Exhibit 3.2
[COVER CERTIFICATE FOR PRE-EFFECTIVE
CHARTER AMENDMENT]
CERTIFICATE OF KIRKLAND'S, INC.
KIRKLAND'S, INC., a Tennessee corporation (the "Company"),
does hereby certify, pursuant to Section 48-20-107(d) of the Tennessee Business
Corporation Act, that:
FIRST: The Board of Directors of the Company, by Unanimous
Written Consent on April __, 2002, adopted a resolution proposing and declaring
advisable that the Charter of the Company be amended and restated to read in
full as set forth in the Amended and Restated Charter attached hereto and filed
herewith as Appendix A (the "Amended and Restated Charter").
SECOND: The Shareholders of the Company, by Unanimous Written
Consent on April __, 2002, adopted the Amended and Restated Charter in
accordance with the provisions of Section 48-20-103 of the Tennessee Business
Corporation Act.
THIRD: Upon the filing of this Certificate and the Amended
and Restated Charter with the Tennessee Department of State, and without any
other action on the part of the Company or any other person, (a) each share of
Common Stock then issued and outstanding shall be converted into _____ shares
of Common Stock, (b) any certificate representing a share of Common Stock shall
thereafter represent ______ shares of Common Stock, and (c) the Amended and
Restated Charter shall become effective, superseding the Company's existing
charter and all prior amendments thereto and restatements thereof.
IN WITNESS WHEREOF, the Company has caused this Certificate
to be signed by _____________, its _____________________, and attested by
_________________, its Secretary, this _____ day of ___________, 2002.
ATTESTED: KIRKLAND'S, INC.
By: By:
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[NAME] [NAME]
Secretary [TITLE]
[To become effective immediately prior
to effectiveness of the Offering]
APPENDIX A
AMENDED AND RESTATED CHARTER
OF
KIRKLAND'S, INC.
This Amended and Restated Charter of Kirkland's, Inc. (the
"Corporation") shall be effective upon filing with the Tennessee Secretary of
State. The undersigned corporation hereby adopts the following amended and
restated charter pursuant to ss. 48-20-107 of the Tennessee Business
Corporation Act:
1. Name. The name of the Corporation is Kirkland's, Inc.
2. Registered Office and Agent. The Corporation's registered
office is located at 805 North Parkway, Jackson, Madison County, Tennessee
38305. The Corporation's registered agent at that office is Robert Alderson.
3. Principal Office. The principal office of the Corporation is
located at 805 North Parkway, Jackson, Madison County, Tennessee 38305.
4. Authorized Shares. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is One Hundred Ten
Million (110,000,000), of which One Hundred Million (100,000,000) shares shall
constitute a separate class of shares known as Common Stock, which shall be
without par value (the "Common Stock"), and the remaining Ten Million
(10,000,000) shares shall constitute a single class of shares known as
Preferred Stock (the "Preferred Stock"). Of the Preferred Stock (i) Three
Million One Hundred Thousand (3,100,000) shares shall be designated as a series
referred to as Class A Preferred Stock, which shall be without par value (the
"Class A Preferred Stock"), (ii) One Million One Hundred Thousand (1,100,000)
shares shall be designated as a series referred to as Class B Preferred Stock,
which shall be without par value (the "Class B Preferred Stock"), (iii) Six
Hundred Thousand (600,000) shares shall be designated as a series referred to
as Class C Preferred Stock, which shall be without par value (the "Class C
Preferred Stock"), and (iv) Seventy-Five Thousand (75,000) shares shall be
designated as a series referred to as Class D Preferred Stock, which shall be
without par value (the "Class D Preferred Stock").
5. Certain Definitions. Unless the context otherwise requires,
the terms defined in this Section 5 shall have, for all purposes of this
Amended and Restated Charter the meanings herein specified (with terms defined
in the singular having comparable meanings when used in the plural).
"Anticipated Effective Date" has the meaning set forth in
Section 8.6.
"Board of Directors" means the Board of Directors of the
Corporation or any authorized committee of the Board of Directors, as the same
may be constituted from time to time.
"Class A Excess Dividend Amount" has the meaning set forth in
Section 8.3.2.
"Class A Liquidation Preference" has the meaning set forth in
Section 8.3.1.
"Class A Preferred Stock" means the Class A Preferred Stock,
no par value per share, designated as "Class A Preferred Stock" in the Charter.
"Class A Preferred Stock Stated Value" means $13.58859 per
share.
"Class A Redemption Price" has the meaning set forth in
Section 8.5.1.
"Class B Excess Dividend Amount" has the meaning set forth in
Section 9.3.2.
"Class B Liquidation Preference" has the meaning set forth in
Section 9.3.1.
"Class B Preferred Stock" means the Class B Preferred Stock,
no par value per share, designated as "Class B Preferred Stock" in the Charter.
"Class B Preferred Stock Stated Value" means $13.58859 per
share.
"Class B Redemption Price" has the meaning set forth in
Section 9.5.1.
"Class C Liquidation Preference" has the meaning set forth in
Section 10.3.1.
"Class C Preferred Stock" means the Class C Preferred Stock,
no par value per share, designated as "Class C Preferred Stock" in the Charter.
"Class C Preferred Stock Stated Value" means $30.63556 per
share.
"Class C Redemption Event" has the meaning set forth in
Section 10.5.2.
"Class C Redemption Price" has the meaning set forth in
Section 10.5.3.
"Class D Liquidation Preference" has the meaning set forth in
Section 11.3.1 hereof.
"Class D Preferred Stock" means the Corporation's Class D
Preferred Stock, no par value per share, as the same may be amended or modified
from time to time.
"Class D Preferred Stock Stated Value" means $450.00 per
share.
"Class D Redemption Price" has the meaning set forth in
Section 11.5.1 hereof.
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"Common Stock" means the Common Stock, no par value per
share, of the Corporation.
"Conversion Date" has the meaning set forth in Section 8.6.
hereof.
"Conversion Price" means the offering price per share at
which the Common Stock of the Corporation is first offered to the public in the
Qualified Public Offering.
"Corporation" means Kirkland's, Inc.
"Event of Conversion" has the meaning set forth in Section
8.6.
"Issue Date" means the first date on which any shares of
Class D Preferred Stock are issued by the Corporation.
"Liquidation" means any sale, merger, consolidation,
dissolution, liquidation or winding up of the Corporation, voluntary or
involuntary.
"Liquidity Event" means
(A) a sale of all or a majority in value of the
assets of the Corporation and its consolidated subsidiaries, taken as a whole.
(B) the acquisition of more than fifty percent
(50%) of the outstanding shares of Common Stock of the Corporation, by a person
or group of persons acting in concert, who are not shareholders of the
Corporation as of August 8, 2000, other than transfers to an Affiliate or to a
Permitted Transferee (as such terms are defined in the shareholders agreement
in effect as of August 8, 2000, between the Corporation and the shareholders
thereof) if such transfers are permitted without restriction pursuant to the
terms of such shareholders agreement;
(C) a Qualified Public Offering; or
(D) a refinancing after August 8, 2000 of the
indebtedness of the Corporation for borrowed money existing as of August 8,
2000, in connection with which the Corporation repurchase or redeem any capital
stock for value.
"Notes" has the meaning set forth in Section 8.2.1 hereof.
"Person" means any individual, corporation, partnership,
firm, joint venture, association, limited liability company or partnership,
joint-stock company, trust, unincorporated organization or any government, or
governmental or regulatory body thereof, or political subdivision thereof,
whether federal, state, local or foreign, or any agency or instrumentality
thereof, or any court or arbitrator (public or private).
"Past Due Interest" has the meaning set forth in Section
8.2.1 hereof.
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"Preferred Stock Designation" has the meaning set forth in
Section 7 hereof.
"Qualified Public Offering" means a sale of shares of the
Common Stock of the Corporation in a registered underwritten public offering
resulting in gross proceeds to the Corporation of at least Thirty Million
Dollars ($30,000,000).
"Redemption Allowance Date" has the meaning set forth in
Section 8.5.1 hereof.
6. Common Stock. The express terms and conditions of the shares
classified and designated as Common Stock are as follows:
6.1. Voting Rights of Common Stock. Each share of Common
Stock shall entitle the holder thereof to one vote, in person or by proxy, upon
each question or matter submitted generally to the holders of the Common Stock
of the Corporation and shall have all voting rights accorded to holders of
Common Stock pursuant to the Tennessee Business Corporation Act.
6.2. Liquidation. On Liquidation, and after payment to
the holders of shares of Preferred Stock as provided below, the remaining
assets and funds of the Corporation, if any, shall be distributed and paid over
to the holders of Common Stock, pro rata according to their respective shares.
7. Preferred Stock. The Board of Directors of the Corporation is
authorized to amend this Charter, by adoption of amendments to the Charter
effective without shareholder approval (hereinafter referred to as a "Preferred
Stock Designation"), to provide for the issuance of serial preferred stock in
series and to fix the preferences, limitations and relative rights of each such
series, including, but not limited to, determination of any of the following:
(a) the distinctive designation for each series and the
number of shares constituting such series;
(b) the voting rights, full, conditional or limited, of
shares of such series;
(c) whether the shares of such series shall be
redeemable and, if so, the price or prices at which,
and the terms and conditions upon which, such shares
may be redeemed;
(d) the dividend rate or the amount of dividends to be
paid on the shares of such series, whether dividends
shall be cumulative and, if so, from which date(s),
the payment date(s) for dividends, and the
participating or other special rights, if any, with
respect to dividends;
(e) the amount(s) payable upon the shares of such series
in the event of voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
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(f) whether the shares of such series shall be entitled
to the benefit of a sinking or retirement fund to be
applied to the purchase or redemption of such
shares, and if so entitled, the amount of such fund
and the manner of its application, including the
price(s) at which such shares may be redeemed or
purchased through the application of such fund;
(g) whether the shares of such series shall be
convertible into, or exchangeable for, shares of any
other class or classes or of any other series of the
same or any other class or classes of stock of the
Corporation and, if so convertible or exchangeable,
the conversion price(s) or the rate(s) of exchange,
and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other
terms and conditions of such conversion or exchange;
(h) the price or other consideration for which the
shares of such series shall be issued;
(i) whether the shares of such series that are redeemed
or converted shall have the status of authorized but
unissued shares of serial preferred stock and
whether such shares may be reissued as shares of the
same or any other series of serial preferred stock;
and
(j) any other designations, preferences, limitations or
rights that are now or hereafter permitted by
applicable law and are not inconsistent with the
provisions of this Charter.
Except as may be provided in this Charter or in a Preferred Stock Designation,
the Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes, and holders of Preferred Stock shall not
be entitled to receive notice of any meeting of shareholders at which they are
not entitled to vote.
8. Class A Preferred Stock. The express terms and conditions of
the shares classified and designated as Class A Preferred Stock, no par value,
of the Corporation (the "Class A Preferred Stock") are as follows:
8.1. Designation and Number of Shares of Class A
Preferred Stock. The designation of the series of preferred stock in this
Section 8 is Class A Preferred Stock and the number of shares of such series is
3,100,000 shares having a stated value per share equal to $13.58859 (the "Class
A Preferred Stock Stated Value"). The Class A Preferred Stock shall rank pari
passu with the Class B Preferred Stock (except as provided in Section 8.3 and
Section 9.3) and senior with respect to payment of dividends, distributions,
redemptions and distributions upon Liquidation to all other shares of capital
stock of the Corporation except the Class C Preferred Stock and the Class D
Preferred Stock.
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8.2. Dividends with Respect to Class A Preferred Stock.
8.2.1. In each year, the holder of each share of
Class A Preferred Stock shall be entitled to receive, subject to the rights of
the holders of Class D Preferred Stock, preferential, cumulative dividends in
cash, which dividends shall be cumulative and shall accrue from the date upon
which the Class A Preferred Stock was issued, in an amount equal to eight
percent (8%) of the Class A Preferred Stock Stated Value per share per year,
provided, that from and after June 12, 1999, dividends shall accrue in an
amount equal to ten (10%) of the Class A Preferred Stock Stated Value per share
per year, provided further that dividends shall accrue in an amount equal to
four percent (4%) per annum of the Class A Preferred Stock Stated Value per
share per year from the period from June 30, 2001 until such time as the
Company has paid on the promissory notes (the "Notes") issued in connection
with that Senior Subordinated Note and Warrant Purchase Agreement dated as of
June 12, 1996, as amended, all interest that had accrued and was not paid as of
June 19, 2001, in the amount of Three Million Seventy-Two Thousand Five Hundred
Nine Dollars ($3,072,509), plus all additional interest accrued under the Notes
after June 19, 2001 that is not paid when due (collectively, "Past Due
Interest"). Dividends shall accrue daily whether or not declared and whether or
not funds are legally available therefor. If such dividends are not paid within
ninety (90) days after the end of the Corporation's fiscal quarter, such
dividends shall accrue additional dividends from the last day of such fiscal
quarter at the same rate per annum. Dividends shall be paid only to the extent
that (i) there shall be sufficient funds of the Corporation legally available
for the payment of such dividends, (ii) the payment of such dividend would not
violate any covenants of the Corporation to any lender to the Corporation or
its subsidiaries and (iii) the payment of such dividend would not violate the
terms of any management or shareholder agreement to which the Corporation is
party.
8.2.2. If, in any dividend period or periods, full
dividends (whether past or current) upon the outstanding Class A Preferred
Stock at the dividend rate set forth herein shall not have been paid, then,
unless and until all dividends accrued and unpaid on the Class A Preferred
Stock through the payment date for such dividends are declared and paid on each
share of Class A Preferred Stock, no dividends shall be declared or paid or set
apart for payment upon any Common Stock or class or series of the Corporation's
capital stock authorized, created or designated after August 8, 2000 which does
not expressly provide that it ranks senior to or on a parity with the Class A
Preferred Stock as to the payment of dividends, distributions, redemptions and
distributions upon Liquidation, nor shall the Corporation purchase, redeem or
otherwise acquire for consideration any such stock. If, at any time, the
Corporation shall pay less than the total amount of dividends then payable on
the then outstanding Class A Preferred Stock, the aggregate payment to all
holders of Class A Preferred Stock shall be distributed among all such holders
so that an amount ratably in proportion to the respective dividends due thereon
shall be paid with respect to each outstanding share of Class A Preferred
Stock.
8.2.3. Holders of the Class A Preferred Stock
shall not, solely as a result of such holders' ownership of such Class A
Preferred Stock, be entitled to participate in any dividends or other
distributions (cash, stock or otherwise) declared or paid on or with respect to
any other class of stock or equity security of the Corporation or any series of
any such class.
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8.2.4. No dividend shall be paid upon shares of
Class A Preferred Stock unless like dividends are simultaneously paid on shares
of Class B Preferred Stock.
8.3. Liquidation Preference with Respect to Class A
Preferred Stock.
8.3.1. Following any Liquidation, no distribution
of any of the assets of the Corporation shall be made to the holders of (i)
Common Stock, (ii) any class or series of the Corporation's capital stock
authorized, created or designated after August 8, 2000 which does not expressly
provide that it ranks senior to or on a parity with the Class A Preferred Stock
as to the payment of dividends, distributions, redemptions and distributions
upon Liquidation, or (iii) Class B Preferred Stock by reason of their ownership
thereof unless and until the holders of Class A Preferred Stock shall have
received out of the assets of the Corporation legally available for
distributions to its shareholders, an amount per share equal to the sum of the
Class A Preferred Stock Stated Value plus all accrued and unpaid dividends, if
any, to the date of payment, less the Class A Excess Dividend Amount
(hereinafter defined) (the "Class A Liquidation Preference") for each share of
Class A Preferred Stock held. If upon any Liquidation the assets of the
Corporation available for distribution to its shareholders shall be
insufficient to pay the holders of shares of Class A Preferred Stock, the full
amount of the Class A Liquidation Preference, the holders of shares of Class A
Preferred Stock shall share ratably in any distribution of assets available for
distribution to the Class A Preferred Stock holders after any distribution of
the Class D Liquidation Preference to the holders of Class D Preferred Stock
pursuant to Section 11.3 and distribution of the Class C Liquidation Preference
to the holders of the Class C Preferred Stock pursuant to Section 10.3.
8.3.2. In the event of any Liquidation, after
payment of the Class D Liquidation Preference, the Class C Liquidation
Preference, Class A Liquidation Preference and the Class B Liquidation
Preference (hereinafter defined), the holders of the Class A Preferred Stock
shall be entitled to receive pari passu with the amounts payable to holders of
Class B Preferred Stock pursuant to Section 9.3.2, an amount equal to all
accrued and unpaid dividends, if any, to the date of payment owing on the Class
A Preferred Stock other than accrued and unpaid dividends that would be owing
thereon if all dividends accrued on the Class A Preferred Stock at the rate of
eight percent (8%) per annum (the "Class A Excess Dividend Amount").
8.3.3. In the event of any Liquidation, after
payment shall have been made to the holders of shares of Class A Preferred
Stock of the amounts described in Section 8.3.1 and Section 8.3.2, the holders
of shares of Class A Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation.
8.3.4. The sale or other disposition (other than
by a contribution to or merger with another corporation of which more than
eighty percent (80%) of the stock (by vote and value) is owned (directly or
indirectly) by the Corporation (or its shareholders)) of all or substantially
all the assets of the Corporation shall be deemed to be a Liquidation.
8.4. Voting Rights with Respect to Class A Preferred
Stock. The Class A Preferred Stock shall have the right to vote on all matters
as to which holders of the Common Stock shall be entitled to vote (at the rate
of one vote per share), in the same manner and with the
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same effect as such holders of the Common Stock, voting together with the
holders of Common Stock, Class B Preferred Stock and Class D Preferred Stock as
one voting group. Without first obtaining the approval (by vote or written
consent) of at least seventy-five percent (75%) of the outstanding shares of
the Class A Preferred Stock as a separate class, the Corporation shall not,
after August 8, 2000,
8.4.1. in any manner authorize, create or issue
(x) any class or series of capital stock which (A) ranks, either as to payment
of dividends, distribution of assets or redemption, prior to or on parity with
the Class A Preferred Stock or (B) in any manner adversely affects the holders
of the Class A Preferred Stock, or (y) any additional shares of capital stock
or any class or series of any bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having optional rights to purchase,
any shares of capital stock having any priority over or parity with or
otherwise adversely affecting the holders of the Class A Preferred Stock;
8.4.2. in any manner alter or change the
designations or the powers, preferences or rights, or the qualifications,
limitations or restrictions of the Class A Preferred Stock, including without
limitation, by increasing or decreasing the number of shares of the Class A
Preferred Stock authorized for issuance hereunder, or by increasing or
decreasing the par value or Class A Preferred Stock Stated Value of the shares
of the Class A Preferred Stock; or
8.4.3. reclassify the shares of any (a) Common
Stock, (b) class or series of the Corporation's capital stock authorized,
created or designated after August 8, 2000 or (c) Class B Preferred Stock into
shares of any class or series of capital stock (A) ranking, either as to
payment of dividends, distribution of assets or redemption, prior to or on a
parity with the Class A Preferred Stock or (B) which in any manner adversely
affects the holders of the Class A Preferred Stock.
8.5. Redemptions with Respect to Class A Preferred Stock.
8.5.1. At any time and from time to time after (or
simultaneously with) the completion of the redemption of all of the outstanding
Class D Preferred Stock pursuant to Section 11.5 and after (or simultaneously
with) the completion of the redemption of all of the outstanding Class C
Preferred Stock pursuant to Section 10.5, and after the earlier to occur of (i)
the closing of a Liquidity Event, (ii) June 12, 2004, and (iii) the full
payment and discharge of the senior subordinated indebtedness of the
Corporation in the initial principal amount of Twenty Million Dollars
($20,000,000) (the earlier of such dates being herein the "Redemption Allowance
Date"), at the option of the Corporation and upon the Corporation's delivery of
thirty (30) days prior written notice of such a redemption to be effected on or
after the Redemption Allowance Date, the Corporation may redeem all or any
portion of the Class A Preferred Stock then outstanding; provided, however,
that (x) any redemption of less than all of the shares of Class A Preferred
Stock shall be divided ratably and equally among the then extant holders of
Class A Preferred Stock and (y) no shares of Class A Preferred Stock shall be
redeemed pursuant to this Section 8.5.1 unless a pro rata number (based on
aggregate stated values) of Class B Preferred shares shall be redeemed pursuant
to Section 9.5.1. For each share of Class A Preferred Stock which is to be
redeemed by the Corporation at any time in a redemption pursuant to this
Section
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8.5.1, the Corporation shall be obligated to pay to the holder thereof (upon
surrender by such holder at the Corporation's principal office of the
certificate representing such share duly endorsed in blank or accompanied by an
appropriate form of assignment) an amount for such share equal to Class A
Preferred Stock Stated Value plus all accrued and unpaid dividends with respect
to such share to the date of payment (the "Class A Redemption Price").
8.5.2. After (or simultaneously with) the
completion of the redemption of all of the outstanding Class D Preferred Stock
pursuant to Section 11.5 and after (or simultaneously with) the completion of
the redemption of all of the outstanding Class C Preferred Stock pursuant to
Section 10.5, at any time and from time to time after June 12, 2004, at the
option of a holder of the Class A Preferred Stock and upon thirty (30) days
prior delivery of written notice by the holder to the Corporation of redemption
to be effected on or after such date, such holder may require the Corporation
to redeem all or any portion of the Class A Preferred Stock held by such
holder. For each share of Class A Preferred Stock which is to be redeemed by
the Corporation at any time in a redemption pursuant to this Section 8.5.2, the
Corporation shall be obligated to pay to the holder thereof (upon surrender by
such holder at the Corporation's principal office of the certificate
representing such share duly endorsed in blank or accompanied by an appropriate
form of assignment) an amount for such share equal to the Class A Preferred
Stock Redemption Price.
8.5.3. If the funds of the Corporation legally
available for redemption pursuant to Section 8.5.2 and Section 9.5.2 are
insufficient to redeem the number of shares which the Corporation is required
to redeem pursuant to Section 8.5.2 and Section 9.5.2, those funds which are
available will be used to redeem the maximum possible number of shares (or
fraction thereof) and such funds shall be distributed ratably among each of the
holders of the Class A Preferred Stock and Class B Preferred Stock, in
proportion to the amount that would have been distributed to each such holder
if the funds of the Corporation would have been sufficient to permit payment of
the full amount required to be paid in respect of such redemption. At any time,
and from time to time thereafter, until all shares of Class A Preferred Stock
and Class B Preferred Stock which the Corporation shall be obligated to redeem
are so redeemed, when additional funds of the Corporation are legally available
for the redemption of any of the shares of Class A Preferred Stock and Class B
Preferred Stock (including fractional shares), such funds shall be used
immediately to redeem shares (or fractions thereof) which the Corporation has
become obligated to redeem but which it has not redeemed, such amount to be
applied ratably among each of the holders of shares of Class A Preferred Stock
and Class B Preferred Stock which the Corporation is then obligated to redeem
in proportion to the number of shares of Class A Preferred Stock and Class B
Preferred Stock which are held by them and which the Corporation shall then be
obligated to redeem. Notwithstanding the foregoing, in connection with any
Liquidation, any redemption payments owing to holders of Class A Preferred
Stock shall be paid in full (up to the Class A Liquidation Preference) before
payments shall be made to holders of Class B Preferred Stock pursuant to
Section 10.5.
8.5.4. Notwithstanding the fact that a written
notice of redemption is given, all rights of the redeeming holder with respect
to shares of Class A Preferred Stock which are the subject of such written
notice of redemption shall continue as if the written notice of
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redemption had not been given until the Class A Preferred Stock Redemption
Price therefor is paid (such payment being a continuing obligation of the
Corporation).
8.5.5. At any time after notice of redemption
pursuant to Section 8.5.1 or Section 8.5.2 hereof shall have been mailed and
before the redemption date specified therein, the Corporation may deposit for
the pro rata benefit of the holders of the shares of Class A Preferred Stock so
called for redemption the funds necessary for such redemption with a bank or
trust company having a capital and surplus of at least $500,000,000. Any monies
so deposited by the Corporation and unclaimed at the end of two years from the
date designated for such redemption shall revert to the general funds of the
Corporation. After such reversion such bank or trust company shall, upon
demand, pay over to the Corporation such unclaimed amounts and thereupon such
bank or trust company shall be relieved of all responsibility in respect
thereof to such holder and such holder shall look only to the Corporation for
the payment of the Class A Redemption Price. Any interest accrued on funds so
deposited pursuant to this Section 8.5.5 shall be paid from time to time to the
Corporation for its own account. Upon the deposit of funds pursuant to this
Section 8.5.5 in respect of shares of Class A Preferred Stock called for
redemption, notwithstanding that any certificates for such shares shall not
have been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding, the rights to receive dividends thereon shall
cease to accrue from and after the redemption date, and all rights of the
holders of the shares of Class A Preferred Stock called for redemption shall
cease and terminate, excepting only the right to receive the Class A Redemption
Price therefor, without interest.
8.5.6. When shares are redeemed pursuant to this
Section 8, such redemption shall only occur to the extent that (i) there shall
be sufficient funds of the Corporation legally available for such redemption,
(ii) such redemption would not violate any covenants of the Corporation to any
lender to the Corporation or its subsidiaries and (iii) such redemption would
not violate the terms of any management or shareholder agreement to which the
Corporation is party.
8.5.7. Upon payment of the Class A Redemption
Price by the Corporation with respect to shares of Class A Preferred Stock
being redeemed pursuant to this Section 8.5, such shares of Class A Preferred
Stock shall no longer be deemed to be outstanding, shall be canceled and shall
not be subject to reissuance by the Corporation.
8.6. Conversion Rights. Upon the occurrence of the
closing of a Qualified Public Offering, provided that, prior to such closing:
(a) at least thirty (30) days prior to the date which the Board of Directors
estimates in good faith to be the likely effective date of the registration of
a Qualified Public Offering (the "Anticipated Effective Date"), the Board of
Directors shall have provided to all of the holders of Class A Preferred Stock,
Class B Preferred Stock and Class D Preferred Stock notice of an anticipated
Qualified Public Offering, which notice shall include the Anticipated Effective
Date and the anticipated offering price per share of Common Stock at which the
Common Stock will be first offered to the public in the Qualified Public
Offering and (b) at least twenty (20) days prior to the Anticipated Effective
Date, the holders of the Class A Preferred Stock, holders of Class B Preferred
Stock and holders of Class D Preferred Stock, together representing at least
sixty percent (60%) of the aggregate outstanding
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shares of Class A Preferred Stock, Class B Preferred Stock and Class D
Preferred Stock shall have elected to convert all of the issued and outstanding
shares of Class A Preferred Stock, Class B Preferred Stock and Class D
Preferred Stock (other than those shares being redeemed pursuant to Section
8.5.1, Section 9.5.1, and Section 11.5.1, respectively) into shares of Common
Stock, then in such event (an "Event of Conversion") each and every share of
Class A Preferred Stock then outstanding (other than those shares being
redeemed pursuant to Section 8.5.1), by virtue of, and simultaneously with the
occurrence of the Event of Conversion and without any additional action on the
part of the holder thereof, be deemed automatically converted into such number
of fully paid and nonassessable shares of Common Stock as is equal to (x) the
sum of (A) the Class A Preferred Stock Stated Value plus (B) all accrued but
unpaid dividends, if any, payable with respect to such shares of Class A
Preferred Stock up to and including the date upon which the Qualified Public
Offering is closed (the "Conversion Date") divided by (y) the Conversion Price.
8.6.1. Conversion shall be deemed to have been
effected with respect to conversion under Section 8.6 on the Conversion Date.
Simultaneous with the conversion being effected, the shares of Class A
Preferred Stock so converted shall no longer be deemed outstanding, shall be
canceled and shall not be subject to reissuance by the Corporation. As promptly
as practicable thereafter, the Corporation shall issue and deliver to the
record locations of each of the holders (or upon the written order of a holder,
at the place designated by such holder), a certificate or certificates for the
number of full shares of Common Stock to which each respective holder is
entitled and a check or cash in respect of any fractional interest in a share
of Common Stock, as provided in Section 8.6.3, payable with respect to the
shares of Class A Preferred Stock so converted. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed
to have become a stockholder of record on the Conversion Date unless the
transfer books of the Corporation are closed on that date, in which event such
holder shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open.
8.6.2. No fractional shares of Common Stock shall
be issued upon conversion of shares of Class A Preferred Stock. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Class A Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional interest in an amount equal to
the Conversion Price of a share of Class A Preferred Stock multiplied by such
fractional interest. Holders of fractional interests shall not be entitled to
dividends in respect of such fractional interests and the holders of fractional
interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interests.
8.6.3. The Corporation shall pay all documentary,
stamp or other transaction taxes attributable to the issuance or delivery of
shares of Common Stock upon conversion of any shares of Class A Preferred
Stock; provided, however, that the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the
holder of the shares of Class A Preferred Stock in respect of which such shares
are being issued.
8.6.4. The holders of the Class A Preferred Stock,
the holders of the Class B Preferred Stock, and the holders of the Class D
Preferred Stock by vote of sixty percent (60%)
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of the aggregate outstanding shares of Class A Preferred Stock, Class B
Preferred Stock and Class D Preferred Stock, voting together as a single voting
group, shall have the right to amend the Corporation's Charter for the sole
purpose of authorizing sufficient additional shares of Common Stock to effect
the conversions under this Section 8.6 and Section 9.6, and Section 11.6. The
additional shares, when so authorized, shall be reserved by the Corporation for
the purpose of effecting such conversions and shall be free of preemptive
rights.
8.6.5. All shares of Common Stock which may be
issued in connection with the conversion provisions set forth herein will, upon
issuance by the Corporation, be validly issued, fully paid and nonassessable
and free from all taxes, liens or charges with respect thereto created or
imposed by the Corporation.
9. Class B Preferred Stock. The express terms and conditions of
the shares classified and designated as Class B Preferred Stock, no par value,
of the Corporation are as follows:
9.1. Designation and Number of Shares of Class B
Preferred Stock. The designation of the series of Preferred Stock set forth in
this Section 9 is Class B Preferred Stock and the number of shares of such
series is 1,100,000 shares having a stated value per share equal to $13.58859
(the "Class B Preferred Stock Stated Value"). The Class B Preferred Stock shall
rank pari passu with the Class A Preferred Stock (except as provided in Section
8.3 and Section 9.3 hereof) and senior with respect to payment of dividends,
distributions, redemptions and distributions upon Liquidation, to all other
shares of the capital stock of the Corporation except the Class C Preferred
Stock and the Class D Preferred Stock.
9.2. Dividends with respect to Class B Preferred Stock.
9.2.1. In each year, the holder of each share of
Class B Preferred Stock shall be entitled to receive subject to the rights of
the holders of Class D Preferred Stock, preferential, cumulative dividends in
cash, which dividends shall be cumulative and shall accrue from the date upon
which the Class B Preferred Stock was issued, in an amount equal to eight
percent (8%) of the Class B Preferred Stock Stated Value per share per year,
provided, however, that from and after June 12, 1999, dividends shall accrue in
an amount equal to ten percent (10%) per annum of the Class B Preferred Stock
Stated Value. Dividends shall accrue daily whether or not declared and whether
or not funds are legally available therefor. If such dividends are not paid
within ninety (90) days after the end of each of the Corporation's fiscal
quarters, such dividends shall accrue additional dividends from the last day of
such fiscal quarter at the same rate per annum. Dividends shall be paid only to
the extent that (i) there shall be sufficient funds of the Corporation legally
available for the payment of such dividends, (ii) the payment of such dividend
would not violate any covenants of the Corporation to any lender to the
Corporation or its subsidiaries and (iii) the payment of such dividend would
not violate the terms of any management or shareholder agreement to which the
Corporation is party.
9.2.2. If, in any dividend period or periods, full
dividends (whether past or current) upon the outstanding Class B Preferred
Stock at the dividend rate set forth herein shall not have been paid, then,
unless and until all dividends accrued and unpaid on the Class B Preferred
Stock through the payment date for such dividends are declared and paid on each
share of Class B
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Preferred Stock, no dividends shall be declared or paid or set apart for
payment upon any Common Stock or class or series of the Corporation's capital
stock authorized, created or designated after August 8, 2000 which does not
expressly provide that it ranks senior to or on a parity with the Class B
Preferred Stock as to the payment of dividends, distributions, redemptions and
distributions upon Liquidation, nor shall the Corporation purchase, redeem or
otherwise acquire for consideration any such stock. If, at any time, the
Corporation shall pay less than the total amount of dividends then payable on
the then outstanding Class B Preferred Stock, the aggregate payment to all
holders of Class B Preferred Stock shall be distributed among all such holders
so that an amount ratably in proportion to the respective dividends due thereon
shall be paid with respect to each outstanding share of Class B Preferred
Stock.
9.2.3. Holders of the Class B Preferred Stock
shall not, solely as a result of such holders' ownership of such Class B
Preferred Stock, be entitled to participate in any dividends or other
distributions (cash, stock or otherwise) declared or paid on or with respect to
any other class of stock or equity security of the Corporation or any series of
any such class.
9.2.4. No dividend shall be paid upon shares of
Class B Preferred Stock unless like dividends are simultaneously paid on shares
of Class A Preferred Stock.
9.3. Liquidation Preference with Respect to Class B
Preferred Stock.
9.3.1. Following any Liquidation, no distribution
of any of the assets of the Corporation shall be made to the holders of (i)
Common Stock or (ii) any class or series of the Corporation's capital stock
authorized, created or designated after August 8, 2000 which does not expressly
provide that it ranks senior to or on a parity with the Class B Preferred Stock
as to the payment of dividends, distributions, redemptions and distributions
upon Liquidation by reason of their ownership thereof unless and until the
holders of Class B Preferred Stock shall have received out of the assets of the
Corporation legally available for distributions to its shareholders, an amount
per share equal to the sum of the Class B Preferred Stock Stated Value plus all
accrued and unpaid dividends, if any, to the date of payment, less the Class B
Excess Dividend Amount (hereinafter defined) (the "Class B Liquidation
Preference") for each share of Class B Preferred Stock held. If upon any
Liquidation the assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of Class B
Preferred Stock the full amount of the Class B Liquidation Preference, the
holders of shares of Class B Preferred Stock shall share ratably in any
distribution of assets available for distribution to the Class B Preferred
Stock holders after distribution of the Class D Liquidation Preference to the
holders of Class D Preferred Stock pursuant to Section 11.3, distribution of
the Class C Liquidation Preference to the holders of the Class C Preferred
Stock pursuant to Section 10.3, and distribution of the Class A Liquidation
Preference to the holders of the Class A Preferred Stock pursuant to Section
8.3.
9.3.2. In the event of any Liquidation, after
payment of the Class D Liquidation Preference, the Class C Liquidation
Preference, the Class A Liquidation Preference and the Class B Liquidation
Preference, the holders of the Class B Preferred Stock shall be entitled to
receive, pari passu with the amounts payable to holders of Class A Preferred
Stock
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pursuant to Section 8.3.2, an amount equal to all accrued and unpaid dividends,
if any, to the date of payment owing on the Class B Preferred Stock other than
accrued and unpaid dividends that would be owing thereon if all dividends
accrued on the Class B Preferred Stock at the rate of eight percent (8%) per
annum (the "Class B Excess Dividend Amount").
9.3.3. In the event of any Liquidation, after
payment shall have been made to the holders of shares of Class B Preferred
Stock of the amounts described in Section 9.3.1 or Section 9.3.2, the holders
of shares of Class B Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation.
9.3.4. The sale or other disposition (other than
by a contribution to or merger with another corporation of which more than
eighty percent (80%) of the stock (by vote and value) is owned (directly or
indirectly) by the Corporation or its shareholders)) of all or substantially
all the assets of the Corporation shall be deemed to be a Liquidation.
9.4. Voting Rights with Respect to Class B Preferred
Stock. The Class B Preferred Stock shall have the right to vote on all matters
as to which holders of the Common Stock shall be entitled to vote (at the rate
of one vote per share), in the same manner and with the same effect as such
holders of the Common Stock, voting together with the holders of Common Stock,
Class A Preferred Stock and Class D Preferred Stock as one voting group.
Without first obtaining the approval (by vote or written consent) of at least
seventy-five percent (75%) of the outstanding shares of the Class B Preferred
Stock as a separate class, the Corporation shall not, after August 8, 2000,
9.4.1. In any manner authorize, create or issue
(x) any class or series of capital stock which (A) ranks, either as to payment
of dividends, distribution of assets or redemption, prior to or on parity with
the Class B Preferred Stock or (B) in any manner adversely affects the holders
of the Class B Preferred Stock, or (y) any additional shares of Class A
Preferred Stock, Class C Preferred Stock , Class D Preferred Stock or any
shares of any class or series of any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having optional rights to
purchase, any shares having any such priority or parity with or so adversely
affecting the holders of the Class B Preferred Stock;
9.4.2. in any manner alter or change the
designations or the powers, preferences or rights, or the qualifications,
limitations or restrictions of the Class B Preferred Stock, including without
limitation, by increasing or decreasing the number of shares of the Class B
Preferred Stock authorized for issuance hereunder, or by increasing or
decreasing the par value or Class B Preferred Stock Stated Value of the shares
of the Class B Preferred Stock; or
9.4.3. reclassify the shares of any (a) Common
Stock, (b) class or series of the Corporation's capital stock authorized,
created or designated after August 8, 2000 or (c) Class A Preferred Stock into
shares of any class or series of capital stock (A) ranking, either as to
payment of dividends, distribution of assets or redemption, prior to or on a
parity with the Class B Preferred Stock or (B) which in any manner adversely
affects the holders of the Class B Preferred Stock.
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9.5. Redemptions with Respect to Class B Preferred Stock.
9.5.1. At any time and from time to time after (or
simultaneously with) the completion of the redemption of all of the outstanding
Class D Preferred Stock pursuant to Section 11.5 and after (or simultaneously
with) the completion of the redemption of all of the outstanding Class C
Preferred Stock pursuant to Section 10.5 and after the Redemption Allowance
Date, at the option of the Corporation and upon the Corporation's delivery of
thirty (30) days prior written notice of such a redemption to be effected on or
after the Redemption Allowance Date, the Corporation may redeem all or any
portion of the Class B Preferred Stock then outstanding; provided, however,
that (x) any redemption of less than all of the shares of Class B Preferred
Stock shall be divided ratably and equally among the then extant holders of
Class B Preferred Stock and (y) no shares of Class B Preferred Stock shall be
redeemed pursuant to this Section 9.5.1 unless a pro rata number (based on
aggregate stated values) of Class A Preferred Stock shall be redeemed pursuant
to Section 8.5.1. For each share of Class B Preferred Stock which is to be
redeemed by the Corporation at any time in a redemption pursuant to this
Section 9.5.1, the Corporation shall be obligated to pay to the holder thereof
(upon surrender by such holder at the Corporation's principal office of the
certificate representing such share duly endorsed in blank or accompanied by an
appropriate form of assignment) an amount for such share equal to the Class B
Preferred Stock Stated Value plus all accrued and unpaid dividends with respect
to such share to the date of payment (the "Class B Redemption Price").
9.5.2. After (or simultaneously with) the
completion of the redemption of all of the outstanding Class D Preferred Stock
pursuant to Section 11.5 and after (or simultaneously with) the completion of
the redemption of all of the outstanding Class C Preferred Stock pursuant to
Section 10.5, at any time and from time to time after June 12, 2004, at the
option of a holder of the Class B Preferred Stock and upon thirty (30) days
prior delivery of a written notice by the holder to the Corporation of
redemption to be effected on or after such date, such holder may require the
Corporation to redeem all or any portion of the Class B Preferred Stock held by
such holder. For each share of Class B Preferred Stock which is to be redeemed
by the Corporation at any time in a redemption pursuant, to this Section 9.5.2,
the Corporation shall be obligated to pay to the holder thereof (upon surrender
by such holder at the Corporation's principal office of the certificate
representing such share duly endorsed in blank or accompanied by an appropriate
form of assignment) an amount for such share equal to the Class B Preferred
Stock Redemption Price.
9.5.3. If the funds of the Corporation legally
available for redemption pursuant to Section 9.5.2 and Section 8.5.2 are
insufficient to redeem the number of shares which the Corporation is required
to redeem pursuant to Section 9.5.2 and Section 8.5.2, those funds which are
available will be used to redeem the maximum possible number of shares (or
fraction thereof) and such funds shall be distributed ratably among each of the
holders of the Class A Preferred Stock and Class B Preferred Stock in
proportion to the amount that would have been distributed to each such holder
if the funds of the Corporation would have been sufficient to permit payment of
the full amount required to be paid in respect of such redemption. At any time,
and from time to the thereafter, until all shares the Corporation shall be
obligated to redeem are so redeemed, when additional funds of the Corporation
are legally available for the redemption of any of the shares of Class A
Preferred Stock and Class B Preferred Stock
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(including fractional shares), such funds shall be used immediately to redeem
shares (or fractions thereof), which the Corporation has become obligated to
redeem but which it has not redeemed, such amount to be applied ratably among
each of the holders of shares of Class A Preferred Stock and Class B Preferred
Stock which the Corporation is then obligated to redeem in proportion to the
number of shares of Class A Preferred Stock and Class B Preferred Stock which
are held by them and which the Corporation shall then be obligated to redeem.
Notwithstanding the foregoing, in connection with any Liquidation, any
redemption payments owing to holders of Class A Preferred Stock shall be paid
in full (up to the Class A Liquidation Preference) before payments shall be
made to holders of Class B Preferred Stock pursuant to this Section 9.5.
9.5.4. Notwithstanding the fact that a written
notice of redemption is given, all rights of the redeeming holder with respect
to shares of Class B Preferred Stock which are the subject of such written
notice of redemption shall continue as if the written notice of redemption had
not been given until the Class B Preferred Stock Redemption Price therefor is
paid (such payment being a continuing obligation of the Corporation).
9.5.5. At any time after notice of redemption
pursuant to Section 9.5.1 or Section 9.5.2 hereof shall have been mailed and
before the redemption date specified therein, the Corporation may deposit for
the pro rata benefit of the holders of the shares of Class B Preferred Stock so
called for redemption the funds necessary for such redemption with a bank or
trust company having a capital and surplus of at least $500,000,000. Any monies
so deposited by the Corporation and unclaimed at the end of two years from the
date designated for such redemption shall revert to the general funds of the
Corporation. After such reversion such bank or trust company shall, upon
demand, pay over to the Corporation such unclaimed amounts and thereupon such
bank or trust company shall be relieved of all responsibility in respect
thereof to such holder and such holder shall look only to the Corporation for
the payment of the Class B Redemption Price. Any interest accrued on funds so
deposited pursuant to this Section 9.5.5 shall be paid from time to time to the
Corporation for its own account. Upon the deposit of funds pursuant to this
Section 9.5.5 in respect of shares of Class B Preferred Stock called for
redemption, notwithstanding that any certificates for such shares shall not
have been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding, the rights to receive dividends thereon shall
cease to accrue from and after the redemption date, and all rights of the
holders of the shares of Class B Preferred Stock called for redemption shall
cease and terminate, excepting only the right to receive the Class B Redemption
Price therefor, without interest.
9.5.6. When shares are redeemed pursuant to this
Section 9, such redemption shall only occur to the extent that (i) there shall
be sufficient funds of the Corporation legally available for such redemption,
(ii) such redemption would not violate any covenants of the Corporation to any
lender to the Corporation or its subsidiaries and (iii) such redemption would
not violate the terms of any management or shareholder agreement to which the
Corporation is party.
9.5.7. Upon payment of the Class B Redemption
Price by the Corporation with respect to shares of Class B Preferred Stock
being redeemed pursuant to this Section 9.5,
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such shares of Class B Preferred Stock shall no longer be deemed to be
outstanding, shall be canceled and shall not be subject to reissuance by the
Corporation.
9.6. Conversion Rights. Upon the occurrence of an Event
of Conversion, each and every share of Class B Preferred Stock then outstanding
(other than those shares being redeemed pursuant to Section 9.5.1), by virtue
of, and simultaneously with the occurrence of the Event of Conversion and
without any additional action on the part of the holder thereof, be deemed
automatically converted into such number of fully paid and nonassessable shares
of Common Stock as is equal to (x) the sum of (A) the Class B Preferred Stock
Stated Value plus (B) accrued but unpaid dividends, if any, payable with
respect to such shares of Class B Preferred Stock up to and including the
Conversion Date divided by (y) the Conversion Price.
9.6.1. Conversion shall be deemed to have been
effected with respect to conversion under Section 9.6 on the Conversion Date.
Simultaneous with the conversion being effected, the shares of Class B
Preferred Stock so converted shall no longer be deemed outstanding, shall be
canceled and shall not be subject to reissuance by the Corporation. As promptly
as practicable thereafter, the Corporation shall issue and deliver to the
record locations of each of the holders (or upon the written order of a holder,
at the place designated by such holder), a certificate or certificates for the
number of full shares of Common Stock to which each respective holder is
entitled and a check or cash in respect of any fractional interest in a share
of Common Stock, as provided in Section 9.6.3, payable with respect to the
shares of Class B Preferred Stock so converted. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed
to have become a stockholder of record on the Conversion Date unless the
transfer books of the Corporation are closed on that date, in which event such
holder shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open.
9.6.2. No fractional shares of Common Stock shall
be issued upon conversion of shares of Class B Preferred Stock. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Class B Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional interest in an amount equal to
the Conversion Price of a share of Class B Preferred Stock multiplied by such
fractional interest. Holders of fractional interests shall not be entitled to
dividends in respect of such fractional interests, and the holders of
fractional interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interests.
9.6.3. The Corporation shall pay all documentary,
stamp or other transaction taxes attributable to the issuance or delivery of
shares of Common Stock upon conversion of any shares of Class B Preferred
Stock; provided, however, that the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the
holder of the shares of Class B Preferred Stock in respect of which such shares
are being issued.
9.6.4. The holders of the Class A Preferred Stock
and the holders of the Class B Preferred Stock, by vote of sixty percent (60%)
of the aggregate outstanding shares of Class A Preferred Stock and Class B
Preferred Stock, voting together as a single voting group,
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shall have the right to amend the Corporation's Charter for the sole purpose of
authorizing sufficient additional shares of Common Stock to effect the
conversions under this Section 9.6 and Section 8.6, and Section 11.6. The
additional shares, when so authorized, shall be reserved by the Corporation for
the purpose of effecting such conversions and shall be free of preemptive
rights.
9.6.5. All shares of Common Stock which may be
issued in connection with the conversion provisions set forth herein will, upon
issuance by the Corporation, be validly issued, fully paid and nonassessable
and free from all taxes, liens or charges with respect thereto created or
imposed by the Corporation.
10. Class C Preferred Stock. The express terms and conditions of
the shares classified and designated as Class C Preferred Stock, no par value,
of the Corporation are as follows:
10.1. Designation and Number Preferred Stock. The
designation of the series of preferred stock in this Section 10 is Class C
Preferred Stock (hereinafter called "Class C Preferred Stock") and the number
of shares of such series is 600,000 shares having a stated value per share
equal to $30.63556 (the "Class C Preferred Stock Stated Value"). The Class C
Preferred Stock shall rank senior with respect to payment of dividends,
distributions, redemptions and distributions upon Liquidation to all other
shares of the capital stock of the Corporation except the Class D Preferred
Stock.
10.2. Dividends with Respect Class C Preferred Stock.
Except as provided herein, the holders of shares of Class C Preferred Stock
shall not be entitled to receive dividends with respect to their shares of
Class C Preferred Stock nor shall they be entitled to participate in any
dividends (cash, stock or otherwise) declared or paid on or with respect to any
other class of stock or equity security of the Corporation or any series of any
such class solely as a result of their ownership of such Class C Preferred
Stock.
10.3. Liquidation Preference with Respect to Class C
Preferred Stock.
10.3.1. Following any Liquidation, no distribution
of any of the assets of the Corporation shall be made to the holders of (i)
Common Stock (ii) any class or series of the Corporation's capital stock
authorized, created or designated after August 8, 2000 which does not expressly
provide that it ranks senior to or on a parity with the Class C Preferred Stock
as to the payment of dividends, distributions, redemptions, or distributions
upon Liquidation, (iii) Class A Preferred Stock, or (iv) Class B Preferred
Stock by reason of their ownership thereof unless and until the holders of
Class C Preferred Stock shall have received out of the assets of the
Corporation legally available for distributions to its shareholders, an amount
per share equal to the sum of the Class C Preferred Stock Stated Value to the
date of payment (the "Class C Liquidation Preference") for each share of Class
C Preferred Stock held. If upon any Liquidation the assets of the Corporation
available for distribution to its shareholders shall be insufficient to pay the
holders of shares of Class C Preferred Stock the full amount of the Class C
Liquidation Preference, the holders of shares of Class C Preferred Stock shall
share ratably in any distribution of assets available for distribution to the
Class C Preferred Stock holders and
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after any distribution of the Class D Liquidation Preference to holders of
Class D Preferred Stock pursuant to Section 11.3.
10.3.2. In the event of any Liquidation, after
payment of the Class D Liquidation Preference and after payment shall have been
made to the holders of shares of Class C Preferred Stock of the amounts
described in Section 10.3.1, the holders of shares of Class C Preferred Stock
shall be entitled to no further participation in the distribution of the assets
of the Corporation.
10.3.3. The sale or other disposition (other than
by a contribution to or merger with another corporation of which more than
eighty percent (80%) of the stock (by vote and value) is owned (directly or
indirectly) by the Corporation or its shareholders)) of all or substantially
all the assets of the Corporation shall be deemed to be a Liquidation.
10.4. Voting Rights with Respect to Class C Preferred
Stock. The Class C Preferred shall not have any voting rights except as set
forth in this Section 10.4. Without first obtaining the approval (by vote or
written consent) of at least seventy-five percent (75%) of the outstanding
shares of the Class C Preferred Stock as a separate class, the Corporation
shall not, after August 8, 2000,
10.4.1. in any manner authorize, create or issue
(x) any class or series of capital stock which (A) ranks, either as to payment
of dividends, distribution of assets or redemption, prior to or on parity with
the Class C Preferred Stock or (B) in any manner adversely affects the holders
of the Class C Preferred Stock, or (y) any shares of any class or series of any
bonds, debentures, notes or other obligations convertible into or exchangeable
for, or having optional rights to purchase, any shares having any such priority
or parity with or so adversely affecting the holders of the Class C Preferred
Stock;
10.4.2. in any manner alter or change the
designations or the powers, preferences or rights, or the qualifications,
limitations or restrictions of the Class C Preferred Stock, including without
limitation, by increasing or decreasing the number of shares of the Class C
Preferred Stock authorized for issuance hereunder, or by increasing or
decreasing the par value of the shares of the Class C Preferred Stock; or
10.4.3. reclassify any shares of capital stock of
the Corporation into shares of any class or series of capital stock (A)
ranking, either as to payment of dividends, distribution of assets or
redemption, prior to or on a parity with the Class C Preferred Stock or (B)
which in any manner adversely affects the holders of the Class C Preferred
Stock.
10.5. Redemption with Respect to Class C Preferred Stock.
10.5.1. At any time and from time to time after
August 8, 2000 and after (or simultaneously with) the completion of the
redemption of all of the outstanding Class D Preferred Stock pursuant to
Section 11.5, at the option of the Corporation and upon the Corporation's
delivery of thirty (30) days prior written notice, the Corporation may redeem
all or any portion of the Class C Preferred Stock then outstanding; provided,
however, that any
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redemption of less than all of the shares of Class C Preferred Stock shall be
divided ratably and equally among the then extant holders of Class C Preferred
Stock.
10.5.2. The Class C Preferred Stock shall be
mandatorily redeemable in whole upon the Redemption Allowance Date (the "Class
C Redemption Event"). In the event that the Corporation is prevented from
redeeming the Class C Preferred Stock when required in accordance with the
foregoing sentence, whether by contract or law, dividends will accrue and
cumulate thereon at an annual rate of nine percent (9%) from the date payment
is due as a result of such Class C Redemption Event pursuant to Section 10.5.3,
until the redemption occurs.
10.5.3. For each share of Class C Preferred Stock
which is to be redeemed by the Corporation at any time in a redemption pursuant
to this Section 10.5, the Corporation shall be obligated to pay to the holder
thereof (upon surrender by such holder at the Corporation's principal office of
the certificate representing such share duly endorsed in blank or accompanied
by an appropriate form of assignment) an amount for such share equal to the
Class C Preferred Stock Stated Value plus all accrued and unpaid dividends, if
any, with respect to such share to the date of payment (the "Class C Redemption
Price"), on (i) in the case of a redemption at the option of the Corporation,
the last day of any fiscal quarter if, during the quarter then ending, a
written notice of redemption shall have been delivered by the Corporation to
the holder more than thirty (30) days prior to such last day or thirty (30) or
fewer days prior to the end of the immediately preceding fiscal quarter, or
(ii) for purposes of the mandatory redemption described in Section 10.5.2, the
earlier to occur of (A) a date set by the Corporation in the redemption notice
which is within thirty (30) days after June 12, 2004 or (B) upon the closing of
a Liquidity Event.
10.5.4. If the funds of the Corporation legally
available for redemption pursuant to Section 10.5.1 or Section 10.5.2 are
insufficient to redeem the number of shares which the Corporation is required
to redeem pursuant to Section 10.5.1 or Section 10.5.2, those funds which are
available will be used to redeem the maximum possible number of shares (or
fraction thereof) and such funds shall be distributed ratably among each of the
holders of the Class C Preferred Stock in proportion to the amount that would
have been distributed to each such holder if the funds of the Corporation would
have been sufficient to permit payment of the full amount required to be paid
in respect of such redemption. At any time, and from time to time there after,
until all shares of Class C Preferred Stock which the Corporation shall be
obligated to redeem are so redeemed, when additional funds of the Corporation
are legally available for the redemption of any of the shares of Class C
Preferred Stock (including fractional shares), such funds shall be used
immediately to redeem shares (or fractions thereof) which the Corporation has
become obligated to redeem but which it has not redeemed, such amount to be
applied ratably among each of the holders of shares of Class C Preferred Stock
which the Corporation is the obligated to redeem in proportion to the number of
shares of Class C Preferred Stock which are held by them and which the
Corporation shall be obligated to redeem.
10.5.5. Notwithstanding the fact that a written
notice of redemption is given, all rights of the redeeming holder with respect
to shares of Class C Preferred Stock which are the subject of such written
notice of redemption shall continue as if the written notice of
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redemption had not been given until the Class C Preferred Stock Redemption
Price therefor is paid (it being understood that such payment shall be a
continuing obligation of the Corporation).
10.5.6. At any time after notice of redemption
pursuant to Section 10.1 or Section 10.2 hereof shall have been mailed and
before the redemption date specified therein, the Corporation may deposit for
the pro rata benefit of the holders of the shares of Class C Preferred Stock so
called for redemption the funds necessary for such redemption with a bank or
trust company having a capital and surplus of at least $500,000,000. Any monies
so deposited by the Corporation and unclaimed at the end of two years from the
date designated for such redemption shall revert to the general funds of the
Corporation. After such reversion such bank or trust company shall, upon
demand, pay over to the Corporation such unclaimed amounts and thereupon such
bank or trust company shall be relieved of all responsibility in respect
thereof to such holder and such holder shall look only to the Corporation for
the payment of the Class C Redemption Price. Any interest accrued on funds so
deposited pursuant to this Section 10.5.6 shall be paid from time to time to
the Corporation for its own account. Upon the deposit of funds pursuant to this
Section 10.5.6 in respect of shares of Class C Preferred Stock called for
redemption, notwithstanding that any certificates for such shares shall not
have been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding, the rights to receive dividends thereon shall
cease to accrue from and after the redemption date, and all rights of the
holders of the shares of Class C Preferred Stock called for redemption shall
cease and terminate, excepting only the right to receive the Class C Redemption
Price therefor, without interest.
10.5.7. When shares are redeemed pursuant to this
Section 10, such redemption shall only occur to the extent that (i) there shall
be sufficient funds of the Corporation legally available for such redemption,
(ii) such redemption would not violate any covenants of the Corporation to any
lender to the Corporation or its Subsidiaries, (iii) such redemption would not
violate the terms of any management or shareholder agreement to which the
Corporation is party, and (iv) with respect to a redemption pursuant to Section
10.5.2, all shares of Class D Preferred Stock shall have been redeemed or are
otherwise no longer outstanding.
10.5.8. Once the Class C Redemption Price has been
paid by the Corporation with respect to shares of Class C Preferred Stock being
redeemed pursuant to this Section 10.5, such shares of Class C Preferred Stock
shall no longer be deemed to be outstanding, shall be canceled and shall not be
subject to reissuance by the Corporation
11. Class D Preferred Stock. The express terms and conditions of
the shares classified and designated as Class D Preferred Stock, no par value,
of the Corporation are as follows:
11.1. Designation and Number of Shares of Class D
Preferred Stock. The designation of the series of preferred stock in this
Section 11 is Class D Preferred Stock and the number of shares of such series
is 75,000 shares having a stated value per share equal to $450.00 (the "Class D
Preferred Stock Stated Value"). The Class D Preferred Stock shall rank senior
with respect to payment of dividends, distributions, redemptions and
distributions upon
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Liquidation to all other shares of capital stock of the Corporation including
the Common Stock and the Class A Preferred Stock, Class B Preferred Stock and
Class C Preferred Stock.
11.2. Dividends with Respect to Class D Preferred Stock.
11.2.1. The holder of each share of Class D
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, preferential, cumulative, dividends in cash, which
dividends shall be cumulative and shall accrue from the Issue Date, in an
amount equal to ten percent (10%) of the Class D Preferred Stock Stated Value
per share per year, provided that from the period from June 30, 2001 until the
Past Due Interest on the Notes is paid, dividends shall accrue in an amount
equal to four (4%) of the Class D Preferred Stock Stated Value per share per
year. Dividends shall accrue daily whether or not declared and whether or not
funds are legally available therefor. If such dividends are not paid within
ninety (90) days after the end of the Corporation's fiscal quarter, such
dividends shall accrue additional dividends from the last day of such fiscal
quarter at the same rate per annum. Whenever dividends are payable pursuant to
this Section 10, dividends shall be paid only to the extent that (i) there
shall be sufficient funds of the Corporation legally available for the payment
of such dividends, (ii) the payment of such dividend would not violate any
covenants of the Corporation to any lender to the Corporation or its
subsidiaries and (iii) the payment of such dividend would not violate the terms
of any management or shareholder agreement to which the Corporation is party.
11.2.2. If, in any dividend period or periods, full
dividends (whether past or current) upon the outstanding shares of Class D
Preferred Stock at the dividend rate set forth herein shall not have been paid,
then, unless and until all dividends accrued and unpaid on the shares of Class
D Preferred Stock through the payment date for such dividends are declared and
paid on each share of Class D Preferred Stock, no dividends shall be declared
or paid or set apart for payment upon any class or series of the Corporation's
capital stock authorized, created or designated after August 8, 2000 which does
not expressly provide that it ranks senior to or on a parity with the Class D
Preferred Stock as to the payment of dividends, distributions, redemptions and
distributions upon Liquidation nor shall the Corporation purchase, redeem or
otherwise acquire for consideration any such stock. If, at any time, the
Corporation shall pay less than the total amount of dividends then payable on
the then outstanding shares of Class D Preferred Stock, the aggregate payment
to all holders of shares of Class D Preferred Stock shall be distributed among
all such holders so that an amount ratably in proportion to the respective
dividends due thereon shall be paid with respect to each outstanding share of
Class D Preferred Stock.
11.2.3. Holders of the Class D Preferred Stock
shall not, solely as a result of such holders' ownership of such Class D
Preferred Stock, be entitled to participate in any dividends or other
distributions (cash, stock or otherwise) declared or paid on or with respect to
any other class of stock or equity security of the Corporation or any series of
any such class.
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11.3. Liquidation Preference with Respect to Class D
Preferred Stock.
11.3.1. Following any Liquidation, no distribution
of any of the assets of the Corporation shall be made to the holders of (i) any
other class or series of the Corporation's capital stock or (ii) any class or
series of the Corporation's capital stock authorized, created or designated
after August 8, 2000 which does not expressly provide that it ranks senior to
or on a parity with the Class D Preferred Stock as to the payment of dividends,
distributions, redemptions and distributions upon Liquidation by reason of
their ownership thereof unless and until the holders of Class D Preferred Stock
shall have received out of the assets of the Corporation legally available for
distributions to its shareholders, an amount per share equal to the sum of the
Class D Preferred Stock Stated Value plus all accrued and unpaid dividends, if
any, to the date of payment, (the "Class D Liquidation Preference") for each
share of Class D Preferred Stock held. If upon any Liquidation the assets of
the Corporation available for distribution to its shareholders shall be
insufficient to pay the holders of shares of Class D Preferred Stock the full
amount of the Class D Liquidation Preference, the holders of shares of Class D
Preferred Stock shall share ratably in any distribution of assets available for
distribution to the Class D Preferred Stock holders.
11.3.2. In the event of any Liquidation, after
payment shall have been made to the holders of shares of Class D Preferred
Stock of the amounts described in Section 11.3.1 and Section 11.3.2 hereof, the
holders of shares of Class D Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation.
11.3.3. The sale or other disposition (other than
by a contribution to or merger with another corporation of which more than
eighty percent (80%) of the stock (by vote and value) is owned (directly or
indirectly) by the Corporation (or its shareholders)) of all or substantially
all the assets of the Corporation shall be deemed to be a Liquidation.
11.4. Voting Rights with Respect to Class D Preferred
Stock. The holders of shares of Class D Preferred Stock shall have the right to
vote on all matters as to which holders of the Common Stock shall be entitled
to vote (at the rate of one vote per share), in the same manner and with the
same effect as such holders of shares of Common Stock, voting together with the
holders of shares of Common Stock, Class A Preferred Stock and Class B
Preferred Stock as one voting group. Without first obtaining the approval (by
vote or written consent) of at least seventy-five percent (75%) of the
outstanding shares of the Class D Preferred Stock as a separate class, the
Corporation shall not,
11.4.1. after the Effective Date, in any manner
authorize, create or issue (x) any class or series of capital stock which (A)
ranks, either as to payment of dividends, distribution of assets or redemption,
prior to or on a parity with the Class D Preferred Stock (other than such
shares of Class D Preferred Stock issued as dividends hereunder) or (B) in any
manner adversely affects the holders of the Class D Preferred Stock, or (y) any
additional shares of capital stock or any class or series of any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having optional rights to purchase, any shares of capital stock having any
priority over or parity with or otherwise adversely affecting the holders of
the Class D Preferred Stock;
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11.4.2. in any manner alter or change the
designations or the powers, preferences or rights, or the qualifications,
limitations or restrictions of the Class D Preferred Stock, including without
limitation, by increasing or decreasing the number of shares of the Class D
Preferred Stock authorized for issuance hereunder, or by increasing or
decreasing the par value or Class D Preferred Stock Stated Value of the shares
of the Class D Preferred Stock; or
11.4.3. reclassify the shares of any (a) Common
Stock, (b) class or series of the Corporation's capital stock authorized,
created or designated after the Effective Date or (c) Class A Preferred Stock,
Class B Preferred Stock or Class C Preferred Stock into shares of any class or
series of capital stock (A) ranking, either as to payment of dividends,
distribution of assets or redemption, prior to or on a parity with the Class D
Preferred Stock or (B) which in any manner adversely affects the holders of the
Class D Preferred Stock.
11.5. Redemptions with Respect to Class D Preferred Stock.
11.5.1. At any time and from time to time after the
Redemption Allowance Date at the option of the Corporation and upon the
Corporation's delivery of thirty (30) days prior written notice of such a
redemption to be effected on or after the Redemption Allowance Date, the
Corporation may redeem all or any portion of the Class D Preferred Stock then
outstanding. For each share of Class D Preferred Stock which is to be redeemed
by the Corporation at any time in a redemption pursuant to this Section 11.5.1,
the Corporation shall be obligated to pay to the holder thereof (upon surrender
by such holder at the Corporation's principal office of the certificate
representing such share duly endorsed in blank or accompanied by an appropriate
form of assignment) an amount for such share equal to the Class D Liquidation
Preference (for purposes of this Section, the "Class D Redemption Price").
11.5.2. At any time and from time to time after a
Redemption Allowance Date, at the option of a holder of the Class D Preferred
Stock and upon thirty (30) days prior delivery of written notice by the holder
to the Corporation of redemption to be effected on or after such date, such
holder may require the Corporation to redeem all or any portion of the shares
of Class D Preferred Stock held by such holder. For each share of Class D
Preferred Stock which is to be redeemed by the Corporation at any time in a
redemption pursuant to this Section 11.5.2, the Corporation shall be obligated
to pay to the holder thereof (upon surrender by such holder at the
Corporation's principal office of the certificate representing such share duly
endorsed in blank or accompanied by an appropriate form of assignment) an
amount for such share equal to the Class D Redemption Price.
11.5.3. If the funds of the Corporation legally
available for redemption pursuant to Section 11.5.2 are insufficient to redeem
the number of shares which the Corporation is required to redeem pursuant to
Section 11.5.2 those funds which are available will be used to redeem the
maximum possible number of shares (or fraction thereof) and such funds shall be
distributed ratably among each of the holders of the Class D Preferred Stock,
in proportion to the amount that would have been distributed to each such
holder if the funds of the Corporation would have been sufficient to permit
payment of the full amount required to be paid in respect of such redemption.
At any time, and from time to time thereafter, until all shares of Class D
Preferred Stock which the Corporation shall be obligated to redeem are so
redeemed, when
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additional funds of the Corporation are legally available for the redemption of
any of the shares of Class D Preferred Stock (including fractional shares),
such funds shall be used immediately to redeem shares (or fractions thereof)
which the Corporation has become obligated to redeem but which it has not
redeemed, such amount to be applied ratably among each of the holders of shares
of Class D Preferred Stock which the Corporation is then obligated to redeem in
proportion to the number of shares of Class D Preferred Stock which are held by
them and which the Corporation shall then be obligated to redeem.
Notwithstanding the foregoing, in connection with any Liquidation, any
redemption payments owing to holders of Class D Preferred Stock shall be paid
in full before payments shall be made to holders of Class A Preferred Stock
pursuant to Section 8.5 and Class B Preferred Stock pursuant to Section 9.5 and
Class C Preferred Stock pursuant to Section 10.5.
11.5.4. Notwithstanding the fact that a written
notice of redemption is given, all rights of the redeeming holder with respect
to shares of Class D Preferred Stock which are the subject of such written
notice of redemption shall continue as if the written notice of redemption had
not been given until the Class D Redemption Price therefor is paid (such
payment being a continuing obligation of the Corporation).
11.5.5. At any time after notice of redemption
pursuant to Section 11.2.1 or Section 11.2.2 hereof shall have been mailed and
before the redemption date specified therein, the Corporation may deposit for
the pro rata benefit of the holders of the shares of Class D Preferred Stock so
called for redemption the funds necessary for such redemption with a bank or
trust company having a capital and surplus of at least $500,000,000. Any monies
so deposited by the Corporation and unclaimed at the end of two years from the
date designated for such redemption shall revert to the general funds of the
Corporation. After such reversion such bank or trust company shall, upon
demand, pay over to the Corporation such unclaimed amounts and thereupon such
bank or trust company shall be relieved of all responsibility in respect
thereof to such holder and such holder shall look only to the Corporation for
the payment of the Class D Redemption Price. Any interest accrued on funds so
deposited pursuant to this Section 11.5.5 shall be paid from time to time to
the Corporation for its own account. Upon the deposit of funds pursuant to this
Section 11.5.5 in respect of shares of Class D Preferred Stock called for
redemption, notwithstanding that any certificates for such shares shall not
have been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding, the rights to receive dividends thereon shall
cease to accrue from and after the redemption date, and all rights of the
holders of the shares of Class D Preferred Stock called for redemption shall
cease and terminate, excepting only the right to receive the Class D Redemption
Price therefor, without interest.
11.5.6. When shares are redeemed pursuant to this
Section 11, such redemption shall only occur to the extent that (i) there shall
be sufficient funds of the Corporation legally available for such redemption,
(ii) such redemption would not violate any covenants of the Corporation to any
lender to the Corporation or its subsidiaries and (iii) such redemption would
not violate the terms of any management or shareholders agreement to which the
Corporation is a party.
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11.5.7. Once the Class D Redemption Price has been
paid by the Corporation with respect to shares of Class D Preferred Stock being
redeemed pursuant to this Section 11.5, such shares of Class D Preferred Stock
shall no longer be deemed to be outstanding, shall be canceled and shall not be
subject to reissuance by the Corporation
11.6. Conversion Rights. Upon an Event of Conversion, each
and every share of Class D Preferred Stock then outstanding (other than those
shares being redeemed), by virtue of, and simultaneously with the occurrence of
a Qualified Public Offering and without any additional action on the part of
the holder thereof, be deemed automatically converted into such number of fully
paid and nonassessable shares of Common Stock as is equal to (x) the sum of (A)
the Class D Preferred Stock Stated Value plus (B) all accrued but unpaid
dividends, if any, payable with respect to such shares of Class D Preferred
Stock up to and including the Conversion Date divided by (y) the Conversion
Price.
11.6.1. Conversion shall be deemed to have been
effected with respect to conversion under this Section 11.6 on the Conversion
Date. Simultaneous with the conversion being effected, the shares of Class D
Preferred Stock so converted shall no longer be deemed outstanding, shall be
canceled and shall not be subject to reissuance by the Corporation. As promptly
as practicable thereafter, the Corporation shall issue and deliver to the
record locations of each of the holders (or upon the written order of a holder,
at the place designated by such holder), a certificate or certificates for the
number of full shares of Common Stock to which each respective holder is
entitled and a check or cash in respect of any fractional interest in a share
of Common Stock, as provided in Section 11.6.3 hereof, payable with respect to
the shares of Class D Preferred Stock so converted. The person in whose name
the certificate or certificates for Common Stock are to be issued shall be
deemed to have become a stockholder of record on the Conversion Date unless the
transfer books of the Corporation are closed on that date, in which event such
holder shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open.
11.6.2. No fractional shares of Common Stock shall
be issued upon conversion of shares of Class D Preferred Stock. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Class D Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional interest in an amount equal to
the Conversion Price of a share of Class D Preferred Stock multiplied by such
fractional interest. Holders of fractional interests shall not be entitled to
dividends in respect of such fractional interests, and the holders of
fractional interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interests.
11.6.3. The Corporation shall pay all documentary,
stamp or other transaction taxes attributable to the issuance or delivery of
shares of Common Stock upon conversion of any shares of Class D Preferred
Stock; provided, however, that the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the
holder of the shares of Class D Preferred Stock in respect of which such shares
are being issued.
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11.6.4. The holders of shares of the Class D
Preferred Stock by vote of sixty percent (60%) of the aggregate outstanding
shares of Class D Preferred Stock, voting together as a single voting group,
shall have the right to amend the Corporation's Charter for the sole purpose of
authorizing sufficient additional shares of Common Stock to effect the
conversions under this Section 11.6. The additional shares, when so authorized,
shall be reserved by the Corporation for the purpose of effecting such
conversions and shall be free of preemptive rights.
11.6.5. All shares of Common Stock which may be
issued in connection with the conversion provisions set forth herein will, upon
issuance by the Corporation, be validly issued, fully paid and nonassessable
and free from all taxes, liens or charges with respect thereto created or
imposed by the Corporation.
12. Special Shareholder Meetings. Special meetings of
shareholders may be called at any time, but only by the Chairman of the Board
of Directors, the President of the Company, or upon a resolution adopted by or
affirmative vote of a majority of the Board of Directors, and not by the
shareholders.
13. Directors.
13.1. Number. The number of directors of the Corporation
shall be such number, neither fewer than three nor more than fifteen (exclusive
of directors, if any, to be elected by holders of preferred stock of the
Corporation, voting separately as a class), as determined by a majority vote of
the Board of Directors. The Board of Directors has the power to fix or change
the number of directors, including an increase or decrease in the number of
directors from time to time as established by a majority vote of the Board of
Directors. A director need not be a shareholder or a resident of the state of
Tennessee.
13.2. Classes.
13.2.1. Number of Classes. The Board of Directors of the
Corporation shall be divided into three classes as nearly equal in number as
the then total number of directors constituting the entire Board of Directors
shall permit, which classes shall be designated Class I, Class II and Class
III.
13.2.2. Term. Directors assigned to be the initial Class I
directors shall be elected to hold office for a term expiring at the annual
meeting of shareholders to be held in 2003; directors assigned to be the
initial Class II directors shall be elected to hold office for a term expiring
at the annual meeting of shareholders to be held in 2004; and, directors
assigned to be the initial Class III directors shall be elected to hold office
for a term expiring at the annual meeting of shareholders to be held in 2005.
Thereafter, at each annual meeting of shareholders of the Corporation,
directors of classes the terms of which expire at such annual meeting shall be
elected for terms of three years by a plurality vote of all votes cast at such
meeting. Notwithstanding the foregoing, a director whose term shall expire at
any annual meeting shall continue to serve until such time as his successor
shall have been duly elected and shall have
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qualified unless his position on the Board of Directors shall have been
abolished by action taken to reduce the size of the Board of Directors prior to
said meeting.
13.2.3. Increase or Decrease in Number. Should the
number of directors of the Corporation be reduced, the directorship(s)
eliminated shall be allocated among classes as appropriate so that the number
of directors in each class is as specified in Section 11.2.1 herein. The Board
of Directors shall designate, by the name of the incumbent(s), the position(s)
to be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, the
additional directorships shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in paragraph Section
13.2.1.
13.3. Removal. No director of the Corporation (including
those directors, if any, elected by holders of any series of preferred stock)
may be removed at any time unless for cause. Upon finding of cause as
determined by a majority of the Board of Directors (excluding the director
which is the subject of removal), the director may be removed only upon the
affirmative vote of the holders of at least 80% of outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors (the "Voting Power"), considered for this purpose as one class,
except as otherwise required by law.
13.4. Vacancies and Newly Created Directorships. Unless
the Board of Directors otherwise determines, and subject to the rights of the
holders of any series of preferred stock, newly created directorships resulting
from any increase in the authorized number of directors or any vacancies on the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled only by a
majority vote of the directors then in office, though less than a quorum, and
shall not be filled by the shareholders. Any director chosen to fill a vacancy
(a "vacancy director") shall be a director of the same class as the director
whose vacancy he or she fills. Any director chosen to fill a vacancy or a newly
created directorship (collectively, a "vacancy director") shall hold office
until the next annual meeting of shareholders and until his or her successor
shall have been elected and qualified. The shareholders shall thereupon elect a
director to fill the vacancy or newly created directorship having been
temporarily filled by the vacancy director, which individual may include the
incumbent vacancy director. The director so elected shall be a director of the
same class as the vacancy director and shall serve until the annual meeting of
shareholders at which the term of office of such class expires and until such
director's successor shall have been duly elected and qualified.
14. Limitation of Liability. Directors of the Corporation shall
have no liability to the Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director, provided that this Section 14 shall
not eliminate liability of a director for (i) any breach of the director's duty
of loyalty to the Corporation or its shareholders; (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) unlawful distributions under Section 48-18-304 of the Tennessee
Business Corporation Act, or (iv) receiving any improper personal benefit. If
the Tennessee Business Corporation Act is amended or other Tennessee law is
enacted to permit further elimination or limitation of the personal
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liability of directors, then the liability of directors of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Tennessee
Business Corporation Act, as so amended, or by such other Tennessee law, as so
enacted. Any repeal or modification of this Section 14 or subsequent amendment
of the Tennessee Business Corporation Act or enactment of other applicable
Tennessee law shall not adversely affect any right or protection of a director
of the Corporation existing at the time of such repeal, modification, amendment
or enactment.
15. Amendment of Bylaws. To the extent permitted by the Tennessee
Business Corporation Act, the Board of Directors of the Corporation is
expressly authorized to repeal, alter, amend or rescind the Bylaws of the
Corporation by vote of a majority of the Board of Directors at a legal meeting
held in accordance with the Bylaws. The shareholders may adopt or amend a bylaw
that fixes a greater quorum or voting requirement for shareholders (or voting
group of shareholders) than is required by the Tennessee Business Corporation
Act, to the extent such bylaw does not conflict with the provisions of this
Charter. The adoption or amendment of a bylaw that adds, changes, or deletes a
greater quorum or voting requirement for shareholders must meet the same quorum
requirement and be adopted by the same vote and voting groups required to take
action under the quorum and voting requirement then in effect or proposed to be
adopted, whichever is greater.
16. Amendment of Charter. The Corporation reserves the right to
repeal, alter, amend or rescind any provision contained in this Charter in the
manner now or hereafter prescribed by law, and all rights conferred on
shareholders herein are granted subject to this reservation. Notwithstanding
the foregoing, the provisions in Sections 12, 13, 14, 15 and this Section 16 of
this Charter may not be repealed, altered, amended or rescinded in any respect
nor may provisions be adopted inconsistent with Sections 12, 13, 14, 15 and
this Section 16 unless the same is approved by the affirmative vote of the
holders at least 80% of the Voting Power, considered for this purpose as a
single class; except that such repeal, alteration, amendment, rescission or
adoption may be made by the affirmative vote of the holders of a majority of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as a single
class) if the same is first approved by a majority of the Board of Directors.
17. Adoption. This amended and restated charter was adopted by
unanimous written consent of the Board of Directors and Shareholders of the
Corporation dated April , 2002. This charter replaces and supersedes the
original charter of the Corporation filed with the Tennessee Secretary of State
and all amendments thereto.
18. Corporation for Profit. The Corporation is for profit.
Dated: , 2002.
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KIRKLAND'S, INC.
By:
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Title:
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