Document:

Second Amendment to Amended and Restated Credit Agreement

 Exhibit 10.1    Second Amendment to Amended and Restated Credit Agreement 
  
 SEALY MATTRESS COMPANY 
 SEALY CORPORATION 
  
 SECOND AMENDMENT TO AMENDED AND RESTATED 
 CREDIT AGREEMENT 
  
 This SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is dated as of October 9, 2003 and entered into by and among Sealy Mattress Company, an Ohio corporation (“Company”), Sealy Corporation, a
Delaware corporation (“Holdings”), Goldman Sachs Credit Partners L.P. (“GSCP”), as co-lead arranger and syndication agent (in such capacity, “Syndication Agent”), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF, JPMORGAN CHASE BANK, as administrative agent for Lenders, J.P. MORGAN SECURITIES INC., as co-lead arranger, FLEET NATIONAL BANK (“Fleet”), as co-documentation
agent and WACHOVIA BANK, N.A., as a co-documentation agent, and is made with reference to (i) that certain Amended and Restated Credit Agreement dated as of November 8, 2002 (as amended, supplemented or otherwise modified to the date hereof,
the “Credit Agreement”) and (ii) that certain AXEL Credit Agreement dated as of December 18, 1997 (as amended, supplemented or otherwise modified to the date hereof, the “AXEL Credit Agreement”; the AXEL Credit
Agreement and the Credit Agreement are, collectively, the “Credit Agreements”), by and among Company, Holdings, certain Lenders, Syndication Agent and Administrative Agent. Capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreements, as applicable, or in Section 1.1 hereof. 
  
 RECITALS 
  
 WHEREAS, Company, Holdings and the Lenders executing this Amendment desire to amend certain of the terms and provisions of the Credit Agreement as set forth below; 
  
 NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the
parties hereto agree as follows: 
  
 SECTION
1.    AMENDMENTS TO THE CREDIT AGREEMENT 
  
 1.1    Amendments to Section 1: Definitions 
  
 Subsection 1.1 of the Credit Agreement is hereby amended by adding the following definitions, which shall be inserted in proper alphabetical order:

  
 “October 2003 Amendment”
means that certain Second Amendment to Amended and Restated Credit Agreement dated as of October 9, 2003 by and among Company, Holdings, Subsidiary Guarantors and the Lenders party thereto. 
  
 “October 2003 Amendment Effective Date”
means the “October 2003 Amendment Effective Date” as defined in the October 2003 Amendment. 
  
 1.2    Amendments to Section 7: Holdings’ and Company’s Negative Covenants 
  
 (a) Clause (xvii) of subsection 7.3 is hereby amended by
inserting the reference “7.5(vii)” immediately prior to the reference “7.7(xi)” therein. 
  
 (b) Clause (ii) of subsection 7.5 is hereby amended by inserting a subclause “(I)” immediately after “(y)” therein and
inserting a new subclause (II) immediately following the language “in respect of the Junior Subordinated Seller Notes” and immediately prior to the language “in accordance with terms of” as follows: 
  
 “and (II) so long as no Event of Default or Potential Event of Default
has occurred and is continuing or would be caused thereby, Restricted Junior Payments to Holdings to the extent 

 
required for Holdings to make, and Holdings may make, regularly scheduled payments of interest in respect of the Junior Subordinated Seller Notes;
provided such payments made pursuant to this clause (ii)(y)(II) shall in no event exceed in the aggregate $5,000,000 per annum, in each case of subclauses (I) and (II)”. 
  
 (c) Clause (vii) of subsection 7.5 is hereby amended by inserting a clause “(a)” immediately prior
to the language “any Existing Subordinated Notes not tendered” therein and inserting the following language prior to the “,”at the end thereof: 
  
 “and (b) Junior Subordinated Seller Notes in an aggregate amount not to exceed $25,000,000; provided,
however, after giving effect to any such transaction, the Company shall have no less than an aggregate $50,000,000 in (I) Cash or Cash Equivalents plus (II) the aggregate Revolving Loan Commitments less the sum of (1) the
aggregate principal amount of outstanding Revolving Loans plus (2) the Letter of Credit Usage”. 
  
 1.3    Consents to Amendments 
  
 Each undersigned Lender hereby consents to the amendments to the Credit Agreement set forth in this
Amendment. 
  
 SECTION 2.    CONDITIONS TO EFFECTIVENESS

  
 Anything herein to the contrary notwithstanding, Section
1 of this Amendment shall become effective only upon the prior or concurrent satisfaction or waiver of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “October 2003
Amendment Effective Date”): 
  
 (i) On
or before the October 2003 Amendment Effective Date, each of Company and Holdings shall have delivered to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the October 2003 Amendment Effective Date: 
  
 (a) A certificate of its corporate secretary or an assistant secretary to the effect that (i) there have been no amendments to its
Certificate of Incorporation or Bylaws after the Effective Date (as defined in the Credit Agreement) (or, in lieu thereof, certified copies of any such amendments), (ii) the execution and delivery of this Amendment and the performance of the Credit
Agreement as amended by this Amendment, and the other Loan Documents have been duly authorized by all necessary corporate action, (iii) the Resolutions of its Board of Directors delivered on the Effective Date are in full force and effect without
modification or amendment, and (iv) there have been no changes after the Effective Date in the incumbency of its officers (or, in lieu thereof, a certificate of signatures and incumbency for the officers executing this Amendment and any related
documents); and 
  
 (b) This Amendment, executed
by Holdings, Company, Credit Support Parties and Requisite Lenders under the Credit Agreement. 
  
 (ii) So long as Requisite Lenders under the Credit Agreement shall have executed this Amendment, Administrative Agent shall have received
from Company, for distribution to each Lender that has executed and delivered this Amendment on or prior to 5:00 p.m. (New York City time) on October 9, 2003, an amendment fee in an amount equal to 0.125% of the total Loans and Commitments of each
Lender under the Credit Agreement, as well as payment for all reasonable fees, expenses and disbursements, including, without limitation, those incurred by Skadden, Arps, Slate, Meagher & Flom LLP through the October 2003 Amendment Effective
Date to the extent such fees are invoiced prior to the October 2003 Amendment Effective Date. 
  

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 SECTION 3.    COMPANY’S REPRESENTATIONS AND WARRANTIES 
  
 In order to induce Lenders to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Company represents and warrants to each Lender under the Credit Agreement that the following statements are true, correct and complete: 
  
 3.1    Incorporation of Representations and Warranties From Credit Agreements.

  
 On and as of the date hereof and the October 2003
Amendment Effective Date, the representations and warranties contained in subsections 5.1A, 5.2A, 5.2B, 5.2C and 5.2D of the Credit Agreement are and will be true, correct and complete with respect to this Amendment and the Credit Agreement as
amended by this Amendment (as so amended, the “Amended Agreement”) as if this Amendment and the Amended Agreement were “Loan Documents” referred to in such representations and warranties, and with the foregoing
modifications such representations and warranties are incorporated herein by this reference; and the representations and warranties contained in Section 5 of the Credit Agreement and Section 4 of the AXEL Credit Agreement are and will be true,
correct and complete in all material respects on and as of the October 2003 Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material respects on and as of such earlier date. 
  
 3.2    Absence of Default. 
  
 No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of Default under the Credit Agreement. 
  
 SECTION 4.    ACKNOWLEDGMENT AND CONSENT 
  
 Each of Company, Holdings and the Persons indicated as Subsidiary Guarantors on the signature pages hereof (each individually a “Credit Support
Party” and collectively, the “Credit Support Parties”) hereby acknowledges and agrees that each Loan Document to which it is a party is in full force and effect and shall not be limited or impaired in any manner by the
effectiveness of this Amendment and the transactions contemplated hereby. 
  
 Section 5.    MISCELLANEOUS 
  
 5.1    Reference to and Effect on the Credit Agreements and the Other Loan Documents. 
  
 (i) On and after the October 2003 Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “hereof’”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other applicable Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the applicable Amended Agreement. 
  
 (ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents relating thereto shall remain in
full force and effect and are hereby ratified and confirmed. 
  
 (iii) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein or therein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy
of any Agent or any Lender under, the Credit Agreement or any of the other Loan Documents relating thereto. 
  
 5.2    Fees and Expenses.    Company acknowledges that all reasonable costs, fees and
expenses incurred by Agents and their counsel that are due and payable pursuant to Section 2(ii) hereto shall be for the account of Company. 
  

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 5.3    Headings.    Section and subsection
headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 
  
 5.4    Applicable
Law.    THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
  
 5.5    Counterparts.    This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature
pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment (other than Section 1 hereof) shall become effective with respect
to the Credit Agreement upon (A) the execution of counterparts hereof by (1) Requisite Lenders (as defined in the Credit Agreement), (2) Company and (3) Holdings and the other Credit Support Parties, and (B) receipt by Company and Administrative
Agent of written or telephonic notification of such execution and authorization of delivery thereof. 
  
 [Remainder of page intentionally left blank] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by
their respective officers thereunto duly authorized as of the date first written above. 
  

	 SEALY MATTRESS COMPANY

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 

  

	 SEALY CORPORATION

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 

  

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 SUBSIDIARY GUARANTORS: 
  
 SEALY MATTRESS COMPANY OF PUERTO RICO 
 OHIO-SEALY MATTRESS MANUFACTURING CO. INC. 
 OHIO-SEALY MATTRESS MANUFACTURING CO. 
 SEALY MATTRESS COMPANY OF MICHIGAN, INC. 

SEALY MATTRESS COMPANY OF KANSAS CITY, INC. 
 SEALY OF MARYLAND AND VIRGINIA, INC. 
 SEALY MATTRESS COMPANY OF ILLINOIS 
 A. BRANDWEIN & CO. 
 SEALY MATTRESS COMPANY OF ALBANY, INC. 
 SEALY OF MINNESOTA, INC. 
 SEALY MATTRESS COMPANY OF MEMPHIS 
 THE OHIO MATTRESS COMPANY LICENSING AND COMPONENTS GROUP 
 SEALY MATTRESS MANUFACTURING COMPANY, INC. 
 SEALY, INC. 
 NORTH AMERICAN BEDDING COMPANY 
 MATTRESS HOLDINGS INTERNATIONAL, LLC 
 SEALY TECHNOLOGY LLC 
 SEALY-KOREA, INC. 
 SEALY REAL ESTATE, INC. 
 SEALY TEXAS MANAGEMENT, INC. 
 SEALY TEXAS HOLDINGS LLC 
 SEALY TEXAS L.P. 
  

	 By:
	 	  

	Name:	 	 
	Title:	 	 

  

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	 AGENTS AND LENDERS:

	
	GOLDMAN SACHS CREDIT PARTNERS L.P., individually and as Syndication Agent
		
	 By:
	 	  

	 	 	Authorized Signatory

  

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	 JPMORGAN CHASE BANK,
 individually and as Administrative Agent

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 

  

 8 

	 FLEET NATIONAL BANK,
 individually and as Co-Documentation Agent

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 

  

 9 

	 WACHOVIA BANK, NATIONAL ASSOCIATION,
 individually and as Co-Documentation Agent

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 

  

 10STATEMENT OF THE POWERS

 EXHIBIT 4.2 
  
 STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND 
 RIGHTS OF THE SERIES A CONVERTIBLE PREFERRED STOCK, 
 PAR VALUE $0.01 PER SHARE 
 OF 
 SONTRA MEDICAL CORPORATION 
  
 Sontra Medical Corporation, a Minnesota corporation (the
“Corporation”), does hereby certify, pursuant to Chapter 302A.401 of the Minnesota Business Corporations Act, that the following resolution, creating a series of seven million (7,000,000) shares of Series A Preferred Stock, was duly
adopted by the Board of Directors on September 8, 2003. 
  
 RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors in accordance with the provisions of the Amended and Restated Articles of Incorporation of the Corporation, as amended, there shall be created a series
of Preferred Stock, $0.01 par value, which series shall have the following designations and number thereof, powers, preferences, rights, qualifications, limitations and restrictions: 
  
 1. Designation and Number of Shares. There shall be hereby created and established a series of Preferred Stock
designated as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”). The authorized number of shares of Series A Preferred Stock shall be seven million (7,000,000). The stated value is $1.00 per share of
Series A Preferred Stock (the “Stated Value Per Share”). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Section 8 below. 
  
 2. Rank. The Series A Preferred Stock shall with respect to (i) the payment of the Liquidation Payment in the event
of Liquidation, (ii) the payment of the Sale Payment in the event of a Change of Control and (iii) the payment of dividends rank senior to all classes of common stock of the Corporation (including, without limitation, the Common Stock) and each
other class or series of Capital Stock of the Corporation hereafter created which does not expressly rank pari passu with or senior to the Series A Preferred Stock (together, the “Junior Stock”). 
  
 3. Dividends. 
  
 (a) Dividend Rate. The holders of shares of Series A Preferred Stock
shall be entitled to cumulative dividends annually (except as set forth below) in arrears on June 30 of each year at an annual rate equal to eight percent (8.0%) of the Stated Value Per Share, calculated on the basis of a 360-day year, consisting of
twelve (12) thirty (30)-day months, which shall accrue on a daily basis from the date of issuance thereof, whether or not declared by the Board of Directors. Dividends shall be payable in cash or Common Stock at the Corporation’s discretion. If
a full or partial dividend on the shares of Series A Preferred Stock with respect to any year is not declared by the Board of Directors, the Corporation shall remain obligated to pay a full dividend with respect to that year; provided,
however, that any unpaid dividends shall not bear interest. Each 

 
record date declared by the Board of Directors for the payment of dividends pursuant to this Section 3(a) is sometimes referred to herein as the
“Compounding Date”. At the election of the Corporation, each dividend on the Series A Preferred Stock may be added to the Accreted Value. In the event that the Corporation elects to pay dividends on the Series A Preferred Stock in
shares of Common Stock in accordance with this Section 3(a), the shares of Common Stock to be delivered to the holders of the Series A Preferred Stock shall be valued at their Current Market Price as of the record date declared by the Board of
Directors. 
  
 (b) Other Dividends. The Corporation shall
not declare or pay any dividends on, or make any other distributions with respect to any other shares of Capital Stock unless and until all accrued dividends on the Series A Preferred Stock have been paid in full. 
  
 (c) Common Stock Dividends. If the Corporation declares and pays any
dividends on the Common Stock, then, in that event, holders of shares of Series A Preferred Stock shall be entitled to share in such dividends on a pro rata basis, as if their shares have been converted into shares of Common Stock pursuant to
Section 6(a) below immediately prior to the record date for determining the shareholders of the Corporation eligible to receive such dividends. 
  
 4. Liquidation and Change of Control. 
  
 (a) Priority Payment. Upon the occurrence of and simultaneously with a Liquidation, the holders of shares of Series A Preferred Stock shall be
paid in cash for each share of Series A Preferred Stock held thereby, out of, but only to the extent of, the assets of the Corporation legally available for distribution to its shareholders, before any payment or distribution is made to any Junior
Stock, an amount equal to the sum of (x) the Accreted Value of such share of Series A Preferred Stock on the date of such Liquidation plus (y) all unpaid dividends accrued at the rate and in the manner specified in Section 3(a) since the
previous Compounding Date to the date of Liquidation (the “Liquidation Payment”). If the assets of the Corporation available for distribution to the holders of shares of Series A Preferred Stock shall be insufficient to permit
payment in full to such holders of the aggregate Liquidation Payment, then all of the assets available for distribution to holders of shares of Series A Preferred Stock shall be distributed among and paid to such holders ratably in proportion to the
amounts that would be payable to such holders if such assets were sufficient to permit payment in full. 
  
 (b) Change of Control. In the event of a Change of Control, the holders of shares of Series A Preferred Stock shall be paid for each share of
Series A Preferred Stock held thereby, before any payment or distribution is made to any Junior Stock, a cash amount equal to (i) the sum of (x) the Accreted Value of such share of Series A Preferred Stock on the closing date of such Change of
Control plus (y) all unpaid dividends accrued at the rate and in the manner specified in Section 3(a) since the previous Compounding Date to the closing date of such Change of Control (the “Sale Payment”). If the assets of
the Corporation available for distribution to the holders of shares of Series A Preferred Stock shall be insufficient to permit payment in full to such holders of the aggregate Sale Payment, then all of the assets available for distribution to

  

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holders of shares of Series A Preferred Stock shall be distributed among and paid to such holders ratably in proportion to the amounts that would be payable
to such holders if such assets were sufficient to permit payment in full. Any amount payable under this Section 4(b) shall be paid on the closing date of such Change of Control. 
  
 (c) No Additional Payment. After the holders of all shares of Series A Preferred Stock shall have been paid in full
the amounts to which they are entitled in Section 4(a) or Section 4(b), as the case may be, the holders of shares of Series A Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Corporation and the
remaining assets of the Corporation shall be distributed to the holders of Junior Stock. 
  
 (d) Notice. Written notice of a Liquidation or a Change of Control stating a payment or payments and the place where such payment or payments shall be payable, shall be delivered in person, mailed by certified
mail, return receipt requested, mailed by overnight mail or sent by telecopier, not less than ten (10) days prior to the date on which such Liquidation or Change of Control is expected to become effective, to the holders of record of shares of
Series A Preferred Stock, such notice to be addressed to each such holder at its address as shown by the records of the Corporation. 
  
 5. Voting Rights. Unless and until the shares of Series A Preferred Stock are converted into Common Stock in accordance with Section 6(a) or (b)
below, the holders of outstanding shares of Series A Preferred Stock shall not be entitled to vote on any matters except to the extent otherwise required under the Minnesota Business Corporations Act. 
  
 6. Conversion and Redemption. 
  
 (a) Conversion at Option of Holder. Any holder of shares of Series A
Preferred Stock shall have the right, at its option, at any time and from time to time, to convert, subject to the terms and provisions of this Section 6 (other than 6(b)), any or all of such holder’s shares of Series A Preferred Stock into
such number of fully paid and non-assessable shares of Common Stock as is equal to the product of (i) the number of shares of Series A Preferred Stock being so converted multiplied by (ii) the quotient of (x) the sum of the Accreted
Value plus all unpaid dividends accrued at the rate and in the manner specified in Section 3(a) since the previous Compounding Date divided by (y) the Per Share Price, subject to adjustment as provided in Section 6(e) below (the
“Conversion Price”) (such quotient being sometimes referred to herein as the “Conversion Ratio”). Such conversion right shall be exercised by the surrender of certificate(s) representing the shares of Series A
Preferred Stock to be converted to the Corporation at any time during usual business hours at its principal place of business maintained by it (or such other office or agency of the Corporation as the Corporation may designate by notice in writing
to the holders of shares of Series A Preferred Stock), accompanied by written notice that the holder elects to convert such shares of Series A Preferred Stock and specifying the name or names (with address) in which a certificate or certificates for
shares of Common Stock are to be issued and (if so required by the Corporation) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized legal 

  

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representative and transfer tax stamps or funds therefor, if required pursuant to Section 6(k) below. Notwithstanding anything herein to the contrary, the
Series A Preferred Stock shall not be convertible unless and until the Corporation’s shareholders approve, as required by Nasdaq Marketplace Rule 4350, the issuance of the shares of Common Stock upon conversion of the Series A Preferred Stock
(the “Nasdaq Approval”). 
  
 (b) Conversion at
Option of the Corporation. If, on any date after the effectiveness of the Registration Statement (as defined in Subscription Agreements by and between the Corporation and each of the holders of the Series A Preferred Stock (the
“Subscription Agreements”)), the closing Market Price for a share of Common Stock for twenty (20) consecutive trading days equals at least $3.00 (subject to adjustment for the events described in Section 6(e)(i)), the Corporation shall
have the right, at its option, to convert, subject to the terms and provisions of this Section 6, all, but not less than all, of the outstanding shares of Series A Preferred Stock into such number of fully paid and non-assessable shares of Common
Stock as is equal to the product of (i) the number of shares of Series A Preferred Stock being so converted multiplied by (ii) the Conversion Ratio. Written notice by the Corporation that the Corporation elects to convert such shares
of Series A Preferred Stock pursuant to this Section 6(b) shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier to the holders of record of the shares of Series A Preferred
Stock, such notice to set forth the date of conversion pursuant to this Section 6(b) and to be addressed to each such holder at its address as shown in the records of the Corporation. Upon receipt of such notice from the Corporation, each holder of
shares of Series A Preferred Stock shall promptly surrender to the Corporation certificates representing the shares of Series A Preferred Stock to be converted at any time during usual business hours at its principal place of business maintained by
it (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holders of shares of Series A Preferred Stock), specifying the name or names (with address) in which a certificate or certificates for
shares of Common Stock are to be issued and (if so required by the Corporation) accompanied by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized
legal representative and transfer tax stamps or funds therefore, if required pursuant to Section 6(k) below. Notwithstanding anything herein to the contrary, the Series A Preferred Stock shall not be convertible unless and until the Nasdaq Approval
is obtained. 
  
 (c) Surrender of Certificates; Delivery of
Shares; Termination of Rights. All certificates representing shares of Series A Preferred Stock surrendered for conversion pursuant to Sections 6(a) and 6(b) shall be delivered to the Corporation for cancellation and canceled by it. As promptly
as practicable after the surrender of any shares of Series A Preferred Stock, the Corporation shall (subject to compliance with the applicable provisions of federal and state securities laws) deliver to the holder of such shares so surrendered
certificate(s) representing the number of fully paid and nonassessable shares of Common Stock into which such shares are entitled to be converted. At the time of the surrender of such certificate(s), the Person in whose name any certificate(s) for
shares of Common Stock shall be issuable upon such conversion 

  

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shall be deemed to be the holder of record of such shares of Common Stock on such date, notwithstanding that the share register of the Corporation shall then
be closed or that the certificates representing such Common Stock shall not then be actually delivered to such Person. Such converted Series A Preferred Stock may not be reissued, and the Corporation may thereafter take such appropriate action
(without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series A Preferred Stock accordingly. On the date of conversion pursuant to Section 6(a) or Section 6(b) above, all rights with respect to the
shares of Series A Preferred Stock so converted, including the rights, if any, to receive notices and vote, shall terminate, except only the rights of holders thereof to (i) receive certificates for the number of shares of Common Stock into which
such shares of Series A Preferred Stock have been converted and (ii) exercise the rights to which they are entitled as holders of Common Stock. 
  
 (d) Adjustments to Per Share Price. (i) In the event the Corporation shall at any time after the Closing Date and prior to the later to occur of
(1) the first anniversary of the Closing Date, (2) the date that is 90 days after the effectiveness of the Registration Statement or (3) the date that the closing Market Price for a share of Common Stock for thirty (30) consecutive trading days is
at least equal to the Conversion Price, issue Additional Shares of Common Stock for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Conversion Price
shall be reduced, concurrently with such issue, to the consideration per share received by the Corporation for the issue of the Additional Shares of Common Stock. For the purpose of the adjustment required under this Section 6(d), if the Corporation
issues or sells any Convertible Securities or Options for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, in each case the Corporation shall be deemed to have issued at the time
of such issuance, the maximum number of Additional Shares of Common Stock issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if
any, received by the Corporation for the issuance of such Convertible Securities or Options, plus, in the case of such Options, the minimum amounts of consideration, if any, payable to the Corporation upon the exercise of such Options, plus, in the
case of Convertible Securities, the minimum amounts of consideration, if any, payable to the Corporation (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) upon the conversion thereof. All
calculations of the above amounts shall be made without regard to any limitation on conversions or exercises of such Convertible Securities or Options. 
  
 For purposes of this Statement: 
  
 “Convertible Securities” shall mean any evidence of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for
Common Stock, but excluding Options. 
  
 “Option” shall mean
rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities. 
  

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 “Additional Shares of Common Stock” shall mean all shares of Common Stock, Convertible Securities and
all Options issued (or deemed to be issued pursuant to this Section 6(d)(i)) by the Corporation after the Closing Date, other than: 
  
 (1) shares of Common Stock issued or issuable upon conversion or exchange of any Convertible Securities or exercise of any Options
outstanding on the Closing Date; provided that adjustment for the issuance of such Convertible Securities and Options has previously been made (for such Convertible Securities and Options issued after the Closing Date); 
  
 (2) shares of Common Stock issued or issuable as a dividend
or distribution on Series A Preferred Stock; 
  
 (3) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution on shares of Common Stock that is covered by Section 6(e) below; 
  
 (4) shares of Common Stock issued or issuable in connection with the offering and issuance of the Series A
Preferred Stock pursuant to the Subscription Agreements; or 
  
 (5) shares of Common Stock (or Options with respect thereto) issued or issuable to employees or directors of, or consultants to, the Corporation pursuant to a plan or arrangement approved by the Board of Directors of
the Corporation. 
  
 (ii) In the event that (1) the Corporation has not filed the
Registration Statement with the Commission within 30 days after the Closing Date, or (2) the Registration Statement has not been declared effective by the Commission within 120 days after the Closing Date, then the Per Share Price then in effect
shall be adjusted such that the number of shares of Common Stock issuable upon conversion of the shares of Series A Preferred Stock shall be increased by 1% for each full 30-day period during which both of the above-stated conditions are not met.

  
 (e) (i) Dividend, Subdivision, Combination or
Reclassification of Common Stock. In the event that the Corporation shall, at any time or from time to time prior to conversion of shares of Series A Preferred Stock, (w) declare a dividend or make a distribution on the outstanding shares of
Common Stock payable in Common Stock, (x) subdivide the outstanding shares of Common Stock into a larger number of shares, (y) combine the outstanding shares of Common Stock into a smaller number of shares or (z) issue any shares of its Capital
Stock in a reclassification of the Common Stock (other than any such event for which an adjustment is made pursuant to another clause of this Section 6(e)), then, and in each such case, the Conversion Price in effect immediately prior to such event
shall be adjusted (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common
Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of 

  

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any of the events described above, had such share of Series A Preferred Stock been converted immediately prior to the occurrence of such event. An adjustment
made pursuant to this Section 6(e)(i) shall become effective retroactively (x) in the case of any such dividend or distribution, to a date immediately following the close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or distribution or (y) in the case of any such subdivision, combination or reclassification, to the close of business on the day upon which such corporate action becomes effective. 
  
 (ii) Certain Distributions. In case the Corporation shall, at any
time or from time to time prior to conversion of shares of Series A Preferred Stock, distribute to all holders of shares of the Common Stock (including any such distribution made in connection with a merger or consolidation in which the Corporation
is the resulting or surviving Person and the Common Stock is not changed or exchanged) cash, evidences of Indebtedness of the Corporation or another issuer, securities of the Corporation or another issuer or other assets (excluding dividends payable
in shares of Common Stock for which adjustment is made under another paragraph of this Section 6(e), any distribution that also is made to the holders of Series A Preferred Stock on an as-converted basis and any distribution in connection with an
Excluded Transaction) or rights or warrants to subscribe for or purchase of any of the foregoing, then, and in each such case, the Conversion Price then in effect shall be adjusted (and any other appropriate actions shall be taken by the
Corporation) by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction (x) the numerator of which shall be the Current Market Price of the Common Stock immediately prior to the date of
distribution less the then fair market value (as determined by the Board of Directors in the exercise of their fiduciary duties) of the portion of the cash, evidences of Indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (y) the denominator of which shall be the Current Market Price of the Common Stock immediately prior to the date of distribution (but such fraction shall not be greater than one); provided,
however, that no adjustment shall be made with respect to any distribution of rights or warrants to subscribe for or purchase securities of the Corporation if the holder of shares of Series A Preferred Stock would otherwise be entitled to
receive such rights or warrants upon conversion at any time of shares of Series A Preferred Stock into Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively to a date immediately
following the close of business on the record date for the determination of shareholders entitled to receive such distribution. 
  
 (iii) Other Changes. In case the Corporation, at any time or from time to time prior to the conversion of shares of Series A Preferred Stock,
shall take any action affecting its Common Stock similar to or having an effect similar to any of the actions described in Sections 6(e)(i) or (ii) above or Section 6(h) below (but not including any action described in any such Section) and the
Board of Directors in good faith determines that it would be equitable in the circumstances to adjust the Conversion Price as a result of such action, then, and in each such case, the Conversion Price shall be adjusted in such manner and at
such time as the Board of Directors in good faith determines would be equitable in the circumstances (such determination to be 

  

 7 

 
evidenced in a resolution, a certified copy of which shall be mailed to the holders of shares of Series A Preferred Stock). 
  
 (f) Abandonment. If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to shareholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then no adjustment in the Conversion Price shall be required by reason of the taking of such record. 
  
 (g) Certificate as to Adjustments. Upon any adjustment in the Conversion Price, the Corporation shall within five (5) business days following any
of the foregoing transactions deliver to each registered holder of shares of Series A Preferred Stock a certificate, signed by an appropriate officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the increased or decreased Conversion Price then in effect following such adjustment. 
  
 (h) Reorganization, Reclassification. In case of any merger, consolidation or other business combination transaction of the Corporation (other
than a Change of Control) or any capital reorganization, reclassification or other change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value) (each, a
“Transaction”), the Corporation shall execute and deliver to each holder of shares of Series A Preferred Stock prior to effecting such Transaction a certificate, signed by an appropriate officer of the Corporation, stating that the
holder of each share of Series A Preferred Stock shall have the right to receive in such Transaction, in exchange for each share of Series A Preferred Stock, a security identical to (and not less favorable than) the Series A Preferred Stock, and
provision shall be made therefor in the agreement, if any, relating to such Transaction. Any certificate delivered pursuant to this Section 6(h) shall provide for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6. The provisions of this Section 6(h) and any equivalent thereof in any such certificate similarly shall apply to successive Transactions. 
  
 (i) Notices. In case at any time or from time to time: 
  
 (w) the Corporation shall declare a dividend (or any other distribution) on
its shares of Common Stock; 
  
 (x) the Corporation subdivides or
combines its outstanding shares of Common Stock; 
  
 (y) the
Corporation shall authorize the granting to the holders of its Common Stock rights or warrants to subscribe for or purchase any shares of Capital Stock of any class or of any other rights or warrants; or 
  
 (z) there shall be any Transaction, 
  

 8 

 
then the Corporation shall mail to each holder of shares of Series A Preferred Stock at such holder’s address as it appears on the transfer books of the
Corporation, as promptly as practicable but in any event at least ten days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution,
subdivision, combination or granting of rights or warrants or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision, combination or granting of rights
or warrants are to be determined, or (B) the date on which such Transaction is expected to become effective and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for shares of
stock or other securities or property or cash deliverable upon such Transaction. Notwithstanding the foregoing, in the case of any event to which Section 6(h) above is applicable, the Corporation shall also deliver the certificate described in
Section 6(h) above to each holder of shares of Series A Preferred Stock prior to effecting such reorganization or reclassification as aforesaid. 
  
 (j) Listing. The Corporation shall: (i) prepare and file with The Nasdaq Stock Market on a timely basis the necessary Notification Form regarding
the listing on the Nasdaq SmallCap Market (“NSCM”) of a number of additional shares of Common Stock which is at least equal to the maximum number of shares then issuable upon conversion of the Series A Preferred Stock (without regard to
any limitation on conversions of Series A Preferred Stock); (ii) maintain, so long as any other shares of Common Stock shall be so listed, the listing of all such shares then issuable upon conversion of the Series A Preferred Stock on the NSCM; and
(iii) provide to the Subscriber evidence of such filing upon request. 
  
 (k) Reservation of Common Stock. The Corporation shall at all times reserve and keep available for issuance upon the conversion of shares of Series A Preferred Stock, such number of its authorized but unissued shares of Common Stock
as will from time to time be sufficient to permit the conversion of all outstanding shares of Series A Preferred Stock, and shall take all action to increase the authorized number of shares of Common Stock if at any time there shall be insufficient
authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series A Preferred Stock; provided, that the holders of shares of Series A Preferred Stock shall vote such
shares in favor of any such action that requires a vote of shareholders. 
  
 (l) No Conversion Tax or Charge. The issuance or delivery of certificates for Common Stock upon the conversion of shares of Series A Preferred Stock shall be made without charge to the converting holder of
shares of Series A Preferred Stock for such certificates or for any tax in respect of the issuance or delivery of such certificates or the securities represented thereby, and such certificates shall be issued or delivered in the respective names of,
or (subject to compliance with the applicable provisions of federal and state securities laws) in such names as may be directed by, the holders of the shares of Series A Preferred Stock so converted; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of Series A Preferred Stock so
converted, and the 

  

 9 

 
Corporation shall not be required to issue or deliver such certificate unless or until the Person or Persons requesting the issuance or delivery thereof
shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. 
  
 (m) Limitations on Conversions. Each holder of the Series A Preferred Stock’s right to convert its shares of
Series A Preferred Stock into shares of Common Stock shall not be limited by any notice delivered by the Corporation of any Change of Control or other event that notwithstanding this subsection (l) shall purport to limit such conversion right.

  
 (n) No Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the Market Price on
the trading day immediately preceding conversion. 
  
 (o)
Redemption. At any time after the fifth anniversary of the Closing Date, the Corporation shall have the right to redeem the shares of Series A Preferred Stock at a per share price equal to the Stated Value Per Share, subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting the number of issued and outstanding shares of Series A Preferred Stock, plus any accrued and unpaid dividends. Shares of the Series
A Preferred Stock redeemed or otherwise repurchased or reacquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as
shares of the Series A Preferred Stock. 
  
 7. Business
Day. If any payment shall be required by the terms hereof to be made on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day. 
  
 8. Definitions. As used in this Statement of Designations, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the plural), unless the context otherwise requires: 
  
 “Accreted Value” means, as of any date, with respect to each share of Series A Preferred Stock, the Stated Value Per Share, plus
the amount of unpaid dividends that have accrued, compounded and been added thereto to such date pursuant to Section 3(a) hereof. 
  
 “Board of Directors” means the Board of Directors of the Corporation. 
  
 “Business Day” means any day except a Saturday, a Sunday, or other day on which commercial banks in the
Commonwealth of Massachusetts are authorized or required by law or executive order to close. 
  

 10 

 “Capital Stock” means, with respect to any Person, any and all shares, interests,
participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person’s capital stock (including, without limitation, common stock and preferred stock) and any and all rights, warrants or options
exchangeable for or convertible into such capital stock. 
  
 “Change of Control” means (i) any merger, consolidation or other business combination transaction (or series of related transactions) in which the shareholders owning a majority of the voting securities of the Corporation
prior to such transaction do not own a majority of the voting securities of the surviving entity, (ii) any tender offer, exchange offer or other transaction whereby any person or “group” other than the holders of shares of Series A
Preferred Stock obtains a majority of the outstanding shares of Common Stock, (iii) a sale of all or substantially all of the assets of the Corporation, (iv) any proxy contest in which a majority of the Board of Directors of the Corporation (or
persons appointed by the Board of Directors) prior to such contest do not constitute a majority of the Corporation’s Board of Directors after such contest or (v) any other transaction described in any stockholder rights agreement or
“poison pill,” if any, to which the Corporation is party, which may permit the holders of any rights or similar certificates to exercise the rights evidenced thereby. 
  
 “Closing Date” means the date of first issuance of a share of Series A Preferred Stock. 
  
 “Commission” means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the Securities Act. 
  
 “Common Stock” shall mean the common stock, par value $0.01 per share, of the Corporation. 
  
 “Current Market Price” per share of Capital Stock of any Person means, as of the date of determination, (a) the average of the daily
Market Price under clause (a), (b) or (c) of the definition thereof of such Capital Stock during the immediately preceding thirty (30) trading days ending on such date, and (b) if such Capital Stock is not then listed or admitted to trading on any
national securities exchange, or quoted on the Nasdaq National Market or the Nasdaq SmallCap Market, or quoted in the over-the-counter market, then the Market Price under clause (d) of the definition thereof on such date. 
  
 “Indebtedness” means, as to any Person, (a) all obligations
of such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured), (b) all obligations of such Person to
pay the deferred purchase price of property or services, except trade accounts payable and accrued commercial or trade liabilities arising in the ordinary course of business, (c) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (d) all indebtedness created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though 

  

 11 

 
the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all
obligations of such Person under any capital leases, (f) all indebtedness secured by any lien (other than liens in favor of lessors under leases other than leases included in clause (e)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, and (g) any direct or indirect liability of such Person with respect to any indebtedness, lease, dividend,
guaranty, letter of credit or other similar obligation of another Person. 
  
 “Liquidation” means the voluntary or involuntary liquidation under applicable bankruptcy or reorganization legislation, or the dissolution or winding up of the Corporation. 
  
 “Market Price” means, with respect to the Capital Stock of
any Person, as of the date of determination, (a) the closing price of the Capital Stock on a national securities exchange or as quoted on the Nasdaq National Market or the Nasdaq SmallCap Market on such day, as reported by the Wall Street Journal;
or (b) if the Capital Stock is quoted on the Nasdaq National Market or the Nasdaq SmallCap Market but no sale occurs on such day, the average of the closing bid and asked prices of the Capital Stock on the Nasdaq National Market or the Nasdaq
SmallCap Market on such day, as reported by the Wall Street Journal; or (c) if the Capital Stock is not so listed or quoted, the average of the closing bid and asked prices of the Capital Stock in the U.S. over-the-counter market; or (d) if none of
(a), (b) or (c) is applicable, a market price per share determined by the Board of Directors (acting in good faith pursuant to the exercise of its fiduciary duties). 
  
 “Per Share Price” initially shall be equal to the Stated Value Per Share (subject to adjustment pursuant to
the provisions of Section 6 hereof). 
  
 “Person”
means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, governmental authority or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity. 
  
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. 
  
 “Series A Preferred Stock” shall have the meaning ascribed to it in Section 1 hereof. 
  
 “Statement of Designations” means this Statement of
Designations relating to the powers, designations, preferences and rights of the Series A Preferred Stock. 
  
 [Remainder of page intentionally left blank] 
  

 12 

 IN WITNESS WHEREOF, the undersigned has executed this Statement of Designations as of September 12, 2003.

  

	 SONTRA MEDICAL CORPORATION

		
	 By:
	 	 /s/ Sean F. Moran

	 	 	 Name: Sean F. Moran

	 	 	 Title: Chief Financial Officer

  

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