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, on April 17,
2002, adopted a resolution proposing and recommending to the Shareholders of
the Company 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, on May 24, 2002,
approved the recommendation of and 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) with respect to each
share of Common Stock issued and outstanding immediately prior to the time (the
"Effective Time") that the Certificate is filed with the Tennessee Department of
State (the "Old Common Stock"), the Company shall issue an additional 53.98270
shares of Common Stock (the "Share Dividend"), (b) each holder of record of one
or more shares of the Old Common Stock shall be entitled to receive, upon
surrender for cancellation of the certificates representing such shares, one or
more new certificates representing the sum of (i) the Old Common Stock held by
the holder, plus (ii) the shares of Common Stock issued to the holder pursuant
to the Share Dividend; provided, however, that any fractional shares resulting
from such Share Dividend shall be cancelled without consideration; and (c) the
Amended and Restated Charter shall become effective, superseding the Company's
existing charter and all prior amendments thereto and restatements thereof.
FOURTH: As of the Effective Time, the certificates
representing the Old Common Stock shall be deemed cancelled and shall not be
recognized as outstanding on the books of the Company for any purpose,
whereupon, there shall be issued and delivered to each holder of Old Common
Stock, promptly in his or its name and at his or its address as shown on the
records of the Company, a certificate for the number of shares of Common Stock
equal to the sum of (a) the Old Common Stock held by the holder, plus (b) the
shares of Common Stock issued to the holder pursuant to the Share Dividend.
IN WITNESS WHEREOF, the Company has caused this Certificate to
be signed by Robert E. Alderson, its Chief Executive Officer and President, and
attested by Lowell E. Pugh, II, its Secretary, this _____ day of ___________,
2002.
ATTESTED: KIRKLAND'S, INC.
By: By:
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Lowell E. Pugh, II Robert E. Alderson
Secretary Chief Executive Officer and
President
[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 articles of amendment 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, in the same
manner and with the same effect as such holders of
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the Common Stock, voting together with the holders of Common Stock, Class B
Preferred Stock and Class D Preferred Stock as one voting group. The rate at
which the Class A Preferred Stock shall have the right to vote shall be 54.98270
votes per share; provided, however, that in the event that, at any time after
the filing date of this Amended and Restated Charter: (a) the outstanding Common
Stock shall be subdivided into a greater number of shares, the number of votes
for each share of Class A Preferred Stock shall be proportionately increased; or
(b) the outstanding shares of Common Stock shall be combined into a smaller
number of shares, the number of votes for each share of Class A Preferred Stock
shall be proportionately reduced. 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
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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 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
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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 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 Corporation and at the
end of five years of the date designated for such redemption shall be remitted
to the Treasurer of the State of Tennessee in accordance with the Tennessee
Uniform Disposition of Unclaimed Property Act. 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
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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 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.
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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%) 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
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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 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
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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 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, 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. The rate at which the Class B Preferred
Stock shall have the right to vote shall be 54.98270 votes per share; provided,
however, that in the event that, at any time after the filing date of this
Amended and Restated Charter: (a) the outstanding Common Stock shall be
subdivided into a greater number of shares, the number of votes for each share
of Class B Preferred Stock shall be proportionately increased; or (b) the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the number of votes for each share of Class B Preferred Stock shall be
proportionately reduced. 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
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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.
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
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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 (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 Corporation and at the
end of five years of the date designated for such redemption shall be remitted
to the Treasurer of the State of Tennessee in accordance with the Tennessee
Uniform Disposition of Unclaimed Property Act. 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
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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, 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.
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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, 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
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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 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;
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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 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
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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 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 Corporation and at the
end of five years of the date designated for such redemption shall be remitted
to the Treasurer of the State of Tennessee in accordance with the Tennessee
Uniform Disposition of Unclaimed Property Act. 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
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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 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
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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.
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
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of the Common Stock shall be entitled to vote, 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. The rate at which the Class D Preferred Stock shall
have the right to vote shall be 54.98270 votes per share; provided, however,
that in the event that, at any time after the filing date of this Amended and
Restated Charter: (a) the outstanding Common Stock shall be subdivided into a
greater number of shares, the number of votes for each share of Class D
Preferred Stock shall be proportionately increased; or (b) the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
number of votes for each share of Class D Preferred Stock shall be
proportionately reduced. 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;
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
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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 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
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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 Corporation and at the end of five years of the date designated for such
redemption shall be remitted to the Treasurer of the State of Tennessee in
accordance with the Tennessee Uniform Disposition of Unclaimed Property Act.
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.
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
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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.
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.
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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 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 13.2.1 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
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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, unless there are no directors
remaining on the Board of Directors. Any director so chosen (a "vacancy
director") shall be a director of the same class as the director whose vacancy
he or she fills. Such 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 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. Indemnification.
15.1. Definitions. As used in this Section 15:
15.1.1. "Director" shall mean any individual who is
or was a director of the Corporation, or any individual who, while a director
of the Corporation, is or was serving at the Corporation's request as a
director, officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise. A director is considered to be serving an employee benefit
plan at the Corporation's request if the director's duties to the Corporation
also impose duties on or otherwise involves services by the director to the
plan or to participants in or beneficiaries of the plan. "Director"
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includes, unless the context requires otherwise, the estate or personal
representative of the director.
15.1.2. "Employee or Agent" shall mean any
individual who is or was an employee or agent of the Corporation other than a
director or officer of the Corporation, or any individual who, is or was
serving at the Corporation's request as an employee or agent of another foreign
or domestic corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise;
15.1.3. "Expenses" shall include reasonable costs,
disbursements and counsel fees;
15.1.4. "Independent Legal Counsel" means a law
firm, or a member of a law firm, that (i) is experienced in matters of
corporation law; (ii) neither presently is, nor in the past five years has
been, retained to represent the Corporation or the corporate agent claiming
indemnification or any other party to the action, suit, or proceeding giving
rise to a claim for indemnification, in any matter material to the Corporation,
the claimant or any such other party; and (iii) would not, under applicable
standards of professional conduct then prevailing, have a conflict of interest
in representing either the Corporation or such corporate agent in an action to
determine the Corporation's or such person's rights under this Section 15;
15.1.5. "Liability" shall mean any obligation to
pay a judgment, settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan), or reasonable expenses incurred with
respect to a proceeding;
15.1.6. "Officer" shall mean any individual who is
or was an officer of the Corporation, or any individual who is or was serving
at the Corporation's request as an employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise; and
15.1.7. "Proceeding" shall mean any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
15.2. General. Except as provided in Section 15.4, the
Corporation shall indemnify any director or officer who is made a party to any
proceeding because the individual is or was a director or officer against
liability incurred in the proceeding if:
15.2.1. the following standards are met:
(A) the individual's conduct was in
good faith;
(B) the individual reasonably
believed,
(i) in the case of conduct in
the individual's official capacity with the Corporation, that the individual's
conduct was in the best interest of the Corporation; and
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(ii) in all other cases, that
the individual's conduct was at least not opposed to the best interests of the
Corporation; and
(iii) in the case of any
criminal proceeding, the individual had no reasonable cause to believe the
individual's conduct was unlawful;
For purposes of Section 15.2.1(B)(ii) hereof, with respect to
an employee benefit plan maintained by the Corporation, the individual shall be
deemed to have reasonably believed that the individual's conduct was not
opposed to the best interests of the Corporation if such conduct was for a
purpose the individual reasonably believed was in the interests of the
participants in and beneficiaries of the plan; and
15.2.2. the individual was wholly successful, on
the merits or otherwise, in the defense of any proceedings to which the
individual was a party because that individual is or was a director or officer
of the Corporation.
15.3. Termination of Proceedings. The termination of any
action or proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent shall not, of itself, create a presumption
that the director or officer (i) did not act in good faith and in a manner that
the individual reasonably believed to be in, or not opposed to, the best
interests of the Corporation and (ii) with respect to any criminal proceeding,
had reasonable cause to believe that the individual's conduct was unlawful.
15.4. Limitations. The Corporation shall not indemnify a
director or officer in connection with a proceeding by or in the right of the
Corporation in which such individual was adjudged liable to the Corporation or
in connection with any other proceeding charging improper personal benefit to
the individual, whether or not involving action in the individual's official
capacity, in which the individual was adjudged liable on the basis that
personal benefit was improperly received by such individual. The Corporation
may only indemnify an individual for liability incurred in connection with a
proceeding for which such individual's defense is wholly successful, on the
merits or otherwise.
15.5. Expenses. The Corporation shall pay for or reimburse
the reasonable expenses incurred by a director or officer who is a party to a
proceeding in advance of final disposition of the proceeding if:
15.5.1. the director or officer furnishes the
Corporation a written affirmation of his good faith belief that he has met the
standard of conduct set forth in Section 15.2;
15.5.2. the director or officer furnishes the
Corporation a written undertaking, executed personally or on his behalf, to
repay the advance if it is ultimately determined that he is not entitled to
indemnification; and
15.5.3. a determination is made that the facts then
known to those making the determination would not preclude indemnification
under this Section 15.
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15.6. Determination and Authorization of Indemnification.
The Corporation may not indemnify a director or officer under Section 15.2
unless authorized in the specific case after a determination has been made that
indemnification of the director or officer is permissible in the circumstances
because he has met the standard set forth in Section 15.2 and is in accordance
with the Procedures for Submission and Determination of Claims for
Indemnification set forth in the Appendix to this Charter. The determination
shall be made:
15.6.1. By the Board of Directors by majority vote
of a quorum consisting of directors not at the time parties to the proceeding;
15.6.2. If a quorum cannot be obtained under
Section 15.6.1, by majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
15.6.3. By independent legal counsel:
(A) Selected by the Board of Directors
or its committee in the manner prescribed in Section 15.6.1. or Section 15.6.2;
or
(B) If a quorum of the Board of
Directors cannot be obtained under Section 15.6.1 and a committee cannot be
designated under Section 15.6.2, selected by majority vote of the full Board of
Directors (in which directors who are parties may participate); or
15.6.4. By the shareholders, but shares owned by or
voted under the control of directors who are at the time parties to the
proceeding may not be voted on the determination.
15.7. Determination and Authorization of Expenses
Authorization of indemnification and evaluation that indemnification is
permissible as to reasonableness of expenses under Section 15.5 shall be made
in the same manner as the determination that indemnification is permissible,
except that, if the determination is made by independent legal counsel,
authorization of indemnification and evaluation as to reasonableness of
expenses shall be made by those entitled under Section 15.6.3 to select
counsel.
15.8. Employees and Agents. The Corporation may indemnify
and advance expenses to an employee or agent of the Corporation to the same
extent as a director or officer under Section 15.2, subject to the
determination and authorization of indemnification procedures set forth in
Section 15.6 and in the Appendix to this Charter.
15.9. Applicability. The indemnification and advancement
of expenses granted pursuant to this Section 15 shall not be deemed exclusive
of any other rights to which a director, officer, employee or agent seeking
indemnification or advancement of expenses may be entitled, whether contained
in the Charter or Bylaws of the Corporation, or authorized in a resolution of
shareholders, a resolution of directors, or an agreement providing for such
indemnification, to the extent permitted by applicable law.
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15.10. Intent and Interpretation. It is the intention of
this Section 15 to provide for indemnification of directors and officers to the
fullest extent permitted by the Tennessee Business Corporation Act, and this
Section 15 shall be interpreted accordingly. If this Section 15 or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director,
officer, employee, and agent of the Corporation as to costs, charges, and
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any proceeding, including an action by or in the
right of the Corporation, to the full extent permitted by any applicable
portion of this Section 15 that shall not have been invalidated and to the full
extent permitted by applicable law. If the Tennessee Business Corporation Act
is amended or other Tennessee law is enacted to permit further or additional
indemnification of a director, officer, employee or agent of the Corporation
beyond that provided in this Section 15, then the Corporation shall be
permitted to indemnify such director, officer, employee or agent to the fullest
extent permitted by the Tennessee Business Corporation Act, as so amended, or
by such other Tennessee law.
15.11. Insurance. The Corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the Corporation, or who, while a director, officer,
employee, or agent of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, against liability asserted against
or incurred by the individual in that capacity or arising from the individual's
status as a director, officer, employee, or agent, whether or not the
Corporation would have power to indemnify him against the same liability under
applicable state law.
16. 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.
17. 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, 16 and this Section
17 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, 16 and this Section 17 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
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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.
18. Adoption. This amended and restated charter was adopted by
the Board of Directors of the Corporation on April 17, 2002 and the
Shareholders of the Corporation on May 24, 2002. This charter replaces and
supersedes the original charter of the Corporation filed with the Tennessee
Secretary of State and all amendments thereto.
19. Corporation for Profit. The Corporation is for profit.
Dated: , 2002.
--------------------------
KIRKLAND'S, INC.
By:
-------------------------------
Robert E. Alderson
Title: Chief Executive Officer
and President
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APPENDIX TO AMENDED AND RESTATED CHARTER
PROCEDURES FOR SUBMISSION AND
DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO SECTION 15 OF THE CHARTER.
Section 1. Purpose. The Procedures for Submission and
Determination of Claims for Indemnification Pursuant to Section 15 of the
Charter (the "Procedures") are to implement the provisions of Section 15 of the
Charter of the Corporation (the "Charter") in compliance with the requirements
of Section 15.6.
Section 2. Definitions. For purposes of these Procedures:
(a) All terms that are defined in Section 15.1 of the
Charter shall have the meanings ascribed to them therein when used in these
Procedures unless otherwise defined herein.
(b) "Change of control" shall mean:
(i) the acquisition in one or more transactions
by any "Person" (as the term person is used
for purposes of Sections 13(d) or 14(d) of
the Securities Exchange Act of 1934 (the
"Exchange Act")) of "Beneficial ownership"
(within the meaning of Rule 13d-3
promulgated under the Exchange Act) of
twenty-five percent (25%) or more of the
combined voting power of the Corporation's
then outstanding voting securities (the
"Voting Securities"), provided that for
purposes of this clause (i) Voting
Securities acquired directly from the
Corporation by any Person shall be excluded
from the determination of such Person's
Beneficial ownership of Voting Securities
(but such Voting Securities shall be
included in the calculation of the total
number of Voting Securities then
outstanding); or
(ii) approval by shareholders of the Corporation
of:
(A) a merger, reorganization or
consolidation involving the
Corporation if the shareholders of
the Corporation immediately before
such merger, reorganization or
consolidation do not or will not
own directly or indirectly
immediately following such merger,
reorganization or consolidation,
more than fifty percent (50%) of
the combined voting power of the
outstanding voting securities of
the Corporation resulting from or
surviving such merger,
reorganization or consolidation in
substantially the same proportion
as their ownership
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of the Voting Securities
outstanding immediately before
such merger, reorganization or
consolidation; or
(B) a complete liquidation or
dissolution of the Corporation; or
(C) an agreement for the sale or other
disposition of all or
substantially all of the assets of
the Corporation; or
(D) acceptance by shareholders of the
Corporation of shares in a share
exchange if the shareholders of
the Corporation immediately before
such share exchange do not or will
not own directly or indirectly
immediately following such share
exchange more than fifty percent
(50%) of the combined voting power
of the outstanding voting
securities of the entity with
which the shareholders effect such
share exchange in substantially
the same proportion as their
ownership of the Voting Securities
outstanding immediately before
such share exchange.
Section 3. Submission and Determination of Claims.
(a) To obtain indemnification or advancement of expenses
under Section 15 of the Charter, a corporate agent shall submit to the
Secretary of the Corporation a written request therefor, including therein or
therewith such documentation and information as is reasonably available to the
corporate agent and is reasonably necessary to permit a determination as to
whether and what extent the Corporate agent is entitled to indemnification or
advancement of expenses, as the case may be. The Secretary shall, promptly upon
receipt of a request for indemnification, advise the Board of Directors thereof
in writing if a determination in accordance with Section 15.6 or Section 15.7
of the Charter is required.
(b) Upon written request by an corporate agent for
indemnification pursuant to Section 3(a) hereof, a determination with respect
to the corporate agent's entitlement thereto in the specific case, if required
by the Charter, shall be made in accordance with Section 15.6 of the Charter,
and, if it is so determined that the corporate agent is entitled to
indemnification, payment to the corporate agent shall be made within ten days
after such determination. The corporate agent shall cooperate with the person,
persons or entity making such determination, with respect to the corporate
agent's entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to the corporate agent and reasonably necessary
to such determination.
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(c) If entitlement to indemnification is to be made by
independent legal counsel pursuant to Section 15.6.3 of the Charter such
counsel shall be selected as provided in this Section 3(c). If a change of
control shall not have occurred, the independent legal counsel shall be
selected by the Board of Directors as set forth in Section 15.6.3 of the
Charter, and the Corporation shall give written notice to the corporate agent
advising the corporate agent of the identity of the independent legal counsel
so selected. If a change of control shall have occurred, the independent legal
counsel shall be selected by the corporate agent (unless the corporate agent
shall request that such selection be made by the Board of Directors, in which
event the immediately preceding sentence shall apply), and the corporate agent
shall give written notice to the Corporation advising it of the identity of the
independent legal counsel so selected. In either event, the corporate agent or
the Corporation, as the case may be, may, within seven days after such written
notice of selection shall have been given, deliver to the Corporation or to the
corporate agent, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the independent legal
counsel so selected does not meet the requirements of "independent legal
counsel" as defined in Section 15.1 of the Charter, and the objection shall set
forth with particularity the factual basis of such assertion. If such written
objection is made, the independent legal counsel so selected may not serve as
independent legal counsel unless and until a court has determined that such
objection is without merit. If, within twenty days after the next regularly
scheduled Board of Directors meeting following submission by the corporate
agent of a written request for indemnification pursuant to Section 3(a) hereof,
no independent legal counsel shall have been selected and not objected to,
either the Corporation or the corporate agent may petition any court of
competent jurisdiction for resolution of any objection which shall have been
made by the Corporation or the corporate agent to the other's selection of
independent legal counsel and/or for the appointment as independent legal
counsel of a person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection is favorably
resolved or the person so appointed shall act as independent legal counsel
under Section 15.6.3 of the Charter. The Corporation shall pay any and all
reasonable fees and expenses (including without limitation any advance
retainers reasonably required by counsel) of independent legal counsel incurred
by such independent legal counsel in connection with acting pursuant to Section
15.6.3 of the Charter, and the Corporation shall pay all reasonable fees and
expenses (including without limitation any advance retainers reasonably
required by counsel) incident to the procedures of Section 15.6.3 of the
Charter and this Section 3(c), regardless of the manner in which independent
legal counsel was selected or appointed. Upon the delivery of its opinion
pursuant to Section 15.6.3 of the Charter or, if earlier, the due commencement
of any judicial proceeding or arbitration pursuant to Section 4(a)(3) of these
Procedures, independent legal counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
(d) If a change of control shall have occurred, in
making a determination with respect to entitlement to indemnification under the
Charter, the person, persons or entity making such determination shall presume
that an corporate agent is entitled to indemnification under the Charter if the
corporate agent has submitted a request for indemnification in accordance with
Section 3(a) hereof, and the Corporation shall have the burden of proof to
overcome that presumption in connection with the making by any person, persons
or entity of any determination contrary to that presumption.
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Section 4. Review and Enforcement of Determination.
(a) In the event that (1) advancement of expenses is not
timely made pursuant to Section 15.5 of the Charter, (2) payment of
indemnification is not made pursuant to Section 15.2 the Charter within ten
days after receipt by the Corporation of written request therefor, (3) a
determination is made pursuant to Section 15.6 of the Charter that a corporate
agent is not entitled to indemnification under the Charter, (4) the
determination of entitlement to indemnification is to be made by independent
legal counsel pursuant to Section 15.6.3 of the Charter and such determination
shall not have been made and delivered in a written opinion within ninety days
after receipt by the Corporation of the written request for indemnification, or
(5) payment of indemnification is not made within ten days after a
determination has been made pursuant to Section 15.6 of the Charter that a
corporate agent is entitled to indemnification, the corporate agent shall be
entitled to an adjudication in an appropriate court of the State of Tennessee,
or in any other court of competent jurisdiction, of the corporate agent's
entitlement to such indemnification or advancement of expenses. Alternatively,
the corporate agent, at his or her option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association. The corporate agent shall commence such proceeding
seeking an adjudication or an award in arbitration within one year following
the date on which the corporate agent first has the right to commence such
proceeding pursuant to this Section 4(a). The Corporation shall not oppose the
corporate agent's right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been
made pursuant to Section 15.6 of the Charter that a corporate agent is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 4 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and the corporate agent shall not be
prejudiced by reason of that adverse determination. If a change of control
shall have occurred, the Corporation shall have the burden of proving in any
judicial proceeding or arbitration commenced pursuant to this Section 4 that
the corporate agent is not entitled to indemnification or advancement of
expenses, as the case may be.
(c) If a determination shall have been made or deemed to
have been made pursuant to Section 15.6 of the Charter that a corporate agent
is entitled to indemnification, the Corporation shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 4, absent (1) a misstatement or omission of a material fact in
connection with the corporate agent's request for indemnification, or (2) a
prohibition of such indemnification under applicable law.
(d) The Corporation shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this Section 4
that the procedures and presumptions of these Procedures are not valid, binding
and enforceable, and shall stipulate in any such judicial proceeding or
arbitration that the Corporation is bound by all the provisions of these
Procedures.
(e) In the event that a corporate agent, pursuant to
this Section 4, seeks to enforce the corporate agent's rights under, or to
recover damages for breach of, Section 15 of the Charter or these Procedures in
a judicial proceeding or arbitration, the Corporate agent shall be entitled to
recover from the Corporation, and shall
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be indemnified by the Corporation against, any and all expenses (of the types
described in the definition of expenses in Section 15.1 of the Charter)
actually and reasonably incurred in such judicial proceeding or arbitration,
but only if the corporate agent prevails therein. If it shall be determined in
such judicial proceeding or arbitration that the corporate agent is entitled to
receive part but not all of the indemnification or advancement of expenses
sought, the expenses incurred by the corporate agent in connection with such
judicial proceeding or arbitration shall be appropriately prorated.
Section 5. AMENDMENTS. These Procedures may be amended at any
time and from time to time in the same manner as any section of the Charter of
the Corporation in accordance with the Amended and Restated Charter of the
Corporation and the Bylaws; provided, however, that notwithstanding any
amendment, alteration or repeal of these Procedures or any provision hereof,
any corporate agent shall be entitled to utilize these Procedures with respect
to any claim for indemnification arising out of any action taken or omitted
prior to such amendment, alteration or repeal except to the extent otherwise
required by law.
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