Exhibit 3.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES A CONVERTIBLE PREFERRED STOCK
OF SUTTER HOLDING COMPANY, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
SUTTER HOLDING COMPANY, INC., a corporation organized and
existing under the General Corporation Law of the State of Delware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Certificate of Incorporation,
the said Board of Directors as of January 26, 2005, adopted the following
resolution creating a series of 1,500 shares of Preferred Stock designated as
"Series A Convertible Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of the
Certificate of Incorporation, a series of preferred stock, par value $0.001 per
share, of the Corporation be and hereby is created, and that the designation and
number of shares thereof and the voting and other powers, preferences and
relative, participating, optional or other rights of the shares of such series
and the qualifications, limitations and restrictions thereof are as follows:
Section 1. Designation and Number of Shares. The designation of the series of
preferred stock authorized hereby shall be "Series A Convertible Preferred
Stock" (the "Series A Preferred Stock"). The maximum number of shares of Series
A Preferred Stock shall be 1,500 shares.
Section 2. Dividends.
2A. General Obligation. When and as declared by the Corporation's Board of
Directors and to the extent permitted under the General Corporation Law of the
State of Delaware, the Corporation shall pay preferential dividends to the
holders of the Series A Preferred Stock as provided in this Section 2. Except as
otherwise provided herein, dividends on each share of Series A Preferred Stock
(a "Share") shall be payable on a quarterly basis equal to $25.00 per Share per
quarter. To the extent that the Corporation, in its sole discretion, decides not
to pay such dividends in cash, dividends on each Share shall accrue at the rate
of 10.00% percent per annum of the sum of the Liquidation Value thereof from and
including the date of issuance of such Share to and including the first to occur
of (i) the date on which the Liquidation Value of such Share (plus all accrued
and unpaid dividends thereon) is paid to the holder thereof in connection with
the liquidation of the Corporation or the redemption of such Share by the
Corporation, (ii) the date on which such Share is converted into shares of
Common Stock hereunder or (iii) the date on which such share is otherwise
acquired by the Corporation; provided that, for the avoidance of doubt, no
dividend shall accrue on unpaid accrued dividends. Any unpaid accrued dividends
shall be accumulated as unpaid dividiends and shall be fully paid or declared
with funds irrevocably set apart for payment before any dividends,
distributions, redemptions or other payments may be made with respect to any
Junior Securities. The date on which the Corporation initially issues any Share
shall be deemed to be its "date of issuance" regardless of the number of times
transfer of such Share is made on the stock records maintained by or for the
Corporation and regardless of the number of certificates which may be issued to
evidence such Share.
2B. Distribution of Partial Dividend Payments. Except as otherwise provided
herein, if at any time the Corporation pays less than the total amount of
dividends then accumulated or accrued with respect to the Series A Preferred
Stock, such payment shall be distributed pro rata among the holders thereof
based upon the aggregate accrued but unpaid dividends on the Shares held by each
such holder.
2C. Participating Dividends. 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 shall also declare and pay to the holders of the Series A
Preferred Stock at the same time that it declares and pays such dividends to the
holders of the Common Stock; provided that no dividends shall be paid to holders
of Common Stock so long as there are any accrued and unpaid dividends on the
Series A Preferred Stock.
Section 3. Liquidation.
3A. Priority of Series A Preferred Stock Upon Liquidation. Upon any liquidation,
dissolution or winding up of the Corporation (whether voluntary or involuntary)
(a "Liquidation Event"), each holder of Series A Preferred Stock shall be
entitled to be paid (a "Preferred Liquidation Payment"), 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 held by such holder
(plus all accumulated, accrued and unpaid dividends thereon) or (ii) the amount
such holder would have received with respect to his, her or its Series A
Preferred Stock if such Series A Preferred Stock had been converted to Common
Stock in accordance with the terms of this designation immediately prior to such
Liquidation Event. If upon any such Liquidation Event, the Corporation's assets
to be distributed among the holders of the Series A Preferred Stock are
insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid under this Section 3, 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 A Preferred Stock
held by each such holder. Not less than 30 days prior to the payment date stated
therein, the Corporation shall mail written notice of any such Liquidation Event
to each record holder of Series A Preferred Stock, 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. For purposes of
this Section 3A, a Realization Event shall not be deemed to be a Liquidation
Event hereunder.
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Section 4. Redemptions.
4A. Optional Redemption. The Corporation may upon 30 days prior notice elect at
any time after the date hereof to redeem all, or any portion, of the Series A
Preferred Stock then outstanding at the Redemption Price in effect at the time
of such redemption.
4B. Less Than Complete Redemption. In case fewer than the total number of Shares
represented by any certificate are redeemed, a new certificate representing the
number of unredeemed Shares shall be issued to the holder thereof without cost
to such holder within five Buiness Days after surrender of the certificate
representing the redeemd Shares.
4C. Dividends After Redemption Date. No Share shall be entitled to any dividends
after the date on which the Redemption Price of such Share is paid in full to
the holder of such Share. On such date, all rights of the holder of such Share
shall cease, and such Share shall no longer be deemed to be issued and
outstanding.
4D. Redeemed or Otherwise Acquired Shares. Any Shares which are redeemed or
otherwise acquired by the Corporation shall be canceled.
Section 5. Voting Rights. The holders of the Series A Preferred Stock shall be
entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and except as otherwise required by applicable law, the
holders of the Series A Preferred Stock shall be entitled to vote on all matters
submitted to the stockholders for a vote together with the holders of the Common
Stock voting together as a single class with each share of Common Stock entitled
to one vote per share and each Share of Series A Preferred Stock entitled to one
vote for each share of Common Stock issuable upon conversion of the Series A
Preferred Stock pursuant to Section 6 hereof as of the record date for such vote
or, if no record date is specified, as of the date of such vote.
Section 6. Conversion.
6A. Conversion Procedure.
(i) Subject to the terms of this Section 6, (A) at any time any holder of
Series A Preferred Stock may convert all or any portion of the Series A
Preferred Stock (including any fraction of a Share) held by such holder
and (B) at any time following a Qualified Public Offering, upon
providing 30 days prior written notice to the holders of Series A
Preferred Stock, the Corporation may require all holders of Series A
Preferred Stock to convert all, but not less than all, of their Shares
into the number of shares of Common Stock equal to (x) the quotient
obtained by dividing the Liquidation Value by the Conversion Price
multiplied by (y) the number of shares of Series A Preferred Stock to
be so converted; provided that with respect to subclause (B) the sum of
(v) the Market Price of the Common Stock received upon such conversion,
valued on the date on which the Corporation mails its notice to the
holders of Series A Preferred Stock, plus (w) any dividends paid or
payable on such Series A Preferred Stock, shall at least equal an
amount equal to the Liquidation Value plus a non-compounding yield of
30% per annum; provided further that the Corporation may unilaterally
alter the Liquidation Value then in effect to the benefit the holders
of Series A Preferred Stock in order for the condition in the preceding
proviso to be met.
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(ii) Except as otherwise provided herein, each conversion of Series A
Preferred Stock shall be deemed to have been effected as of the close
of business on the date on which the certificate or certificates
representing the Series A Preferred Stock to be converted have been
surrendered for conversion at the principal office of the Corporation.
At the time any such conversion has been effected, the rights of the
holder of the Shares converted as a holder of Series A Preferred Stock
shall cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock are to be issued
upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby,
subject to compliance with requirements necessary to assure that, prior
to the registration of the Common Stock under the Securities Act, such
shares of Common Stock may be issued in a transaction exempt from
registration under the Securities Act.
(iii) The conversion rights of any Share subject to redemption hereunder
shall terminate on the date of redemption for such Share unless the
Corporation has failed to pay to the holder thereof the Redemption
Price for such Share.
(iv) As soon as possible after a conversion has been effected (but in any
event within five (5) Business Days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of shares of
Common Stock issuable by reason of such conversion in such name or
names and such denomination or denominations as the converting holder
has specified;
(b) a certificate representing any Shares of Series A Preferred Stock which
were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not
converted.
(v) The issuance of certificates for shares of Common Stock upon conversion
of Series A Preferred Stock shall be made without charge to the holders
of such Series A Preferred Stock 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 Common Stock.
Upon conversion of each Share, the Corporation shall take all such
actions as are necessary in order to insure that the Common Stock
issuable with respect to such conversion shall be validly issued, fully
paid and nonassessable, free and clear of all taxes, liens, charges and
encumbrances with respect to the issuance thereof.
(vi) The Corporation shall not close its books against the transfer of
Series A Preferred Stock or of Common Stock issued or issuable upon
conversion of Series A Preferred Stock in any manner which interferes
with the timely conversion of Series A Preferred Stock. 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).
(vii) The Corporation shall reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of issuance
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upon the conversion of the Series A Preferred Stock, such number of
shares of Common Stock issuable upon the conversion of all outstanding
Series A Preferred Stock. All shares of Common 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 ensure
that all such shares of Common 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 Common 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 that would cause the number of
authorized but unissued shares of Common Stock to be less than the
number of such shares required to be reserved hereunder for issuance
upon conversion of the Series A Preferred Stock.
(viii) If the shares of Common Stock issuable by reason of conversion of
Series A Preferred Stock are convertible into or exchangeable for any
other stock or securities of the Corporation, the Corporation shall, at
the converting holder's option, upon surrender of the Shares to be
converted by such holder as provided herein together with any notice,
statement or payment required to effect such conversion or exchange of
Common Stock, deliver to such holder or as otherwise specified by such
holder a certificate or certificates representing the stock or
securities into which the shares of Common Stock issuable by reason of
such conversion are so convertible or exchangeable, registered in such
name or names and in such denomination or denominations as such holder
has specified.
6B. Conversion Ratio. Except for (a) the sale or grant of options to
employees, directors or consultants to purchase up to 10% of the
outstanding shares of Common Stock and except for shares of Common
Stock issued upon the exercise of such options granted pursuant to such
plans or arrangements; provided that any shares or options issued
pursuant to this Section 6B(a) shall have a strike price or sale price,
as the case may be, that is greater than or equal to the Conversion
Price in effect at the time of such grant or sale, (b) any shares of
Common Stock issued as a dividend or distribution on the Common Stock
(in which case Section 6C would apply), (c) any securities issued by
the Corporation upon the exercise or conversion of any securities
outstanding on the date hereof, (d) issuances in acquisitions of
another company or assets approved by the Board of Directors wherein
the Common Stock is valued at or above then-effective Conversion Price
and (e) issuances made in connection with any share split, reverse
share split, recapitalization, reclassification, share combination or
similar reorganization, if and whenever after the date of issuance of
any Share of Series A Preferred Stock the Corporation issues or sells,
or in accordance with Section 6D is deemed to have issued or sold, any
shares of its Common Stock (such shares, the "Additional Shares") for a
consideration per share less than the Conversion Price, then
immediately upon such issue or sale the applicable Conversion Price
shall be equal to a fraction, the numerator of which shall be the sum
of: (x) the number of shares of Common Stock Deemed Outstanding
immediately prior to the issuance of the Additional Shares multiplied
by the Conversion Price immediately prior to such issuance, plus (y)
the consideration, if any, received by the Corporation upon such issue
or sale, and the denominator of which shall be the number of shares of
Common Stock Deemed Outstanding immediately after the issuance of the
Additional Shares.
6C. Effect on Conversion Price of Certain Events. For purposes of
determining any adjusted Conversion Price under Section 6B, the
following shall be applicable:
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(i) Issuance of Rights or Options. If the Corporation in any manner grants
or sells any Options and the price per share for which Common Stock is
issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such
Options, is less than the Market Price of the Common Stock, determined
as of such time, then the total maximum number of shares of Common
Stock, issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to be
outstanding and to have been issued and sold by the Corporation at the
time of the granting or sale of such Options for such price per share.
For purposes of this paragraph the "price per share for which Common
Stock is issuable" shall be determined by dividing (A) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting or sale of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon exercise of all such Options, plus in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Corporation
upon the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (B) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of
any Conversion Price shall be made when Convertible Securities are
actually issued upon the exercise of such Options or when shares of
Common Stock are actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in any manner
issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon conversion or exchange thereof is
less than the Market Price of the Common Stock, determined as of such
time, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be deemed
to be outstanding and to have been issued and sold by the Corporation
at the time of the issuance or sale of such Convertible Securities for
such price per share. For the purposes of this paragraph, the "price
per share for which Common Stock is issuable" shall be determined by
dividing (A) the total amount received or receivable by the Corporation
as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No
further adjustment of any Conversion Price shall be made when shares of
Common Stock are actually issued upon the conversion or exchange of
such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustments of the Conversion Price had been or are to be made pursuant
to other provisions of this Section 6C, no further adjustment of the
Conversion Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase price
provided for in any Options, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities
or the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock changes at any time, the applicable
Conversion Price in effect at the time of such change shall be
immediately adjusted to such Conversion Price which would have been in
effect at such time had such Options or Convertible Securities still
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outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 6C, if
the terms of any Option or Convertible Security which was outstanding
as of the date of issuance with respect to any Share of Series A
Preferred Stock are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such
change.
(iv) Treatment of Expired Options and Unexercised Convertible Securities.
Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of
any such Option or right, the Conversion Price then in effect hereunder
shall be adjusted immediately to the Conversion Price which would have
been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
(v) Calculation of Consideration Received. If any Common Stock, Option or
Convertible Security is issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor. If any Common
Stock, Option or Convertible Security is issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Corporation shall be the fair value of such
consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Corporation
shall be the Market Price thereof as of the date of receipt. If any
Series A Preferred Stock, Common Stock, Option or Convertible Security
is issued to the owners of the non-surviving entity in connection with
any merger in which the Corporation is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value
of the portion of the net assets of the non-surviving entity that is
attributable to such Series A Preferred Stock, Common Stock, Option or
Convertible Security, as the case may be. The fair value of any
consideration or net assets other than cash and securities (and, if
applicable, the portions thereof attributable to any such stock or
securities) shall be determined jointly by the Corporation and the
holders of a majority of the shares of Senior Preferred Stock then
outstanding. If such parties are unable to reach agreement within a
reasonable period of time, the fair value of such consideration shall
be determined by an independent appraiser experienced in valuing such
type of consideration jointly selected by the Corporation and the
holders of a majority of the shares of Senior Preferred Stock then
outstanding. The determination of such appraiser shall be final and
binding upon the parties, and the fees and expenses of such appraiser
shall be borne by the Corporation.
(vi) Integrated Transactions. In case any Option is issued in connection
with the issue or sale of other securities of the Corporation, together
comprising one integrated transaction, each Option shall be deemed to
have been issued for a consideration of $0.01.
(vii) Treasury Shares. The number of shares of Series A Preferred Stock or
Common Stock, as applicable, outstanding at any given time shall not
include shares owned or held by or for the account of the Corporation
or any Subsidiary, and the disposition of any shares so owned or held
shall be considered an issue or sale of Series A Preferred Stock or
Common Stock, as applicable.
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(viii) Record Date. If the Corporation takes a record of the holders of Series
A Preferred Stock or Common Stock for the purpose of entitling them (a)
to receive a dividend or other distribution payable in Series A
Preferred Stock, Common Stock, Options or in Convertible Securities or
(b) to subscribe for or purchase Series A Preferred Stock, Common
Stock, Options or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the shares of Series A
Preferred Stock or Common Stock, as applicable, deemed to have been
issued or sold upon the declaration of such dividend or upon the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be. If after taking such
record the Corporation shall have legally abandoned its plan to make or
do any of the foregoing (without having made such issuance), then any
adjustment made to any Conversion Price hereunder as a result of
securities having been deemed issued on the date of such record, shall
be recomputed as if such record had not been taken.
6D. 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
satisfactory to the holders of a majority of the Series A Preferred
Stock then outstanding) to insure that each of the holders of Series A
Preferred Stock shall thereafter have the right to acquire and receive,
in lieu of or in addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series A Preferred Stock, 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 A Preferred Stock immediately prior to such Organic Change. In
each such case, the Corporation shall also make appropriate provisions
(in form and substance satisfactory to the holders of a majority of the
Series A Preferred Stock then outstanding) to ensure that the
provisions of Section 7 below shall thereafter be applicable to the
Series A Preferred Stock. 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 satisfactory to
the holders of a majority of the Series A Preferred Stock then
outstanding), 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.
Section 7. Protective Provisions. The Corporation shall not, without the consent
of 50% of the Series A Preferred Stock outstanding at such time:
(i) fail to make any redemption payment with respect to the Series A Preferred
Stock which it is required to make hereunder;
(ii) increase or decrease the authorized number of shares of Common Stock or
Series A Preferred Stock;
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(iii) make any material amendment or change to the rights, preferences,
privileges or powers of, or the restrictions provided for the benefit of, the
Series A Preferred Stock;
(iv) take any action that authorizes, creates or issues shares of any class of
stock having preferences superior to or on parity with the Series A Preferred
Stock;
(v) take any action that reclassifies any outstanding shares into shares having
preferences or priority as to dividends or assets senior to or on parity with
the preference of the Series A Preferred Stock;
(vi) merge or consolidate with one or more other entities in which the
shareholders of the Corporation immediately after such merger or consolidation
hold stock (or the equivalent of stock) representing less than a majority of the
voting power of the outstanding stock of the surviving corporation;
(vii) sell of all or substantially all the Corporation's assets;
(viii) increase the Corporation's Indebtedness (other than Permitted
Indebtedness); or
(ix) voluntarily liquidate or dissolve itself.
Section 8. Registration of Transfer. The Corporation shall keep at its principal
office a register for the registration of Series A Preferred Stock. Upon the
surrender of any certificate representing Series A Preferred Stock 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 A Preferred Stock represented by such new certificate
from the date to which dividends have been fully paid on such Series A Preferred
Stock 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 A Preferred Stock, 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 A Preferred Stock represented by such new certificate
from the date to which dividends have been fully paid on such lost, stolen,
destroyed or mutilated certificate.
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Section 10. Definitions.
"Accruing Amount" means, as of any date of determination, the number of
calendar days that have been completed since the third anniversary of the date
hereof multiplied by $0.54794; provided, that the Accruing Amount shall in no
event be less than zero.
"Additional Shares" has the meaning assigned to such term in Section
6B.
"Adjustment" has the meaning assigned to such term in Section 8B(i).
"Affiliate" means, as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
"Board of Directors" means the board of directors of the Corporation.
"Business Day" means any day other than a Saturday, Sunday, or any day
on which banks in San Francisco, California are authorized or obligated by
applicable law to close.
"Common Stock" means, collectively, the Corporation's common stock and
any capital stock of any class of the Corporation hereafter authorized 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, dissolution or winding up of the
Corporation.
"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 issuable upon the exercise, conversion or exchange of
Options or Convertible Securities (excluding Options or Convertible Securities
that were not at or in the money at the time such Options or Convertible
Securities were issued).
"Conversion Price" is equal to $6.00, as the same may be adjusted
pursuant to Section 6.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"Corporation" has the meaning assigned to such term in the introductory
paragraph.
"Diversified Risk" means FLF, Inc. (d/b/a Diversified Risk Insurance
Brokers), a California corporation.
"Indebtedness" of any Person shall mean, without duplication, (i) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind and (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments.
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"Junior Securities" means any capital stock or other equity securities
of the Corporation, except for the Series A Preferred Stock.
"Liquidation Event" has the meaning assigned to such term in Section
3A.
"Liquidation Value" of any Share as of any particular date shall be
equal to $1,000.00.
"Market Price" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges 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 System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ 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,
in each such case (i) averaged over a period of 20 days consisting of the day as
of which "Market Price" is being determined and the 19 consecutive Business Days
prior to such day, and (ii) averaged on a volume-weighted basis based on the
trading volume for each such Business Day. If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Market Price" shall be the fair value thereof
determined in good faith by the Board of Directors.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Organic Change" has the meaning assigned to such term in Section 6B.
"Permitted Indebtedness" means warehouse lines of credit, Indebtedness
incurred pursuant to the Business Loan Agreement by and between Bank of Alameda
and Diversified Risk dated as of the date hereof, the loan made by Heather Knuff
to the Corporation on or about December 15, 2004 and accounts payable in the
ordinary course of business.
"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 a public offering by the Corporation of its
Common 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.
"Qualified Public Offering" means a Public Offering resulting in
aggregate net proceeds to the Corporation of at least $3 million.
"Redemption Price" means, as of any date of determination, $1,600 plus
any accumulated or accrued but unpaid dividends plus the Accruing Amount.
"Securities Act" means the Securities Act of 1933, as amended.
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"Series A Preferred Stock" has the meaning assigned to such term in the
introductory paragraph hereof.
"Share" has the meaning assigned to such term in Section 2A.
Section 11. Amendment and Waiver. No amendment, modification or waiver shall be
binding or effective with respect to any provision of Sections 2 to 13 hereof
without the prior written consent of the holders of at least 50.0% the Series A
Preferred Stock outstanding at the time such action is taken.
Section 12. Notices. Except as otherwise expressly provided hereunder, all
notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and shall be deemed to
have been given when so mailed or sent (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).
* * * *
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IN WITNESS WHEREOF, the undersigned has executed this Certificate and does
affirm the foregoing as of this 26th day of January, 2005.
SUTTER HOLDING COMPANY, INC.
By: /s/ ROBERT DIXON
-----------------------------------
Name: Robert Dixon
Title: Co-Chief Executive Officer
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