EXECUTION COPY
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CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF 12% SERIES C
SENIOR REDEEMABLE PREFERRED STOCK OF
IT PARTNERS, INC,
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CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF 12% SERIES C
SENIOR REDEEMABLE PREFERRED STOCK OF
IT PARTNERS, INC.
Pursuant to Section 151 of the
General Corporation law of the State of Delaware
We, the undersigned, Daniel J. Klein, Chairman of the Board, and Jamie
Blech, Secretary, respectively, of IT Partners, Inc., a Delaware corporation
(the "Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, do hereby make this Certificate of
Designation and do hereby state and certify that, pursuant to the authority
expressly vested in the Board of Directors of the Corporation by the
Certificate of Incorporation of the Corporation, the Board of Directors at a
meeting held on July 20, 1998, unanimously adopted the following resolutions
providing for the issuance of a series of Preferred Stock designated as the
12% Series C Senior Redeemable Preferred Stock:
RESOLVED, that the Board of Directors of the Corporation, pursuant to the
authority expressly vested in it by the Certificate of Incorporation, does
hereby provide for the issue of a series of the Corporation's Preferred Stock,
par value of $.01 per share, and does hereby fix and herein state the
preferences and relative and other special rights and the qualifications,
limitations and restrictions thereof, as follows (all terms used herein that
are defined in the Certificate of Incorporation shall have the meanings
provided therein):
1. Designation and Amount. There shall be a series of Preferred
Stock designated as "12% Series C Senior Redeemable Preferred Stock" ("Series
C Preferred") with a stated value of $10,000 per share (as compounded pursuant
to Section 2, the "Stated Value"), and the number of shares constituting such
series shall initially be 1,000.
2. Dividends.
(a) The holders of shares of Series C Preferred shall be entitled to
receive quarterly, cumulative dividends (the "Dividends") at an annual rate
per share equal to 12% of the Stated Value of each such share (as adjusted
pursuant to Section 6, the "Dividend Rate") on September 30, December 31,
March 31 and June 30 of each fiscal year of the Corporation (each, a "Payment
Date"), payable beginning on September 30, 1998. From the date of the filing
of this Certificate until the date 18 months thereafter (the "Accrual
Period"), the Corporation shall have the option to either pay the Dividends as
they become payable or permit them to accrue; provided, however, that
following the Accrual Period the Corporation shall pay the Dividends that
accrue after the Accrual Period, as such Dividends accrue. Any Dividends
which accrue during the Accrual Period and are not paid during the Accrual
Period shall continue to be accrued Dividends and shall be paid by the
Corporation upon redemption of the Series C Preferred.
(b) During any period in which an Event of Default exists under the
Loan Agreement (or any refinancing or full or partial replacement thereof )
(the "Senior Lending Facilities") or would exist under the Senior Lending
Facilities after giving effect to the payment of any Dividends (a "Default
Period"), the Corporation shall have the option of permitting any Dividends
which become payable during such Default Period to accrue; provided, however,
that any Dividends which are permitted to accrue during such Default Period
shall be paid by the Corporation on the earliest to occur of (i) the first
Payment Date following the termination of such Default Period, or (ii)
redemption of the Series C Preferred.
(c) All Dividends which accrue during the Accrual Period and are not
paid during the Accrual Period, or which are permitted to accrue and are not
paid during any Default Period, shall, until such Dividends are paid, be
compounded with and included as part of the Stated Value of the respective
shares of Series C Preferred as to which such Dividends were unpaid, and
Dividends shall be paid thereon in accordance with this Section 2.
3. Preference on Liquidation or Sale.
(a) In the event of any sale, liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, after
payment or provision for payment of the debts of the Corporation, the holders
of Series C Preferred shall be entitled to receive, in preference to all
shares of any class, series or issue of capital stock of the Corporation
whether already issued or issued after the date of filing of this Certificate
(the "Subordinated Stock"), an amount in cash for each share of Series C
Preferred equal to (i) the Stated Value of such share of Series C Preferred,
plus (ii) all accrued and unpaid Dividends with respect to such share which
have not already been included in the Stated Value of such share pursuant to
Section 2 of this Certificate (collectively, and with respect to a share of
Series C Preferred, the "Liquidation Preference"), before any distribution
shall be made in respect of the Subordinated Stock. If upon any sale,
liquidation, dissolution or winding up of the affairs of the Corporation, the
assets distributable among the holders of Series C Preferred shall be
insufficient to permit the payment in full of the Liquidation Preference to
all the holders of the then outstanding shares of Series C Preferred, then the
entire assets of the Corporation thus distributable shall be distributed
ratably among the holders of the Series C Preferred in proportion to the
respective aggregate amounts otherwise payable with respect thereto. For
purposes of this Certificate, a "sale, liquidation, dissolution or winding up
of the affairs of the Corporation" shall include without limitation a Change
of Control (as defined below).
(b) For purposes of this Certificate, "Change of Control" means (A)
any event or series of events by which any person, entity or group obtains a
majority of the voting securities or equity interest of the Corporation; (B)
the merger, consolidation, reorganization, recapitalization, dissolution,
liquidation or winding up of the Corporation if as a result the then-current
stockholders no longer own more than 50% of the voting securities or other
equity interest of the Corporation; (C) any sale, lease, exchange or other
transfer of all, or substantially all, of the assets of the Corporation; or
(D) the adoption of a plan leading to the sale, liquidation, dissolution or
winding up of the affairs of the Corporation.
4. Redemption.
(a) The Corporation shall redeem, at the redemption price set forth
in Section 4(b), (c), (d) or (e), as applicable, all of the outstanding shares
of Series C Preferred at the earliest to occur of (i) the closing of a
Qualified Initial Public Offering (as defined below), (ii) the sale,
liquidation, dissolution or winding up of the affairs of the Corporation
(including without limitation a Change of Control), and (iii) the third
anniversary of the date of the filing of this Certificate. In addition, at
the option of holders of a majority of the outstanding Series C Preferred, the
Corporation shall redeem shares of Series C Preferred in accordance with the
provisions of Section 6 hereof. For purposes of this Certificate, "Qualified
Initial Public Offering" means the first offer and sale to the public by the
Corporation of shares of any class of the Corporation's capital stock,
pursuant to a registration statement that has been declared effective by the
Securities and Exchange Commission; provided, however, that the proceeds of
the shares issued and sold by the Corporation (net of underwriting commissions
and discounts) are at least $40,000,000 in the aggregate.
(b) Upon redemption of the Series C Preferred pursuant to Section
4(a)(i), the Corporation shall pay to the holders of the Series C Preferred as
a group an aggregate redemption price equal to:
(i) the product of (1) the Liquidation Preference, times (2)
the number of shares of Series C Preferred to be redeemed, plus
(ii) a redemption dividend equal to the product of (1) the
public offering price per share of capital stock of the
Corporation in the Qualified Initial Public Offering (the
"Qualified IPO Price"), minus the Deduction Price, times (2) the
Multiplier.
The redemption dividend payable pursuant to Section 4(b)(ii) may be paid, at
the Corporation's option, in either (A) cash, or (B) Common Stock valued at
the Qualified IPO Price.
(c) Upon a redemption of the Series C Preferred pursuant to Section
4(a)(ii) in connection with a distribution of all or substantially all of the
remaining assets and other proceeds of the Corporation among the stockholders
of the Corporation, the Corporation shall pay to the holders of the Series C
Preferred as a group an aggregate redemption price equal to:
(i) the product of (1) the Liquidation Preference, times (2)
the number of shares of Series C Preferred to be redeemed, plus
(ii) a redemption dividend equal to the product of (1) all
assets and other proceeds distributed in respect of each share
of Common Stock following such sale, liquidation, dissolution
or winding up of the affairs of the Corporation, minus the
Deduction Price, times (2) the Multiplier.
The redemption dividend payable pursuant to Section 4(b)(ii) shall be paid in
whatever assets or other proceeds of the Corporation are distributed generally
to the other holders of Common Stock of the Corporation in such sale,
liquidation, dissolution or winding up.
(d) Upon redemption of the Series C Preferred pursuant to Section
4(a)(iii), Section 6 or a redemption pursuant to Section 4(a)(ii) which is not
in connection with a distribution of all or substantially all of the remaining
assets and other proceeds of the Corporation among the stockholders of the
Corporation, the Corporation shall pay to the holders of the Series C
Preferred as a group an aggregate redemption price equal to:
(i) the product of (1) the Liquidation Preference, times (2)
the number of shares of Series C Preferred to be redeemed, plus
(ii) a redemption dividend equal to the product of (1) the
Fair Market Value per share of Common Stock, minus the Deduction
Price, times (2) the Multiplier.
The redemption dividend payable pursuant to Section 4(d)(ii) may be paid, at
the Corporation's option, in either (A) cash, or (B) Common Stock (valued at
Fair Market Value).
(e) In the event the Corporation has not redeemed all of the
outstanding shares of Series C Preferred by the close of business on the third
anniversary of the date of the filing of this Certificate, the Corporation
shall immediately redeem all outstanding shares of Series C Preferred and
shall pay to the holders of the Series C Preferred as a group an aggregate
redemption price equal to:
(i) the product of (1) the Liquidation Preference, times
(2) the number of shares of Series C Preferred to be redeemed,
plus
(ii) a redemption dividend equal to the product of (1) the
Fair Market Value per share of Common Stock, minus the
product of (x) the Deduction Price, times (y) .10; times (2)
the Multiplier.
The redemption dividend payable pursuant to Section 4(e)(ii) may be paid, at
the Corporation's option, in either (A) cash, or (B) Common Stock (valued at
Fair Market Value).
(f) Notice of any redemption of shares of Series C Preferred shall be
made by means of certified mail return receipt requested, addressed to the
holders identified in the records of the Corporation (the "Registered
Holders") of the Series C Preferred to be redeemed, at their respective
addresses then appearing on the books of the Corporation, not less than
fifteen (15) nor more than sixty (60) days prior to the date fixed for such
redemption (herein referred to as the "Redemption Date"); provided, however,
that notwithstanding the foregoing, upon a redemption pursuant to Section
4(a)(ii), the Corporation shall deliver such notice as soon as possible after
the Corporation has knowledge of the approximate date of such sale,
liquidation, dissolution or winding up of the affairs of the Corporation.
Each such notice shall specify (i) the Redemption Date, (ii) the applicable
redemption price, (iii) the place for payment and for delivering the stock
certificate(s) and transfer instrument(s) in order to collect the applicable
redemption price, and (iv) the shares of Series C Preferred to be redeemed.
(g) From and after the Redemption Date, each Registered Holder of any
shares of Series C Preferred to be redeemed pursuant to this Section 4 shall
be entitled to receive payment of the applicable redemption price as soon as
such holder shall cause to be delivered to the Corporation (i) the
certificate(s) representing such Series C Preferred and (ii) transfer
instrument(s) sufficient to transfer such Series C Preferred to the
Corporation free of any adverse interest.
(h) At the close of business on the Redemption Date for any Series C
Preferred, such stock shall be deemed to cease to be outstanding and all
rights of any person other than the Corporation in such stock shall be
extinguished on the Redemption Date for such stock except for the right to
receive the applicable redemption price, without interest, for such stock in
accordance with the provisions of this Section 4, subject to applicable
escheat laws.
(i) Any redemption dividend to be paid in respect of any shares of
Series C Preferred pursuant to this Section 4 shall be paid to each Registered
Holder pro rata based on the number of shares of Series C Preferred of such
Registered Holder to be redeemed. Any Liquidation Preference to be paid
pursuant to this Section 4 shall be paid to each Registered Holder based on
the Liquidation Preferences of the shares of Series C Preferred of such
Registered Holder to be redeemed.
5. Financial Covenants
(a) Net Worth. The Corporation shall not, and shall cause each of
its Subsidiaries not to, incur any Indebtedness if, immediately prior to such
incurrence or immediately after giving effect to such incurrence, the Net
Worth of the Corporation and all of its Subsidiaries on a consolidated basis
is or would be less than the sum of (x) $26,125,000, plus (y) effective upon
the closing of any issuance of equity securities of the Corporation, seventy
five percent (75%) of the amount by which the Corporation's shareholders'
equity is increased as a result of such issuance of equity securities, plus
(z) effective January 1 of each year, an amount equal to the greater of (A)
zero, and (B) seventy percent (70%) of Net Income of the Corporation and all
of its Subsidiaries on a consolidated basis for the immediately preceding
fiscal year.
(b) Leverage Ratio.
(i) During each applicable period, the Corporation shall not,
and shall cause each of its Subsidiaries not to incur any Indebtedness if,
immediately prior to such incurrence or immediately after giving effect to
such incurrence, the Leverage Ratio of the Corporation and all of its
Subsidiaries on a consolidated basis is or would be greater than the ratio set
forth below opposite the applicable period:
Applicable Period Ratio
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Date of filing of this Certificate - 12/31/98 6.25:1.0
01/01/99 - 06/30/99 6.00:1.0
At all times thereafter 5.75:1.0
(ii) Notwithstanding the foregoing, the Company may (A) incur
aggregate Indebtedness under the Loan Agreement of up to, but not exceeding,
$100 million, and (B) in the event that, other than as a result of violating
any of the provisions set forth in Section 5(b)(i), the Leverage Ratio of the
Corporation and all of its Subsidiaries on a consolidated basis exceeds the
maximum ratio set forth for the applicable period in Section 5(b)(i), the
Corporation or any of its Subsidiaries may incur Indebtedness ("Additional
Indebtedness") in addition to the Indebtedness permitted under Section
5(b)(ii)(A), if and only if the incurrence of such Additional Indebtedness
combined with the application of the proceeds of such Additional Indebtedness
reduces the Leverage Ratio of the Corporation and all of its Subsidiaries on a
consolidated basis.
(c) Interest Coverage Ratio. During each applicable period, the
Corporation shall not, and shall cause each of its Subsidiaries not to incur
any Indebtedness if, immediately prior to such incurrence or immediately after
giving effect to such incurrence, the Interest Coverage Ratio of the
Corporation and all of its Subsidiaries on a consolidated basis is or would be
less than the ratio set forth below opposite the applicable period.
Applicable Period Ratio
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Date of filing of this Certificate - 12/31/98 1.75:1.0
01/01/99 - 06/30/99 2.00:1.0
07/01/99 - 12/31/00 2.25:1.0
At all times thereafter 2.50:1.0
6. Events of Noncompliance.
(a) An Event of Noncompliance shall be deemed to have occurred if:
(i) the Corporation or any Subsidiary defaults in the payment of
principal of or interest on any obligation for money borrowed having a
principal amount outstanding in excess of $5 million (a "Material
Obligation"), beyond any period of grace provided with respect thereto, or
defaults in the performance of any other agreement, term or condition
contained in any agreement under which any Material Obligation is created (or
if any other default under any such agreement shall occur and be continuing)
and as a result of such default such Material Obligation has become, or the
holder or holders of such Material Obligation have caused such Material
Obligation to become due prior to its stated maturity;
(ii) the Corporation or any Subsidiary breaches any of the
provisions set forth in Section 5(b) hereof;
(iii) the Corporation (i) discontinues the conduct of its
business; (ii) applies for or consents to the imposition of any Insolvency
Relief; (iii) voluntarily commences or consents to the commencement of an
Insolvency Proceeding; (iv) files an answer admitting the material allegations
of any involuntary commencement of an Insolvency Proceeding; (v) makes a
general assignment for the benefit of its creditors; or (vi) is unable or
admits in writing its inability to pay its debts as they become due;
(iv) any Insolvency Order is entered against the Corporation and
such Insolvency Order is not dismissed within 30 calendar days of its entry;
or
(v) within one year following the date of filing of this
Certificate, the Corporation has not entered into a registration rights
agreement granting to each of the Registered Holders of Series C Preferred (i)
at least one demand registration right which is at least as favorable as the
most favorable demand registration right granted to any other holder of
securities of the Corporation, and (ii) piggyback, cutback and other
registration rights at least as favorable as, and ranking at least pari passu
in priority with, the most favorable piggyback, cutback and other registration
rights granted to any other holder of securities of the Corporation.
(b) If and whenever an Event of Noncompliance shall occur and be
continuing, the holders of a majority of the outstanding Series C Preferred
shall have the right, at their sole discretion, to cause the Corporation to
redeem all or any part of the shares of Series C Preferred then outstanding at
a price per share equal to the redemption price set forth in Section 4(d).
The holders of a majority of the outstanding Series C Preferred shall exercise
this right to redemption under this Section 5(b) by delivering to the
Corporation written notice of the election of such right, specifying the
number of shares to be redeemed. The redemption of any shares of Series C
Preferred pursuant to this Section shall occur in accordance with the
redemption procedures set forth in Section 4 hereof. Unless otherwise
determined by the holders of a majority of the outstanding Series C Preferred,
any redemption of less than all outstanding shares of Series C Preferred shall
be pro rata in proportion to each Registered Holder's ownership percentage of
all outstanding Series C Preferred.
7. Penalty Events. Upon the occurrence of any of the following
events (each, a "Penalty Event") and until the first date on which such
Penalty Event has been remedied or waived in writing by the holders of a
majority of the outstanding Series C Preferred and no other Penalty Event is
continuing unremedied or unwaived, the Dividend Rate shall be equal to an
annual rate of 15% of the Stated Value of each share of Series C Preferred:
(a) the Corporation fails for any reason to pay when due the full
amount of Dividends then calculated as payable on the shares of Series C
Preferred;
(b) the Corporation or any Subsidiary defaults in the payment of
principal of or interest on any Material Obligation, beyond any period of
grace provided with respect thereto, or defaults in the performance of any
other agreement, term or condition contained in any agreement under which any
such Material Obligation is created (or if any other default under any such
agreement shall occur and be continuing) if the effect of such default is to
cause, or to permit the holder or holders of such Material Obligation (or a
trustee on behalf of such holder or holders) to cause such Material Obligation
to become due prior to its stated maturity;
(c) the Corporation or any Subsidiary breaches any of the provisions
set forth in Sections 5(a) or 5(c) hereof; or
(d) the Corporation fails to redeem the Series C Preferred as
required pursuant to Section 4(a)(i), 4(a)(ii) or Section 6 hereof.
8. Reissuance of Shares. Any shares of the Series C Preferred which
are redeemed or otherwise acquired by the Corporation shall assume the status
of authorized but unissued Preferred Stock undesignated as to series, subject
to later issuance, and shall not be reissued as shares of Series C Preferred.
9. Preemptive Rights. No holder of shares of Series C Preferred
solely by reason of holding such shares shall have any preemptive or
preferential right to purchase or subscribe to any securities of the
Corporation, now or hereafter to be authorized.
10. Voting Rights.
Except as specified herein, the holders of the Series C Preferred shall
be entitled to vote as a separate class only when required by applicable law
to do so. So long as any shares of Series C Preferred remain outstanding, the
Corporation shall not, without the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of Series C Preferred voting
separately as class:
(a) issue any equity securities of a class or series senior to or on
parity with the Series C Preferred as to payment of dividends or as to
payments on the sale, dissolution, liquidation or winding-up of the affairs of
the Corporation, or authorize or issue equity securities of any class or
series or any bonds, debentures, notes or other obligations convertible into
or exchangeable for, or having option rights to purchase, any shares of equity
securities of the Corporation senior to or on parity with the Series C
Preferred as to payment of dividends or as to payments on the sale,
dissolution, liquidation or winding-up of the affairs of the Corporation;
(b) amend the certificate of incorporation of the Corporation;
(c) alter, impair, reduce or affect in any manner the rights,
preferences, privileges or powers of, or the restrictions provided for the
benefit of, the Series C Preferred; or
(d) enter into or engage in any business activities or operations
other than those directly related to the Corporation's present business.
11. Board of Director Rights.
(a) For as long as any shares of Series C Preferred remain
outstanding, the holders of a majority of the outstanding Series C Preferred
shall have the right, at their option, to exercise both of the following
rights:
(i) the right to have a designated representative (x) receive
notice of all meetings of the Corporation's Board of Directors, (y) attend all
meetings of the Board of Directors in a non-voting, non-participating observer
capacity, and (z) receive copies of all notices, minutes, consents, and all
other materials provided by the Corporation to the Board of Directors; and
(ii) the right to elect one member of the Board of Directors of
the Corporation.
(b) Only holders of the Series C Preferred (to the extent they are
entitled to vote thereon) shall be entitled to vote on the removal of any
director elected by the holders of Series C Preferred, and exercise of such
right of removal shall be determined by vote of the holders of a majority of
the outstanding Series C Preferred. Any vacancy in the office of a director
created by the death, resignation or removal of a director elected by the
holders of the Series C Preferred may be filled only by a vote of holders of a
majority of the outstanding Series C Preferred (to the extent they are
entitled to vote thereon). Any director elected by the holders of the Series
C Preferred shall serve until the annual meeting at which time such director's
term expires and until his or her successor has been elected and has
qualified, unless removed and replaced pursuant to this subsection 11(b).
12. Subordination of Right of Redemption. The redemption rights in
respect of the Series C Preferred set forth hereunder shall be subordinate to
any rights, privileges and entitlements held by the Lenders under the Loan
Agreement and redemption of the Series C Preferred may not be made if there
exists, or if such redemption would result in, a Default or Event of Default;
provided, however, that notwithstanding the foregoing, as long as (i) no
Default or Event of Default has occurred and is continuing under the Loan
Agreement or would occur after giving effect to such redemption, and (ii) no
Obligations have been accelerated as a result of an Event of Default and
remain due and payable under the Loan Agreement, the Corporation shall enforce
the redemption provisions set forth hereunder; provided further, that nothing
set forth herein shall prohibit the holders of the Series C Preferred from
seeking appropriate remedies from the Company in the event the Series C
Preferred is not redeemed or dividends are not paid in the respect of the
Series C Preferred in accordance with this Certificate.
13. Certain Definitions. When used herein, the following capitalized
terms shall have the following respective meanings:
(a) "Deduction Price" means $4.63, as adjusted pursuant to Section
14.
(b) "Default" has the meaning set forth in the Loan Agreement as in
effect on the date hereof, without giving effect to any subsequent amendments
or modifications of Article 8 or 9 of the Loan Agreement after the date of
filing of this Certificate.
(c) "Event of Default" has the meaning set forth in the Loan
Agreement as in effect on the date hereof, without giving effect to any
subsequent amendments or modifications of Article 8 or 9 of the Loan Agreement
after the date of filing of this Certificate.
(d) "Fair Market Value" as of a particular date, shall be determined
by a recognized appraisal or investment firm with experience in making
determinations of value of the type required to be made under this
Certificate, selected jointly by the Corporation and the holders of a majority
of the outstanding Series C Preferred.
(e) "Indebtedness" has the meaning set forth in the Loan Agreement as
in effect on the date of filing of this Certificate; provided, however, that
for purposes of this Certificate the term "Indebtedness" shall not include
purchase money Indebtedness or unsecured Indebtedness, in an aggregate
principal amount which, when aggregated with the aggregate outstanding
events (each, a "Penalty Event") and until the first date on which such
Penalty Event has been remedied or waived in writing by the holders of a
majority of the outstanding Series C Preferred and no other Penalty Event is
continuing unremedied or unwaived, the Dividend Rate shall be equal to an
annual rate of 15% of the Stated Value of each share of Series C Preferred:
(a) the Corporation fails for any reason to pay when due the full
r bankruptcy,
insolvency, conservatorship, receivership or other similar debtor's relief.
(h) "Insolvency Relief" means discharge of indebtedness, liquidation,
reorganization or arrangement, appointment of a receiver, trustee,
conservator, custodian or liquidator or the granting of any stay or
restraining order against creditors under any Insolvency Law or other similar
debtor's relief under any Insolvency Law.
(i) "Insolvency Order" means any order, judgment or decree entered in
any Insolvency Proceeding granting any Insolvency Relief.
(j) "Interest Coverage Ratio" has the meaning set forth in the Loan
Agreement as of the date of filing of this Certificate.
(k) "Lenders" has the meaning set forth in the Loan Agreement as of
the date of filing of this Certificate.
(l) "Leverage Ratio" has the meaning set forth in the Loan Agreement
as of the date of filing of this Certificate.
(m) "Loan Agreement" means the Amended and Restated Loan and Security
Agreement dated as of March 31, 1998, by and among the Corporation, the
Lenders named therein, Creditanstalt Corporate Finance, Inc. (as the LC
Issuer), Credit Agricole Indosuez (as Co-Agent) and Creditanstalt Corporate
Finance, Inc. (as the Collateral Agent and Administrative Agent), as amended
from time to time.
(n) "Multiplier" means 678,572, as adjusted pursuant to Section 14.
(o) "Net Income" has the meaning set forth in the Loan Agreement as
of the date of filing of this Certificate.
(p) "Net Worth" has the meaning set forth in the Loan Agreement as of
the date of filing of this Certificate.
(q) "Obligations" has the meaning set forth in the Loan Agreement.
(r) "Series B Agreement" means the Second Amended and Restated
Preferred Stock and Warrant Purchase Agreement dated as of March 31, 1998, as
amended, among the Corporation, Creditanstalt, FF-ITP, L.P., Indosuez IT
Partners, Wachovia Capital Associates, Inc. and the other signatories thereto.
(s) "Subordinated Debt" has the meaning set forth in the Loan
Agreement.
(t) "Subsidiaries" means each corporation or other entity in which
the Corporation owns or controls, directly or indirectly, capital stock or
other equity interests representing at least 50% of the outstanding voting
stock or other equity interests of such corporation or entity.
14. Anti-dilution Provisions. The Corporation hereby agrees to apply
to the Deduction Price and the Multiplier the most favorable anti-dilution
provisions (including without limitation adjustments related to stock splits,
stock consolidations and similar events) heretofore granted to any holder of
Series B Preferred Stock of the Corporation with respect to the Series B
Preferred (including without limitation the anti-dilution provisions set forth
in Article 4(B)(5) of the Certificate of Incorporation of the Corporation, as
amended and in effect as of the date of filing of this Certificate), and to
adjust the Deduction Price and the Multiplier as necessary to give effect to
any such anti-dilution provision.
RESOLVED FURTHER, that, before the Corporation shall issue any
shares of the Series C Preferred, a certificate pursuant to Section 151 of the
General Corporation Law of the State of Delaware shall be made, executed,
acknowledged, filed and recorded in accordance with the provisions of said
Section 151; and that the proper officers of the Corporation are hereby
authorized and directed to do all acts and things which may be necessary or
proper in their opinion to carry into effect the purposes and intent of this
and the foregoing resolutions.
IN WITNESS WHEREOF, this Certificate of Designation has been made
under the seal of the Corporation and the hands of the undersigned, said
Daniel F. Klein, Chairman of the Board, and Jamie Blech, Secretary,
respectively, of the Corporation, this 27th day of July, 1998.
IT PARTNERS, INC.
By: /s/ Daniel J. Klein
--------------------
Daniel J. Klein
Chairman of the Board
ATTEST:
/s/ Jamie E. Blech
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Jamie E. Blech
Secretary