[MINNESOTA MINNESOTA SECRETARY OF STATE
STATE SEAL] AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW.
CORPORATE NAME: (List the name of the company prior to any desired name change)
Merrill Corporation
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This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State. _________________________________
The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form 2.)
ARTICLE VI
See Exhibit A attached hereto.
This amendment has been approved pursuant to MINNESOTA STATUTES CHAPTER 302A OR
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
/s/ Steven J. Machov
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Steven J. Machov, Secretary
(Signature of Authorized Person)
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INSTRUCTIONS FOR OFFICE USE ONLY
1. Type or print with black ink.
2. A Filing Fee of: $35.00, made payable to the
Secretary of State
3. Return completed forms to:
Secretary of State
180 State Office Building
100 Constitution Ave.
St. Paul, MN 55155-1299
(612) 296-2803
EXHIBIT A
RESOLVED, That Article VI of Merrill Corporation's Articles of
Incorporation is hereby amended in its entirety to read as follows:
ARTICLE VI
(a) The aggregate number of shares that this Corporation has authority to issue
is thirty-five million five hundred thousand (35,500,000) shares which
shall consist of: (i) five hundred thousand (500,000) undesignated shares;
(ii) twenty-five million (25,000,000) shares of voting common stock of $.01
par value per share; and (iii) ten million (10,000,000) shares of voting
Class B common stock of $.01 par value per share. The voting common stock
and Class B common stock shall be identical in all respects and shall have
equal rights and privileges, except as provided in paragraph (b) below.
Only the authorization of the Board of Directors is necessary for this
Corporation to issue shares and other securities and rights to purchase
shares and other securities. The Board of Directors is authorized to
establish, from the undesignated shares, one or more classes and series of
shares to designate each such class and series and to fix the relative
rights and preferences of each such class and series. No holders of shares
shall be entitled as such preemptively or as a matter of right to subscribe
for or purchase any part of any issue of stock or any securities
convertible into stock of any class whatsoever, whether now or hereafter
authorized and whether issued for cash, property, services, or by way of
dividends or otherwise, unless the Board of Directors shall grant
preemptive rights to the holders of some or all of the undesignated shares
with respect to some or all of the undesignated shares. This Corporation
may issue shares and it may issue shares of any class or series of the
undesignated shares to the holders of shares of voting common stock or
Class B common stock. There shall be no right of cumulative voting.
(b) The Class B common stock shall, with respect to rights on liquidation,
winding up or dissolution of the Corporation, rank prior to the voting
common stock, but junior to all other classes and series of equity
securities of the Corporation now or hereafter authorized, issued or
outstanding (such other classes and series of equity securities
collectively referred to herein as "SENIOR STOCK"). In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of outstanding shares of Class B common stock
shall be entitled to receive out of the assets of the Corporation available
for distribution to shareholders, before any distribution of assets shall
be made to the holders of shares of voting common stock, an amount equal to
One Dollar ($1.00) per outstanding share of Class B common stock; PROVIDED,
HOWEVER, if, upon any such voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the amounts payable with
respect to Senior Stock are not paid in full, the holders of voting common
stock and Class B common stock shall not receive any distribution of assets
of the Corporation. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the amounts payable with
respect to the Class B common stock are not paid in full, the holders of
voting common stock shall not receive any distribution of assets of the
Corporation. All distributions made with respect to the Class B common
stock in connection with such a liquidation, dissolution or winding up of
the Corporation shall be made pro rata to the holders entitled thereto.
After amounts payable with respect to Senior Stock are paid in full and
after payment to the holders of the Class B common stock of the full
preferential amount provided for in this paragraph (b) of Article VI, the
holders of the voting common stock and Class B common stock shall share on
a pro rata basis in any distribution of assets of the Corporation. Neither
the voluntary sale, conveyance, exchange or transfer (for cash, securities
or other consideration) of all or any part of the property or assets of the
Corporation, nor the consolidation or merger or other business combination
of the Corporation with or into any other corporation or corporations,
shall be deemed to be a voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the Corporation.
CERTIFICATE OF DESIGNATION OF 14.5% SENIOR PREFERRED
STOCK DUE 2011
of
MERRILL CORPORATION
Pursuant to Section 401, Subd. 3(b) of the Business Corporation Act
of the State of Minnesota
I, the undersigned, Steven J. Machov, Secretary of Merrill Corporation,
a Minnesota corporation (hereinafter called the "CORPORATION"), pursuant to the
provisions of Section 401, Subd. 3(b) of the Business Corporation Act of the
State of Minnesota, do hereby make this Certificate of Designations and do
hereby state and certify that pursuant to the authority expressly vested in the
Board of Directors of the Corporation by the Articles of Incorporation, the
Board of Directors on November 19, 1999, in accordance with Section 401, Subd.
3, of the Business Corporation Act of the State of Minnesota, duly adopted the
following resolution establishing a series of 500,000 shares of preferred stock,
to be designated as 14.5% Senior Preferred Stock due 2011:
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by the Articles of Incorporation (which authorizes the Board of
Directors to designate 500,000 undesignated shares as shares of preferred stock,
$0.01 par value ("PREFERRED STOCK")), the Board of Directors hereby establishes
a series of 14.5% Senior Preferred Stock due 2011 and hereby states the
designation and number of shares, and fixes the powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of such series of Preferred Stock.
RESOLVED, that each share of such series of Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
(1) NUMBER AND DESIGNATION. 500,000 shares of the Preferred Stock of
the Corporation shall be designated as 14.5% Senior Preferred Stock due 2011
(the "SENIOR PREFERRED STOCK").
(2) RANK. The Senior Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution and winding up, rank prior to all
classes of or series of common stock of the Corporation, including any class of
the Corporation's common shares, par value $0.01 per share ("COMMON SHARES"),
and each other class of capital stock of the Corporation, the terms of which
provide that such class shall rank junior to the Senior Preferred Stock or the
terms of which do not specify any rank relative to the Senior Preferred Stock.
All equity securities of the Corporation to which the Senior Preferred Stock
ranks prior (whether with respect to dividends
or upon liquidation, dissolution, winding up or otherwise), including the
Common Shares, are collectively referred to herein as the "JUNIOR
SECURITIES." All equity securities of the Corporation with which the Senior
Preferred Stock ranks on a parity (whether with respect to dividends or upon
liquidation, dissolution or winding up) are collectively referred to herein
as the "PARITY SECURITIES." The respective definitions of Junior Securities
and Parity Securities shall also include any rights or options exercisable
for or convertible into any of the Junior Securities and Parity Securities,
as the case may be. The Senior Preferred Stock shall be subject to the right
of the Corporation to create Junior Securities.
(3) DIVIDENDS.
(a) (i) The holders of shares of Senior Preferred Stock shall
be entitled to receive, when, as and if declared by the Board
of Directors, out of funds legally available for the payment
of dividends, dividends (subject to Sections 3(a)(ii) and
(iii) hereof) at a rate equal to 14.5% per annum (computed on
the basis of a 360 day year of twelve 30 day months) (the
"DIVIDEND RATE") on the Liquidation Value (as defined below)
of each share of Senior Preferred Stock on and as of each
Dividend Payment Date (as defined below). In the event the
Corporation is unable or shall fail to discharge its
obligation to redeem all outstanding shares of Senior
Preferred Stock pursuant to paragraph 5(c) or 5(d) hereof, the
Dividend Rate shall increase by .25 percent per quarter (each,
a "DEFAULT DIVIDEND") for each quarter or portion thereof
following the date on which such redemption was required to be
made until cured, PROVIDED that the aggregate increase shall
not exceed 5%. Such dividends shall be payable in the manner
set forth below in Sections 3(a)(ii) and (iii) quarterly on
February 15, May 15, August 15, and November 15 of each year
(unless such day is not a business day, in which event on the
next succeeding business day) (each of such dates being a
"DIVIDEND PAYMENT DATE" and each such quarterly period being a
"DIVIDEND PERIOD"). Such dividends shall be cumulative from
the date of issue, whether or not in any Dividend Period or
Periods there shall be funds of the Corporation legally
available for the payment of such dividends.
(ii) On and prior to November 15, 2004, dividends shall not be
payable in cash to holders of shares of Senior Preferred Stock
but shall, subject to Section 3(b) hereof, accrete to the
Liquidation Value in accordance with Section 4(a) hereof
whether or not such dividends are declared by the Board of
Directors.
(iii) On each Dividend Payment Date following November 15,
2004, each such dividend shall be payable in cash on the
Liquidation Value per share of the Senior Preferred Stock, in
equal quarterly amounts at the Dividend Rate (to which the
Default Dividend, if any, shall be added), to the holders of
record of shares of the Senior Preferred Stock, as they appear
on the stock records of the Corporation at the close of
business on such record dates, not more than 60 days or less
than 10 days preceding the payment dates thereof, as shall be
fixed by the Board of Directors. Accrued and unpaid dividends
for any past Dividend Periods may be
declared and paid at any time, without reference to any
Dividend Payment Date, to holders of record on such date,
not more than 45 days preceding the payment date thereof,
as may be fixed by the Board of Directors.
(b) At the written request of the holders of a majority of the shares
of Senior Preferred Stock, the Corporation shall, commencing on the first
Dividend Payment Date after such request and ending on November 15, 2004, be
required to pay all dividends on shares of Senior Preferred Stock by the
issuance of additional shares of Senior Preferred Stock ("ADDITIONAL SHARES")
but only if the Corporation shall have reserved and authorized for issuance the
full amount of Additional Shares. The Additional Shares shall be identical to
all other shares of Senior Preferred Stock, except as set forth in Section 4.
For the purposes of determining the number of Additional Shares to be issued as
dividends pursuant to this Paragraph (b), such Additional Shares shall be valued
at their Applicable Liquidation Value as provided in Section 4(c). The
entitlement to dividends under this paragraph (b) shall cumulate on Additional
Shares payable under this paragraph (b) whether or not such dividends are
declared by the Board of Directors.
(c) Holders of shares of Senior Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
cumulative dividends, as herein provided, on the Senior Preferred Stock. Except
as provided in this Section 3, no interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Senior
Preferred Stock that may be in arrears.
(d) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment and no distribution shall be
declared or made upon Parity Securities, nor shall any Parity Securities be
redeemed, purchased or otherwise acquired by the Corporation unless full
cumulative dividends (to the extent such dividends are payable in cash) have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Senior Preferred Stock
for all Dividend Periods terminating on or prior to the date of payment of the
dividend on such class or series of Parity Securities. When (to the extent such
dividends are payable in cash) dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon shares of the Senior Preferred Stock and all dividends declared
upon any other class or series of Parity Securities shall (in each case, to the
extent payable in cash) be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Senior Preferred Stock and
accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Securities) shall be declared or paid or set apart for payment and no
other distribution shall be declared or made upon Junior Securities, nor shall
any Junior Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Shares made for purposes of
an employee incentive or benefit plan of the Corporation or any subsidiary) (any
such dividend, distribution, redemption or purchase being hereinafter referred
to as a "JUNIOR SECURITIES DISTRIBUTION") for any consideration (nor
shall any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Junior Securities),
unless in each case (i) the full cumulative dividends on all outstanding
shares of the Senior Preferred Stock and any other Parity Securities shall
(to the extent payable in cash) have been paid or set apart for payment for
all past Dividend Periods with respect to the Senior Preferred Stock and all
past dividend periods with respect to such Parity Securities and (ii) (to the
extent payable in cash) sufficient funds shall have been paid or set apart
for the payment of the dividend for the current Dividend Period with respect
to the Senior Preferred Stock and the current dividend period with respect to
such Parity Securities.
(4) LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of Senior Preferred Stock shall be
entitled to receive an amount equal to the Liquidation Value of such share plus
any accrued and unpaid dividends, payable in cash, to the date of distribution.
"LIQUIDATION VALUE" on any date means, with respect to (x) any share of Senior
Preferred Stock other than any Additional Shares, the sum of (1) $80.00 per
share and (2) the aggregate of all dividends accreted on such share until the
most recent Dividend Payment Date upon which an accretion to Liquidation Value
has occurred (or if such date is a Dividend Payment Date upon which an accretion
to Liquidation Value has occurred, such date), PROVIDED that in the event of an
actual liquidation, dissolution or winding up of the Corporation or the
redemption of any shares of Senior Preferred Stock pursuant to Section 5
hereunder, the amount referred to in (2) shall be calculated by including
dividends accreting to the actual date of such liquidation, dissolution or
winding up or the redemption date, as the case may be, rather than the Dividend
Payment Date referred to above and PROVIDED FURTHER that in no event will
dividends accrete beyond the earlier of (i) November 15, 2004 and (ii) the most
recent Dividend Payment Date prior to the Dividend Payment Date on which
dividends on the Senior Preferred Stock are payable in Additional Shares and (y)
any Additional Share, the Applicable Liquidation Value; provided that, in the
event of an actual liquidation, dissolution or winding up of the Corporation or
the redemption of any shares of Senior Preferred Stock pursuant to Section 5
hereunder, the Applicable Liquidation Value shall be calculated to include,
without duplication, dividends accruing to the actual date of such liquidation,
dissolution or winding up or the redemption date, as the case may be. All
accretions to Liquidation Value will be calculated using compounding on a
quarterly basis (computed on the basis of a 360 day year of twelve 30 day
months). Except as provided in the preceding sentences, holders of shares of
Senior Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
shares of Senior Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any Parity Securities,
then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Senior Preferred Stock and any such other Parity Securities
ratably in accordance with the respective amounts that would be payable on such
shares of Senior Preferred Stock and any such other stock as if all amounts
payable thereon were paid in full. For the purposes of this paragraph (4), (i) a
consolidation or merger of the Corporation with one or more corporations, or
(ii) a sale
or transfer of all or substantially all of the Corporation's assets, shall
not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of any Parity Securities,
after payment shall have been made in full to the holders of the Senior
Preferred Stock, as provided in this paragraph (4), any other series or class or
classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Senior Preferred
Stock shall not be entitled to share therein.
(c) The "APPLICABLE LIQUIDATION VALUE" of any Additional Shares shall
be the Liquidation Value of Senior Preferred Stock outstanding immediately prior
to the first Dividend Payment Date occurring after a request for payment in
Additional Shares has been made in accordance with Section 3(b).
(5) REDEMPTION. (a) REDEMPTION AT THE OPTION OF THE CORPORATION PRIOR
TO YEAR FIVE. The Corporation may, at its option, to the extent it shall have
funds legally available for such payment, redeem, prior to November 15, 2004, in
whole but not in part, shares of Senior Preferred Stock, at a redemption price
per share equal to 114.5% of the Liquidation Value, in cash, plus accrued and
unpaid dividends, payable in cash, on such shares to the date fixed for
redemption, without interest.
(b) REDEMPTION AT THE OPTION OF THE CORPORATION AFTER YEAR FIVE. On and
after November 15, 2004, to the extent the Corporation shall have funds legally
available for such payment, the Corporation may, at its option, redeem shares of
Senior Preferred Stock, at any time in whole but not in part, at redemption
prices per share in cash (calculated as a percentage of Liquidation Value) set
forth in the table below, together with accrued and unpaid dividends thereon,
payable in cash, to the date fixed for redemption, without interest:
Year Beginning
November 15 PERCENTAGE OF LIQUIDATION VALUE
2004 107.25
2005 104.83
2006 102.42
2007 (and thereafter) 100.00
(c) REDEMPTION IN THE EVENT OF A CHANGE OF CONTROL. In the event of a
Change of Control, the Corporation shall, to the extent it shall have funds
legally available for such payment, offer to redeem all of the shares of Senior
Preferred Stock then outstanding, and shall redeem the shares of Senior
Preferred Stock of any holder of such shares that shall consent to such
redemption, upon a date no later than 30 days (or if a later date is required
under federal securities laws the first date thereafter on which such redemption
is permitted; the date upon which such redemption may occur is referred to as
the "CHANGE OF CONTROL REDEMPTION DATE") following the Change of Control, at a
redemption price per share equal to 101% of the Liquidation Value,
in cash, plus accrued and unpaid cash dividends thereon, payable in cash, to
the date fixed for redemption, without interest.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition, other
than by way of merger or consolidation, in one or a series of related
transactions, of all or substantially all of the assets of the Corporation and
its subsidiaries, taken as a whole, to any "person" or "group" (as those terms
are used in Section 13(d) of the Exchange Act), other than the Initial Investors
and their Related Parties;
(ii) the adoption of a plan for the liquidation or dissolution of the
Corporation;
(iii) the consummation of any transaction, including, without
limitation, any merger (but excluding the merger of the Corporation with and
into Merrill Corporation (the "MERGER")) or consolidation, the result of which
is that any person"person" or "group" (as those terms used in Section 13(d) of
the Exchange Act), other the Initial Investors and their Related Parties,
becomes the "beneficial owner" (as that term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly through one or more
intermediaries, of 50% or more of the voting power of the outstanding voting
stock of the Corporation; or
(iv) the first day, after the Merger, on which a majority of the
members of the board of directors of the Corporation are not Continuing Members.
"CONTINUING MEMBERs" means, as of any date of determination, any member
of the board of directors of the Corporation who:
(i) was a member of the Corporation's board of directors immediately
after consummation of the Merger; or
(ii) was nominated for election or elected to the Corporation's board
of directors with the approval of, or whose election to the board of directors
was ratified by, at least a majority of the Continuing Members who were members
of the Corporation's board or directors at the time of that nomination or
election.
"INITIAL INVESTORS" means the DLJ Entities (as defined in the
Investors' Agreement), John Castro and Rick Atterbury.
"RELATED PARTY" means, with respect to any Initial Investor,
(i) any controlling shareholder or partner of that Initial Investor on
the Closing Date; or
(ii) any trust, corporation, partnership or other entity, the
beneficiaries, shareholders, partners, owners or persons beneficially holding
(directly or through one or more subsidiaries) a majority of the controlling
interest of which consist of the Initial Investors and/or such other persons
referred to in the immediately preceding clause (i) or this clause (ii).
"INVESTORS' AGREEMENT" means the Investors' Agreement executed on
November 23, 1999 among Viking Merger Sub, Inc., DLJ Merchant Banking Partners
II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners, C.V.,
DLJ Merchant Banking Funding, Inc., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium-A, L.P., DLJMB Funding II, Inc., DLJ EAB
Partners, L.P., DLJ First ESC L.P., DLJ ESC II L.P., DLJ Investment Partners II,
L.P., DLJ Investment Partners, L.P. and certain other stockholders listed on the
signature pages thereof.
(d) MANDATORY REDEMPTION. To the extent the Corporation shall have
funds legally available for such payment, on November 15, 2011, if any shares of
the Senior Preferred Stock shall be outstanding, the Corporation shall redeem
all outstanding shares of the Senior Preferred Stock, at a redemption price
equal to the aggregate Liquidation Value, in cash, together with any accrued and
unpaid dividends thereon, payable in cash, to the date fixed for redemption,
without interest.
(e) STATUS OF REDEEMED SHARES. Shares of Senior Preferred Stock which
have been issued and reacquired in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Minnesota) have the status of authorized and unissued shares of the
class of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock; PROVIDED that no such issued
and reacquired shares of Senior Preferred Stock shall be reissued or sold as
Senior Preferred Stock.
(f) FAILURE TO REDEEM. If the Corporation is unable or shall fail to
discharge any obligation it may have to redeem all outstanding shares of Senior
Preferred Stock pursuant to paragraph 5(a), 5(b), 5(c) or 5(d) (each, a
"MANDATORY REDEMPTION OBLIGATION"), such Mandatory Redemption Obligation shall
be discharged as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as any Mandatory Redemption Obligation
with respect to the Senior Preferred Stock shall not be fully discharged, the
Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise
acquire any Parity Security or discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of any Parity Securities
(except in connection with a redemption, sinking fund or other similar
obligation to be satisfied pro rata with the Senior Preferred Stock) or (ii) in
accordance with paragraph 3(e), declare or make any Junior Securities
Distribution, or, directly or indirectly, discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of the Junior
Securities.
(g) FAILURE TO PAY DIVIDENDS. Notwithstanding the foregoing provisions
of this paragraph (5), unless full cumulative cash dividends (whether or not
declared) on all outstanding shares of Senior Preferred Stock shall have been
paid or contemporaneously are declared and paid or set apart for payment for all
dividend periods terminating on or prior to the applicable redemption date, none
of the shares of Senior Preferred Stock shall be redeemed, and no sum shall be
set aside for such redemption, unless shares of Senior Preferred Stock are
redeemed pro rata to the holdings of holders of Senior Preferred Stock.
(6) PROCEDURE FOR REDEMPTION. (a) In the event the Corporation shall
redeem shares of Senior Preferred Stock pursuant to Sections 5(a), (b) or (d),
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed at such holder's address
as the same appears on the stock register of the Corporation; PROVIDED that
neither the failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of Senior
Preferred Stock to be redeemed except as to a holder to whom the Corporation has
failed to give said notice or except as to a holder whose notice was defective.
Each such notice shall state: (i) the redemption date; (ii) the number of shares
of Senior Preferred Stock of such holder and in the aggregate to be redeemed;
(iii) the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(b) In the case of any redemption pursuant to Sections 5(a), (b) or (d)
hereof, notice having been mailed as provided in Section 6(a) hereof, from and
after the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares called for
redemption), dividends on the shares of Senior Preferred Stock so called for
redemption shall cease to accrue, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such share shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
(c) In the case of a redemption pursuant to Section 5(c) hereof, notice
shall be given by first class mail, postage prepaid, mailed not more than 10
days following the occurrence of the Change of Control and not less than 20 days
prior to the redemption date, to each holder of record of Senior Preferred Stock
at such holder's address as the same appears on the stock register of the
Corporation; PROVIDED that neither the failure to give such notice nor any
defect therein shall affect the validity of the giving of notice for the
redemption of any share of Senior Preferred Stock to be redeemed except as to a
holder to whom the Corporation has failed to give said notice or except as to a
holder whose notice was defective. Each such notice shall state: (i) that a
Change of Control has occurred; (ii) the Change of Control Redemption Date;
(iii) the redemption price; (iv) that such holder may elect to cause the
Corporation to redeem all or any of the shares of Senior Preferred Stock held by
such holder; (v) the place or places where certificates for such shares are to
be surrendered for payment of the redemption price; and (vi) that dividends on
any shares a holder elects to cause the Corporation to redeem will cease to
accrue on such redemption date.
Upon receipt of such notice, the holder shall, within the time period
specified therein, return such notice to the Corporation indicating the number
of shares of Senior Preferred Stock such holder shall elect to cause the
Corporation to redeem, if any.
(d) In the case of a redemption pursuant to Section 5(c) hereof, notice
having been mailed as provided in Section 6(c) hereof, from and after the Change
of Control Redemption Date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares called for
redemption), dividends on such shares of Senior Preferred Stock as any holder
elects to cause the Corporation to redeem shall cease to accrue, and all rights
of the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such share shall be
redeemed by the Corporation at the redemption price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
(7) VOTING RIGHTS. (a) The holders of record of shares of Senior
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this paragraph (7), as otherwise provided by law or as provided in
the Investors' Agreement.
(b) If and whenever (i) four consecutive or six quarterly cash
dividends payable on the Senior Preferred Stock have not been paid in full, (ii)
for any reason (including the reason that funds are not legally available for a
redemption), the Corporation shall have failed to discharge any Mandatory
Redemption Obligation (including a redemption in the event of a Change of
Control pursuant to Section 5(c) hereof), (iii) the Corporation shall have
failed to provide the notice required by Section 6(c) hereof within the time
period specified in such section or (iv) the Corporation shall have failed to
comply with Sections 3(d), 3(e), 7(c), 7(d) or (9) hereof, the number of
directors then constituting the Board of Directors shall be increased by two and
the holders of a majority of the outstanding shares of Senior Preferred Stock,
together with the holders of shares of any other series of preferred stock on a
parity with or senior to the Senior Preferred Stock issued in accordance with
Section 7(c) hereof upon which like rights have been conferred and are
exercisable (resulting from either the failure to pay dividends or the failure
to redeem) (any such series is referred to as the "PREFERRED SHARES"), voting as
a single class regardless of series, shall be entitled to elect two additional
directors to serve on the Board of Directors, such election to be at any annual
meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Senior Preferred Stock and the Preferred
Shares called as hereinafter provided. Whenever (i) all arrears in cash
dividends on the Senior Preferred Stock and the Preferred Shares then
outstanding shall have been paid and cash dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart for
payment, (ii) the Corporation shall have fulfilled its Mandatory Redemption
Obligation, (iii) the Corporation shall have fulfilled its obligation to provide
notice as specified in subsection (b)(iii) above, or (iv) the Corporation shall
have complied with Sections 3(d), 3(e), 7(c), 7(d) or (9) hereof, as the case
may be, then the right of the holders of the Senior Preferred Stock to elect
such additional two directors shall cease (but subject always to the same
provisions for the vesting of such voting rights in the case of any similar
future (i) arrearage in four consecutive or six quarterly cash dividends, (ii)
failure to fulfill any Mandatory Redemption Obligation, (iii) failure to fulfill
the obligation to provide the notice required by Section 6(c) hereof within the
time period specified in such section or (iv) failure to comply with Sections
3(d), 3(e), 7(c), 7(d) or (9)) and the terms of office of all persons elected as
directors by the holders of the Senior Preferred Stock shall forthwith terminate
and the number of the Board of Directors shall be reduced accordingly. At any
time after such voting power shall have been so vested in the holders of shares
of Senior Preferred Stock and the Preferred Shares, the secretary of the
Corporation may, and upon the written request of any holder of Senior Preferred
Stock (addressed to the secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Senior Preferred Stock and
of the Preferred Shares for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that provided
in the Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the secretary within 20 days after receipt of
any such request, then any holder of shares of Senior Preferred Stock may call
such meeting, upon the notice above provided, and for that purpose shall have
access to the stock books of the Corporation. The directors elected at any such
special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Senior Preferred Stock and the
Preferred Shares, a successor shall be elected by the Board of Directors, upon
the nomination of the then-remaining director elected by the holders of the
Senior Preferred Stock and the Preferred Shares or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(c) Without the written consent of a majority of the outstanding shares
of Senior Preferred Stock or the vote of holders of a majority of the
outstanding shares of Senior Preferred Stock at a meeting of the holders of
Senior Preferred Stock called for such purpose, the Corporation will not (i)
amend, alter or repeal any provision of the Articles of Incorporation (by
merger, other than the Merger, or otherwise) so as to adversely affect the
preferences, rights or powers of the Senior Preferred Stock; PROVIDED that any
such amendment that decreases the dividend payable on or the Liquidation Value
of the Senior Preferred Stock or extends the maturity of the Senior Preferred
Stock shall require the affirmative vote of holders of each share of Senior
Preferred Stock at a meeting of holders of Senior Preferred Stock called for
such purpose or written consent of the holder of each share of Senior Preferred
Stock; or (ii) create, authorize or issue any class of stock ranking prior to,
or on a parity with, the Senior Preferred Stock with respect to dividends or
upon liquidation, dissolution, winding up or otherwise, or increase the
authorized number of shares of any such class or series, or reclassify any
authorized stock of the Corporation into any such prior or parity shares or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such prior or parity shares, except that
the Corporation may, without such approval, create, authorize and issue Parity
Securities for the purpose of utilizing the proceeds from the issuance of such
Parity Securities for the redemption of all outstanding shares of Senior
Preferred Stock in accordance with the terms hereof.
(d) Without the affirmative vote or written consent of holders of a
majority of the issued and outstanding shares of Senior Preferred Stock, voting
or consenting, as the case may be, as a separate class, given in person or by
proxy, either in writing or by resolution adopted at an
annual or special meeting, the Corporation shall not, in a single transaction
or series of related transactions, consolidate or merge (except for the
Merger) with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, another Person unless:
(A) either (1) the Corporation is the surviving or continuing Person or (2)
the Person (if other than the Corporation) formed by such consolidation or
into which the Corporation is merged or the Person that acquires by
conveyance, transfer or lease the properties and assets of the Corporation
substantially as an entirety, shall be a corporation, partnership or trust
organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (B) if the Corporation is not the
surviving Person, the Senior Preferred Stock shall be converted into or
exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or
resulting Person the same powers, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereon, that the Senior Preferred Stock had immediately prior
to such transaction; (C) immediately after giving effect to such transaction
and the assumption of the obligations as set forth in clause (A) above and
the incurrence of any debt to be incurred in connection therewith, on a pro
forma basis, such surviving Person or the Corporation, as the case may be,
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of the Corporation immediately prior to such transaction (without
giving effect to any purchase accounting adjustments related to such
transactions); and (D) the Corporation is current on all dividend payments,
payable in cash, pursuant to paragraph (3)(a)(iii) hereof.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise) in a single transaction or series of related transactions, of all
or substantially all of the properties or assets of one or more subsidiaries of
the Corporation, the capital stock of which constitutes all or substantially all
of the properties and assets of the Corporation shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Corporation.
For purposes of the foregoing, "CONSOLIDATED NET WORTH" shall mean,
with respect to any Person as of any date, the sum of (i) the consolidated
equity of the common stockholders of such Person and its consolidated
subsidiaries as of such date plus (ii) the respective amounts reported on the
balance sheet of such Person and its consolidated subsidiaries as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is a Junior Security, determined in accordance with GAAP.
For purposes of the foregoing, "DISQUALIFIED STOCK" shall mean any
capital stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event (other than any event solely within the control of the issuer thereof),
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to November 15, 2011; PROVIDED that any capital stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the issuer to repurchase that capital stock upon the occurrence
of any change of control of the issuer, or sale or other disposition of any
assets of the issuer shall not constitute Disqualified Stock and PROVIDED
FURTHER that, if that capital stock is issued to any plan for the benefit of
employees of the Corporation or its subsidiaries or by any such plan to those
employees, that capital stock shall not
constitute Disqualified Stock solely because it may be required to be
repurchased by the Corporation in order to satisfy applicable statutory or
regulatory obligations.
For purposes of the foregoing, "GAAP" shall mean generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect from time to time.
(e) In exercising the voting rights set forth in this paragraph (7),
each share of Senior Preferred Stock shall have one vote per share, except that
when any other series of preferred stock shall have the right to vote with the
Senior Preferred Stock as a single class on any matter, then the Senior
Preferred Stock and such other series shall have with respect to such matters
one vote per $80.00 of Liquidation Value or other liquidation preference. Except
as otherwise required by applicable law or as set forth herein, the shares of
Senior Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
(8) REPORTS. So long as any of the Senior Preferred Stock is
outstanding, the Corporation will furnish the holders thereof with the quarterly
and annual financial reports that the Corporation is required to file with the
Securities and Exchange Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 or, in the event the Corporation is not
required to file such reports, reports containing the same information as would
be required in such reports.
(9) LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Corporation shall
comply with the limitations on transactions with affiliates that are set forth
in Section 4.11 of the Indenture dated as of November 23, 1999 between Norwest
Bank Minnesota, N.A., as Trustee, and Merrill Corporation relating to those
certain 12% Senior Subordinated Notes due 2009 (the "INDENTURE") as fully as
though such limitations (and the definitions relating thereto) were set forth
herein, regardless of whether any securities issued pursuant to such Indenture
remain outstanding, provided that if such Section 4.11 shall require the
obtaining by the Corporation of any board resolution, officer's certificate or
fairness opinion, no delivery shall be required for purposes of the Senior
Preferred Stock to any trustee, or any like Person, of any such document.
(10) GENERAL PROVISIONS. (a) The term "PERSON" as used herein means any
corporation, limited liability company, partnership, trust, organization,
association, other entity or individual.
(b) The term "OUTSTANDING", when used with reference to shares of
stock, shall mean issued shares, excluding shares held by the Corporation or a
subsidiary.
(c) The headings of the paragraphs, subparagraphs, clauses and
subclauses used herein are for convenience of reference only and shall not
define, limit or affect any of the provisions hereof.
(d) Each holder of Senior Preferred Stock, by acceptance thereof,
acknowledges and agrees that payments of dividends, interest, premium and
principal on, and redemption and repurchase of, such securities by the
Corporation are subject to restrictions on the Corporation contained in certain
credit and financing agreements.
IN WITNESS WHEREOF, Merrill Corporation has caused this Certificate of
Designation to be signed and attested by the undersigned this 22nd day of
November, 1999.
Merrill Corporation
By /s/ STEVEN J. MACHOV
---------------------------------
Name: Steven J. Machov
Title: Secretary