Document:

Exhibit
10.1

FIRST
AMENDMENT TO CREDIT AGREEMENT

          This
FIRST AMENDMENT TO CREDIT AGREEMENT
(this “Amendment”), made and entered into as of November 30, 2010,
is by and between Electromed, Inc., a Minnesota corporation (the “Borrower”),
and U.S. Bank National Association, a national banking association (the “Bank”).

RECITALS

          1.          The
Bank and the Borrower entered into a Credit Agreement dated as of
December 9, 2009 (the “Credit Agreement”); and

          2.          The
Borrower desires to amend certain provisions of the Credit Agreement, and the
Bank has agreed to make such amendments, subject to the terms and conditions
set forth in this Amendment.

AGREEMENT

          NOW, THEREFORE, for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby covenant and agree to be bound as follows:

          Section
1.          Capitalized
Terms. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement, unless the
context otherwise requires.

          Section
2.          Amendments.
The Credit Agreement is hereby amended as follows:

	
  

 	
  

 
	
  

 	
             2.1          Definitions.
 Section 1.1 of the Credit Agreement is amended as follows:

 

	
  

 	
  

 
	
  

 	
                (a)          The
 definitions of “Fixed Charge Coverage Ratio,” “Obligations,” and “Termination
 Date” are amended to read in their respective entireties as follows:

 

	
  

 	
  

 
	
  

 	
                “Fixed
 Charge Coverage Ratio”: For the four consecutive fiscal quarters ending
 on the date of determination, the ratio of 

 

	
  

 	
  

 
	
  

 	
           (a)          EBITDA,
 plus operating lease expense, minus the sum of (i) any Restricted Payments,
 (ii) 50% of depreciation and (iii) tax expenses of the Borrower paid in cash,
 

 

to

	
  

 	
  

 
	
  

 	
           (b)          the
 sum of cash interest payments and all required principal payments with
 respect to Total Liabilities (including but not limited to all payments with
 respect to Capitalized Lease Obligations of the Borrower), plus operating
 lease expense, in each case determined for said period in
 accordance with GAAP.

 

	
  

 	
  

 
	
  

 	
           “Obligations”: The
 Borrower’s obligations in respect of the due and punctual payment of
 principal and interest on the Notes when and as due, whether by acceleration
 or otherwise, all fees (including Revolving Commitment Fees), expenses,
 indemnities, reimbursements and other obligations of the Borrower under this
 Agreement or any other Borrower Loan Document, and the Rate Protection Obligations,
 in all cases whether now existing or hereafter arising or incurred.

 
	
  

 	
  

 
	
  

 	
           “Termination
 Date”: The
 earlier of (a) November 30, 2011, and (b) the date on which
 the Revolving Commitment is terminated pursuant to Section 7.2.

 

	
  

 	
  

 
	
  

 	
                     (b)          The
 following new definitions are added in their proper alphabetical order:

 

	
  

 	
  

 
	
  

 	
               “Revolving
 Commitment Fee”: As
 defined in Section 2.12.

 
	
  

 	
  

 
	
  

 	
               “Unused
 Revolving Commitment”: As
 of any date of determination, the amount by which the Revolving Commitment
 Amount exceeds the principal amount of Revolving Loans outstanding on such
 date.

 
	
  

 	
  

 

	
  

 	
  

 
	
  

 	
                2.2          Application
 of Mandatory Prepayments for a Prepayment Event.
 Section 2.6(b) of the Credit Agreement is amended to read in its
 entirety as follows:

 

	
  

 	
  

 
	
  

 	
               (b)          Mandatory Prepayments for a Prepayment Event.
 If at any time a Prepayment Event occurs, the Borrower shall immediately pay
 to the Bank the net proceeds realized by such Prepayment Event. Each such
 payment shall be applied first to any outstanding Revolving Loans, second
 to the Term Loan B, and third to the Term Loan A. All
 prepayments applied to a Term Loan shall be applied to the scheduled
 principal payments on such Term Loan in the inverse order of their
 maturities.

 

	
  

 	
  

 
	
  

 	
                2.3          Computation.
 Section 2.7 of the Credit Agreement is amended to read in its entirety
 as follows:

 

	
  

 	
  

 
	
  

 	
                Section
 2.7          Computation.
 Revolving Commitment Fees and interest on the Loans shall be computed on the
 basis of actual days elapsed and a year of 360 days.

 

	
  

 	
  

 
	
  

 	
                2.4          Revolving
 Commitment Fees. The following new Section 2.12 is added
 to the Credit Agreement:

 

	
  

 	
  

 
	
  

 	
                Section
 2.12          Revolving
 Commitment Fees. The Borrower shall pay to the Bank fees (the “Revolving
 Commitment Fees”) in an amount determined by applying a rate of 0.125%
 per annum to the average daily Unused Revolving Commitment for the period from the date of the First
 Amendment hereto to the Termination Date. Revolving Commitment Fees are
 payable in arrears on the last day of each fiscal quarter of the Borrower and
 on the Termination Date.

 

2

	
  

 	
  

 
	
  

 	
                2.5          Financial
 Statements and Reports. Section 5.1(c), (d), and (e) of
 the Credit Agreement are amended to read in their respective entireties as
 follows:

 

	
  

 	
  

 
	
  

 	
                (c)          As
 soon as practicable and in any event within 30 days after the end of each
 fiscal quarter of the Borrower, (i) a compliance certificate in the form
 attached hereto as Exhibit G signed by the chief financial officer of the
 Borrower demonstrating in reasonable detail compliance (or noncompliance, as
 the case may be) with Sections 6.14 and 6.15 as at the end of such quarter
 and stating that as at the end of such quarter there existed no Default or
 Event of Default or, if a Default or Event of Default existed, specifying the
 nature and period of existence thereof and what action the Borrower has
 taken, is taking, and proposes to take with respect thereto and
 (ii) levels of dilutive write-offs to receivables.

 
	
  

 	
  

 
	
  

 	
                (d)          As
 soon as practicable and in any event within 30 days after the end of each
 month, a Borrowing Base Certificate signed by the chief financial officer of
 the Borrower, reporting (i) the Borrowing Base as of the last day of the
 month just ended and (ii) gross monthly A/R billings.

 
	
  

 	
  

 
	
  

 	
                (e)          As
 soon as practicable and in any event within 120 days after the beginning of
 each fiscal year of the Borrower, statements of forecasted income for the
 Borrower for each fiscal month in such fiscal year and a forecasted balance
 sheet of the Borrower, together with supporting assumptions, as at the end of
 each fiscal month, all in reasonable detail and reasonably satisfactory in
 scope to the Bank.

 

	
  

 	
  

 
	
  

 	
                2.6          Disposition
 of Assets. Section 6.2 of the Credit Agreement is amended by
 (a) deleting the word “and” from the end of subsection (a) thereof;
 (b) deleting the period at the end of subsection (b) thereof and
 inserting “; and”; and (c) adding the following new subsection (c):

 

	
  

 	
  

 
	
  

 	
                (c)          the sale of property (other than accounts
 receivable) in an amount not to exceed $100,000 in the aggregate in an fiscal
 year of the Borrower (so long as before and after giving effect to each such
 sale no Default or Event of Default exists).

 

	
  

 	
  

 
	
  

 	
                2.7          Collateral
 Exam. Section 6.20 of the Credit Agreement is amended to
 read in its entirety as follows:

 

	
  

 	
  

 
	
  

 	
                Section
 6.20 Collateral Exam. Upon request of the Bank, the Borrower shall
 permit the Bank to make collateral examinations as provided in the Security
 Agreement. 

 

3

	
  

 	
  

 
	
  

 	
            2.8          Form
 of Compliance Certificate. Exhibit G to the Credit Agreement
 is amended to read in its entirety as set forth on Exhibit A hereto.

 

          Section
3.          Effectiveness
of Amendments. The amendments in this Amendment shall become
effective upon delivery by the Borrower of, and compliance by the Borrower
with, the following:

	
  

 	
  

 
	
  

 	
           3.1          This
 Amendment duly executed by the Borrower.

 
	
  

 	
  

 
	
  

 	
           3.2          A
 copy of the resolutions of the board of directors of the Borrower authorizing
 the execution, delivery, and performance of this Amendment certified as true
 and accurate by the Borrower’s secretary or assistant secretary, along with a
 certification by such secretary or assistant secretary (i) that there
 has been no amendment to the articles of incorporation or bylaws of the Borrower
 since true and accurate copies of the same were delivered to the Bank with a
 certificate of the secretary of the Borrower dated December 9, 2009, and
 (ii) as to each officer of the Borrower authorized to execute this
 Amendment and any other instrument or agreement executed by the Borrower in
 connection with this Amendment (collectively, the “Amendment Documents”),
 and as to specimens of such officer’s signature and such officer’s incumbency
 in such offices as such officer holds. 

 
	
  

 	
  

 
	
  

 	
           3.3          Certified
 copies of all documents evidencing any necessary corporate action, consent,
 or governmental or regulatory approval (if any) with respect to this
 Amendment.

 
	
  

 	
  

 
	
  

 	
           3.4          A
 consent by the Guarantor in the form of Exhibit B hereto, duly
 executed by the Guarantor.

 
	
  

 	
  

 
	
  

 	
           3.5          Good
 standing certificates for the Borrower and Guarantor from the State of
 Minnesota issued as of a date acceptable to the Bank.

 
	
  

 	
  

 
	
  

 	
           3.6          The
 Borrower shall have satisfied such other conditions as specified by the Bank,
 including payment of all unpaid legal fees and expenses incurred by the Bank
 through the date of this Amendment in connection with the Credit Agreement
 and the Amendment Documents.

 

          Section
4.          Representations,
Warranties, Authority, No Adverse Claim. 

	
  

 	
  

 
	
  

 	
           4.1          Reassertion
 of Representations and Warranties, No Default. The Borrower hereby
 represents that on and as of the date hereof and after giving effect to this
 Amendment (a) all of the representations and warranties in the Credit
 Agreement are true, correct, and complete in all respects as of the date
 hereof as though made on and as of such date, except for changes permitted by
 the terms of the Credit Agreement, and (b) there will exist no Default
 or Event of Default under the Credit Agreement as amended by this Amendment
 on such date that the Bank has not waived. 

 

4

	
  

 	
  

 
	
  

 	
           4.2          Authority,
 No Conflict, No Consent Required. The Borrower represents and warrants
 that it has the power, legal right, and authority to enter into the Amendment Documents and has duly authorized as
 appropriate the execution and delivery of the Amendment Documents and other
 agreements and documents executed and delivered by the Borrower in connection
 therewith by proper corporate action, and none of the Amendment Documents and
 the agreements therein contravenes or constitutes a default under any
 agreement, instrument, or indenture to which the Borrower is a party or a
 signatory, any provision of the Borrower’s articles of incorporation or
 bylaws, or any other agreement or requirement of law, or results in the
 imposition of any Lien on any of the Borrower’s property under any agreement
 binding on or applicable to the Borrower or any of its property except, if
 any, in favor of the Bank. The Borrower represents and warrants that no
 consent, approval, or authorization of or registration or declaration with
 any Person, including but not limited to any governmental authority, is
 required in connection with the execution and delivery by the Borrower of the
 Amendment Documents or other agreements and documents executed and delivered
 by the Borrower in connection therewith or the performance of obligations of
 the Borrower therein described, except for those that the Borrower has
 obtained or provided and as to which the Borrower has delivered certified
 copies of documents evidencing each such action to the Bank.

 
	
  

 	
  

 
	
  

 	
           4.3          No
 Adverse Claim. The Borrower warrants, acknowledges, and agrees that no
 events have taken place and no circumstances exist at the date hereof that
 would give the Borrower a basis to assert a defense, offset, or counterclaim
 to any claim of the Bank with respect to the Obligations. 

 

          Section
5.          Affirmation of
Credit Agreement, Further References, Affirmation of Security Interest.
The Bank and the Borrower each acknowledge and affirm that the Credit
Agreement, as hereby amended, is hereby ratified and confirmed in all respects
and all terms, conditions, and provisions of the Credit Agreement, except as
amended by this Amendment, shall remain unmodified and in full force and
effect. All references in any document or instrument to the Credit Agreement
are hereby amended to refer to the Credit Agreement as amended by this
Amendment. The Borrower confirms to the Bank that the Obligations are and
continue to be secured by the security interests granted by the Borrower in
favor of the Bank under the Security Documents, and all of the terms,
conditions, provisions, agreements, requirements, promises, obligations,
duties, covenants, and representations of the Borrower under the Security
Documents and any and all other documents and agreements entered into with respect
to the obligations under the Credit Agreement are incorporated herein by
reference and are hereby ratified and affirmed in all respects by the Borrower.

          Section
6.          Merger and
Integration, Superseding Effect. This Amendment, from and after
the date hereof, embodies the entire agreement and understanding between the
parties hereto and supersedes and has merged into this Amendment all prior oral
and written agreements on the same subjects by and between the parties hereto
with the effect that this Amendment shall control with respect to the specific
subjects hereof and thereof.

          Section
7.          Severability.
Whenever possible, each provision of this Amendment and the other Amendment
Documents and any other statement, instrument, or transaction contemplated
hereby or thereby or relating hereto or thereto shall be interpreted so as to
be effective, valid, and enforceable under the applicable law of any
jurisdiction, but if any provision of this Amendment, the other Amendment Documents, or
any other statement, instrument, or transaction contemplated hereby or thereby
or relating hereto or thereto is held to be prohibited, invalid, or
unenforceable under the applicable law, such provision shall be ineffective in
such jurisdiction only to the extent of such prohibition, invalidity, or
unenforceability, without invalidating or rendering unenforceable the remainder
of such provision or the remaining provisions of this Amendment, the other
Amendment Documents, or any other statement, instrument, or transaction
contemplated hereby or thereby or relating hereto or thereto in such
jurisdiction, or affecting the effectiveness, validity, or enforceability of
such provision in any other jurisdiction.

5

          Section
8.          Successors.
The Amendment Documents shall be binding upon the Borrower, the Bank, and their
respective successors and assigns and shall inure to the benefit of the
Borrower, the Bank, and the Bank’s successors and assigns.

          Section
9.          Legal Expenses.
As provided in Section 8.2 of the Credit Agreement, the Borrower shall pay
or reimburse the Bank, upon execution of this Amendment, for all reasonable
out-of-pocket expenses paid or incurred by the Bank, including filing and
recording costs and fees, charges and disbursements of outside counsel to the
Bank (determined on the basis of such counsel’s generally applicable rates,
which may be higher than the rates such counsel charges the Bank in certain
matters), and/or the allocated costs of in-house counsel incurred from time to
time, in connection with the Credit Agreement, including in connection with the
negotiation, preparation, execution, collection, and enforcement of the
Amendment Documents and all other documents negotiated, prepared, and executed
in connection with the Amendment Documents, and in enforcing the obligations of
the Borrower under the Amendment Documents, and to pay and save the Bank
harmless from all liability for any stamp or other taxes that may be payable
with respect to the execution or delivery of the Amendment Documents, which
obligations of the Borrower shall survive any termination of the Credit
Agreement.

          Section
10.          Headings.
The headings of various sections of this Amendment are for reference only and
shall not be deemed to be a part of this Amendment.

          Section
11.          Counterparts.
The Amendment Documents may be executed in several counterparts as deemed
necessary or convenient, each of which, when so executed, shall be deemed an
original, provided that all such counterparts shall be regarded as one and the
same document.

          Section
12.          Governing Law. THE AMENDMENT DOCUMENTS SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS, THEIR HOLDING COMPANIES, AND THEIR AFFILIATES.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

6

          IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be executed as of the date and year first above
written.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 BORROWER:

 	
  

 	
 ELECTROMED, INC.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
   /s/ Terry Belford

 
	
  

 	
  

 	
 Title:

 	
   Chief Financial Officer

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 BANK:

 	
  

 	
 U.S. BANK NATIONAL ASSOCIATION

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
   /s/ Dan Miller

 
	
  

 	
  

 	
  

 	
  

 

[Signature Page to
First Amendment to Credit Agreement]

EXHIBIT A TO 

FIRST AMENDMENT TO 

CREDIT AGREEMENT 

EXHIBIT G TO 

CREDIT AGREEMENT 

FORM OF COMPLIANCE CERTIFICATE

To: U.S. Bank
National Association: 

THE
UNDERSIGNED HEREBY CERTIFIES THAT: 

          (1)          I
am the duly elected chief financial officer of Electromed, Inc. (the
“Borrower”); 

          (2)          I
have reviewed the terms of the Credit Agreement dated as of December 9, 2009,
between the Borrower and U.S. Bank National Association (as amended, restated,
or otherwise modified from time to time, the “Credit Agreement”), and I have
made, or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower during the accounting period
covered by the Attachment hereto; 

          (3)          The
examination described in paragraph (2) did not disclose, and I have no
knowledge, whether arising out of such examinations or otherwise, of the
existence of any condition or event that constitutes a Default or an Event of
Default (as such terms are defined in the Credit Agreement) during or at the
end of the accounting period covered by the Attachment hereto or as of the date
of this Certificate, except as described below (or on a separate attachment to
this Certificate). The exceptions listing, in detail, the nature of the
condition or event, the period during which it has existed, and the action the
Borrower has taken, is taking, or proposes to take with respect to each such
condition or event are as follows: 

	
  

 
	
  

 
	
  

 
	
  

 

          The
foregoing certification, together with the computations in the Attachment
hereto and the financial statements delivered with this Certificate in support
hereof, are made and delivered this_____ day of_________________ , ________ pursuant to Section 5.1(d) of the
Credit Agreement. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ELECTROMED,
 INC. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Title

 	 

 

[Signature Page to First Amendment to Credit Agreement]

ATTACHMENT TO COMPLIANCE CERTIFICATE

This
Compliance Certificate is delivered under the Credit Agreement dated as of
December 9, 2009, as amended, between Electromed and U.S. Bank National
Association (the “Credit Agreement”). 

All terms used
in this Compliance Certificate shall have the meanings given them in the Credit
Agreement. 

The figures
used in this Compliance Certificate were determined as of _________________. 

I certify that
the following amounts were correctly determined according to the Credit
Agreement as of the date set forth above: 

1. Total Cash Flow Leverage (Tested
Quarterly) In Compliance Yes _____ No ____ 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Long Term Interest Bearing Debt

 	
  

 	
  

 
	
  

 	
 Plus Short Term Interest Bearing Debt

 	
  

 	
  

 
	
  

 	
 Plus Capital Leases

 	
  

 	
  

 
	
  

 	
 Plus 6 times Annual Rent Expense

 	
  

 	
  

 
	
  

 	
 Total (A)

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EBITDAR for LTM (B)

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Ratio of (A) to (B)

 	
  

 	
  

 

2. Fixed Charge Coverage Ratio (Tested
Quarterly) In Compliance Yes _____ No ____

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 For LTM

 	
  

 
	
  

 	
 EBITDAR

 	
  

 	
  

 
	
  

 	
 Less:

 	
  

 	
  

 
	
  

 	
 Cash Taxes

 	
  

 	
  

 
	
  

 	
 Cash Dividends/Cash distributions

 	
  

 	
  

 
	
  

 	
 Maintenance CAPEX (50% of Depreciation
 Expense)

 	
  

 	
  

 
	
  

 	
 Total (A)

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Required Principal Payments

 	
  

 	
  

 
	
  

 	
 Plus Cash Interest Payments

 	
  

 	
  

 
	
  

 	
 Plus Rental or Lease Expense

 	
  

 	
  

 
	
  

 	
 Total (B)

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Ratio of (A) to (B)

 	
  

 	
  

 

[Signature Page to First Amendment to Credit Agreement]

3. No Additional Interest Bearing Debt
(except for $2.5MM debentures, if approved by US Bank) (Tested Quarterly) 

In Compliance Yes _____ No _____ 

I further
certify that the Borrower is in compliance with all other terms and conditions
of the Agreement and that no Event of Default or event that with notice or
lapse of time would be an Event of Default has occurred since the last Compliance
Certificate provided to the Bank. 

	
  

 	
  

 	
  

 
	
 Electromed, Inc.

 
	
  

 	
  

 	
  

 
	
By

 	 

 
	
  

 	
  

 	
  

 
	
 Title

 	 

 

[Signature Page to First Amendment to Credit Agreement]

EXHIBIT B TO 

FIRST AMENDMENT TO

CREDIT AGREEMENT 

REAFFIRMATION OF GUARANTY

          This
REAFFIRMATION OF GUARANTY is executed as of November __, 2010, and is made and
given by Electromed Financial, LLC (the “Guarantor”) in favor of U.S.
Bank National Association (the “Bank”). 

          The
Guarantor has executed and delivered to the Bank a Guaranty dated as of December
9, 2009 (as amended, the “Guaranty”), in connection with the Credit
Agreement dated as of December 9, 2009, by and between Electromed, Inc. (the “Borrower”)
and the Bank (as amended, restated, or otherwise modified from time to time,
the “Credit Agreement”) and the Notes dated as of December 9, 2009, made
by the Borrower in favor of the Bank. Capitalized terms used but not defined
herein shall have the meanings given in the Credit Agreement. 

          The
Guarantor acknowledges that it has received a copy of the proposed First
Amendment to Credit Agreement, to be dated concurrently herewith (the “Amendment”).
The Guarantor agrees and acknowledges that the Amendment shall in no way impair
or limit the rights of the Bank under the Guaranty, and confirms that by, and
subject to the terms and conditions of, the Guaranty, the Guarantor continues
to guaranty payment and performance of the obligations of the Borrower to the
Bank under the Credit Agreement and the Notes as amended pursuant to the
Amendment. The Guarantor hereby confirms that the Guaranty remains in full
force and effect, enforceable against the Guarantor in accordance with its
terms. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ELECTROMED FINANCIAL, LLC

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
 Title:doc1.htm

 

EXHIBIT 4.3

 

 

CERTIFICATE OF DESIGNATIONS

 

 

of

 

 

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

 

 

of

 

 

BORG-WARNER AUTOMOTIVE, INC.

 

 

(Pursuant to Section 151 of the

 

 

Delaware General Corporation Law)

 

 

Borg-Warner Automotive, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the "Corporation"), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Section 151 of the General Corporation Law at a meeting duly called and held on July 21, 1998:

 

 

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the "Board of Directors" or the "Board") in accordance with the provisions of the Certificate of Incorporation, the Board of Directors hereby creates a series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the Corporation and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows:

 

 

Series A Junior Participating Preferred Stock:

 

 

Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting the Series A Preferred Stock shall be 500,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock.

 

 

Section 2. Dividends and Distributions.

 

 

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Voting Common Stock, par value $.01 per share ("Voting Common Stock") and Non-Voting Common Stock, par value $.01 per share ("Non-Voting Common Stock", and together with the Voting Common Stock, "Common Stock"), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number

 

 

 

 

of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

 

(B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

 

 

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

 

 

Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

 

 

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Voting Common Stock payable in shares of Voting Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Voting Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Voting Common Stock) into a greater or lesser number of shares of Voting Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Voting Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Voting Common Stock that were outstanding immediately prior to such event.

 

 

(B) Except as otherwise provided herein, in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

 

 

(C) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

 

 

Section 4. Certain Restrictions.

 

 

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

 

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(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

 

 

(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

 

 

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

 

 

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

 

 

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

 

 

Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

 

 

Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

 

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Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Voting Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

 

Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.

 

 

Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock.

 

 

Section 10. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.

 

 

IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its Vice President and General Counsel and attested by its Assistant Secretary this 4th day of January, 1999.

 

	
Attest:

	  	  
	  	  	  
	
/s/ Vincent M. Lichtenberger

 

	  	
/s/ Laurene H. Horiszny

 

	
Name: Vincent M. Lichtenberger

	  	
Name: Laurene H. Horiszny

	
Title: Assistant Secretary

	  	
Title: Vice President and General

Counsel

 

 

 

 

 

 

 

 

 

 

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