<\/p>\nCENTRE CAPITAL INVESTORS II, L.P. $12,312,000 12,312 30.7800%<\/p>\n
CENTRE CAPITAL TAX-EXEMPT 4,006,000 4,006 10.0150%
\n INVESTORS II, L.P.<\/p>\n
CENTRE CAPITAL OFFSHORE 2,679,000 2,679 6.6975%
\n INVESTORS II, L.P.<\/p>\n
CENTRE PARALLEL MANAGEMENT 189,000 189 0.4725%
\n PARTNERS, L.P.<\/p>\n
CENTRE PARTNERS COINVESTMENT, L.P. 2,117,000 2,117 5.2925%<\/p>\n
STATE BOARD OF ADMINISTRATION 18,697,000 18,697 46.7425%
\n OF FLORIDA ———– —— ———<\/p>\n
$40,000,000 40,000 100.0000%
\n =========== ======= =========
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
48<\/p>\n
53
\n EXHIBIT A<\/p>\n
REGISTRATION RIGHTS AGREEMENT dated as of July 15, 1998 by and among
\nSALTON\/MAXIM HOUSEWARES, INC., a Delaware corporation (the “Company”), and each
\nof the parties listed on the signature pages hereto under the caption
\n“Purchasers” (each, a “Purchaser,” and collectively, the “Purchasers”).<\/p>\n
This Agreement is made pursuant to the Stock Purchase Agreement (the
\n“Purchase Agreement”), dated as of July 15, 1998, by and among the Company and
\nthe Purchasers, whereby the Company has agreed, among other things, to issue to
\nthe Purchasers 40,000 shares of its Series A Voting Convertible Preferred
\nStock, par value $0.01 per share (the “Preferred Stock”). The Preferred Stock
\nis convertible into shares of the Company’s common stock, par value $.01 per
\nshare (the “Common Stock”), at a conversion price of $17.00 per share, as such
\nprice may be adjusted pursuant to the Certificate of Designation of the
\nrelative powers, preferences and rights and qualifications of the Preferred
\nStock.
\n In order to induce the Purchasers to enter into the Purchase Agreement,
\nthe Company has agreed to provide the registration rights set forth in this
\nAgreement. This<\/p>\n
54<\/p>\n
Agreement shall become effective upon the issuance of the shares of Preferred
\nStock to the Purchasers pursuant to the Purchase Agreement.<\/p>\n
In consideration of the foregoing and the respective covenants and
\nagreements herein contained, the parties hereto, intending to be legally bound
\nhereby, agree as follows:<\/p>\n
SECTION 1. Definitions. Capitalized terms used and not defined herein
\nhave the meanings assigned to such terms in the Purchase Agreement. As used
\nherein, unless the context otherwise requires, the following terms have the
\nfollowing respective meanings:<\/p>\n
“Blue Sky Filing” is defined in Section 2.07(a) of this Agreement.<\/p>\n
“Commission” means the Securities and Exchange Commission or any other
\nfederal agency at the time administering the Securities Act.<\/p>\n
“Common Stock” is defined in the introduction to this Agreement.<\/p>\n
“Company” is defined in the introduction to this Agreement.<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or
\nany successor federal statute, and the rules and regulations of the Commission
\nthereunder, all<\/p>\n
2<\/p>\n
55<\/p>\n
as the same shall be in effect at the time. Reference to a particular section
\ntherein shall include a reference to the comparable section, if any, of any
\nsuch successor federal statute.<\/p>\n
“Person” means a corporation, an association, a partnership, an
\norganization, a business, an individual, a governmental or political
\nsubdivision thereof or a governmental agency.<\/p>\n
“Preferred Stock” is defined in the introduction to this Agreement.<\/p>\n
“Purchase Agreement” is defined in the introduction to this Agreement.<\/p>\n
“Purchasers” is defined in the introduction to this Agreement.<\/p>\n
“Registrable Securities” means any (i) shares of Preferred Stock, (ii)
\nshares of Common Stock issued upon the conversion of the Preferred Stock and
\n(iii) securities issued or issuable with respect to any shares of Preferred
\nStock or Common Stock by way of stock dividend or stock split or in connection
\nwith a combination of shares, recapitalization, merger, consolidation or other
\nreorganization or otherwise. As to any particular Registrable Securities, once
\nissued such securities shall cease to be Registrable Securities when (a) a
\nregistration<\/p>\n
3<\/p>\n
56<\/p>\n
statement with respect to the sale of such securities shall have become
\neffective under the Securities Act and such securities shall have been disposed
\nof in accordance with such registration statement, (b) they shall have been
\nsold to the public pursuant to Rule 144 (or any successor provision) under the
\nSecurities Act, (c) they shall have been otherwise transferred, new
\ncertificates for them not bearing a legend restricting further transfer shall
\nhave been delivered by the Company and in the opinion of counsel reasonably
\nsatisfactory to the Company subsequent public distribution of them shall not
\nrequire registration or qualification of them under the Securities Act or any
\nsimilar state law then in force, or (d) they shall have ceased to be
\noutstanding.<\/p>\n
“Registration Expenses” is defined in Section 2.09(a) of this Agreement.<\/p>\n
“Securities Act” means the Securities Act of 1933, as amended, or any
\nsuccessor federal statute, and the rules and regulations of the Commission
\nthereunder, all as the same shall be in effect at the time. References to a
\nparticular section therein shall include a reference to the comparable section,
\nif any, of any such similar federal statute.<\/p>\n
4<\/p>\n
57<\/p>\n
SECTION 2. Registration under Securities Act. <\/p>\n
SECTION 2.01. Demand Registration. (a) Request. At any time after the
\ndate hereof, upon the written request of the Purchasers that the Company
\neffect the registration under the Securities Act of all or part (subject to
\nSection 2.01(f)) of the Purchasers’ Registrable Securities and specifying the
\ntypes of Registrable Securities to be registered and the intended method of
\ndisposition thereof, the Company will give prompt written notice of such
\nrequest to all registered holders of Registrable Securities, and thereupon the
\nCompany will, subject to the terms of this Agreement, use its reasonable best
\nefforts to effect the registration under the Securities Act of: <\/p>\n
(i) the Registrable Securities which the Company has been
\n requested to register by the Purchasers, and<\/p>\n
(ii) all other Registrable Securities which the Company has
\n been requested to register by written request of the holders
\n thereof given to the Company within 30 days after the giving of
\n the aforesaid written notice by the Company (specifying the
\n intended method of disposition of such Registrable Securities),
\n all to the extent<\/p>\n
5<\/p>\n
58<\/p>\n
requisite to permit the intended disposition of the Registrable
\n Securities to be so registered.<\/p>\n
(b) Registration of Other Securities. Whenever the Company shall effect a
\nregistration pursuant to this Section 2.01 in connection with an underwritten
\noffering by one or more holders of Registrable Securities, no securities other
\nthan Registrable Securities shall be included among the securities covered by
\nsuch registration unless (i) the managing underwriter of such offering shall
\nhave advised the Purchasers in writing that the inclusion of such other
\nsecurities would not adversely affect such offering or (ii) the Purchasers
\nshall have consented in writing to the inclusion of such other securities.<\/p>\n
(c) Registration Statement Form. Registrations under this Section 2.01
\nshall be on such appropriate registration form of the Commission (i) as shall
\nbe selected by the Company and (ii) as shall permit the disposition of such
\nRegistrable Securities in accordance with the intended method or methods of
\ndisposition specified in their request for such registration; provided,
\nhowever, that if at the time of such registration the Company satisfies the
\neligibility requirements for use of a registration statement on Form S-3 under
\nthe Securities Act, the Purchasers may request a registration on Form S-3 for
\nan offering to be<\/p>\n
6<\/p>\n
59<\/p>\n
made on a continuous basis pursuant to Rule 415 under the Securities Act (a
\n“Shelf Registration”) and the Company shall use all reasonable efforts to cause
\nthe registration to be made on such form. The Company agrees to include in any
\nsuch registration statement all information which, in the opinion of counsel to
\nthe Purchasers or counsel to the Company, is required to be included.<\/p>\n
(d) Effective Registration Statement. A registration requested pursuant
\nto this Section 2.01 shall not be deemed to have been effected and will not be
\nconsidered one of the three demand registrations which may be requested
\npursuant to this Agreement (i) if the registration statement with respect
\nthereto does not become effective, (ii) if after it has become effective, it
\ndoes not remain effective for a period of at least 90 days or, in the case of a
\nShelf Registration, one year (or in each case such shorter period during which
\nall the Registrable Securities registered thereunder are sold or disposed of)
\nor such registration is interfered with by any stop order, injunction or other
\norder or requirement of the Commission or other governmental agency or court
\nfor any reason and has not thereafter become effective, or (iii) if the
\nconditions to closing specified in the underwriting agreement entered into in
\nconnection with such registration are not satisfied<\/p>\n
7<\/p>\n
60<\/p>\n
or waived other than by reason of the failure or refusal of a holder of
\nRegistrable Securities to satisfy or perform a condition to such closing or a
\ndefault by an underwriter. If a demand is made pursuant to Section 2.01 and
\nthe Company files a registration statement and causes (or is in the process of
\ncausing) such registration statement to become effective and the holders
\nrequesting registration decide not to proceed with such registration for
\nreasons other than a breach by the Company of its obligations hereunder or the
\nCompany’s inability or failure to obtain the effectiveness of such registration
\nstatement, such request shall nevertheless count as one demand under Section
\n2.01.<\/p>\n
(e) Priority in Demand Registrations. If a demand registration pursuant
\nto this Section 2.01 involves an underwritten offering, and the managing
\nunderwriter shall advise the Company in writing (with a copy sent to each
\nholder of the Registrable Securities requesting registration) that the number
\nof securities requested to be included in such registration exceeds the number
\nwhich can be sold in such offering within a price range acceptable to the
\nPurchasers or such other person entitled to make a demand registration pursuant
\nto Section 8 hereof, such registration will include only that number of
\nRegistrable Securities which the Company is so advised can be sold in<\/p>\n
8<\/p>\n
61<\/p>\n
such offering, drawn pro rata from the holders of the Registrable Securities
\nrequesting such registration on the basis of the percentage of Registrable
\nSecurities held by the holders of Registrable Securities which have requested
\nthat such securities be included. In connection with any such registration, no
\nsecurities other than Registrable Securities shall be covered by such
\nregistration.<\/p>\n
(f) Limitations on Registration; Expenses. The Company will not be
\nrequired to effect, in the aggregate, more than three demand registrations
\npursuant to this Section 2.01 (or any other provision of this Agreement), of
\nwhich the Company shall pay all Registration Expenses in connection with all
\nthree demand registrations. The Company shall not be required to effectuate
\nany registration pursuant to this Section 2.01 within less than six months
\nafter the end of the effectiveness period of any other registration pursuant to
\nSection 2.01. Notwithstanding the foregoing, no demand may be made in respect
\nof a number of Registrable Securities by all holders demanding registration
\nwhich is less than the lesser of (x) 25% of the total Registrable Securities
\noriginally issued (or the equivalent thereof in the case of securities issued
\nupon the conversion thereof) or (y) the number of Registrable Securities having<\/p>\n
9<\/p>\n
62<\/p>\n
a market value (as reasonably estimated in good faith by the holders requesting
\nregistration) of at least $10,000,000.<\/p>\n
SECTION 2.02. Incidental Registration. (a) Right to Include the
\nRegistrable Securities. If the Company at any time proposes to register any of
\nits securities under the Securities Act by registration on Forms S-l, S-2 or
\nS-3 or any successor or similar form(s), whether or not for sale for its own
\naccount, it will each such time give prompt written notice to the Purchasers
\nand all other holders of Registrable Securities of its intention to do so and
\nof such holders’ rights under this Section 2.02. Upon the written request of
\nany such holder made within 30 days after the receipt of any such notice (15
\ndays if the Company gives telephonic notice to all holders of Registrable
\nSecurities, with written confirmation to follow promptly thereafter, stating
\nthat (i) such registration will be on Form S-3 and (ii) such shorter period of
\ntime is required because of a planned filing date) (which request shall specify
\nthe Registrable Securities to be disposed of by such holder), the Company will,
\nsubject to the next sentence, use its reasonable best efforts to effect the
\nregistration under the Securities Act of all Registrable Securities which the
\nCompany has been so requested to register by the holders thereof, to the extent
\nrequisite to permit the disposition <\/p>\n
10<\/p>\n
63<\/p>\n
of such Registrable Securities to be so registered. If the Company
\nthereafter determines for any reason not to register or to delay registration
\nof such securities, the Company may, at its election, give written notice of
\nsuch determination to each holder of Registrable Securities and, thereupon, (i)
\nin the case of a determination not to register, shall be relieved of the
\nobligation to register such Registrable Securities in connection with such
\nregistration (but not from any obligation of the Company to pay the
\nRegistration Expenses in connection therewith), without prejudice, however, to
\nthe rights (if any) of the Purchasers or an assignee to request that such
\nregistration be effected as a registration under Section 2.01, and (ii) in the
\ncase of a determination to delay registration, shall be permitted to delay
\nregistering any Registrable Securities, for the same period as the delay in
\nregistration of such other securities. All obligations of the Company with
\nrespect to any registration described in this Section 2.02(a) shall be subject
\nto the rights of the Company set forth in the immediately preceding sentence.
\nNo registration effected under this Section 2.02 shall relieve the Company of
\nits obligation to effect any registration upon request under Section 2.01. The
\nCompany will pay all Registration Expenses in connection with registration of<\/p>\n
11<\/p>\n
64<\/p>\n
Registrable Securities requested pursuant to this Section 2.02. If such
\noffering is to be underwritten, the holders seeking to sell such Registrable
\nSecurities agree to join in such underwritten offering.<\/p>\n
(b) Priority in Incidental Registrations. In a registration pursuant to
\nthis Section 2.02 involving an underwritten offering of the securities so being
\nregistered, whether or not for sale for the account of the Company by or
\nthrough one or more underwriters of recognized standing, if the managing
\nunderwriter of such underwritten offering shall inform the Company and the
\nholders of Registrable Securities requesting registration in such offering by
\nletter of its belief that the number or type of securities to be included in
\nsuch registration would interfere with the successful marketing of the
\nsecurities being distributed by such underwriters, then the Company will be
\nrequired to include in such registration only that number and type of
\nRegistrable Securities which it is so advised can be sold in such offering,
\ndrawn pro rata from the holders of Registrable Securities requesting such
\nregistration and the holders of any other securities to be registered (whether
\nor not pursuant to the exercise of a demand registration right by such holders)
\non the basis of the number of securities the registration of which shall have
\nbeen requested by such<\/p>\n
12<\/p>\n
65<\/p>\n
holders (it being understood that this provision shall not limit the number of
\nsecurities that the Company shall be entitled to register for sale for its own
\naccount).<\/p>\n
SECTION 2.03. Registration Procedures. In connection with the Company’s
\nobligations pursuant to Sections 2.01 and 2.02 hereof, the Company will use its
\nreasonable best efforts to effect such registrations to permit the sale of
\nRegistrable Securities in accordance with the intended method or methods of
\ndisposition thereof, and pursuant thereto the Company will as expeditiously as
\npossible:
\n (a) prepare and, as soon as reasonably practicable and in any
\n event within 30 days after the end of the period within which
\n requests for registration may be given to the Company, file with
\n the Commission (but not earlier than 90 days after the end of the
\n Company’s fiscal year or 45 days after the end of the last fiscal
\n quarter), a registration statement or registration statements on
\n the appropriate form under the Securities Act, which form shall be
\n available for the sale of the Registrable Securities by the
\n holders thereof in accordance with the intended method or methods
\n of distribution thereof, and use its reasonable best<\/p>\n
13<\/p>\n
66<\/p>\n
efforts to cause such registration statement to become effective
\n and to remain continuously effective for a period of 90 days
\n following the date on which such registration statement is
\n declared effective (or, in the case of a Shelf Registration, for a
\n period of one year following such date); provided that the Company
\n shall have no obligation to maintain the effectiveness of such
\n registration statement after the sale of all Registrable
\n Securities registered thereunder or for a period longer than that
\n specified in this paragraph (a);<\/p>\n
(b) prepare and file with the Commission such amendments and
\n post-effective amendments to the registration statement as may be
\n necessary to keep such registration statement effective for the
\n applicable period; cause the related prospectus to be supplemented
\n by any required prospectus supplement, and as so supplemented to
\n be filed pursuant to Rule 424 under the Securities Act; and comply
\n with the provisions of the Securities Act with respect to the
\n disposition of all securities covered by such registration
\n statement during the applicable period in accordance with the
\n intended<\/p>\n
14<\/p>\n
67<\/p>\n
methods of disposition by the sellers thereof set forth in such
\n registration statement or supplement to such prospectus;<\/p>\n
(c) notify the selling holders of Registrable Securities, and
\n the managing underwriters, if any, promptly, and (if requested by
\n any such Person) confirm such advice in writing, (i) when a
\n prospectus or any prospectus supplement or post-effective
\n amendment has been filed, and, with respect to a registration
\n statement or any post-effective amendment, when the same has
\n become effective, (ii) of any request by the Commission for
\n amendments or supplements to a registration statement or related
\n prospectus or for additional information, (iii) of the issuance by
\n the Commission of any stop order suspending the effectiveness of a
\n registration statement or the initiation of any proceedings for
\n that purpose, (iv) if at any time the representations and
\n warranties of the Company made as contemplated by Section 2.04(a)
\n below cease to be true and correct in any material respect, (v) of
\n the receipt by the Company of any notification with respect to the
\n suspension of the qualification of any of the<\/p>\n
15<\/p>\n
68<\/p>\n
Registrable Securities for sale in any jurisdiction or the
\n initiation or threatening of any proceeding for such purpose, (vi)
\n of the happening of any event which requires the making of any
\n changes in a registration statement or related prospectus so that
\n such documents will not contain any untrue statement of a material
\n fact or omit to state any material fact required to be stated
\n therein or necessary to make the statements therein not misleading
\n and (vii) if the Company reasonably determines that a
\n post-effective amendment to a registration statement would be
\n appropriate;<\/p>\n
(d) use its reasonable best efforts to prevent the issuance
\n of any order suspending the effectiveness of a Registration
\n Statement or of any order preventing or suspending the use of a
\n Prospectus or suspending the qualification (or exemption from
\n qualification) of any Registrable Securities for sale in any
\n jurisdiction and, if any such order is issued, to obtain the
\n withdrawal of any such order at the earliest possible moment.<\/p>\n
(e) if requested by the managing underwriters or any holder
\n of Registrable<\/p>\n
16<\/p>\n
69<\/p>\n
Securities being sold in connection with an underwritten offering,
\n immediately incorporate in a prospectus supplement or
\n post-effective amendment such information as the managing
\n underwriters and such holder agree should be included therein
\n relating to the sale and distribution of Registrable Securities,
\n including, without limitation, information with respect to the
\n number of Registrable Securities being sold to such underwriters,
\n the purchase price being paid therefor by such underwriters and
\n with respect to any other terms of the underwritten (or best
\n efforts underwritten) offering of the Registrable Securities to be
\n sold in such offering; make all required filings of such
\n prospectus supplement or post-effective amendment as soon as
\n notified of the matters to be incorporated in such prospectus
\n supplement or post-effective amendment; and supplement or make
\n amendments to any registration statement if requested by any
\n holder of Registrable Securities covered by such registration
\n statement or any underwriter of such Registrable Securities;<\/p>\n
17<\/p>\n
70<\/p>\n
(f) furnish to each selling holder of Registrable Securities
\n and each managing underwriter, without charge, at least one signed
\n copy of the registration statement or statements and any
\n post-effective amendment thereto, including financial statements
\n and schedules, all documents incorporated therein by reference and
\n all exhibits (including those incorporated by reference);<\/p>\n
(g) deliver to each holder of Registrable Securities and the
\n underwriters, if any, without charge, as many copies of the
\n prospectus or prospectuses (including each preliminary Prospectus)
\n and any amendment or supplement thereto as such Persons may
\n reasonably request; the Company consents to the use of such
\n prospectus or any amendment or supplement thereto by each of the
\n selling holders of Registrable Securities and the underwriters, if
\n any, in connection with the offering and sale of the Registrable
\n Securities covered by such Prospectus or any amendment or
\n supplement thereto;<\/p>\n
(h) prior to any public offering of Registrable Securities,
\n use its reasonable best<\/p>\n
18<\/p>\n
71<\/p>\n
efforts to register or qualify or cooperate with the selling
\n holders of Registrable Securities, the underwriters, if any, and
\n their respective counsel in connection with the registration or
\n qualification of such Registrable Securities for offer and sale
\n under the securities or Blue Sky laws of such jurisdictions as any
\n selling holder or underwriter reasonably requests in writing; keep
\n each such registration or qualification effective during the
\n period such registration statement is required to be kept
\n effective and do any and all other acts or things reasonably
\n necessary or advisable to enable the disposition in such
\n jurisdictions of the Registrable Securities covered by the
\n applicable registration statement; provided that the Company will
\n not be required to qualify generally to do business in any
\n jurisdiction where it is not then so qualified or to take any
\n action which would subject it to general service of process in any
\n such jurisdiction where it is not then so subject;<\/p>\n
(i) cooperate with the selling holders of Registrable
\n Securities and the managing underwriters, if any, to facilitate
\n the timely<\/p>\n
19<\/p>\n
72<\/p>\n
preparation and delivery of certificates representing Registrable
\n Securities to be sold and not bearing any restrictive legends
\n unless required by applicable law; and enable such Registrable
\n Securities to be in such denominations and registered in such
\n names as the managing underwriters may request at least two
\n business days prior to any sale of Registrable Securities to the
\n underwriters;<\/p>\n
(j) use its reasonable best efforts to cause the Registrable
\n Securities covered by the applicable registration statement to be
\n registered with or approved by such other governmental agencies or
\n authorities as may be necessary to enable the seller or sellers
\n thereof or the underwriters, if any, to consummate the disposition
\n of such Registrable Securities;<\/p>\n
(k) upon the occurrence of any event contemplated by
\n paragraph (c)(vi) above, prepare a supplement or post-effective
\n amendment to the applicable registration statement or related
\n prospectus or any document incorporated therein by reference or
\n file any other required document so that, as thereafter delivered
\n to the purchasers of <\/p>\n
20<\/p>\n
73<\/p>\n
the Registrable Securities being sold thereunder, such
\n prospectus will not contain any untrue statement of a material
\n fact or omit to state any material fact necessary to make the
\n statements therein not misleading;<\/p>\n
(l) take all such actions in connection therewith in order to
\n expedite or facilitate the disposition of such Registrable
\n Securities;<\/p>\n
(m) otherwise use its reasonable best efforts to comply with
\n all applicable rules and regulations of the Commission and make
\n generally available to its security holders earnings statements
\n satisfying the provisions of Section 11(a) of the Securities Act
\n and Rule 158 thereunder;<\/p>\n
(n) permit any holder of Registrable Securities, which
\n holder, in the judgment of its counsel, might be deemed to be a
\n “control person” of the Company (within the meaning of Section 15
\n of the Securities Act and Section 20 of the Exchange Act), to
\n participate in the preparation of such registration statement and
\n include therein material, furnished to the Company in writing
\n which, in the reasonable judgment of such holder <\/p>\n
21<\/p>\n
74<\/p>\n
and its counsel, is required to be included therein;<\/p>\n
(o) use its reasonable best efforts to cause all such
\n Registrable Securities to be listed on each securities exchange,
\n if any, on which Registrable Securities of the type then being
\n registered are listed; and<\/p>\n
(p) provide and cause to be maintained a transfer agent and
\n registrar (if applicable) for all Registrable Securities covered
\n by such registration statement from and after a date not later
\n than the effective date of such registration statement.<\/p>\n
The Company may require each holder of Registrable Securities as to which
\nany registration is being effected to furnish to the Company such information
\nregarding such holder and the distribution of such Registrable Securities as
\nthe Company may from time to time reasonably request in writing in order to
\ncomply with the Securities Act. Each holder of Registrable Securities as to
\nwhich any registration is being effected agrees to notify the Company, as
\npromptly as practicable, of any inaccuracy or change in information previously
\nfurnished by such holder to the Company or of the happening of any event in
\neither case as a <\/p>\n
22<\/p>\n
75<\/p>\n
result of which any prospectus relating to such registration contains an
\nuntrue statement of a material fact regarding such holder or the distribution
\nof such Registrable Securities or omits to state any material fact regarding
\nsuch holder or the distribution of such Registrable Securities required to be
\nstated therein or necessary to make the statement therein not misleading in
\nlight of the circumstances then existing, and to promptly furnish to the
\nCompany any additional information required to correct and update any
\npreviously furnished information or required such that such prospectus shall
\nnot contain, with respect to such holder or the distribution of such
\nRegistrable Securities, an untrue statement of a material fact or omit to state
\na material fact required to be stated therein or necessary to make the
\nstatements therein not misleading in light of the circumstances then existing.<\/p>\n
Each holder of Registrable Securities agrees that, upon receipt of any
\nnotice from the Company of the happening of any event of the kind described in
\nSection 2.03(c)(ii), (iii), (v), (vi) or (vii) hereof, such holder will
\nforthwith discontinue disposition of such Registrable Securities covered by
\nsuch registration statement or prospectus until such holder’s receipt of the
\ncopies of the supplemented or amended prospectus relating to such registration
\nstatement <\/p>\n
23<\/p>\n
76<\/p>\n
or prospectus, or until it is advised in writing by the Company that
\nthe use of the applicable prospectus may be resumed, and has received copies of
\nany additional or supplemental filings which are incorporated by reference in
\nsuch Prospectus, and, if so directed by the Company, such holder will deliver
\nto the Company (at the Company’s expense) all copies, other than permanent file
\ncopies then in such holder’s possession, of the prospectus covering the
\nRegistrable Securities current at the time of receipt of such notice.<\/p>\n
SECTION 2.04. Underwritten Offerings.<\/p>\n
(a) Demand Underwritten Offerings. In any offering by holders of
\nRegistrable Securities pursuant to a registration requested under Section
\n2.01, sales shall, at the request of the Purchasers, be made through a
\nnationally recognized investment banking firm (or syndicate managed by such a
\nfirm) selected by the holders of at least a majority in aggregate principal
\namount of the Registrable Securities to be included in such offering and
\napproved by the Company (which approval shall not be unreasonably withheld) and
\nthe Company shall enter into an underwriting agreement which shall be
\nreasonably satisfactory in form and substance to each holder and the
\nunderwriters and which shall contain representations, warranties and agreements
\n(including<\/p>\n
24<\/p>\n
77<\/p>\n
indemnification agreements to the effect and to the extent provided in Section
\n2.07(a)) as are customarily included by an issuer in underwriting agreements
\nwith respect to primary distributions. The holders of Registrable Securities
\nto be distributed by such underwriters shall be parties to such underwriting
\nagreement and may, at their option, require that any or all of the
\nrepresentations and warranties by, and the other agreements on the part of, the
\nCompany to and for the benefit of such underwriters shall also be made to and
\nfor the benefit of such holders of Registrable Securities and that any or all
\nof the conditions precedent to the obligations of such underwriters under such
\nunderwriting agreement be conditions precedent to the obligations of such
\nholders of Registrable Securities. Any such holder of Registrable Securities
\nshall not be required to make any representations or warranties to or
\nagreements with the Company or the underwriters other than representations,
\nwarranties or agreements regarding such holder, such holder3s Registrable
\nSecurities and such holder’s intended method of distribution and any other
\nrepresentation required by law.<\/p>\n
(b) Incidental Underwritten Offerings. If the Company at any time
\nproposes to register any of its securities under the Securities Act as
\ncontemplated by <\/p>\n
25<\/p>\n
78<\/p>\n
Section 2.02 and such securities are to be distributed by or through one or
\nmore underwriters, the Company will, if requested by any holder of Registrable
\nSecurities as provided in Section 2.02 and subject to the provisions of Section
\n2.02(b), use its reasonable best efforts to arrange for such underwriters to
\ninclude all the Registrable Securities to be offered and sold by such holder
\namong the securities to be distributed by such underwriters. The holders of
\nRegistrable Securities to be distributed by such underwriters shall be parties
\nto the underwriting agreement between the Company and such underwriters. Any
\nsuch holder of Registrable Securities shall not be required to make any
\nrepresentations or warranties to or agreements with the Company or the
\nunderwriters other than representations, warranties or agreements regarding
\nsuch holder, such holder’s Registrable Securities and such holder’s intended
\nmethod of distribution and any other representation required by law.<\/p>\n
SECTION 2.05. Preparation; Reasonable Investigation. In connection with
\nthe preparation and filing of each registration statement under the Securities
\nAct pursuant to this Agreement, the Company will give the holders of
\nRegistrable Securities to be registered under such registration statement,
\ntheir underwriters, and their respective counsel and accountants the
\nopportunity to <\/p>\n
26<\/p>\n
79<\/p>\n
participate in the preparation of such registration statement, each prospectus
\nincluded therein or filed with the Commission, and each amendment thereof or
\nsupplement thereto, and will give each of them such access to its books and
\nrecords and such opportunities to discuss the business of the Company with its
\nofficers and the independent public accountants who have certified its
\nfinancial statements as shall be necessary, in the opinion of such holders3 and
\nsuch underwriters’ respective counsel, to conduct a reasonable investigation
\nwithin the meaning of the Securities Act.<\/p>\n
SECTION 2.06. Limitations, Conditions and Qualifications to Obligations
\nUnder Registration Covenants. The obligations of the Company to use its
\nreasonable efforts to cause the Registrable Securities to be registered under
\nthe Securities Act are subject to each of the following limitations, conditions
\nand qualifications:<\/p>\n
(a) The Company shall not be obligated to file or keep effective any
\nregistration statement pursuant to Section 2.01 hereof at any time if the
\nCompany would be required to include financial statements audited as of any
\ndate other than the end of its fiscal year.<\/p>\n
(b) The Company shall be entitled to postpone for a reasonable period of
\ntime (but not exceeding 30 days and not more than once in any six-month period)
\nthe filing or <\/p>\n
27<\/p>\n
80<\/p>\n
effectiveness of any registration statement otherwise required to be prepared
\nand filed by it pursuant to Section 2.01 if the Company determines, in its
\nreasonable judgment, that (i) the Company is in possession of material
\ninformation that has not been disclosed to the public and the Company
\nreasonably determines that it would be significantly detrimental to the Company
\nand its stockholders to disclose such information at such time in a
\nregistration statement or (ii) such registration and offering would
\nsignificantly interfere with any financing, acquisition, corporate
\nreorganization or other material transaction involving the Company or any of
\nits Affiliates (as defined in the rules and regulations adopted under the
\nExchange Act) and, in any such case, the Company promptly gives the requesting
\nholders of Registrable Securities written notice of such determination,
\ncontaining a general statement of the reasons for such postponement and an
\napproximation of the anticipated delay. If the Company shall so postpone the
\nfiling of a registration statement, the requesting holders of Registrable
\nSecurities shall have the right to withdraw the request for registration by
\ngiving written notice to the Company within 30 days after receipt of the notice
\nof postponement and, in the event of such withdrawal, such request shall not be
\ncounted for purposes <\/p>\n
28<\/p>\n
81<\/p>\n
of the requests for registration to which the Purchasers and their assignees
\nare entitled pursuant to Section 2.01 hereof.<\/p>\n
(c) No holder of Registrable Securities may participate in any
\nunderwritten offering hereunder unless such holder (i) agrees to sell such
\nholder’s Registrable Securities on the basis provided in any underwriting
\narrangements approved by the persons entitled hereunder to approve such
\narrangements and (ii) completes and executes all questionnaires, powers of
\nattorney, indemnities, underwriting agreements and other documents reasonably
\nrequired under the terms of such underwriting arrangements.<\/p>\n
SECTION 2.07. Indemnification. (a) Indemnification by the Company. In
\nthe event of any registration of any Registrable Securities under the
\nSecurities Act, the Company will, and hereby does, indemnify and hold harmless,
\nto the fullest extent permitted by law, the holder of any Registrable
\nSecurities whose Registrable Securities are covered by such registration
\nstatement, its directors and officers, each other Person who participates as an
\nunderwriter in the offering or sale of such securities and each other Person,
\nif any, who controls such seller or any such underwriter within the meaning of
\nthe Securities Act, against any and all losses, claims, damages, liabilities
\nand <\/p>\n
29<\/p>\n
82<\/p>\n
expenses, joint or several, (or actions or proceedings, whether commenced
\nor threatened, in respect thereof) to which they or any of them may become
\nsubject under the Securities Act or any other statute or common law, including
\nany amount paid in settlement of any litigation, commenced or threatened, and
\nto reimburse them for any reasonable legal or other expenses incurred by them
\nin connection with investigating any claims and defending any actions, insofar
\nas any such losses, claims, damages, liabilities, expenses or actions arise out
\nof or are based upon (i) any untrue statement or alleged untrue statement of a
\nmaterial fact contained in the registration statement or prospectus relating to
\nthe sale of such securities or any post-effective amendment thereto or in any
\nfiling made in connection with the qualification of the offering under Blue Sky
\nor other securities laws of jurisdictions in which the Registrable Securities
\nare offered (“Blue Sky Filing”), or the omission or alleged omission to state
\ntherein a material fact required to be stated therein or necessary in order to
\nmake the statements therein, in light of the circumstances under which they
\nwere made, not misleading or (ii) any untrue statement or alleged untrue
\nstatement of a material fact contained in any preliminary prospectus, if used
\nprior to the effective date of such registration statement (unless <\/p>\n
30<\/p>\n
83<\/p>\n
such statement is corrected in the final prospectus and the Company has
\npreviously furnished copies thereof to any holder of Registrable Securities
\nseeking such indemnification and the underwriters), or contained in the final
\nprospectus (as amended or supplemented if the Company shall have filed with the
\nCommission any amendment thereof or supplement thereto) if used within the
\nperiod during which the Company is required to keep the registration statement
\nto which such prospectus relates current, or the omission or alleged omission
\nto state therein (if so used) a material fact necessary in order to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading; provided, however, that the indemnification agreement contained
\nherein shall not (i) apply to such losses, claims, damages, liabilities,
\nexpenses or actions arising out of, or based upon, any such untrue statement or
\nalleged untrue statement, or any such omission or alleged omission, if such
\nstatement or omission was made in reliance upon and in conformity with written
\ninformation furnished to the Company by such seller or such underwriter
\nspecifically stating that it is for use in connection with preparation of the
\nregistration statement, any preliminary prospectus or final prospectus
\ncontained in the registration statement, any such amendment or supplement
\nthereto or any <\/p>\n
31<\/p>\n
84<\/p>\n
Blue Sky Filing or (ii) inure to the benefit of any underwriter or any person
\ncontrolling such underwriter, to the extent that any such loss, claim, damage,
\nliability (or action or proceeding in respect thereof) or expense arises out of
\nsuch person’s failure to send or give a copy of the final prospectus, as the
\nsame may be then supplemented or amended, to the person asserting an untrue
\nstatement or alleged untrue statement or omission or alleged omission at or
\nprior to the written confirmation of the sale of Registrable Securities to such
\nperson if such statement or omission was corrected in such final prospectus.<\/p>\n
Such indemnity shall remain in full force and effect regardless of any
\ninvestigation made by or on behalf of such seller or any such director, officer
\nor controlling person and shall survive the transfer of such securities by such
\nseller.<\/p>\n
(b) Indemnification by the Sellers. The Company may require, as a
\ncondition to including any Registrable Securities in any registration statement
\nfiled pursuant to Section 2.01 or 2.02, that the Company shall have received an
\nundertaking satisfactory to it from the prospective seller of such securities,
\nto indemnify and hold harmless (in the same manner and to the same extent as
\nset forth in subdivision (a) of this Section 2.07(a)) the Company, each<\/p>\n
32<\/p>\n
85<\/p>\n
director of the Company, each officer of the Company and each other person, if
\nany, who controls the Company within the meaning of the Securities Act, with
\nrespect to any untrue statement or alleged untrue statement in, or omission or
\nalleged omission from, such registration statement, any preliminary prospectus
\nor final prospectus contained therein, or any amendment or supplement thereto,
\nif such statement or omission was made in reliance upon and in conformity with
\nwritten information furnished to the Company through an instrument duly
\nexecuted by such seller specifically stating that it is for use in such
\nregistration statement, preliminary prospectus, final prospectus, amendment or
\nsupplement. Such indemnity shall remain in full force and effect, regardless
\nof any investigation made by or on behalf of the Company or any such director,
\nofficer or controlling person and shall survive the transfer of such securities
\nby such seller. In no event shall any indemnity or contribution paid by any
\nseller to the Company pursuant to this Section 2.07, or otherwise, exceed the
\nproceeds received by such seller in such offering. In the case of an
\nunderwritten offering of Registrable Securities, each holder of Registrable
\nSecurities shall agree to indemnify such underwriters, their officers and
\ndirectors, if any, and each person, if any, who controls such underwriters
\nwithin the <\/p>\n
33<\/p>\n
86<\/p>\n
meaning of Section 15 of the Securities Act and Section 20 of the
\nExchange Act, with respect to information furnished by them for use in the
\nregistration statement or prospectus to the extent customary in the
\ncircumstances for a selling stockholder in an underwritten public offering.<\/p>\n
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
\nparty of notice of the commencement of any action or proceeding involving a
\nclaim referred to in the preceding subdivisions of this Section 2.07(a), such
\nindemnified party will, if a claim in respect thereof is to be made against an
\nindemnifying party, give written notice to the latter within five days of the
\ncommencement of such action; provided that the failure of any indemnified party
\nto give notice as provided herein shall not relieve the indemnifying party of
\nits obligations under the preceding subdivisions of this Section 2.07(a),
\nexcept to the extent that the indemnifying party is actually prejudiced by such
\nfailure to give notice. In case any such action is brought against an
\nindemnified party, the indemnifying party shall be entitled to participate in
\nand, unless in such indemnified party’s reasonable good faith judgment a
\nconflict of interest between such indemnified and indemnifying parties may
\nexist in respect of such claim, to assume the defense thereof, jointly with any
\nother <\/p>\n
34<\/p>\n
87<\/p>\n
indemnifying party similarly notified to the extent that it may wish, with
\ncounsel reasonably satisfactory to such indemnified party, and after notice
\nfrom the indemnifying party to such indemnified party of its election so to
\nassume the defense thereof, the indemnifying party shall not be liable to such
\nindemnified party for any legal or other expenses subsequently incurred by the
\nlatter in connection with the defense thereof other than reasonable costs of
\ninvestigation. In the event that the indemnifying party advises an indemnified
\nparty that it will contest a claim for indemnification hereunder, or fails,
\nwithin thirty (30) days of receipt of any indemnification notice to notify, in
\nwriting, such person of its election to defend, settle or compromise, at its
\nsole cost and expense, any action, proceeding or claim (or discontinues its
\ndefense at any time after it commences such defense), then the indemnified
\nparty may, at its option, defend, settle or otherwise compromise or pay such
\naction or claim. In any event, unless and until the indemnifying party elects
\nin writing to assume and does so assume the defense of any such claim,
\nproceeding or action, the indemnified party’s reasonable out-of-pocket costs
\nand expenses arising out of the defense, settlement or compromise of any such
\naction, claim or proceeding shall be losses subject to indemnification
\nhereunder. The <\/p>\n
35<\/p>\n
88<\/p>\n
indemnified party shall cooperate fully with the indemnifying party in
\nconnection with any negotiation or defense of any such action or claim by the
\nindemnifying party and shall furnish to the indemnifying party all information
\nreasonably available to the indemnified party which relates to such action or
\nclaim. The indemnifying party shall keep the indemnified party fully appraised
\nat all times as to the status of the defense or any settlement negotiations
\nwith respect thereto. If the indemnifying party elects to defend any such
\naction or claim, then the indemnified party shall be entitled to participate in
\nsuch defense with counsel of its choice at its sole cost and expense. If the
\nindemnifying party does not assume such defense, the indemnified party shall
\nkeep the indemnifying party appraised at all times as to the status of the
\ndefense; provided, however, that the failure to keep the indemnifying party so
\ninformed shall not affect the obligations of the indemnifying party hereunder.
\nNo indemnifying party shall be liable for any settlement of any action, claim
\nor proceeding effected without its written consent; provided, however, that the
\nindemnifying party shall not unreasonably withhold, delay or condition its
\nconsent. No indemnifying party shall, without the consent of the indemnified
\nparty (which consent shall not be <\/p>\n
36<\/p>\n
89<\/p>\n
unreasonably withheld, delayed or conditioned), consent to entry of any
\njudgment or enter into any settlement which does not include as an
\nunconditional term thereof the giving by the claimant or plaintiff to such
\nindemnified party of a release from all liability in respect to such claim or
\nlitigation.<\/p>\n
(d) Contribution. (i) If the indemnification from the indemnifying party
\nas provided in this Section 2.07 is unavailable or is otherwise insufficient to
\nhold harmless an indemnified party in respect of any losses, claims, damages,
\nliabilities or expenses referred to therein, then the indemnifying party shall,
\nto the fullest extent permitted by law, contribute to the amount paid or
\npayable by such indemnified party as a result of such losses, claims, damages,
\nliabilities or expenses in such proportion as is appropriate to reflect the
\nrelative fault of the indemnifying party and indemnified parties in connection
\nwith the actions which resulted in such losses, claims, damages, liabilities or
\nexpenses, as well as any other relevant equitable considerations. The relative
\nfault of such indemnifying party shall be determined by reference to, among
\nother things, whether any action in question, including any untrue (or alleged
\nuntrue) statement of a material fact or omission (or alleged omission) to state
\na <\/p>\n
37<\/p>\n
90<\/p>\n
material fact, has been made, or related to information supplied by such
\nindemnifying party, and the parties3 relative intent, knowledge, access to
\ninformation and opportunity to correct or prevent such action. The amount paid
\nor payable by a party as a result of the losses, claims, damages, liabilities
\nand expenses referred to above shall be deemed to include, subject to the
\nlimitations set forth in Section 2.07(c), any legal or other fees or expenses
\nreasonably incurred by such party in connection with any investigation or
\nproceeding.<\/p>\n
(ii) The parties hereto agree that it would not be just and equitable if
\ncontribution pursuant to this Section 2.07 were determined by pro rata
\nallocation or by any other method of allocation which does not take account of
\nthe equitable considerations referred to in the immediately preceding
\nparagraph. No person guilty of fraudulent misrepresentation (within the
\nmeaning of Section 11(f) of the Securities Act) shall be entitled to
\ncontribution from any person who was not guilty of such fraudulent
\nmisrepresentation. If however, indemnification is available under this Section
\n2.07, the indemnifying parties shall indemnify each indemnified party to the
\nfullest extent provided in Section 2.07(a) and (b) hereof without regard to the
\nrelative fault of said indemnifying party or indemnified <\/p>\n
38<\/p>\n
91<\/p>\n
party or any other equitable consideration provided for in this Section
\n2.07(d).<\/p>\n
(e) Indemnification Payments. The indemnification and contribution
\nrequired by this Section 2.07(a) shall be made by periodic payments of the
\namount thereof during the course of the investigation or defense, as and when
\nbills are received or expense, loss, damage or liability is incurred.<\/p>\n
(f) Other Rights; Liabilities. The indemnity agreements contained herein
\nshall be in addition to (i) any cause of action or similar right of the
\nindemnified party against the indemnifying party or others, and (ii) any
\nliabilities the indemnifying party may be subject to pursuant to the law.<\/p>\n
SECTION 2.08. Adjustments Affecting Registrable Securities.<\/p>\n
(a) During any period commencing on either (i) the date a request for a
\ndemand registration has been made pursuant to Section 2.01(a) hereof or (ii)
\nthe date on which any holder of Registrable Securities makes written request in
\naccordance with the terms of Section 2.02(a) hereof to have its Registrable
\nShares registered, and in either event, terminating on the date which is the
\nearlier of (i) 180 days after the date on which the registration statement<\/p>\n
39<\/p>\n
92<\/p>\n
registering such Registrable Securities becomes effective and (ii) the date on
\nwhich all Registrable Securities registered under such registration statement
\nare sold, transferred or disposed of, the Company will not, without the consent
\nof the Purchasers, effect, permit to occur or announce any future intent to
\neffect or permit to occur, any combination or subdivision of shares which would
\nmaterially adversely affect the ability of the holders of Registrable
\nSecurities to include Registrable Securities in any registration of securities
\ncontemplated by this Section 2 or the marketability of Registrable Securities
\nunder any such registration.<\/p>\n
SECTION 2.09. Registration Expenses. (a) Except as provided in Section
\n2.09(b), all expenses incident to the Company’s performance of or compliance
\nwith this Agreement, including without limitation (i) any allocation of
\nsalaries and expenses of Company personnel or other general overhead expenses
\nof the Company, or other expenses for the preparation of historical and pro
\nforma financial statements or other data normally prepared by the Company in
\nthe ordinary course of business or customarily prepared by the issuer in a
\npublic offering; (ii) all registration, application, filing, listing, transfer
\nand registrar fees; (iii) all National Association of Securities Dealers fees<\/p>\n
40<\/p>\n
93<\/p>\n
and fees and expenses of registration or qualification of Registrable
\nSecurities under state securities or blue sky laws; (iv) all word processing,
\nduplicating and printing expenses, messenger and delivery expenses; and (v) the
\nfees and disbursements of counsel for the Company and the reasonable fees and
\ndisbursements of one counsel retained by the holder or holders a majority of
\nthe Registrable Securities being registered and the fees and disbursements of
\nthe Company’s independent public accountants, including the expenses of
\ncustomary “cold comfort” letters required by or incident to such performance
\nand compliance; and (vi) subject to the proviso hereinbelow, any fees and
\ndisbursements of underwriters and broker-dealers customarily paid by issuers or
\nsellers of securities (all such expenses being herein called “Registration
\nExpenses”) will be borne or caused to be borne by the Company whether or not
\nany of the Registration Statements become effective provided, however, that in
\nall cases in which the Company is required to pay Registration Expenses
\nhereunder, Registration Expenses shall exclude, and the sellers of the
\nRegistrable Securities being registered shall pay, all underwriting discounts
\nand commissions and transfer taxes in respect of the Registrable Securities
\nunder state securities or blue sky laws.<\/p>\n
41<\/p>\n
94<\/p>\n
SECTION 2.10. Other Sales. (a) The Company hereby agrees not to effect,
\nany public sale or distribution of any securities of the same class as (or
\notherwise similar to) the Registrable Securities, or any securities which, with
\nnotice, lapse of time and\/or payment of monies, are exchangeable or exercisable
\nfor or convertible into any such securities, or to enter into any agreement to
\nmake, file a registration statement for, or announce any such public sale or
\ndistribution of, any such securities, excluding the grant and exercise of
\nemployee stock options and the issuance of shares in connection with
\nacquisitions as long as all executive officers, directors and other affiliates
\nof the entity being acquired have agreed in writing to the restrictions set
\nforth in this Section 2.10(a), during the 15-day period prior to, and during
\nthe 90-day period commencing on, the effective date of a registration statement
\nfiled with the Commission in connection with an underwritten offering effected
\npursuant to Section 2.1 of this Agreement without the prior written consent of
\nthe managing underwriters of such offering.<\/p>\n
(b) The Purchasers (and their assigns) agree, during the 10-day period
\nprior to, and during the 90-day period commencing on, the effective date of a
\nregistration statement filed with the Commission (other than on Form S-8)<\/p>\n
42<\/p>\n
95<\/p>\n
in connection with an underwritten offering of securities of the same class as
\nthe then outstanding Registrable Securities (or any securities issuable upon
\nconversion or exchange thereof), not to make any sales of Registrable
\nSecurities (or such other securities) pursuant to Rule 144, provided that they
\nwere given the opportunity, if required by (and subject to) Section 2.02
\nhereof, to include in such registration statement all such Registrable
\nSecurities as they may have requested.<\/p>\n
SECTION 3. Rule 144. The Company shall take all actions reasonably
\nnecessary to enable holders of Registrable Securities to sell such securities
\nwithout registration under the Securities Act within the limitation of the
\nexemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
\nbe amended from time to time, or (b) any similar rule or regulation hereafter
\nadopted by the Commission including, without limiting the generality of the
\nforegoing, filing on a timely basis all reports required to be filed by the
\nExchange Act. Upon the request of any holder of Registrable Securities, the
\nCompany will deliver to such holder a written statement as to whether it has
\ncomplied with such requirements. Notwithstanding anything herein to the
\ncontrary, no holder may exercise any right to require the registration of a<\/p>\n
43<\/p>\n
96<\/p>\n
number of Registrable Securities which he is at such time able to sell pursuant
\nto Rule 144 (without being limited by any volume restriction therein with
\nrespect to Registrable Securities desired to be sold immediately by such
\nholder).<\/p>\n
SECTION 4. Entire Agreement; Amendments and Waivers. This Agreement,
\ntogether with the Purchase Agreement and the agreements, schedules, exhibits
\nand annexes referred to therein, and the Certificate of Designation, represents
\nthe entire agreement and understanding among the parties hereto with respect to
\nthe subject matter hereof and supersedes any and all prior oral and written
\nagreements, arrangements and understandings among the parties hereto with
\nrespect to such subject matters. This Agreement may be amended, waived or
\nmodified only by a written instrument signed by the Company and the holder or
\nholders of a majority of the shares of Registrable Securities.<\/p>\n
SECTION 5. Other Registration Rights. The Company hereby covenants and
\nagrees not to hereafter enter into any agreement, arrangement or understanding
\nwith respect to its securities which conflicts with or is inconsistent with the
\nrights granted to the holders of Registrable Securities under this Agreement.<\/p>\n
44<\/p>\n
97<\/p>\n
SECTION 6. Nominees for Beneficial Owners. In the event that any
\nRegistrable Securities are held by a nominee for the beneficial owner thereof,
\nthe beneficial owner thereof may, at its election, be treated as the holder of
\nsuch securities for purposes of any request or other action by any holder or
\nholders of securities pursuant to this Agreement or any determination of any
\nnumber or percentage of shares of securities held by any holder or holders of
\nsecurities contemplated by this Agreement. If the beneficial owner of any
\nRegistrable Securities so elects, the Company may require assurances reasonably
\nsatisfactory to it of such owner’s beneficial ownership of such Registrable
\nSecurities.<\/p>\n
SECTION 7. Notices. Any notice, demand, request, waiver, or other
\ncommunication under this Agreement shall be in writing and shall be deemed to
\nhave been duly given (i) on the date of service if personally served or
\ntransmitted via telecopy, (ii) on the next business day after delivery to an
\novernight carrier or (iii) on the third day after mailing if mailed to the
\nparty to whom notice is to be given, by first class mail, registered, return
\nreceipt requested, postage prepaid and (a) if addressed to the Purchasers,
\naddressed to such party in the manner set forth in the Purchase Agreement, or
\nat such other address as such<\/p>\n
45<\/p>\n
98<\/p>\n
party shall have furnished to the Company in writing, or (b) if addressed to
\nany other holder of Registrable Securities, at the address that such holder
\nshall have furnished to the Company in writing, or, until any such other holder
\nso furnishes to the Company an address, then to and at the address of the last
\nholder of such securities who has furnished an address to the Company, or (c)
\nif addressed to the Company, at 550 Business Center Drive, Mount Prospect,
\nIllinois, 60656 attention of the General Counsel or at such other address, or
\nto the attention of such other officer, as the Company shall have furnished to
\neach holder of Registrable Securities at the time outstanding.<\/p>\n
SECTION 8. Assignment. This Agreement shall be binding upon and inure to
\nthe benefit of and be enforceable by the parties hereto and their respective
\nsuccessors by merger, consolidation or amalgamation and permitted assigns. The
\nCompany may not assign any of its rights and obligations hereunder without the
\nconsent of the holders of all the Registrable Securities then outstanding. Any
\nPurchaser may assign its rights hereunder without the consent of the Company to
\nany Purchaser Affiliate (as defined in the Purchase Agreement) or successor or
\nto any Person who purchases or otherwise duly receives title to 10% or more of
\nthe Registrable Securities then outstanding; provided that<\/p>\n
46<\/p>\n
99<\/p>\n
such assignee agrees in writing to be bound by the terms of this Agreement.
\nThis Agreement shall not inure to the benefit of any person who is not a party
\nhereto or a successor to or permitted assignee of a party hereto.<\/p>\n
SECTION 9. Descriptive Headings. The descriptive headings of the several
\nsections and paragraphs of this Agreement are inserted for reference only and
\nshall not limit or otherwise affect the meaning hereof.<\/p>\n
SECTION 10. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
\nCONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
\nAPPLICABLE TO CONTRACTS TO BE MADE, EXECUTED, DELIVERED AND PERFORMED WHOLLY
\nWITHIN SUCH STATE AND, IN ANY CASE, WITHOUT REGARD TO THE CONFLICTS OF LAW
\nPRINCIPLES OF SUCH STATE.<\/p>\n
SECTION 11. Severability. If at any time subsequent to the date hereof,
\nany provision of this Agreement shall be held by any court of competent
\njurisdiction to be illegal, void or unenforceable, such provision shall be of
\nno force and effect, but the illegality or unenforceability of such provision
\nshall have no effect upon and shall not impair the enforceability of any other
\nprovision of this Agreement.<\/p>\n
47<\/p>\n
100<\/p>\n
SECTION 12. Equitable Remedies. The parties hereto agree that irreparable
\nharm would occur in the event that any of the agreements and provisions of this
\nAgreement were not performed fully by the parties hereto in accordance with
\ntheir specific terms or conditions or were otherwise breached, and that money
\ndamages are an inadequate remedy for breach of this Agreement because of the
\ndifficulty of ascertaining and quantifying the amount of damage that will be
\nsuffered by the parties hereto in the event that this Agreement is not
\nperformed in accordance with its terms or conditions or is otherwise breached.
\nIt is accordingly hereby agreed that the parties hereto shall be entitled to an
\ninjunction or injunctions to restrain, enjoin and prevent breaches of this
\nAgreement by the other parties and to enforce specifically the terms and
\nprovisions hereof in any court of the United States or any state having
\njurisdiction, such remedy being in addition to and not in lieu of, any other
\nrights and remedies to which the other parties are entitled to at law or in
\nequity.<\/p>\n
SECTION 13. No Waiver. The failure of any party at any time or times to
\nrequire performance of any provision hereof (within the time limitations
\ncontained herein) shall not affect the right at a later time to enforce the
\nsame. No waiver by any party of any condition, and no breach of<\/p>\n
48<\/p>\n
101<\/p>\n
any provision, term, covenant, representation or warranty contained in this
\nAgreement, whether by conduct or otherwise, in any one or more instances, shall
\nbe deemed to be construed as a further or continuing waiver of any such
\ncondition or of the breach of any other provision, term, covenant,
\nrepresentation or warranty of this Agreement.<\/p>\n
SECTION 14. Counterparts. This Agreement may be executed simultaneously
\nin any number of counterparts, each of which shall be deemed an original, but
\nall such counterparts shall together constitute one and the same instrument.<\/p>\n
49<\/p>\n
102<\/p>\n
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
\nand delivered by their respective officers thereunto duly authorized as of the
\ndate first above written.<\/p>\n
THE COMPANY<\/p>\n
SALTON\/MAXIM HOUSEWARES, INC.<\/p>\n
By:
\n ——————————
\n Name:<\/p>\n
Title:<\/p>\n
THE PURCHASERS:<\/p>\n
CENTRE CAPITAL INVESTORS II, L.P.
\n CENTRE CAPITAL TAX-EXEMPT INVESTORS II, L.P.
\n CENTRE CAPITAL OFFSHORE INVESTORS II, L.P.<\/p>\n
By: Centre Partners II, L.P.
\n General Partner<\/p>\n
By: Centre Partners Management LLC
\n Attorney-in-fact<\/p>\n
By:
\n ————————————
\n Bruce G. Pollack
\n Managing Director<\/p>\n
50<\/p>\n
103<\/p>\n
STATE BOARD OF ADMINISTRATION OF FLORIDA<\/p>\n
By: Centre Parallel Management Partners, L.P.
\n Manager<\/p>\n
By: Centre Partners Management LLC
\n Attorney-in-fact<\/p>\n
By:
\n —————————————–
\n Bruce G. Pollack
\n Managing Director<\/p>\n
CENTRE PARALLEL MANAGEMENT PARTNERS, L.P.
\n CENTRE PARTNERS COINVESTMENT, L.P.<\/p>\n
By: Centre Partners II LLC
\n General Partner<\/p>\n
By:
\n —————————————–
\n Bruce G. Pollack
\n Managing Director<\/p>\n
51<\/p>\n
104
\n Exhibit B<\/p>\n
Salton\/Maxim Housewares, Inc.<\/p>\n
CERTIFICATE OF DESIGNATION OF SERIES A VOTING
\n CONVERTIBLE PREFERRED STOCK SETTING FORTH THE
\n POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS,
\n LIMITATIONS AND RESTRICTIONS OF SUCH SERIES
\n OF PREFERRED STOCK<\/p>\n
Salton\/Maxim Housewares, Inc. (hereinafter referred to as the
\n“Corporation”), a corporation organized and existing under the General
\nCorporation Law of the State of Delaware, in accordance with the provisions of
\nSection 151 of the General Corporation Law of the State of Delaware, as amended
\n(the “Delaware Code”), does HEREBY CERTIFY:<\/p>\n
That, pursuant to authority conferred by Article IV of the Second
\nAmended and Restated Certificate of Incorporation of the Corporation, the Board
\nof Directors of the Corporation has adopted a resolution providing for the
\nissuance of a series of Preferred Stock consisting of 40,000 shares designated
\n“Series A Voting Convertible Preferred Stock”, which resolution is as follows:<\/p>\n
RESOLVED, that pursuant to the authority vested in the Board of
\n Directors (the “Board”) of Salton\/Maxim Housewares, Inc., a Delaware
\n corporation (the “Corporation”), by Article IV of the Second Amended and
\n Restated Certificate of Incorporation of the Corporation (the “Second
\n Restated Certificate”), the Board does hereby create, provide for and
\n approve a series of Preferred Stock, par value $.01 per share (herein
\n called “Preferred Stock”), of the Corporation to be designated “Series A
\n Voting Convertible Preferred Stock” (such series being herein called the
\n “Convertible Preferred Stock”), consisting of 40,000 shares of the
\n presently authorized but unissued shares of Preferred Stock, and does
\n hereby fix and herein state and express the designations, powers,
\n preferences and relative, participating, optional and other special
\n rights, and the qualifications, limitations and restrictions of the
\n Convertible Preferred Stock as follows (all terms used herein which are
\n defined in the <\/p>\n
105<\/p>\n
Second Restated Certificate shall have the meaning
\n provided in said Second Restated Certificate):<\/p>\n
Section 1. Dividends.<\/p>\n
(a) Upon the occurrence and during the continuation of a Restriction
\nEvent described in Section 5(a)(i) or (ii), the holders of shares of Convertible
\nPreferred Stock shall be entitled to receive, out of funds legally available
\ntherefor, cumulative dividends on the shares of Convertible Preferred Stock at
\nthe Restriction Event Dividend Rate (as defined below) computed as a percentage
\nof the liquidation preference per share per year, payable quarterly on the 15th
\nday of each of January, April, July and October, respectively (each, a
\n“Quarterly Dividend Payment Date”), commencing on the first such Quarterly
\nDividend Payment Date after the occurrence of such Restriction Event (except
\nthat if any such date is a Saturday, Sunday or legal holiday, then such dividend
\nshall be payable on the next day that is not a Saturday, Sunday or legal
\nholiday). Such dividends shall be payable in cash. The amount of dividends
\npayable per share of Convertible Preferred Stock for each quarterly dividend
\nperiod shall be computed by dividing the annual amount by four. The amount of
\ndividends payable for the initial dividend period and any period shorter than a
\nfull quarterly dividend period shall be computed on a pro rata basis, based on
\nthe number of days <\/p>\n
2
\n 106
\nelapsed. For purposes hereof, “Restriction Event Dividend Rate” means a rate
\nper annum equal to 12 1\/2%.<\/p>\n
(b) On each Quarterly Dividend Payment Date all dividends which shall
\nhave accrued on each share of Convertible Preferred Stock outstanding on such
\ndate shall accumulate and shall be deemed to have become due. Additional
\ndividends shall be paid to reflect amounts equivalent to interest on accrued but
\nunpaid dividends at the Restriction Event Dividend Rate from the Quarterly
\nDividend Payment Date with respect to which such dividend was not paid until the
\ndate such dividend is paid.<\/p>\n
(c) In addition to the dividend provided hereinabove, in the event
\nthe Board of Directors of the Corporation shall determine to pay any cash or
\nnon-cash dividends or distributions on its Common Stock (other than dividends
\npayable in shares of its Common Stock, as to which the provisions of Section
\n3(a) below shall apply), the holders of shares of Convertible Preferred Stock
\nshall be entitled to receive cash and non-cash dividends or distributions in an
\namount and of kind equal to the dividends or distributions that would have been
\npayable to each such holder if the Convertible Preferred Stock held by such
\nholder had been converted into Common Stock immediately prior to the record date
\nfor the determination of the holders of Common Stock entitled to each such
\ndividend or <\/p>\n
3
\n 107
\ndistribution; provided, however, that if the Corporation shall dividend or
\notherwise distribute rights to all holders of Common Stock entitling the holders
\nthereof to subscribe for or purchase shares of capital stock of the Corporation,
\nwhich rights (i) until the occurrence of a specified event or events are deemed
\nto be transferred with such shares of Common Stock and are not exercisable and
\n(ii) are issued in respect of future issuances of Common Stock, the holders of
\nshares of the Convertible Preferred Stock shall not be entitled to receive any
\nsuch rights until such rights separate from the Common Stock or become
\nexercisable, whichever is sooner.<\/p>\n
(d) No dividends or other distributions, other than dividends payable
\nsolely in shares of Common Stock or other capital stock of the Corporation
\nranking junior as to dividends and as to any distribution of assets other than
\nby way of dividends to the Convertible Preferred Stock, shall be paid, or
\ndeclared and set apart for payment by the Corporation, and no purchase,
\nredemption or other acquisition shall be made by the Corporation or any of its
\nsubsidiaries of, any shares of Common Stock or other capital stock of the
\nCorporation ranking junior as to dividends or as to any distribution of assets
\nother than by way of dividends to the Convertible Preferred Stock (the “Junior
\nStock”) unless and until all accrued and unpaid dividends <\/p>\n
4<\/p>\n
108
\nand distributions on the Convertible Preferred Stock, if any, including the full
\ndividend for the then current dividend period, shall have been paid or declared
\nand set apart for payment.<\/p>\n
Section 2. Voting Rights.<\/p>\n
In addition to any voting rights provided by law, the holders of
\nshares of Convertible Preferred Stock shall have the following voting rights:<\/p>\n
(a) So long as the Convertible Preferred Stock is outstanding, each
\n share of Convertible Preferred Stock shall entitle the holder thereof to
\n vote on all matters voted on by holders of the capital stock of the
\n Corporation into which such share of Convertible Preferred Stock is
\n convertible, voting together as a single class with the other shares
\n entitled to vote, at all meetings of the stockholders of the Corporation.
\n With respect to any such vote, each share of Convertible Preferred Stock
\n shall entitle the holder thereof to cast the number of votes equal to the
\n number of votes which could be cast in such vote by a holder of the
\n number of shares of capital stock of the Corporation into which such
\n share of Convertible Preferred Stock is convertible on the record date
\n for such vote.<\/p>\n
5<\/p>\n
109<\/p>\n
(b) So long as any shares of Convertible Preferred Stock are
\n outstanding, subject to the provisions of Section 275(c) of the Delaware
\n Code, the Corporation shall not, without consent of the holders of at
\n least a majority of the number of shares of Convertible Preferred Stock
\n at the time outstanding, given in person or by proxy, either in writing
\n or by vote at a special meeting called for the purpose, enter into any
\n plan of complete liquidation or dissolution or otherwise effect the
\n voluntary liquidation, dissolution or winding up of the Corporation
\n unless, as a result of such liquidation, dissolution or winding-up, the
\n liquidation preference on the Convertible Preferred Stock is satisfied in
\n full pursuant to Section 6 herein.<\/p>\n
(c) Except as otherwise required by applicable law, the consent of a
\n majority of the number of shares of Convertible Preferred Stock at the
\n time outstanding, given in person or by proxy, either in writing or by
\n vote, at a special or annual meeting, shall be necessary to (i) authorize
\n or issue, or obligate the Corporation to issue, any other capital stock
\n or security or right convertible or exchangeable for capital stock of the
\n Corporation that is senior to or on a parity with the Convertible
\n Preferred Stock as to <\/p>\n
6<\/p>\n
110
\n rights on liquidation or which is not Junior Stock for purposes of Section
\n 1(d) herein; (ii) increase the authorized number of shares of the
\n Convertible Preferred Stock; (iii) enter any agreement, contract or
\n understanding or otherwise incur any obligation which by its terms would
\n violate or be in conflict with the holders of Convertible Preferred Stock
\n hereunder or the Corporation’s performance of the terms of its Second
\n Amended and Restated Articles of Incorporation; (iv) amend the Second
\n Amended and Restated Articles of Incorporation or By-laws of the
\n Corporation, if such amendment would adversely affect the rights of the
\n holders of the Convertible Preferred Stock in any material respect; or (v)
\n amend or waive any provision of this Certificate of Designation.<\/p>\n
Section 3. Conversion.<\/p>\n
At the option of the holder thereof and upon surrender thereof for
\nconversion to the Corporation at the office of the Transfer Agent of the
\nCorporation’s Common Stock (or to the Corporation’s principal executive
\noffices), each share of Convertible Preferred Stock shall be convertible at any
\ntime (or if such share is called or surrendered for redemption, then in respect
\nof such share to and including, but not after, the close of business on the
\nredemption date, unless the Corporation shall default in the <\/p>\n
7<\/p>\n
111
\npayment of the redemption price, in which case such right shall not terminate at
\nsuch time and date) into that number of fully paid and nonassessable shares of
\nCommon Stock (calculated as to each conversion to the nearest 1\/100 of a share)
\nobtained by dividing $1,000.00 by the Conversion Price (as defined below) in
\neffect at such time.<\/p>\n
Each holder that desires to convert Convertible Preferred Stock into
\nCommon Stock pursuant to this Section 3 shall surrender the certificate or
\ncertificates therefor, duly endorsed, at the office of the Transfer Agent (or
\nto the Corporation’s principal executive offices) as aforesaid, and shall give
\nnotice to the Corporation at such office that such holder elects to convert the
\nsame and shall state therein the number of shares of Convertible Preferred
\nStock being converted. Thereupon the Corporation shall promptly issue and
\ndeliver at such office to such holder certificates for the number of shares of
\nCommon Stock to which such holder is entitled upon conversion. Such conversion
\nshall be deemed to have been made immediately prior to the close of business on
\nthe date of such surrender of the certificate representing the shares of
\nConvertible Preferred Stock to be converted, and the person entitled to receive
\nthe Common Stock issuable upon such conversion shall be treated for all
\npurposes as the record holder of such Common Stock on such date.<\/p>\n
8<\/p>\n
112<\/p>\n
The “Conversion Price” shall mean and be $17.00, subject to adjustment
\nfrom time to time by the Corporation as follows:<\/p>\n
(a) In case the Corporation shall, at any time or from time to time
\nwhile any of the shares of Convertible Preferred Stock are outstanding, (i) pay
\na dividend or make a distribution on its Common Stock in shares of its Common
\nStock, (ii) subdivide its outstanding shares of Common Stock into a greater
\nnumber of shares, (iii) combine its outstanding shares of Common Stock into a
\nsmaller number of shares or (iv) issue by reclassification of its shares of
\nCommon Stock any shares of its capital stock (each such transaction being called
\na “Stock Transaction”), then and in each such case, the Conversion Price in
\neffect immediately prior thereto shall be adjusted so that the holder of a share
\nof Convertible Preferred Stock surrendered for conversion after the record date
\nfixing stockholders to be affected by such Stock Transaction shall be entitled
\nto receive upon conversion the number of such shares of Common Stock or other
\ncapital stock of the Corporation that he would have owned or been entitled to
\nreceive after the happening of such event had such share of Convertible
\nPreferred Stock been converted immediately prior to such record date (or, if no
\nrecord date, the effective date). Such adjustment shall be made whenever any of
\nsuch events <\/p>\n
9<\/p>\n
113
\nshall happen, but shall also be effective retroactively as to shares of
\nConvertible Preferred Stock converted between such record date and the date of
\nthe happening of any such event.<\/p>\n
(b) (i) In case the Corporation shall, at any time or from time to
\ntime while any of the shares of Convertible Preferred Stock are outstanding,
\nissue, sell or exchange shares of Common Stock (other than (w) pursuant to any
\nright or warrant to purchase or acquire shares of Common Stock (including as
\nsuch a right or warrant any security convertible into or exchangeable for shares
\nof Common Stock), (x) pursuant to any employee or director incentive or benefit
\nplan or arrangement, including any employment, severance or consulting agreement
\nbut excluding any employee stock ownership plan within the meaning of Section
\n4975(e)(7) of the Internal Revenue Code of 1986, as amended (an “ESOP”), whether
\npresently existing or, subject to approval by a majority of the disinterested
\nmembers of the Board of Directors of the Corporation, to be established in the
\nfuture, of the Corporation or any subsidiary of the Corporation heretofore or
\nhereafter adopted, (y) pursuant to a Minor Acquisition (as defined below) and
\n(z) in a Permitted Secondary Offering (as defined below)) for a consideration
\nhaving a Fair Market Value (as defined below) on the date of such issuance, sale
\nor exchange that is less <\/p>\n
10<\/p>\n
114
\nthan the Market Price (as defined below) of such shares on the date of such
\nissuance, sale or exchange, then and in each case, the Conversion Price shall be
\nadjusted by multiplying such Conversion Price by a fraction (which shall not be
\ngreater than 1), the numerator of which shall be the sum of (x) the Current
\nMarket Price per share of Common Stock as of the trading day immediately
\npreceding the date of the public announcement of the actual terms (including the
\npricing terms) of such issuance, sale or exchange (or if there is no such public
\nannouncement prior to the effective date of such issuance, sale or exchange,
\nsuch effective date) multiplied by the number of shares of Common Stock
\noutstanding immediately prior to such issuance, sale or exchange plus (y) the
\naggregate Fair Market Value of the consideration received by the Corporation in
\nrespect of such issuance, sale or exchange of shares of Common Stock, and the
\ndenominator of which shall be the product of (x) the Current Market Price per
\nshare of Common Stock referred to in the immediately preceding clause (x)
\nmultiplied by (y) the sum of the number of shares of Common Stock outstanding on
\nsuch day plus the number of shares of Common Stock so issued, sold or exchanged
\nby the Corporation. For purposes of the preceding sentence, the aggregate
\nconsideration receivable by the Corporation in connection with the issuance,
\nsale or exchange of shares of Common Stock shall <\/p>\n
11<\/p>\n
115
\nbe deemed to be equal to the sum of the aggregate offering price (before
\ndeduction of reasonable underwriting discounts or commissions and expenses) of
\nall such shares.<\/p>\n
(ii) In the event the Corporation shall, at any time or from time to
\ntime while any shares of Convertible Preferred Stock are outstanding, issue,
\nsell or exchange any right or warrant to purchase or acquire shares of Common
\nStock (including as such a right or warrant any security convertible into or
\nexchangeable for shares of Common Stock) (other than (x) any issuance, sale or
\nexchange to holders of shares of Common Stock as a dividend or distribution
\n(including by way of a reclassification of shares or a recapitalization of the
\nCorporation), and (y) pursuant to any employee or director incentive or benefit
\nplan or arrangement (excluding any ESOP), of the Corporation or any subsidiary
\nof the Corporation heretofore or, subject to approval by a majority of the
\ndisinterested members of the Board of Directors of the Corporation, hereafter
\nadopted), for a consideration having a Fair Market Value on the date of such
\nissuance, sale or exchange less than the Fair Market Value of such rights or
\nwarrants on the date of such issuance, sale or exchange, then and in each case,
\nthe Conversion Price shall be adjusted by multiplying such Conversion Price by a
\nfraction (which shall not be greater than 1), the numerator of which shall be
\nthe sum of (a) the <\/p>\n
12<\/p>\n
116
\nCurrent Market Price per share of Common Stock as of the trading date
\nimmediately preceding the date of the public announcement of the actual terms
\n(including the price terms) of such issuance, sale or exchange (or if there is
\nno such public announcement prior to the effective date of such issuance, sale
\nor exchange, such effective date) multiplied by the number of shares of Common
\nStock outstanding immediately prior to such issuance, sale or exchange plus (b)
\nthe aggregate Fair Market Value of the consideration received by the Corporation
\nin respect of such issuance, sale or exchange of such right or warrant, and the
\ndenominator of which shall be the sum of (i) the Current Market Price per share
\nof Common Stock referred to in the preceding clause (a) multiplied by the number
\nof shares of Common Stock outstanding immediately prior to such issuance, sale
\nor exchange plus (ii) the aggregate Fair Market Value of such rights or warrants
\nat the time of such issuance. For the purposes of the preceding sentence, the
\naggregate consideration receivable by the Corporation in connection with the
\nissuance, sale or exchange of any such right or warrant shall be deemed to be
\nequal to the sum of the aggregate offering price (before deduction of reasonable
\nunderwriting discounts or commissions and expenses) of all such rights or
\nwarrants.<\/p>\n
13<\/p>\n
117
\n (c) In the event the Corporation or any of its subsidiaries shall, at
\nany time or from time to time while any shares of Convertible Preferred Stock
\nare outstanding, repurchase or redeem any of the Corporation’s outstanding
\ncapital stock at a premium over the average Market Price per share on the
\ntrading day immediately preceding such repurchase or redemption (a
\n“Repurchase”), then and in the case of each Repurchase the Conversion Price in
\neffect immediately prior thereto shall be adjusted by multiplying such
\nConversion Price by a fraction, the numerator of which is (i) the product of (x)
\nthe number of shares of Common Stock outstanding immediately before such
\nrepurchase or redemption multiplied by (y) the average Market Price per share of
\nCommon Stock on the five (5) trading days immediately following the consummation
\nof such Repurchase minus (ii) the aggregate purchase price of the Repurchase and
\nthe denominator of which shall be the product of (x) the number of shares of
\nCommon Stock outstanding immediately before such Repurchase minus the number of
\nshares of Common Stock repurchased or redeemed by the Corporation multiplied by
\n(y) the average Market Price per share of Common Stock on such five trading days
\nreferred to in the preceding clause (i)(y); provided, however, that the
\nconversion price shall not be so adjusted with respect to any Repurchase of the<\/p>\n
14<\/p>\n
118<\/p>\n
Convertible Preferred Stock pursuant to Section 6 or 7 hereof.<\/p>\n
(d) For the purposes of any computation under paragraphs (a) through
\n(c) of this Section 3, the following definitions shall apply:<\/p>\n
(i) “Closing Price” of publicly traded shares of Common Stock or any
\n other class of capital stock or other security of the Corporation or any
\n other issuer for a day shall mean the average of the reported closing bid
\n and asked prices, in either case as reported by the NASDAQ National
\n Market System or, if such security is not listed or admitted to trading
\n on the NASDAQ National Market System, the last reported sales price,
\n regular way, on the principal national securities exchange on which such
\n security is listed or admitted to trading or, if not listed or admitted
\n to trading on any national securities exchange, the average of the
\n closing bid and asked prices on each such day in the over-the-counter
\n market as reported by NASDAQ or, if bid and asked prices for such
\n security on each such day shall not have been reported through NASDAQ,
\n the average of the bid and asked prices of such day as furnished by any
\n New York Stock Exchange member firm regularly making a market in such
\n security selected for such purpose by the Board of Directors of <\/p>\n
15<\/p>\n
119
\n the Corporation or a committee thereof. If the Common Stock or other
\n class of capital stock or security in question is not publicly held, or so
\n listed, or publicly traded, “Closing Price” shall mean the Fair Market
\n Value thereof.<\/p>\n
(ii) “Current Market Price” per share of Common Stock as of any date
\n shall be deemed to be the average of the daily Closing Price per share
\n for the ten (10) consecutive trading days ending on and including the day
\n in question.<\/p>\n
(iii) “Fair Market Value” of any consideration other than cash or of
\n any securities shall mean the amount which a willing buyer would pay to a
\n willing seller in an arm’s length transaction as determined by an
\n independent investment banking or appraisal firm experienced in the
\n valuation of such securities or property selected in good faith by the
\n Board of Directors of the Corporation or a committee thereof.<\/p>\n
(iv) “Market Price” per share at any date shall be the Closing Price
\n on the specified date; provided, that, in the case of the issuance, sale
\n or exchange of shares of Common Stock pursuant to paragraph (b) of this
\n Section 3 that are not registered under the Securities Act of 1933 Market
\n Price shall be reduced by an amount, if any (as determined by an
\n independent <\/p>\n
16<\/p>\n
120
\n investment banking or appraisal firm experienced in the valuation of such
\n securities or property selected in good faith by the Board of Directors of
\n the Corporation or a committee thereof), to compensate for the fact that
\n such shares are not so registered, and in making such determination any
\n registration rights granted by the Company shall be taken into account.<\/p>\n
(v) “Minor Acquisition” means any acquisition of the stock or
\n assets of an unaffiliated third party by the Corporation by merger,
\n purchase, joint venture or other reorganization or business combination
\n in consideration for the issuance of Common Stock having a Fair Market
\n Value not greater than $5,000,000.<\/p>\n
(vi) “Permitted Secondary Offering” means any firmly underwritten
\n public offering of the Common Stock at a price to the public equal to or
\n greater than the Conversion Price then in effect.<\/p>\n
(e) No adjustment in the Conversion Price shall be required unless
\nsuch adjustment would require an increase or decrease of at least $.01 in such
\nprice; provided, however, that any adjustments which by reason of this paragraph
\n(e) are not required to be made shall be carried forward and taken into account
\nin any subsequent adjustment. All calculations under this Section 3 shall be
\nmade to the nearest one-hundredth of a share.<\/p>\n
17<\/p>\n
121<\/p>\n
(f) No fractional shares or scrip representing fractional shares of
\nCommon Stock shall be issued upon the conversion of any share of Convertible
\nPreferred Stock. If the conversion thereof results in a fraction, an amount
\nequal to such fraction multiplied by the Current Market Price per share of
\nCommon Stock (as defined above) as of the conversion date shall be paid to such
\nholder in cash by the Corporation.<\/p>\n
(g) In the event of any capital reorganization or reclassification of
\noutstanding shares of Common Stock (other than a reclassification covered by
\nparagraph (a) of this Section 3), or in case of any merger, consolidation or
\nother corporate combination of the Corporation with or into another corporation,
\nor in case of any sale or conveyance to another corporation of the property of
\nthe Corporation as an entirety or substantially as an entirety (each of the
\nforegoing being referred to as a “Transaction”), each share of Convertible
\nPreferred Stock shall continue to remain outstanding if the Corporation is the
\nSurviving Person (as defined below) of such Transaction, and shall be subject to
\nall the provisions of the Certificate of Designation of Series A Convertible
\nPreferred Stock which embodies this resolution, as in effect prior to such
\nTransaction (including, without limitation, the provisions of Section 4 hereof
\nif such Transaction also constitutes a Change of <\/p>\n
18
\n 122
\nControl (as hereinafter defined)), or if the Corporation is not the Surviving
\nPerson in such Transaction, then each holder of shares of Convertible Preferred
\nStock may elect (which election shall be made within twenty days (20) of the
\nTransaction) to either (1) have Section 4 hereof be applicable to such holder’s
\nshares of Convertible Preferred Stock or (2) if the consideration to be received
\nby stockholders of the Corporation in the Transaction does not consist entirely
\nof cash, have each share of Convertible Preferred Stock be exchanged for a new
\nseries of senior preferred stock of the Surviving Person, or in the case of a
\nSurviving Person other than a corporation, comparable securities of such
\nSurviving Person, in either case having economic terms as nearly equivalent as
\npossible to, and with the same voting and other rights as, the Convertible
\nPreferred Stock (including the right to convert into Survivor Common Stock);
\nprovided, however, that, at the option of the holder of any shares of
\nConvertible Preferred Stock (which election shall be made within such twenty
\ndays), each share of Convertible Preferred Stock then outstanding or deemed to
\nbe outstanding, as the case may be, shall entitle the holder thereof to receive,
\nupon presentation of the certificate therefor to the Surviving Person subsequent
\nto the consummation of such Transaction the kind and amount of shares of stock
\nand other securities <\/p>\n
19<\/p>\n
123
\nand property receivable (including cash) upon the consummation of such
\nTransaction by a holder of that number of shares of Common Stock into which one
\nshare of Convertible Preferred Stock was convertible immediately prior to such
\nTransaction; provided, further, that if in connection with the Transaction a
\ntender or exchange offer shall have been made and there shall have been acquired
\npursuant thereto more than 50% of the outstanding shares of Common Stock, and if
\nthe holder of shares of Convertible Preferred Stock so designates in the notice
\ngiven to the Corporation which specifies such holder’s selection of this
\nalternative, such holder of such shares shall be entitled to receive upon
\nconversion thereof, the amount of securities or other property to which such
\nholder would actually have been entitled as a holder of shares of Common Stock
\nif such holder had converted such shares of Convertible Preferred Stock prior to
\nthe expiration of such tender or exchange offer and accepted such offer and had
\nsold therein the percentage of all the shares of Common Stock issuable upon
\nconversion of its shares of Convertible Preferred Stock equal to the percentage
\nof shares of the then outstanding Common Stock so purchased in the tender or
\nexchange offer, with the remaining portion of its shares of Convertible
\nPreferred Stock thereafter being convertible into the amount of securities or
\nother property to which such holder would <\/p>\n
20<\/p>\n
124
\nactually have been entitled upon the consummation of the Transaction as a holder
\nof shares of Common Stock if such holder had converted such shares of
\nConvertible Preferred Stock immediately prior to such Transaction (subject to
\nadjustments from and after the consummation of the Transaction as nearly
\nequivalent as possible to the adjustments provided for in this Section 3). In
\nany such case, if necessary, appropriate adjustment (as determined by the Board
\nof Directors in good faith) shall be made in the application of the provisions
\nset forth in this Section 3 with respect to the rights and interests thereafter
\nof the holders of shares of Convertible Preferred Stock to the end that the
\nprovisions set forth herein for the protection of the conversion rights of the
\nConvertible Preferred Stock shall thereafter be applicable, as nearly as
\nreasonably may be, to any such other shares of stock and other securities and
\nproperty deliverable upon conversion of the shares of Convertible Preferred
\nStock remaining outstanding (with such adjustments in the conversion price and
\nnumber of shares issuable upon conversion and such other adjustments in the
\nprovisions hereof as the Board of Directors in good faith shall determine to be
\nappropriate). In case securities or property other than Common Stock shall be
\nissuable or deliverable upon conversion as aforesaid, then all references in
\nthis Section 3 shall be deemed to apply, so <\/p>\n
21<\/p>\n
125
\nfar as appropriate and as nearly as may be, to such other securities or
\nproperty.<\/p>\n
Notwithstanding anything contained herein to the contrary, the
\nCorporation will not effect any Transaction unless, prior to the consummation
\nthereof, (i) proper provision is made to ensure that the holders of shares of
\nConvertible Preferred Stock will be entitled to receive the benefits afforded by
\nthis paragraph (i) of Section 3, and (ii) if, following the Transaction, one or
\nmore entities other than the Corporation shall be required to deliver securities
\nor other property upon the conversion of the Convertible Preferred Stock, such
\nentity or entities shall assume, by written instrument delivered to each holder
\nof shares of Convertible Preferred Stock, if such shares are held by 10 or fewer
\nholders or group of affiliated holders, or to each Transfer Agent for the shares
\nof Convertible Preferred Stock, if such shares are held by a greater number of
\nholders, the obligation to deliver to such holder the amounts in cash to which,
\nin accordance with the foregoing provisions, such holder is entitled.<\/p>\n
For purposes of this paragraph (i) of Section 3, the following terms
\nshall have the meanings ascribed to them below:<\/p>\n
(i) “Surviving Person” shall mean the continuing or surviving Person
\nof a merger, consolidation or other <\/p>\n
22<\/p>\n
126
\ncorporate combination, the Person receiving a transfer of all or a substantial
\npart of the properties and assets of the Corporation, or the Person
\nconsolidating with or merging into the Corporation in a merger, consolidation or
\nother corporate combination in which the Corporation is the continuing or
\nsurviving Person, but in connection with which the Convertible Preferred Stock
\nor Common Stock of the Corporation is exchanged, converted or reclassified into
\nthe securities of any other Person or cash or any other property.<\/p>\n
(ii) “Survivor Common Stock” with respect to any Person shall mean
\nshares of such Person of any class or series which has no preference or priority
\nin the payment of dividends or in the distribution of assets upon any voluntary
\nor involuntary liquidation, dissolution or winding up of such Person and which
\nis not subject to redemption by such Person provided, however, that if (x) the
\nshares of such class or series are not (or upon consummation of such Transaction
\nwill not be) listed on the New York Stock Exchange or the American Stock
\nExchange or quoted by the NASDAQ National Market System or any successor thereto
\nor comparable system, and (y) the Surviving Person is a direct or indirect
\nsubsidiary of a Qualified Person, the Survivor Common Stock shall be the common
\nstock (or equivalent equity <\/p>\n
23
\n 127
\nsecurities referred to in the definition of “Qualified Person”) of such
\nQualified Person.<\/p>\n
(iii) “Qualified Person” shall mean any Person that, immediately
\nafter giving effect to the applicable Transaction, is a solvent corporation or
\nother entity organized under the laws of any state of the United States of
\nAmerica having its common stock or, in the case of an entity other than a
\ncorporation, equivalent equity securities, listed on the New York Stock Exchange
\nor the American Stock Exchange or quoted by the NASDAQ National Market System or
\nany successor thereto or comparable system.<\/p>\n
(iv) “Person” shall mean any individual, firm, corporation or other
\nentity, and shall include any successor (by merger or otherwise) of such entity.<\/p>\n
(v) “Current Market Price” shall have the meaning set forth in
\nparagraph (d) of this Section 3.<\/p>\n
(h) In case at any time or from time to time, the Corporation shall
\npay any dividend or make any other distribution to the holders of its Common
\nStock of, or shall offer for subscription pro rata to the holders of its Common
\nStock, any additional shares of stock of any class or any other right, or there
\nshall be any capital reorganization or reclassification of the Common Stock of
\nthe Corporation or merger, consolidation or other corporate combination of the
\nCorporation with or into another corporation, or any sale or <\/p>\n
24<\/p>\n
128
\nconveyance to another corporation of the property of the Corporation as an
\nentirety or substantially as an entirety, or there shall be a voluntary or
\ninvoluntary dissolution, liquidation or winding up the Corporation, then, in any
\none or more of said cases the Corporation shall give written notice at the same
\ntime as, or as soon as practicable after, such event is first communicated
\n(including by announcement of a record date in accordance with the rules of any
\nstock exchange on which the Common Stock is listed or admitted to trading) to
\nholders of Common Stock, but in any event at least 10 days prior to the record
\ndate for such event specified below (the time of mailing of such notice shall be
\ndeemed to be the time of delivery thereof) to the registered holders of the
\nConvertible Preferred Stock at the addresses of each as shown on the books of
\nthe Corporation maintained by the Transfer Agent thereof of the date on which
\n(x) the books of the corporation shall close or a record shall be taken for such
\nstock dividend, distribution or subscription rights or (y) such reorganization,
\nreclassification, merger, consolidation, corporate combination, sale or
\nconveyance, dissolution, liquidation or winding up shall take place, as the case
\nmay be. Such notice shall also specify the date as of which the holders of the
\nCommon Stock of record shall participate in said dividend, distribution,
\nsubscription rights or shall be entitled to exchange their Common Stock <\/p>\n
25<\/p>\n
129
\nfor securities or other property deliverable upon such reorganization,
\nreclassification, merger, consolidation, corporate combination, sale or
\nconveyance or participate in such dissolution, liquidation or winding up, as the
\ncase may be, as well as the conversion price and the number of shares into which
\neach share of Convertible Preferred Stock may be converted at such time. Failure
\nto give such notice shall not invalidate any action so taken.<\/p>\n
(i) The Corporation covenants that it will at all times reserve and
\nkeep available, free from preemptive rights, out of the aggregate of its
\nauthorized but unissued shares of Common Stock or its issued shares of Common
\nStock held in its treasury, or both, for the purpose of effecting conversions of
\nshares of Convertible Preferred Stock, the full number of shares of Common Stock
\ndeliverable upon the conversion of all outstanding shares of Convertible
\nPreferred Stock not theretofore converted. For purposes of this Section 3(i),
\nthe number of shares of Common Stock which shall be deliverable upon the
\nconversion of all outstanding shares of Convertible Preferred Stock shall be
\ncomputed as if at the time of computation all outstanding shares of Convertible
\nPreferred Stock were held by a single holder.<\/p>\n
Before taking any action which would cause an adjustment reducing the
\nConversion Price below the then par <\/p>\n
26<\/p>\n
130
\nvalue (if any) of the shares of Common Stock deliverable upon conversion of the
\nshares of Convertible Preferred Stock, the Corporation will take any corporate
\naction which may, in the opinion of its counsel, be necessary in order that the
\nCorporation may validly and legally issue fully paid and non-assessable shares
\nof Common Stock at such adjusted Conversion Price.<\/p>\n
(j) The Corporation will pay any and all documentary stamp or similar
\nissue or transfer taxes payable in respect of the issue or delivery of shares of
\nCommon Stock upon conversions of shares of Convertible Preferred Stock pursuant
\nhereto.<\/p>\n
(k) Upon any adjustment of the Conversion Price, then, and in each
\nsuch case, the Corporation shall promptly deliver to the transfer agent of the
\nConvertible Preferred Stock and the Common Stock, a certificate signed by the
\nPresident or a Vice President and by the Treasurer or an Assistant Treasurer or
\nthe Secretary or an Assistant Secretary of the Corporation setting forth in
\nreasonable detail the event requiring the adjustment and the method by which
\nsuch adjustment was calculated and specifying the Conversion Price then in
\neffect following such adjustment. The Corporation shall also promptly after the
\nmaking of such adjustment give written notice to the registered holders of the
\nConvertible Preferred Stock at the address of each <\/p>\n
27<\/p>\n
131
\nholder as shown on the books of the Corporation maintained by the transfer agent
\nthereof, which notice shall state the Conversion Price then in effect, as
\nadjusted, and shall set forth in reasonable detail the method of calculation of
\nthe same and a brief statement of the facts requiring such adjustment. Where
\nappropriate, such notice to holders of the Convertible Preferred Stock may be
\ngiven in advance and included as part of the notice required under the
\nprovisions of Section 3(i).<\/p>\n
Section 4. Change of Control.<\/p>\n
(a) (i) In the event that any Change of Control (as hereinafter
\ndefined) shall occur at any time and from time to time while any shares of
\nConvertible Preferred Stock are outstanding, each holder of Convertible
\nPreferred Stock shall have the right to give notice that it is exercising a
\nChange of Control election (a “Change of Control Election”), with respect to all
\nor any number of such holder’s shares of Convertible Preferred Stock, during the
\nperiod (the “Exercise Period”) beginning on the 30th day and ending on the 90th
\nday after the date of such Change of Control. Upon any such election, the
\nCorporation shall redeem each such holder’s shares for which such an election is
\nmade, to the extent the Corporation shall have capital and surplus lawfully
\navailable therefor, at a redemption price per share <\/p>\n
28
\n 132
\nequal to the liquidation preference per share plus an amount equivalent to
\ninterest accrued thereon at a rate of 7% per annum compounded annually on each
\nanniversary date of the original issuance of the Convertible Preferred Stock for
\nthe period from the date of such original issuance through the earlier of the
\ndate of such redemption or the fifth (5th) anniversary of the date of such
\noriginal issuance.<\/p>\n
(b) As used herein, “Change of Control” shall mean:<\/p>\n
(i) the acquisition by any individual, entity or group (within the
\nmeaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
\n(the “Acquiring Person”) of beneficial ownership (within the meaning of Rule
\n13d-3 promulgated under such Act) of 50% or more of the combined voting power of
\nthe then outstanding voting securities of the Corporation entitled to vote
\ngenerally in the election of directors, but excluding, for this purpose, any
\nsuch action by (x) the Corporation or any of its subsidiaries, (y) any Purchaser
\n(as defined in Section 5) or (z) any corporation or other entity with respect to
\nwhich, following such acquisition, more than 50% of the combined voting power of
\nthe then outstanding voting securities of such corporation entitled to vote
\ngenerally in the election of directors (or if another entity, more than 50% of
\nthe equivalent controlling interests) is then beneficially<\/p>\n
29<\/p>\n
133
\nowned, directly or indirectly, by individuals and entities who were the
\nbeneficial owners of voting securities of the Corporation immediately prior to
\nsuch acquisition in substantially the same proportion as their ownership,
\nimmediately prior to such acquisition, of the combined voting power of the then
\noutstanding voting securities of the Corporation entitled to vote generally in
\nthe election of directors; or<\/p>\n
(ii) consummation of a reorganization, merger or consolidation
\ninvolving the Corporation, in each case, with respect to which the individuals
\nand entities who were the respective beneficial owners of at least 80% of the
\nvoting securities of the Corporation immediately prior to such reorganization,
\nmerger or consolidation do not or will not, following such reorganization,
\nmerger or consolidation, beneficially own, directly or indirectly, more than 50%
\nof the combined voting power of the then outstanding voting securities entitled
\nto vote generally in the election of directors of the corporation resulting from
\nsuch reorganization, merger or consolidation; or<\/p>\n
(iii) the sale or other disposition of all or substantially all the
\nassets of the Corporation in one transaction or series of related transactions;
\nor<\/p>\n
(iv) individuals who would constitute a majority of the members of
\nthe Board of Directors elected at any <\/p>\n
30<\/p>\n
134
\nmeeting of stockholders or by written consent (without regard to any members of
\nthe Board of Directors elected pursuant to the terms of any series of Preferred
\nStock) shall be elected to the Board of Directors and the election or the
\nnomination for election by the Corporation’s Stockholders of such directors was
\nnot approved by a vote of at least a majority of the directors in office
\nimmediately prior to such election or nomination.<\/p>\n
(c) On or before the fourteenth (14th) day after a Change of Control,
\nthe Corporation shall mail to all holders of record of the Convertible Preferred
\nStock at their respective addresses as the same shall appear on the books of the
\nCorporation as of such date, a notice disclosing (i) the Change of Control, (ii)
\nthe redemption price per share of the Convertible Preferred Stock applicable
\nhereunder and (iii) the procedure which the holder must follow to exercise the
\nredemption right provided above. To exercise such redemption right, if
\napplicable, a holder of the Convertible Preferred Stock must deliver during the
\nExercise Period written notice to the Corporation (or an agent designated by the
\nCorporation for such purpose) of the holder’s exercise of such redemption right,
\nand, to be valid, any such notice of exercise must be accompanied by each
\ncertificate evidencing shares of the Convertible Preferred Stock with respect to
\nwhich the redemption right <\/p>\n
31<\/p>\n
135
\nis being exercised, duly endorsed for transfer. On or prior to the fifth (5th)
\nbusiness day after receipt of such written notice, the Corporation shall accept
\nfor payment all shares of Convertible Preferred Stock properly surrendered to
\nthe Corporation (or an agent designated by the Corporation for such purpose)
\nduring the Exercise Period for redemption in connection with the valid exercise
\nof such redemption right and shall cause payment to be made in cash for such
\nshares of Convertible Preferred Stock. If at the time of any Change of Control,
\nthe Corporation does not have sufficient capital and surplus legally available
\nto purchase all of the outstanding shares of Convertible Preferred Stock, the
\nCorporation shall take all measures permitted under the Delaware Code to
\nincrease the amount of its capital and surplus legally available, and the
\nCorporation shall offer in its written notice of such Change of Control to
\npurchase as many shares of Convertible Preferred Stock as it has capital and
\nsurplus legally available therefor, ratably from the holders thereof in
\nproportion to the total number of shares tendered, and shall thereafter,
\nwhenever it shall have capital and surplus legally available therefor, offer to
\npurchase as many shares of Convertible Preferred Stock as it has capital and
\nsurplus available therefor until it has offered to purchase all of the
\noutstanding shares of Convertible Preferred Stock.<\/p>\n
32<\/p>\n
136
\n (d) In the event of any Change of Control, proper provision shall be
\nmade to ensure that the holders of shares of Convertible Preferred Stock will be
\nentitled to receive the benefits afforded by this Section 4; provided, however,
\nthat in the event of any Change of Control effected with the Corporation3s
\nconsent, such provision to ensure the benefits of this Section 4 shall be made
\nprior to such Change of Control. If, following the Change of Control, one or
\nmore entities other than the Corporation shall be required to deliver securities
\nor other property upon the conversion of the Convertible Preferred Stock, such
\nentity or entities shall assume, by written instrument delivered to each holder
\nof shares of Convertible Preferred Stock, if such shares are held by ten (10) or
\nfewer holders or group of affiliated holders, or to each Transfer Agent for the
\nshares of Convertible Preferred Stock, if such shares are held by a greater
\nnumber of holders; the obligation to deliver to such holder the amounts in cash
\nto which, in accordance with the foregoing provisions, such holder is entitled.<\/p>\n
Section 5. Certain Restrictions.<\/p>\n
(a) In case of the happening of any of the following events
\n(“Restriction Events”): (i) the Corporation breaches in any material respect
\n(x) any of its obligations under Section 6(d) of the Stock Purchase <\/p>\n
33<\/p>\n
137
\nAgreement (the “Stock Purchase Agreement”) dated as of July 15, 1998, among the
\nCorporation and the purchasers named therein (the “Purchasers”), and such breach
\nshall have continued for ten (10) days after notice thereof by any holder to the
\nCorporation or (y) any of its other material obligations under the Stock
\nPurchase Agreement or under the Registration Rights Agreement or this
\nCertificate of Designation, and such breach shall have continued for twenty days
\n(20) after notice thereof by any holder; (ii) the Corporation shall not have
\nredeemed any shares of the Convertible Preferred Stock when required pursuant to
\nthis Certificate; (iii) a default or breach shall occur and be continuing under
\nany other agreement, document or instrument to which the Corporation is a party
\nrelating to indebtedness for borrowed money incurred by it which is not cured
\nwithin any applicable grace period, and such default or breach (x) involves the
\nfailure to make any payment of principal, premium or interest when due in
\nrespect of such indebtedness or (y) results in the acceleration of such
\nindebtedness prior to its express meaning and, in each case the principal amount
\nof such indebtedness, together with the principal amount of any other
\nindebtedness as to which there has been such a payment default or the maturity
\nof which has been accelerated, aggregates $1,000,000 or more; and (iv) a case or
\nproceeding shall have been commenced against the<\/p>\n
34<\/p>\n
138
\nCorporation seeking a decree or order in respect of the Corporation (x) under
\nTitle 11 of the United States Code, as now constituted or hereafter amended or
\nany other applicable federal, state or foreign bankruptcy or other similar law,
\n(y) appointing a custodian, receiver, liquidator, assignee, trustee or
\nsequestrator (or similar official) for the Corporation or of any substantial
\npart of the Corporation’s assets, or (z) ordering the winding-up or liquidation
\nof the affairs of the Corporation, and such case or proceeding shall remain
\nundismissed or unstayed for sixty (60) days or more or such court shall enter a
\ndecree or order granting the relief sought in such case or proceeding, then,
\nuntil such breach is cured or until such redemption occurs: (x) in the case of
\nany Restriction Event described in Section 5(a)(i) or (ii), dividends shall
\naccrue as set forth in Section 1; and (y) in the case of any Restriction Event,
\nthe Corporation shall not:<\/p>\n
(1) declare or pay dividends on, or make any other distributions of
\n cash, properties or securities of the Corporation on or with respect to
\n any shares of capital stock ranking junior (as to any distribution of
\n assets) to the Convertible Preferred Stock;<\/p>\n
(2) redeem or purchase or otherwise acquire for consideration (or
\n make any sinking fund, purchase fund or other similar payments in respect
\n of) any shares of <\/p>\n
35
\n 139
\n capital stock ranking (as to any distribution of assets) junior to, or on
\n parity with, the Convertible Preferred Stock, provided that the
\n Corporation may at any time redeem, purchase or otherwise acquire shares
\n of capital stock ranking on parity with the Convertible Preferred Stock in
\n exchange for shares of any capital stock ranking junior to the Convertible
\n Preferred Stock, or permit any subsidiary of the Corporation to purchase
\n or otherwise acquire for consideration any shares of capital stock of the
\n Corporation unless the Corporation could, pursuant to this Section 5,
\n purchase such shares at such time and in such manner;<\/p>\n
(3) make, or permit to remain outstanding after such time when
\n pursuant to its terms such loan or advance would be due, any loan or
\n advance (including any guarantee of a loan or advance by a third party)
\n by the Corporation or a subsidiary to any person who beneficially owns
\n any capital stock ranking junior (as to any distribution of assets) to
\n the Convertible Preferred Stock, or any affiliate or associate of such
\n Person; or<\/p>\n
(4) without the consent of the holders of at least a majority of the
\n number of shares of the Convertible Preferred Stock at the time
\n outstanding, given in person or by proxy, either in writing or by <\/p>\n
36
\n 140
\n vote at a special meeting called for the purpose, redeem or purchase or
\n otherwise acquire for consideration or offer to redeem, purchase or
\n acquire for consideration any shares of Convertible Preferred Stock except
\n as provided in Section 4 and Section 7.<\/p>\n
Section 6. Liquidation Preference.<\/p>\n
In the event of a liquidation, dissolution or winding up of the
\nCorporation, whether voluntary or involuntary, the holders of Convertible
\nPreferred Stock shall be entitled to receive out of the assets of the
\nCorporation, whether such assets are stated capital or surplus of any nature, an
\namount equal to $1,000.00 per share, plus the amount of any accrued and unpaid
\ndividends or distributions payable pursuant to Section 1 hereinabove. Such
\npayments shall be made before any payment shall be made or any assets
\ndistributed to the holders of Common Stock or any other class or series of the
\nCorporation3s capital stock ranking junior as to liquidation rights to the
\nConvertible Preferred Stock. Neither a consolidation, merger or other business
\ncombination of the Corporation3s assets for cash, securities or other property
\nshall be considered a liquidation, dissolution or winding up of the Corporation
\nfor purposes of this Section 6 (unless in connection <\/p>\n
37<\/p>\n
141
\ntherewith the liquidation of the Corporation is specifically approved).<\/p>\n
Section 7. Optional and Mandatory Redemption.<\/p>\n
(a) The Corporation may not redeem the Convertible Preferred Stock
\nprior to July 15, 2003.<\/p>\n
(b) The Corporation, at its option, may at any time on and after July
\n15, 2003 redeem the Convertible Preferred Stock in whole or in part, at a cash
\nredemption price per share equal to 100% of the liquidation preference, if the
\ndaily Closing Price (as defined in Section 3(c)) per share of the Common Stock
\nfor the 20 consecutive trading days ending two days preceding the mailing of the
\nredemption notice provided in Section 7(d) is greater than or equal to 200% of
\nthe then current Conversion Price.<\/p>\n
(c) On September 15, 2008, the Corporation shall redeem all
\noutstanding shares of Convertible Preferred Stock at a redemption price equal to
\nthe liquidation preference per share. The redemption price shall be paid, at
\nthe Corporation3s option, in cash or in shares of Common Stock which shall be
\nregistered for resale pursuant to a permanent shelf registration statement or
\nfor which any subsequent public distribution shall not require registration or
\nqualification of such shares under applicable federal and state securities laws.
\nIf the redemption price is paid in <\/p>\n
38
\n 142
\nshares of freely tradeable Common Stock, each share of Common Stock shall be
\nvalued at the product of (1) .95 and (2) the average of the daily Closing Prices
\nper share of the Common Stock for the twenty (20) consecutive trading days
\nimmediately ending two (2) days preceding the redemption date.<\/p>\n
(d) Not more than sixty (60) nor less than thirty (30) days prior to
\nthe redemption date, notice by first class mail, postage prepaid, shall be given
\nto each holder of record of the Convertible Preferred Stock to be redeemed, at
\nsuch holder’s address as it shall appear upon the stock transfer books of the
\nCorporation. Each such notice of redemption shall be irrevocable and shall
\nspecify the date fixed for redemption, the Redemption Price (or the method by
\nwhich such price will be determined), whether such redemption price shall be
\npaid in cash or in shares of Common Stock, the identification of the shares to
\nbe redeemed (if fewer than all the outstanding shares are to be redeemed), the
\nplace or places of payment, that payment will be made upon presentation and
\nsurrender of the certificate(s) evidencing the shares of Convertible Preferred
\nStock to be redeemed, the then effective Conversion Price pursuant to Section 3
\nand that the right of holders to convert shares called for redemption shall
\nterminate at the close of business on the redemption date <\/p>\n
39<\/p>\n
143
\n(unless the Corporation defaults in the payment of the Redemption Price).<\/p>\n
(e) Any notice that is mailed as herein provided shall be
\nconclusively presumed to have been duly given, whether or not the holder of the
\nConvertible Preferred Stock receives such notice; and failure to give such
\nnotice by mail, or any defect in such notice, to the holders of any shares
\ndesignated for redemption shall not affect the validity of the proceedings for
\nthe redemption of any other shares of Convertible Preferred Stock. On or after
\nthe date fixed for redemption as stated in such notice, each holder of the
\nshares called for redemption shall surrender the certificate evidencing such
\nshares to the Corporation at the place designated in such notice and shall
\nthereupon be entitled to receive payment of the Redemption Price in the manner
\nset forth in the notice. If fewer than all the shares represented by any such
\nsurrendered certificate are redeemed, a new certificate shall be issued
\nrepresenting the unredeemed shares. If, on the date fixed for redemption, funds
\n(or shares of Common Stock) necessary for the redemption shall be available
\ntherefor and shall have been irrevocably deposited or set aside, then,
\nnotwithstanding that the certificates evidencing any shares so called for
\nredemption shall not have been surrendered, the shares shall no longer be deemed
\noutstanding, the holders thereof shall <\/p>\n
40<\/p>\n
144
\ncease to be stockholders, and all rights whatsoever with respect to the shares
\nso called for redemption (except the right of the holders to receive the
\nRedemption Price without interest upon surrender of their certificates therefor)
\nshall terminate.<\/p>\n
(f) In the event that any shares of Convertible Preferred Stock shall
\nbe converted into Common Stock pursuant to Section 3, then (i) the Corporation
\nshall not have the right to redeem such shares and (ii) any funds which shall
\nhave been deposited for the payment of the Redemption Price for such shares
\nshall be returned to the Corporation immediately after such conversion.<\/p>\n
(i) If fewer than all the shares outstanding are to be redeemed, the
\nCorporation shall select the shares to be redeemed pro rata.<\/p>\n
Section 8. Rank.<\/p>\n
All shares of Convertible Preferred Stock shall rank, as to
\ndistribution of assets upon liquidation, dissolution or winding up of the
\nCorporation, whether voluntary or involuntary, prior to all classes and series
\nof the Corporation’s Preferred Stock, par value $.01 per share, and prior to all
\nof the Corporation’s now or hereafter issued Common Stock. The term “Common
\nStock” shall mean the Common Stock, $.01 par value per share, of the
\nCorporation <\/p>\n
41<\/p>\n
145
\nas the same exists at the date hereof or as such stock may be constituted from
\ntime to time, except that for the purpose of Section 3, the term “Common Stock”
\nshall also mean and include stock of the Corporation of any class, whether now
\nor hereafter authorized, which shall have the right to participate in the
\ndistribution of either dividends or assets of the Corporation upon liquidation,
\ndissolution or winding up, without limit as to the amount or percentage.<\/p>\n
Section 9. Notice. All notices hereunder shall be in writing.<\/p>\n
Section 10. Reacquired Shares. Any shares of Convertible Preferred
\nStock converted, purchased or otherwise acquired by the Corporation in any
\nmanner whatsoever shall be retired and cancelled promptly after the acquisition
\nthereof. All such shares of Convertible Preferred Stock shall upon their
\ncancellation, and upon the filing of an appropriate certificate with the
\nSecretary of the State of Delaware, become authorized but unissued shares of
\nPreferred Stock, par value $.01 per share, of the Corporation, undesignated as
\nto series, and may be reissued as part of another series of Preferred Stock, par
\nvalue $.01 per share, of the Corporation subject to the conditions of
\nrestrictions on issuance set forth therein.<\/p>\n
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