EXHIBIT 3.2
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF
SERIES B CONVERTIBLE REDEEMABLE PARTICIPATING PREFERRED STOCK
OF
LPA HOLDING CORP.
* * * *
LPA HOLDING CORP., a corporation organized and existing under
the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY that, pursuant to authority conferred upon
the Board of Directors by the Certificate of Incorporation, as amended, of said
corporation, and pursuant to the provisions of Section 151 of Title 8 of the
Delaware Code of 1953, said Board of Directors, pursuant to resolutions adopted
at a meeting on November 12, 2001, adopted a resolution providing for the
issuance of a series of 6,900,000 shares of Series B Convertible Redeemable
Participating Preferred Stock, which resolution is set forth below.
RESOLVED, that a series of convertible preferred stock in LPA
Holding Corp., a Delaware corporation (the "Corporation"), having the rights,
preferences, privileges and restrictions, and the number of shares constituting
such series and the designation of such series set forth below, is hereby
authorized by the Board of Directors of the Corporation pursuant to authority
given by the Corporation's Certificate of Incorporation, as amended.
1. Number and Designation.
This series shall consist of 6,900,000 preferred shares in the
Corporation and shall be designated the Series B Convertible Redeemable
Participating Preferred Stock (the "Convertible Preferred Stock").
2. Dividends.
(a) Dividends on the Convertible Preferred Stock shall accrue
at the Dividend Rate, commencing on the date that such share of Convertible
Preferred Stock is first issued, on the sum of (x) the Original Cost of a share
of Convertible Preferred Stock and (y) all accrued and unpaid dividends thereon.
Dividends shall be payable semi-annually, when and if, declared by the Board.
Such dividends shall accrue at the Dividend Rate regardless of whether the Board
has declared a dividend payment or whether there are any profits, surplus or
other funds of the Corporation legally available for such dividends. Any
dividends which accrue pursuant to this
Section 2(a) and which are not paid shall be classified as "accrued and unpaid
dividends" and shall remain "accrued and unpaid dividends" until paid or
otherwise canceled pursuant to this Certificate.
(b) Subject to the restrictions set forth in Section 5(b)(vi), so
long as any shares of the Convertible Preferred Stock are outstanding, the
Corporation shall not pay or declare or set apart for payment any dividend or
make any other distribution or other payment on or with respect to the Common
Stock or any class or series of stock of the Corporation ranking on a parity
with or junior to the Convertible Preferred Stock with respect to dividends or
redeem, repurchase or otherwise acquire any such stock unless the Corporation
has paid, or at the same time pays, all unpaid dividends on the Convertible
Preferred Stock pursuant to this Section 2 that have accrued since the Original
Issuance Date. Furthermore, if any dividend, distribution or other payment on or
with respect to the Common Stock is declared and paid on any Common Stock, the
holders of Convertible Preferred Stock shall be entitled to share in such
dividends, distributions or other payment pro rata in accordance with the number
of shares of Common Stock into which such Convertible Preferred Stock are then
convertible pursuant to Section 6 hereof.
(c) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Convertible Preferred Stock, such payment shall be distributed
ratably among the holders of the such class of Convertible Preferred Stock based
upon the number of shares of such class of Convertible Preferred Stock then held
by each holder.
3. Liquidity Event.
(a) Upon a Liquidity Event, after payment or provision for payment
in cash or cash equivalents of the debts and other liabilities of the
Corporation (including any payments to the holders of the Redeemable Preferred
Stock pursuant to the terms of the Redeemable Preferred Stock, as applicable),
the holders of Convertible Preferred Stock shall be entitled to receive, out of
the remaining assets of the Corporation available for distribution to its
stockholders, with respect to each share of Convertible Preferred Stock, an
amount equal to the Liquidation Amount of such share before any distribution
shall be made to the holders of the Common Stock or any other class of capital
stock of the Corporation ranking junior to the Convertible Preferred Stock. If
upon any Liquidity Event the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
Convertible Preferred Stock the full Liquidation Amount to which they shall be
entitled, the holders of Convertible Preferred Stock shall share in any
distribution of assets pro rata in accordance with the total Liquidation Amount
that each such holder would have received had there been such sufficient assets.
(b) Upon a Liquidity Event, after payment in full of all Liquidation
Amounts and all payments with respect to any Capital Stock pursuant to the terms
of such Capital Stock that is junior to the Convertible Preferred Stock and also
senior to the Common Stock, the holders of the Common Stock and the Convertible
Preferred Stock (participating on an "as converted basis" (as determined
pursuant to Section 6) shall be entitled to share pro rata in the distribution
of the remaining assets of the Corporation.
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4. Redemption.
(a) At any time on or after May 11, 2009, the Requisite Convertible
Preferred Stockholders shall have the right to cause the Corporation to redeem,
out of funds legally available for such purpose, all of the shares of
Convertible Preferred Stock then outstanding at an amount equal to (the
"Redemption Price") the Liquidation Amount with respect to each share of
Convertible Preferred Stock. The Requisite Convertible Preferred Stockholders
shall exercise the foregoing right by delivering written notice (the "Redemption
Notice") to the Corporation specifying (i) the Redemption Price for such shares
and (ii) the proposed date of the closing of the applicable redemption (the
"Redemption Date") (such date being no sooner than 30 days following delivery of
the Redemption Notice to the Corporation). On the Redemption Date, (i) the
holders of the Convertible Preferred Stock shall surrender the certificates
evidencing the shares to be redeemed pursuant to this Section 4, duly endorsed
or assigned in blank or to the Corporation and (ii) the Corporation shall (A)
accept for payment the number of shares of Convertible Preferred Stock tendered
for redemption and (B) promptly mail to each holder of shares so accepted the
Redemption Price therefor. The Corporation will comply with any securities laws
and regulations, to the extent such laws and regulations are applicable to the
redemption of the Convertible Preferred Stock hereunder.
(b) If the funds of the Corporation legally available for redemption
of shares of Convertible Preferred Stock shall be insufficient to permit the
payment of the Redemption Price required to be paid pursuant to this Section 4,
then the holders of Convertible Preferred Stock shall share in any legally
available funds ratably in any such redemption based on the respective number of
Convertible Preferred Stock that each holder thereof holds and the Corporation
shall redeem the remaining shares to have been redeemed as soon as practicable
after the Corporation has funds legally available therefor.
(c) If any Senior Debt of the Corporation or its Subsidiaries or the
terms of the Redeemable Preferred Stock would prohibit the Corporation from
paying the Redemption Price (including any limitations on dividends or
distributions by Subsidiaries), then, prior to the Redemption Date the
Corporation shall, to the extent required to permit the repurchase of
Convertible Preferred Stock pursuant to this Section 4, be required to (i) cause
the borrowers thereunder to repay in full all obligations under such Senior Debt
and/or the Redeemable Preferred Stock, as applicable, or (ii) cause such
borrowers to obtain the requisite consent from the holders of such Senior Debt
and/or holders of the Redeemable Preferred Stock, as applicable, to permit the
repurchase of the Convertible Preferred Stock as described above.
(d) On and after any redemption date pursuant to this Section 4
(unless default shall be made by the Corporation in the payment of the
applicable redemption price, in which event such rights shall be exercisable
until such default is cured), all rights in respect of the shares of Convertible
Preferred Stock to be redeemed, except the right to receive the applicable
redemption price, shall cease and terminate, and such shares shall no longer be
deemed to be outstanding, whether or not the certificates representing such
shares have been received by the Corporation.
(e) Any communication or notice relating to redemption given
pursuant to this Section 4 shall be sent by first-class certified mail, return
receipt requested, postage prepaid, to
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the holders of record of shares of Convertible Preferred Stock, at their
respective addresses as the same shall appear on the books of the Corporation,
or to the Corporation at the address of its principal, or registered office, as
the case may be.
(f) Any redemption payments by the Corporation pursuant to this
Section 4 shall be paid in cash.
5. Voting Rights.
(a) In addition to the rights provided by law, the holders of the
Convertible Preferred Stock shall be entitled to vote, in the same manner and
with the same effect as such holders of Common Stock, voting together with the
holders of the Common Stock as one class. Each share of Convertible Preferred
Stock shall entitle the holder thereof to such number of votes as shall equal
the number of votes of shares of Common Stock into which such Convertible
Preferred Stock is then convertible pursuant to Section 6.
(b) The Corporation shall not, and shall not permit any Subsidiary
to, without first obtaining the affirmative written consent or approval of the
Requisite Convertible Preferred Stockholders:
(i) in any manner authorize, create, designate, issue or sell
any class or series of Capital Stock of the Corporation (including any
shares of treasury stock) or rights, options, warrants or other
securities convertible into or exercisable or exchangeable for Capital
Stock or any debt security which by its terms is convertible into or
exchangeable for any equity security or has any other equity feature or
any security that is a combination of debt and equity, which, in each
case, as to the payment of dividends, distribution of assets or
redemptions, including, without limitation, distributions to be made
upon a Liquidity Event, is pari passu with or is senior to the
Convertible Preferred Stock as to payment of dividends, distribution of
assets or redemptions or which affects the holders of the Convertible
Preferred Stock in a material adverse manner (it being understood that
the Corporation shall be entitled to incur Indebtedness and issue
warrants to acquire Common Stock in connection with any such incurrence
of Indebtedness);
(ii) in any manner alter or change the terms, designations,
powers, preferences or relative, participating, optional or other
special rights, or the qualifications, limitations or restrictions, of
the Convertible Preferred Stock;
(iii) reclassify the shares of any class or series of Capital
Stock of the Corporation into shares of any class or series of Capital
Stock (A) ranking, either as to payment of dividends, distributions of
assets or redemptions, including, without limitation, distributions to
be made upon a Liquidity Event, senior to or on a parity with such
Convertible Preferred Stock, or (B) which in any manner adversely
affects the rights of the holders of such Convertible Preferred Stock
in their capacity as such;
(iv) amend, alter or repeal any of the provisions of (A) this
Certificate of Designation, (B) the Certificate of Incorporation of the
Corporation (as amended or restated) or (C) the By-laws of the
Corporation, if such amendment, alteration or repeal
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would have an adverse effect on the rights, preferences or privileges of the
holders of such Convertible Preferred Stock;
(v) permit any Subsidiary to issue any Capital Stock to any
Person other than the Corporation or a direct or indirect wholly owned
Subsidiary of the Corporation; or
(vi) other than with respect to the Convertible Preferred
Stock, the Qualified Stock or as would not be prohibited by Section
4.04 of the Notes Indenture, declare or pay any dividend, or make any
payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of the
Corporation, or any warrants or options to purchase any such Capital
Stock, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations
of the Corporation.
6. Optional Conversion.
(a) Upon the terms set forth in this Section 6, each holder of
Convertible Preferred Stock shall have the right, at such holder's option, at
any time and from time to time, to convert all or any of such shares into the
number of fully paid and nonassessable shares of Class A Common Stock equal to
the quotient obtained by dividing (i) the product of the Liquidation Amount and
the number of Convertible Preferred Stock being converted, by (ii) the
Conversion Price, as last adjusted and then in effect, by surrender of the
certificates representing the Convertible Preferred Stock to be converted. The
initial conversion price per share at which shares of Class A Common Stock shall
be issuable upon conversion of Convertible Preferred Stock (the "Conversion
Price") shall be the Original Cost. The Conversion Price shall be subject to
adjustment from time to time in accordance with this Section 6.
(b) Any holder of Convertible Preferred Stock may exercise the
conversion right pursuant to Section 6(a) by delivering to the Corporation the
certificate or certificates for the shares to be converted, duly endorsed or
assigned in blank or to the Corporation (if required by it), accompanied by
written notice stating that the holder elects to convert such shares and stating
the name or names (with address) in which the certificate or certificates for
the shares of Class A Common Stock are to be issued. Conversion shall be deemed
to have been effected on the date when such delivery is made (the "Conversion
Date"). As promptly as practicable thereafter, the Corporation shall issue and
deliver to or upon the written order of such holder, to the place designated by
such holder, a certificate or certificates for the number of full shares of
Class A Common Stock to which such holder is entitled, and a cash amount in
respect of any fractional interest in a share of Class A Common Stock as
provided in Section 6(c). The Person in whose name the certificate or
certificates for Class A Common Stock are to be issued shall be deemed to have
become a stockholder of record on the applicable Conversion Date unless the
transfer books of the Corporation are closed on that date, in which event such
Person shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open, but the Conversion Price
shall be that in effect on the Conversion Date. Upon conversion of only a
portion of the number of shares covered by a certificate representing shares of
the Convertible Preferred Stock surrendered for conversion, the Corporation
shall issue and deliver
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to or upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of such Convertible Preferred Stock representing the
unconverted portion of the certificate so surrendered.
(c) Upon conversion, the Corporation (unless otherwise requested by
the holder of the Convertible Preferred Stock subject to conversion) will not
issue fractional shares of its Class A Common Stock, and shall, to the extent
not prohibited by the terms of the Senior Debt, distribute cash in lieu of such
fractional shares. In lieu of any fractional shares of Class A Common Stock
which would otherwise be issuable upon the conversion of Convertible Preferred
Stock, the Corporation shall pay to the holder of the Convertible Preferred
Stock being so converted a cash adjustment in respect of such fractional
interest in an amount equal to the then fair market value, as determined in good
faith by the Board, of a share of Class A Common Stock multiplied by such
fractional interest, provided that such payment is not prohibited by the terms
of the Senior Debt.
(d) The Conversion Price shall be subject to adjustment from time to
time as set forth below.
(i) If the Corporation shall, at any time on or prior to the
first anniversary of the Original Issuance Date, issue any Capital
Stock (other than Excluded Stock) without consideration or for a
consideration per share less than the Conversion Price for the
Convertible Preferred Stock in effect immediately prior to the
issuance of such Capital Stock, then the Conversion Price in effect
immediately prior to each such issuance shall be lowered to an amount
equal to the lowest amount of per share consideration that was
received for such Capital Stock that were issued.
(ii) If the Corporation shall, at any time after the first
anniversary Original Issuance Date, issue any Capital Stock (other
than Excluded Stock) without consideration or for a consideration per
share less than the Conversion Price for the Convertible Preferred
Stock in effect immediately prior to the issuance of such Capital
Stock, then the Conversion Price in effect immediately prior to each
such issuance shall forthwith be lowered to a price equal to the
quotient obtained by dividing:
(A) an amount equal to the sum of (x) the total
number of shares of Common Stock outstanding on an "as
converted" basis (including any shares of Common Stock deemed
to have been issued pursuant to subdivision (C) of clause (iii)
below) immediately prior to such issuance, multiplied by the
Conversion Price in effect immediately prior to such issuance,
and (y) the consideration received by the Corporation upon such
issuance; by
(B) the total number of shares of Common Stock
outstanding on an "as converted" basis (including any shares of
Common Stock deemed to have been issued pursuant to subdivision
(C) of clause (iii) below) immediately after the issuance of
such Common Stock.
(iii) For the purposes of any adjustment of the Conversion
Price pursuant to clause (i) or (ii) above, the provisions set forth
below shall be applicable.
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(A) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting therefrom any discounts,
commissions or placement fees payable by the Corporation to any
underwriter or placement agent in connection with the issuance
and sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board,
irrespective of any accounting treatment.
(C) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, securities by
their terms convertible into or exchangeable for Common Stock,
or options to purchase or rights to subscribe for such
convertible or exchangeable securities:
(1) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such
options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time
such options or rights were issued and for a
consideration equal to the consideration (determined in
the manner provided in subdivisions (A) and (B) above),
if any, received by the Corporation upon the issuance
of such options or rights plus the minimum purchase
price provided in such options or rights for the Common
Stock covered thereby;
(1) the aggregate maximum number of
shares of Common Stock deliverable upon conversion of,
or in exchange for, any such convertible or
exchangeable securities or upon the exercise of options
to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at
the time such securities, options, or rights were
issued and for a consideration equal to the
consideration received by the Corporation for any such
securities and related options or rights (excluding any
cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any,
to be received by the Corporation upon the conversion
or exchange of such securities or the exercise of any
related options or rights (the consideration in each
case to be determined in the manner provided in
subdivisions (A) and (B) above);
(2) on any change in the number of
shares or exercise price of Common Stock deliverable to
the Corporation upon exercise of any such options or
rights or upon conversions of or in exchange for such
convertible or exchangeable securities, other than a
change resulting from the anti-dilution provisions
thereof, the Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been
obtained had the adjustment made upon the issuance of
such options, rights or securities not converted prior
to such change or options or rights related to such
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securities not converted prior to such change been made
upon the basis of such change; and
(3) on the expiration of any such
options or rights, the termination of any such rights
to convert or exchange or the expiration of any options
or rights related to such convertible or exchangeable
securities, the Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been
obtained had the adjustment made upon the issuance of
such options, rights, securities or options or rights
related to such securities been made upon the basis of
the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options
or rights, upon the conversion or exchange of such
securities, or upon the exercise of the options or
rights related to such securities and subsequent
conversion or exchange thereof.
(iv) "Excluded Stock" means (1) Qualified Stock, (2) stock,
warrants or other securities issued to a bank or other financial
institution in connection with a financing, (3) shares of Class A
Common Stock issuable upon conversion of the Convertible Preferred
Stock and (4) shares of Common Stock issued in connection with any
acquisition by the Corporation approved by the Board (including the
director elected by the holders of the Class B Common Stock of the
Corporation).
(v) If at any time after the Original Issuance Date the
number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or
split-up of shares of Common Stock, then, following the record date for
the determination of holders of Common Stock entitled to receive such
stock dividend, subdivision or split-up, the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of the Convertible Preferred Stock
shall be increased in proportion to such increase in outstanding
shares. The provisions of this clause shall similarly apply to
successive subdivisions or split-ups.
(vi) If at any time after the Original Issuance Date the
number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock or a
reverse-split of the Common Stock, then, following the record date for
such combination, the Conversion Price shall be appropriately increased
so that the number of shares of Common Stock issuable on conversion of
each share of the Convertible Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares. The provisions of
this clause shall similarly apply to successive combinations or
reverse-splits.
(vii) Except in connection with a Liquidity Event, in the
event of any capital reorganization of the Corporation, any
reclassification of the stock of the Corporation (other than a change
in par value or from no par value to par value or from par value to no
par value), or any consolidation or merger of the Corporation, each
share of the Convertible Preferred Stock shall after such
reorganization, reclassification, consolidation, or merger be
convertible into the kind and number of shares of stock or
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other securities or property of the Corporation or of the corporation
resulting from such consolidation or surviving such merger to which the
holder of the number of shares of Common Stock deliverable (immediately
prior to the time of such reorganization, reclassification,
consolidation or merger) upon conversion of such share of the
Convertible Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation or merger. The
provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations or mergers.
(viii) All calculations under this paragraph shall be made
to the nearest one hundredth (1/100) of a cent or the nearest one tenth
(1/10) of a share, as the case may be.
(ix) In any case in which the provisions of this Section
6(d) shall require that an adjustment shall become effective
immediately after a record date of an event, the Corporation may defer
until the occurrence of such event (A) issuing to the holder of any
share of the Convertible Preferred Stock converted after such record
date and before the occurrence of such event the shares of capital
stock issuable upon such conversion by reason of the adjustment
required by such event in addition to the shares of capital stock
issuable upon such conversion before giving effect to such adjustments,
and (B) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to Section 6(c); provided,
however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder's right to receive such
additional shares and such cash.
(e) Whenever the Conversion Price shall be adjusted as provided in
Section 6(d), the Corporation shall make available for inspection during regular
business hours, at its principal executive offices or at such other place as may
be designated by the Corporation, a statement, signed by its chief executive
officer, showing in detail the facts requiring such adjustment and the
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent by nationally recognized
overnight carrier or by first class certified mail, return receipt requested and
postage prepaid, to each holder of the Convertible Preferred Stock at such
holder's address appearing on the Corporation's records. Where appropriate, such
copy may be given in advance and may be included as part of any notice required
to be mailed under the provisions of Section 6(f).
(f) If the Corporation shall propose to take any action of the types
described in clauses (v), (vi) or (vii) of Section 6(d) above, the Corporation
shall give notice to each holder of the Convertible Preferred Stock, in the
manner set forth in Section 6(e), which notice shall specify the record date, if
any, with respect to any such action and the date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Convertible Preferred Stock. In the case of
any action which would require the fixing of a record date, such notice shall be
given at least 20 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 30 days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.
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(g) The Corporation shall reserve, and at all times from and after
the Original Issuance Date keep reserved, free from preemptive rights, out of
its authorized but unissued shares of Class A Common Stock, solely for the
purpose of effecting the conversion of the Convertible Preferred Stock,
sufficient shares of Class A Common Stock to provide for the conversion of all
outstanding Convertible Preferred Stock.
(h) Any adjustment to the Conversion Price hereunder shall, for all
tax purposes, be treated as an adjustment to the Original Cost and not as a
deemed exchange of the Convertible Preferred Stock.
7. Mandatory Conversion.
(a) Upon the first to occur of (i) the election to convert by the
Requisite Convertible Preferred Stockholders or (ii) the consummation of a
Public Offering of Capital Stock of the Corporation resulting in aggregate
proceeds (net of underwriting discounts and commissions) to the Corporation of
not less than one hundred million dollars ($100,000,000) and a per share price
of not less than five (5) times the Original Cost, each share of Convertible
Preferred Stock then outstanding shall, by virtue of and simultaneously with
such occurrence, be deemed automatically converted into the number of fully paid
and nonassessable shares of Class A Common Stock which would be issuable in
respect thereof pursuant to Section 6.
(b) As promptly as practicable after the satisfaction of either of
the conditions set forth in Section 7(a) to occur and the delivery to the
Corporation of the certificate or certificates for the Convertible Preferred
Stock which have been converted, duly endorsed or assigned in blank to the
Corporation (if required by it), the Corporation shall issue and deliver to or
upon the written order of each holder of Convertible Preferred Stock, to the
place designated by such holder, a certificate or certificates for the number of
full shares of Class A Common Stock to which such holder is entitled, and a cash
amount in respect of any fractional interest in a share of Class A Common Stock
as provided in Section 6(c) above. The Person in whose name the certificate or
certificates for Class A Common Stock are to be issued shall be deemed to have
become a stockholder of record on the date of such occurrence and on such date
the Convertible Preferred Stock shall cease to be outstanding, whether or not
the certificates representing such shares have been received by the Corporation.
8. Reissuance of Convertible Preferred Stock.
Shares of Convertible Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of Delaware) have the
status of authorized and unissued shares of Convertible Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Convertible Preferred Stock; provided, that any issuance of such
shares of Convertible Preferred Stock must be in compliance with the terms
hereof.
9. Definitions.
As used herein, the following terms shall have the following
meanings:
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"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person. For the purpose of
the above definition, the term "control" (including, with correlative meaning,
the terms "controlling", "controlled by", and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Board" shall mean the Board of Directors of the Corporation.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of, or interests in (however designated), equity of such Person,
including any Convertible Preferred Stock, but excluding any debt securities
convertible into such equity.
"Change of Control" means the occurrence of any of the following
events (each a "Change of Control"):
(a) prior to the earlier to occur of (i) the first public offering
of Common Stock of the Corporation or (ii) the first public offering of Common
Stock of La Petite Academy, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of La Petite Academy, whether as a result of issuance of securities
of the Corporation, any merger, consolidation, liquidation or dissolution of the
Corporation or La Petite Academy, any direct or indirect transfer of securities
by any Permitted Holder or otherwise (for the purposes of this clause (a) and
clause (b) below, the Permitted Holders shall be deemed to beneficially own any
Voting Stock of an entity (the "specified entity") held by any other entity (the
"parent entity") so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent entity);
(b) (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (a) above, except that for
purposes of this clause (b) such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the Voting
Stock of La Petite Academy and (ii) the Permitted Holders "beneficially own" (as
defined in clause (a) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of La Petite Academy
than such other person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the Board
of Directors (for the purposes of this clause (b), such other person shall be
deemed to beneficially own any Voting Stock of a specified entity held by a
parent entity, if such other person is the beneficial owner (as defined in this
clause (b)), directly or indirectly, of more than 35% of the voting power of the
Voting Stock of such parent entity and the Permitted Holders "beneficially own"
(as defined in clause (a) above), directly or indirectly, in the aggregate a
lesser percentage of the voting power of the Voting Stock of such parent entity
and do not have the right or ability by voting power,
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contract or otherwise to elect or designate for election a majority of the board
of directors of such parent entity);
(c) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Corporation or La Petite Academy, as the case may be, (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Corporation or La Petite Academy, as
applicable, was approved (i) in accordance with the Stockholders Agreement, (ii)
by the Permitted Holders or (iii) by a vote of 66 2/3% of the directors of the
Corporation or La Petite Academy, as applicable, then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Corporation or La Petite Academy, as
applicable, then in office;
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company or La Petite Academy; or
(e) the merger or consolidation of the Corporation or La Petite
Academy with or into another Person or the merger of another Person with or into
the Corporation or La Petite Academy, and, in the case of any such merger or
consolidation, the securities of the Corporation or La Petite Academy, as the
case may be, that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of the
Corporation or La Petite Academy, as applicable, are changed into or exchanged
for cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving Person or transferee that represent,
immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving Person or transferee.
"Class A Common Stock" means the Class A Common Stock of the
Corporation, par value $.01.
"Common Stock" means (i) the Common Stock, par value $0.01, of
the Corporation, and (ii) any other class of capital stock of the Corporation
authorized after the Original Issuance Date that is not entitled to at least a
fixed sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Corporation.
"Credit Agreement" shall mean the Credit Agreement dated as of
May 11, 1998, among the Corporation, La Petite Academy, The Chase Manhattan Bank
and NationsBank, N.A, as amended, supplemented or otherwise modified from time
to time.
"Dividend Rate" means 5.0 % per annum.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by (or which
customarily would be evidenced by) bonds,
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debentures, notes or similar instruments, (c) all reimbursement obligations of
such Person with respect to letters of credit and similar instruments, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all
obligations of such Person incurred, issued or assumed as the deferred purchase
price of property or services other than accounts payable incurred and paid on
terms customary in the business of such Person (it being understood that the
"deferred purchase price" in connection with any purchase of property or assets
shall include only that portion of the purchase price which shall be deferred
beyond the date on which the purchase is actually consummated), (f) all
obligations secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all obligations of such Person under forward sales,
futures, options and other similar hedging arrangements (including interest rate
hedging or protection agreements), (h) all obligations of such Person to
purchase or otherwise pay for merchandise, materials, supplies, services or
other property under an arrangement which provides that payment for such
merchandise, materials, supplies, services or other property shall be made
regardless of whether delivery of such merchandise, materials, supplies,
services or other property is ever made or tendered, (i) all guaranties by such
Person of obligations of others and (j) all capitalized lease obligations of
such Person.
"JPMP" means J.P. Morgan Partners, LLC and its Affiliates.
"King Investor" means an entity a majority of the economic
interests of which are owned by JPMP and a majority of the voting interests of
which are owned by (i) Robert E. King, his descendants or, in the event of the
death or incompetence of any of the foregoing individuals, such Person's estate,
executor, administrator, committee or other personal representative or (ii) any
other Person approved by JPMP.
"La Petite Academy" means La Petite Academy, Inc., a Delaware
corporation.
"Lien" means any security interest, lien, pledge, claim, charge,
escrow, encumbrance, option, right of first offer, right of first refusal,
preemptive right, mortgage, indenture, security agreement or other similar
agreement, arrangement, contract, commitment, understanding or obligation,
whether written or oral and whether or not relating in any way to credit or the
borrowing of money.
"Liquidation" means any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, other than any
dissolution, liquidation or winding up for the sole purpose of reincorporating
the Corporation in another jurisdiction.
"Liquidation Amount" means, as to each share of Convertible
Preferred Stock, the Original Cost plus all accrued and unpaid dividends payable
with respect to such share of Convertible Preferred Stock.
"Liquidity Event" means (i) any Liquidation; (ii) any sale of
all or substantially all of the Corporation's assets determined on a
consolidated basis; or (iii) the occurrence of a Change of Control.
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"LPA Investment" means LPA Investment LLC, a Delaware limited
liability company.
"Management Group" means the group consisting of the directors
and executive officers of La Petite Academy.
"Merger Agreement" means the Agreement and Plan of Merger dated
as of March 17, 1998, between the Corporation and LPA Investment.
"Notes Indenture" means the Indenture dated as of May 11, 1998,
among the Corporation and the other signatories thereto.
"Original Cost" is $2.174 per share.
"Original Issuance Date" means the date of original issuance of
the first share of such Convertible Preferred Stock.
"Permitted Holders" means JPMP, the Management Group, the King
Investor and any Person acting in the capacity of an underwriter in connection
with a public or private offering of the Corporation's or La Petite Academy's
Capital Stock.
"Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, an investment fund, a limited
liability corporation, a corporation, an association, a joint stock corporation,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of 1933, as amended, of shares of
capital stock.
"Purchase Agreement" means the Securities Purchase Agreement
dated as of November 12, 2001, among the Corporation, LPA Investment and the
other stockholders of the Corporation signatory thereto.
"Qualified Stock" means any Capital Stock issued pursuant to (i)
any Management Stock Option Plan (as such term is defined in the Stockholders
Agreement), (ii) the Rollover Options (as such term is defined in the Merger
Agreement) or (iii) the Warrants.
"Redeemable Preferred Stock" means the Series A Redeemable
Preferred Stock of the Corporation, $0.01 par value per share.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 11, 1998, among the Corporation, LPA Investment,
Vestar/LPT Limited Partnership, a Delaware limited partnership, and the other
stockholders of the Corporation signatory thereto.
"Related Documents" shall mean (i) this Certificate of
Designations, Preferences and Rights, (ii) the Purchase Agreement, (iii) the
Stockholders Agreement and (iv) the Registration Rights Agreement.
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"Requisite Convertible Preferred Stockholders" means, as of any
date of determination, the holders of at least 51% of the outstanding shares of
Convertible Preferred Stock as of such date.
"Senior Debt" shall mean any (i) Indebtedness pursuant to the
Credit Agreement or any related documents governing, evidencing or securing the
same, (ii) Indebtedness pursuant to the Senior Notes and any related documents
governing, evidencing or securing the same, (iii) any other Indebtedness of the
Corporation or its Subsidiaries which is not expressly subordinated to the
Convertible Preferred Stock and (iv) all refinancings or modifications of the
Indebtedness described in clauses (i) - (iii) above; provided, however, that
neither Corporation nor its Subsidiaries shall incur any Indebtedness that
contains restrictions on the payment of dividends or the repurchase of
Convertible Preferred Stock pursuant to Section 2 or Section 4 that are more
materially restrictive than those contained in the Indebtedness existing on the
date hereof.
"Senior Notes" means the 10% Senior Notes due 2008, issued
jointly by the Corporation and La Petite Academy.
"Stockholders Agreement" means the Stockholders Agreement dated
as of May 11, 1998 among the Corporation and its stockholders.
"Subsidiary" means any corporation of which the shares of
outstanding Capital Stock possessing the voting power (under ordinary
circumstances) in electing the board of directors are, at the time as of which
any determination is being made, owned by the Corporation either directly or
indirectly through Subsidiaries.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Warrants" means, collectively, (a) the Warrant to purchase
42,180 shares of Class A Common Stock of the Corporation issued to LPA
Investment on May 11, 1998, (b) the Warrant to purchase 22,051 shares of Class A
Common Stock of the Corporation issued to LPA Investment on December 15, 1999
and (c) the Warrants to purchase 562,500 shares of Class A Common Stock to be
issued to the purchasers of Convertible Preferred Stock.
*******
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IN WITNESS WHEREOF, LPA Holding Corp. has caused this
Certificate of Designations, Preferences and Rights to be duly executed by the
Chief Financial Officer of the Corporation as of November 14, 2001.
By: /s/ Jeffrey Fletcher
---------------------------------
Name: Jeffrey Fletcher
Title: Secretary and Chief Financial Officer
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