EXHIBIT 3.3
Draft of November 1, 1994
CERTIFICATE OF DESIGNATION
OF
BEST BUY CO., INC.
Series A Cumulative Convertible Preferred Stock
______________________
THE UNDERSIGNED, ELLIOT S. KAPLAN, the Secretary of the Best Buy Co.,
Inc. (the "Corporation"), does hereby certify that pursuant to Minnesota
Statutes Section 302A.401, resolutions as hereinafter set forth were adopted in
writing as of October 27, 1994 by the Board of Directors of the Corporation,
such resolutions stating the number, designation, relative rights, preferences
and limitations of a series of Preferred Stock, as fixed by the Board of
Directors of the Corporation:
RESOLVED:
That the Board of Directors of this Corporation hereby
establishes a series of preferred stock of the Corporation with such
terms and relative rights and preferences as set forth in EXHIBIT A,
attached hereto (the "Series A Preferred Stock").
RESOLVED
FURTHER:
That the appropriate officer or officers of this Corporation
shall prepare a Certificate of Designation describing the Series A
Preferred Stock and cause the same to be filed with the Secretary of
State of the State of Minnesota.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Designation this ____ day of November, 1994.
-----------------------------------
Elliot S. Kaplan
Secretary
EXHIBIT A
SECTION 1. DESIGNATION AND AMOUNT; SPECIAL PURPOSE; RESTRICTION ON
SENIOR SERIES.
(A) The shares of this series of Preferred Stock shall be designated
as "Series A Cumulative Convertible Preferred Stock" ("Series A Preferred
Stock") and the number of shares constituting such series shall be 46,000, par
value $1.00 per share.
(B) Shares of Series A Preferred Stock shall be issued by the
conversion and exchange agent (the "Conversion Agent") for the Series A
Preferred Stock only upon the exchange of 6 1/2% Convertible Subordinated
Debentures due 2024 of the Corporation (the "Subordinated Debentures") following
a valid exchange election (an "Exchange Election") by the holders of a majority
of the aggregate liquidation preference of the outstanding 6 1/2% Convertible
Monthly Income Preferred Securities, liquidation preference $50 per security
(the "Best Buy Capital Preferred Securities"), of Best Buy Capital, L.P., a
Delaware limited partnership ("Best Buy Capital"), to cause the Best Buy Capital
Preferred Securities then outstanding to be exchanged for depositary shares,
each representing a one one-hundredth (1/100th) interest in a share of Series A
Preferred Stock (the "Depositary Shares"), issued pursuant to the Deposit
Agreement, dated as of November 3, 1994, among the Corporation, Harris Trust and
Savings Bank, as Depositary and the holders from time to time of the receipts
described therein (the "Deposit Agreement"), in the manner prescribed in the
Amended and Restated Agreement of Limited Partnership of Best Buy Capital, dated
as of November 3, 1994 (the "Partnership Agreement").
(C) So long as any Best Buy Capital Preferred Securities are
outstanding, the Corporation shall not authorize or issue any other class or
series of capital stock ranking senior as to the payment of dividends or amounts
upon liquidation, dissolution or winding-up to the Series A Preferred Stock
without the approval of the holders of not less than 66 2/3% of the aggregate
liquidation preference of the Best Buy Capital Preferred Securities then
outstanding.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A)(1) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
in an amount per share per annum equal to $325.00 (equivalent to a rate per
annum of 6 1/2% of the stated liquidation
preference of $5,000 per share of Series A Preferred Stock), calculated on the
basis of a 360-day year consisting of 12 months of 30 days each, and for any
period shorter than a full monthly dividend period, dividends will be computed
on the basis of the actual number of days elapsed in such period, and payable in
United States dollars monthly in arrears on the last day of each calendar month
of each year.
(2) Dividends, when, as and if declared by the Board of Directors of
the Corporation out of funds legally available therefor, shall be paid on the
last day of each month. Such dividends will accrue and be cumulative whether or
not they have been earned or declared and whether or not there are funds of the
Corporation legally available for the payment of dividends. Dividends on the
Series A Preferred Stock shall be cumulative from the date of the Exchange
Election. Accumulated but unpaid dividends, if any (including arrearages at the
rate of 6 1/2% per annum compounded monthly), on the Best Buy Capital Preferred
Securities on the date of the Exchange Election shall constitute, and be treated
as, accumulated and unpaid dividends on the Series A Preferred Stock as of the
date of the issuance thereof. The record date for each dividend payment date
shall be the day immediately preceding such dividend payment date, provided that
such day is a day on which banking institutions in The City of New York are not
authorized or obligated by law or executive order to be closed (a "Business
Day"). In the event that any date on which dividends are payable on the
Series A Preferred Stock is not a Business Day, then payment of the dividend
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(B) In the event that full cumulative dividends on the Series A
Preferred Stock have not been declared and paid or set apart for payment when
due, then the Corporation shall not, and shall not permit any majority-owned
subsidiary to, declare or pay any dividend on, or redeem, purchase, acquire for
value or make a liquidation payment with respect to, any Pari Passu Stock or
Junior Stock (each as defined herein) (other than as a result of a
reclassification of Pari Passu Stock or Junior Stock or the exchange or
conversion of one class or series of Pari Passu Stock or Junior Stock for
another class or series of Pari Passu Stock or Junior Stock, respectively), or
make any guarantee payments with respect to the foregoing (other than payments
under the Guarantee Agreement dated as of November 3, 1994
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of the Corporation in favor of the holders of Best Buy Capital Preferred
Securities with respect to such securities or dividends or guarantee payments to
the Corporation).
When dividends are not paid in full, all dividends declared upon the
Series A Preferred Stock and all dividends declared upon any Pari Passu Stock
shall be paid ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series A Preferred Stock and accumulated and
unpaid on such Pari Passu Stock. "Pari Passu Stock" means any preference stock
or preferred stock of the Corporation, or any guarantee now or hereafter entered
into by the Corporation in respect of any preferred or preference stock of any
affiliate of the Corporation, ranking, in such case, as to the payment of
dividends and amounts upon liquidation, dissolution and winding-up on a parity
with the Series A Preferred Stock. "Junior Stock" means Common Stock and any
other class or series of capital stock of the Corporation or any of its
affiliates which by its express terms ranks junior in the payment of dividends
or amounts upon liquidation, dissolution or winding-up to the Series A Preferred
Stock.
SECTION 3. VOTING RIGHTS.
(A) In the event that full cumulative dividends on the Series A
Preferred Stock have not been paid for 18 monthly dividend periods (including
for this purpose any arrearage with respect to Best Buy Capital Preferred
Securities), the number of directors of the Corporation constituting the entire
Board of Directors shall be increased by two (2) persons and the holders of the
Series A Preferred Stock shall have the right to elect such persons to fill such
positions at any regular meeting of shareholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series A Preferred
Stock called as hereinafter provided. Whenever all arrearages of dividends on
the Series A Preferred Stock then outstanding shall have been paid and dividends
thereon for the current monthly period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series A Preferred Stock
to elect such additional two (2) directors shall cease (but subject always to
the same provisions for the vesting of such voting rights in the case of any
similar future arrearages in dividends), and the terms of office of all persons
elected as directors by the holders of the Series A Preferred Stock shall
forthwith terminate and the number of directors of the Corporation shall be
reduced accordingly. At any time after such voting power shall have been so
vested in the holders of shares of the Series A Preferred Stock, the Secretary
of the
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Corporation may, and upon the written request for a special meeting signed by
the holders of at least 10% of all outstanding Series A Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Series A Preferred Stock for the
election of the two (2) directors to be elected by them as herein provided; such
call to be made by notice similar to that provided for in the by-laws for a
special meeting of the shareholders 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
Series A Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books and records of the
Corporation. The directors elected at any such special meeting shall hold
office until the next regular meeting of the shareholders or special meeting
held in place thereof if such office shall not have previously terminated as
above provided. In case any vacancy shall occur among the directors elected by
the holders of the Series A Preferred Stock, a successor shall be elected by the
Board of Directors to serve until the next regular meeting of the shareholders
or special meeting held in place thereof upon the nomination of the then
remaining director elected by the holders of the Series A Preferred Stock or the
successor of such remaining director.
(B) Except as otherwise required by law or set forth herein, holders
of Series A Preferred Stock shall have no voting rights and their consent shall
not be required for the taking of any corporate action. So long as any shares
of Series A Preferred Stock are outstanding, the consent of the holders of not
less than 66 2/3% of the outstanding shares of Series A Preferred Stock, given
in person or by proxy either at a regular meeting or at a special meeting called
for that purpose, at which the holders of Series A Preferred Stock shall vote
separately as a series, shall be necessary for effecting, validating or
authorizing any one or more of the following:
(1) The amendment, alteration or repeal of any of the provisions of
the Amended and Restated Articles of Incorporation, as amended, of the
Corporation, or any amendment thereto or any other certificate filed
pursuant to law (including any such amendment, alteration or repeal
effected by any merger or consolidation to which the Corporation is a
party) that would adversely affect any of the rights, powers or preferences
of outstanding shares of Series A Preferred Stock; PROVIDED, HOWEVER, that
any amendment or amendments to the provisions of the Amended and
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Restated Articles of Incorporation, as amended, so as to authorize or
create, or to increase the authorized amount of, any Junior Stock shall not
be deemed to adversely affect the voting powers, rights or preferences of
the holders of the Series A Preferred Stock;
(2) The creation of any shares of any class or series or any security
convertible into shares of any class or series of capital stock ranking
prior to the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding-up of the Corporation or in the payment
of dividends; or
(3) Any merger or consolidation with or into, or any sale, transfer,
exchange or lease of all or substantially all of the assets of the
Corporation to, any other corporation, in either case that would adversely
affect any of the rights, powers or preferences of outstanding shares of
Series A Preferred Stock.
(C) For purposes of this Section 3, while Best Buy Capital Preferred
Securities are outstanding and owned by any entity other than the Corporation,
Best Buy Capital, or their subsidiaries or affiliates, any Best Buy Capital
Preferred Securities owned by the Corporation, Best Buy Capital or their
subsidiaries or affiliates shall not have the voting rights referred to in this
Section.
SECTION 4. REDEMPTION.
(A) If at any time following the Conversion Expiration Date (as
defined below), less than five percent (5%) of the shares of Series A Preferred
Stock remain outstanding, such shares of Series A Preferred Stock are
redeemable, at the option of the Corporation, in whole but not in part, from
time to time, at a redemption price equal to the liquidation preference, plus
accumulated and unpaid dividends, whether or not earned or declared, to the date
of redemption (the "Redemption Price").
(B) Unless otherwise required by law, notice of redemption will be
sent to the holders of Series A Preferred Stock by first-class mail, postage
prepaid, mailed not less than thirty (30), nor more than sixty (60) days prior
to the redemption date. Each such notice shall state: (i) the redemption date;
(ii) the Redemption Price; (iii) the place or places where receipts for
Depositary Shares representing such shares are to be surrendered for payment of
the Redemption Price; and (iv) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
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Upon surrender of the receipts for Depositary Shares representing the shares so
called for redemption (properly endorsed or assigned for transfer, if the Board
of Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation on the date fixed for
redemption at the Redemption Price.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING-UP.
(A) Upon any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Corporation, the holders of Series A Preferred
Stock at the time outstanding will be entitled to receive out of the net assets
of the Corporation available for payment to shareholders and subject to the
rights of the holders of any stock of the Corporation ranking senior to or on a
parity with the Series A Preferred Stock in respect of distributions upon
liquidation, dissolution, winding-up or termination of the Corporation, before
any amount shall be paid or distributed with respect to any Junior Stock,
liquidating distributions in the amount of $5,000 per share plus an amount equal
to all accrued and unpaid dividends thereon (whether or not earned or declared)
to the date fixed for distribution. If, upon any liquidation, dissolution,
winding-up or termination of the Corporation, the amounts payable with respect
to the Series A Preferred Stock and any Pari Passu Stock are not paid in full,
the holders of the Series A Preferred Stock and such Pari Passu Stock shall
share ratably in any distribution of assets based on the proportion of their
full respective liquidation preference to the entire amount of the unpaid
liquidation preference of the Series A Preferred Stock. After payment of the
full amount to which they are entitled as provided by the foregoing provisions
of this Section 5(A), the holders of shares of Series A Preferred Stock shall
not be entitled to any further right or claim to any of the remaining assets of
the Corporation.
(B) Neither the merger or consolidation of the Corporation with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Corporation, nor the sale, transfer, exchange or
lease of all or any portion of the assets of the Corporation, shall be deemed to
be a dissolution, liquidation or winding-up of the affairs of the Corporation
for purposes of this Section 5.
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the
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place or places where, the amounts distributable to holders of Series A
Preferred Stock in such circumstances shall be payable, shall be given by first-
class mail, postage prepaid, mailed not less than twenty (20) days prior to any
payment date stated therein, to the holders of Series A Preferred Stock, at the
address shown on the books of the Corporation or the transfer agent for the
Series A Preferred Stock; PROVIDED, HOWEVER, that a failure to give notice as
provided above or any defect therein shall not affect the Corporation's ability
to consummate a voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation.
SECTION 6. CONVERSION RIGHTS OF SERIES A PREFERRED STOCK.
(A) The shares of Series A Preferred Stock are convertible at any
time before the close of business on the Conversion Expiration Date, at the
option of the holder thereof, into shares of Common Stock at the initial
conversion price of $45.00 per share of Common Stock, subject to adjustment, as
provided in Section 7 (as so adjusted, the "Conversion Price"). For this
purpose, each share of Series A Preferred Stock shall be taken at $5,000.
(B) Holders of record of Series A Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares of Series A Preferred Stock on the corresponding
dividend payment date notwithstanding the conversion thereof following such
dividend payment record date but on or prior to such dividend payment date.
Except as provided in the immediately preceding sentence, the Corporation will
make no payment or allowance for accumulated and unpaid dividends, whether or
not in arrears, on converted shares of Series A Preferred Stock.
(C) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, the Corporation shall pay a cash adjustment
in an amount equal to the same fraction of the Closing Price (as hereinafter
defined) on the date on which the certificate or certificates for such shares
were duly surrendered for conversion, or, if such date is not a Trading Day (as
hereinafter defined), on the next Trading Day.
(D) Any holder of shares of Series A Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the certificate
or certificates representing the shares of Series A Preferred Stock being
converted, duly assigned or endorsed for transfer to the
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Corporation (or accompanied by duly executed stock powers relating thereto), at
the principal executive office of the Corporation or the offices of the transfer
agent for the Series A Preferred Stock or such office or offices in the
continental United States of an agent for conversion as may from time to time be
designated by notice to the holders of the Series A Preferred Stock by the
Corporation or the transfer agent for the Series A Preferred Stock, accompanied
by written notice of conversion, on any day prior to the Conversion Expiration
Date (as defined herein) that is a Business Day. Such notice of conversion
shall specify (i) the number of shares of Series A Preferred Stock to be
converted and the name or names in which such holder desires the certificate or
certificates for Common Stock and for any shares of Series A Preferred Stock not
to be so converted to be issued (subject to compliance with applicable legal
requirements if any of such certificates are to be issued in a name other than
the name of the holder), and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued upon such conversion.
(E) Upon surrender of a certificate representing a share or shares of
Series A Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery (with receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof, at the address designated by such holder, a
certificate or certificates representing the number of shares of Common Stock to
which such holder shall be entitled upon conversion. In the event that there
shall have been surrendered a certificate or certificates representing shares of
Series A Preferred Stock, only part of which are to be converted, the
Corporation shall issue and deliver to such holder or such holder's designee in
the manner provided in the immediately preceding sentence a new certificate or
certificates representing the number of shares of Series A Preferred Stock that
shall not have been converted.
(F) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of Series A Preferred Stock into shares of Common Stock
made at the option of the holder thereof shall be effective upon the surrender
by such holder or such holder's designee of the certificate or certificates for
the shares of Series A Preferred Stock to be converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto). The person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of the close of
business on the effective date of the
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conversion. No allowance or adjustment shall be made in respect of dividends
payable to holders of Common Stock of record as of any date prior to such
effective date.
(G) (i) On and after November 3, 1997, the Corporation shall have the
right, at its option, to cause the conversion rights set forth in this Section
to expire, provided that the Current Market Price (as defined below) of the
Common Stock of the Corporation on each of 20 Trading Days within any period of
30 consecutive Trading Days, including the last Trading Day of such period,
exceeds 120% of the Conversion Price in effect on such Trading Day;
(ii) In order to exercise its option to cause the conversion rights
of holders of shares of Series A Preferred Stock to expire, the Corporation must
issue a press release for publication on the Dow Jones News Service and such
other print and electronic media as the Corporation shall select announcing the
Conversion Expiration Date (the "Press Release") prior to the opening of
business on the second Trading Day after a period in which the condition in the
preceding paragraph has been met (but in no event prior to November 3, 1997).
The Press Release shall state that the Corporation has elected to exercise its
right to extinguish the conversion rights of holders of shares of Series A
Preferred Stock, specify the Conversion Expiration Date and provide the
Conversion Price of the Series A Preferred Stock and the Current Market Price of
the Common Stock, in each case as of the close of business on the Trading Day
next preceding the date of the Press Release. If the Corporation exercises the
option described in this paragraph, the "Conversion Expiration Date" shall be a
date selected by the Corporation which date shall be not less than 30 or more
than 60 days after the date on which the Corporation issues the Press Release;
and
(iii) In addition to issuing the Press Release, the Company shall
send notice of the expiration of conversion rights (a "Notice of Conversion
Expiration") by first-class mail to each record holder of shares of Series A
Preferred Stock not more than four (4) Business Days after the Corporation
issues the Press Release. Such Notice of Conversion Expiration shall state:
(1) the Conversion Expiration Date; (2) the Conversion Price of the Series A
Preferred Stock and the Current Market Price of the Common Stock, in each case
as of the close of business on the Trading Day next preceding the date of the
Notice of Conversion Expiration; (3) the place or places at which receipts for
Depositary Shares representing shares of Series A Preferred Stock are to be
surrendered prior to the Conversion Expiration Date for certificates
representing
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shares of Common Stock; and (4) such other information or instructions as the
Corporation deems necessary or advisable to enable a holder of shares of Series
A Preferred Stock to exercise its conversion right hereunder. No defect in the
Notice of Conversion Expiration or in the mailing thereof with respect to any
shares of Series A Preferred Stock shall affect the validity of such notice with
respect to any other share of Series A Preferred Stock. As of the close of
business on the Conversion Expiration Date, the Series A Preferred Stock shall
no longer be convertible into Common Stock. As used in this Section, "Current
Market Price" of publicly traded shares of Common Stock for any day means the
last reported sales price, regular way on such day, or, if no sale takes place
on such day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York Stock Exchange
Consolidated Transaction Tape, or, if the Common Stock is not listed or admitted
to trading on the New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading if the
Common Stock is listed on a national securities exchange, or the National Market
System of the National Association of Securities Dealers, Inc., or, if the
Common Stock is not quoted or admitted to trading on such quotation system, on
the principal quotation system on which the Common Stock may be listed or
admitted to trading or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the Common Stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or, if not so
available in such manner, as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors of the Corporation for
that purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors.
(H) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of Series A Preferred Stock as herein provided, free from
any preemptive or other similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Series A Preferred Stock then outstanding. All shares of Common Stock delivered
upon conversion of the Series A Preferred Stock shall be duly authorized,
validly issued, fully paid and non-assessable, free and clear of all liens,
claims, interests and other encumbrances. The Corporation shall prepare and
shall use its best efforts to obtain and keep in force such govern-
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mental or regulatory permits or other authorizations as may be required by law,
and shall comply with all applicable requirements as to registration or
qualification of the Common Stock (and all requirements to list the Common Stock
issuable upon conversion of Series A Preferred Stock that are at the time
applicable), in order to enable the Corporation lawfully to issue and deliver to
each holder of record of Series A Preferred Stock such number of shares of its
Common Stock as shall from time to time be sufficient to effect the conversion
of all shares of Series A Preferred Stock then outstanding and convertible into
shares of Common Stock.
SECTION 7. ADJUSTMENT OF CONVERSION PRICE.
(A) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price at which a share
of Series A Preferred Stock is convertible into Common Stock shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class or series of capital stock of the Corporation
exclusively in Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution or exchange, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination.
(ii) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(a)) of the Common Stock on the date
fixed for the determination of shareholders entitled to receive such rights or
warrants, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock
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outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. In case any rights or warrants referred to
in this subparagraph (ii) in respect of which an adjustment shall have been made
shall expire unexercised within 45 days after the same shall have been
distributed or issued by the Corporation, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case the
Corporation shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this Section 7(A), any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (i) of this Section 7(A)), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (iv) by a fraction
of which the numerator shall be the current market price per share (determined
as provided in
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subparagraph (vii) of this Section 7(A)) of the Common Stock on the date fixed
for the payment of such distribution (the "Reference Date") less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the actual
or when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock pursuant to
subparagraph (vii) of this Section 7(A). For purposes of this subparagraph
(iv), any dividend or distribution that includes shares of Common Stock or
rights or warrants to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, shares of capital stock, cash or assets other than such shares of
Common Stock or such rights or warrants (making any Conversion Price reduction
required by this subparagraph (iv)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants (making
any further Conversion Price reduction required by subparagraph (i) or (ii) of
this Section 7(A)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted as "the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution," "the date fixed for the determination of
shareholders entitled to receive such rights or warrants" and "the date fixed
for such determination" within the meaning of subparagraphs (i) and (ii) of this
Section 7(A) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of subparagraph (i) of
this Section 7(A).
(v) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the case of
any regular cash dividend on the Common Stock, the portion thereof that does not
exceed the per share amount of the next preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events referred to
in
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subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 7(A)), or
excluding all of such regular cash dividend if the annualized amount thereof per
share of Common Stock does not exceed 15% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day (as defined in Section 7(E)) next preceding the
date of declaration of such dividend), the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph (v) by a fraction of which the
numerator shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock on the date fixed
for the payment of such distribution less the amount of cash so distributed and
not excluded as provided above applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the date fixed for the payment of such distribution.
(vi) In case a tender or exchange offer made by the Corporation or any
subsidiary of the Corporation for all or any portion of the Corporation's Common
Stock shall expire and such tender or exchange offer shall involve the payment
by the Corporation or such subsidiary of consideration per share of Common Stock
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds 10% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day (as defined in Section 7(E)) next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (vi) by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in subparagraph (vii) of this
Section 7(A)) of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
holders of Common Stock
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based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(A)) of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Time.
(vii) For the purpose of any computation under subparagraphs (ii), (iv),
(v) and (vi) of this Section 7(A), the current market price per share of Common
Stock on any date in question shall be deemed to be the average of the daily
Closing Prices (as defined in Section 7(E)) for the five consecutive Trading
Days selected by the Company commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; PROVIDED, HOWEVER, that if another
event occurs that would require an adjustment pursuant to subparagraphs (i)
through (vi), inclusive, the Board of Directors may make such adjustments to the
Closing Prices during such five Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section 7(A), in which case any
such determination by the Board of Directors shall be set forth in a resolution
of the Board of Directors and shall be conclusive. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the New York Stock Exchange or on such successor securities exchange as the
Common Stock may be listed or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or distribution,
and (2) when used with respect to any tender or exchange offer means the first
date on which the Common Stock trades regular way on such securities exchange or
in such market after the Expiration Time of such offer.
(viii) The Corporation may make such reductions in the Conversion Price,
in addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of this Section 7(A), as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or dis-
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tribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. The Corporation from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least
twenty (20) days, the reduction is irrevocable during the period, and the Board
of Directors of the Corporation shall have made a determination that such
reduction would be in the best interest of the Corporation, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Corporation shall mail to holders of record of the
Series A Preferred Stock a notice of the reduction at least fifteen (15) days
prior to the date the reduced Conversion Price takes effect, and such notice
shall state the reduced Conversion Price and the period it will be in effect.
(ix) Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Conversion Price; PROVIDED, HOWEVER,
that any adjustments which by reason of this subparagraph (ix) are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
(x) Whenever the Conversion Price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Corporation setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed with the transfer
agent for the Series A Preferred Stock; and
(2) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Corporation to all record holders of shares of Series A
Preferred Stock at their last addresses as they shall appear upon the stock
transfer books of the Corporation.
(B) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the 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, or as a result of a subdivision or combination of the
Common Stock), any
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consolidation of the Corporation with, or merger of the Corporation into, any
other person, any merger of another person into the Corporation (other than a
merger which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Corporation), any sale
or transfer of all or substantially all of the assets of the Corporation or any
compulsory share exchange) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property), then lawful
provision shall be made as part of the terms of such transaction whereby the
holder of each share of Series A Preferred Stock then outstanding shall have the
right thereafter, to convert such share only into (i) in the case of any such
transaction other than a Common Stock Fundamental Change (as defined in Section
7(E)), the kind and amount of securities, cash and other property receivable
upon such transaction by a holder of the number of shares of Common Stock of the
Corporation into which such share of Series A Preferred Stock could have been
converted immediately prior to such transaction, after giving effect, in the
case of any Non-Stock Fundamental Change (as defined in Section 7(E)), to any
adjustment in the Conversion Price required by the provisions of Section 7(D),
and (ii) in the case of a Common Stock Fundamental Change, common stock of the
kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions of Section
7(D). The Corporation or the person formed by such consolidation or resulting
from such merger or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make provision in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments which, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(C) PRIOR NOTICE OF CERTAIN EVENTS. In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash out of its
retained earnings that would not require an adjustment pursuant to 7(A)(iv)
or (v) or (2) authorize a tender or exchange offer that would require an
adjustment pursuant to 7(A)(vi);
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(ii) the Corporation shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other than a subdivision or
combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of
any consolidation or merger to which the Corporation is a party and for
which approval of any shareholders of the Corporation shall be required, or
of the sale or transfer of all or substantially all of the assets of the
Corporation or of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding-
up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen (15) days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, redemption, repurchase, 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, redemption, repurchase,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up 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 shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding-up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(D) ADJUSTMENTS IN CASE OF FUNDAMENTAL CHANGES. Notwithstanding any other
provision in this Section 7 to the contrary, if any Fundamental Change (as
defined in Section 7(E)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as
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described below. In addition, in the event of a Common Stock Fundamental
Change, each share of Series A Preferred Stock shall be convertible solely into
common stock of the kind and amount received by holders of Common Stock as the
result of such Common Stock Fundamental Change as more specifically provided in
the following clauses (D)(i) and (D)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
7(D) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the Conversion Price of
the Series A Preferred Stock shall thereupon become the lower of (A) the
Conversion Price in effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjustments effected pursuant
to this Section 7, and (B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 7(E)) or the then applicable Reference
Market Price (as defined in Section 7(E)) by a fraction of which the numerator
shall be $5,000 and the denominator shall be an amount per share of Series A
Preferred Stock determined by the Corporation in its sole discretion, after
consultation with a nationally recognized investment banking firm, to be the
equivalent of the hypothetical redemption price that would have been applicable
if the Series A Preferred Stock had been redeemable during such period; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price of the Series A Preferred Stock in effect immediately prior to such Common
Stock Fundamental Change, but after giving effect to any other prior adjustments
effected pursuant to this Section 7, shall thereupon be adjusted by multiplying
such Conversion Price by a fraction of which the numerator shall be the
Purchaser Stock Price (as defined in Section 7(E)) and the denominator shall be
the Applicable Price; PROVIDED, HOWEVER, that in the event of a Common Stock
Fundamental Change in which (A) 100% by value of the consideration received by a
holder of Common Stock is common stock of the successor, acquiror or other third
party (and cash, if any, is paid with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental Change) and (B)
all of the Common Stock shall have been exchanged for, converted into or
acquired for common stock (and cash with respect to fractional interests) of the
successor, acquiror or other third party, the Conversion Price of the Series A
Preferred Stock in effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by
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multiplying such Conversion Price by a fraction of which the numerator shall be
one (1) and the denominator shall be the number of shares of common stock of the
successor, acquiror, or other third party received by a shareholder for one
share of Common Stock as a result of such Common Stock Fundamental Change.
(E) DEFINITIONS. The following definitions shall apply to terms used in
this Section 7:
(1) "Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a shareholder for one share of Common Stock and
(ii) in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily Closing Prices of the Common Stock
for the ten (10) consecutive Trading Days prior to and including the record date
for the determination of the holders of Common Stock entitled to receive
securities, cash or other property in connection with such Non-Stock Fundamental
Change or Common Stock Fundamental Change, or, if there is no such record date,
the date upon which the holders of the Common Stock shall have the right to
receive such securities, cash or other property, in each case, as adjusted in
good faith by the Board of Directors of the Corporation to appropriately reflect
any of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of Section 7(A).
(2) "Closing Price" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices regular
way of such common stock, in each case on the principal national securities
exchange on which such common stock is listed, if the common stock is listed on
a national securities exchange, or the NASDAQ National Market System of the
National Association of Securities Dealers, Inc., or, if the common stock is not
quoted or admitted to trading on such quotation system, on the principal
national securities exchange or quotation system on which the common stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the common stock in the over-the-
counter market on the day in question as reported by the National Quotation
Bureau Incorporated, or a similarly generally accepted reporting service, or, if
not so available in such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors of the
Corporation for that purpose or, if not so available in
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such manner, as otherwise determined in good faith by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean any Fundamental Change in
which more than 50% by value (as determined in good faith by the Board of
Directors of the Corporation) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten (10) consecutive Trading
Days referred to with respect to such Fundamental Change in Section 7(E)(1)
above has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the NASDAQ National
Market System of the National Association of Securities Dealers, Inc.; PROVIDED,
HOWEVER, that a Fundamental Change shall not be a Common Stock Fundamental
Change unless either (i) the Corporation continues to exist after the occurrence
of such Fundamental Change and the outstanding shares of Series A Preferred
Stock continue to exist as outstanding shares of Series A Preferred Stock, or
(ii) not later than the occurrence of such Fundamental Change, the outstanding
shares of Series A Preferred Stock are converted into or exchanged for shares of
convertible preferred stock of a corporation succeeding to the business of the
Corporation, which convertible preferred stock has powers, preferences and
relative, participating, optional or other rights, and qualifications,
limitations and restrictions, substantially similar to those of the Series A
Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive securities, cash or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); PROVIDED, HOWEVER, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the Conversion Price,
such Fundamental Change shall be deemed to have occurred when substantially all
of the Common Stock of the Corporation shall be exchanged for, converted into,
or acquired for or constitute solely the right to receive securities, cash or
other property, but the adjustment shall be based upon the highest weighted
average of consideration per share which a holder of Common Stock could have
received in such transactions or events as a result of which more than 50% of
the Common Stock of the Corporation shall have been exchanged for, converted
into, or acquired for or constitute solely the right to receive securities, cash
or other property.
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(5) "Non-Stock Fundamental Change" shall mean any Fundamental Change other
than a Common Stock Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Prices of the common stock
received in such Common Stock Fundamental Change for the ten (10) consecutive
Trading Days prior to and including the record date for the determination of the
holders of Common Stock entitled to receive such common stock, or, if there is
no such record date, the date upon which the holders of the Common Stock shall
have the right to receive such common stock, in each case, as adjusted in good
faith by the Board of Directors of the Corporation to appropriately reflect any
of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi)
of Section 7(A);
(7) "Reference Market Price" shall initially mean $25.00 and in the event
of any adjustment to the Conversion Price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the Conversion Price after giving
effect to any such adjustment shall always be the same as the ratio of $25.00 to
the initial Conversion Price per share.
(8) "Trading Day" shall mean a day on which securities are traded on the
national securities exchange or quotation system or in the over-the-counter
market used to determine the Closing Price.
(F) DIVIDEND OR INTEREST REINVESTMENT PLANS. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in shares of Common Stock under any such plan, and the issuance of any shares of
Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding
as of the date the Series A Preferred Stock was first designated, shall not be
deemed to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Corporation to which any of the adjustment
provisions described above applies.
(G) CERTAIN ADDITIONAL RIGHTS. In case the Corporation shall, by dividend
or otherwise, declare or make
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a distribution on its Common Stock referred to in Section 7(A)(iv) or 7(A)(v)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 7(A)(iv)), the holder of each share of Series A
Preferred Stock, upon the conversion thereof subsequent to the close of business
on the date fixed for the determination of shareholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which such share of Series A Preferred Stock is
converted, the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; PROVIDED, HOWEVER, that, at
the election of the Corporation (whose election shall be evidenced by a
resolution of the Board of Directors) with respect to all holders so converting,
the Corporation may, in lieu of distributing to such holder any portion of such
distribution not consisting of cash or securities of the Corporation, pay such
holder an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors). If any conversion of
a share of Series A Preferred Stock described in the immediately preceding
sentence occurs prior to the payment date for a distribution to holders of
Common Stock which the holder of the share of Series A Preferred Stock so
converted is entitled to receive in accordance with the immediately preceding
sentence, the Corporation may elect (such election to be evidenced by a
resolution of the Board of Directors) to distribute to such holder a due bill
for the shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets to which such holder is so entitled,
PROVIDED that such due bill (i) meets any applicable requirements of the
principal national securities exchange or other market on which the Common Stock
is then traded and (ii) requires payment or delivery of such shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets no later than the date of payment or delivery thereof to holders
of shares of Common Stock receiving such distribution.
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(H) STOCK ISSUANCES; MULTIPLE ADJUSTMENTS. There shall be no adjustment of
the Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Corporation except as
specifically described in this Section 7. If any action would require
adjustment of the Conversion Price pursuant to more than one of the provisions
described above, only one adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value to holders of
Series A Preferred Stock.
SECTION 8. RANKING; ATTRIBUTABLE CAPITAL AND ADEQUACY OF SURPLUS;
RETIREMENT OF SHARES.
(A) The Series A Preferred Stock shall rank senior to all shares of
Junior Stock as to the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation. The ranking of any subsequent
series of Preferred Stock issued by the Corporation as compared to the Series A
Preferred Stock as to the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation shall be as specified in the
Amended and Restated Articles of Incorporation, as amended, of the Corporation,
the Certificate of Designation pertaining thereto and, if appropriate, shall
also be subject to the provisions of paragraph (C) of Section 1 and
paragraph (B) of Section 3 hereof.
(B) The capital of the Corporation allocable to the Series A
Preferred Stock for purposes of the Minnesota Business Corporation Act shall be
$1.00 per share.
(C) Any shares of Series A Preferred Stock acquired by the
Corporation by reason of the conversion or redemption of such shares, or
otherwise so acquired, shall be retired as shares of Series A Preferred Stock
and restored to the status of authorized but unissued shares of Preferred Stock,
par value $1.00 per share, of the Corporation, undesignated as to series, and
may thereafter be reissued as part of a new series of Preferred Stock as
permitted by law.
SECTION 9. MISCELLANEOUS.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three business days after the mailing thereof if sent by registered
or certified mail (unless first-class mail shall be specifically permitted for
such notice) with postage prepaid addressed: (i) if to the Corporation, to its
office
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at 7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344 (Attention: Chief
Financial Officer) or to the transfer agent for the Series A Preferred Stock, or
such other agent of the Corporation designated as permitted by this paragraph,
or (ii) if to any holder of the Series A Preferred Stock or Common Stock, as the
case may be, to such holder at the address of such holder as listed in the stock
record books of the Corporation (which may include the records of any transfer
agent for the Series A Preferred Stock or Common Stock, as the case may be) or
(iii) to such other address as the Corporation or any such holder, as the case
may be, shall have designated by notice similarly given.
(B) The term "Common Stock" as used herein means the Corporation's
Common Stock, par value $0.10 per share, as the same exists at the date of
filing of the Certificate of Designation relating to the Series A Preferred
Stock (the "Certificate of Designation") with the Secretary of State of the
state of Minnesota, or any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. However, subject to the provisions of Section 7(B), shares of Common
Stock issuable on conversion of shares of Series A Preferred Stock shall include
only shares of the class designated as Common Stock of the Corporation at the
date of the filing of the Certificate of Designation with the Secretary of State
of the state of Minnesota or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation and which
are not subject to redemption by the Corporation; PROVIDED that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to the
total number of shares of such classes resulting from all such
reclassifications.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series A Preferred Stock or shares of Common Stock or
other securities issued on account of Series A Preferred Stock pursuant hereto
or certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax that may be payable in respect of
any transfer involving the issuance or delivery of shares of
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Series A Preferred Stock or Common Stock or other securities in a name other
than that in which the shares of Series A Preferred Stock with respect to which
such shares or other securities are issued or delivered were registered, or in
respect of any payment to any person with respect to any such shares or
securities other than a payment to the registered holder thereof, and shall not
be required to make any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.
(D) In the event that a holder of shares of Series A Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of Series A Preferred Stock should be made or
the address to which the certificate or certificates representing such shares,
or such payment, should be sent, the Corporation shall be entitled to register
such shares, and make such payment, in the name of the holder of such Series A
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Corporation.
(E) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the Series A Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of
Series A Preferred Stock.
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