Persons with the Securities and Exchange Commission (the "Commission") on
January 24, 2000 (the "Schedule 13D"), relating to the common stock, par
value $.01 per share (the "Common Stock") of ProMedCo Management Company, a
Delaware corporation (the "Company"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in
the Schedule 13D. The Schedule 13D is hereby amended and supplemented as
follows:
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
Each of GS Capital III and Stone 2000, Delaware limited
partnerships, GS Offshore, a Cayman Islands exempted limited partnership,
and GS Germany, a German civil law partnership, was formed for the purpose
of investing in equity and equity-related securities primarily acquired or
issued in leveraged acquisitions, reorganizations and other private equity
transactions. GS Advisors, a Delaware limited liability company, is the
sole general partner of GS Capital III and GS Offshore. GS oHG is the sole
managing partner of GS Germany. Stone L.L.C., a Delaware limited liability
company, is the sole general partner of Stone 2000. Goldman Sachs, a New
York limited partnership, is an investment banking firm and a member of the
New York Stock Exchange, Inc. and other national exchanges. Goldman Sachs
also serves as the manager for GS Advisors and Stone 2000 and the
investment manager for GS Capital III, GS Offshore and GS Germany. Goldman
Sachs is wholly owned, directly and indirectly, by GS Group. GS Group is a
Delaware corporation and holding company that (directly and indirectly
through subsidiaries or affiliated companies or both) is a leading
investment banking organization. The principal business address of each
Filing Person (other than GS Offshore, GS Germany and GS oHG) is 85 Broad
Street, New York, NY 10004. The principal business address for GS Offshore
is c/o Maples and Calder, P.O. Box 309, Grand Cayman, Cayman Islands. The
principal business address for each of GS Germany and GS oHG is MesseTurm,
60308 Frankfurt am Main, Germany.
The name, business address, present principal occupation or
employment and citizenship of each director of GS Group are set forth in
Schedule I hereto and are incorporated herein by reference. The name,
business address, present principal occupation or employment and
citizenship of each executive officer of GS Advisors are set forth in
Schedule II-A-i hereto and are incorporated herein by reference. The name,
business address, present principal occupation or employment and
citizenship of each member of the Principal Investment Area Investment
Committee of Goldman Sachs, which is responsible for making all investment
and management decisions for GS Advisors on behalf of Goldman Sachs, are
set forth in Schedule II-A-ii hereto and are incorporated herein by
reference. The name, business address, present principal occupation or
employment and citizenship of each executive officer and director of
Goldman, Sachs & Co. Finanz GmbH, which is the sole managing general
partner of GS oHG, are set forth in Schedule II-B hereto and are
incorporated herein by reference. The name, business address, present
principal occupation or employment and citizenship of each executive
officer of Stone L.L.C. are set forth in Schedule II-C-i hereto and are
incorporated herein by reference. The name, business address, present
principal occupation or employment and citizenship of each member of the
Stone Street Investment Committee of Goldman Sachs, which is responsible
for making all investment and management decisions for Stone L.L.C. on
behalf of Goldman Sachs, are set forth on Schedule II-C-ii and are
incorporated herein by reference.
During the last five years, none of the Filing Persons, nor, to
the knowledge of each of the Filing Persons, any of the persons listed on
Schedules I, II-A-i, II-A-ii, II-B, II-C-i or II-C-ii hereto, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order
enjoining future violations of, or prohibiting or mandating activities
subject to federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
As more fully described herein, GS Capital III, GS Offshore, GS
Germany (through its nominee, Goldman, Sachs & Co. Verwaltungs GmbH) and
Stone 2000 (collectively, the "Purchasers") have agreed to purchase at the
Second Closing an aggregate of 425,000 shares of the Company's Series A
Convertible Preferred Stock, par value $0.01 per share (the "Series A
Preferred Stock") and warrants (the "Warrants") to purchase up to, in the
aggregate, 125,000 shares of the Company's Series B Convertible Preferred
Stock, par value $0.01 per share (the "Series B Preferred Stock" and,
together with the Series A Preferred Stock, the "Preferred Stock") (i) for
an aggregate cash purchase price equal to $26,500,000 less an amount equal
to the sum of (x) the Second Closing Payment (defined below), (y) the
accrued and unpaid interest on the Notes (through and including the date of
the Second Closing), and (z) the aggregate principal amount of any PIK
Notes (as defined in the Notes) issued to the Purchasers with any accrued
and unpaid interest thereon (through and including the date of the Second
Closing) (the "Second Closing Cash Purchase Price") and (ii) in exchange
for all outstanding Notes and GS Shares. The "Second Closing Payment" is an
amount in cash equal to $795,000.
It is expected that the funds to be used by the Purchasers to
purchase the Series A Preferred Stock and the Warrants at the Second
Closing will be obtained by such entities from capital contributions by
their partners and from the available funds of such entities.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
First Amendment to Securities Purchase Agreement
- ------------------------------------------------
On May 5, 2000, the Company and the Purchasers entered into the
First Amendment to Securities Purchase Agreement (the "First Amendment"),
which provides, among other things, that at the Second Closing, the
Purchasers will purchase an aggregate of 425,000 shares of the Series A
Preferred Stock and Warrants to purchase up to, in the aggregate, 125,000
shares of Series B Preferred Stock (i) for an amount in cash equal to the
Second Closing Cash Purchase Price and (ii) in exchange for all outstanding
Notes and GS Shares. As more fully described herein, in connection with the
First Amendment, the following agreements were entered into: (i) an
Amendment No. 2 to Rights Agreement, dated as of May 5, 2000 ("Second
Rights Amendment"), (ii) amended and restated Lock-up Agreements, dated as
of May 5, 2000 ("Amended Lock-up Agreements"), by and among the Lock-up
Stockholders and the Purchasers, and (iii) a First Amendment to
Registration Rights Agreement, dated as of May 5, 2000 (the "Registration
Rights Amendment"), by and among the Company and the Purchasers. In
addition, pursuant to the First Amendment, the Company and the Purchasers
will enter into a Warrant Agreement (the "Warrant Agreement"), which sets
forth the terms and conditions of the Warrants, at the Second Closing. The
First Amendment, the Second Rights Amendment, the form of Amended Lock-up
Agreement, the Registration Rights Amendment and the form of Warrant
Agreement are attached hereto as Exhibits 3 through 7, respectively, and
are incorporated in and made a part of this Schedule 13D by this reference
in their entirety.
The purpose of the acquisition of the Series A Preferred Stock
and the Warrants by the Purchasers is to acquire a significant equity
interest in the Company.
Pursuant to the First Amendment, from the Second Closing and for
so long as the Purchasers and their affiliates collectively beneficially
own a number of shares of Common Stock that is not less than (i) 66 2/3% of
the Second Closing Ownership Amount (as defined below), GS Capital III will
have the right to designate three directors of the Company; (ii) 33 1/3% of
the Second Closing Ownership Amount, GS Capital III will have the right to
designate two directors of the Company; and (iii) 10% of the Second Closing
Ownership Amount, GS Capital III will have the right to designate one
director of the Company (collectively, the "Preferred Designees"). Mr.
Sanjeev Mehra will be one of the initial Preferred Designees, and the
remaining two initial Preferred Designees will be designated by GS Capital
III prior to the Second Closing. In addition, one Preferred Designee will
have the right to sit on the executive committee of the Board of Directors.
The "Second Closing Ownership Amount" is the number of shares of Common
Stock beneficially owned by the Purchasers immediately after the Second
Closing (excluding the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock) (as such number may be adjusted
for stock splits, reverse stock splits, dividends paid in Common Stock,
reclassifications of the Common Stock, and other similar events).
Pursuant to the First Amendment, without the prior written
consent of GS Capital III, the Board of Directors, if the Second Closing
occurs, will not consist of more than ten members so long as the Purchasers
and their affiliates beneficially own at least 10% of the Second Closing
Ownership Amount.
Pursuant to the First Amendment, the Company is required, in
connection with the Second Closing, to cause to be filed with the Secretary
of State of the State of Delaware (the "Secretary of State") (i) the
Certificate of Designation of Series A Preferred Stock (the "Series A
Certificate of Designation") and (ii) the Certificate of Designation of
Series B Preferred Stock (the "Series B Certificate of Designation" and,
together with the Series A Certificate of Designation, the "Preferred Stock
Certificates of Designation"). The terms of the Preferred Stock
Certificates of Designation provide that the Series A Preferred Stock and
the Series B Preferred Stock rank on a parity with respect to dividend
rights and rights on liquidation, dissolution or winding up. Pursuant to
the Preferred Stock Certificates of Designation, the Series A Preferred
Stock and the Series B Preferred Stock have substantially identical voting
rights, rights to board representation, and rights with respect to
recapitalization. The form of Series A Certificate of Designation and the
form of Series B Certificate of Designation are attached hereto as Exhibits
8 and 9, respectively, and are incorporated in and made part of this
Schedule 13D by this reference in their entirety.
Assuming the Second Closing occurs, the Purchasers will hold in
the aggregate (i) 425,000 shares Series A Preferred Stock, which shares
will be convertible initially into 17,000,000 shares of Common Stock as of
the date of the Second Closing (subject to adjustment as provided in the
Series A Certificate of Designation), and (ii) Warrants to purchase up to
125,000 shares of Series B Preferred Stock, which shares will be
convertible initially into 3,125,000 shares of Common Stock upon conversion
of the Warrants (subject to adjustment as provided in the Series B
Certificate of Designation).
Pursuant to the First Amendment, from the period commencing on
January 13, 2000, and ending on the earlier of (i) the expiration of the
Standstill Period (as defined below), (ii) the occurrence of any breach by
the Company in any material respect of any covenant or agreement contained
in the Securities Purchase Agreement, as amended, or in any other
transaction document, (iii) the occurrence of the filing of a bankruptcy
petition by the Company or on the 60th day following the filing of an
involuntary bankruptcy petition against the Company if such petition is not
discharged with prejudice during such 60-day period, (iv) the occurrence of
a change in control of the Company or (v) the occurrence of a third party
proposal, except as (x) contemplated by the Securities Purchase Agreement,
as amended, or any other transaction document or (y) specifically approved
in writing in advance by the Company, the Purchasers will not, and will
cause any affiliates controlled by them to not, in any manner, directly or
indirectly (A) acquire, or offer or agree to acquire, or become the
beneficial owner of or obtain any rights in respect of any capital stock of
the Company in an amount in excess of the Grandfathered Amount (as defined
below); or (B) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined or used in Regulation 14A under
the Act) of proxies or consents with respect to any voting securities of
the Company or any of its successors or initiate or become a participant in
any stockholder proposal or "election contest" (as such term is defined or
used in Rule 14a-11 under the Act) with respect to the Company or any of
its successors or induce others to initiate the same (except for activities
undertaken by the Purchasers or the directors designated by GS Capital III
in connection with solicitations by the Board of Directors). "Standstill
Period" means the later of (i) January 13, 2003, or (ii) the date on which
the Purchasers and their affiliates beneficially own, in the aggregate, a
number of shares of Common Stock constituting less than 10.0% of the Second
Closing Ownership Amount (as such ownership may be adjusted from time to
time for stock splits, reverse stock splits, dividends paid in Common
Stock, reclassifications of the Common Stock, and other similar events).
Warrant Agreement
- -----------------
Pursuant to the Warrant Agreement, the Purchasers may exercise,
at any time prior to the third anniversary of the Second Closing, the
Warrants to purchase up to, in the aggregate, 125,000 shares of Series B
Preferred Stock, at an exercise price of $97.00 per share. In addition,
subject to the Company having obtained Additional Senior Debt Financing (as
defined below) and the satisfaction of certain other conditions, the
Company will have the right, at any time prior to 5:00 p.m. New York City
time on December 31, 2000 (the "Mandatory Exercise Period"), at its sole
option and election (a "Mandatory Exercise Election"), to require the
Purchasers to exercise, on a pro-rata basis, up to (x) in the aggregate (A)
25,000 Warrants, if at least $5,000,000 of Additional Senior Debt Financing
is obtained, (B) 50,000 Warrants, if at least $10,000,000 of Additional
Senior Debt Financing is obtained, (C) 75,000 Warrants, if at least
$15,000,000 of Additional Senior Debt Financing is obtained, (D) 100,000
Warrants, if at least $20,000,000 of Additional Senior Debt Financing is
obtained, or (E) 125,000 Warrants, if at least $25,000,000 of Additional
Senior Debt Financing is obtained, less (y) the aggregate number of
Warrants exercised prior to such Mandatory Exercise Election (such
difference between (x) and (y), the "Callable Warrants"). "Additional
Senior Debt Financing" is any senior debt financing obtained by the Company
after the Second Closing which, after giving effect to such financing,
would result in the Company having senior debt financing in an aggregate
principal amount in excess of $182.5 million under its Amended and Restated
Credit Agreement (as defined below in Item 6) (or another facility
syndicated or privately placed by a bank or its affiliates) on terms at
least as favorable to the Company as the terms governing the Company's
Tranche B Term Notes to be purchased by General Electric Capital
Corporation (as discussed below in Item 6). Additional Senior Debt
Financing does not include, however, any financing the proceeds of which
are used to replace or refinance any existing senior debt financing of the
Company.
Pursuant to the Warrant Agreement, the Company has agreed that,
so long as at least 10% of the Warrants remain outstanding, the Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, without the affirmative vote or consent of the holders of not
less than 50% of all Warrants at any time outstanding: (i) authorize,
increase the authorized number of shares of, or issue any shares of stock
senior to or on parity with the Series B Preferred Stock; (ii) increase the
authorized number of shares of, or issue (including on conversion or
exchange of any convertible or exchangeable securities or by
reclassification) any shares of, Series B Preferred Stock other than as
required by the Series B Certificate of Designation and pursuant to the
exercise of the Warrants; or (iii) reclassify any shares of Series B
Preferred Stock or authorize, adopt or approve an amendment to the Series B
Certificate of Designation which would increase or decrease the par value
of the shares of Series B Preferred Stock, or alter or change the powers,
preferences or special rights of the Series B Preferred Stock so as to
affect such shares of Series B Preferred Stock adversely.
Pursuant to the Warrant Agreement, if shares of the Series B
Preferred Stock issuable upon exercise of the Warrants are changed into the
same or a different number of shares of any other class or classes of stock
or other securities or property, whether by capital reorganization,
reclassification, sale of the Company or other transaction, each Warrant
will, in lieu of representing the right to purchase shares of Series B
Preferred Stock, represent the right to purchase the number of shares of
stock or other securities or property to which a holder of the number of
shares of Series B Preferred Stock would have been entitled upon such
reorganization, reclassification, sale of the Company or other transaction.
The exercise price per share in effect immediately prior to such event will
be adjusted so that (i) the aggregate exercise price in effect immediately
after such event payable by the Purchasers will be the same as that payable
by the Purchasers immediately before such event, and (ii) the Purchasers
would receive the number and type of stock or other securities or property
which they would have been entitled to receive after the happening of any
such event, if immediately prior to such event, they had exercised the
Warrants to acquire shares of Series B Preferred Stock.
Second Shareholder Rights Amendment
- -----------------------------------
In connection with the First Amendment, on May 5, 2000, the
Company entered into the Second Rights Amendment, which amended the
Company's "rights plan" to exempt therefrom certain shares of Common Stock
which may be beneficially owned by the Purchasers including (i) all shares
of Common Stock beneficially owned by the Purchasers and their affiliates
as of January 13, 2000, (ii) all shares of Common Stock the Purchasers and
their affiliates become the beneficial owner of after January 13, 2000,
pursuant to, and in accordance with the terms of, the Securities Purchase
Agreement, as amended by the First Amendment, the Warrant Agreement and the
other transaction documents, (iii) Ordinary Course Broker Dealer Shares (as
defined in the Rights Amendment), and (iv) an additional 1,400,000 shares
of Common Stock (other than Ordinary Broker Dealer Shares) (collectively,
the "Grandfathered Amount").
Amended Lock-Up Agreements
- --------------------------
In connection with the First Amendment, on May 5, 2000, the
Lock-up Stockholders executed the Amended Lock-up Agreements which amended
and superseded the terms contained in the Lock-up Agreements. Pursuant to
the Amended Lock-up Agreements, the Lock-up Stockholders agreed that (i)
during a period of six months from May 5, 2000 (the "Initial Lock-up
Period"), such stockholders will not, directly or indirectly, (x) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
for the sale of, or otherwise dispose of or transfer (collectively,
"Transfer") any shares of Common Stock or any securities convertible into
or exchangeable or exercisable for Common Stock, owned by such stockholders
or with respect to which such stockholder has the power of disposition as
of May 5, 2000, or (y) enter into any swap or any other agreement or any
transaction that Transfers, in whole or in part, directly or indirectly,
the economic consequence of such stockholder's ownership of the Common
Stock as of May 5, 2000, whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or
otherwise, and (ii) for a period of eighteen months following the end of
the Initial Lock-up Period, such stockholders will not, directly or
indirectly, (x) Transfer greater than 25% of such stockholder's shares of
Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, owned by such stockholder or with respect to
which such stockholder has the power of disposition as of May 5, 2000, or
(y) enter into any swap or any other agreement or any transaction that
Transfers, in whole or in part, directly or indirectly, greater than 25% of
the economic consequence of such stockholder's ownership of the Common
Stock as of May 5, 2000, whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or
otherwise. Notwithstanding the foregoing, each of the Lock-up Stockholders
may, at any time after the Second Closing and following a Transfer by the
Purchasers of greater than 25% of the shares of Common Stock beneficially
owned by the Purchasers as of the Second Closing to a person who or which
is not an affiliate of the Purchasers, Transfer shares of Common Stock in
an amount up to the number of shares of Common Stock equal to the number of
shares of Common Stock beneficially owned by such Lock-up Stockholder on
May 5, 2000 multiplied by a fraction, the numerator of which is the number
of shares of Common Stock sold or transferred by the Purchasers prior to
such date in excess of 25% of the shares of Common Stock beneficially owned
by the Purchasers as of the Second Closing and the denominator of which is
the number of shares of Common Stock equal to 75% of the shares of Common
Stock beneficially owned by the Purchasers as of the Second Closing.
Other Plans and Proposals
- -------------------------
Except as described above or otherwise described in this
Amendment, the Filing Persons currently have no plans or proposals which
relate to or would result in any transaction, event or action enumerated in
paragraphs (a) through (j) of Item 4 of the form of Schedule 13D
promulgated under the Act.
Each of the Filing Persons expects to evaluate on an ongoing
basis the Company's financial condition, business, operations and
prospects, the market price of the Common Stock, conditions in the
securities markets generally, general economic and industry conditions and
other factors. Accordingly, each Filing Person reserves the right to change
its plans and intentions at any time, as it deems appropriate. In
particular, any one or more of Filing Persons (and their respective
affiliates) may purchase additional shares of Common Stock or Preferred
Stock or other securities of the Company or may sell or transfer shares of
Common Stock or Preferred Stock (or any of the shares of Common Stock into
which such Preferred Stock is converted or any convertible notes, for which
such Preferred Stock is exchanged) beneficially owned by them from time to
time in public or private transactions and/or may enter into privately
negotiated derivative transactions with institutional counterparties to
hedge the market risk of some or all of their positions in the shares of
Common Stock, Preferred Stock or other securities and/or may cause any of
the Purchasers to distribute in kind to their respective partners or
members, as the case may be, shares of Common Stock or Preferred Stock or
other securities owned by such Purchasers. Any such transactions may be
effected at any time or from time to time subject to (i) the restrictions
contained in the Securities Purchase Agreement, as amended, and (ii) any
applicable limitations imposed on the sale of any of their Company
securities by the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") or other
applicable law. To the knowledge of each Filing Person, each of the persons
listed on Schedules I, II-A-i, II-A-ii, II-B, II-C-i or II-C-ii hereto may
make similar evaluations from time to time or on an ongoing basis.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
-------------------------------------
(a) Based on the information contained in the Company's Amendment
to Form 10-K for the year ended December 31, 1999, filed with the
Commission on May 1, 2000, there were 22,479,239 shares of Common Stock
outstanding as of February 17, 2000.
As of May 5, 2000 GS Capital III beneficially owns 928,994 shares
of Common Stock, representing 4.1% of the outstanding shares of Common
Stock.
As of May 5, 2000, GS Offshore beneficially owns 255,391 shares
of Common Stock, representing 1.1% of the outstanding shares of Common
Stock.
As of May 5, 2000, GS Advisors may be deemed to beneficially own
an aggregate of 1,184,385 shares of Common Stock beneficially owned by GS
Capital III and GS Offshore, as described above, representing in the
aggregate approximately 5.3% of the outstanding shares of Common Stock.
As of May 5, 2000, GS Germany beneficially owns and its managing
partner, GS oHG may be deemed to beneficially own, 42,888 shares of Common
Stock, representing 0.2% of the outstanding shares of Common Stock.
As of May 5, 2000, Stone 2000 beneficially owns, and its general
partner, Stone L.L.C., may be deemed to beneficially own an aggregate of
22,727 shares of Common Stock, representing 0.1% of the outstanding shares
of Common Stock.
As of May 5, 2000, Goldman Sachs and GS Group may be deemed to
beneficially own an aggregate of 1,253,335 shares of Common Stock,
consisting of (i) 1,250,000 shares of Common Stock beneficially owned by
the Purchasers, as described above, and (ii) 3,335 shares of Common Stock
held in Managed Accounts, representing in the aggregate approximately 5.6%
of the outstanding shares of Common Stock. Goldman Sachs disclaims
beneficial ownership of (i) the shares of Common Stock beneficially owned
by the Purchasers to the extent that partnership interests in Purchasers
are held by persons other than Goldman Sachs or its affiliates and (ii) the
shares of Common Stock held in Managed Accounts.
None of the Filing Persons or, to the knowledge of the Filing
Persons, the persons listed on Schedules I, II-A-i, II-A-ii, II-B, II-C-i
or II-C-ii hereto beneficially owns any shares of Common Stock other than
as set forth herein.
(b) Each Filing Person shares the power to vote or direct the
vote and to dispose or to direct the disposition of shares of Common Stock
beneficially owned by such Filing Person as indicated above.
(c) Except as described in this Schedule 13D, no transactions in
the shares of Common Stock were effected by the Filing Persons, or, to
their knowledge, any of the persons listed on Schedules I, II-A-i, II-A-ii,
II-B, II-C-i or II-C-ii hereto, during the past sixty days.
(d) Except for clients of Goldman Sachs who may have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, any shares of Common Stock held in Managed
Accounts, no other person is known by any Filing Person to have the right
to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, any shares of Common Stock beneficially owned by
any Filing Person.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
----------------------------------------
The responses set forth in Items 3 and 4 of this Schedule 13D are
incorporated herein by this reference in their entirety.
Pursuant to the First Amendment, the Company is no longer
required to obtain, prior to the Second Closing, additional senior debt
financing under its credit agreement or another facility syndicated or
privately placed by a bank or its affiliates in an amount not less than $65
million. Pursuant to the First Amendment, the obligation of the Purchasers
to purchase the Series A Preferred Stock and the Warrants at the Second
Closing is subject to, among other things, (i) the Company entering into an
amended and restated credit agreement with its lenders on terms
satisfactory to the Purchasers in their sole discretion (the "Amended and
Restated Credit Agreement"), (ii) General Electric Capital Corporation
purchasing $20 million in aggregate principal amount of the Company's
Tranche B Term Notes and (iii) Bank of America, N.A.'s revolving credit
commitment increasing by at least $5 million from its existing revolving
credit commitment.
Pursuant to the First Amendment, the obligations of the parties
to consummate the Second Closing may be terminated at any time prior to the
Second Closing, notwithstanding approval thereof by the stockholders of the
Company: (a) by mutual written consent of the Company and the Purchasers at
any time prior to the Second Closing; or (b) by either the Purchasers or
the Company if the Second Closing is not consummated by June 15, 2000; or
(c) by either the Purchasers or the Company if a governmental entity issues
a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by Securities Purchase Agreement,
as amended; or (d) by the Purchasers or the Company, (i) if any
representation or warranty of the other set forth in the Securities
Purchase Agreement, as amended, or in any other transaction document is
untrue in any material respect when made, or (ii) upon a breach in any
material respect of any covenant or agreement on the part of the other set
forth in the Securities Purchase Agreement, as amended, or in any other
transaction document; or (e) by the Purchasers if an "event of default"
under the Notes occurs and is continuing; or (f) by either the Company or
the Purchasers in the event that the stockholders of the Company fail to
approve the transactions described in the Securities Purchase Agreement, as
amended, at the stockholder meeting; or (g) by the Purchasers if the
Company has not complied in all respects with the covenants relating to GS
Capital III's right to designate the Noteholder Designee to the Board of
Directors.
Pursuant to the First Amendment the Company has agreed to
reimburse the Purchasers for their fees and expenses incurred in connection
with the transactions contemplated by the Securities Purchase Agreement, as
amended, provided that such fees and expenses do not exceed $800,000.
Pursuant to the Registration Rights Amendment, Purchasers holding
25% of the Registrable Securities (as defined below) have the right,
subject to certain limitations and restrictions, (i) to require the Company
at the request of such Purchasers on two separate occasions to effect a
registration of shares of Common Stock and Common Stock Equivalents held by
such Purchasers, and (ii) to require the Company to include shares of
Common Stock and Common Stock Equivalents then held by such Purchasers (on
a pro rata basis with other participating selling stockholders) in any
other registration by the Company of its equity securities under the
Securities Act. "Registrable Securities" means (i) any shares of Common
Stock or Common Stock Equivalents owned by the Purchasers at any time, (ii)
any shares of Common Stock issued or issuable upon the conversion, exercise
or exchange of any shares of Series A Preferred Stock or Series B Preferred
Stock owned by the Purchasers at any time, and (iii) any shares of Common
Stock issued with respect to the securities referred to in clauses (i) and
(ii) by way of a stock dividend, stock split or reverse stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or otherwise.
Pursuant to the Preferred Stock Certificates of Designation, if
the Company shall liquidate, dissolve or wind-up, before any payment or
distribution to holders of shares of junior stock or parity stock (other
than Series A Preferred Stock or Series B Preferred Stock, as the case may
be), holders of shares of Preferred Stock taken together will be entitled
to receive an amount equal to the greater of (x) the Liquidation Preference
(as defined below) with respect to each share of Preferred Stock held by
such holder as of the date of liquidation, or (y) the amount that would
have been received with respect to shares of Preferred Stock upon any such
liquidation if such shares had been converted to shares of Common Stock
immediately prior to the date of such liquidation. If, upon any such
liquidation, whether voluntary or involuntary, the assets to be distributed
to the holders of the Preferred Stock are insufficient to permit payment of
the full amount of the Liquidation Preference with respect to each share of
Preferred Stock, then the entire assets of the Company to be distributed
among the holders of the Preferred Stock will be distributed ratably among
such holders in accordance with the number of shares of Preferred Stock
held by each such holder. The "Liquidation Preference" is $100.00 per share
(as adjusted for any stock dividends, combinations or splits with respect
to such share), plus an amount equal to all accrued but unpaid dividends
(whether or not declared) on such share.
Pursuant to the Preferred Stock Certificates of Designation, the
holders of shares of Preferred Stock, in preference to the holders of
shares of Common Stock and of any shares of other capital stock of the
Company as to payment of dividends (other than Series A Preferred Stock or
Series B Preferred Stock, as the case may be), are entitled to receive
cumulative dividends at an annual rate per share equal to 6% of the
Liquidation Preference from and after the respective dates of issuance of
applicable shares of Preferred Stock. Dividends on each of the Series A
Preferred Stock and the Series B Preferred Stock will be (i) computed on
the basis of the Liquidation Preference; (ii) accrue and be payable
quarterly, in arrears, on the last business day of March, June, September
and December in each year (each such date being referred to as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date following the Second Closing; and (iii) payable in cash. Under the
terms of the Preferred Stock Certificates of Designation, accrued dividends
not paid within 10 days of any Quarterly Dividend Payment Date will accrue
dividends at an annual dividend rate of 8% of the Liquidation Preference
until paid in full.
Under the terms of the Preferred Stock Certificates of
Designation and subject to certain adjustment provisions as provided
therein, at any time from and after the respective dates of issuance of
applicable shares of Preferred Stock, each share of Preferred Stock is
convertible at the option of the holder into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the
Liquidation Preference, as of the conversion date by the applicable
conversion price as of the conversion date. The initial conversion price of
the Series A Preferred Stock is $2.50 per share, which is subject to
adjustment as provided in the Series A Certificate of Designation. The
initial conversion price of the Series B Preferred Stock is $4.00 per
share, which is subject to adjustment as provided in the Series B
Certificate of Designation.
Pursuant to the Preferred Stock Certificates of Designation,
subject to certain rights of holders of shares of Preferred Stock set forth
therein, the Company will, at any time following the fourth anniversary of
the Second Closing, have the right to redeem all, but not less than all, of
the outstanding shares of Series A Preferred Stock or Series B Preferred
Stock, as the case may be, within 45 days following any date on which the
market price per share of Common Stock for at least 20 out of 30
consecutive trading days immediately preceding such date, including the
last trading day of such period, is equal to or greater than 150% of the
conversion price of such series of Preferred Stock in effect as of the
first day of such 30-trading day period for an amount per share equal to
the Liquidation Preference as of the date of redemption.
Pursuant to the Preferred Stock Certificates of Designation, the
Company will, on the seventh anniversary of the Second Closing, redeem all,
but not less than all, of the outstanding shares of Series A Preferred
Stock and Series B Preferred Stock, for an amount per share equal to the
Liquidation Preference of such series of Preferred Stock as of such date.
Pursuant to the Preferred Stock Certificates of Designation, upon
the occurrence of a change of control, the Company will make an offer to
each holder of shares of Preferred Stock to repurchase all or any part
(subject to certain rights of holder pursuant to the Preferred Stock
Certificates of Designation) of each such holder's shares of Preferred
Stock at an offer price in cash equal to 101% of the Liquidation Preference
as of the change of control payment date.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit 1 Power of Attorney, dated March 20, 2000, relating to Stone
Street Fund 2000, L.P.
Exhibit 2 Power of Attorney, dated March 20, 2000, relating to Stone
Street 2000, L.L.C.
Exhibit 3 First Amendment to Securities Purchase Agreement, dated as of
May 5, 2000, by and among the Company and the Purchasers
Exhibit 4 Amendment No. 2 to Rights Agreement, dated as of May 5, 2000
Exhibit 5 Form of Amended and Restated Lock-up Agreement
Exhibit 6 First Amendment to Registration Rights Agreement, dated as of
May 5, 2000, by and among the Company and the Purchasers
Exhibit 7 Form of Warrant Agreement
Exhibit 8 Form of Certificate of Designation of Series A Convertible
Preferred Stock
Exhibit 9 Form of Certificate of Designation of Series B Convertible
Preferred Stock
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement is
true, complete and correct.
May 8, 2000
GOLDMAN, SACHS & CO.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS ADVISORS III, L.L.C.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III, L.P.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III GERMANY
CIVIL LAW PARTNERSHIP (with
limitation of liability)
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GOLDMAN, SACHS & CO. oHG
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
STONE STREET FUND 2000, L.P.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
STONE STREET 2000, L.L.C.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
<PAGE>
SCHEDULE II-A-i
The name, position and present principal occupation of each executive
officer of GS Advisors III, L.L.C., the sole general partner of GS Capital
Partners III, L.P. and GS Capital Partners III Offshore, L.P., are set
forth below.
The business address for all the executive officers listed below
except Barry S. Volpert is 85 Broad Street, New York, New York 10004. The
business address of Barry S. Volpert is 133 Fleet Street, London EC4A 2BB,
England.
All executive officers listed below are United States citizens.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
---------------------------------------------------------------------------------------------
<S> <C> <C>
Richard A. Friedman President Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Vice President Managing Director of Goldman, Sachs & Co.
Elizabeth C. Fascitelli Treasurer Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Vice President Managing Director of Goldman, Sachs & Co.
Henry Cornell Vice President Managing Director of Goldman, Sachs & Co.
Barry S. Volpert Vice President Managing Director of Goldman Sachs International
David J. Greenwald Assistant Secretary Managing Director of Goldman, Sachs & Co.
Esta E. Stecher Assistant Secretary Managing Director of Goldman, Sachs & Co.
James B. McHugh Assistant Secretary Vice President of Goldman, Sachs & Co.
Patrick P. Mulvihill Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Sarah Smith Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Dan H. Jester Assistant Treasurer Managing Director of Goldman, Sachs & Co.
David A. Viniar Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Katherine B. Enquist Vice President/Secretary Vice President of Goldman, Sachs & Co.
John E. Bowman Vice President Vice President of Goldman, Sachs & Co.
Katherine L. Nissenbaum Vice President Vice President of Goldman, Sachs & Co.
</TABLE>
<PAGE>
SCHEDULE II-B
The name, position and present principal occupation of each executive
officer and director of Goldman, Sachs & Co. Finanz GmbH which is the sole
managing general partner of Goldman, Sachs & Co. oHG are set forth below.
The business address for each of the executive officers and directors
listed below is MesseTurm, 60308 Frankfurt am Main, Germany.
Of the directors and executive officers listed below, Stefan J.
Jentzsch, Timothy C. Plaut and Alexander C. Dibelius are citizens of
Germany, Gregory T. Hoogkamp and Daniel W. Stanton are citizens of the
United States and Rudolf W. Ferscha is a citizen of Austria.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- --------------------------------------------------------------------------------
<S> <C> <C>
Stefan J. Jentzsch Managing Director Managing Director of Goldman, Sachs & Co. oHG
Gregory T. Hoogkamp Managing Director Managing Director of Goldman, Sachs & Co. oHG
Rudolf W. Ferscha Managing Director Executive Director of Goldman, Sachs & Co. oHG
Timothy C. Plaut Managing Director Managing Director of Goldman, Sachs & Co. oHG
Daniel W. Stanton Managing Director Managing Director of Goldman, Sachs & Co. oHG
Alexander C. Dibelius Managing Director Managing Director of Goldman, Sachs & Co. oHG
</TABLE>
<PAGE>
SCHEDULE II-C-i
The name, position and present principal occupation of each executive
officer of Stone Street 2000, L.L.C., the sole general partner of Stone
Street Fund 2000, L.P., are set forth below.
The business address for each of the executive officers listed below
is 85 Broad Street, New York, New York 10004.
All executive officers listed below except Sanjeev K. Mehra are United
States citizens. Sanjeev K. Mehra is a citizen of India.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Richard A. Friedman Vice President Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Vice President Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Vice President Managing Director of Goldman, Sachs & Co.
Sanjeev K. Mehra Vice President/Treasurer Managing Director of Goldman, Sachs & Co.
Peter G. Sachs Vice President Senior Director of The Goldman Sachs Group, Inc.
Peter M. Sacerdote President Advisory Director of Goldman, Sachs & Co.
David J. Greenwald Vice President Managing Director of Goldman, Sachs & Co.
Esta E. Stecher Vice President Managing Director of Goldman, Sachs & Co.
Patrick P. Mulvihill Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Sarah Smith Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Elizabeth C. Fascitelli Vice President Managing Director of Goldman, Sachs & Co.
Katherine B. Enquist Vice President/Secretary Vice President of Goldman, Sachs & Co.
Richard J. Stingi Vice President Vice President of Goldman, Sachs & Co.
John E. Bowman Vice President Vice President of Goldman, Sachs & Co.
Katherine L. Nissenbaum Vice President Vice President of Goldman, Sachs & Co.
</TABLE>
<PAGE>
SCHEDULE II-C-ii
The name and principal occupation of each member of the Stone
Street Investment Committee of Goldman, Sachs & Co., which exercises the
authority of Goldman, Sachs & Co. in managing Stone Street 2000, L.L.C.,
are set forth below.
The business address for each member listed below is 85 Broad
Street, New York, New York 10004.
All members listed below except Sanjeev K. Mehra are United
States citizens. Sanjeev K. Mehra is a citizen of India.
Name Present Principal Occupation
Peter M. Sacerdote Advisory Director of Goldman, Sachs & Co.
Peter G. Sachs Senior Director of The Goldman Sachs Group, Inc.
Richard A. Friedman Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Managing Director of Goldman, Sachs & Co.
Sanjeev K. Mehra Managing Director of Goldman, Sachs & Co.
<PAGE>
EXHIBITS
Exhibit 1 Power of Attorney, dated March 20, 2000, relating to Stone
Street Fund 2000, L.P.
Exhibit 2 Power of Attorney, dated March 20, 2000, relating to Stone
Street 2000, L.L.C.
Exhibit 3 First Amendment to Securities Purchase Agreement, dated as of
May 5, 2000, by and among the Company and the Purchasers
Exhibit 4 Amendment No. 2 to Rights Agreement, dated as of May 5, 2000
Exhibit 5 Form of Amended and Restated Lock-up Agreement
Exhibit 6 First Amendment to Registration Rights Agreement, dated as of
May 5, 2000, by and among the Company and the Purchasers
Exhibit 7 Form of Warrant Agreement
Exhibit 8 Form of Certificate of Designation of Series A Convertible
Preferred Stock
Exhibit 9 Form of Certificate of Designation of Series B Convertible
Preferred Stock
EXHIBIT 1 - POWER OF ATTORNEY
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that STONE STREET FUND 2000, L.P.
(the "Company") does hereby make, constitute and appoint each of Hans L.
Reich and Roger S. Begelman, acting individually, its true and lawful
attorney, to execute and deliver in its name and on its behalf whether the
Company is acting individually or as representative of others, any and all
filings required to be made by the Company under the Securities Exchange
Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect until
either revoked in writing by the undersigned or until such time as the
person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of March 20, 2000.
STONE STREET FUND 2000, L.P.
By: Stone Street 2000, L.L.C.
By: /s/ Kaca B. Enquist
- ---------------------------------
Name: Kaca B. Enquist
Title: Vice President
EXHIBIT 2 - POWER OF ATTORNEY
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that STONE STREET 2000, L.L.C. (the
"Company") does hereby make, constitute and appoint each of Hans L. Reich
and Roger S. Begelman, acting individually, its true and lawful attorney,
to execute and deliver in its name and on its behalf whether the Company is
acting individually or as representative of others, any and all filings
required to be made by the Company under the Securities Exchange Act of
1934, as amended, giving and granting unto each said attorney-in-fact power
and authority to act in the premises as fully and to all intents and
purposes as the Company might or could do if personally present by one of
its authorized signatories, hereby ratifying and confirming all that said
attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect until
either revoked in writing by the undersigned or until such time as the
person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of March 20, 2000.
STONE STREET 2000, L.L.C.
By: /s/ Kaca B. Enquist
- ---------------------------------
Name: Kaca B. Enquist
Title: Vice President
EXHIBIT 3 - FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
FIRST AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT
FIRST AMENDMENT (this "First Amendment") dated as of May 5, 2000, by
and among PROMEDCO MANAGEMENT COMPANY, a Delaware corporation (the
"Company"), GS CAPITAL PARTNERS III, L.P., a Delaware limited partnership
("GSCP"), and certain affiliates of GSCP set forth on the signature page of
this First Amendment (the "GSCP Affiliates", and collectively with GSCP and
including their respective successors and assigns, the "Investors", and
each individually, an "Investor").
WHEREAS, the Company and the Investors previously entered into a
Securities Purchase Agreement (the "Securities Purchase Agreement") dated
as of January 13, 2000; and
WHEREAS, the Company and the Investors desire to amend the Securities
Purchase Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; INTERPRETATION. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Securities Purchase Agreement has the meaning assigned to such term in the
Securities Purchase Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each reference
to "this Agreement" and each other similar reference contained in the
Securities Purchase Agreement shall from and after the effective date of
this First Amendment refer to the Securities Purchase Agreement as amended
hereby, except in any instance in the Securities Purchase Agreement where
any such reference relates to the date of the execution of the Securities
Purchase Agreement in which instance such reference shall relate to the
Securities Purchase Agreement without giving effect to this amendment.
SECTION 2. AMENDMENTS. The Securities Purchase Agreement is hereby
amended as follows:
(a) The second and third "Whereas" clauses are hereby amended and
restated in their entirety as follows:
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, at the second closing (the "Second Closing"), the
Company wishes to issue and sell to the Investors, and the Investors wish
to purchase from the Company, an aggregate of 425,000 shares of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share
(the "Series A Preferred Stock") and warrants (the "Warrants") to purchase
up to 125,000 shares of the Company's Series B Convertible Preferred Stock,
par value $0.01 per share (the "Series B Preferred Stock"; and together
with the Series A Preferred Stock, the "Preferred Stock"); and
WHEREAS, the Investors and the Company desire to provide for the
purchase and sale of the Notes, the GS Shares, the Series A Preferred Stock
and the Warrants and to establish certain rights and obligations in
connection therewith.
(b) The definitions of "Additional Financing" and "Certificate of
Designation" in Section 1.1 are hereby deleted.
(c) The following definitions from Section 1.1 are hereby amended and
restated in their entirety:
"Conversion Shares" shall mean the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and the Series B
Preferred Stock.
"Preferred Stock" shall mean the Series A Preferred Stock
and the Series B Preferred Stock.
"Second Closing Payment" shall be an amount in cash equal to
$795,000 payable to the Investors at the Second Closing as provided in
Section 2.4.
"Shareholder Rights Plan" shall mean the Agreement, dated as of
February 18, 1997, between the Company and Harris Trust Company, as Rights
Agent, as amended.
"Standstill Period" shall mean the period from the date hereof
until the later of (i) the third anniversary of the date hereof and (ii)
the date on which GSCP and the GSCP Affiliates and Affiliates controlled by
them beneficially own, in the aggregate, a number of shares of Common Stock
constituting less than 10.0% of the Second Closing Ownership Amount (as
such ownership may be adjusted from time to time for stock splits, reverse
stock splits, dividends paid in Common Stock, reclassifications of the
Common Stock, and other similar events).
"Transaction Documents" shall mean this Agreement, the Notes, the
Warrant Agreement, the Voting Agreements, the Lock-up Agreements, the
Series A Certificate of Designation, the Series B Certificate of
Designation, the Registration Rights Agreement and all other contracts,
agreements, schedules, certificates and other documents being delivered
pursuant to or in connection with this Agreement or the transactions
contemplated hereby or thereby.
(d) The following definitions are hereby added to Section 1.1:
"Amended and Restated Credit Agreement" shall have the
meaning ascribed thereto in Section 5.3.
"PIK Notes" shall have the meaning ascribed thereto in the Notes.
"Series A Certificate of Designation" shall have the meaning
ascribed thereto in Section 2.6(a)(iv).
"Series B Certificate of Designation" shall have the meaning
ascribed thereto in Section 2.6(a)(v).
"Second Closing Ownership Amount" shall mean the number of shares
of Common Stock beneficially owned by the Investors as of the Second
Closing (excluding the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock).
"Series A Preferred Stock" shall have the meaning ascribed
thereto in the recitals.
"Series B Preferred Stock" shall have the meaning ascribed
thereto in the recitals.
"Warrant Agreement" shall have the meaning ascribed thereto in
Section 2.6(a)(iii).
"Warrant Shares" shall mean the shares of Series B Preferred
Stock issuable upon exercise of the Warrants.
"Warrants" shall have the meaning ascribed thereto in the
recitals.
(e) The heading of Article II is hereby amended and restated in its
entirety as follows:
ARTICLE II
ISSUANCE AND SALE OF NOTES, GS SHARES, SERIES A PREFERRED STOCK
AND WARRANTS
(f) Section 2.4 is hereby amended and restated in its entirety as
follows:
2.4. Second Issuance, Purchase and Sale. Upon the terms and
subject to the conditions set forth herein, at the Second Closing, the
Company shall issue and sell to each Investor, and each Investor shall
purchase from the Company, the number of shares of Series A Preferred Stock
and Warrants set forth opposite such Investor's name on the signature page
of the First Amendment to this Agreement (i) for an aggregate cash purchase
price equal to $26,500,000, minus the sum of (x) the Second Closing
Payment, (y) any accrued and unpaid interest on the Notes through and
including the Second Closing Date and (z) the aggregate principal amount of
any PIK Notes issued to the Investors together with any accrued and unpaid
interest thereon through and including the Second Closing Date (the "Second
Closing Cash Purchase Price"), and (ii) in exchange for all of the Notes
and GS Shares issued to such Investor at the Initial Closing (the
transactions to occur at the Second Closing, the "Second Purchase");
provided, that the Investors shall have the right to reallocate among the
Investors the Series A Preferred Stock and Warrants to be purchased by each
Investor by delivering written notice of such reallocation to the Company
not less than three days prior to the Second Closing so long as such
reallocation does not change the total number of Series A Preferred Stock
and Warrants being acquired hereunder or the Second Closing Purchase Price.
The Company and the Investors agree that for U.S. federal, state and local
income Tax purposes, the portion of the Second Closing Cash Purchase Price
allocable to the Warrants shall be $547,797. The Company and the Investors
agree that they shall not take any position inconsistent with any such
allocation.
(g) Section 2.6(a) is hereby amended and restated in its entirety as
follows:
(a) At the Second Closing, the Company shall deliver to the
Investors the following:
(i) certificates representing the shares of Series A
Preferred Stock in the amounts set forth opposite such Investor's name
on the signature page to the First Amendment to this Agreement;
(ii) certificates representing the number of Warrants being
purchased by each Investor as set forth opposite such Investor's name
on the signature page to the First Amendment to this Agreement;
(iii) an executed copy of the Warrant Agreement, in the form
of Exhibit A to the First Amendment to this Agreement (the "Warrant
Agreement");
(iv) a copy of the Certificate of Designation of the Series
A Preferred Stock (the "Series A Certificate of Designation"), as
filed with the Secretary of State of the State of Delaware;
(v) a copy of the Certificate of Designation of the Series B
Preferred Stock (the "Series B Certificate of Designation"), as filed
with the Secretary of State of the State of Delaware;
(vi) a copy of the executed Amended and Restated Credit
Agreement and evidence, satisfactory to the Investors, that the
transactions contemplated thereunder shall have closed prior to or
simultaneously with the Second Closing;
(vii) an opinion of the Company's counsel, dated as of the
Second Closing Date, addressed to the Investors in the form of Exhibit
B to the First Amendment to this Agreement, which opinion shall be
satisfactory to the Investors;
(viii) a copy of the resolutions adopted by the Company's
stockholders at the Stockholders Meeting, which resolutions shall be
satisfactory to the Investors;
(ix) evidence, satisfactory to the Investors, that the
Preferred Designees have been appointed to the Board of Directors and
that the Board of Directors consists of ten directors effective as of
the Second Closing;
(x) evidence, satisfactory to the Investors, that the
Warrant Shares have been reserved for issuance and delivery;
(xi) evidence, satisfactory to the Investors, that the
Conversion Shares have been reserved for issuance and delivery upon
conversion of the Preferred Stock;
(xii) copies of all third-party consents required to be
obtained by the Company prior to the Second Closing as set forth on
Schedule 6.2(h), which consents shall be satisfactory to the
Investors;
(xiii) an Officers' Certificate, dated as of the Second
Closing Date, certifying that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied; and
(xiv) such other instruments and documents as the Investors
reasonably request.
(h) Section 2.6(b)(ii) is hereby amended by adding the words "and any
PIK Notes issued to the Investors prior to the Second Closing" after the
words "Initial Closing".
(i) The heading and preamble of Article III is hereby amended and
restated in its entirety as follows:
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor, as
of January 13, 2000 with respect to all representations and warranties and
as of May 5, 2000 with respect to all representations and warranties that
were modified by the First Amendment to this Agreement, and as of the
Second Closing Date with respect to all of the representations and
warranties (to the extent the Second Closing is consummated), as follows:
(j) Section 3.2 is hereby amended and restated in its entirety as
follows:
3.2. Due Authorization. The Company has all right, corporate
power and authority to enter into this Agreement and each of the other
Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
the Company of this Agreement and each of the other Transaction Documents
to which it is a party, the issuance and sale of the Notes, the GS Shares,
the Series A Preferred Stock and the Warrants by the Company and the
compliance by the Company with each of the provisions of this Agreement and
each of the other Transaction Documents to which it is a party (including
the reservation and issuance of the Conversion Shares, the reservation and
issuance of Warrant Shares, and the consummation by the Company of the
transactions contemplated hereby and thereby) (a) are within the corporate
power and authority of the Company and (b) have been duly authorized by all
requisite corporate proceedings on the part of the Company, except for the
approval by the stockholders of the Company referenced in Section 5.6. The
Board of Directors has determined that it is advisable and in the best
interest of the Company's stockholders for the Company to consummate the
issuance and sale of the Notes, the GS Shares, the Series A Preferred Stock
and the Warrants upon the terms and subject to the conditions set forth in
this Agreement, and has unanimously recommended that the Company's
stockholders approve the transactions referenced in Section 5.6. As of May
5, 2000, the Board of Directors consists of eight directors and the Initial
Noteholder Designee has been duly appointed to serve as a member of the
Board of Directors and the Executive Committee of the Board of Directors as
of January 20, 2000. This Agreement has been, and each of the other
Transaction Documents to which the Company is a party when executed and
delivered by the Company will be, duly and validly executed and delivered
by the Company, and this Agreement constitutes, and each of such other
Transaction Documents when executed and delivered by the Company will
constitute, a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforceability
against the Company may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect
relating to the rights of creditors generally. The GS Shares have been duly
and validly issued and are outstanding, fully paid and nonassessable. At
the Second Closing, the Conversion Shares will be validly reserved for
issuance, and upon issuance in accordance with the Series A Certificate of
Designation and Series B Certificate of Designation will be duly and
validly issued and outstanding, fully paid and nonassessable. At the Second
Closing, the Warrant Shares will be validly reserved for issuance, and upon
issuance in accordance with the terms of the Warrants will be duly and
validly issued and outstanding, fully paid and nonassessable.
(k) Section 3.3 is hereby amended and restated in its entirety as
follows:
3.3. Capitalization. As of January 13, 2000 and May 5, 2000, the
authorized capital stock of the Company consists of (i) 50,000,000 shares
of Common Stock, of which 21,732,423 shares are issued and outstanding and
(ii) 20,000,000 shares of preferred stock, par value $0.01 per share, of
which no shares are issued and outstanding. All of the issued and
outstanding shares of Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Other than the shares of
Series A Preferred Stock to be issued to the Investors at the Second
Closing and the Warrant Shares, no shares of capital stock of the Company
are entitled to preemptive rights. Except as set forth on Schedule 3.3, as
disclosed in the SEC Reports or as contemplated by this Agreement or the
other Transaction Documents, there are no outstanding subscription rights,
options, warrants, convertible or exchangeable securities or other rights
of any character whatsoever relating to issued or unissued capital stock of
the Company, or any Commitments of any character whatsoever relating to
issued or unissued capital stock of the Company or pursuant to which the
Company or any of the Subsidiaries is or may become bound to issue or grant
additional shares of its capital stock or related subscription rights,
options, warrants, convertible or exchangeable securities or other rights,
or to grant preemptive rights. Except as set forth on Schedule 3.3, as
disclosed in the SEC Reports or as contemplated by this Agreement or the
other Transaction Documents, (i) the Company has not agreed to register any
securities under the Securities Act or under any state securities law or
granted registration rights to any Person or entity and (ii) there are no
voting trusts, stockholders agreements, proxies or other Commitments or
understandings in effect to which the Company is a party or of which it has
Knowledge with respect to the voting or transfer of any of the shares of
Common Stock. Except as set forth on Schedule 3.3, to the extent that any
options, warrants or any of the other rights described above are
outstanding, neither the issuance and sale of the Notes, the GS Shares, the
Preferred Stock, the Warrants, nor the issuance of any Conversion Shares or
the Warrant Shares will result in an adjustment of the exercise or
conversion price or number of shares issuable upon the exercise or
conversion of any such options, warrants or other rights.
(l) Section 3.9 of the Securities Purchase Agreement is hereby amended
by adding the following paragraph (c) to the end thereof:
(c) The Company has received all consents required to be obtained
prior to the execution and delivery of the First Amendment to this
Agreement including, without limitation, the consent of the Required
Lenders under the Credit Agreement to the transactions contemplated hereby
and by the other Transaction Documents. The Company has delivered to the
Investors a complete and correct copy of a commitment letter from General
Electric Capital Corporation relating to its agreement to purchase $20
million in aggregate principal amount of the Company's Tranche B Term Notes
under the Amended and Restated Credit Agreement.
(m) Section 3.20 of the Securities Purchase Agreement is hereby
amended and restated in its entirety as follows:
3.20. Offering of the Notes, the GS Shares, the Series A
Preferred Stock and the Warrants. (a) It is not necessary in connection
with the offer, sale and delivery of the Notes, the GS Shares, the Series A
Preferred Stock or the Warrants to the Investors to register the Notes, the
GS Shares, the Series A Preferred Stock or the Warrants under the
Securities Act. Until such time as the exchange notes are issued pursuant
to the Exchange and Registration Rights Agreement or the Notes or exchange
notes are otherwise registered pursuant to an effective registration
statement under the Securities Act, it is not necessary to qualify an
indenture relating to the Notes or exchange notes under the TIA.
(b) The Company has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer,
sell or solicit any offer to buy, any security of a type or in a manner
which would be integrated with the sale of the Notes, the GS Shares, the
Series A Preferred Stock or the Warrants and require any of the Notes, the
GS Shares, the Series A Preferred Stock or the Warrants to be registered
under the Securities Act. None of the Company, its Affiliates or any person
acting on its or any of their behalf has engaged or will engage in any form
of general solicitation or general advertising (within the meaning of Rule
502(c) under the Securities Act) in connection with the offering of the
Notes, the GS Shares, the Preferred Stock or the Warrants. With respect to
any Notes, GS Shares, Series A Preferred Stock or Warrants, if any, sold in
reliance upon the exemption afforded by Regulation S: (i) none of the
Company, its Affiliates or any person acting on its or their behalf has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (ii) each of the Company and its Affiliates and any
Person acting on its or their behalf has complied and will comply with the
offering restrictions set forth in Regulation S.
(c) The Notes are eligible for resale pursuant to Rule 144A and
will not, as of the date hereof, be of the same class as securities listed
on a national securities exchange registered under Section 6 of the
Exchange Act or quoted on a U.S. automated interdealer quotation system.
(n) Section 3.22 is hereby amended and restated in its entirety as
follows:
3.22. Solvency. The Company is not, and after giving effect to
the issuance and sale of the Notes, the GS Shares, the Series A Preferred
Stock and the Warrants, and the exercise of the Warrants and the purchase
of the Warrant Shares in connection therewith, and the application of the
proceeds therefrom will not be, insolvent within the meaning of Title 11 of
the United States Code or any comparable state law provision.
(o) Section 4.1 is hereby amended and restated in its entirety as
follows:
4.1. Acquisition for Investment. Such Investor is acquiring the
Notes, the GS Shares, the Series A Preferred Stock and the Warrants for its
own account, for investment and not with a view to the distribution thereof
within the meaning of the Securities Act.
(p) Section 4.2 is hereby amended and restated in its entirety as
follows:
4.2. Restricted Securities. Such Investor understands that (i)
the Notes, the GS Shares, the Series A Preferred Stock and the Warrants
will not be registered under the Securities Act or any state securities
laws by reason of their issuance by the Company in a transaction exempt
from the registration requirements thereof and (ii) the Notes, the GS
Shares, the Series A Preferred Stock, the Warrants, the Conversion Shares
and the Warrant Shares, may not be sold unless such disposition is
registered under the Securities Act and applicable state securities laws or
is exempt from registration thereunder.
(q) Section 5.1(iii) is hereby amended by deleting the words
"Certificate of Designation" and inserting in place thereof the words
"Series A Certificate of Designation and Series B Certificate of
Designation".
(r) Section 5.3 is hereby amended and restated in its entirety as
follows:
5.3. Bank Financing. Prior to or concurrently with the Second
Closing, the Company shall have entered into an amended and restated credit
agreement with its lenders on terms satisfactory to the Investors in their
sole discretion (the "Amended and Restated Credit Agreement"), and the
closing thereunder shall have occurred. Without limiting the generality of
the foregoing, the Amended and Restated Credit Agreement shall provide,
among other things, for (i) a commitment from General Electric Capital
Corporation to purchase $20 million in aggregate principal amount of the
Company's Tranche B Term Notes; and (ii) Bank of America, N.A.'s revolving
credit commitment to be increased by at least $5 million from its existing
revolving credit commitment under the Credit Agreement. In determining
whether the Amended and Restated Credit Agreement is satisfactory to the
Investors in their sole discretion, the Investors shall not be deemed to
have accepted or agreed to any terms contained in any draft documents or
term sheets disclosed to the Investors prior to the execution and delivery
of the First Amendment to this Agreement.
(s) Section 5.6 is hereby amended and restated in its entirety as
follows:
5.6. Proxy Statement; Stockholders Meeting. The Company shall
hold the Stockholders Meeting as soon as practicable after the date hereof
for the purpose of acting upon this Agreement and the transactions to be
consummated at the Second Closing to the extent requiring stockholder
approval, including, without limitation, the issuance and sale of the
Series A Preferred Stock and the Warrants to the Investors; provided,
however, that at the request of GSCP, the Company shall adjourn the
Stockholders Meeting from time to time until all of the conditions set
forth in Article VI (other than the condition set forth in Section 6.1(c)
and other than those conditions that by their nature are to be satisfied at
the Second Closing) are satisfied or waived, such that the Stockholders
Meeting shall take place on the same day as the Second Closing in
accordance with Section 2.5. The Company shall recommend that its
stockholders approve this Agreement and the transactions contemplated
hereby requiring such stockholder approval. The Company and the Investors
shall cooperate in the preparation of the Proxy Statement to be mailed to
the Company's stockholders in connection with the solicitation of such
approval and shall use their reasonable best efforts to take, or cause to
be taken, all actions necessary to prepare the Proxy Statement, file the
Proxy Statement with the SEC and respond to any comments it may have, and
distribute the Proxy Statement to the Company's stockholders as
expeditiously as practicable; provided, that the Company shall file the
Proxy Statement with the SEC no later than January 31, 2000 and the Company
shall file a supplement to the Proxy Statement in connection with the
execution of the First Amendment to this Agreement no later than May 15,
2000. The Company shall give the Investors a reasonable opportunity to
review and comment on the Proxy Statement and related communications with
stockholders of the Company, and the Investors shall have the right to
consent to any descriptions of or references to (i) the Investors or any of
their Affiliates, and (ii) the Transaction Documents and the other
agreements executed concurrently therewith and the transactions
contemplated thereby in the Proxy Statement or such communications, which
consent shall not be unreasonably withheld or delayed.
(t) Section 5.9(b) is hereby amended and restated in its entirety as
follows:
(b) From the Second Closing Date and for so long as the Investors
and their Affiliates collectively beneficially own not less than (i) 66
2/3% of the Second Closing Ownership Amount (as such ownership may be
adjusted for stock splits, reverse stock splits, dividends paid in Common
Stock, reclassifications of the Common Stock, and other similar events),
GSCP shall have the right to designate, at all times and from time to time,
three directors of the Company; (ii) 33 1/3% of the Second Closing
Ownership Amount (as such ownership may be adjusted for stock splits,
reverse stock splits, dividends paid in Common Stock, reclassifications of
the Common Stock, and other similar events), GSCP shall have the right to
designate, at all times and from time to time, two directors of the
Company; and (iii) 10.0% of the Second Closing Ownership Amount (as such
ownership may be adjusted for stock splits, reverse stock splits, dividends
paid in Common Stock, reclassifications of the Common Stock, and other
similar events), GSCP shall have the right to designate, at all times and
from time to time, one director of the Company (individuals designated
pursuant to this paragraph, the "Preferred Designees", and together with
the Noteholder Designees, the "Investor Designees"). The Initial Preferred
Designees elected pursuant to paragraph (c) below and the Initial
Noteholder Designee elected prior to the Initial Closing shall be the
initial Preferred Designees.
(u) Section 5.9(f) is hereby amended and restated in its entirety as
follows:
(f) After the date hereof, without the prior written consent of
GSCP, the Board of Directors (i) shall not consist of more than eight
members so long as the Investors and their Affiliates own any Notes and
(ii) shall not consist of more than ten members so long as the Investors
and their Affiliates beneficially own at least 10.0% of Second Closing
Ownership Amount (as such ownership may be adjusted for stock splits,
reverse stock splits, dividends paid in Common Stock, reclassifications of
the Common Stock, and other similar events).
(v) Section 5.10 is hereby amended and restated in its entirety as
follows:
5.10. Certificates of Designation. The Series A Certificate of
Designation, in the form of Exhibit C to the First Amendment to this
Agreement, and the Series B Certificate of Designation, in the form of
Exhibit D to the First Amendment to this Agreement, set forth the terms,
designations, powers, preferences and relative participation, optional and
other special rights, qualifications, limitations and restrictions of the
Series A Preferred Stock and the Series B Preferred Stock, respectively.
The Company shall, prior to or concurrently with the Second Closing, cause
the Series A Certificate of Designation and Series B Certificate of
Designation to be filed with the Secretary of State of the State of
Delaware.
(w) Section 5.15 is hereby amended and restated as follows:
5.15. Transfer Taxes. The Company shall be responsible for any
Liability with respect to any transfer, stamp or similar Taxes that may be
payable in connection with the execution, delivery and performance of this
Agreement including, without limitation, any such Taxes with respect to the
issuance or transfer of the Notes, the GS Shares, the Series A Preferred
Stock, the Warrants, the Conversion Shares or the Warrant Shares.
(x) Section 5.16(a) is hereby amended and restated as follows:
(a) So long as any Notes, GS Shares, Preferred Stock, Warrants or
Conversion Shares are outstanding, the Company shall file all reports
required to be filed by it under the Securities Act and the Exchange Act
and after the Second Closing, shall take such further action as the
Investors may reasonably request, all to the extent required to enable the
Investors to sell any of the foregoing securities pursuant to and in
accordance with Rule 144. Such action shall include, but not be limited to,
making available adequate current public information meeting the
requirements of paragraph (c) of Rule 144. During the period of two years
following the Initial Closing, the Company shall not, and shall not permit
any of its Affiliates to, resell any of the Notes which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
(y) Section 5.18(a) is hereby amended and restated as follows:
(a) From the Second Closing Date and for so long as the Investors
collectively beneficially own not less than 10.0% of the total number of
shares of Common Stock outstanding from time to time, in the event the
Company proposes to issue any capital stock of any kind (including any
Common Stock, preferred stock, warrants, options or securities or units
comprising securities convertible into or exchangeable for Common Stock or
preferred stock or rights to acquire the same) of the Company, other than
(1) pursuant to an employee or non-management director stock option plan,
stock bonus plan, stock purchase plan or other management equity program or
plan, (2) pursuant to any merger, share exchange or acquisition pursuant to
which shares of Common Stock are exchanged for, or issued upon cancellation
or conversion of, equity securities of an entity engaged primarily in, or
to acquire assets primarily for use in, the business conducted by the
Company and the Subsidiaries or a business reasonably related to the
business conducted by the Company and the Subsidiaries, or (3) securities
issuable upon exercise of previously issued warrants, options or other
rights to acquire capital stock or upon conversion of previously issued
securities convertible into capital stock, then the Company shall:
(i) deliver to the Investors written notice setting forth in
reasonable detail (1) the terms and provisions of the securities
proposed to be issued (the "Proposed Securities"); (2) the price and
other terms of the proposed sale of such securities; (3) the amount of
such securities proposed to be issued; and (4) such other information
as the Investors may reasonably request in order to evaluate the
proposed issuance; and
(ii) offer to issue to the Investors in the aggregate a
portion of the Proposed Securities equal to a percentage determined by
dividing (x) the number of shares of Common Stock beneficially owned
by the Purchasers (assuming exercise of the Warrants (and conversion
of the Warrant Shares upon exercise of the Warrants into Common Stock)
and conversion of all of the shares of Series A Preferred Stock into
Common Stock), by (y) the total number of shares of Common Stock then
outstanding.
The Investors must exercise the purchase rights hereunder within ten
business days after receipt of such notice from the Company.
(z) Section 5.19(a) is hereby amended by deleting the words "the
Investors" and inserting in place thereof the words "GSCP and the GSCP
Affiliates".
(aa) Section 5.19(a)(A) is hereby amended by deleting the words "the
Investors" and inserting in place thereof the words "GSCP and the GSCP
Affiliates".
(bb) Section 5.19(a)(B) is hereby amended by deleting the words
"the Investors or the Investor Designees" and inserting in place thereof
the words "GSCP and the GSCP Affiliates or Investor Designees appointed by
GSCP".
(cc) Section 5.19(b) is hereby amended by inserting the words "Series
A" before the words "Certificate of Designation".
(dd) Section 5.20 is hereby amended by inserting the words "Series A"
before the words "Preferred Stock".
(ee) Section 5.22 is hereby amended and restated in its entirety as
follows:
5.22. Use of Proceeds. The proceeds from the sale of the Notes,
the GS Shares, the Series A Preferred Stock and the Warrants shall be used
for general corporate purposes as shall be determined by the Board of
Directors.
(ff) Section 6.1(c) is hereby amended and restated as follows:
(c) the issuance of the Series A Preferred Stock and the Warrants
to the Investors in connection with the Second Purchase shall have been
approved and adopted by the requisite vote of the stockholders of the
Company in accordance with applicable NASDAQ rules and the Company's
certificate of incorporation and by-laws.
(gg) Section 6.2(a) is hereby amended and restated as follows:
(a) each of the representations and warranties of the Company
contained in this Agreement shall be true and correct (disregarding for
this purpose all references in such representations and warranties to any
materiality, Material Adverse Effect, Knowledge or similar qualifications)
when made (other than representations and warranties that were modified by
the First Amendment to this Agreement, which shall be true and correct as
of May 5, 2000) and as of the Second Closing (except to the extent such
representations and warranties are made as of a particular date, in which
case such representations and warranties shall have been true and correct
in all material respects as of such date), except for failures to be true
and correct which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect;
(hh) Section 6.2(c) is hereby amended by deleting the words
"Certificate of Designation" and inserting in place thereof "Series A
Certificate of Designation and Series B Certificate of Designation".
(ii) Section 6.2(e) is hereby amended and restated in its entirety as
follows:
(e) the Company shall have entered into the Amended and Restated
Credit Agreement on terms satisfactory to the Investors in their sole
discretion as provided in Section 5.3 hereof, and the closing of the
transactions contemplated thereunder shall occur prior to or simultaneously
with the Second Closing;
(jj) Section 6.2(h) is hereby amended by deleting the word "and" at
the end thereof.
(kk) Section 6.2(i) is hereby amended by deleting clause (i) thereof
and inserting in place thereof the following:
(i) the Warrant Shares shall have been duly authorized and
reserved for issuance;
(j) the Company shall have paid in full all interest that is due
and payable under the Notes; and
(k) the Company shall have made the deliveries set forth in
Section 2.6(a) hereof.
(ll) Section 7.1(b) is hereby amended and restated in its entirety as
follows:
(b) by either the Investors or the Company if the Second Closing
shall not have been consummated by June 15, 2000; or
(mm) Section 8.5(c) is hereby amended and restated in its entirety as
follows:
(c) The parties agree to treat any indemnification payments made
by the Company pursuant to this Agreement for Tax purposes as adjustments
to the purchase price of the Notes, the GS Shares, the Series A Preferred
Stock or the Warrants, as the case may be.
(nn) Section 9.1 is hereby amended by deleting the words "$700,000"
and inserting in place thereof "$800,000".
(oo) Section 9.3 is hereby amended by adding the words ", the
Warrants" immediately after the words "GS Shares".
(pp) Section 9.5 is hereby amended by adding the words ", the
Warrants" immediately after each instance in which the words "GS Shares"
appear therein.
(qq) The references on the signature to the Securities Purchase
Agreement as to the number of shares of Preferred Stock each Investor is
purchasing at the Second Closing are hereby deleted.
SECTION 3. COUNTERPARTS; EFFECTIVENESS. This Amendment may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective when each party hereto
shall have received counterparts hereof signed by all of the other parties
hereto.
SECTION 4. MISCELLANEOUS. Except as expressly set forth in this
Amendment, the Securities Purchase Agreement shall otherwise remain
unchanged and in full force and effect and remain binding upon the parties
hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment or have caused this Amendment to be duly executed by their
respective authorized officers as of the day and year first above written.
PROMEDCO MANAGEMENT COMPANY
By: /s/ Robert D. Smith
-------------------------------
Name: Robert D. Smith
Title: Chief Financial Officer
GS CAPITAL PARTNERS III, L.P.
315,858 shares of Series A Preferred
By: GS Advisors III, L.L.C., Stock
its general partner
By: /s/ John E. Bowman
------------------------------- 92,899 Warrants
Name: John E. Bowman
Title: Vice President
GS CAPITAL PARTNERS III OFFSHORE, L.P.
86,833 shares of Series A Preferred
By: GS Advisors III, L.L.C., Stock
its general partner
By: /s/ John E. Bowman
------------------------------- 25,539 Warrants
Name: John E. Bowman
Title: Vice President
GOLDMAN, SACHS & CO.
VERWALTUNGS GMBH 14,582 shares of Series A Preferred
Stock
By: /s/ Terence M. O'Toole
------------------------------- 4,289 Warrants
Name: Terence M. O'Toole
Title: Managing Director
and
By: /s/ John E. Bowman
-------------------------------
Name: John E. Bowman
Title: Registered Agent
STONE STREET FUND 2000, L.P.
By: Stone Street 2000, L.L.C., 7,727 shares of Series A Preferred
its general partner Stock
By: /s/ John E. Bowman
------------------------------- 2,273 Warrants
Name: John E. Bowman
Title: Vice President
EXHIBIT 4 - AMENDMENT NO. 2 TO RIGHTS AGREEMENT
AMENDMENT NO. 2 TO
RIGHTS AGREEMENT
Amendment No. 2 (this "Amendment"), dated as of May 5, 2000, to
the Rights Agreement, dated as of February 18, 1997 (the "Rights
Agreement"), between ProMedCo Management Company, a Delaware corporation
(the "Company") and Harris Trust and Savings Bank, an Illinois Banking
Corporation (the "Rights Agent"), at the direction of the Company.
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or amend the
Rights Agreement in accordance with Section 27 thereof;
WHEREAS, all acts and things necessary to make this Amendment
valid and enforceable have been performed and done;
WHEREAS, on December 27, 1999, the Board of Directors resolved to
adopt Amendment No. 1 to Rights Agreement; and
WHEREAS, on May 5, 2000, the Board of Directors resolved to adopt
this Amendment No. 2 to Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the Rights Agreement is hereby amended as
follows:
1. Section 1(a) of the Rights Agreement is hereby amended to read
in its entirety as follows:
"Acquiring Person" shall mean, subject to the next sentence,
any Person (as such term is hereinafter defined) who or which,
together with any Affiliates and Associates of such Person, shall
be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Company, (ii) any Subsidiaries of the
Company, (iii) any employee benefit plan of the Company or of any
Subsidiaries of the Company, (iv) any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan, or (v) any of the Goldman Stockholders
(as such term is hereinafter defined), unless such Goldman
Stockholders subsequently become the Beneficial Owner of more
than the Grandfathered Amount of Common Shares and (B) no Person
shall be deemed to be an Acquiring Person, either (x) as a result
of the acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the
proportional number of Common Shares beneficially owned by such
Person together with all Affiliates and Associates of such
Person; except that if (1) a Person would become an Acquiring
Person (but for the operation of this sub clause (x)) as a result
of the acquisition of Common Shares by the Company and (2) after
such share acquisition by the Company, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (y) if (1) within 8 days after
such Person would otherwise have become an Acquiring Person (but
for the operation of this sub-clause (y)), such Person notifies
the Board of Directors that such Person did so inadvertently and
(2) within 2 days after such notification, such Person divests a
sufficient number of Common Shares so that such Person is the
Beneficial Owner of less than 15% of the outstanding Common
Shares following such divestiture.
2. Section 1(f) of the Rights Agreement is hereby amended to read
in its entirety as follows:
"Common Shares" when used with reference to the Company shall
mean the shares of Common Stock, par value $0.01 per share, of the Company
and securities convertible into or exchangeable for shares of such Common
Stock. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
3. The following definitions are hereby added to Section 1:
"Goldman Stockholders" shall mean each of GS Capital
Partners III, L.P., GS Capital Partners III Offshore, L.P.,
Goldman, Sachs & Co. Verwaltungs GmbH, Stone Street Fund 2000,
LLC and their respective Affiliates, Associates, successors and
assigns and each of their respective, partners, stockholders,
members, officers and directors.
"Grandfathered Amount" shall mean, with respect to the
Goldman Stockholders, as of any date, an amount equal to the sum
of (i) all Common Shares of the Company beneficially owned by the
Goldman Stockholders as of January 13, 2000, (ii) all Common
Shares the Goldman Stockholders become the Beneficial Owner of
after January 13, 2000, pursuant to, and in accordance with the
terms of, the Securities Purchase Agreement, dated as of January
13, 2000, as amended by the First Amendment to Securities
Purchase Agreement (together, the "Amended Securities Purchase
Agreement"), dated as of May ___, 2000, by and among the Company
and the Investors (as defined therein) and the other Transaction
Documents (as defined therein) entered into in connection with
the Amended Securities Purchase Agreement, (iii) Ordinary Course
Broker Dealer Shares, and (iv) an additional 1,400,000 Common
Shares (other than Ordinary Broker Dealer Shares).
"Ordinary Course Broker Dealer Shares" shall mean Common
Shares, the beneficial ownership of which is acquired in
connection with the activities of a broker or dealer registered
under Section 15 of the Exchange Act, including, but not limited
to, the acquisitions of beneficial ownership of such shares as a
result of any market-making or underwriting activities (including
any shares acquired for the investment account of a broker or
dealer in connection with such underwriting activities), or the
acquisition of Common Shares as a result of the exercise of
investment or voting discretion authority with respect to any of
its customer accounts, or the acquisition in good faith of such
shares in connection with a debt previously contracted.
4. Section 27 of the Rights Agreement is hereby amended to read
in its entirety as follows:
The Company may from time to time supplement or amend this
Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, or to make any
other provisions with respect to the Rights which the Company may
deem necessary or desirable, any such supplement or amendment to
be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be
amended in any manner which would adversely affect the interests
of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of such person). Without limiting the
foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower
the thresholds in Sections 1(a) and 3 hereof to not less than the
greater of (x) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be
beneficially owned by any Person (other than the Company, or any
Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan) and (y) 10%.
Notwithstanding anything in this Agreement to the contrary, (i)
no supplement or amendment that changes the rights and duties of
the Rights Agent under this Agreement shall be effective without
the written consent of the Rights Agent and (ii) the Company
shall not amend, modify or supplement any provision of this
Agreement which adversely affects the rights and benefits of any
Goldman Stockholder under any such provision in any such case
without the prior written consent of the Goldman Stockholders. It
is understood and agreed that the Goldman Stockholders are each a
third party beneficiary to this Rights Agreement and may enforce
the provisions of this Section as if it were a party to the
Rights Agreement.
5. The Rights Agreement shall not otherwise be supplemented or
amended by virtue of this Amendment, but shall remain in full force and
effect. This Amendment may be executed in one or more counterparts, all of
which shall be considered one and the same amendment and each of which
shall be deemed an original.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed, all on the day and year first above written.
Attest: PROMEDCO MANAGEMENT COMPANY
By: By: /s/ Robert D. Smith
---------------------- ----------------------------
Name Name: Robert D. Smith
Title: Title: Chief Financial Officer
Attest: HARRIS TRUST AND SAVINGS BANK,
AS RIGHTS AGENT
By: By: /s/ Mark Asbury
---------------------- ----------------------------
Name Name: Mark Asbury
Title: Title: Vice President
EXHIBIT 5 - FORM OF AMENDED AND RESTATED LOCK-UP AGREEMENT
May 5, 2000
GS Capital Partners III, L.P.
GS Capital Partners III Offshore, L.P.
Goldman, Sachs & Co. Verwaltungs GMBH
Stone Street Fund 2000, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Re: Sale of ProMedCo Management Company Securities
----------------------------------------------
Ladies and Gentlemen:
The undersigned is a holder of securities of ProMedCo Management
Company, a Delaware Corporation (the "Company"), and understands that the
Company and GS Capital Partners III, L.P., GS Capital Partners III
Offshore, L.P., Goldman, Sachs & Co. Verwaltungs GMBH and Stone Street Fund
2000, L.P. (collectively, the "Purchaser") have entered into a Securities
Purchase Agreement, dated as of January 13, 2000, and are simultaneously
herewith entering into a First Amendment to Securities Purchase Agreement
(as amended, the "Purchase Agreement"), which provides, among other things,
for the acquisition by the Purchaser of certain securities of the Company
(the "Acquisition") upon the terms and subject to the conditions set forth
therein. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
To facilitate the Acquisition and as a material inducement for
the Purchaser to enter into the Purchase Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees that subject to the next paragraph
hereof, (i) during a period of six months from the date hereof (the
"Initial Lock-up Period"), the undersigned will not, directly or
indirectly, (x) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of or
transfer (collectively, "Transfer") any shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock") or any securities
convertible into or exchangeable or exercisable for Common Stock, owned by
the undersigned or with respect to which the undersigned has the power of
disposition as of the date hereof, or (y) enter into any swap or any other
agreement or any transaction that Transfers, in whole or in part, directly
or indirectly, the economic consequence of the undersigned's ownership of
the Common Stock as of the date hereof, whether any such swap or
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, and (ii) for a period of eighteen months
following the end of the Initial Lock-up Period, the undersigned will not,
directly or indirectly, (x) Transfer greater than 25% of the undersigned's
shares of Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, owned by the undersigned or with respect
to which the undersigned has the power of disposition as of the date
hereof, or (y) enter into any swap or any other agreement or any
transaction that Transfers, in whole or in part, directly or indirectly,
greater than 25% of the economic consequence of the undersigned's ownership
of the Common Stock as of the date hereof, whether any such swap or
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
Notwithstanding the foregoing, the undersigned may Transfer any
and all of its shares of Common Stock (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by
the restrictions set forth herein, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any
such Transfer shall not involve a disposition for value, (iii) with the
prior written consent of the Purchaser, or (iv) at any time after the
Second Closing Date and following the occurrence of a Purchaser Transfer
Event (as defined below), Transfer shares of Common Stock in an amount up
to the Released Amount (as defined below). For purposes of subclause (iv)
(A) a "Purchaser Transfer Event" shall be deemed to have occurred on the
date the Purchaser Transfers in excess of 25% of the shares of Common Stock
beneficially owned by the Purchaser as of the Second Closing Date to a
Person who or which is not an Affiliate of the Purchaser and (B) the
"Released Amount", as at any date, shall mean a number of shares of Common
Stock equal to the number of shares of Common Stock beneficially owned by
the undersigned in the date hereof multiplied by a fraction, the numerator
of which is the number of shares of Common Stock sold or transferred by the
Purchaser prior to such date in excess of 25% of the shares of Common Stock
beneficially owned by the Purchaser as of the Second Closing and the
denominator of which is the number of shares of Common Stock equal to 75%
of the shares of Common Stock beneficially owned by the Purchaser as of the
Second Closing (as such numbers may be adjusted for stock splits, reverse
stock splits, dividends paid in Common Stock, reclassifications of the
Common Stock, and other similar events). For purposes hereof, "immediate
family" shall mean any relationship by blood, marriage or adoption, not
more remote than first cousin.
The undersigned understands that the Company and the Purchaser
are relying upon this letter in proceeding toward consummation of the
Acquisition. The undersigned further understands that this letter is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
This letter shall terminate on the earlier to occur of (i) the
Second Closing Termination Date and (ii) the date on which the Purchaser
owns less than 10.0% of the number of shares of Common Stock beneficially
owned by the Purchaser and its affiliates as of the Second Closing, as such
number may be adjusted for stock splits, reverse stock splits, dividends
paid in Common Stock, reclassifications of the Common Stock, and other
similar events.
The undersigned and the Purchaser acknowledge that this letter
supersedes the letter dated January 13, 2000 from the undersigned to the
Purchaser and that such letter shall be deemed to be terminated as of the
execution of this letter.
Very truly yours,
---------------------------------
Exact Name of Shareholder
---------------------------------
Authorized Signature
EXHIBIT 6 - FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
FIRST AMENDMENT
TO
REGISTRATION RIGHTS AGREEMENT
FIRST AMENDMENT (this "First Amendment") dated as of May 5, 2000, by
and among PROMEDCO MANAGEMENT COMPANY, a Delaware corporation (the
"Company"), GS CAPITAL PARTNERS III, L.P., a Delaware limited partnership
("GSCP"), and certain affiliates of GSCP set forth on the signature page of
this First Amendment (the "GSCP Affiliates", and collectively with GSCP and
including their respective successors and permitted assigns, the "GSCP
Parties").
WHEREAS, the Company and the GSCP Parties previously entered into a
Registration Rights Agreement (the "Registration Rights Agreement") dated
as of January 13, 2000; and
WHEREAS, the Company and the GSCP Parties desire to amend the
Registration Rights Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; INTERPRETATION. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Registration Rights Agreement has the meaning assigned to such term in the
Registration Rights Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each reference
to "this Agreement" and each other similar reference contained in the
Registration Rights Agreement shall from and after the effective date of
this First Amendment refer to the Registration Rights Agreement as amended
hereby, except in any instance in the Registration Rights Agreement where
any such reference relates to the date of the execution of the Registration
Rights Agreement in which instance such reference shall relate to the
Registration Rights Agreement without giving effect to this amendment.
SECTION 2. AMENDMENTS. The Registration Rights Agreement is hereby
amended as follows:
(a) The first "Whereas" clause is hereby amended and restated in its
entirety as follows:
WHEREAS, the Company and the GSCP Parties have entered into a
Securities Purchase Agreement, dated as of January 13, 2000, and a First
Amendment to Securities Purchase Agreement, dated as of May 5, 2000 (as
amended, the "Purchase Agreement"), pursuant to which, among other things,
the GSCP Parties have purchased 1,250,000 shares of the Company's common
stock, par value $0.01 per share (the "Common Stock"), of the Company and
have agreed, subject to the terms and conditions set forth therein, to
purchase 425,000 shares of the Company's Series A Convertible Preferred
Stock, par value $0.01 per share (the "Series A Preferred Stock") and
warrants to purchase 125,000 shares of Series B Convertible Preferred
Stock, par value $0.01 per share (the "Series B Preferred Stock"); and
(b) The following definitions from Section 1 are hereby amended and
restated in their entirety:
"Registrable Securities" means (a) any shares of Common Stock or
Common Stock Equivalents owned by the GSCP Parties at any time, (b) any
shares of Common Stock issued or issuable upon the conversion, exercise or
exchange of any shares of Series A Preferred Stock or Series B Preferred
Stock owned by the GSCP Parties at any time, and (c) any shares of Common
Stock issued with respect to the securities referred to in clauses (a), (b)
by way of a stock dividend, stock split or reverse stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or otherwise. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall
have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement,
(B) such securities shall have been sold (other than in a privately
negotiated sale) pursuant to Rule 144 (or any successor provision) under
the Securities Act and in compliance with the requirements of paragraphs
(f) and (g) of Rule 144 (notwithstanding the provisions of paragraph (k) of
such Rule) or (C) such securities may be sold pursuant to Rule 144(k) under
the Securities Act.
(c) The definition of "Series A Preferred Stock" is hereby deleted
from Section 1.
(d) Section 2.1(a)(i) is hereby amended as follows:
(i) by deleting the words "15%" and inserting in place thereof
the words "25%"; and
(ii) by adding the words "and Series B Preferred Stock"
immediately after the words "Series A Preferred Stock".
SECTION 3. COUNTERPARTS; EFFECTIVENESS. This First Amendment may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This First Amendment shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto.
SECTION 4. MISCELLANEOUS. Except as expressly set forth in this First
Amendment, the Registration Rights Agreement shall otherwise remain
unchanged and in full force and effect and remain binding upon the parties
hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
First Amendment or have caused this First Amendment to be duly executed by
their respective authorized officers as of the day and year first above
written.
PROMEDCO MANAGEMENT COMPANY
By: /s/ Robert D. Smith
--------------------------------
Name: Robert D. Smith
Title: Chief Financial Officer
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.L.C.,
its general partner
By: /s/ John E. Bowman
--------------------------------
Name: John E. Bowman
Title: Vice President
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III, L.L.C.,
its general partner
By: /s/ John E. Bowman
--------------------------------
Name: John E. Bowman
Title: Vice President
GOLDMAN, SACHS & CO.
VERWALTUNGS GMBH
By: /s/ Terence M. O'Toole
--------------------------------
Name: Terence M. O'Toole
Title: Managing Director
and
By: /s/ John E. Bowman
--------------------------------
Name: John E. Bowman
Title: Registered Agent
STONE STREET FUND 2000, L.P.
By: Stone Street 2000, L.L.C.,
its general partner
By: /s/ John E. Bowman
--------------------------------
Name: John E. Bowman
Title: Vice President
EXHIBIT 7 - FORM OF WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Agreement"), dated as of [ ], 2000, by
and among PROMEDCO MANAGEMENT COMPANY, a Delaware corporation (the
"Corporation") and GS CAPITAL PARTNERS III, L.P., a Delaware limited
partnership ("GSCP"), and certain affiliates of GSCP set forth on the
signature page of this Agreement (the "GSCP Affiliates", and collectively
with GSCP and including their respective successors and assigns, the
"Warrantholders", and each individually, a "Warrantholder").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Corporation has entered into a Securities Purchase
Agreement, dated as of January 13, 2000, and the First Amendment to the
Securities Purchase Agreement, dated as of May 5, 2000 (as amended, the
"Purchase Agreement"), with the Warrantholders, pursuant to which the
Company has agreed to sell to the Warrantholders warrants (the "Warrants")
to purchase up to an aggregate of 125,000 shares (subject to adjustment as
provided in Sections 11 hereof), exercisable at any time, at an exercise
price of $97.00 per share, of the Corporation's Series B Preferred Stock,
par value $.01 per share (the "Series B Preferred Stock") (the shares of
Series B Preferred Stock issuable on exercise of the Warrants being herein
called the "Warrant Shares");
WHEREAS, the parties hereto desire to enter into this Agreement
in order to set forth the terms and conditions of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
ARTICLE I
Section 1.01: Definition of Terms. As used herein, the following
capitalized terms shall have the following respective meanings (capitalized
terms used herein and not defined herein shall have the meanings assigned
to such terms in the Purchase Agreement):
(a) Additional Senior Debt Financing: Any senior debt financing
obtained by the Corporation after the Second Closing which after giving
effect to such financing, would result in the Corporation having senior
debt financing in an aggregate principal amount in excess of $182.5 million
under the Amended and Restated Credit Agreement or another facility
syndicated or privately placed by a bank or its affiliates on terms at
least as favorable to the Corporation as the terms governing the
Corporation's Tranche B Term Notes purchased by General Electric Capital
Corporation under the Amended and Restated Credit Agreement (the "GE
Notes"), including, without limitation, a maturity date no earlier than the
maturity date of the GE Notes, covenants and events of default no more
restrictive than the covenants and events of default contained in the GE
Notes and an interest rate no more than 100 basis points higher than the
interest rate on the GE Notes as each such term is in effect on the date
hereof; provided, however, that Additional Senior Debt Financing shall not
include any financing the proceeds of which are used to replace or
refinance any existing senior debt financing of the Corporation.
(b) Amended and Restated Credit Agreement: The Amended and Restated
Credit Agreement, dated as of the date hereof, among the Corporation, the
lenders from time to time parties thereto, Bank of America, N.A., a
national banking association, as administrative agent for the lenders
thereunder and Banc of America Securities LLC, as arranger.
(c) Business Day: A day other than a Saturday, Sunday or other day on
which banks in the State of New York are authorized by law to remain
closed.
(d) Common Stock: The Corporation's common stock, par value $0.01 per
share.
(e) Credit Agreement: The Credit Agreement dated as of December 17,
1998, among the Corporation, the Lenders referred to therein and Bank of
America, N.A. as Agent and Banc of America Securities, LLC, as Arranger,
and as amended by the First Amendment to Credit Agreement, dated as of
December 31, 1998, the Amended and Restated Credit Agreement and First
Amendment to Guarantee and Collateral Agreement, dated as of June 29, 1999,
the First Amendment to Amended and Restated Credit Agreement dated as of
November 9, 1999, the Consent and Second Amendment to Amended and Restated
Credit Agreement, dated as of November 12, 1999, and the Second Amendment
to Amended and Restated Credit Agreement, dated as of January 13, 2000, all
as amended, modified, renewed, refunded, restated, replaced or refinanced
from time to time.
(f) Exercise Price: On a per Warrant Share basis, $97.00, as adjusted
in accordance with Article IV hereof.
(g) Governmental Entity: Any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
(h) Market Price: The price of the Common Stock, as reported on the
Nasdaq National Market, not identified as having been reported late to such
system, or if the Common Stock is so traded, but not so quoted, the average
of the bid and ask prices, as those prices are reported on the Nasdaq
National Market.
(i) Parity Stock: Any capital stock or any rights, warrants or other
securities convertible into or exchangeable for shares of any capital stock
of the Corporation ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock.
(j) Senior Stock: Any capital stock or any rights, warrants or other
securities convertible into or exchangeable for shares of any capital stock
of the Corporation ranking senior to (either as to dividends or upon
liquidation, dissolution or winding up) the Series B Preferred Stock.
(k) Trading Day: A Business Day or, if the Common Stock is listed or
admitted to trading on any national securities exchange, a day on which
such exchange is open for the transaction of business.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.01: Duration of Warrant. Subject to the terms of this
Agreement, the Warrants may be exercised at any time prior to the third
anniversary of the date hereof (the "Expiration Date"). If any Warrant is
not exercised on or before the Expiration Date, it shall become void, and
all rights hereunder shall thereupon cease.
Section 2.02: Optional Exercise of Warrant.
(a) Subject to Section 2.02(b) hereof, the Warrantholder may exercise
any Warrant, in whole or in part, by presentation and surrender of the
Warrant Certificate in the form of the Warrant Certificate attached as
Exhibit A hereto (the "Warrant Certificate") to the Corporation at its
principal corporate office (deemed to be the address for notice pursuant to
Section 5.05) or at the office of its stock transfer agent, if any, with
the subscription form attached hereto as Exhibit B (the "Form of Election
to Purchase") duly executed and accompanied by payment of the full Exercise
Price for each Warrant Share to be purchased. The exercise of the Warrant
shall be deemed made upon the receipt by the Corporation of the originally
executed Form of Election to Purchase, the Warrant Certificate and the full
Exercise Price, calculated as of the date of receipt by the Corporation of
the Election to Purchase.
(b) Upon receipt of any Warrant Certificate with the Form of Election
to Purchase fully executed and accompanied by payment of the aggregate
Exercise Price for the Warrant Shares for which the Warrant is then being
exercised pursuant to the provisions of the foregoing Section 2.02(a), the
Corporation shall cause to be issued certificates for the total number of
Warrant Shares for which the Warrant is being exercised in such
denominations as are requested for delivery to the Warrantholder registered
in the name of the Warrantholder or its nominee, and the Corporation shall
thereupon deliver such certificates to the Warrantholder. The Warrantholder
shall be deemed to be the holder of record of the shares of Warrant Shares
issuable upon such exercise, notwithstanding that the stock transfer books
of the Corporation shall then be closed or that certificates representing
such shares of Warrant Shares shall not then be actually delivered to the
Warrantholder.
(c) Upon any partial exercise, the Corporation shall promptly issue an
amended Warrant Certificate representing the remaining amount of Warrant
Shares purchasable hereunder. All other terms and conditions of such
amended Warrant Certificate shall be identical to those contained herein.
(d) The Corporation shall pay any and all stock transfer and similar
taxes which may be payable in respect of the issue of any Warrant Shares to
the Warrantholder.
Section 2.03: Mandatory Exercise of Warrant.
(a) Subject to satisfaction of the conditions set forth below,
the Corporation shall have the right, at any time or from time to time
prior to 5 p.m. New York City time on December 31, 2000 (the "Mandatory
Exercise Period"), at its sole option and election made in accordance with
clause (b) below (a "Mandatory Exercise Election"), to require the
Warrantholders to exercise, on a pro-rata basis, up to (x) the aggregate
number of Warrants set forth in the table below opposite the amount of
Additional Senior Debt Financing obtained by the Corporation, less (y) the
aggregate number of Warrants exercised prior to such Mandatory Exercise
Election (the "Callable Warrants").
Additional Senior Debt Financing Obtained
by the Corporation Callable Warrants
- ----------------------------------------- -----------------
$5,000,000............................... 25,000 Warrants
$10,000,000.............................. 50,000 Warrants
$15,000,000.............................. 75,000 Warrants
$20,000,000.............................. 100,000 Warrants
$25,000,000.............................. 125,000 Warrants
The Corporation's right to require the Warrantholders to exercise Warrants
on any occasion during the Mandatory Exercise Period as provided above is
subject on each such occasion to the satisfaction of the following
conditions:
(i) the Company shall have obtained Additional Senior Debt
Financing in the minimum amount necessary to call the minimum number of
Warrants set forth in the table above;
(ii) the Market Price per share of the Common Stock at all times
on each day during the 15 Trading Days immediately preceding the date of
such Mandatory Exercise Election must be greater than or equal to $2.00 per
share (as adjusted for any stock dividends, combinations or stock splits);
(iii) the Common Stock shall be listed or admitted to be listed
on any of the New York Stock Exchange, the American Stock Exchange, or the
Nasdaq National Market;
(iv) the Corporation shall have performed, satisfied and complied
with each of its covenants and agreements set forth in this Agreement, the
Purchase Agreement and the other Transaction Documents to be performed,
satisfied and complied with prior to the date of the Mandatory Exercise
Election and the Corporation's representations and warranties contained
therein shall be true and correct in all material respects (disregarding
for this purpose all references in such representations and warranties to
any materiality, Material Adverse Effect, Knowledge or similar
qualifications) as of the date of the Mandatory Exercise Election;
(v) there being no statute, rule or regulation or order of any
Governmental Entity, court or administrative agency in effect that
prohibits the exercise of the Callable Warrants; and
(vi) any Warrantholder shall have made a claim for
indemnification under the Purchase Agreement and such claim remains unpaid.
(b) If the Corporation elects to cause the Warrantholders to
exercise the Callable Warrants pursuant to a Mandatory Exercise Election,
it shall furnish to the Warrantholders a written notice thereof within two
Business Days of such exercise (the "Call Notice"), which Call Notice shall
be accompanied by a certificate from the Chief Financial Officer of the
Corporation certifying (i) such Warrantholder's pro rata portion of the
Callable Warrants subject to the Mandatory Exercise Election, (ii) the
amount of Additional Senior Debt Financing obtained by the Corporation,
(iii) the date of the Mandatory Exercise Election and (iv) that all of the
Mandatory Exercise Conditions have been satisfied. Not later than five
Business Days following the later of (i) receipt of the Call Notice, and
(ii) the expiration or termination of any waiting period (and any extension
thereof) applicable to the acquisition by the Warrantholder thereof of the
shares of Series B Preferred Stock issuable upon exercise of the Callable
Warrants under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended and the receipt of all governmental and contractual permits,
consents and approvals necessary in connection with such acquisition, the
Warrantholder shall deliver to the Corporation an originally executed Form
of Election to Purchase, the applicable Warrant Certificate(s) and the full
Exercise Price, calculated as of the date of receipt by the Corporation of
the Election to Purchase.
(c) Upon receipt of any Warrant Certificate with the Form of
Election to Purchase fully executed and accompanied by payment of the
aggregate Exercise Price for the Warrant Shares for which the Callable
Warrants are then being exercised pursuant to the provisions of the
foregoing Section 2.03(a), the Corporation shall cause to be issued
certificates for the total number of Warrant Shares for which the Callable
Warrants are being exercised in such denominations as are requested for
delivery to the Warrantholder registered in the name of the Warrantholder
or its nominee, and the Corporation shall thereupon deliver such
certificates to the Warrantholder. The Warrantholder shall be deemed to be
the holder of record of the shares of Warrant Shares issuable upon such
exercise, notwithstanding that the stock transfer books of the Corporation
shall then be closed or that certificates representing such shares of
Warrant Shares shall not then be actually delivered to the Warrantholder.
(d) Upon any partial exercise, the Corporation shall promptly
issue an amended Warrant Certificate representing the remaining amount of
Warrant Shares purchasable hereunder. All other terms and conditions of
such amended Warrant Certificate shall be identical to those contained
herein.
(e) The Corporation shall pay any and all stock transfer and
similar taxes which may be payable in respect of the issue of any Warrant
Shares to the Warrantholder.
Section 2.04: Fractional Shares. The Corporation shall not issue
fractional shares of its capital stock in connection with the exercise of
the Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 3.01: No Rights as Shareholders; Notice to Warrantholders.
Except as set forth in Section 3.02 hereof, nothing contained in this
Warrant Agreement shall be construed as conferring upon the Warrantholder
the right to vote or to receive dividends or to consent or to receive
notice as a stockholder in respect of any meeting of stockholders for the
election of directors of the Corporation or of any other matter, or any
rights whatsoever as a stockholder of the Corporation. The Corporation
shall give notice to the Warrantholder by certified mail if at any time
prior to the expiration or exercise in full of all of its Warrant, any of
the following events shall occur:
(a) the Corporation shall declare any dividend or distribution with
respect to its capital stock;
(b) a dissolution, liquidation or winding up of the Corporation shall
be proposed; or
(c) a capital reorganization or reclassification of the capital stock
of the Corporation, any consolidation or merger of the Corporation with or
into another corporation, any transaction or series of transactions in
which more than fifty percent (50%) of the voting securities of the
Corporation are transferred to another person, or of any sale or conveyance
to another corporation of the property of the Corporation as an entirety or
substantially as an entirety.
Such giving of notice shall be effected at least five Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Corporation's stock transfer books for the determination of
the stockholders entitled to such dividend or distribution, or for the
determination of the stockholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up.
Such notice shall specify such record date or the date of closing the stock
transfer books, as the case may be.
Section 3.02: Actions Requiring Warrantholder Consent. So long as at
least 10% of the Warrants remain outstanding, the Corporation shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly,
without the affirmative vote or consent of the holders of not less than 50%
of all Warrants at any time outstanding:
(i) authorize, increase the authorized number of shares of,
or issue any shares of Senior Stock or Parity Stock;
(ii) increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Series B Preferred Stock
other than as required by the Series B Certificate of Designation and upon
exercise of the Warrants; or
(iii) reclassify any shares of Series B Preferred Stock or
authorize, adopt or approve an amendment to the Series B Certificate of
Designation which would increase or decrease the par value of the shares of
Series B Preferred Stock, or alter or change the powers, preferences or
special rights of the Series B Preferred Stock so as to affect such shares
of Series B Preferred Stock adversely.
Section 3.03: Lost, Stolen, Mutilated or Destroyed Warrants. If any
Warrant Certificate is lost, stolen, mutilated or destroyed, the
Corporation may, on such reasonable terms as to indemnity or otherwise as
it may in its reasonable discretion impose (which shall, in the case of a
mutilated Warrant Certificate, include the surrender thereof), issue a new
Warrant Certificate of like denomination and tenor as, and in substitution
for, the Warrant Certificate.
ARTICLE IV
SPLIT-UP, COMBINATION,
EXCHANGE AND TRANSFER OF WARRANTS
Section 4.01: Split-Up, Combination, Exchange and Transfer of
Warrants. Subject to the provisions of Section 4.02 hereof, any Warrant
Certificate may be split up, combined or exchanged for another Warrant
Certificate or Warrant Certificates containing the same terms to purchase a
like aggregate number of Warrant Shares. If the Warrantholder desires to
split up, combine or exchange any Warrant Certificate, the Warrantholder
shall make such request in writing delivered to the Corporation and shall
surrender to the Corporation the Warrant Certificate and any other Warrant
Certificates to be so split-up, combined or exchanged. Upon any such
surrender for a split-up, combination or exchange, the Corporation shall
execute and deliver to the person entitled thereto a Warrant Certificate or
Warrant Certificates, as the case may be, as so requested.
Section 4.02: Adjustments for Reclassification, Exchange and
Substitution. If shares of the Series B Preferred Stock issuable upon
exercise of the Warrants, shall be changed into the same or a different
number of shares of any other class or classes of stock or other securities
or property, whether by capital reorganization, reclassification, sale of
the Corporation or other transaction, each Warrant shall, in lieu of
representing the right to purchase shares of Series B Preferred Stock,
represent the right to purchase the number of shares of stock or other
securities or property to which a holder of the number of shares of Series
B Preferred Stock shall have been entitled upon such reorganization,
reclassification, sale of the Corporation or other transaction, and the
Exercise Price per Warrant Share in effect immediately prior to such event
shall be appropriately adjusted, so that (i) the aggregate Exercise Price
in effect immediately after such event payable by the Warrantholders shall
be the same as that payable by the Warrantholders immediately before such
event, and (ii) the Warrantholders would receive the number and type of
stock or other securities or property which such Warrantholders would have
been entitled to receive after the happening of any such event, if
immediately prior to such event, such holder had exercised such holders'
Warrants to acquire shares of Series B Preferred Stock. The provisions of
this Section 4.02(a) shall similarly apply to successive reorganizations,
reclassifications, sale of the Corporation or other transactions.
Section 4.03: Adjustments from Second Closing. The Series B Preferred
Stock shall be deemed to be outstanding from and after the Second Closing
for purposes of calculating adjustments to the Conversion Price (as defined
in the Series B Certificate of Designation) pursuant to Sections 9(e), (f)
and (g) of the Series B Certificate of Designation.
Section 4.04: Form of Warrant After Adjustment. The form of the
Warrant Certificate need not be changed because of any adjustments in the
Exercise Price or the number or kind of the Warrant Shares, and Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant, as initially
issued.
Section 4.05: Transfer. Subject to the provisions of the Securities
Purchase Agreement, the Warrant Certificates and all rights thereunder may
be sold, transferred or otherwise disposed of, in whole or in part, to any
person in accordance with and subject to the provisions of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder. Upon the delivery to the Corporation at
its principal corporate office of any Warrant Certificate along with a duly
completed Form of Transfer substantially in the form of Exhibit C hereto,
the Corporation shall execute and deliver a new Warrant Certificate in the
form of the Warrant Certificate substantially in the form of Exhibit A
hereto, but registered in the name of the transferee, to purchase the
number of Warrant Shares assigned to the transferee. In case the
Warrantholder shall assign any Warrant Certificate with respect to less
than all of the Warrant Shares that may be purchased under any Warrant
Certificate, the Corporation shall execute a new Warrant Certificate in the
form of the Warrant Certificate substantially in the form of Exhibit A
hereto for the balance of such Warrant Shares and deliver such new Warrant
Certificate to the Warrantholder.
Section 4.06: Restrictive Legend. Each Warrant Share issued upon
exercise of the Warrants shall bear a legend containing the following words
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE
SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS
EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE SECURITIES
LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER SUCH
ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO
THE DISPOSITION OF SECURITIES, INCLUDING RULE 144.
The requirement that the above securities legend be placed upon
certificates evidencing any such securities shall cease and terminate upon
the earliest of the following events: (i) when such shares are transferred
in an underwritten public offering, (ii) when such shares are transferred
pursuant to Rule 144 under the Securities Act or (iii) when such shares are
transferred in any other transaction if the seller delivers to the
Corporation an opinion of its counsel, which counsel and opinion shall be
reasonably satisfactory to the Corporation, or a "no-action" letter from
the Staff of the Securities and Exchange Commission, in either case to the
effect that such legend is no longer necessary in order to protect the
Corporation against a violation by it of the Securities Act upon any sale
or other disposition of such shares without registration thereunder. Upon
the occurrence of such event, the Corporation, upon the surrender of
certificates containing such legend, shall, at its own expense, deliver to
the holder of any such securities as to which the requirement for such
legend shall have terminated, one or more new certificates evidencing such
securities not bearing such legend. Upon the occurrence of any event
requiring the removal of a legend hereunder, the Corporation, upon the
surrender of certificates containing such legend, shall, at its own
expense, deliver to the holder of any such shares as to which the
requirement for such legend shall have terminated, one or more new
certificates evidencing such shares not bearing such legend.
ARTICLE V
OTHER MATTERS
Section 5.01: Successors and Assigns. The terms and provisions of this
Warrant Agreement shall bind and inure to the benefit of the Warrantholder
and its successors and assigns.
Section 5.02: No Inconsistent Agreements. The Corporation will not on
or after the date of this Warrant Agreement enter into any agreement with
respect to its securities which is inconsistent with the rights granted to
the Warrantholder or otherwise conflicts with the provisions hereof. The
Corporation agrees and hereby represents that the rights granted to the
Warrantholder hereunder do not in any way conflict with and are not
inconsistent with the rights granted to holders of the Corporation's
securities under any other agreements.
Section 5.03: Amendments and Waivers. The terms and provisions of this
Agreement may be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, pursuant to the written consent of the
Corporation and Warrantholders holding at least 50% of the outstanding
Warrants.
Section 5.04: GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW.
Section 5.05: Notice. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or such other address as may
hereafter be designated in writing by such party to the other parties:
(i) if to the Company, to:
ProMedCo Management Company
801 Cherry Street, Suite 1450
Fort Worth, Texas 76102
Facsimile: (817) 335-8321
Attention: Mr. Robert Smith
Chief Financial Officer
with a copy to (which shall not constitute notice):
Dyer, Ellis & Joseph
600 New Hampshire, NW
Washington, DC 20037
Telecopy: (202) 944-3068
Attention: Michael Joseph, Esq.
(ii) if to the Warrantholders, to:
GS Capital Partners III, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy: (212) 357-5505
Attention: Mr. Sanjeev Mehra
Attention: Ben Adler, Esq.
with copies to (which shall not constitute notice):
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications
shall be deemed to have been given or made if and when delivered personally
or by overnight courier to the parties at the above addresses or sent by
electronic transmission, with confirmation received, to the telecopy
numbers specified above (or at such other address or telecopy number for a
party as shall be specified by like notice).
Section 5.06: Severability. Whenever possible, each provision of this
Warrant Agreement shall be interpreted in such manner as to be effective
and valid, but if any provision of this Warrant Agreement is held to be
invalid or unenforceable in any respect, such invalidity or
unenforceability shall not render invalid or unenforceable any other
provision of this Warrant Agreement.
Section 5.07 Entire Agreement. This Agreement and the other
Transaction Documents and the Confidentiality Agreement writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire agreement among the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
Section 5.08 Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to
be an original instrument, but all such counterparts together shall
constitute but one agreement.
Section 5.09 Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PROMEDCO MANAGEMENT COMPANY
By:
---------------------------------
Name:
Title:
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.L.C.,
its general partner
By:
---------------------------------
Name:
Title:
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III, L.L.C.,
its general partner
By:
---------------------------------
Name:
Title:
GOLDMAN, SACHS & CO. VERWALTUNGS GmbH
By:
---------------------------------
Name:
Title:
and
By:
---------------------------------
Name:
Title:
STONE STREET FUND 2000, L.P.
By: Stone Street 2000, L.L.C.,
its general partner
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
---------
Form of Warrant Certificate
[Face]
Warrant No. __
Warrant Certificate
PROMEDCO MANAGEMENT COMPANY
This Warrant Certificate certifies that _____________, or
registered assigns, is the registered Warrantholder of Warrants (the
"Warrants") expiring on the Expiration Date (as defined in the Warrant
Agreement, dated [ ], 2000, among the Warrantholders and the Corporation
(the "Warrant Agreement")) to purchase an aggregate of __________ shares of
Series B Preferred Stock, par value $.01 per share (the "Series B Preferred
Stock"), of ProMedCo Management Company, a Delaware corporation (the
"Corporation"). Each Warrant entitles the Warrantholder upon exercise to
purchase from the Corporation at any time on or after [ ], 2000 and prior
to 5:00 p.m. New York City time on the Expiration Date, __________ fully
paid and nonassessable shares of Series B Preferred Stock ("Warrant
Shares") upon surrender of this Warrant Certificate, subject to the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof, subject to adjustments as provided in the Warrant
Agreement.
No Warrant may be exercised after 5:00 p.m., New York City time
on the Expiration Date, and to the extent not exercised by such time, such
Warrants shall become void.
Subject to (i) the Corporation receiving additional senior debt
financing, (ii) the market price of the Corporation's common stock, par
value $0.01 per share (the "Common Stock"), remaining at or above $2.00 per
share for a specified period, and (iii) the satisfaction of the other
conditions set forth in Section 2.03(a) of the Warrant Agreement, the
Corporation may have the right, at any time prior to 5 p.m. New York City
time on December 31, 2000, at its sole option and election to require the
exercise of this Warrant.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, which provisions shall
for all purposes have the same effect as though fully set forth at this
place.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
EXERCISABLE ONLY ON AND AFTER [ ], 2000 OR BEFORE 5:00 P.M. NEW
YORK CITY TIME ON THE EXPIRATION DATE.
<PAGE>
IN WITNESS WHEREOF, ProMedCo Management Company has caused this
Warrant Certificate to be signed by its Chief Financial Officer.
Dated: [ ], 2000
PROMEDCO MANAGEMENT COMPANY
By:
---------------------------------
Name:
Title:
<PAGE>
Form of Warrant Certificate
[Reverse]
THE SECURITIES FOR WHICH THE WARRANT IS EXERCISABLE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF
ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY
EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE
SECURITIES LAW, RELATING TO THE DISPOSITION OF SECURITIES,
INCLUDING RULE 144.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring on the Expiration Date and
entitling the holder upon exercise to receive shares of Series B Preferred
Stock of the Corporation, par value $.01 per share (the "Series B Preferred
Stock"), and are issued or to be issued pursuant to a Warrant Agreement,
duly executed and delivered by the Corporation, which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and
is hereby referred to for a description of the rights, limitation of
rights, obligations, duties and immunities thereunder of the Corporation
and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants. All terms not otherwise
defined herein shall have the meanings set forth in the Warrant Agreement.
A copy of the Warrant Agreement may be obtained by the Warrantholder hereof
upon written request to the Corporation.
The Exercise Price, and the type and number of Warrant Shares are
subject to adjustments from time to time upon the happening of certain
events as provided in the Warrant Agreement.
Warrants may be exercised at any time on or after [ ], 2000 and
prior to 5:00 p.m. New York City time on the Expiration Date. The holder of
Warrants evidenced by this Warrant Certificate may exercise such Warrants
by surrendering this Warrant Certificate, with the Form of Election to
Purchase set forth hereon properly completed and executed, together with
any required payment to the Corporation of the Exercise Price for each
Warrant then exercised. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the
total number of Warrants evidenced hereby, there shall be issued to the
Warrantholder hereof or his assignee a new Warrant Certificate evidencing
the number of Warrants not exercised.
Subject to (i) the Corporation receiving additional senior debt
financing, (ii) the market price of the Common Stock remaining at or above
$2.00 per share for a specified period and (iii) the satisfaction of the
other conditions set forth in Section 2.03(a) of the Warrant Agreement, the
Corporation may have the right, at any time prior to 5 p.m. New York City
time on December 31, 2000, at its sole option and election to require the
exercise of this Warrant.
Warrant Certificates, when surrendered at the office of the
Corporation by the registered Warrantholder in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in
the manner and subject to the limitations provided in the Warrant
Agreement, but without payment of any service charge except for any tax or
other governmental charge imposed in connection therewith, for another
Warrant Certificate or Warrant Certificates of like tenor evidencing in the
aggregate a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Corporation, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
in the Warrant Agreement, without charge.
The Corporation may deem and treat the registered
Warrantholder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the Warrantholder(s) hereof, and for all other purposes,
and the Corporation shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any
Warrantholder hereof to any rights of a shareholder of the Corporation.
<PAGE>
EXHIBIT B
---------
Form of Election to Purchase
(To Be Executed Upon Exercise of Warrant)
Select Type of Exercise:
____________, the undersigned hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, to receive
____________ shares of Series B Preferred Stock, subject to adjustments as
provided in the Warrant Agreement, dated ______, 2000, among the ProMedCo
Management Company and the several warrantholders named thereto, and hereby
tenders for payment for such shares to the order of ProMedCo Management
Company in the amount of $____________ in accordance with the terms hereof,
which represents the full Exercise Price as of the date of receipt of this
Form of Election to Purchase. The undersigned has also enclosed the true
and correct original Warrant Certificate herewith.
The undersigned requests that a certificate for shares issued
pursuant to this election be registered in the name of
_____________________________________, whose address is
_________________________________ and that such shares be delivered to
______________________________ whose address is ________________________.
<PAGE>
To the extent that Warrant Shares represented by the Warrant
Certificate remain available for future exercise, is less than all of the
shares of Warrant Shares purchasable hereunder, the undersigned requests
that a new Warrant Certificate representing the remaining balance of such
shares be registered in the name of _________________________, whose
address is __________________________, and that such Warrant Certificate be
delivered to __________________________, whose address is
_____________________________.
_________________________(1)
(Signature)
Date:
-----------------------
Signature Guaranteed by:
---------------------
Name:
Title:
---------------------
Participant in a Recognized
Signature Guaranty
Medallion Program
- ----------------------------
(1) The signature must correspond with the name as written upon the face
of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever, and must be
guaranteed by an "eligible guarantor institution".
<PAGE>
EXHIBIT C
---------
Form of Transfer
(To Be Executed Upon Transfer of Warrant)
FOR VALUE RECEIVED, the undersigned registered
Warrantholder of this Warrant Certificate hereby sells, assigns and
transfers unto the Assignee(s) named below (including the undersigned with
respect to any Warrants constituting a part of the Warrants evidenced by
this Warrant Certificate not being assigned hereby) all of the rights of
the undersigned under this Warrant Certificate, with respect to the number
of Warrants set forth below:
Name of Assignee(s) Address Social Security or other Number of Warrants
identifying
number of assignee(s)
Date:
(1)
- -----------------------------
(Signature of Owner)
- -----------------------------
(Street Address)
- -----------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
- -----------------------------
Name:
Title:
- --------------------------
(1) The signature must correspond with the name as written upon the face
of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever, and must be
guaranteed by an "eligible guarantor institution".
EXHIBIT 8 - FORM OF CERTIFICATE OF DESIGNATION OF SERIES A
CONVERTIBLE PREFERRED STOCK
PROMEDCO MANAGEMENT COMPANY
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151(g) of the General Corporation Law of the
State of Delaware, ProMedCo Management Company (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("DGCL"), DOES HEREBY CERTIFY that:
Pursuant to the authority conferred upon the Board of Directors
of the Corporation (the "Board of Directors") by Section A of Article IV of
the Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), and in accordance with the provisions of
Section 151(g) of the DGCL, the Board of Directors on _______________,
adopted the following resolution creating a series of Preferred Stock
designated as Series A Convertible Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the DGCL and the provisions of the Certificate
of Incorporation, a series of the class of authorized Preferred Stock, par
value $0.01 per share, of the Corporation is hereby created and that the
designation and number of shares thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations and restrictions
thereof, are as follows:
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in The City of New York or at a
place of payment are authorized by law, regulation or executive order
to remain closed.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or more related
transactions, of all or substantially all of the properties and assets
of the Corporation and its Subsidiaries taken as a whole to any Person
(as such term is used in Section 13(d)(3) of the Exchange Act), other
than the Purchasers or their affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Corporation, (iii)
the consummation of any transaction or other event (including, without
limitation, any merger or consolidation) the result of which is that
any "Person" or "Group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) (other than the Purchasers and their
affiliates) becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 45% of the voting stock of the Corporation,
or (iv) the first day on which a majority of the members of the Board
of Directors are not Continuing Directors.
"Commission" shall mean the Securities and Exchange Commission.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of the Board
of Directors as of January 13, 2000 or (ii) was nominated for election
or elected to the Board of Directors with the approval, recommendation
or endorsement of a majority of the Continuing Directors who were
members of the Board of Directors at the time of such nomination or
election.
"Conversion Price" shall mean the Initial Conversion Price,
subject to adjustment as provided in Section 9.
"Current Market Price" shall mean the average of the daily Market
Prices of the Common Stock for twenty consecutive Trading Days
immediately preceding the date for which such value is to be computed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect
at the time. Reference to a particular section of the Exchange Act
shall include reference to the comparable section, if any, of any such
successor federal statute.
"Fair Market Value" shall mean, as to shares of Common Stock or
any other class of capital stock or securities of the Corporation or
any other issuer which are publicly traded, the average of the daily
Market Prices of such shares for twenty consecutive Trading Days
immediately preceding the date for which the Fair Market Value of any
such security is to be determined. The "Fair Market Value" of any such
security which is not publicly traded or of any other property shall
mean the fair value thereof as determined by an independent investment
banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of
Directors or a committee thereof.
"Junior Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock.
"Liquidation Preference" with respect to a share of Series A
Preferred Stock shall mean, as at any date, $100.00 per share (as
adjusted for any stock dividends, combinations or splits with respect
to such share), plus an amount equal to all accrued but unpaid
dividends (whether or not declared) on such share as at such date.
"Market Price" when used with reference to shares of Common Stock
or other securities on any date, shall mean (i) the price of the last
trade, as reported on the Nasdaq National Market, not identified as
having been reported late to such system, or (ii) if the Common Stock
is so traded, but not so quoted, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or
(iii) if the Common Stock is not listed or authorized for trading on
the Nasdaq National Market or any comparable system, the average of
the closing bid and asked prices as furnished by two members of the
National Association of Securities Dealers, Inc. selected from time to
time by the Corporation for that purpose. If the Common Stock or such
other securities are not publicly held or so listed or publicly
traded, "Market Price" shall mean the Fair Market Value per share of
Common Stock or of such other securities as determined in good faith
by the Board of Directors based on an opinion of an independent
investment banking firm acceptable to holders of a majority of the
shares of Series A Preferred Stock, which opinion may be based on such
assumptions as such firm shall deem to be necessary and appropriate.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, fully diluted shares of Common Stock (calculated as
prescribed by generally accepted accounting principles), except shares
then owned or held by or for the account of the Corporation or any
subsidiary thereof, and shall include all shares (i) issuable in
respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock and (ii) issuable in
respect of options or warrants to purchase, or securities convertible
into, shares of Common Stock.
"Parity Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, including the Series B
Preferred Stock.
"Paying Agent" shall mean the Transfer Agent or such other Person
or Persons as may be appointed by the Board of Directors from time to
time.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement, dated as of January 13, 2000, by and among the
Corporation and GS Capital Partners III, L.P. ("GSCP"), and certain
affiliates of GSCP set forth on the signature page thereto (the "GSCP
Affiliates", and collectively with GSCP and including their respective
successors and permitted assigns, the "Purchasers"), as amended by the
First Amendment to the Securities Purchase Agreement, dated as of May
5, 2000.
"Senior Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking senior to
(either as to dividends or upon liquidation, dissolution or winding
up) the Series A Preferred Stock.
"Series B Certificate of Designation" shall mean the Certificate
of Designation of the Series B Preferred Stock.
"Series B Preferred Stock" shall mean the Corporation's Series B
Convertible Preferred Stock, par value $0.01 per share.
"Subsidiary" or "Subsidiaries" shall mean any corporation,
limited liability company, partnership, business association or other
Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests
having the power to elect a majority of such Person's board of
directors or analogous or similar governing body, or otherwise having
the power to direct the management, business or policies of that
corporation, limited liability company, partnership, business
association or other Person.
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange, a
day on which such exchange is open for the transaction of business.
SECTION 2. DESIGNATION; NUMBER; RANK.
(a) Number; Designation. 425,000 shares of Preferred Stock of the
Corporation shall constitute a series designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock").
(b) Rank. The Series A Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution or winding up, rank
on a parity with the Series B Preferred Stock and senior to the Common
Stock, par value $0.01 per share, of the Corporation (the "Common Stock")
and all other capital stock of the Corporation issued prior to or on or
after the date hereof other than the Series B Preferred Stock.
SECTION 3. DIVIDENDS.
(a) Payment of Dividends. The holders of shares of Series A
Preferred Stock, in preference to the holders of shares of Common Stock and
of any shares of other capital stock of the Corporation as to payment of
dividends other than the Series B Preferred Stock, shall be entitled to
receive, when, as and if declared by the Board of Directors, out of the
assets of the Corporation legally available therefor, distributions in the
form of cumulative cash dividends at an annual rate per share equal to 6%
of the Liquidation Preference from and after the respective dates of
issuance of applicable shares of Series A Preferred Stock (the "Issue
Date"), as long as the shares of Series A Preferred Stock remain
outstanding. Dividends shall be (i) computed on the basis of the
Liquidation Preference; (ii) accrue and be payable quarterly, in arrears,
on March 31, June 30, September 30 and December 31 (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), except that if
any Quarterly Dividend Payment Date is not a Business Day then the
Quarterly Dividend Payment Date shall be on the first immediately
succeeding Business Day, commencing on the first Quarterly Dividend Payment
Date following the Issue Date; and (iii) payable in cash.
(b) Accrual of Dividends; Default Dividends. Dividends payable
pursuant to clause (a) of this Section 3 shall begin to accrue and be
cumulative from the Issue Date, whether or not declared on a daily basis.
The amount of dividends so payable shall be determined on the basis of
twelve 30-day months and a 360-day year. Accrued dividends not paid within
10 days of any Quarterly Dividend Payment Date shall accrue dividends at an
annual dividend rate of 8% of the Liquidation Preference (the "Default
Dividend Rate") until paid in full and shall be payable at any time as of
which funds legally available therefor are available to the Corporation
(without reference to any regular Quarterly Dividend Payment Date) to the
holders of record on such date, not exceeding 30 days preceding the payment
thereof, as may be fixed by the Board of Directors. Dividends paid on
shares of Series A Preferred Stock (including any dividends payable at the
Default Dividend Rate (such dividends, "Default Dividends")) in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. All references herein
to "unpaid dividends" shall be deemed to include any unpaid Default
Dividends.
(c) Restricted Payments. So long as any shares of Series A
Preferred Stock are outstanding, the Corporation shall not declare, pay or
set apart for payment any dividend on any of shares of Common Stock or
other capital stock of the Corporation other than the Series B Preferred
Stock, or make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of shares of Common Stock or other capital stock of the
Corporation other than the Series B Preferred Stock or any warrants,
rights, calls or options exercisable for or convertible into any shares of
Common Stock or other capital stock of the Corporation, or make any
distribution in respect thereof, either directly or indirectly, and whether
in cash, obligations or shares of the Corporation or other property, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Common Stock
or other capital stock of the Corporation other than the Series B Preferred
Stock or any warrants, rights, calls or options exercisable for or
convertible into any Common Stock or other capital stock of the Corporation
unless, all unpaid dividends on the shares of Series A Preferred Stock
shall have been paid.
(d) Dividends on Common Stock. So long as any shares of Series A
Preferred Stock remain outstanding, if the Corporation pays a dividend in
cash, securities or other property on shares of Common Stock then at the
same time the Corporation shall declare and pay a dividend on shares of
Series A Preferred Stock in the amount of dividends that would be paid with
respect to shares of Series A Preferred Stock if such shares were converted
into shares of Common Stock on the record date for such dividends (or if no
record date is established, at the date such dividend is declared).
SECTION 4. VOTING RIGHTS.
In addition to any voting rights provided by law, the holders of
shares of Series A Preferred Stock shall have the voting rights set forth
in this Section 4:
(a) Right to Vote as a Single Class with Holders of Common Stock.
So long as any shares of Series A Preferred Stock are outstanding, each
share of Series A Preferred Stock shall entitle the holder thereof to
notice of and to vote on all matters submitted to a vote of the
stockholders of the Corporation, voting together as a single class with the
holders of shares of Common Stock. The holders of each share of Series A
Preferred Stock shall be entitled to vote with respect to each share of
Series A Preferred Stock held by each such holder a number of votes equal
to the number of votes which could be cast in such vote by a holder of the
number of shares of Common Stock into which such share of Series A
Preferred Stock is convertible (as adjusted pursuant to Section 9) on the
record date for such vote. Fractional votes shall not, however, be
permitted and any fractional voting rights available on an as-converted
basis (after aggregation of all shares of Common Stock into which shares of
Series A Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward).
(b) Right to Designate Directors. In addition to any of the
voting rights provided to the holders of shares of Series A Preferred Stock
pursuant to the Securities Purchase Agreement, in the event the Corporation
shall have failed to pay in full (i) dividends on the shares of Series A
Preferred Stock for a period of twelve consecutive months or (ii) the
Mandatory Redemption Price within 30 days of the Mandatory Redemption Date,
then, in addition to any other rights that may otherwise be available to
holders of Series A Preferred Stock pursuant to this Certificate of
Designation or otherwise, the total number of directors of the Corporation
shall be increased by two, and the holders of Series A Preferred Stock,
voting together as a single class, shall by affirmative vote of holders of
a plurality of the total number of shares of Series A Preferred Stock
voting thereon, be entitled to elect to the Board of Directors, at a
meeting of such stockholders or by written consent in lieu thereof, two
additional directors (the "Default Directors") (which directors shall be in
addition to, and not in lieu of, any Preferred Designees (as defined in the
Securities Purchase Agreement) any "Default Directors" elected by the
holders of the Series B Preferred Stock pursuant to the terms of the Series
B Certificate of Designation, and which shall each be required to satisfy
any qualifications existing under applicable law and shall be entitled to
all rights of voting and participation as are directors of the Corporation
generally), and shall be entitled, by affirmative vote of holders of a
majority of the total number of shares of Series A Preferred Stock then
outstanding or by written consent in lieu thereof, at any time to remove
any director so elected. Any other provision of this Certificate of
Designation or the Certificate of Incorporation or By-laws of the
Corporation notwithstanding, no Default Director may be removed except in
the manner provided for in this paragraph. Vacancies among the Default
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled at any time, but only by
the affirmative vote of holders of a plurality of the total number of
shares of Series A Preferred Stock then outstanding, voting together as a
single class, or by written consent in lieu thereof, and any director so
chosen shall hold office for a term expiring on the date the term of office
of the director such newly-elected director shall have replaced would have
expired. At any time during which the holders of Series A Preferred Stock
are entitled to elect Default Directors, in the event the Corporation
declares and pays in cash all theretofore unpaid dividends and/or pays in
full the Mandatory Redemption Amount, as the case may be, then the term of
any Default Director then in office shall be deemed to have expired as of
the time such payments are made, and the total number of directors of the
Corporation shall be reduced by the number of Default Directors then in
office whose term shall have expired and the holders of Series A Preferred
Stock shall cease to have any rights hereunder to elect Default Directors,
in each case, unless and until one or more of the conditions specified in
clauses (i) and (ii) hereof shall recur.
(c) Actions Not to be Taken Without Vote of Holders of Series A
Preferred Stock. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, without the affirmative vote or
consent of the holders of not less than 50% of all shares of Series A
Preferred Stock at any time outstanding:
(i) authorize, increase the authorized number of shares of,
or issue any shares of Senior Stock or Parity Stock;
(ii) increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Series A Preferred Stock
other than as required by this Certificate of Designation; or
(iii) reclassify any shares of Series A Preferred Stock or
authorize, adopt or approve an amendment to this Certificate of Designation
which would increase or decrease the par value of the shares of Series A
Preferred Stock, or alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect such shares of
Series A Preferred Stock adversely.
(d) Exercise of Voting Rights. (i) The foregoing rights of
holders of shares of Series A Preferred Stock to take any actions as
provided in this Section 4 may be exercised at any annual meeting of
stockholders or at a special meeting of stockholders held for such purpose
or at any adjournment thereof, or by the written consent, delivered to the
Secretary of the Corporation, of the holders of not less than 50% of all
shares of Series A Preferred Stock outstanding as of the record date of
such written consent.
So long as such right to vote continues, the Chairman of the
Board of the Corporation may call, and if the holders of shares of Series A
Preferred Stock are to vote separately as a single class, upon the written
request of holders of record of 20% of the outstanding shares of Series A
Preferred Stock, addressed to the Secretary of the Corporation, at the
principal office of the Corporation, the Chairman of the Board of the
Corporation shall call, a special meeting of the holders of shares of
Series A Preferred Stock entitled to vote as provided herein. The
Corporation shall use its best efforts to hold such meeting within 60, but
in any event not later than 90, days after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in the
By-laws of the Corporation for the holding of meetings of stockholders;
provided that the Corporation shall not be required to call such a special
meeting if such request is received fewer than 90 days before the date
fixed for the next ensuing annual meeting of stockholders of the
Corporation; and provided, further, that if it is necessary for the
Corporation to solicit proxies for use at such special meeting, the
Corporation's obligation to conduct such special meeting shall be delayed
for such period of time as is necessary for the Corporation to prepare and
file a proxy statement and to obtain the Commission's clearance of such
proxy statement.
(ii) At each meeting of stockholders at which the holders of
shares of Series A Preferred Stock shall have the right, voting separately
as a single class, to take any action, the presence in person or by proxy
of the holders of record of one-half of the total number of shares of
Series A Preferred Stock then outstanding and entitled to vote on the
matter shall be necessary and sufficient to constitute a quorum. At any
such meeting or at any adjournment thereof, in the absence of a quorum of
the holders of shares of Series A Preferred Stock, a majority of the
holders of such shares present in person or by proxy shall have the power
to adjourn the meeting as to the actions to be taken by the holders of
shares of Series A Preferred Stock from time to time and place to place
without notice other than announcement at the meeting until a quorum shall
be present.
(iii) For the taking of any action as provided in this
Section 4 by the holders of shares of Series A Preferred Stock, each such
holder shall have one vote for each share of such stock standing in his
name on the transfer books of the Corporation as of any record date fixed
for such purpose or, if no such date be fixed, at the close of business on
the Business Day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the Business Day next
preceding the day on which the meeting is held.
SECTION 5. REDEMPTION.
(a) Optional Redemption. (i) Subject to the rights of holders of
shares of Series A Preferred Stock set forth in Section 9 hereof, the
Corporation shall, at any time following the fourth anniversary of the
Issue Date, have the right, at its sole option and election made in
accordance with clause (a)(ii) below, to redeem, to the extent the
Corporation shall have the funds legally available therefor, all, but not
less than all, of the then outstanding shares of Series A Preferred Stock
within 45 days following any date on which the Market Price per share of
Common Stock for at least 20 out of 30 consecutive Trading Days immediately
preceding such date (as adjusted for any stock dividends, combinations or
stock splits), including the last Trading Day of such period, is equal to
or greater than 150% of the Conversion Price in effect as of the first day
of such 30-Trading Day period (any such date, a "Redemption Trigger Date"),
for an amount per share equal to the Liquidation Preference (the "Optional
Redemption Price") as of the Optional Redemption Date (as defined below).
Notwithstanding the foregoing, no redemption shall be permitted pursuant to
this Section 5(a) at any time during which the Common Stock is not listed
or admitted to be listed on any of the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market.
(ii) Notice of any redemption of shares of Series A
Preferred Stock pursuant to clause (a)(i) shall be mailed, first class
postage prepaid, to each holder of shares of Series A Preferred Stock, at
such holder's address as it appears on the transfer books of the
Corporation, specifying (x) the Optional Redemption Price and (y) the
redemption date (the "Optional Redemption Date"); and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the
shares to be redeemed (the "Optional Redemption Notice"). The Optional
Redemption Notice shall be mailed not more than 20 days following the
applicable Redemption Trigger Date. The Optional Redemption Date shall be
determined by the Corporation but in no event shall be earlier than the
10th day following the date of the Redemption Notice or later than the 25th
day following the Redemption Notice.
(b) Mandatory Redemption. (i) Subject to the rights of holders of
shares of Series A Preferred Stock set forth in Section 9 hereof, the
Corporation shall, on the seventh anniversary of the Issue Date (such date,
the "Mandatory Redemption Date"), redeem, to the extent the Corporation
shall have the funds legally available therefor, all, but not less than
all, of the then outstanding shares of Series A Preferred Stock for an
amount per share equal to the Liquidation Preference as of such date (the
"Mandatory Redemption Price"). If the funds of the Corporation legally
available for redemption of the shares of Series B Preferred Stock and
Series A Preferred Stock on the Mandatory Redemption Date are insufficient
to redeem the total number of shares of Series B Preferred Stock and Series
A Preferred Stock to be redeemed on such date, those funds which are
legally available will be used to redeem the maximum possible number of
such shares of Series B Preferred Stock and Series A Preferred Stock
ratably among the holders of such shares to be redeemed based upon the
number of shares of Series B Preferred Stock and Series A Preferred Stock
held by each such holder. The shares of Series A Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and
preferences provided in this Certificate of Designation at any time.
Thereafter, when sufficient additional funds of the Corporation are legally
available for the redemption of shares of Series B Preferred Stock and
Series A Preferred Stock that remain outstanding, such funds shall
immediately be used to redeem the entire balance of such shares of Series B
Preferred Stock and Series A Preferred Stock that the Corporation has
become obliged to redeem on the Mandatory Redemption Date but which the
Corporation has not redeemed.
(ii) Notice of any redemption of shares of Series A
Preferred Stock pursuant to clause (b)(i) shall be mailed, first class
postage prepaid, to each holder of shares of Series A Preferred Stock, at
such holder's address as it appears on the transfer books of the
Corporation, specifying (x) the number of shares of Series A Preferred
Stock to be redeemed, (y) the Mandatory Redemption Price and (z) the
Mandatory Redemption Date; and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, such holder's
certificate or certificates representing the shares to be redeemed (the
"Mandatory Redemption Notice"). The Mandatory Redemption Notice shall be
mailed not less than 25 and not more than 45 days prior to the Mandatory
Redemption Date.
(c) Payment of Redemption Price. On the date of any redemption
pursuant to this Section 5, (i) the Corporation shall in cash or by wire
transfer to an account designated by each holder the Optional Redemption
Price or the Mandatory Redemption Price, as the case may be, for each of
its shares of Series A Preferred Stock, and (ii) after payment has been
made in accordance with clause (i) above, dividends on the shares of Series
A Preferred Stock so called for redemption shall cease to accrue, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the Optional Redemption Price or
the Mandatory Redemption Price, as the case may be, and except the right to
convert shares of Series A Preferred Stock so called for redemption prior
to the close of business on the date immediately preceding the date fixed
for such redemption) shall cease.
SECTION 6. CHANGE OF CONTROL.
(a) Offer to Repurchase. Upon the occurrence of a Change of
Control, the Corporation shall make an offer (a "Change of Control Offer")
to each holder of shares of Series A Preferred Stock to repurchase all or
any part (subject to the rights of holder pursuant to Section 9) of each
such holder's shares of Series A Preferred Stock at an offer price in cash
equal to 101% of the Liquidation Preference as of the Change of Control
Payment Date (the "Change of Control Payment"). The Corporation shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of shares
of Series A Preferred Stock as a result of a Change of Control, and the
Corporation shall not be in violation of this Certificate of Designation by
reason of any act required by such rule or other applicable law.
(b) Within 25 days following any Change of Control, the
Corporation shall mail a notice to each holder of shares of Series A
Preferred Stock stating:
(i) that the Change of Control Offer is being made pursuant
to this Section 6 and that all shares of Series A Preferred Stock tendered
will be accepted for payment;
(ii) the purchase price and the purchase date, which shall
be at least 30 but no more than 60 days from the date on which the
Corporation mails notice of the Change of Control (the "Change of Control
Payment Date");
(iii) that any shares of Series A Preferred Stock not
tendered will continue to accrue dividends as provided in this Certificate
of Designation;
(iv) that, unless the Corporation defaults in the payment of
the Change of Control Payment, all shares of Series A Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue dividends after the Change of Control Payment Date;
(v) that holders of shares of Series A Preferred Stock
electing to have any shares of Series A Preferred Stock purchased pursuant
to a Change of Control Offer shall be required to surrender the shares of
Series A Preferred Stock to the Corporation or its designated agent for
such purpose, at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; and
(vi) that holders of shares of Series A Preferred Stock will
be entitled to withdraw their election if the Corporation or its designated
agent for such purpose, receives, not later than the close of business on
the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the holder of shares of Series A Preferred Stock, the number of shares of
Series A Preferred Stock delivered for purchase, and a statement that such
holder is withdrawing his election to have such shares purchased.
(c) On the Change of Control Payment Date, the Corporation shall,
to the extent lawful, (i) accept for payment all shares of Series A
Preferred Stock tendered pursuant to the Change of Control Offer and (ii)
deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all shares of Series A Preferred Stock so tendered.
The Corporation shall promptly mail to each holder of shares of Series A
Preferred Stock so tendered the Change of Control Payment for such shares.
The Corporation shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control
Payment Date.
SECTION 7. STATUS OF CONVERTED OR REDEEMED STOCK.
Any shares of Series A Preferred Stock converted, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares of Series A Preferred Stock shall upon their cancellation, and
upon the filing of any document required by the DGCL, become authorized but
unissued shares of Preferred Stock, $0.01 par value, of the Corporation and
may be reissued as part of another series of Preferred Stock, $0.01 par
value, of the Corporation.
SECTION 8. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) (i) In the event the Corporation shall (A) commence a
voluntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or (B) consent to
the entry of an order for relief in an involuntary case under such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation, or of any
substantial part of its property, or (C) make an assignment for the benefit
of its creditors, or (D) admit in writing its inability to pay its debts
generally as they become due, or (ii)(x) if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction
in the premises in an involuntary case under the Federal bankruptcy laws or
any other applicable Federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and (y) any such decree or order shall be unstayed and in
effect for a period of 60 consecutive days and on account of any such event
the Corporation shall liquidate, dissolve or wind up, or (iii) if the
Corporation shall otherwise liquidate, dissolve or wind up, after payment
or provision for the payment for the debts and other liabilities of the
Corporation (each, a "Liquidation"), before any payment or distribution to
holders of shares of Junior Stock or Parity Stock (other than the Series B
Preferred Stock), holders of shares of Series B Preferred Stock and Series
A Preferred Stock taken together shall be entitled to receive an amount
equal to the greater of (x) the Liquidation Preference (as set forth herein
and in the Series B Certificate of Designation) with respect to each share
of Series B Preferred Stock and Series A Preferred Stock held by such
holder as of the date of Liquidation, or (y) the aggregate amount that
would have been received with respect to the shares of Series B Preferred
Stock and Series A Preferred Stock upon any such Liquidation if such shares
had been converted to shares of Common Stock immediately prior to the date
of such Liquidation.
(b) If, upon any such Liquidation, whether voluntary or
involuntary, the assets to be distributed to the holders of the Series A
Preferred Stock shall be insufficient to permit payment of the full amount
of the Liquidation Preference with respect to each share of Series B
Preferred Stock and Series A Preferred Stock, then the entire assets of the
Corporation to be distributed among the holders of the Series B Preferred
Stock and Series A Preferred Stock shall be distributed ratably among such
holders of Series B Preferred Stock and Series A Preferred Stock in
accordance with the number of shares of Series B Preferred Stock and Series
A Preferred Stock held by each such holder.
(c) After the payment to the holders of shares of the Series A
Preferred Stock of the full amount of any liquidating distribution to which
they are entitled under this Section 8, the holders of the Series A
Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(d) Whenever the distribution provided for in this Section 8
shall be payable in securities or property other than cash, the value of
such distribution shall be the Fair Market Value of such securities or
property.
SECTION 9. CONVERSION.
(a) Right to Convert. Subject to the provisions for adjustment
hereinafter set forth, each share of Series A Preferred Stock shall be
convertible into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Liquidation Preference as of
the Conversion Date by the Conversion Price in effect as of the Conversion
Date. The Conversion Price shall initially be $2.50 (the "Initial
Conversion Price"), and shall be subject to adjustment as provided in
clauses (e) through (g) of this Section 9. The conversion right set forth
in this clause (a) shall be exercisable at the option of the holder at any
time following the Issue Date. In the case of shares of Series A Preferred
Stock called for redemption pursuant to Section 5 hereof, conversion rights
shall expire with respect to such shares on the Optional Redemption Date or
the Mandatory Redemption Date, as the case may be, when payment in full of
the applicable redemption price shall have been made by the Corporation.
(b) Mechanics of Conversion. Conversion of shares of Series A
Preferred Stock may be effected by any such holder upon the surrender to
the Corporation at the principal office of the Corporation or at the office
of any agent or agents of the Corporation, as may be designated by the
Board of Directors (the "Transfer Agent"), of the certificate(s) for such
Series A Preferred Stock to be converted, accompanied by a written notice
(the date of such notice being referred to as the "Conversion Date")
stating that such holder elects to convert all or a specified whole number
of such shares in accordance with the provisions of this Section 9 and
specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued; provided that in all
cases the converting holder shall convert at least 1000 shares of Series A
Preferred Stock (or if such holder holds less than 1000 shares, all shares
of Series A Preferred Stock held by such holder). In case any holder's
notice shall specify a name or names other than that of such holder, such
notice shall be accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock in such name or names. Other than
such taxes, the Corporation will pay any and all transfer, issue, stamp and
other taxes (other than taxes based on income) that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
Series A Preferred Stock pursuant hereto. As promptly as practicable, and
in any event within five Business Days after the surrender of such
certificate or certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes which are the
responsibility of the holder as set forth above (or the demonstration to
the satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable
full shares of Common Stock, to which the holder of shares of Series A
Preferred Stock being converted shall be entitled and (ii) if less than the
full number of shares of Series A Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new
certificate or certificates, of like tenor, for the number of shares
evidenced by such surrendered certificate or certificates less the number
of shares being converted. Such conversion shall be deemed to have been
made at the close of business on the Conversion Date so that the rights of
the holder thereof as to the shares being converted shall cease except for
the rights pursuant to Section 9(c) to receive shares of Common Stock, in
accordance herewith, and the person entitled to receive the shares of
Common Stock shall be treated for all purposes as having become the record
holder of such shares of Common Stock at such time.
In case any shares of Series A Preferred Stock are to be redeemed
pursuant to Sections 5 or 6, such right of conversion shall cease and
terminate as to the shares of Series A Preferred Stock to be redeemed at
the close of business on the Business Day preceding the applicable
redemption date.
(c) Fractional Shares. In connection with the conversion of any
shares of Series A Preferred Stock into shares of Common Stock, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the
Market Price per share of Common Stock on the Trading Day on which such
shares of Series A Preferred Stock are deemed to have been converted. If
more than one share of Series A Preferred Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares
of Common Stock issuable on conversion thereof shall be computed on the
basis of the total number of shares of Series A Preferred Stock so
surrendered. Promptly upon conversion, the Corporation shall pay to the
holder of shares of Series A Preferred Stock so converted out of funds
legally available, an amount equal to any accrued and unpaid dividends on
the shares of Series A Preferred Stock surrendered for conversion to the
date of such conversion, together with cash in lieu of any fractional
interest of such holder.
(d) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available for issuance upon
the conversion of the Series A Preferred Stock, free from any preemptive
rights, such number of its authorized but unissued shares of Common Stock
as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series A Preferred Stock issued or issuable pursuant
to the Securities Purchase Agreement into shares of Common Stock, and shall
take all actions required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all outstanding
shares of Series A Preferred Stock.
(e) Adjustment to Conversion Price for Dividends and for
Combinations or Subdivisions of Common Stock; Additional Shares. (i) In
case the Corporation shall at any time or from time to time after the Issue
Date (A) pay a dividend, or make a distribution, on the outstanding shares
of Common Stock in shares of Common Stock, (B) subdivide the outstanding
shares of Common Stock, (C) combine the outstanding shares of Common Stock
into a smaller number of shares or (D) issue by reclassification of the
shares of Common Stock any shares of capital stock of the Corporation,
then, and in each such case, the Conversion Price in effect immediately
prior to such event or the record date therefor, whichever is earlier,
shall be adjusted so that the holder of any shares of Series A Preferred
Stock thereafter surrendered for conversion into Common Stock shall be
entitled to receive the number of shares of Common Stock or other
securities of the Corporation which such holder would have owned or have
been entitled to receive after the happening of any of the events described
above, had such shares of Series A Preferred Stock been surrendered for
conversion immediately prior to the happening of such event or the record
date therefor, whichever is earlier. An adjustment made pursuant to this
clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date
for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on
the day upon which such corporate action becomes effective. No adjustment
shall be made pursuant to this clause (i) in connection with any
transaction to which clause (f) applies.
(ii) In case the Corporation shall pay a dividend or make a
distribution to all holders of shares of Common Stock (including any
dividend or distribution paid in connection with a consolidation or merger
in which the Corporation is the continuing corporation) of any shares of
capital stock of the Corporation or evidences of its indebtedness or assets
or cash (excluding dividends or distributions in connection with the
liquidation, dissolution or winding up of the Corporation) or rights or
warrants to subscribe for or purchase shares of Common Stock or securities
convertible into or exchangeable for Common Stock (excluding those
securities referred to in subsection (i) above), then in each such case the
Conversion Price in effect immediately prior thereto shall be reduced to an
amount determined by determined by multiplying (A) the Conversion Price in
effect on the record date for the determination of stockholders entitled to
receive the payment or distribution by (B) a fraction, the numerator of
which shall be the Current Market Price per share of Common Stock on such
record date less the then Fair Market Value as of such record date of the
cash, assets, evidences of indebtedness or securities so paid with respect
to one share of Common Stock, and the denominator of which shall be the
Current Market Price per share of Common Stock on such record date. Such
adjustment shall be made whenever any such payment is made, and shall
become effective retroactively immediately after such record date.
(iii) In case the Corporation shall issue shares of Common
Stock (or rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) (collectively, "Additional
Shares") after the Issue Date at a price per share (or having a conversion
price per share) less than the greater of (A) the Current Market Price per
share of Common Stock on the date preceding the earlier of the issuance or
public announcement of the issuance of such Additional Shares of Common
Stock and (B) the Conversion Price as of the date of issuance of such
shares (or, in the case of convertible or exchangeable securities, less
than the Current Market Price as of the date of issuance of the rights,
warrants or other securities in respect of which shares of Common Stock
were issued), then, and in each such case, the Conversion Price shall be
reduced to an amount determined by multiplying (A) the Conversion Price in
effect on the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the sum of (1) the number of shares of Common
Stock Outstanding immediately prior to such sale or issue multiplied by the
greater of (a) the then applicable Conversion Price per share and (b) the
Current Market Price per share of Common Stock on the date preceding the
earlier of the issuance or public announcement of the issuance of such
Additional Shares of Common Stock (the greater of (a) and (b) above
hereinafter referred to as the "Adjustment Price") and (2) the aggregate
consideration receivable by the Corporation for the total number of shares
of Common Stock so issued (or into or for which the rights, warrants or
other convertible securities may convert or be exercisable), and the
denominator of which shall be the sum of (x) the total number of shares of
Common Stock Outstanding immediately prior to such sale or issue and (y)
the number of Additional Shares issued (or into or for which the rights,
warrants or convertible securities may be converted or exercised),
multiplied by the Adjustment Price. An adjustment made pursuant to this
clause (iii) shall be made on the next Business Day following the date on
which any such issuance is made and shall be effective retroactively to the
close of business on the date of such issuance. For purposes of this clause
(iii), the aggregate consideration receivable by the Corporation in
connection with the issuance of shares of Common Stock or of rights,
warrants or other securities convertible into shares of Common Stock shall
be deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable to
third parties) of all such Common Stock, rights, warrants and convertible
securities plus the aggregate amount (as determined on the date of
issuance), if any, payable upon exercise or conversion of any such rights,
warrants and convertible securities into shares of Common Stock. If,
subsequent to the date of issuance of such right, warrants or other
convertible securities, the exercise or conversion price thereof is
reduced, such aggregate amount shall be recalculated and the Conversion
Price shall be adjusted retroactively to give effect to such reduction. On
the expiration of any option or the termination of any right to convert or
exchange any securities into Additional Shares, the Conversion Price then
in effect hereunder shall forthwith be increased to the Conversion Price
which would have been in effect at the time of such expiration or
termination (but taking into account other adjustments made following the
time of issuance of such options or securities) had such option or
security, to the extent outstanding immediately prior to such expiration or
termination, never been issued. If Common Stock is sold as a unit with
other securities, the aggregate consideration received for such Common
Stock shall be deemed to be net of the Fair Market Value of such other
securities. The issuance or reissuance of (i) any shares of Common Stock or
rights, warrants or other securities convertible into shares of Common
Stock (whether treasury shares or newly issued shares) (A) pursuant to a
dividend or distribution on, or subdivision, combination or
reclassification of, the Outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to clause (i) of this clause
(e); (B) pursuant to any restricted stock or stock option plan or program
of the Corporation involving the grant of options or rights to acquire
shares of Common Stock after the date hereof to directors, officers and
employees of the Corporation and its Subsidiaries as provided in Section
5.13 of the Purchase Agreement; (C) pursuant to any option, warrant, right,
or convertible security outstanding as of the Issue Date, or (ii) the
Series A Preferred Stock and any shares of Common Stock issuable upon
conversion or exercise thereof, shall not be deemed to constitute an
issuance of Common Stock or convertible securities by the Corporation to
which this clause (iii) applies. No adjustment shall be made pursuant to
this clause (iii) in connection with any transaction to which clause (f)
applies.
(iv) The term "dividend," as used in this clause (e), shall
mean a dividend or other distribution upon the capital stock of the
Corporation.
(v) Anything in this clause (e) to the contrary
notwithstanding, the Corporation shall not be required to give effect to
any adjustment in the Conversion Price (x) if, in connection with any event
which would otherwise require an adjustment pursuant to this clause (e),
the holders of Series A Preferred Stock have received the dividend or
distribution to which such holders are entitled under Section 3 hereof or
(y) unless and until the net effect of one or more adjustments (each of
which shall be carried forward), determined as above provided, shall have
resulted in a change of the Conversion Price such that the number of shares
of Common Stock receivable upon conversion of each share of Series A
Preferred Stock would differ by at least one one-hundredth of one share of
Common Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by at
least one one-hundredth of one share of Common Stock, such change in
Conversion Price shall thereupon be given effect.
(vi) The certificate of any firm of independent public
accountants of recognized national standing selected by the Board of
Directors (which may be the firm of independent public accountants
regularly employed by the Corporation) shall be presumptively correct for
any computation made under this clause (e).
(vii) If the Corporation shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive a dividend
or other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this clause (e) or in the Conversion Price then in effect shall
be required by reason of the taking of such record.
(viii) If any event occurs as to which the provisions of
this Section 9(e) are not strictly applicable or if strictly applicable
would not fairly protect the rights of the holders of the Series A
Preferred Stock in accordance with the essential intent and principles of
such provisions, the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent
and principles, so as to protect such rights of the holders of the Series A
Preferred Stock.
(f) Adjustment to Conversion Price for Reclassification and
Reorganization. In the case of any reclassification of the Common Stock,
any consolidation of the Corporation with, or merger with the Corporation
into, any other Person, any merger of another entity into the Corporation
(other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock
of the Corporation), any sale or transfer of all or substantially all of
the assets of the Corporation or any compulsory share exchange pursuant to
which share exchange the shares of Common Stock are converted into other
securities, cash or other property (each of the foregoing, a
"Transaction"), in addition to any rights of holders of shares of Series A
Preferred Stock pursuant to Section 6, each share of Series A Preferred
Stock then outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation of such
Transaction, the kind and amount of shares of stock and other securities
and property receivable (including cash) upon the consummation of such
Transaction by a holder of that number of shares of Common Stock into which
one share of Series A Preferred Stock was convertible immediately prior to
such Transaction. In case securities or property other than Common Stock
shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 9 shall be deemed to apply, so far as
appropriate and nearly as may be, to such other securities or property. The
Corporation, the person formed by the consolidation or resulting from the
merger or which acquires such assets or which acquires the Corporation's
shares, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such
rights and such rights shall be clearly provided for in the definitive
transaction documents relating to such transaction. The certificate or
articles of incorporation or other constituent document shall provide for
adjustments, which, for events subsequent to the effective date of the
certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The provisions of this Section 9(f) shall
similarly apply to successive reclassifications, consolidations, mergers,
sales, transfers or share exchanges.
(g) Adjustment to Conversion Price for Redemption. In case the
Corporation shall purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Current Market Price per
share of such Common Stock on the date of such event, or in case the
Corporation shall purchase, redeem or otherwise acquire other securities
convertible into or exchangeable for Common Stock for a consideration per
share of Common Stock into which such security is convertible or
exchangeable greater than the Current Market Price per share of Common
Stock on the date of such event, then the Conversion Price in effect
immediately prior thereto shall be reduced to an amount determined by
multiplying (A) the Conversion Price in effect on the day immediately prior
to such date by (B) a fraction, the numerator of which shall be the
difference between (1) the number of shares of Common Stock Outstanding
immediately prior to such purchase, redemption or acquisition multiplied by
the then applicable Current Market Price per share and (2) the aggregate
consideration payable by the Corporation for the total number of shares of
Common Stock so purchased, redeemed or acquired (or, into or for which the
rights, warrants or other convertible securities may convert or be
exercisable), and the denominator of which shall be the difference between
(x) the total number of shares of Common Stock Outstanding immediately
prior to such event and (y) the number of shares so purchased, redeemed or
acquired, multiplied by the then applicable Current Market Price per share.
Such adjustment shall be made whenever such Common Stock is purchased,
redeemed or otherwise acquired by the Corporation, and shall become
effective immediately after such date.
(h) Notice of Record Date. In case at any time or from time to
time (i) the Corporation shall pay any stock dividend or make any other
non-cash distribution to the holders of its Common Stock, or offer for
subscription pro rata to the holders of its Common Stock any additional
shares of stock of any class or any other right, or (ii) there shall be any
capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into
another corporation, or any sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially as an
entirety, or (iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then, in any one or more of
said cases the Corporation shall give at least 20 days' prior written
notice (the time of mailing of such notice shall be deemed to be the time
of giving thereof) to the registered holders of the Series A Preferred
Stock at the addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (A) a record
shall be taken for such stock dividend, distribution or subscription rights
or (B) such reorganization, reclassification, consolidation, merger, sale
or conveyance, dissolution, liquidation or winding up shall take place, as
the case may be; provided that, in the case of any Transaction to which
clause (f) applies the Corporation shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the date as of
which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding up,
as the case may be. Failure to give such notice shall not invalidate any
action so taken.
SECTION 10. REPORTS.
(a) Reports as to Adjustments. Upon any adjustment of the
Conversion Price then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion
provisions set forth in Section 9, then, and in each such case, the
Corporation shall promptly deliver to the Transfer Agent of the Series A
Preferred Stock and Common Stock, a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the Conversion Price
then in effect following such adjustment and the increased or decreased
number of shares issuable upon a conversion following such adjustment, and
shall set forth in reasonable detail the method of calculation of each and
a brief statement of the facts requiring such adjustment. Where
appropriate, such notice to holders of the Series A Preferred Stock may be
given in advance and included as part of the notice required under the
provisions of Section 9(i).
(b) Financial Reports. So long as any of shares of Series A
Preferred Stock is outstanding, in the event the Corporation is not
required to file quarterly and annual financial reports with the Securities
and Exchange Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act, the Corporation will furnish the holders of the Series A
Preferred Stock with reports containing the same information as would be
required in such reports.
SECTION 11. CERTAIN COVENANTS.
Any registered holder of Series A Preferred Stock may proceed to
protect and enforce its rights and the rights of such holders by any
available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision in
this Certificate of Designation or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
<PAGE>
IN WITNESS WHEREOF, the officers named below, acting for and on
behalf of ProMedCo Management Company have hereunto subscribed their names
on this ___ day of ________________.
PROMEDCO MANAGEMENT COMPANY
By:
---------------------------------
Name:
Title:
Attest:
By:
--------------------------
Name:
Title:
EXHIBIT 9 - FORM OF CERTIFICATE OF DESIGNATION OF SERIES B CONVERTIBLE
PREFERRED STOCK
PROMEDCO MANAGEMENT COMPANY
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151(g) of the General Corporation Law of the
State of Delaware, ProMedCo Management Company (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("DGCL"), DOES HEREBY CERTIFY that:
Pursuant to the authority conferred upon the Board of Directors
of the Corporation (the "Board of Directors") by Section A of Article IV of
the Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), and in accordance with the provisions of
Section 151(g) of the DGCL, the Board of Directors on _______________,
adopted the following resolution creating a series of Preferred Stock
designated as Series B Convertible Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the DGCL and the provisions of the Certificate
of Incorporation, a series of the class of authorized Preferred Stock, par
value $0.01 per share, of the Corporation is hereby created and that the
designation and number of shares thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations and restrictions
thereof, are as follows:
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in The City of New York or at a
place of payment are authorized by law, regulation or executive order
to remain closed.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or more related
transactions, of all or substantially all of the properties and assets
of the Corporation and its Subsidiaries taken as a whole to any Person
(as such term is used in Section 13(d)(3) of the Exchange Act), other
than the Purchasers or their affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Corporation, (iii)
the consummation of any transaction or other event (including, without
limitation, any merger or consolidation) the result of which is that
any "Person" or "Group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) (other than the Purchasers and their
affiliates) becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 45% of the voting stock of the Corporation,
or (iv) the first day on which a majority of the members of the Board
of Directors are not Continuing Directors.
"Commission" shall mean the Securities and Exchange Commission.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of the Board
of Directors as of January 13, 2000 or (ii) was nominated for election
or elected to the Board of Directors with the approval, recommendation
or endorsement of a majority of the Continuing Directors who were
members of the Board of Directors at the time of such nomination or
election.
"Conversion Price" shall mean the Initial Conversion Price,
subject to adjustment as provided in Section 9.
"Current Market Price" shall mean the average of the
daily Market Prices of the Common Stock for twenty consecutive
Trading Days immediately preceding the date for which such value
is to be computed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect
at the time. Reference to a particular section of the Exchange Act
shall include reference to the comparable section, if any, of any such
successor federal statute.
"Fair Market Value" shall mean, as to shares of Common Stock or
any other class of capital stock or securities of the Corporation or
any other issuer which are publicly traded, the average of the daily
Market Prices of such shares for twenty consecutive Trading Days
immediately preceding the date for which the Fair Market Value of any
such security is to be determined. The "Fair Market Value" of any such
security which is not publicly traded or of any other property shall
mean the fair value thereof as determined by an independent investment
banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of
Directors or a committee thereof.
"Junior Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock.
"Liquidation Preference" with respect to a share of Series B
Preferred Stock shall mean, as at any date, $100.00 per share (as
adjusted for any stock dividends, combinations or splits with respect
to such share), plus an amount equal to all accrued but unpaid
dividends (whether or not declared) on such share as at such date.
"Market Price" when used with reference to shares of Common Stock
or other securities on any date, shall mean (i) the price of the last
trade, as reported on the Nasdaq National Market, not identified as
having been reported late to such system, or (ii) if the Common Stock
is so traded, but not so quoted, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or
(iii) if the Common Stock is not listed or authorized for trading on
the Nasdaq National Market or any comparable system, the average of
the closing bid and asked prices as furnished by two members of the
National Association of Securities Dealers, Inc. selected from time to
time by the Corporation for that purpose. If the Common Stock or such
other securities are not publicly held or so listed or publicly
traded, "Market Price" shall mean the Fair Market Value per share of
Common Stock or of such other securities as determined in good faith
by the Board of Directors based on an opinion of an independent
investment banking firm acceptable to holders of a majority of the
shares of Series B Preferred Stock, which opinion may be based on such
assumptions as such firm shall deem to be necessary and appropriate.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, fully diluted shares of Common Stock (calculated as
prescribed by generally accepted accounting principles), except shares
then owned or held by or for the account of the Corporation or any
subsidiary thereof, and shall include all shares (i) issuable in
respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock and (ii) issuable in
respect of options or warrants to purchase, or securities convertible
into, shares of Common Stock.
"Parity Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding
up) with the Series B Preferred Stock, including the Series A
Preferred Stock.
"Paying Agent" shall mean the Transfer Agent or such other Person
or Persons as may be appointed by the Board of Directors from time to
time.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Second Closing" shall have the meaning ascribed to such term in
the Securities Purchase Agreement.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement, dated as of January 13, 2000, by and among the
Corporation and GS Capital Partners III, L.P. ("GSCP"), and certain
affiliates of GSCP set forth on the signature page thereto (the "GSCP
Affiliates", and collectively with GSCP and including their respective
successors and permitted assigns, the "Purchasers"), as amended by the
First Amendment to the Securities Purchase Agreement, dated as of May
5, 2000.
"Senior Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking senior to
(either as to dividends or upon liquidation, dissolution or winding
up) the Series B Preferred Stock.
"Series A Certificate of Designation" shall mean the Certificate
of Designation of the Series A Preferred Stock.
"Series A Preferred Stock" shall mean the Corporation's Series A
Convertible Preferred Stock, par value $0.01 per share.
"Subsidiary" or "Subsidiaries" shall mean any corporation,
limited liability company, partnership, business association or other
Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests
having the power to elect a majority of such Person's board of
directors or analogous or similar governing body, or otherwise having
the power to direct the management, business or policies of that
corporation, limited liability company, partnership, business
association or other Person.
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange, a
day on which such exchange is open for the transaction of business.
SECTION 2. DESIGNATION; NUMBER; RANK.
(a) Number; Designation. 125,000 shares of Preferred Stock of the
Corporation shall constitute a series designated as "Series B Convertible
Preferred Stock" (the "Series B Preferred Stock").
(b) Rank. The Series B Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution or winding up, rank
on a parity with the Series A Preferred Stock and senior to the Common
Stock, par value $0.01 per share, of the Corporation (the "Common Stock")
and all other capital stock of the Corporation issued prior to or on or
after the date hereof other than the Series A Preferred Stock.
SECTION 3. DIVIDENDS.
(a) Payment of Dividends. The holders of shares of Series B
Preferred Stock, in preference to the holders of shares of Common Stock and
of any shares of other capital stock of the Corporation as to payment of
dividends other than the Series A Preferred Stock, shall be entitled to
receive, when, as and if declared by the Board of Directors, out of the
assets of the Corporation legally available therefor, distributions in the
form of cumulative cash dividends at an annual rate per share equal to 6%
of the Liquidation Preference from and after the respective dates of
issuance of applicable shares of Series B Preferred Stock (the "Issue
Date"), as long as the shares of Series B Preferred Stock remain
outstanding. Dividends shall be (i) computed on the basis of the
Liquidation Preference; (ii) accrue and be payable quarterly, in arrears,
on March 31, June 30, September 30 and December 31 (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), except that if
any Quarterly Dividend Payment Date is not a Business Day then the
Quarterly Dividend Payment Date shall be on the first immediately
succeeding Business Day, commencing on the first Quarterly Dividend Payment
Date following the Issue Date; and (iii) payable in cash.
(b) Accrual of Dividends; Default Dividends. Dividends payable
pursuant to clause (a) of this Section 3 shall begin to accrue and be
cumulative from the Issue Date, whether or not declared on a daily basis.
The amount of dividends so payable shall be determined on the basis of
twelve 30-day months and a 360-day year. Accrued dividends not paid within
10 days of any Quarterly Dividend Payment Date shall accrue dividends at an
annual dividend rate of 8% of the Liquidation Preference (the "Default
Dividend Rate") until paid in full and shall be payable at any time as of
which funds legally available therefor are available to the Corporation
(without reference to any regular Quarterly Dividend Payment Date) to the
holders of record on such date, not exceeding 30 days preceding the payment
thereof, as may be fixed by the Board of Directors. Dividends paid on
shares of Series B Preferred Stock (including any dividends payable at the
Default Dividend Rate (such dividends, "Default Dividends")) in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. All references herein
to "unpaid dividends" shall be deemed to include any unpaid Default
Dividends.
(c) Restricted Payments. So long as any shares of Series B
Preferred Stock are outstanding, the Corporation shall not declare, pay or
set apart for payment any dividend on any of shares of Common Stock or
other capital stock of the Corporation other than the Series A Preferred
Stock, or make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any shares of Common Stock or other capital stock of the
Corporation other than the Series A Preferred Stock or any warrants,
rights, calls or options exercisable for or convertible into any shares of
Common Stock or other capital stock of the Corporation, or make any
distribution in respect thereof, either directly or indirectly, and whether
in cash, obligations or shares of the Corporation or other property, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Common Stock
or other capital stock of the Corporation other than the Series A Preferred
Stock or any warrants, rights, calls or options exercisable for or
convertible into any Common Stock or other capital stock of the Corporation
unless, all unpaid dividends on the shares of Series B Preferred Stock
shall have been paid.
(d) Dividends on Common Stock. So long as any shares of Series B
Preferred Stock remain outstanding, if the Corporation pays a dividend in
cash, securities or other property on shares of Common Stock then at the
same time the Corporation shall declare and pay a dividend on shares of
Series B Preferred Stock in the amount of dividends that would be paid with
respect to shares of Series B Preferred Stock if such shares were converted
into shares of Common Stock on the record date for such dividends (or if no
record date is established, at the date such dividend is declared).
SECTION 4. VOTING RIGHTS.
In addition to any voting rights provided by law, the holders of
shares of Series B Preferred Stock shall have the voting rights set forth
in this Section 4:
(a) Right to Vote as a Single Class with Holders of Common Stock.
So long as any shares of Series B Preferred Stock are outstanding, each
share of Series B Preferred Stock shall entitle the holder thereof to
notice of and to vote on all matters submitted to a vote of the
stockholders of the Corporation, voting together as a single class with the
holders of shares of Common Stock. The holders of each share of Series B
Preferred Stock shall be entitled to vote with respect to each share of
Series B Preferred Stock held by each such holder a number of votes equal
to the number of votes which could be cast in such vote by a holder of the
number of shares of Common Stock into which such share of Series B
Preferred Stock is convertible (as adjusted pursuant to Section 9) on the
record date for such vote. Fractional votes shall not, however, be
permitted and any fractional voting rights available on an as-converted
basis (after aggregation of all shares of Common Stock into which shares of
Series B Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward).
(b) Right to Designate Directors. In addition to any of the
voting rights provided to the holders of shares of Series B Preferred Stock
pursuant to the Securities Purchase Agreement, in the event the Corporation
shall have failed to pay in full (i) dividends on the shares of Series B
Preferred Stock for a period of twelve consecutive months or (ii) the
Mandatory Redemption Price within 30 days of the Mandatory Redemption Date,
then, in addition to any other rights that may otherwise be available to
holders of Series B Preferred Stock pursuant to this Certificate of
Designation or otherwise, the total number of directors of the Corporation
shall be increased by two, and the holders of Series B Preferred Stock,
voting together as a single class, shall by affirmative vote of holders of
a plurality of the total number of shares of Series B Preferred Stock
voting thereon, be entitled to elect to the Board of Directors, at a
meeting of such stockholders or by written consent in lieu thereof, two
additional directors (the "Default Directors") (which directors shall be in
addition to, and not in lieu of, any Preferred Designees (as defined in the
Securities Purchase Agreement) and any "Default Directors" elected by the
holders of the Series A Preferred Stock pursuant to the terms of the Series
A Certificate of Designation, and which shall each be required to satisfy
any qualifications existing under applicable law and shall be entitled to
all rights of voting and participation as are directors of the Corporation
generally), and shall be entitled, by affirmative vote of holders of a
majority of the total number of shares of Series B Preferred Stock then
outstanding or by written consent in lieu thereof, at any time to remove
any director so elected. Any other provision of this Certificate of
Designation or the Certificate of Incorporation or By-laws of the
Corporation notwithstanding, no Default Director may be removed except in
the manner provided for in this paragraph. Vacancies among the Default
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled at any time, but only by
the affirmative vote of holders of a plurality of the total number of
shares of Series B Preferred Stock then outstanding, voting together as a
single class, or by written consent in lieu thereof, and any director so
chosen shall hold office for a term expiring on the date the term of office
of the director such newly-elected director shall have replaced would have
expired. At any time during which the holders of Series B Preferred Stock
are entitled to elect Default Directors, in the event the Corporation
declares and pays in cash all theretofore unpaid dividends and/or pays in
full the Mandatory Redemption Amount, as the case may be, then the term of
any Default Director then in office shall be deemed to have expired as of
the time such payments are made, and the total number of directors of the
Corporation shall be reduced by the number of Default Directors then in
office whose term shall have expired and the holders of Series B Preferred
Stock shall cease to have any rights hereunder to elect Default Directors,
in each case, unless and until one or more of the conditions specified in
clauses (i) and (ii) hereof shall recur.
(c) Actions Not to be Taken Without Vote of Holders of Series B
Preferred Stock. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, without the affirmative vote or
consent of the holders of not less than 50% of all shares of Series B
Preferred Stock at any time outstanding:
(i) authorize, increase the authorized number of shares of,
or issue any shares of Senior Stock or Parity Stock;
(ii) increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Series B Preferred Stock
other than as required by this Certificate of Designation and pursuant to
the exercise of Series B Warrants; or
(iii) reclassify any shares of Series B Preferred Stock or
authorize, adopt or approve an amendment to this Certificate of Designation
which would increase or decrease the par value of the shares of Series B
Preferred Stock, or alter or change the powers, preferences or special
rights of the Series B Preferred Stock so as to affect such shares of
Series B Preferred Stock adversely.
(d) Exercise of Voting Rights. (i) The foregoing rights of
holders of shares of Series B Preferred Stock to take any actions as
provided in this Section 4 may be exercised at any annual meeting of
stockholders or at a special meeting of stockholders held for such purpose
or at any adjournment thereof, or by the written consent, delivered to the
Secretary of the Corporation, of the holders of not less than 50% of all
shares of Series B Preferred Stock outstanding as of the record date of
such written consent.
So long as such right to vote continues, the Chairman of the
Board of the Corporation may call, and if the holders of shares of Series B
Preferred Stock are to vote separately as a single class, upon the written
request of holders of record of 20% of the outstanding shares of Series B
Preferred Stock, addressed to the Secretary of the Corporation, at the
principal office of the Corporation, the Chairman of the Board of the
Corporation shall call, a special meeting of the holders of shares of
Series B Preferred Stock entitled to vote as provided herein. The
Corporation shall use its best efforts to hold such meeting within 60, but
in any event not later than 90, days after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in the
By-laws of the Corporation for the holding of meetings of stockholders;
provided that the Corporation shall not be required to call such a special
meeting if such request is received fewer than 90 days before the date
fixed for the next ensuing annual meeting of stockholders of the
Corporation; and provided, further, that if it is necessary for the
Corporation to solicit proxies for use at such special meeting, the
Corporation's obligation to conduct such special meeting shall be delayed
for such period of time as is necessary for the Corporation to prepare and
file a proxy statement and to obtain the Commission's clearance of such
proxy statement.
(ii) At each meeting of stockholders at which the holders of
shares of Series B Preferred Stock shall have the right, voting separately
as a single class, to take any action, the presence in person or by proxy
of the holders of record of one-half of the total number of shares of
Series B Preferred Stock then outstanding and entitled to vote on the
matter shall be necessary and sufficient to constitute a quorum. At any
such meeting or at any adjournment thereof, in the absence of a quorum of
the holders of shares of Series B Preferred Stock, a majority of the
holders of such shares present in person or by proxy shall have the power
to adjourn the meeting as to the actions to be taken by the holders of
shares of Series B Preferred Stock from time to time and place to place
without notice other than announcement at the meeting until a quorum shall
be present.
(iii) For the taking of any action as provided in this
Section 4 by the holders of shares of Series B Preferred Stock, each such
holder shall have one vote for each share of such stock standing in his
name on the transfer books of the Corporation as of any record date fixed
for such purpose or, if no such date be fixed, at the close of business on
the Business Day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the Business Day next
preceding the day on which the meeting is held.
SECTION 5. REDEMPTION.
(a) Optional Redemption. (i) Subject to the rights of holders of
shares of Series B Preferred Stock set forth in Section 9 hereof, the
Corporation shall, at any time following the fourth anniversary of the
Second Closing, have the right, at its sole option and election made in
accordance with clause (a)(ii) below, to redeem, to the extent the
Corporation shall have the funds legally available therefor, all, but not
less than all, of the outstanding shares of Series B Preferred Stock within
45 days following any date on which the Market Price per share of Common
Stock for at least 20 out of 30 consecutive Trading Days immediately
preceding such date (as adjusted for any stock dividends, combinations or
stock splits), including the last Trading Day of such period, is equal to
or greater than 150% of the Conversion Price in effect as of the first day
of such 30-Trading Day period (any such date, a "Redemption Trigger Date"),
for an amount per share equal to the Liquidation Preference (the "Optional
Redemption Price") as of the Optional Redemption Date (as defined below).
Notwithstanding the foregoing, no redemption shall be permitted pursuant to
this Section 5(a) at any time during which the Common Stock is not listed
or admitted to be listed on any of the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market.
(ii) Notice of any redemption of shares of Series B
Preferred Stock pursuant to clause (a)(i) shall be mailed, first class
postage prepaid, to each holder of such shares of Series B Preferred Stock,
at such holder's address as it appears on the transfer books of the
Corporation, specifying (x) the Optional Redemption Price and (y) the
redemption date (the "Optional Redemption Date"); and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the
shares to be redeemed (the "Optional Redemption Notice"). The Optional
Redemption Notice shall be mailed not more than 20 days following the
applicable Redemption Trigger Date. The Optional Redemption Date shall be
determined by the Corporation but in no event shall be earlier than the
10th day following the date of the Redemption Notice or later than the 25th
day following the Redemption Notice.
(b) Mandatory Redemption. (i) Subject to the rights of
holders of shares of Series B Preferred Stock set forth in Section 9
hereof, the Corporation shall, on the seventh anniversary of the Second
Closing (such date, the "Mandatory Redemption Date"), redeem, to the extent
the Corporation shall have the funds legally available therefor, all, but
not less than all, of the outstanding shares of Series B Preferred Stock
for an amount per share equal to the Liquidation Preference as of such date
(the "Mandatory Redemption Price"). If the funds of the Corporation legally
available for redemption of the shares of Series A Preferred Stock and
Series B Preferred Stock on the Mandatory Redemption Date are insufficient
to redeem the total number of shares of Series A Preferred Stock and Series
B Preferred Stock to be redeemed on such date, those funds which are
legally available will be used to redeem the maximum possible number of
such shares of Series A Preferred Stock and Series B Preferred Stock
ratably among the holders of such shares to be redeemed based upon the
number of shares of Series A Preferred Stock and Series B Preferred Stock
held by each such holder. The shares of Series B Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and
preferences provided in this Certificate of Designation at any time.
Thereafter, when sufficient additional funds of the Corporation are legally
available for the redemption of shares of Series A Preferred Stock and
Series B Preferred Stock that remain outstanding, such funds shall
immediately be used to redeem the entire balance of such shares of Series A
Preferred Stock and Series B Preferred Stock that the Corporation has
become obliged to redeem on the Mandatory Redemption Date but which the
Corporation has not redeemed.
(ii) Notice of any redemption of shares of Series B
Preferred Stock pursuant to clause (b)(i) shall be mailed, first class
postage prepaid, to each holder of shares of Series B Preferred Stock, at
such holder's address as it appears on the transfer books of the
Corporation, specifying (x) the number of shares of Series B Preferred
Stock to be redeemed, (y) the Mandatory Redemption Price and (z) the
Mandatory Redemption Date; and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, such holder's
certificate or certificates representing the shares to be redeemed (the
"Mandatory Redemption Notice"). The Mandatory Redemption Notice shall be
mailed not less than 25 and not more than 45 days prior to the Mandatory
Redemption Date.
(c) Payment of Redemption Price. On the date of any redemption
pursuant to this Section 5, (i) the Corporation shall in cash or by wire
transfer to an account designated by each holder the Optional Redemption
Price or the Mandatory Redemption Price, as the case may be, for each of
its shares of Series B Preferred Stock, and (ii) after payment has been
made in accordance with clause (i) above, dividends on the shares of Series
B Preferred Stock so called for redemption shall cease to accrue, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the Optional Redemption Price or
the Mandatory Redemption Price, as the case may be, and except the right to
convert shares of Series B Preferred Stock so called for redemption prior
to the close of business on the date immediately preceding the date fixed
for such redemption) shall cease.
SECTION 6. CHANGE OF CONTROL.
(a) Offer to Repurchase. Upon the occurrence of a Change of
Control, the Corporation shall make an offer (a "Change of Control Offer")
to each holder of shares of Series B Preferred Stock to repurchase all or
any part (subject to the rights of holder pursuant to Section 9) of each
such holder's shares of Series B Preferred Stock at an offer price in cash
equal to 101% of the Liquidation Preference as of the Change of Control
Payment Date (the "Change of Control Payment"). The Corporation shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of shares
of Series B Preferred Stock as a result of a Change of Control, and the
Corporation shall not be in violation of this Certificate of Designation by
reason of any act required by such rule or other applicable law.
(b) Within 25 days following any Change of Control, the
Corporation shall mail a notice to each holder of shares of Series B
Preferred Stock stating:
(i) that the Change of Control Offer is being made pursuant
to this Section 6 and that all shares of Series B Preferred Stock tendered
will be accepted for payment;
(ii) the purchase price and the purchase date, which shall
be at least 30 but no more than 60 days from the date on which the
Corporation mails notice of the Change of Control (the "Change of Control
Payment Date");
(iii) that any shares of Series B Preferred Stock not
tendered will continue to accrue dividends as provided in this Certificate
of Designation;
(iv) that, unless the Corporation defaults in the payment of
the Change of Control Payment, all shares of Series B Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue dividends after the Change of Control Payment Date;
(v) that holders of shares of Series B Preferred Stock
electing to have any shares of Series B Preferred Stock purchased pursuant
to a Change of Control Offer shall be required to surrender the shares of
Series B Preferred Stock to the Corporation or its designated agent for
such purpose, at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; and
(vi) that holders of shares of Series B Preferred Stock will
be entitled to withdraw their election if the Corporation or its designated
agent for such purpose, receives, not later than the close of business on
the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the holder of shares of Series B Preferred Stock, the number of shares of
Series B Preferred Stock delivered for purchase, and a statement that such
holder is withdrawing his election to have such shares purchased.
(c) On the Change of Control Payment Date, the Corporation shall,
to the extent lawful, (i) accept for payment all shares of Series B
Preferred Stock tendered pursuant to the Change of Control Offer and (ii)
deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all shares of Series B Preferred Stock so tendered.
The Corporation shall promptly mail to each holder of shares of Series B
Preferred Stock so tendered the Change of Control Payment for such shares.
The Corporation shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control
Payment Date.
SECTION 7. STATUS OF CONVERTED OR REDEEMED STOCK.
Any shares of Series B Preferred Stock converted, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares of Series B Preferred Stock shall upon their cancellation, and
upon the filing of any document required by the DGCL, become authorized but
unissued shares of Preferred Stock, $0.01 par value, of the Corporation and
may be reissued as part of another series of Preferred Stock, $0.01 par
value, of the Corporation.
SECTION 8. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) (i) In the event the Corporation shall (A) commence a
voluntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or (B) consent to
the entry of an order for relief in an involuntary case under such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation, or of any
substantial part of its property, or (C) make an assignment for the benefit
of its creditors, or (D) admit in writing its inability to pay its debts
generally as they become due, or (ii)(x) if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction
in the premises in an involuntary case under the Federal bankruptcy laws or
any other applicable Federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and (y) any such decree or order shall be unstayed and in
effect for a period of 60 consecutive days and on account of any such event
the Corporation shall liquidate, dissolve or wind up, or (iii) if the
Corporation shall otherwise liquidate, dissolve or wind up, after payment
or provision for the payment for the debts and other liabilities of the
Corporation (each, a "Liquidation"), before any payment or distribution to
holders of shares of Junior Stock or Parity Stock (other than the Series A
Preferred Stock), holders of shares of Series A Preferred Stock and Series
B Preferred Stock taken together shall be entitled to receive an amount
equal to the greater of (x) the Liquidation Preference (as set forth herein
and in the Series A Certificate of Designation) with respect to each share
of Series A Preferred Stock and Series B Preferred Stock held by such
holder as of the date of Liquidation, or (y) the aggregate amount that
would have been received with respect to the shares of Series A Preferred
Stock and Series B Preferred Stock upon any such Liquidation if such shares
had been converted to shares of Common Stock immediately prior to the date
of such Liquidation.
(b) If, upon any such Liquidation, whether voluntary or
involuntary, the assets to be distributed to the holders of the Series B
Preferred Stock shall be insufficient to permit payment of the full amount
of the Liquidation Preference with respect to each share of Series A
Preferred Stock and Series B Preferred Stock, then the entire assets of the
Corporation to be distributed among the holders of the Series A Preferred
Stock and Series B Preferred Stock shall be distributed ratably among such
holders of Series A Preferred Stock and Series B Preferred Stock in
accordance with the number of shares of Series A Preferred Stock and Series
B Preferred Stock held by each such holder.
(c) After the payment to the holders of shares of the Series B
Preferred Stock of the full amount of any liquidating distribution to which
they are entitled under this Section 8, the holders of the Series B
Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(d) Whenever the distribution provided for in this Section 8
shall be payable in securities or property other than cash, the value of
such distribution shall be the Fair Market Value of such securities or
property.
SECTION 9. CONVERSION.
(a) Right to Convert. Subject to the provisions for adjustment
hereinafter set forth, each share of Series B Preferred Stock shall be
convertible into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Liquidation Preference as of
the Conversion Date by the Conversion Price in effect as of the Conversion
Date. The Conversion Price shall initially be $4.00 (the "Initial
Conversion Price"), and shall be subject to adjustment as provided in
clauses (e) through (g) of this Section 9. The conversion right set forth
in this clause (a) shall be exercisable at the option of the holder at any
time following the Issue Date. In the case of shares of Series B Preferred
Stock called for redemption pursuant to Section 5 hereof, conversion rights
shall expire with respect to such shares on the Optional Redemption Date or
the Mandatory Redemption Date, as the case may be, when payment in full of
the applicable redemption price shall have been made by the Corporation.
(b) Mechanics of Conversion. Conversion of shares of Series B
Preferred Stock may be effected by any such holder upon the surrender to
the Corporation at the principal office of the Corporation or at the office
of any agent or agents of the Corporation, as may be designated by the
Board of Directors (the "Transfer Agent"), of the certificate(s) for such
Series B Preferred Stock to be converted, accompanied by a written notice
(the date of such notice being referred to as the "Conversion Date")
stating that such holder elects to convert all or a specified whole number
of such shares in accordance with the provisions of this Section 9 and
specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued; provided that in all
cases the converting holder shall convert at least 1000 shares of Series B
Preferred Stock (or if such holder holds less than 1000 shares, all shares
of Series B Preferred Stock held by such holder). In case any holder's
notice shall specify a name or names other than that of such holder, such
notice shall be accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock in such name or names. Other than
such taxes, the Corporation will pay any and all transfer, issue, stamp and
other taxes (other than taxes based on income) that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
Series B Preferred Stock pursuant hereto. As promptly as practicable, and
in any event within five Business Days after the surrender of such
certificate or certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes which are the
responsibility of the holder as set forth above (or the demonstration to
the satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable
full shares of Common Stock, to which the holder of shares of Series B
Preferred Stock being converted shall be entitled and (ii) if less than the
full number of shares of Series B Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new
certificate or certificates, of like tenor, for the number of shares
evidenced by such surrendered certificate or certificates less the number
of shares being converted. Such conversion shall be deemed to have been
made at the close of business on the Conversion Date so that the rights of
the holder thereof as to the shares being converted shall cease except for
the rights pursuant to Section 9(c) to receive shares of Common Stock, in
accordance herewith, and the person entitled to receive the shares of
Common Stock shall be treated for all purposes as having become the record
holder of such shares of Common Stock at such time.
In case any shares of Series B Preferred Stock are to be redeemed
pursuant to Sections 5 or 6, such right of conversion shall cease and
terminate as to the shares of Series B Preferred Stock to be redeemed at
the close of business on the Business Day preceding the applicable
redemption date.
(c) Fractional Shares. In connection with the conversion of any
shares of Series B Preferred Stock into shares of Common Stock, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the
Market Price per share of Common Stock on the Trading Day on which such
shares of Series B Preferred Stock are deemed to have been converted. If
more than one share of Series B Preferred Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares
of Common Stock issuable on conversion thereof shall be computed on the
basis of the total number of shares of Series B Preferred Stock so
surrendered. Promptly upon conversion, the Corporation shall pay to the
holder of shares of Series B Preferred Stock so converted out of funds
legally available, an amount equal to any accrued and unpaid dividends on
the shares of Series B Preferred Stock surrendered for conversion to the
date of such conversion, together with cash in lieu of any fractional
interest of such holder.
(d) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available for issuance upon
the conversion of the Series B Preferred Stock, free from any preemptive
rights, such number of its authorized but unissued shares of Common Stock
as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series B Preferred Stock issued or issuable pursuant
to the Securities Purchase Agreement into shares of Common Stock, and shall
take all actions required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all outstanding
shares of Series B Preferred Stock.
(e) Adjustment to Conversion Price for Dividends and for
Combinations or Subdivisions of Common Stock; Additional Shares. (i) In
case the Corporation shall at any time or from time to time after the
Second Closing (A) pay a dividend, or make a distribution, on the
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide
the outstanding shares of Common Stock, (C) combine the outstanding shares
of Common Stock into a smaller number of shares or (D) issue by
reclassification of the shares of Common Stock any shares of capital stock
of the Corporation, then, and in each such case, the Conversion Price in
effect immediately prior to such event or the record date therefor,
whichever is earlier, shall be adjusted so that the holder of any shares of
Series B Preferred Stock thereafter surrendered for conversion into Common
Stock shall be entitled to receive the number of shares of Common Stock or
other securities of the Corporation which such holder would have owned or
have been entitled to receive after the happening of any of the events
described above, had such shares of Series B Preferred Stock been
surrendered for conversion immediately prior to the happening of such event
or the record date therefor, whichever is earlier. An adjustment made
pursuant to this clause (i) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of
such subdivision, reclassification or combination, at the close of business
on the day upon which such corporate action becomes effective. No
adjustment shall be made pursuant to this clause (i) in connection with any
transaction to which clause (f) applies.
(ii) In case the Corporation shall at any time or from time
to time after the Second Closing pay a dividend or make a distribution to
all holders of shares of Common Stock (including any dividend or
distribution paid in connection with a consolidation or merger in which the
Corporation is the continuing corporation) of any shares of capital stock
of the Corporation or evidences of its indebtedness or assets or cash
(excluding dividends or distributions in connection with the liquidation,
dissolution or winding up of the Corporation) or rights or warrants to
subscribe for or purchase shares of Common Stock or securities convertible
into or exchangeable for Common Stock (excluding those securities referred
to in subsection (i) above), then in each such case the Conversion Price in
effect immediately prior thereto shall be reduced to an amount determined
by determined by multiplying (A) the Conversion Price in effect on the
record date for the determination of stockholders entitled to receive the
payment or distribution by (B) a fraction, the numerator of which shall be
the Current Market Price per share of Common Stock on such record date less
the then Fair Market Value as of such record date of the cash, assets,
evidences of indebtedness or securities so paid with respect to one share
of Common Stock, and the denominator of which shall be the Current Market
Price per share of Common Stock on such record date. Such adjustment shall
be made whenever any such payment is made, and shall become effective
retroactively immediately after such record date.
(iii) In case the Corporation shall issue shares of Common
Stock (or rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) (collectively, "Additional
Shares") after the Second Closing at a price per share (or having a
conversion price per share) less than the greater of (A) the Current Market
Price per share of Common Stock on the date preceding the earlier of the
issuance or public announcement of the issuance of such Additional Shares
of Common Stock and (B) the Conversion Price as of the date of issuance of
such shares (or, in the case of convertible or exchangeable securities,
less than the Current Market Price as of the date of issuance of the
rights, warrants or other securities in respect of which shares of Common
Stock were issued), then, and in each such case, the Conversion Price shall
be reduced to an amount determined by multiplying (A) the Conversion Price
in effect on the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the sum of (1) the number of shares of Common
Stock Outstanding immediately prior to such sale or issue multiplied by the
greater of (a) the then applicable Conversion Price per share and (b) the
Current Market Price per share of Common Stock on the date preceding the
earlier of the issuance or public announcement of the issuance of such
Additional Shares of Common Stock (the greater of (a) and (b) above
hereinafter referred to as the "Adjustment Price") and (2) the aggregate
consideration receivable by the Corporation for the total number of shares
of Common Stock so issued (or into or for which the rights, warrants or
other convertible securities may convert or be exercisable), and the
denominator of which shall be the sum of (x) the total number of shares of
Common Stock Outstanding immediately prior to such sale or issue and (y)
the number of Additional Shares issued (or into or for which the rights,
warrants or convertible securities may be converted or exercised),
multiplied by the Adjustment Price. An adjustment made pursuant to this
clause (iii) shall be made on the next Business Day following the date on
which any such issuance is made and shall be effective retroactively to the
close of business on the date of such issuance. For purposes of this clause
(iii), the aggregate consideration receivable by the Corporation in
connection with the issuance of shares of Common Stock or of rights,
warrants or other securities convertible into shares of Common Stock shall
be deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable to
third parties) of all such Common Stock, rights, warrants and convertible
securities plus the aggregate amount (as determined on the date of
issuance), if any, payable upon exercise or conversion of any such rights,
warrants and convertible securities into shares of Common Stock. If,
subsequent to the date of issuance of such right, warrants or other
convertible securities, the exercise or conversion price thereof is
reduced, such aggregate amount shall be recalculated and the Conversion
Price shall be adjusted retroactively to give effect to such reduction. On
the expiration of any option or the termination of any right to convert or
exchange any securities into Additional Shares, the Conversion Price then
in effect hereunder shall forthwith be increased to the Conversion Price
which would have been in effect at the time of such expiration or
termination (but taking into account other adjustments made following the
time of issuance of such options or securities) had such option or
security, to the extent outstanding immediately prior to such expiration or
termination, never been issued. If Common Stock is sold as a unit with
other securities, the aggregate consideration received for such Common
Stock shall be deemed to be net of the Fair Market Value of such other
securities. The issuance or reissuance of (i) any shares of Common Stock or
rights, warrants or other securities convertible into shares of Common
Stock (whether treasury shares or newly issued shares) (A) pursuant to a
dividend or distribution on, or subdivision, combination or
reclassification of, the Outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to clause (i) of this clause
(e); (B) pursuant to any restricted stock or stock option plan or program
of the Corporation involving the grant of options or rights to acquire
shares of Common Stock after the date hereof to directors, officers and
employees of the Corporation and its Subsidiaries as provided in Section
5.13 of the Purchase Agreement; (C) pursuant to any option, warrant, right,
or convertible security outstanding as of the Second Closing, or (ii) the
Series B Preferred Stock and any shares of Common Stock issuable upon
conversion or exercise thereof, shall not be deemed to constitute an
issuance of Common Stock or convertible securities by the Corporation to
which this clause (iii) applies. No adjustment shall be made pursuant to
this clause (iii) in connection with any transaction to which clause (f)
applies.
(iv) The term "dividend," as used in this clause (e), shall
mean a dividend or other distribution upon the capital stock of the
Corporation.
(v) Anything in this clause (e) to the contrary
notwithstanding, the Corporation shall not be required to give effect to
any adjustment in the Conversion Price (x) if, in connection with any event
which would otherwise require an adjustment pursuant to this clause (e),
the holders of Series B Preferred Stock have received the dividend or
distribution to which such holders are entitled under Section 3 hereof or
(y) unless and until the net effect of one or more adjustments (each of
which shall be carried forward), determined as above provided, shall have
resulted in a change of the Conversion Price such that the number of shares
of Common Stock receivable upon conversion of each share of Series B
Preferred Stock would differ by at least one one-hundredth of one share of
Common Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by at
least one one-hundredth of one share of Common Stock, such change in
Conversion Price shall thereupon be given effect.
(vi) The certificate of any firm of independent public
accountants of recognized national standing selected by the Board of
Directors (which may be the firm of independent public accountants
regularly employed by the Corporation) shall be presumptively correct for
any computation made under this clause (e).
(vii) If the Corporation shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive a dividend
or other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this clause (e) or in the Conversion Price then in effect shall
be required by reason of the taking of such record.
(viii) If any event occurs as to which the provisions of
this Section 9(e) are not strictly applicable or if strictly applicable
would not fairly protect the rights of the holders of the Series B
Preferred Stock in accordance with the essential intent and principles of
such provisions, the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent
and principles, so as to protect such rights of the holders of the Series B
Preferred Stock.
(f) Adjustment to Conversion Price for Reclassification and
Reorganization. In the case of any reclassification of the Common Stock,
any consolidation of the Corporation with, or merger with the Corporation
into, any other Person, any merger of another entity into the Corporation
(other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock
of the Corporation), any sale or transfer of all or substantially all of
the assets of the Corporation or any compulsory share exchange pursuant to
which share exchange the shares of Common Stock are converted into other
securities, cash or other property (each of the foregoing, a
"Transaction"), in addition to any rights of holders of shares of Series B
Preferred Stock pursuant to Section 6, each share of Series B Preferred
Stock then outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation of such
Transaction, the kind and amount of shares of stock and other securities
and property receivable (including cash) upon the consummation of such
Transaction by a holder of that number of shares of Common Stock into which
one share of Series B Preferred Stock was convertible immediately prior to
such Transaction. In case securities or property other than Common Stock
shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 9 shall be deemed to apply, so far as
appropriate and nearly as may be, to such other securities or property. The
Corporation, the person formed by the consolidation or resulting from the
merger or which acquires such assets or which acquires the Corporation's
shares, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such
rights and such rights shall be clearly provided for in the definitive
transaction documents relating to such transaction. The certificate or
articles of incorporation or other constituent document shall provide for
adjustments, which, for events subsequent to the effective date of the
certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The provisions of this Section 9(f) shall
similarly apply to successive reclassifications, consolidations, mergers,
sales, transfers or share exchanges.
(g) Adjustment to Conversion Price for Redemption. In case at any
time or from time to time after the Second Closing the Corporation shall
purchase, redeem or otherwise acquire any shares of Common Stock at a price
per share greater than the Current Market Price per share of such Common
Stock on the date of such event, or in case the Corporation shall purchase,
redeem or otherwise acquire other securities convertible into or
exchangeable for Common Stock for a consideration per share of Common Stock
into which such security is convertible or exchangeable greater than the
Current Market Price per share of Common Stock on the date of such event,
then the Conversion Price in effect immediately prior thereto shall be
reduced to an amount determined by multiplying (A) the Conversion Price in
effect on the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the difference between (1) the number of shares
of Common Stock Outstanding immediately prior to such purchase, redemption
or acquisition multiplied by the then applicable Current Market Price per
share and (2) the aggregate consideration payable by the Corporation for
the total number of shares of Common Stock so purchased, redeemed or
acquired (or, into or for which the rights, warrants or other convertible
securities may convert or be exercisable), and the denominator of which
shall be the difference between (x) the total number of shares of Common
Stock Outstanding immediately prior to such event and (y) the number of
shares so purchased, redeemed or acquired, multiplied by the then
applicable Current Market Price per share. Such adjustment shall be made
whenever such Common Stock is purchased, redeemed or otherwise acquired by
the Corporation, and shall become effective immediately after such date.
(h) Notice of Record Date. In case at any time or from time to
time (i) the Corporation shall pay any stock dividend or make any other
non-cash distribution to the holders of its Common Stock, or offer for
subscription pro rata to the holders of its Common Stock any additional
shares of stock of any class or any other right, or (ii) there shall be any
capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into
another corporation, or any sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially as an
entirety, or (iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then, in any one or more of
said cases the Corporation shall give at least 20 days' prior written
notice (the time of mailing of such notice shall be deemed to be the time
of giving thereof) to the registered holders of the Series B Preferred
Stock at the addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (A) a record
shall be taken for such stock dividend, distribution or subscription rights
or (B) such reorganization, reclassification, consolidation, merger, sale
or conveyance, dissolution, liquidation or winding up shall take place, as
the case may be; provided that, in the case of any Transaction to which
clause (f) applies the Corporation shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the date as of
which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding up,
as the case may be. Failure to give such notice shall not invalidate any
action so taken.
SECTION 10. REPORTS.
(a) Reports as to Adjustments. Upon any adjustment of the
Conversion Price then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion
provisions set forth in Section 9, then, and in each such case, the
Corporation shall promptly deliver to the Transfer Agent of the Series B
Preferred Stock and Common Stock, a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the Conversion Price
then in effect following such adjustment and the increased or decreased
number of shares issuable upon a conversion following such adjustment, and
shall set forth in reasonable detail the method of calculation of each and
a brief statement of the facts requiring such adjustment. Where
appropriate, such notice to holders of the Series B Preferred Stock may be
given in advance and included as part of the notice required under the
provisions of Section 9(i).
(b) Financial Reports. So long as any of shares of Series B
Preferred Stock is outstanding, in the event the Corporation is not
required to file quarterly and annual financial reports with the Securities
and Exchange Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act, the Corporation will furnish the holders of the Series B
Preferred Stock with reports containing the same information as would be
required in such reports.
SECTION 11. CERTAIN COVENANTS.
Any registered holder of Series B Preferred Stock may proceed to
protect and enforce its rights and the rights of such holders by any
available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision in
this Certificate of Designation or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
<PAGE>
IN WITNESS WHEREOF, the officers named below, acting for and on
behalf of ProMedCo Management Company have hereunto subscribed their names
on this ___ day of ________________.
PROMEDCO MANAGEMENT COMPANY
By:
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Name:
Title:
Attest:
By:
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Name:
Title:
