1
EXHIBIT 3.1
[FORM OF]
RESTATED CERTIFICATE OF INCORPORATION
OF
WHITE CAP HOLDINGS, INC.
ARTICLE I - Name
The name of the corporation is White Cap Industries, Inc. (hereinafter
referred to as the "Corporation").
ARTICLE II - Registered Office
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, County of New Castle, Wilmington, Delaware
19801. The name of the registered agent of the Corporation at that address is
The Corporation Trust Company.
ARTICLE III - Purpose
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law").
ARTICLE IV - Capital Stock
Section A. General. The total number of shares of stock that the
Corporation is authorized to have outstanding at any one time is 21,000,000
shares consisting of 20,000,000 shares of Common Stock, par value $.01 per share
(the "Common Stock"), and 1,000,000 shares of Preferred Stock, par value $1.00
per share (the "Preferred Stock").
Section B. Common Stock. Except as otherwise provided by the Delaware
General Corporation Law, by this Restated Certificate of Incorporation and
subject to the rights of holders of any series of Preferred Stock, the holders
of record of Common Stock shall share ratably all dividends in cash, stock or
otherwise in such amounts as the board of directors of the Corporation may from
time to time determine and, are subject to all the powers, rights, privileges,
preferences and priorities of any series of Preferred Stock as provided herein
or in any resolution or resolutions adopted by the board of directors pursuant
to authority expressly vested in it by the provisions of Section C of this
ARTICLE IV. Upon liquidation, dissolution or winding up of the Corporation, the
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holders of the Common Stock are entitled to receive pro rata, the assets of the
Corporation which are legally available for distribution, after payment of all
debts and other liabilities and subject to the prior rights of any holders of
Preferred Stock then outstanding.
(a) The Common Stock shall not be convertible into, or
exchangeable for, shares of any other class or classes or of any other series of
the Corporation's capital stock.
(b) No holder of Common Stock shall have any preemptive,
subscription, redemption, conversion or sinking fund rights with respect to the
Common Stock, or to any obligations convertible (directly or indirectly) into
stock of the Corporation whether now or hereafter authorized.
(c) Except as otherwise provided by the Delaware General
Corporation Law, by this Restated Certificate of Incorporation and subject to
the rights of holders of any series of Preferred Stock, all of the voting power
of the stockholders of the Corporation shall be vested in the holders of the
Common Stock, and each holder of Common Stock shall have one vote for each share
held by such holder on all matters voted upon by the stockholders of the
Corporation.
Section C. Preferred Stock. Authority is hereby expressly vested in the
board of directors of the Corporation, subject to the provisions of this ARTICLE
IV and to the limitations prescribed by law, to authorize the issuance from time
to time of one or more series of Preferred Stock. The authority of the board of
directors with respect to each series shall include, but not be limited to, the
determination or fixing of the following by resolution or resolutions adopted by
the affirmative vote of the majority of the total number of the directors then
in office:
(a) The designation of such series;
(b) The dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the relation which such dividends
shall bear to the dividends payable on any other class or classes or series of
the Corporation's capital stock, and whether such dividends shall be cumulative
or non-cumulative;
(c) Whether the shares of such series shall be subject to
redemption for cash, property or rights, including securities of any other
corporation, by the Corporation or upon the happening of a specified event, and,
if made subject to any such redemption, the times or events, prices, rates,
adjustments and other terms and conditions of such redemptions;
(d) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series;
(e) Whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either the holder or the
Corporation or upon the happening of a specified event, shares of any other
class or classes or any other series of the same class of the
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Corporation's capital stock, and, if provision be made for conversion or
exchange, the times or events, prices, rates, adjustments and other terms and
conditions of such conversions or exchanges;
(f) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(g) The rights of the holders of the shares of such series
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(h) The provisions as to voting, optional and/or other special
rights and preferences, if any, including, without limitation, the right to
elect one or more directors.
Section D. Series B Convertible Preferred Stock
(a) Designation; Shares Authorized. Sixty thousand (60,000) of
the shares of preferred stock authorized by this Article IV are hereby
designated as "Series B Convertible Preferred Stock" (hereinafter referred to as
"Series B Preferred Shares"). Such number of shares may be decreased by
resolution of the Board of Directors adopted and filed pursuant to DGCL Section
151(g) or any successor provision; provided, that no such decrease shall reduce
the number of authorized Series B Preferred Shares to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, warrants, convertible or
exchangeable securities or other rights to acquire Series B Preferred Shares.
(b) Stated Capital. The par value and the amount to be
represented in the stated capital of the Corporation for each Series B Preferred
Share shall be $0.01.
(c) Rank. The Series B Preferred Shares shall rank (i) junior
to all of the Corporation's shares of senior redeemable preferred stock, par
value $0.01 per share, and Series A-1 and A-2 convertible preferred stock, par
value $0.01 per share, (ii) prior to all of the Corporation's Common Stock, and
(iii) except as otherwise may be set forth in the herein or a resolution of the
Board of Directors adopting other series of preferred stock consistent with
Section D(d)(iii)(C)(a), prior to or pari passu with all other shares of the
Corporation's preferred stock hereafter issued, as to payment of dividends and
as to distributions of assets upon the Equitation, dissolution or winding up of
the Corporation, whether voluntary or involuntary.
(d) Description of Series B Preferred Shares. The rights,
preferences, privileges and restrictions granted to or imposed upon the Series B
Preferred Shares or the holders thereof are as follows:
(i) Voting Rights. Except as may be required by law,
holders of Series B Preferred Shares shall not be entitled to
vote with holders of the Common Stock for the election of
directors and other makers submitted to a vote of holders of
Common
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Stock. Each holder of Series B Preferred Shares shall have the
special voting rights which are described in subsection
D(d)(iii)(C).
(ii) Preemptive Rights. Holders of Series B Preferred
Shares shall not be entitled, as a matter of right, to
subscribe for, purchase or receive any part of any stock of
the Corporation of any class whatsoever, or of securities
convertible into or exchangeable for any stock of any class
whatsoever, whether now or hereafter authorized and whether
issued for cash or other consideration or by way of dividend.
(iii) Other Rights, Preferences, Privileges and
Restrictions.
(A) Dividends. The holder of each Series B
Preferred Share shall participate ratably with holders of the
shares of Common Stock in any dividends declared by the
Corporation's Board of Directors on the Common Stock based
upon the number of shares of Common Stock into which each
Series B Preferred Share is convertible at the time of such
declaration. In no event shall any dividend be paid, nor shall
any distribution be made, on the Common Stock, unless all
dividends on the Series B Preferred Shares shall have been
paid or declared and a sum sufficient for the payment thereof
set apart for payment.
(B) Liquidation Right and Preference. In the
event of the liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of
Series B Preferred Shares shall be entitled to receive in
cash, out of the assets of the Corporation, an amount equal to
(i) $0.10 per share for each outstanding Series B Preferred
Share held by such holder (the "Stated Value Per Share"), plus
(ii) all declared but unpaid dividends (the aggregate value of
(i) and (ii) hereinafter referred to as the "Liquidation
Preference"), before any payment shall be made or any assets
distributed to the holders of shares of Common Stock or any
other class of shares of the Corporation ranking junior to
Series B Preferred Shares. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of
the Corporation are insufficient to pay such Liquidation
Preference, the holders of such Series B Preferred Shares
shall share pro rata in any such distribution in proportion to
the full amounts to which they would otherwise be respectively
entitled. Following such payment to the holders of Series B
Preferred Shares upon such liquidation, dissolution or winding
up of the Corporation, the holders of shares of Common Stock
and Series B Preferred Shares (as if such Series B Preferred
Shares had been converted into shares of Common Stock pursuant
to subsection D(d)(iii)(D)hereof) shall then be entitled to
share ratably in all the assets of the Corporation thereafter
remaining.
The sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, shall be
deemed to be a liquidation or dissolution of the Corporation
for purposes of this subsection D(d)(iii)(B).
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(C) Special Voting Rights. Without the
affirmative vote of the holders (acting together as a class)
of at least 662/3% of the Series B Preferred Shares at the
time outstanding (including, for such purpose, any holder of
any warrant to purchase any shares of Series B Preferred
Shares) given in person or by proxy at any annual meeting, or
at such special meeting called for that purpose, or, if
permitted by law, in writing without a meeting, the
Corporation shall not:
a. declare or pay any dividend or
make any other distribution on any shares of capital stock of
the Corporation at any time created and issued ranking junior
to the Series B Preferred Shares (hereinafter called "Junior
Stock"), other than dividends or distributions payable solely
in shares of Junior Stock, or purchase, redeem or otherwise
acquire for any consideration (other than in exchange for or
out of the net cash proceeds of the contemporaneous issue or
sale of other shares of Junior Stock), or set aside as a
sinking fund or other fund for the redemption or repurchase of
any shares of Junior Stock or any warrant, rights or options
to purchase shares of Junior Stock, except, with respect to
any of the foregoing, pursuant to any employee benefit plan of
the Corporation, or redeem, purchase or otherwise acquire for
value (or pay into or set aside a sinking fund for such
purpose) any Series B Preferred Share, except as set forth in
Section D(d)(iii)(D) and Section 5 below; or
b. change the authorized number of
shares of Series B Preferred Shares, or alter or amend the
rights or preferences of Series B Preferred Shares as stated
in this Certificate.
(D) Conversion Rights.
a. Automatic Conversion. Series B
Preferred Shares shall be automatically converted into shares
of Common Stock, upon the election of the Corporation and
delivery of written notice of such election to the holders of
Series B Preferred Shares (which election and notice may be
delivered within ninety (90) days before or after the
automatic conversion events described below without effecting
the effective time of such automatic conversion), upon the
occurrence of (i) the closing of the issuance and sale of
shares of Common Stock in an underwritten public offering,
pursuant to an effective registration statement under the
Securities Act of 1933, as amended (as used herein, a "Public
Offering'); (ii) any sale of all the outstanding capital stock
of the Corporation, or (iii) a merger, consolidation, sale of
substantially all of the assets of the Corporation or similar
transaction involving the Corporation (each, a "Automatic
Conversion Event"). Any such automatic conversion shall only
be effected at the time of, and subject to, the closing of the
transactions contemplated by the Automatic Conversion Event.
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b. Optional Conversion. Except as
prohibited by Section D(e)(i)(G) hereof, commencing April 1,
2000, each Series B Preferred Share shall be convertible at
the option of the holder thereof into Shares of Common Stock
of the Corporation in accordance with the provisions and
subject to the adjustments provided for in subsection
D(d)(iii)(D)(d) hereof. In order to exercise the conversion
privilege, a holder of Series B Preferred Shares shall
surrender the certificate evidencing such Series B Preferred
Shares to the Corporation at its principal office, duly
endorsed to the Corporation and accompanied by written notice
to the Corporation that the holder elects to convert a
specified portion or all of such shares. Series B Preferred
Shares converted at the option of the holder shall be deemed
to have been converted on the day of surrender of the
certificate representing such shares for conversion in
accordance with the foregoing provisions, and at such time the
right of the holder of such Series B Preferred Shares, as such
holder, shall cease and such holder shall be treated for all
purposes as the record holder of that number of Shares of
Common Stock issuable upon conversion. As promptly as
practicable on or after the conversion date, the Corporation
shall issue and mail or deliver to such holder a certificate
or certificates for the number of Shares of Common Stock
issuable upon conversion, computed to the nearest one
hundredth of a full share, and a certificate or certificates
for the balance of Series B Preferred Shares surrendered, if
any, not converted into Shares of Common Stock.
c. Effect of Conversion. After a
conversion contemplated by subsection D(d)(iii)(D) or (b)
hereof, accrual of all dividends on the Series B Preferred
Shares shall cease and payment of any previously accrued and
unpaid dividends shall be made (i) only on such date as
declared by the Corporation's directors, of (ii) if made as a
result of an Automatic Conversion Event, within five business
days of the closing of such Automatic Conversion Event.
d. Conversion Price and
Adjustments.
i. Except as limited by
Section D(e)(i)(G) hereof, each Series B Preferred Share
issued and outstanding shall be convertible into-the number of
Shares of Common Stock of the Corporation equal to the
quotient obtained by dividing $0.10 by the Conversion Price
(as defined below) then in effect (the "Conversion Shares").
The initial "Conversion Price" shall be equal to $0.10. In the
event the Corporation shall at any time subdivide or split its
outstanding Shares of Common Stock into a greater number of
shares or declare any dividend payable in Shares of Common
Stock, the Conversion Price in effect immediately prior to
such subdivision, split or dividend shall be proportionately
decreased, and conversely, in case the outstanding Shares of
Common Stock of the Corporation shall be combined into a
smaller number of shares, the Conversion Price in effect
immediately prior to such combination shall be proportionately
increased.
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ii. In case of any capital
reorganization or any reclassification of the Common Stock of
the Corporation (whether pursuant to a merger or consolidation
or otherwise), each Series B Preferred Share shall thereafter
be convertible for the number of shares of stock or other
securities or property receivable upon such capital
reorganization or reclassification of Common Stock, as the
case may be, by a holder of the number of shares of Common
Stock into which each Series B Preferred Share was convertible
immediately prior to such capital reorganization or
reclassification of Common Stock; and, in any case,
appropriate adjustment shall be made in the application of the
provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series B Preferred
Shares to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other securities or
property thereafter deliverable upon the conversion of each
Series B Preferred Share. The provisions of this subsection
D(d)(iii)(D)(d)(ii) shall apply to successive capital
reorganizations or reclassifications.
iii. If and whenever the
Corporation shall issue or sell any shares of Common Stock for
a consideration per share less than $0.10 (other than pursuant
to the exercise of (A) any options issued to any officer or
employee of the Corporation under any stock option plan
adopted by the Corporation, or (B) warrants to purchase Common
Stock or other securities convertible into Common Stock issued
as of the date of the original issuance of Series B Preferred
Shares), or shall issue any options, warrants or other rights
for the purchase of such shares at a consideration per share
of less than $0.10 (other than pursuant to the exercise of (A)
any options issued to any officer or employee of the
Corporation under any stock option plan adopted by the
Corporation, or (B) warrants to purchase Common Stock or other
securities convertible into Common Stock issued as of the date
of original issuance of the Series B Preferred Shares, the
number of Conversion Shares into which each Series B Preferred
Share is convertible shall be adjusted according to the
following formulas:
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O + N
W = [( ----- x W) - W] x A
1 O
where
P x (O + N)
A = 1 - -----------
M x O
and
W1 = the number of Conversion Shares to be added to the
current number of Conversion shares
W = the current number of Conversion Shares into which
each Series B Preferred Share is convertible
N = the number of additional shares of Common Stock
issued
O = the number of shares of Common Stock outstanding,
determined on a fully diluted basis, prior to the
issuance of additional Common Stock
P = the offering price or deemed value per share of the
additional shares of Common Stock issued
M = $0.10
Such adjustment shall become effective immediately after the issuance
of such additional shares of Common Stock (or securities convertible
into Common Stock).
iv. Upon each adjustment
to the Conversion Price pursuant to any provision of this
subsection D(d)(iii)(D)(d), the number of Conversion Shares
shall be adjusted by multiplying such number by a fraction,
the numerator of which shall be the Conversion Price
immediately prior to such adjustment and the denominator of
which shall be the Conversion Price immediately thereafter.
v. The anti-dilution
provisions of this subsection D(d)(iii)(D)(d), as applied to
any holder of Series B Preferred Shares, may be waived
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by the affirmative vote of the holders (acting together as a
class) of at least seventy-five percent (75%) of the then
outstanding Series B Preferred Shares.
e. Notice of Conversion Price
Adjustment. Upon any adjustment of the Conversion Price, then
and in each such case the Corporation shall give written
notice thereof, by first-class mail, postage prepaid,
addressed to the registered holders of Series B Preferred
Shares at the addresses of such holders as shown on the books
of the Corporation, which notice shall state the Conversion
Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares receivable at such
price upon the conversion of Series B Preferred Shares,
setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
f. Rights to Preconversion
Distributions. The holders of Series B Preferred Shares shall
have the following rights to certain properties received by
the holders of Shares of Common Stock:
i. In case the Corporation
shall declare a dividend or distribution upon Shares of Common
Stock payable other than in cash out of earnings or surplus or
other than in Shares of Common Stock, then thereafter each
holder of Series B Preferred Shares upon the conversion
thereof will be entitled to receive the number of Shares of
Common Stock into which such Series B Preferred Shares shall
be converted, and, in addition and without payment therefor,
the property which such holder would have received as a
dividend if continuously since the record date for any such
dividend or distribution such holder (A) had been the record
holder of the number of Shares of Common Stock then received,
and (B) had retained all dividends or distributions in stock
or securities payable in respect of such Shares of Common
Stock or in respect of any stock or securities paid as
dividends or distributions and originating directly or
indirectly from such Shares of Common Stock.
ii. Subject to the
provisions of subsection D(d)(iii)(B) regarding liquidation
rights, if any capital reorganization or reclassification of
the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the
sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of
Shares of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Shares
of Common Stock, -then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of Series
B Preferred Shares shall thereafter have the right to receive,
in lieu of Shares of Common Stock of the Corporation
immediately theretofore receivable upon the conversion of such
Series B Preferred Shares, such shares of stock, securities or
assets as may be issued or
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payable with respect to or in exchange for a number of
outstanding Shares of Common Stock equal to the number of
Shares of Common Stock immediately theretofore receivable upon
the conversion or such Series B Preferred Shares had such
reorganization, reclassification, consolidation, merger or
sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and
interests of the holders of the Series B Preferred Shares to
the end that the provisions hereof (including without
limitation provisions for adjustments of the Conversion Price
and of the number of shares receivable upon the conversion of
such Series B Preferred Shares) shall thereafter be
applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter receivable upon the
conversion of such Series B Preferred Shares. The Corporation
shall not effect any such reorganization, reclassification,
consolidation, merger or sale, unless prior to the
consummation thereof the surviving corporation (if other than
the Corporation), the corporation resulting from such
consolidation or the corporation purchasing such assets shall
assume by written instrument executed and mailed to the
registered holders of the Series B Preferred Shares at the
last address of such holders appearing on the books of the
corporation, the obligation to deliver to such holders such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holders may be entitled to
receive.
g. Notice of Certain Events.
i. the Corporation shall
pay any dividend payable in stock upon Shares of Common Stock
or make any distribution (other than regular cash dividends)
to the holders of Shares of Common Stock; or
ii. the Corporation shall
offer for subscription pro rata to the holders of Shares of
Common Stock any additional shares of stock of any class or
other rights; or
iii. there shall be any
capital reorganization, reclassification of the capital stock
of the Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all of in
assets, to another corporation; provided, however, that this
provision shall not be applicable to the merger or
consolidation of the Corporation with or into another
corporation if, following such merger or consolidation, the
shareholders of the Corporation immediately prior to such
merger or consolidation own at least 80% of the equity of the
combined entity; or
iv. there shall be a
voluntary or involuntary dissolution, liquidation or winding
up of the Corporation;
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then, in any one or more of said cases, the Corporation shall
give written notice, by first-class mail, postage prepaid,
addressed to the holders of Series B Preferred Shares at the
addresses of such holders as shown on the books of the
Corporation, on the date on which (A) the books of the
Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (B) such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as
the case may be. Such notice shall also specify the date as of
which the holders of Common Stock of record shall participate
in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Shares of Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
Such written notice shall be given at least 20 days prior to
the action in question and not less than 20 days prior to the
record date or the date on which the Corporation's transfer
books are closed in respect thereto.
h. As used in this subsection
D(d)(iii)(D) the term "Common Shares" shall mean and include
the Corporation's presently authorized Common Stock and shall
also include any options, warrants, securities convertible
into Common Stock or other rights for the purchase of such
Common Stock which are vested and presently exercisable;
provided that the shares receivable pursuant to conversion of
Series B Preferred Shares shall be shares designated as Common
Stock of the Corporation as of the date of issuance of such
Series B Preferred Shares, or, in case of any reclassification
of the outstanding shares thereof, the stock, securities or
assets provided for in subsection D(d)(iii)(D)(f)(ii) above.
(e) Redemption.
(i) Mandatory Redemption of Series B Preferred
Shares.
(A) For purposes of this subsection
D(e)(i), the following terms shall have the meanings set forth
below:
a. "Business" shall mean that part
of the Corporation's operations in Northern California
formerly represented by the businesses conducted, and store
locations operated, by Viking Distributing Co., Inc., a
California corporation, A-Y Supply, Inc., a California
corporation, and Stop Supply, Inc., a California corporation.
"Business" shall not include any store locations of the
Corporation in Northern California which are opened by the
Corporation subsequent to the date of the initial issuance of
the Series B Preferred Shares.
b. "Compounded Growth Rate" shall
mean the percentage change in EBITDA, compounded annually, for
the cumulative, three twelve-month
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periods ended on March 31, 2000, as compared to a base amount
equal to $7,500,000.
c. "EBITDA" shall mean, for any
period, Net Income of the Business, plus (i) any income or
franchise taxes related to the Business, plus (ii) total
interest expenses in such period, allocable to the Business,
plus (iii) amortization and depreciation deducted in
determining Net Income for such period and allocable to the
Business, plus (iv) all other non-cash charges deducted in
determining Net Income for such period and allocable to the
Business.
d. "Net Income" for any period of
determination shall mean the net income of the Business
determined in accordance with generally accepted accounting
principles in effect at the time of determination, but
excluding (but only to the extent otherwise included): (i)
extraordinary items; (ii) earnings or losses from sales of
fixed or capital assets; (iii) earnings or losses attributable
to any period other than the period of calculation: (iv)
earnings of entities that are not Subsidiaries, except to the
extent such earnings are actually paid to the Corporation in
cash; (v) earnings of any Subsidiary, the payment of which to
the Corporation is prohibited by law, rule, regulation or
contract; and (vi) earnings attributable to minority interests
(meaning shares of stock of any class of a Subsidiary) that
are not owned by the Corporation.
e. "Security" or "Securities" shall
have the same meaning as in Section 2(1) of the Securities Act
of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Securities and Exchange
Commission thereunder, all as the same shall be in effect at
the time.
f. "Subsidiary" shall mean any
corporation of which more than 50% (by number of votes) of the
Voting Stock shall be beneficially owned, directly or
indirectly, by such parent corporation.
g. "Voting Stock" shall mean
Securities of any class or classes, the hollers of which are
ordinarily, in the absence of contingencies, entitled to elect
the corporate directors (or persons performing similar
functions).
(B) The Series B Preferred Shares shall
be subject to redemption, at a redemption price per share
equal to $0.10 (such sum being hereinafter referred to as the
"Redemption Price"), as follows:
a. If the Compounded Growth Rate is
greater than or equal to 10.0%, none of the Series B Preferred
Shares shall be subject to redemption at any time.
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b. If the Compounded Growth Rate is
less than or equal to 5.0%, all of the Series B Preferred
Shares then outstanding shall be subject to redemption by the
Corporation.
c. If the Compounded Growth Rate is
greater than 5.0%, but less than 10.0%, Series B Preferred
Shares then outstanding shall be subject to redemption by the
Corporation pursuant to the following formula:
[10% - COMPOUNDED GROWTH RATE] X 100 X 12,000 SHARES = SERIES
B PREFERRED SHARES SUBJECT TO REDEMPTION]
(C) For purposes of subsection
D(e)(i)(B)(c) and (e)(iv), any fractional share amounts shall
be adjusted upward or downward to the nearest whole number of
shares.
(D) For purposes of Section D(e)(i),
all amounts shall be adjusted to reflect stock splits, stock
dividends or over subdivisions of the Capital Stock of the
Corporation.
(E) Upon an Automatic Conversion Event
elected by the Corporation as described in Section
D(d)(iii)(D)(a), the Compounded Growth Rate shall be
determined as of the end of the last full calendar month
immediately preceding the effectiveness of such required or
requested conversion (the "Month End"), and shall be
calculated based upon the percentage change in EBITDA during
the 12-month period immediately preceding the Month End as
compared to EBITDA during the 12-month period commencing 24
months prior to the Month End (the "Measurement Period"). If
the annual growth rate for the Measurement Period is greater
than or equal to 10.0%, none of the Series B Preferred Shares
shall be subject to redemption. If the annual growth rate of
the Measurement Period is less than or equal to 5.0%, all of
the Series B Preferred Shares then outstanding shall be
subject to redemption by the Corporation. If the annual growth
rate of the Measurement Period is greater than 5.0%, but less
than 10.0%, Series B Preferred Shares then outstanding shall
be subject to redemption by the Corporation at the Redemption
Price in accordance with Section 5(B) hereof pursuant to the
following formula:
[10% - ANNUAL GROWTH RATE] X 100 X 6,000 SHARES = SERIES B
PREFERRED SHARES SUBJECT TO REDEMPTION]
(F) The determination of any
calculation required by this Section D(e)(1) shall be
determined by the then independent public accountants of the
Corporation, consistent with applicable generally accepted
accounting principles and using methods of allocating revenue
of the Corporation that are no less favorable to the holders
of Series B Preferred Shares than any other methods used by
the
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Corporation, and which determination shall be binding upon the
Corporation and any holder of Series B Preferred Shares after
delivery thereof to the Corporation.
(G) All Series B Preferred Shares
subject to redemption pursuant to this Section D(e)(i) shall
have no right to receive any accumulated and unpaid dividend
thereon, and no right to exercise the optional conversion
rights set forth in Section D(d)(iii )(D)(b) hereof.
(ii) Redemption Procedures. Not more than 30 nor
less than 10 days prior to the redemption date, notice by
first class mail, postage prepaid, shall be given to the
holders of record of the Series B Preferred Shares to be
redeemed, addressed to such shareholders at their last
addresses as shown on the stock books of the Corporation. Each
such notice of redemption shall specify the date fixed for
redemption; the Redemption Price; the place or places of
payment; and that payment of the Redemption Price will be made
upon presentation and surrender of certificates representing
the shares of Series B Preferred Shares. Any notice which is
mailed as herein provided shall be conclusively presumed to
have been duly given, whether or not a holder of the Series B
Preferred Shares receives such notice; and failure so to give
such notice, or any defect in such notice, to the holders of
any shares designated for redemption shall not affect the
validity of the proceedings for the redemption of any other
shares of Series B Preferred Shares. On or after the date
fixed for redemption as stated in such notice, each holder of
the shares called for redemption (other than shares which have
been duly surrendered for conversion at or before the close of
business on the date fixed for redemption) shall surrender the
certificate or certificates evidencing such shares to the
Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption
Price. If fewer than all the shares represented by any such
surrendered certificate or certificates are redeemed, a new
certificate shall be issued representing the unredeemed
shares. If, on the date fixed for redemption, funds necessary
for the redemption shall be available therefor and shall have
been irrevocably deposited or set aside, then, notwithstanding
that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with
respect to the shares so called shall cease to accumulate on
and after the date fixed for redemption, such shares shall no
longer be deemed outstanding, the holders thereof shall cease
to be shareholders, and all rights whatsoever with respect to
such shares (except the right of the holders thereof to
receive the Redemption Price without interest upon surrender
of their certificates) shall terminate.
(f) Outstanding Shares. For purposes of this Certificate, all
Series B Preferred Shares shall be deemed outstanding except for (a) Series B
Preferred Shares held of record or beneficially by the Corporation or any
subsidiary of the Corporation; (b) from the date of surrender of certificates
representing Series B Preferred Shares for conversion pursuant to Section
D(d)(iii)(D), all Series B Preferred Shares which have been converted
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into Common Stock or other securities or property pursuant to Section
D(d)(iii)(D); and all authorized but unissued Series B Preferred Shares.
(g) Status of Series B Preferred Shares Upon Retirement.
Series B Preferred Shares which are acquired by the Corporation or converted
pursuant to Section D(d) shall be canceled pursuant to the DGCL, or any
successor provision, and thereupon shall return to the status of authorized and
unissued shares of Preferred Stock of the Corporation without designation as to
series. Upon the acquisition by the Corporation or conversion pursuant to
Section D(d) of all outstanding Series B Preferred Shares, all provisions of
this Section D Certificate shall cease to be of further effect. Upon the
occurrence of suds event, the Board of Directors of the Corporation shall have
the power pursuant to the DGCL, without shareholder action, to cause this
Certificate of Designation to be eliminated from the Certificate of
Incorporation.
Section E. Recapitalization
(a) Stock Split. Immediately upon the filing of this Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware (the "Effective Time"), each share of Common Stock outstanding at the
Effective Time shall be, without further action by the Corporation or the holder
thereof, changed and converted into a number of shares of Common Stock equal to
the number determined by multiplying each outstanding share of Common Stock by
1.74 (the "Stock Split"). Each certificate then outstanding representing shares
of Common Stock shall automatically represent from and after the Effective Time
that number of shares of Common Stock equal to the number of shares shown on the
face of the certificate multiplied by 1.74.
(b) Fractional Shares. In the event that the Stock Split would
result in any holder of shares of Common Stock holding a share of Common Stock
that is not an integral multiple of one, the effect of the Stock Split shall be
such that the shares of Common Stock issued as a result of the Stock Split shall
be rounded down to the next integrel multiple of one.
ARTICLE V - Existence
The Corporation is to have a perpetual existence.
ARTICLE VI - Stockholders and Directors
Section A. Stockholders Action. Election of directors need not be by
written ballot unless the by-laws of the Corporation so provide. Subject to the
rights of any series of Preferred Stock, from and after the date on which the
Common Stock of the Corporation is registered pursuant to the Securities Act of
1933, as amended (the "1933 Act"), (i) any action required or permitted to be
taken by the stockholders of the Corporation must be effected at an annual or
special meeting of stockholders of the Corporation and may not be effected in
lieu thereof by any consent in writing by such stockholders, (ii) special
meetings of the stockholders of the Corporation may be called only by either the
board of directors pursuant to a resolution adopted by the affirmative vote of
the
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majority number of the total number of directors then in office or by the chief
executive officer of the Corporation, (iii) special meetings of the stockholders
cannot be called by the stockholders of the Corporation, and (iv) advance notice
of stockholder nominations of persons for election to the Board of Directors of
the Corporation and of business to be brought before any annual meeting of the
stockholders by the stockholders of the Corporation shall be given in the manner
provided in the by-laws of the Corporation.
Section B. Number of Directors and Term of Office. Subject to any
rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances, the number of directors which shall
constitute the Board of Directors of the Corporation shall be such number as
shall be fixed by resolution adopted by the affirmative vote of the majority of
the total number of directors then in office. Each director shall be elected at
each annual meeting of stockholders and shall hold such office until the next
annual meeting of stockholders and until his successor shall be elected and
qualified.
Section C. Removal and Resignation. No director may be removed from
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors;
provided, however, that if the holders of any class or series of capital stock
are entitled to vote by the provisions of this Restated Certificate of
Incorporation (it being understood that any references to this Restated
Certificate of Incorporation shall include any duly authorized certificate of
designation) to elect one or more directors, such director or directors so
elected may be removed without cause only by the vote of the holders of a
majority of the outstanding shares of that class or series entitled to vote. Any
director may resign at any time upon written notice to the Corporation.
Section D. Vacancies and Newly Created Directorships. Subject to any
rights of the holders of any series of Preferred Stock to fill such newly
created directorships or vacancies, any newly created directorships resulting
from any increase in the authorized number of directors and any vacancies in the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall, unless provided by law or by resolution approved by the
majority of the total number of directors then in office, be filled only by
resolution approved by the affirmative vote of the majority of the total number
of directors then in office, and any director so chosen shall hold office until
the next annual meeting of stockholders and until his successor shall have been
duly elected and qualified, unless he shall resign, die, become disqualified or
be removed for cause.
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ARTICLE VII - General Provisions
Section A. Dividends. The board of directors shall have authority from
time to time to set apart out of any assets of the Corporation otherwise
available for dividends a reserve or reserves as working capital or for any
other purpose or purposes, and to abolish or add to any such reserve or reserves
from time to time as said board may deem to be in the interest of the
Corporation; and said board shall likewise have power to determine in its
discretion, except as herein otherwise provided, what part of the assets of the
Corporation available for dividends in excess of such reserve or reserves shall
be declared in dividends and paid to the stockholders of the Corporation.
Section B. Issuance of Stock. The shares of all classes of stock of the
Corporation may be issued by the Corporation from time to time for such
consideration as from time to time may be fixed by the board of directors of the
Corporation, provided that shares having a par value shall not be issued for a
consideration less than such par value, as determined by the board. At any time,
or from time to time, the Corporation may grant rights or options to purchase
from the Corporation any shares of its stock of any class or classes to run for
such period of time, for such consideration, upon such terms and conditions, and
in such form as the board of directors may determine. The board of directors
shall have authority, as provided by law, to determine that only a part of the
consideration which shall be received by the Corporation for the shares of its
stock issued shall be shares having a par value, the amount of the part of such
consideration so determined to be capital shall be equal to the aggregate par
value of such shares. The excess, if any, at any time, of the total net assets
of the Corporation over the amount so determined to be capital, as aforesaid,
shall be surplus. All classes of stock of the Corporation shall be and remain at
all times nonassessable.
The board of directors is hereby expressly authorized, in its
discretion, in connection with the issuance of any obligations or stock of the
Corporation (but without intending hereby to limit its general power so to do in
other cases), to grant rights or options to purchase stock of the Corporation of
any class upon such terms and during such period as the board of directors shall
determine, and to cause such rights to be evidenced by such warrants or other
instruments as it may deem advisable.
Section C. Inspection of Books and Records. The board of directors
shall have power from time to time to determine to what extent and at what times
and places and under what conditions and regulations the accounts and books of
the Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
board of directors or of the stockholders of the Corporation.
Section D. Location of Meetings, Books and Records. Except as otherwise
provided in the by-laws, the stockholders of the Corporation and the board of
directors may hold their meetings and have an office or offices outside of the
State of Delaware, and, subject to the provisions of the laws of said State, may
keep the books of the Corporation outside of said State at such places as may,
from time to time, be designated by the Board of Directors.
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ARTICLE VIII - Amendments
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereinafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation. Notwithstanding anything contained in this Restated
Certificate of Incorporation to the contrary, ARTICLE IX, ARTICLE XI and this
ARTICLE VIII of this Restated Certificate of Incorporation shall not be altered,
amended or repealed and no provision inconsistent therewith shall be adopted
without the affirmative vote of the holders of at least 662/3% of the voting
power of the then outstanding shares of capital stock of the Corporation
entitled to vote on such alteration, amendment or repeal.
ARTICLE IX - Liability
Section A. Limitation of Liability.
(a) To the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), and except as otherwise provided in the Corporation's by-laws, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages arising from a breach of fiduciary duty owed
to the Corporation or its stockholders.
(b) Any repeal or modification of the foregoing paragraph by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Section B. Right to Indemnification. Each person who was or is made
party or is threatened to be made a part to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee
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or agent of another Corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide for broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith and
such indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in Section C of this ARTICLE IX with respect to proceedings
to enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the board
of directors of the Corporation. The right to indemnification conferred in this
Section B of ARTICLE IX shall be a contract right and shall include the
obligation of the Corporation to pay the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an "advance of
expenses"); provided, however, that, if and to the extent that the Delaware
General Corporation Law requires, an advance of expenses incurred by an
indemnitee in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section B or otherwise. The Corporation may, by action of its board of
directors, provide indemnification to employees and agents of the Corporation
with the same or lesser scope and effect as the foregoing indemnification of
directors and officer.
Section C. Procedure for Indemnification. Any indemnification of a
director or officer of the Corporation or advance of expenses under Section B of
this ARTICLE IX shall be made promptly, and in any event within forty-five days
(or, in the case of an advance of expenses, twenty days) upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this ARTICLE
IX is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE IX shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of expenses where the undertaking required pursuant to
Section B of this ARTICLE IX, if any, has been tendered to the Corporation) that
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its board of
directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the
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claimant has not met the applicable standard of conduct. The procedure for
indemnification of other employees and agents for whom indemnification is
provided pursuant to Section B of this ARTICLE IX shall be the same procedure
set forth in this Section C for directors or officers, unless otherwise set
forth in the action of the board of directors providing for indemnification for
such employee or agent.
Section D. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.
Section E. Service for Subsidiaries. Any person serving as a director,
officer, employee or agent of another Corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (hereinafter a "subsidiary" for
this ARTICLE IX) shall be conclusively presumed to be serving in such capacity
at the request of the Corporation.
Section F. Reliance. Persons who after the date of the adoption of this
provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE IX in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE IX shall apply to claims made against an indemnitee arising out of acts
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.
Section G. Non-Exclusivity of Rights. The rights to indemnification and
to the advance of expenses conferred in this ARTICLE IX shall not be exclusive
of any other right which any person may have or hereafter acquire under this
Restated Certificate of Incorporation or under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise.
Section H. Merger or Consolidation. For purposes of this ARTICLE IX,
references to "the Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this ARTICLE IX with respect to the resulting or surviving
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corporation as he or she would have with respect to such constituent corporation
if its separate existence had continued.
ARTICLE X - Business Combinations
The Corporation expressly elects to be governed by Section 203
of the Delaware General Corporation Law. Notwithstanding the terms of Section
203 of the Delaware General Corporation Law, Greg Grosch and KRG Capital
Partners, LLC and their respective affiliates (the "Excepted Stockholders")
shall not be deemed at any time and without regard to percentage of voting stock
of the Corporation owned by the Excepted Stockholders to be an "interested
stockholder" as such term is defined in Section 203 (c)5 of the Delaware General
Corporation Law.
ARTICLE XI - Fair Price Provision
Section A. Required Vote for Certain Business Combinations. In addition
to any affirmative vote required by law or by this Restated Certificate of
Incorporation, and except as otherwise expressly provided in Section B of this
ARTICLE XI:
(a) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as
herein defined) or (ii) any other corporation or entity (whether or not itself
an Interested Stockholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defied) of any Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Interested Stockholder or any Affiliate of any Interested Stockholder of any
assets of the Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) of $5,000,000 or more; or
(c) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value of $5,000,000
or more; or
(d) the adoption of any plan or proposal for the liquidation,
dissolution or winding up of the Corporation proposed by or on behalf of any
Interested Stockholder or any Affiliate of any Interested Stockholder; or
(e) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving any Interested
Stockholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or
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any Subsidiary which is directly or indirectly owned by any Interested
Stockholder or any Affiliate of any Interested Stockholder;
shall require, subject to Section B of this ARTICLE XI, the affirmative vote of
the holders of at least 66 2/3% of the voting power of the then outstanding
Voting Stock (as hereinafter defined), voting together as a single class at a
duly constituted meeting of stockholders called expressly for such purpose. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law.
Section B. Definition of "Business Combination." The term "Business
Combination" as used in this ARTICLE XI shall mean any transaction which is
referred to in any one or more of clauses (a) through (e) of Section A of
ARTICLE XI; provided, however, that the term "Business Combination" shall not
include any transaction which occurs on or prior to the date of the closing of
the initial public offering of the Common Stock of the Corporation.
Section C. Conditions to be Satisfied. The provisions of Section A of
this ARTICLE XI shall not be applicable to any particular Business Combination,
and such Business Combination shall require only such affirmative vote, if any,
as is required by law and any other provisions of this Restated Certificate of
Incorporation, if all of the conditions specified in any of the following
Paragraphs (a), (b) or (c) are met:
(a) The Business Combination shall have been approved by the
affirmative vote of 70% of the Continuing Directors then in office.
(b) All of the following conditions shall have been met:
(i) aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received
per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest of the
following:
(A) (if applicable) the highest per share
price (including any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested Stockholder
for any shares of Common Stock acquired by it (1) within the
two-year period immediately prior to and including the first
public announcement of the proposal of the Business
Combination (the "Announcement Date") or (2) in the
transaction in which it became an Interested Stockholder,
whichever is higher; or
(B) the Fair Market Value per share of
Common Stock on the Announcement Date or on the date
on which the Interested Stockholder became an
Interested Stockholder (such latter date is referred
to in this ARTICLE XI as the "Determination Date"),
whichever is higher.
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(ii) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of shares of any other class of
outstanding Voting Stock in such Business Combination shall be
at least equal to the highest of the following (it being
intended that the requirements of this Paragraph 2(ii) shall
be required to be met with respect to every other class of
outstanding Voting Stock, whether or not the Interested
Stockholder has previously acquired any shares of a particular
class of Voting Stock):
(A) (if applicable) the highest per share
price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by it
(1) within the two-year period immediately prior to and
including the Announcement Date or (2) in the transaction in
which it became an Interested Stockholder, whichever is
higher;
(B) (if applicable) the highest preferential
amount per share which the holders of shares of such class of
Voting Stock are entitled to receive from the corporation in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation; and
(C) the Fair Market Value per share of such
class of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher.
(iii) The consideration to be received by holders of
a particular class of outstanding Voting Stock shall be in
cash or in the same form as the Interested Stockholder has
previously paid for shares of such class of Voting Stock. If
the Interested Stockholder has paid for shares of any class of
Voting Stock with varying forms of consideration, the form of
consideration for such a class of Voting Stock shall be either
cash or the form used to acquire the largest number of shares
of such class of Voting Stock previously acquired by such
Interested Stockholder.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such
Business Combination: (a) there shall have been (1) no failure
to declare and pay at regular dates therefor the full amount
of any dividends (whether or not cumulative) payable on any
class or series of Preferred Stock, except as approved by the
affirmative vote of a majority of the Continuing Directors;
(2) no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by the affirmative
vote of the majority of the Continuing Directors; and (3) an
increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number
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of outstanding shares of the Common Stock, unless the failure
so to increase such annual rate is approved by the affirmative
vote of a majority of the Continuing Directors; the beneficial
owner of any additional shares of Voting Stock except as part
of the transaction which results in such Interested
Stockholder becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not
have received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise, unless such transaction shall have
been approved or ratified by the affirmative vote of a
majority of the Continuing Directors after such person shall
have become an Interested Stockholder.
(vi) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the 1934 Act and the rules and regulations
thereunder (or any subsequent provisions replacing such 1934
Act, rules and regulations) shall be mailed to public
stockholders of the Corporation at least 20 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed
pursuant to such 1934 Act, rules or regulations or subsequent
provisions thereof).
(c) Upon consummation of the transaction which resulted in the
stockholder becoming an Interested Stockholder, the Interested Stockholder owned
at least 85% of the voting stock of the Corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by (i) persons who are directors and also
officers of the Corporation and (ii) employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer.
Section D. Certain Definitions. For the purposes of this ARTICLE XI:
(a) A "person" shall mean an individual, a Group Acting in
Concert, a corporation, a partnership, an association, a joint stock company, a
trust, a business trust, a government or political subdivision, any
unincorporated organization, or any other association or entity.
(b) "Interested Stockholder" shall mean any person who or
which:
(i) is the beneficial owner, directly or indirectly,
of 15% or more of the voting power of the then outstanding
shares of Voting Stock; or
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(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to and
including the date in question was the beneficial owner,
directly or indirectly, of 15% or more of the voting power of
the then outstanding shares of Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock which
were at any time within the two-year period immediately prior
to and including the date in question beneficially owned by
any Interested Stockholder, if such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933 (or any subsequent
provisions replacing such Act or the rules and regulations
promulgated thereunder) and such Assignment or succession was
not approved by a majority of the Continuing Directors;
provided, however, that the term "Interested Stockholder"
shall not include (1) the Corporation; (2) any Subsidiary of
the Corporation; (3) any person, directly or indirectly,
owning of the record or beneficially 100% of the issued and
outstanding capital stock of the Corporation (other than
directors' qualifying shares, if any); (4) any employee
benefit plan or compensation arrangement of the Corporation or
any Subsidiary of the Corporation; (5) any person holding
shares of Voting Stock organized, appointed or established by
the Corporation or any Subsidiary for or pursuant to the terms
of any such employee benefit plan or compensation arrangement;
or (6) any Grandfathered Person unless such Grandfathered
Person becomes, after the closing of the initial public
offering of shares of Common Stock of the Corporation, the
beneficial owner of more than the Grandfathered Percentage of
the Voting Stock then outstanding.
Notwithstanding the foregoing, no person shall become an
"Interested Stockholder" as the result of an acquisition of
Voting Stock by the Corporation which, by reducing the number
of shares outstanding, increase the proportionate number of
shares beneficially owned by such person to 15% (or, if
applicable, the Grandfathered Percentage with respect to such
person) or more of the voting power of the then outstanding
shares of Voting Stock; provided, however, that if a person
shall become the beneficial owner of 15% (or, if applicable,
the Grandfathered Percentage with respect to such person) or
more of the voting power of the then outstanding shares of
Voting Stock by reason of share purchases by the Corporation
and shall, after such share purchases by the Corporation,
become the beneficial owner of any additional shares of Voting
Stock of the Corporation (other than any shares of Voting
Stock issued to such person as a result of a stock dividend,
stock split, reclassification, recapitalization, or other
similar transaction involving the issuance of shares of Voting
Stock on a pro rata basis to all holders of Voting Stock),
then such person shall be deemed to be an "Interested
Stockholder" if immediately thereafter the voting power of the
shares of Voting Stock beneficially owned by such person
equals or exceeds 15% (or in the case of a Grandfathered
Person, the Grandfathered
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Percentage with respect to such person) or more of the voting
power of all of the shares of Voting Stock then outstanding.
(c) A person shall be deemed the "beneficial owner" of, and
shall be deemed to beneficially own, any Voting Stock:
(i) which such person or any of such person's
Affiliates or Associates, directly or indirectly beneficially
owns (as determined pursuant to Rule 13d-3 of the Rules and
Regulations promulgated by the Securities and Exchange
Commission under the 1934 Act);
(ii) which such person or any of its Affiliates or
Associates, directly or indirectly, has or shares with respect
to the Voting Stock (1) the right to acquire, or direct the
acquisition of such voting Stock pursuant to any agreement,
arrangement, understanding or otherwise (whether or not in
writing) (other than customary arrangements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities) or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise; provided, however, that a person shall not be
deemed the "beneficial owner" of, or to "beneficially own,"
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such person or any of such person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (2) the right to vote, or
to direct the voting of, such Voting Stock pursuant to any
agreement, arrangement, understanding or otherwise (whether or
not in writing) (provided that a person shall not be deemed to
be the beneficial owner of any securities if the agreement,
arrangement or understanding to vote such security arises
solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the Rules and Regulations promulgated under
the 1934 Act and is not also then reportable by such person on
Schedule 13D under the 1934 Act (or any comparable or
successor report)), or (3) the right to dispose of, or to
direct the disposition of, such Voting Stock pursuant to any
agreement, arrangement, understanding or otherwise (whether or
not in writing) (other than customary arrangements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities); or
(iii) which is beneficially owned, directly or
indirectly, by any other person (or any Affiliate or Associate
thereof) with which such person or any of such person's
Affiliates or Associates has any agreement, arrangement,
understanding or otherwise (whether or not in writing) (other
than customary arrangements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy described in
Clause 3(ii)(2) above) or disposing of any shares of Voting
Stock;
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provided, however, that (1) no person engaged in business as
an underwriter of securities shall be deemed the beneficial
owner of any securities acquired through such person's
participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of 40 days after
the date of such acquisition and (2) no person who is a
director or an officer of the Corporation shall be deemed,
solely as a result of his or her position as director or
officer of the Corporation, the beneficial owner of any
securities of the Corporation that are beneficially owned by
any other director or officer of the Corporation.
(d) Notwithstanding anything in the definition of beneficial
owner to the contrary, the phrase "then outstanding," when used with reference
to a person's beneficial ownership of securities of the Corporation, shall mean
the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
person would be deemed to own beneficially hereunder.
(e) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the 1934 Act (or any subsequent provisions replacing the 1934
Act or the rules and regulations promulgated thereunder); provided, however,
that no person who is a director or officer of the Corporation shall be deemed
an Affiliate or an Associate of any other director or officer of the Corporation
solely as a result of his or her position as a director or officer of the
Corporation.
(f) "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in Paragraph (b) of this Section D, the term
"Subsidiary" shall mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the Corporation.
(g) "Continuing Director" means (i) any member of the Board of
Directors of the Corporation who is not an Interested Stockholder or an
Affiliate or Associate of an Interested Stockholder and was a member of the
Board of Directors prior to the time that the Interested Stockholder became an
Interested Stockholder, and (ii) any person who subsequently becomes a member of
the Corporation's Board of Directors who is not an Associate or Affiliate of an
Interested Stockholder and is recommended or approved by the affirmative vote of
a majority of the Continuing Directors.
(h) "Fair Market Value" means:
(i) in the case of stock, the highest closing sale
price during the 30-day period immediately prior to and
including the date in question of a share of such stock on the
principal United States securities exchange registered under
the 1934 Act (or any subsequent provisions replacing such Act
or the rules and regulations promulgated thereunder) on which
such stock is listed, or, if such stock is not listed
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on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period
immediately prior to and including the date in question on the
National Association of Securities Dealers Automated Quotation
System or any comparable system then in use, or if no such
quotations are available, the fair market value on the date in
question of a share of such stock as determined by the
affirmative vote of a majority of the Continuing Directors of
the Board of Directors in good faith; and
(ii) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by an affirmative vote of a majority of
the Continuing Directors of the Board of Directors in good
faith.
(i) "Group Acting in Concert" shall mean persons seeking to
combine or pool their voting or other interests in the securities of the
Corporation for a common purpose, pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written, oral or
otherwise, or any "group of persons" as defined under Section 13(d) of the 1934
Act (or any subsequent provisions replacing the 1934 Act or the rules and
regulations promulgated thereunder). When persons act together for any such
purpose, their group is deemed to have acquired their stock.
(j) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in Paragraphs (i) and (ii) of Section C of this ARTICLE XI shall include
the shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
(k) "Voting Stock" shall mean the outstanding shares of
capital stock of the Corporation entitled, at the time, to vote generally in the
election of directors.
(l) "Grandfathered Percentage" shall mean, with respect to any
Grandfathered Person, the percentage of the voting power of the then outstanding
shares of Voting Stock that such Grandfathered Person beneficially owns as of
the close of business on the date of the closing of the initial public offering
of shares of Common Stock of the Corporation plus an additional five (5)
percentage points; provided, however, than in the event the underwriters
exercise their over-allotment option in connection with the initial public
offering of shares of Common Stock, the Grandfathered Percentage shall, from and
after the closing of such over-allotment option, mean, with respect to any
Grandfathered Person, the percentage of the voting power of the then outstanding
shares of Voting Stock that such Grandfathered Person beneficially owns as of
the close of business on the date of the closing of the over-allotment option
plus an additional five (5) percentage points; and provided, further, that, in
the event any Grandfathered Person shall sell, transfer, or otherwise dispose of
any outstanding shares of Voting Stock after the close of business on the date
of the closing of the initial public offering of the Corporation's Common Stock,
the Grandfathered Percentage shall, subsequent to such sale, transfer or
disposition, mean, with respect to such Grandfathered Person, the lesser of (1)
the Grandfathered Percentage as in effect immediately prior to such sale,
transfer, or disposition or (2) the percentage of the voting power of the then
outstanding
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shares of Voting Stock that such Grandfathered Person beneficially owns
immediately following such sale, transfer or disposition plus an additional five
(5) percentage points.
(m) "Grandfathered Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, is, as of the close
of business on the date of the closing of the initial public offering of shares
of Common Stock of the Corporation, the beneficial owner of 15% or more of the
voting power of the then outstanding Voting Stock at such time. Any
Grandfathered Person who becomes, after the close of business on the date of the
initial public offering of shares of Common Stock of the Corporation, the
beneficial owner of less than 15% of the voting power of the then outstanding
shares of Voting Stock shall cease to be a Grandfathered Person.
(n) The term "voting power" shall mean, with respect to each
outstanding share of capital stock of the Corporation, the number of votes which
a holder of such share shall be entitled, at the time, to vote generally in the
election of directors.
Section E. Powers of the Board of Directors. A majority of the
directors of the Corporation, unless there is an Interested Stockholder, in
which case a majority of the Continuing Directors then in office, shall have the
power to determine for the purposes of this ARTICLE XI, on the basis of
information known to them after reasonable inquiry, (i) whether a person is an
Interested Stockholder, (ii) the number or percentage of shares of Voting Stock
or other equity securities beneficially owned by any person, (iii) whether a
person is an Affiliate or Associate of, or is affiliated or associated with,
another person, (iv) whether the assets of which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $5,000,000 or more, (v)
whether the requirements of Section C of this ARTICLE XI have been met with
respect to any Business Combination, and (vi) any other matters of
interpretation arising under this ARTICLE XI. The good faith determination by
the affirmative vote of 70% of the directors or, if there is an Interested
Stockholder, by the affirmative vote of a majority of the Continuing Directors
then in office, on such matters shall be conclusive and binding for all purposes
of this ARTICLE XI.
Section F. No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this ARTICLE XI shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
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IN WITNESS WHEREOF, White Cap Holdings, Inc. has caused this
Certificate to be executed by Greg Grosch, its Chief Executive Officer and
President, and attested to by Dan Tsujioka, its Secretary, as of this __th day
of October, 1997.
WHITE CAP HOLDINGS, INC.
By: _____________________________
Greg Grosch
Chief Executive Officer & President
Attest:
By: _______________________
Dan Tsujioka
Secretary
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