EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
OF
RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
JDA SOFTWARE GROUP, INC.
The undersigned officer of JDA Software Group, Inc. (the "Corporation"), a
corporation organized and existing under and by virtue of the provisions of the
General Corporation Law of the State of Delaware (the "DGCL"), does hereby
certify the following:
A. The Corporation has authorized 2,000,000 shares of Preferred Stock, par
value $0.01 per share, none of which has been issued.
B. Pursuant to the authority conferred upon the Board of Directors of the
Corporation (the "Board") by its Third Restated Certificate of
Incorporation (the "Certificate of Incorporation"), and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board has duly adopted recitals and resolutions in accordance
with the powers granted it by the Certificate of Incorporation, which
resolutions remains in full force and effect on the date hereof, as
follows:
WHEREAS, the Certificate of Incorporation provides for a class of stock
designated "Preferred Stock", issuable from time to time in one or more series;
WHEREAS, the Board is authorized, within the limitations and restrictions stated
in the Certificate of Incorporation, to fix or alter the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, and the
liquidation preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such series and the designation thereof,
or any of them; and,
WHEREAS, the Board desires, pursuant to its authority as aforesaid, to designate
a series of Preferred Stock as "Series B Convertible Preferred Stock" and to fix
and determine the number of shares constituting such series and the rights,
preferences, privileges and restrictions of such series.
NOW, THEREFORE, BE IT RESOLVED, that the Board hereby designates such new series
of Preferred Stock and the number of shares constituting such series as follows:
I. Designation of Series. The Corporation shall have a series of Preferred
Stock designated as "Series B Convertible Preferred Stock" (the "Series B
Preferred").
II. Designation of Number of Shares of Series B Preferred. The number of shares
constituting the Series B Preferred shall be 50,000 shares.
III. Rank of Series B Preferred. The Series B Preferred shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior to all classes of common stock of the Corporation (including Common
Stock (as hereinafter defined)) and senior to any other class of capital
stock or series of preferred stock, unless the issuance of capital stock
being on parity with or senior to the Series B Preferred shall be in
compliance with this Certificate of Designation.
IV. Fixing the Rights, Preferences, Privileges and Restrictions of the Series B
Preferred. The rights, preferences, privileges and restrictions hereby
granted to and imposed upon the Series B Preferred are as follows:
* * * *
SECTION 1. DIVIDENDS.
The Series B Preferred shall not bear a fixed yield or dividend.
However, in the event that the Corporation declares or pays any dividends upon
the Common Stock (whether payable in cash, securities or other property) other
than dividends payable solely in shares of Common Stock, the Corporation also
shall declare and pay to the holders of the Series B Preferred, at the same time
that it declares and pays such dividends to the holders of the Common Stock, the
dividends which would have been declared and paid with respect to the Common
Stock issuable upon conversion of the Series B Preferred had all of the
outstanding Series B Preferred been converted immediately prior to the record
date for such dividend or, if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined.
SECTION 2. LIQUIDATION.
2A. Liquidation Events. Upon any liquidation, dissolution or winding
up of the Corporation (whether voluntary or involuntary) (a "Liquidation
Event"), each holder of Series B Preferred shall be entitled to be paid out of
cash legally available for distribution to stockholders, before any distribution
or payment is made upon any Junior Securities, an amount in cash equal to the
greater of (i) the aggregate Liquidation Value of all shares of the Series B
Preferred (each, a "Share" and collectively, the "Shares") held by such holder
plus all accrued and unpaid dividends thereon and (ii) the aggregate amount that
would be paid in connection with such Liquidation Event with respect to the
Common Stock issuable upon conversion of all Shares held by such holder had all
of the outstanding Series B Preferred been converted immediately prior to such
Liquidation Event, and the holders of Series B Preferred shall not be
-2-
entitled to any further payment. If upon any such Liquidation Event the
Corporation's assets to be distributed among the holders of the Series B
Preferred are insufficient to permit payment to such holders of the aggregate
amount which they are entitled to be paid under this Section 2A, then the entire
assets available to be distributed to the Corporation's stockholders shall be
distributed pro rata among such holders based upon the aggregate Liquidation
Value (plus all accrued and unpaid dividends) of the Series B Preferred held by
each such holder.
2B. Notice. Not less than 40 days and not more than 90 days prior to
the payment date stated therein, the Corporation shall deliver written notice of
any such Liquidation Event, and not less than 40 days and not more than 90 days
prior to consummating any transaction deemed a Liquidation Event as described in
Section 2C below, the Corporation shall deliver written notice of such
transaction, in each case to each record holder of Series B Preferred, setting
forth in reasonable detail the amount of proceeds to be paid with respect to
each Share and each share of Common Stock in connection with such Liquidation
Event or the terms of such transaction described in Section 2C (including the
amount to be paid with respect to each Share and each share of Common Stock in
connection therewith), as the case may be.
2C. Deemed Liquidation Events. Upon the election of the Majority
Holders delivered to the Corporation within 15 days after receipt of the
Corporation's notice to the holders of Series B Preferred under Section 2B, any
consolidation or merger of the Corporation with or into another entity or
entities (whether or not the Corporation is the surviving entity) or any sale or
transfer by the Corporation of all or substantially all of its assets
(determined either for the Corporation alone or with its Subsidiaries on a
consolidated basis) or any sale, transfer or issuance or series of sales,
transfers and/or issuances of shares of the Corporation's capital stock by the
Corporation or the beneficial or record holders thereof as a result of which
such holders of the Corporation's outstanding capital stock possessing the
voting power (under ordinary circumstances) to elect a majority of the
Corporation's Board of Directors immediately prior to such sale or issuance
cease to own the Corporation's outstanding capital stock possessing the voting
power (under ordinary circumstances) to elect a majority of the Corporation's
Board of Directors, shall be deemed to be a Liquidation Event for purposes of
this Section 2, and, to the extent permitted by the Senior Debt, the holders of
the Series B Preferred shall be entitled to receive a payment from the
Corporation equal to the amounts payable with respect to the Series B Preferred
upon a Liquidation Event under this Section 2 (the "Liquidation Payment Amount")
in cancellation of their Shares upon the consummation of any such transaction;
provided that the foregoing provision shall not apply to any merger in which (i)
the Corporation is the surviving entity, (ii) the terms of the Series B
Preferred are not changed and the Series B Preferred is not exchanged for any
cash, securities or other property, (iii) the beneficial holders of the
Corporation's outstanding capital stock immediately prior to the merger shall
continue to own shares of the Corporation's outstanding capital stock possessing
the voting power (under ordinary circumstances) to elect a majority of the
Corporation's Board of Directors and (iv) no Person or group of Persons (as the
term "group" is used under the Securities Exchange Act of 1934), other than the
holders of Series B Preferred as of the date of the Purchase Agreement, has
"beneficial ownership" (as that term is used under the Securities Exchange Act
of 1934, as amended) of more than 25% of the outstanding Common Stock. The
Corporation shall give prompt written notice of any such election of the
Majority Holders to all other holders of Series B Preferred within five days
after the receipt thereof, and each such holder shall have until the
-3-
fifth business day prior to the date of consummation of such deemed Liquidation
Event to demand payment from the Corporation of the Liquidation Payment Amount
in cancellation of their Shares upon the consummation of any such transaction.
The Majority Holders shall have the right to elect the benefits of either this
Section 2 or Section 3G hereof in connection with any such merger, consolidation
or sale of assets.
SECTION 3. REDEMPTIONS.
3A. Scheduled Redemption. At any time after September 6, 2013, any
holder of Series B Preferred may demand redemption of all or any part of the
Shares of Series B Preferred then held by such holder. Holders may exercise such
redemption right by giving written notice to the Corporation of such election
not more than 60 days and not less than 15 days prior to the date on which such
redemption is to be made. Upon such holders' redemption election pursuant to
this Section 3A, the Corporation shall be obligated to redeem such Shares on the
date specified in such notice at a price per Share equal to the Cash Redemption
Price.
3B. Redemption Payments. For each Share which is to be redeemed
hereunder, the Corporation shall be obligated on the Redemption Date to pay to
the holder thereof (upon surrender by such holder at the Corporation's principal
office of the certificate representing such Share) an amount in cash equal to
the Cash Redemption Price. If the funds of the Corporation legally available for
redemption of Shares on any Redemption Date are insufficient to redeem the total
number of Shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of Shares pro rata
among the holders of the Shares to be redeemed based upon the aggregate Cash
Redemption Price of such Shares held by each such holder. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of Shares, such funds shall immediately be used to redeem the balance
of the Shares which the Corporation has become obligated to redeem on any
Redemption Date but which it has not redeemed.
3C. Upon Notice of Redemption. Upon mailing any redemption notice, the
Corporation shall become obligated to redeem the total number of Shares
specified in such notice at the time of redemption specified therein in
accordance with the applicable paragraph of this Section 3. In case fewer than
the total number of Shares represented by any certificate are redeemed in any
redemption hereunder, a new certificate representing the number of unredeemed
Shares shall be issued to the holder thereof without cost to such holder within
five business days after surrender of the certificate representing the redeemed
Shares.
3D. Dividends After Redemption Date. No Share shall be entitled to any
dividends accruing after the date on which the Cash Redemption Price specified
herein is paid to the holder of such Share. On such date, all rights of the
holder of such Share (other than as set forth in Section 3D) shall cease, and
such Share shall no longer be deemed to be issued and outstanding.
3E. Redeemed or Otherwise Acquired Shares. Any Shares which are
redeemed or otherwise acquired by the Corporation shall be canceled and shall
not be reissued, sold or transferred.
-4-
3F. Other Redemptions or Acquisitions. The Corporation shall not, nor
shall it permit any Subsidiary to, redeem or otherwise acquire any Shares of
Series B Preferred, except as expressly authorized herein or pursuant to a
purchase offer made pro rata to all holders of Series B Preferred on the basis
of the number of Shares owned by each such holder. Except as otherwise provided
herein, the number of Shares of Series B Preferred to be redeemed from each
holder thereof in redemptions hereunder shall be the number of Shares determined
by multiplying the total number of Shares to be redeemed times a fraction, the
numerator of which shall be the total number of Shares then held by such holder
and the denominator of which shall be the total number of Shares then
outstanding, but in no event more than the number of Shares of which such holder
has accepted or requested redemption.
3G. Special Redemptions.
(i) If a Change in Ownership has occurred or the Corporation obtains
knowledge that a Change in Ownership is proposed to occur, the Corporation shall
give prompt written notice of such Change in Ownership describing in reasonable
detail the material terms and date of consummation thereof to each holder of
Series B Preferred, but in any event such notice shall not be given later than
five days after the occurrence of such Change in Ownership, and the Corporation
shall give each holder of Series B Preferred prompt written notice of any
material change in the terms or timing of such transaction. The Majority Holders
may require, to the extent permitted by the Senior Debt, the Corporation to
redeem all or any portion of the Series B Preferred owned by such holder or
holders at a price per Share equal to the Cash Redemption Price by giving
written notice to the Corporation of such election prior to the later of (a) 15
days after receipt of the Corporation's notice and (b) 15 days prior to the
consummation of the Change in Ownership (the "Expiration Date"). The Corporation
shall give prompt written notice of any such election to require the Corporation
to redeem all or any portion of the Series B Preferred to all other holders of
Series B Preferred within five days after the receipt thereof, and each such
holder shall have until the later of (a) the Expiration Date or (b) ten days
after receipt of such second notice to request redemption hereunder (by giving
written notice to the Corporation) of all or any portion of the Series B
Preferred owned by such holder.
Upon receipt of such election(s), the Corporation shall be obligated,
to the extent permitted by the Senior Debt, to redeem the aggregate number of
Shares specified therein on the later of (a) the occurrence of the Change in
Ownership or (b) five days after the Corporation's receipt of such election(s).
If any proposed Change in Ownership does not occur, all requests for redemption
in connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Series B Preferred may rescind such holder's request for redemption by giving
written notice of such rescission to the Corporation.
(ii) If a Fundamental Change is proposed to occur, the Corporation
shall give written notice of such Fundamental Change describing in reasonable
detail the material terms and date of consummation thereof to each holder of
Series B Preferred not more than 45 days nor less than 20 days prior to the
consummation of such Fundamental Change, and the Corporation shall give each
holder of Series B Preferred prompt written notice of any material change in the
terms or timing of such transaction. The Majority Holders may require, to the
extent permitted
-5-
by the Senior Debt, the Corporation to redeem all or any portion of the Series B
Preferred owned by such holder or holders at a price per Share equal to the Cash
Redemption Price by giving written notice to the Corporation of such election
prior to the later of (a) fifteen days prior to the consummation of the
Fundamental Change or (b) ten days after receipt of notice from the Corporation.
The Corporation shall give prompt written notice of such election to all other
holders of Series B Preferred (but in any event within five days prior to the
consummation of the Fundamental Change), and each such holder shall have until
two days after the receipt of such notice to request redemption (by written
notice given to the Corporation) of all or any portion of the Series B Preferred
owned by such holder.
Upon receipt of such election(s), the Corporation shall be obligated,
to the extent permitted by the Senior Debt, to redeem the aggregate number of
Shares specified therein upon the consummation of such Fundamental Change. If
any proposed Fundamental Change does not occur, all requests for redemption in
connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Series B Preferred may rescind such holder's request for redemption by
delivering written notice thereof to the Corporation prior to the consummation
of the transaction.
SECTION 4. VOTING RIGHTS.
4A. Election of Directors. In the election of directors of the
Corporation, the holders of the Series B Preferred, voting separately as a
single series to the exclusion of all other classes and series of the
Corporation's capital stock and with each Share of Series B Preferred entitled
to one vote, shall be entitled (so long as Thoma Cressey is the Majority Holder,
but in no event at any time that Thoma Cressey is not the Majority Holder) at an
annual or special meeting of the shareholders to elect one director to serve as
a member of the Corporation's Board of Directors (the "Series B Director"),
until his successor is duly elected by the holders of the Series B Preferred,
subject to prior death, resignation, retirement, disqualification, or removal or
termination of term of office in accordance with this Section 4A. The Series B
Director so elected shall be in addition to the directors elected by the holders
of the Common Stock of the Corporation, and shall in accordance with the
Corporation's bylaws increase the maximum number of directors otherwise
permitted pursuant to the Corporation's bylaws.
(i) Initial Appointment. Upon the initial issuance of any Series B
Preferred, the vacancy resulting from the directorship newly created hereby
shall be filled by a vote of the other directors on the Board of Directors to
designate Orlando Bravo as the initial Series B Director.
(ii) Subsequent Designation and Election. At any time that the holders
of Series B Preferred are entitled to elect a Series B Director pursuant to
Section 4A above, the individual designated by the Majority Holders shall be
elected by the holders of the Series B Preferred as the Series B Director and
all holders of Series B Preferred shall vote their Shares in such a manner to
effect the election of the Series B Director designated by the Majority Holders.
-6-
(iii) Qualifications; Disqualification; Resignation; Termination of
Term; Removal; and Vacancies.
(a) Qualification. Notwithstanding appointment or election to the
Board of Directors, the Series B Director's qualification to serve on the
Board of Directors is subject to compliance with any then existing
applicable local, state or federal law or regulations governing the
business operations of the Corporation and the Corporation's directors
generally.
(b) Resignation. The Series B Director may resign from the Board
of Directors at any time by giving written notice to the Corporation at its
principal executive office. The resignation is effective without acceptance
when the notice is given to the Corporation, unless a later effective time
is specified in the notice.
(c) Termination of Term of Office. So long as any Series B
Preferred remains outstanding and Thoma Cressey is the Majority Holder, the
term of office of the Series B Director may be terminated only by the
Majority Holders. The term of office of the Series B Director shall
automatically terminate on the date on which Thoma Cressey is no longer the
Majority Holder.
(d) Removal. So long as any Series B Preferred remains
outstanding, the Series B Director may be removed only by (I) a written
direction of removal delivered to the Corporation by the Majority Holders
or (II) a resolution of the Board of Directors excluding such Series B
Director if such Series B Director fails to meet the requirements for
qualification provided for in Section 4A(iii)(a).
(e) Vacancies. In the event of a vacancy on the Board resulting
from the death, disqualification, resignation, retirement or termination of
term of office of the Series B Director designated by the Majority Holders,
the resulting vacancy shall be filled by a representative designated in a
writing to the Corporation by the Majority Holders, until the next annual
or special meeting of the shareholders (and at such meeting, such
representative, or another representative designated by the Majority
Holders, will be elected to the Board in the manner described in this
Section 4A). If the Majority Holders fail or decline to fill the vacancy,
then the directorship shall remain open until such time as the Majority
Holders elect to fill it with a representative designated hereunder.
(iv) Committees. The Series B Director shall serve on any executive
committee of the Board of Directors and on any pricing committee relating to the
offering or sale of securities by the Corporation and, in each case, on any
successor or comparable committee thereto.
(v) Fees & Expenses. The Series B Director shall be entitled to all
fees, other compensation and reimbursement of expenses paid to Board of
Directors members who are not employees of the Corporation or its Subsidiaries.
-7-
(vi) Reporting Information. The Majority Holders shall provide the
Corporation with all necessary assistance and information related to the Series
B Director that is required (or would be required if the Corporation were
subject to Regulation 14A under the Securities Exchange Act of 1934, as amended)
to be disclosed in solicitations of proxies or otherwise, including such
person's written consent to being named in the proxy statement (if applicable)
and to serving as a director if elected.
(vii) Voting Agreement. The holders of Series B Preferred intend the
provisions of this Section 4A to be enforceable as a shareholder voting
agreement in accordance with the provisions of the DGCL.
4B. Other Voting Rights. The holders of the Series B Preferred shall
be entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws and shall be entitled to all votes as a single class
provided for or required by applicable law, and, except as otherwise required by
applicable law, the holders of the Series B Preferred shall be entitled to vote
on all matters submitted to the stockholders for a vote together as a single
class with (i) the holders of the Common Stock, (ii) the holders of any class or
series of preferred stock entitled to vote with the Common Stock and (iii) the
holders of any note or debenture entitled to vote with the Common Stock, in each
case pursuant to the terms of the Certificate of Incorporation or any
certificate of designation, with each share of Series B Preferred entitled to
one vote for each share of Common Stock issuable upon conversion of the Series B
Preferred as of the record date for such vote or, if no record date is
specified, as of the date of such vote; provided that, so long as at least
shares of Series B Preferred greater than or equal to 25% of the shares
initially issued in by the Corporation on July 5, 2006 remain outstanding,
written consent or other affirmative vote of the Majority Holders (which
Majority Holders shall act in good faith to provide the Corporation with a
response (whether affirmative or negative) to any request for the written
consent or other affirmative vote of the Majority Holders hereunder and to make
any requests for additional information necessary or desirable in considering
such request), voting as a single and separate class, will be required (so long
as Thoma Cressey is the Majority Holder, but in no event at any time that Thoma
Cressey is not the Majority Holder) for the Corporation to:
(i) authorize, issue, sell (including from treasury) or enter into any
agreement providing for the issuance or sale (contingent or otherwise) of, or
take any action that would amend the terms of or reclassify any existing
securities so as to constitute, (a) any capital stock or other equity securities
of the Corporation or any Subsidiary (or any such securities convertible into or
exchangeable for any capital stock or other equity securities or containing
equity or profit participation features), other than issuances of up to an
aggregate of 6,254,418 shares of Common Stock (as such number of shares is
proportionately adjusted for subsequent stock splits, combinations, dividends,
recapitalizations, reclassifications and similar events affecting the Common
Stock) upon the exercise of Options issued pursuant to the Permitted Stock Plans
and other than the issuance, sale or entering into any agreements with respect
thereto of Junior Securities for a price no less than their Market Price, or (b)
any additional shares of Series B Preferred;
-8-
(ii) consummate or permit any Subsidiary to consummate any Fundamental
Change, Organic Change or Change in Ownership or permit any Subsidiary to merge
or consolidate with any Person (other than a merger or consolidation with the
Corporation or between or among Wholly-Owned Subsidiaries) within three years of
the original date of issuance of the Series B Preferred;
(iii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes);
(iv) make any material change to the Corporation's capital structure;
(v) make an assignment for the benefit of creditors or admit in
writing its inability to pay its debts generally as they become due; or petition
or apply, or permit any Subsidiary to petition or apply, to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Corporation
or any Subsidiary or of any substantial part of the assets of the Corporation or
any Subsidiary, or commence any proceeding (other than a proceeding for the
voluntary liquidation and dissolution of a Subsidiary) relating to the
Corporation or any Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or, after any such petition or application is filed, or any such
proceeding is commenced, against the Corporation or any Subsidiary, either (A)
by any act of the Corporation or any Subsidiary indicate its approval thereof,
consent thereto or acquiescence therein or (B) fail to seek to have such
petition, application or proceeding dismissed;
(vi) acquire or enter into, or permit any Subsidiary to acquire or
enter into, any material interest or material Investment in any company or
business (whether by a purchase of assets, purchase of stock, merger or
otherwise), or any material joint venture (including by issuing or selling any
shares of the capital stock, or rights to acquire shares of the capital stock,
of any Subsidiary to any Person other than the Corporation or a Wholly-Owned
Subsidiary);
(vii) create, incur, assume or suffer to exist or enter into any
agreement providing for a facility from which it may incur, or permit any
Subsidiary to create, incur, assume or suffer to exist or enter into any
agreement providing for a facility from which it may incur, Funded Debt;
(viii) become subject to, or permit any of its Subsidiaries to become
subject to, (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would (under any
circumstances) restricts (a) the right of any Subsidiary to make loans or
advances or pay dividends to, transfer property to, or repay any indebtedness
owed to, the Corporation or another Subsidiary or (b) the Corporation's right to
perform the provisions of this Certificate of Designation or the Corporation's
bylaws (including, without limitation, restrictions relating to the declaration
and payment of dividends on and/or the making of redemptions of the Series B
Preferred as contemplated by this Certificate of Designation and/or relating to
conversions of the Series B Preferred);
-9-
(ix) increase the number of authorized shares of any series of
preferred stock or alter, change or otherwise affect or impair the rights,
preferences or powers or the relative preferences and priorities of the holders
of any series of preferred stock;
(x) make any amendment to the Certificate of Incorporation, this
Certificate of Designation or the Corporation's bylaws (other than as required
by law);
(xi) adopt or amend any anti-takeover protections (including, without
limitation, any agreement in which the payment of money is or could be triggered
by a change of control or any shareholder rights plan or poison pill plan or
similar arrangement relating to accumulations of beneficial ownership of the
Corporation's capital stock or a change in control of the Corporation), other
than the adoption or entering into of change of control agreements with officers
of the Corporation on terms substantially similar to the terms of the change of
control agreements between the corporation and officers of the Corporation in
effect on the date of the initial issuance of the Series B Preferred; or
(xii) commit or agree to do any of the foregoing.
Notwithstanding the foregoing, no consent or affirmative vote of the Majority
Holders shall be required for the Corporation or any of its Subsidiaries to (x)
enter into any agreement with respect to the initial incurrence of the Senior
Debt or any incurrence of revolving credit indebtedness thereunder (including
the incurrence of liens), (y) perform any of its obligations thereunder or abide
by any of the provisions thereof or (z) repay or prepay any loans, indebtedness
or obligations thereunder when due, including the repayment of revolving credit
loans from time to time, in accordance with the terms thereof.
SECTION 5. CONVERSION.
5A. Conversion at the Holder's Option. At any time and from time to
time, any holder of Series B Preferred may convert (without the payment of any
additional consideration) all or any portion of the Series B Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by multiplying the number of Shares to be converted
by $1,000 and dividing the result by the Conversion Price then in effect.
5B. Conversion at the Corporation's Option. The Corporation may, at
any time that the Market Price per shares of the Underlying Common Stock is
greater than or equal to a price that is 250% of the Conversion Price then in
effect, force a conversion of all (but not less than all) of the Shares of
Series B Preferred then outstanding. The Corporation may exercise such
conversion right by giving written notice to the holders of Series B Preferred
of such election not less than 30 calendar days prior to the date on which such
conversion is to be made.
5C. Conversion Procedure.
(i) Except as otherwise provided herein, each conversion of Series B
Preferred shall be deemed to have been effected as of the close of business on
the date on which
-10-
the applicable notice of conversion has been made in accordance with this
Certificate of Designations. At the time any such conversion has been effected,
the rights of the holder of the Shares converted as a holder of Series B
Preferred shall cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
(ii) The conversion rights of any Share subject to redemption
hereunder shall terminate on the Redemption Date for such Share unless the
Corporation has failed to pay to the holder thereof the Cash Redemption Price
for such Share.
(iii) Notwithstanding any other provision hereof, if a conversion of
Series B Preferred is to be made in connection with a Change in Ownership, a
Fundamental Change or other transaction affecting the Corporation, the
conversion of any Shares of Series B Preferred may, at the election of the
holder thereof, be conditioned upon the consummation of such transaction, in
which case such conversion shall not be deemed to be effective until such
transaction has been consummated.
(iv) As soon as possible after a conversion has been effected (but in
any event within three business days), the Corporation shall deliver to the
converting holder:
(a) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting
holder has specified;
(b) payment in an amount equal to all accrued dividends with
respect to each Share converted which have not been paid prior thereto; and
(c) a certificate representing any Shares which were represented
by the certificate or certificates delivered to the Corporation in
connection with such conversion but which were not converted.
(v) The Corporation shall declare the payment of all dividends payable
under Section 5C(iv)(b) above. If the Corporation is not permitted under
applicable law to pay any portion of the accrued and unpaid dividends on the
Series B Preferred being converted, the Corporation shall pay such dividends to
the converting holder as soon thereafter as funds of the Corporation are legally
available for such payment. At the request of any such converting holder, the
Corporation shall provide such holder with written evidence of its obligation to
such holder.
(vi) The issuance of certificates for shares of Conversion Stock upon
conversion of Series B Preferred shall be made without charge to the holders of
such Series B Preferred for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of shares of Conversion Stock. Upon conversion of each Share, the
Corporation shall take all such actions as are necessary in order to insure that
the Conversion Stock issuable with respect to such conversion shall be validly
issued,
-11-
fully paid and nonassessable, free and clear of all taxes, liens, charges and
encumbrances with respect to the issuance thereof.
(vii) The Corporation shall not close its books against the transfer
of Series B Preferred or of Conversion Stock issued or issuable upon conversion
of Series B Preferred in any manner which interferes with the timely conversion
of Series B Preferred. The Corporation shall assist and cooperate with any
holder of Shares required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of Shares
hereunder (including, without limitation, making any filings required to be made
by the Corporation).
(viii) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Conversion Stock, solely for the
purpose of issuance upon the conversion of the Series B Preferred, such number
of shares of Conversion Stock issuable upon the conversion of all outstanding
Series B Preferred. All shares of Conversion Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall take all such actions
as may be necessary to assure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Conversion
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Corporation upon each such issuance). The
Corporation shall not take any action which would cause the number of authorized
but unissued shares of Conversion Stock to be less than the number of such
shares required to be reserved hereunder for issuance upon conversion of the
Series B Preferred.
5D. Conversion Price. The initial Conversion Price shall be $13.875.
In order to prevent dilution of the conversion rights granted under this Section
5, the Conversion Price shall be subject to adjustment from time to time
pursuant to this Section 5D, Section 5E, Section 5F and Section 5G.
5E. Subdivision or Combination of Common Stock. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
5F. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change." Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance reasonably satisfactory to the Majority
Holders) to insure that the Series B Preferred shall not be cancelled
-12-
or retired as a result of such Organic Change and each of the holders of the
Series B Preferred shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be) the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series B Preferred, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such holder
had converted its Series B Preferred immediately prior to such Organic Change.
In each such case, the Corporation shall also make appropriate provisions (in
form and substance reasonably satisfactory to the Majority Holders) to insure
that the provisions of this Section 5 and Section 6 hereof shall thereafter be
applicable to the Series B Preferred (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Corporation, an immediate adjustment of the Conversion Price,
and a corresponding immediate adjustment in the number of shares of Conversion
Stock acquirable and receivable upon conversion of Series B Preferred, if the
value so reflected is less than the Conversion Price determined as of the date
of such consolidation, merger or sale). The Corporation shall not effect any
such consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than the Corporation) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance reasonably satisfactory to the Majority
Holders), the obligation to deliver to each such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire.
5G. Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 5 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors shall make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of Series B
Preferred; provided that no such adjustment shall increase the Conversion Price
as otherwise determined pursuant to this Section 5 or decrease the number of
shares of Conversion Stock issuable upon conversion of each Share of Series B
Preferred.
5H. Notices.
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Series B
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders of
Series B Preferred at least 20 days prior to the date on which the Corporation
closes its books or takes a record (a) with respect to any dividend or
distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the holders of
Series B Preferred at least 20 days prior to the date on which any Organic
Change shall take place.
-13-
5I. No Avoidance. If the Corporation shall enter into any transaction
for the purpose of avoiding the application of the provisions of this Section 5,
the benefits of such provisions shall nevertheless apply and be preserved.
SECTION 6. PURCHASE RIGHTS.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then each holder of Series B Preferred shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Conversion Stock acquirable upon conversion of such
holder's Series B Preferred immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
SECTION 7. EVENTS OF NONCOMPLIANCE.
7A. Definition. An "Event of Noncompliance" shall have occurred if:
(i) the Corporation fails to pay on any dividends with respect to the
Series B Preferred that it is required to make pursuant to Section 1A hereof;
(ii) the Corporation fails to make any redemption payment with respect
to the Series B Preferred which it is required to make hereunder, whether or not
such payment is legally permissible or is prohibited by any agreement to which
the Corporation is subject;
(iii) the Corporation materially breaches or otherwise materially
fails to perform or observe any other covenant or agreement set forth herein or
in any of the Transaction Documents and such breach or failure continues for a
period of 30 days after notice is given the Corporation by any holder of Series
B Preferred or the Corporation otherwise has actual knowledge thereof or any
opinion of the Corporation's independent accountants on the Corporation's
audited financial statements contains a going-concern exception;
(iv) any representation or warranty contained in any of the
Transaction Documents or required to be furnished to any holder of Series B
Preferred pursuant to the Purchase Agreement, or any information contained in
writing furnished by the Corporation or any Subsidiary to any holder of Series B
Preferred, is false or misleading on the date made or furnished, and such breach
of the representation or warranty has had or would reasonably be expected to
result in a Material Adverse Effect;
(v) the Corporation or any Subsidiary makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Corporation or any Subsidiary bankrupt or insolvent; or any
order for relief with respect to the Corporation or any Subsidiary is entered
under the Federal Bankruptcy Code; or the Corporation or any Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Corporation
-14-
or any Subsidiary or of any substantial part of the assets of the Corporation or
any Subsidiary, or commences any proceeding (other than a proceeding for the
voluntary liquidation and dissolution of a Subsidiary) relating to the
Corporation or any Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Corporation or any Subsidiary and either
(a) the Corporation or any such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein or (b) such petition,
application or proceeding is not dismissed within 60 days;
(vi) a judgment in excess of the sum of $25,000,000 plus (unless the
applicable insurer has in any way disputed or denied such coverage) the amount
of applicable insurance coverage is rendered against the Corporation or any
Subsidiary and, within 60 days after entry thereof, such judgment is not fully
discharged or execution thereof stayed pending appeal, or within 60 days after
the expiration of any such stay, such judgment is not discharged; or
(vii) the Corporation or any Subsidiary defaults in the performance of
any obligation or agreement if the effect of such default is to cause an amount
exceeding $25,000,000 to become due prior to its stated maturity or to permit
the holder or holders of any obligation to cause an amount exceeding $25,000,000
to become due prior to its stated maturity.
7B. Consequences of Events of Noncompliance.
(i) If an Event of Noncompliance other than an Event of Noncompliance
of the type described in Section 7A(v) has occurred and is continuing, the
Majority Holders may demand (by written notice delivered to the Corporation), to
the extent permitted by the Senior Debt, immediate redemption of all or any
portion of the Series B Preferred owned by such holder or holders at a price per
Share equal to the Cash Redemption Price. The Corporation shall give prompt
written notice of such election to the other holders of Series B Preferred (but
in any event within five days after receipt of the initial demand for
redemption), and each such other holder may demand, to the extent permitted by
the Senior Debt, immediate redemption of all or any portion of such holder's
Series B Preferred by giving written notice thereof to the Corporation within
seven days after receipt of the Corporation's notice. The Corporation shall
redeem, to the extent permitted by the Senior Debt, all Series B Preferred as to
which rights under this Section 7B(i) have been exercised within 15 days after
receipt of the initial demand for redemption.
(ii) If an Event of Noncompliance of the type described in Section
7A(v) has occurred, all of the Series B Preferred then outstanding shall, to the
extent permitted by the Senior Debt, be subject to immediate redemption by the
Corporation (without any action on the part of the holders of the Series B
Preferred) at a price per Share equal to the Cash Redemption Price. The
Corporation shall immediately redeem all Series B Preferred upon the occurrence
of such Event of Noncompliance.
(iii) If any Event of Noncompliance exists, each holder of Series B
Preferred shall also have any other rights which such holder is entitled to
under any contract or agreement at any time and any other rights which such
holder may have pursuant to applicable law.
-15-
SECTION 8. REGISTRATION OF TRANSFER.
The Corporation shall keep at its principal office a register for the
registration of Series B Preferred. Upon the surrender of any certificate
representing Series B Preferred at such place, the Corporation shall, at the
request of the record holder of such certificate, execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange therefor
representing in the aggregate the number of Shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of Shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Series B Preferred
represented by such new certificate from the date to which dividends have been
fully paid on such Series B Preferred represented by the surrendered
certificate.
SECTION 9. REPLACEMENT.
Upon receipt of evidence reasonably satisfactory to the Corporation
(an affidavit of the registered holder shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing
Shares of Series B Preferred, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and dividends
shall accrue on the Series B Preferred represented by such new certificate from
the date to which dividends have been fully paid on such lost, stolen, destroyed
or mutilated certificate.
SECTION 10. AMENDMENT AND WAIVER.
No amendment, modification or waiver shall be binding or effective
with respect to any provision of Sections 1 to 12 hereof without the prior
written consent of the Majority Holders as of the time such action is taken;
provided that if any such amendment, modification or waiver is to a provision in
this Certificate of Designation that requires a specific vote to take an action
thereunder or to take an action with respect to the matters described therein,
such amendment, modification or waiver shall not be effective unless such vote
is obtained with respect to such amendment, modification or waiver; and provided
further that no change in the terms hereof may be accomplished by merger or
consolidation of the Corporation with another corporation or entity unless the
Corporation has obtained the prior written consent of the holders of the
applicable percentage of the Series B Preferred then outstanding. No other
course of dealing between the Corporation and the holder of any Series B
Preferred or any delay in exercising any rights hereunder shall operate as a
waiver of any rights of any such holders. For purposes of this Certificate of
Designation, Series B Preferred held by the Corporation or any Subsidiaries
shall not be deemed to be outstanding.
-16-
SECTION 11. NOTICES.
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Certificate of Designation shall be
in writing and shall be deemed to have been given when delivered personally to
the recipient, telecopied to the recipient (with hard copy sent by overnight
courier in the manner provided hereunder) if sent prior to 4:00 p.m. Chicago
time on a business day (and otherwise, on the immediately succeeding business
day), one business day after being sent to the recipient by reputable overnight
courier service (charges prepaid) or three business days after being mailed to
the recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications shall be sent
(i) to the Corporation, at its principal executive offices and (ii) to any
holder of Series B Preferred, at such holder's address as it appears in the
stock records of the Corporation (unless otherwise indicated by any such
holder).
SECTION 12. DEFINITIONS.
"Affiliate" of any particular Person means (i) any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, by contract or otherwise, and (ii) if such Person is a
partnership or limited liability company, any partner or member thereof.
"Cash Redemption Price" of any Share as of any date of determination
means the greater of (a) the Liquidation Value thereof plus all accrued and
unpaid dividends thereon and (b) the sum of (i) the Fair Market Value of the
Conversion Stock issuable upon conversion of such Share of Series B Preferred
(which, in the case of a redemption in connection with a Change in Ownership or
Fundamental Change, shall be the Fair Market Value of the total consideration
that the holder of the Share of Series B Preferred to be redeemed would have
received in connection with such Change in Ownership or Fundamental Change had
such holder converted such Share into Conversion Stock immediately prior to such
Change in Ownership or Fundamental Change) plus (ii) accrued and unpaid
dividends on such Share.
"Change in Ownership" means any transaction or event (including,
without limitation, any sale, transfer or issuance or series of sales, transfers
and/or issuances of Common Stock by the Corporation or any holders thereof)
which results in any Person or group of Persons (as the term "group" is used
under the Securities Exchange Act of 1934, as amended), other than the initial
holders of Series B Preferred, owning (including "beneficial ownership," as that
term is used under the Securities Exchange Act of 1934, as amended) more than
25% of the Common Stock outstanding at the time of such transaction or event, or
of capital stock of the Corporation possessing the voting power (under ordinary
circumstances) to elect a majority of the Corporation's Board of Directors.
"Closing" means the closing of the separate purchases and sales of the
Series B Preferred pursuant to the Purchase Agreement.
"Common Stock" means, collectively, the Corporation's Common Stock,
par value $.01 per share, and any capital stock of any class of the Corporation
hereafter authorized
-17-
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any Liquidation Event.
"Common Stock Deemed Outstanding" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Sections 5C(i) and
5C(ii) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time, but excluding any shares of Common Stock issuable upon
conversion of the Series B Preferred.
"Conversion Stock" means shares of the Corporation's Common Stock, par
value $.01 per share; provided that if there is a change such that the
securities issuable upon conversion of the Series B Preferred are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the security issuable upon conversion of the Series B Preferred if such security
is issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"Disclosure Schedules" means the schedules referenced in the Purchase
Agreement (other than the Schedule of Purchasers) and delivered to each of the
Purchasers in a letter dated as of the date of the Purchase Agreement.
"Event of Noncompliance" has the meaning specified in Section 7A.
"Fair Market Value" means (a) with respect to cash, the amount
thereof, (b) with respect to securities, their Market Price and (c) with respect
to any consideration other than cash or securities, its fair value determined
jointly by the Corporation's Board of Directors and the Majority Holders. If
such parties are unable to reach agreement within a reasonable period of time,
such fair value shall be determined by an independent appraiser experienced in
valuing securities jointly selected by the Corporation and the Majority Holders.
The determination of such appraiser shall be final and binding upon the parties,
and the Corporation and the holders of Series B Preferred (pro rata based on the
number of Shares held by each such holder) each shall pay one-half of the fees
and expenses of such appraiser.
"Fundamental Change" means (1) any sale or transfer of more than 50%
of the assets of the Corporation and its Subsidiaries on a consolidated basis
(measured by Fair Market Value) in any transaction or series of transactions, or
(2) any merger or consolidation to which the Corporation is a party or any
recapitalization, reorganization or reclassification of the Corporation or its
capital stock, except for a merger, recapitalization, reorganization or
reclassification in which the Corporation is the surviving corporation, the
terms of the Series B Preferred are not changed and the Series B Preferred is
not exchanged for cash, securities or other property, and after giving effect to
such merger, recapitalization, reorganization or reclassification, the
beneficial holders of the Corporation's outstanding capital stock immediately
prior to the merger shall continue to own the Corporation's outstanding capital
-18-
stock possessing the voting power (under ordinary circumstances) to elect a
majority of the Corporation's Board of Directors and no Person or group of
Persons (as the term "group" is used under the Securities Exchange Act of 1934),
other than the initial holders of Series B Preferred, has "beneficial ownership"
(as that term is used under the Securities Exchange Act of 1934, as amended) of
more than 25% of the outstanding Common Stock.
"Funded Debt" means at a particular time, without duplication, (i) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security and (iii) any indebtedness described in
clauses (i) or (ii) guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse);
provided that "Funded Debt" shall not include any loans between the Corporation
and/or its Wholly-Owned Subsidiaries.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied.
"Investments" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interests (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Junior Securities" means shares of any class or series of the
Corporation's capital stock or other equity securities which are junior to the
Series B Preferred in all respects with respect to preference and priority on
dividends, redemptions, liquidations and otherwise, including, without
limitation, (i) not having redemption rights or obligations or other put or call
rights in priority to, or earlier in time than, the payment in full in cash of
the Redemption Price or conversion of all Shares of Series B Preferred, except
for after the Scheduled Demand Redemption Date, (ii) being subordinate in all
respects to prior payment in full of all amounts to which the holders of the
Series B Preferred are entitled hereunder upon a Liquidation Event (including in
the case of any deemed Liquidation Event described in Section 2C), (iii) not
providing for cash dividends (although such securities may have payment-in-kind
or accruing dividends), (iv) not containing any other rights or terms entitling
the holder thereof to receive or obtain any other payments prior to the payment
in full of all amounts to which the holders of Series B Preferred are entitled,
(v) not containing any provision which in any way could impair, restrict or
otherwise adversely affect the Corporation's right or ability to comply with its
obligations with respect to the Series B Preferred, (vi) not containing any
other rights superior to the rights afforded to the holders of Series B
Preferred pursuant to this Certificate of Designation, and (vii) not providing
for or permitting the conversion, exercise or exchange of such security
(regardless of the circumstances) into or for a security other than a Junior
Security as otherwise described in this definition.
"Liquidation Event" has the meaning specified in Section 2A.
"Liquidation Payment Amount" has the meaning specified in Section 2C.
-19-
"Liquidation Value" of any Share as of any particular date shall be
equal to $1,000.
"Majority Holders" means the holders of a majority of the then
outstanding Series B Preferred.
"Market Price" of any security means the average, over a period of 20
days consisting of the day as of which "Market Price" is being determined and
the 19 consecutive trading days prior to such day, of the closing prices of such
security's sales on the principal securities exchange on which such security may
at the time be listed, or, if there has been no sales on such exchange on any
day, the average of the highest bid and lowest asked prices on such exchange at
the end of such day, or, if on any day such security is not so listed, the
average of the representative bid and asked prices quoted in the Nasdaq National
Market System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the Nasdaq National Market System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization. If at any time such security is not listed on any
securities exchange or quoted in the Nasdaq National Market System or the
over-the-counter market, the "Market Price" shall be the fair value thereof
determined jointly by the Corporation and the Majority Holders. If such parties
are unable to reach agreement within a reasonable period of time, such fair
value shall be determined by an independent appraiser experienced in valuing
securities jointly selected by the Corporation and the Majority Holders. The
determination of such appraiser shall be final and binding upon the parties, and
the Corporation and the holders of Series B Preferred (pro rata based on the
number of Shares held by each such holder) each shall pay one-half of the fees
and expenses of such appraiser.
"Marketable Securities" means securities which are (i) listed or
quoted on a United States national securities exchange or quoted on a United
States national automated inter-dealer quotation system, (ii) in the Majority
Holders' reasonable belief after consultation with counsel, immediately eligible
for sale by each holder pursuant to a registration statement effective under the
Securities Act of 1933, as amended, or immediately eligible for sale by the
holder (independently of sales by other holders) pursuant to Rule 144(k) of the
Securities Act of 1933, as amended, or any similar provision then in force and
(iii) not subject to any "hold-back" or "lock-up" imposed by a managing
underwriter in connection with a public offering of the issuer or any other
restriction on the disposition thereof under the terms of any other agreement.
"Material Adverse Effect" means a material and adverse effect, change
or development upon or in the business, operations, assets, liabilities,
condition (financial or otherwise), business prospects or operating results of
the Corporation and its Subsidiaries taken as a whole.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Organic Change" has the meaning specified in Section 5F.
-20-
"Permitted Stock Plans" means the following stock option plans of the
Company, each of which have been approved by the Company's stockholders in
accordance with the applicable rules of the Nasdaq National Market: 1995 Stock
Option Plan, 1996 Stock Option Plan, 1996 Outside Director Stock Option Plan,
1998 Non-statutory Stock Option Plan and 2005 Performance Incentive Plan.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force.
"Purchase Agreement" means the Preferred Stock Purchase Agreement,
dated as of April 23, 2006, by and among the Corporation and certain investors,
as such agreement may from time to time be amended in accordance with its terms.
"Purchase Rights" has the meaning specified in Section 6.
"Redemption Date" as to any Share means the date specified in the
notice of any redemption at the Corporation's option or at the Scheduled
Redemption Date; provided that no such date shall be a Redemption Date unless
the Cash Redemption Price is actually paid in full on such date, and if not so
paid in full, the Redemption Date shall be the date on which such amount is
fully paid.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 23, 2006, by and among the Corporation and certain
investors, as such agreement may from time to time be amended in accordance with
its terms.
"Scheduled Demand Redemption Date" has the meaning specified in
Section 3A.
"SEC Reports" means the quarterly reports on Form 10-Q and the annual
reports on Form 10-K (including any amendments thereto) required to be filed by
it with the Securities and Exchange Commission (including any successor thereto)
pursuant to the federal securities laws and the Securities and Exchange
Commission rules and regulations thereunder.
"Senior Debt" means (a) the Credit Agreement ("Credit Agreement"),
dated July 5, 2006, by and among the Corporation, the Lenders identified
therein, Citigroup North America, Inc., as Administrative Agent and Collateral
Agent, Citibank, N.A., as Issuing Bank, and the other agents party thereto,
including any notes, guarantees, collateral and security documents, instruments
and agreements executed in connection therewith, and in each case, as amended,
restated, refinanced or waived from time to time (other than to increase the
principal amount or maturity thereof unless consented to by the Majority Holders
if the Majority Holders continue to possess the other voting rights set forth in
Section 4B hereof at the time of such increase in
-21-
principal amount or maturity; and, notwithstanding the foregoing, increases in
principal amount or commitments under the Credit Agreement in an aggregate
amount of up to an additional $75.0 million pursuant to Section 2.21 thereunder
(or any successor provision thereto) shall not require the consent of the
Majority Holders pursuant to Section 4B hereof or otherwise, and shall for all
purposes hereof constitute "Senior Debt") and (b) all obligations thereunder or
with respect thereto.
"Series B Director" has the meaning specified in Section 4A.
"Series B Preferred" has the meaning specified in Section 1A.
"Share" has the meaning specified in Section 1A.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity. For purposes of this
Certificate of Designation, if the context does not otherwise specify in respect
of which Person the term "Subsidiary" is used, the term "Subsidiary" shall refer
to a Subsidiary of the Corporation.
"Thoma Cressey" means, collectively, any and all funds affiliated with
Thoma Cressey Equity Partners Inc. and their co-investors and limited partners.
"Transaction Documents" means the Purchase Agreement, the Registration
Rights Agreement, the Disclosure Schedules, any other agreement contemplated
hereby or thereby to which the Corporation is a party and any certificate
delivered by the Corporation with respect hereto or thereto in connection with
the Closing.
"Underlying Common Stock" means (i) the Common Stock issuable upon
conversion of the Series B Preferred and (ii) any Common Stock issuable with
respect to the securities referred to in clause (i) above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For all
purposes of this Certificate of Designation, any Person who holds Series B
Preferred shall be deemed to be the holder of the Underlying Common Stock
obtainable upon conversion of the Series B Preferred in connection with the
transfer thereof or otherwise regardless of any restriction or limitation on the
conversion of the Series B Preferred, such Underlying Common
-22-
Stock shall be deemed to be in existence and outstanding, and such Person shall
be entitled to exercise the rights of a holder of Underlying Common Stock
hereunder.
"Wholly-Owned Subsidiary" means, with respect to any Person, a
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
****
[Signature page follows.]
-23-
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation
to be executed by its duly authorized officer this 5th day of July, 2006.
JDA SOFTWARE GROUP, INC.
/s/ Hamish Brewer
----------------------------------------
By: Hamish Brewer
Its: President and Chief Executive
Officer