Exhibit 3.1(o)
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF DESIGNATION
FOR SERIES B SENIOR CUMULATIVE
COMPOUNDING CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
MENTUS MEDIA CORP.
PURSUANT TO SECTION 242 OF THE
DELAWARE GENERAL CORPORATION LAW
-----------------------
MENTUS MEDIA CORP. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the board of directors of the Corporation, by unanimous
written consent, duly adopted resolutions setting forth a proposed amendment to
the Certificate of Designation for the Series B Senior Cumulative Compounding
Convertible Preferred Stock, par value $1.00 per share of the Corporation, of
the Corporation, declaring such amendment to be advisable and authorizing the
solicitation of written consents of the stockholders of the Corporation with
respect thereto. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Designation for the Corporation's
Series B Senior Cumulative Compounding Convertible Redeemable Preferred Stock,
par value $1.00 per share, be amended as follows:
1. The definition of "Affiliate" in Section 2 is amended by adding
"or Series C Shares" immediately after the term "Series B Shares" appearing in
such definition.
2. The definition of "Affiliate" in Section 2 is further amended by
adding "or Series C Preferred Stock" immediately after the term "Series B
Preferred Stock" in each place that such term appears in such definition.
3. Clause (ii) of the first sentence of the definition of "Change in
Control" in Section 2 is amended to read in its entirety as follows:
"(ii) the Corporation consolidates with, or merges with or
into, another Person or any Person consolidates with, or merges with
or into, the Corporation, in any such event pursuant to a
transaction in which the outstanding Common Stock of the Corporation
is converted into or exchanged for cash, securities, equity
interests or other property and immediately after such transaction
the Persons who were the Beneficial Owners of the outstanding Common
Stock of the Corporation immediately prior to such transaction are
not the beneficial owners, directly or indirectly, of more than 50%
of the combined voting power represented by all then outstanding
common stock of the surviving or transferee
Person; or"
4. Clause (v) of the first sentence of the definition of "Change in
Control" in Section 2 is amended to read in its entirety as follows:
"(v) for any reason (including death or disability), Gerard
Joyce or Thomas Pugliese ceases to be the Beneficial Owner, directly
or indirectly, of 80% or more of the shares of Common Stock held by
him on September 25, 1996 (as appropriately adjusted for any
subdivision, combination, reclassification, recapitalization,
reorganization, merger or other change of or in the outstanding
Common Stock), other than any shares thereof which were 'Restricted
Shares' issued subject to forfeiture pursuant to his employment
agreement with the Corporation as amended and in effect on September
25, 1996."
5. The definition of "Existing Rights" in Section 2 is amended by
(i) adding "(i)" immediately after the word "means" appearing therein and (i)
adding "and (ii) all Series C Shares from time to time outstanding" at the end
of such definition.
6. The definition of "Fair Market Value" in Section 2 is amended to
read in its entirety as follows:
"'Fair Market Value' means, in respect of any security,
asset or other property, the price at which a willing seller would sell and a
willing buyer would buy such security, asset or other property having full
knowledge of the facts, in an arm's-length auction transaction without time
constraints, and without being under any compulsion to buy or sell. The
determination of the Fair Market Value of the Corporation, the Common Stock or
any other capital stock of the Corporation shall be determined on a going
concern or liquidation basis, whichever yields the higher result, on the basis
of the assumption that the management and other key employees of the Corporation
and its subsidiaries will continue to be employed indefinitely and without
treating as liabilities the amount, if any, (i) payable or which may become
payable by the Corporation pursuant to the indemnification provisions of the TFC
Purchase Agreement, the Series C TFC Purchase Agreement or any other purchase
agreement pursuant to which any Series C Shares are acquired by any Person, (ii)
any indebtedness of the Corporation to Gerard P. Joyce subject to the Agreement,
dated as of September 25, 1996, among the Corporation, Mr. Joyce and the
Purchasers or (iii) in the case of any Participation Event, any indebtedness or
liability of the Corporation or any of its subsidiaries to its controlling
Person or Persons or any of their respective Affiliates. In the case of a
determination of the Fair Market Value of a share of capital stock of the
Corporation as of any time, (i) if such capital stock is Publicly Traded at such
time, the Fair Market Value of a share of such capital stock shall be the
Current Market Price thereof as of such time and (ii) if such capital stock is
not Publicly Traded at such time, the Fair Market Value of a share of such
capital stock shall be the price determined as of such time in accordance with
the first three sentences of this definition, without giving effect to any
discount for a minority interest, to the fact that such capital stock is not
Publicly Traded, to any lack of liquidity of such capital stock or to the fact
(if true) that the Corporation has no class of equity security registered under
the Exchange Act."
7. The definition of "Issue Date" in Section 2 is amended to read in
its entirety as follows:
"'Issue Date' means, with respect to any Investor Preferred
Share, the date of original issuance of such Investor Preferred
Share. The date of original issuance of the Series B Shares issued
pursuant to any Purchase Agreement is the Closing Date. The date of
original issuance of each Series C Share issued pursuant to the TFC
Series C Purchase
Agreement or any of the Other Purchase Agreements or the
Co-Investment Agreement referred to therein is the date of the TFC
Series C Purchase Agreement."
8. The definition of "Junior Stock" in Section 2 is amended by (i)
substituting "Corporation" for the term "Company" in the last sentence thereof,
(ii) (i)substituting "Series B Preferred Stock" for the term "Series A Preferred
Stock" appearing in the last sentence thereof and (iii) amending the first
sentence thereof to read in its entirety as follows:
"Junior Stock" means (i) each class or series of Common Stock,
(ii) the Series A Preferred Stock of the Corporation, (iii) any
other class or series of capital stock of the Corporation hereafter
created, other than (A) the Series C Preferred Stock, (B) any class
or series of Parity Stock (except to the extent provided under
clause (iv) of this sentence) and (C) any class or series of Senior
Stock (except to the extent provided under clause (iv) of this
sentence), and (iv) any class or series of Parity Stock or Senior
Stock to the extent that it ranks junior to the Series B Preferred
Stock as to dividend rights, rights of redemption or rights on
liquidation, as the case may be.
9. The definition of "Liquidation Price" in Section 2 is amended to
read in its entirety as follows:
"'Liquidation Price'" means, as of any time:
"(i) in the case of any Series B Share, the sum of (A)
Seventy-Seven Dollars ($77.00) plus (B) an amount equal to all
unpaid dividends accrued on such Series B Share since the
Issue Date thereof which, pursuant to Section 4(b) hereof,
have been added to and remain part of the Liquidation Price as
of such time of determination, whether or not such unpaid
dividends have been earned or declared or there are any
unrestricted funds of the Corporation legally available for
the payment of dividends; and
"(ii) in the case of any Series C Share, the 'Liquidation
Price' of such Series C Share as of such time as defined in
and determined in accordance with the Series C Certificate of
Designation".
10. The first sentence of the definition of "Parity Stock" in
Section 2 is amended by redesignating clause (ii) thereof as clause (iii) and
adding ", (ii) the Series C Preferred Stock" immediately after the end of clause
(i) thereof.
11. The definition of "Qualified IPO" in Section 2 is amended to
read in its entirety as follows:
"'Qualified IPO' means either (i) consummation of
an initial public offering of the Corporation's Common Stock
generating proceeds of at least $20 million on a pre-money
equity valuation of at
least $308 per share of Common Stock (as appropriately
adjusted for stock splits, reverse splits, stock dividends or
other reclassifications, reorganizations or similar events
affecting the capital stock of the Corporation, the record
date for which occurs after the Closing Date) or (ii) any date
at which all of the following statements are true: (A) the
Common Stock is registered under Section 12(b) or Section
12(g) of the Securities Exchange Act of 1934, as amended, (B)
the Common Stock is listed for trading on a national
securities exchange registered under the Exchange Act or
traded in over-the counter market and quoted in an automated
quotation system of the National Association of Securities
Dealers, Inc., (C) the average daily trading volume of shares
of the Common Stock reported by such exchange or quotation
systems for the period of 5 consecutive trading days prior to
such date of closing has exceeded 0.7% of the number of shares
of Common Stock actually issued and outstanding on such date
and (D) the average closing price for the period of 20
consecutive trading days before such date is at least $308 per
share (as appropriately adjusted for stock splits, reverse
splits, stock dividends or other reclassifications,
reorganizations or similar events affecting the capital stock
of the Corporation, the record date for which occurs after the
Closing Date)."
12. The definition of "Series A Preferred Stock" is amended by
deleting the word "Exchangeable" therefrom.
13. The definition of "Series B Certificate of Designation" in
Section 2 is amended to read in its entirety as follows:
"'Series B Certificate of Designation' means the
Certificate of Designation setting forth the resolution of the
Board of Directors creating and authorizing the issuance of
the Series B Preferred Stock and filed with the Delaware
Secretary of State pursuant to Section 151 of the Delaware
General Corporation Law or any successor provisions of the
Corporation's Certificate of Incorporation, as the same may
have been or be amended."
14. The definition of "Valuation Committee" in Section 2 is amended
to read in its entirety as follows:
"'Valuation Committee' means a committee of the Board of
Directors composed of (i) the Series B Director or, during any
period that there is no Series B Director, the Series C
Director, (ii) one or more independent directors (as defined
in Section 8(f) hereof) and (iii) not more than one other
director."
15. Section 2 is further amended by deleting therefrom the
definitions of (i) "Accrual Date" and "Conversion Value."
16. Section 2 is further amended by adding thereto, in the proper
alphabetical order, the following additional defined terms:
"Dividend Date" means (i) in the case of the Series B Preferred
Stock, any Dividend Payment Date; and (ii) in the case of the Series C Preferred
Stock, any "Dividend Payment Date" as defined in the Series C Certificate of
Designation.
"Investor Preferred Stock" means the Series B Preferred Stock or the
Series C Preferred Stock.
"Investor Preferred Share" means any Series B Share or Series C
Share.
"Majority Senior Holders" means, as of any time, the holder or
holders of Series B Shares, Series C Shares or both having an aggregate
Liquidation Price representing more than 50% of the total Liquidation Price of
all Series B Shares and Series C Shares then outstanding.
"Participation Amount" means, with respect to any share of Investor
Preferred Stock as of any time, the aggregate amount that would be payable to
the holder of such share pursuant to subsections (a) and (b) of Section 5 hereof
if it were assumed that at such time (i) the assets of the Corporation were sold
in a tax-free transaction for cash equal to the Fair Market Value of the
Corporation determined as of such time, (ii) the Corporation was dissolved and
liquidated, and the cash proceeds of the deemed sale of the Corporation's assets
were distributed to the Corporation's stockholders, including the holders of the
Investor Preferred Stock, the Series A Preferred Stock and the Common Stock, in
accordance with their respective preferences and priorities upon dissolution and
liquidation of the Corporation. For purposes of the calculation of the
Participation Amount as of any time, it shall be assumed that (i) all Rights and
Convertible Securities, including the Series A Preferred Stock, but excluding
the Series B Preferred Stock and the Series C Preferred Stock, that are
exercisable at such time were either exercised or not exercised, whichever would
result in the greatest payment to the holders thereof in the event of the
assumed dissolution and liquidation of the Corporation at such time as provided
in the first sentence of this definition, and (ii) all shares of Series B
Preferred Stock or Series C Preferred Stock then outstanding continue to be
outstanding and are not converted into Common Stock.
"Participation Event" means (i) any Change in Control, or (ii) any
consolidation, merger, binding share exchange or reorganization to which the
Corporation is party, except a consolidation, merger, share exchange or
reorganization in which the Corporation is the continuing corporation and which
does not result in any exchange or conversion of the outstanding shares of any
class or series of capital stock of the Corporation, any distribution, issuance
of securities or payment of other consideration to the holders of the
outstanding shares of any class or series of capital stock of the Corporation,
or change in the outstanding shares of
any class or series of capital stock of the Corporation (other than an increase
in the number of shares thereof issued and outstanding) or (iii) any sale,
assignment, conveyance, leasing or other disposition, in one or more
transactions, of all or substantially all of its assets to any Person or
Persons.
"Publicly Traded" is defined under the definition of "Current Market
Price" above in this Section 2.
"Pugliese Employment Agreement" means the Employment Agreement,
dated August 1, 1990, between the Corporation and Thomas Pugliese, as amended
pursuant to the Amendment to Employment Agreement dated September 25, 1996 and
the Second Amendment to Employment Agreement dated the date of the TFC Series C
Purchase Agreement, as the same may be amended from time to time with the
approval of the Series B Director or the Majority Holders.
"Redemption Price" means:
(i) as to any share of Series B Preferred Stock that is to be
redeemed on any Redemption Date pursuant to any subsection of
Section 6, the redemption price determined pursuant to such
subsection.
(ii) in the case of any Series C Share as of any time, the
"Redemption Price" of such Series C Share as of such time as defined in and
determined in accordance with the Series C Certificate of Designation.
"Series B Certificate of Designation" means the Certificate of
Designation setting forth the resolution of the Board of Directors creating and
authorizing the issuance of the Series B Preferred Stock and filed with the
Delaware Secretary of State pursuant to Section 151 of the Delaware General
Corporation Law or any successor provisions of the Corporation's Certificate of
Incorporation, as the same may have been or may be amended.
"Series C Certificate of Designation" means the Certificate of
Designation setting forth the resolution of the Board of Directors creating and
authorizing the issuance of the Series C Preferred Stock and filed with the
Delaware Secretary of State pursuant to Section 151 of the Delaware General
Corporation Law or any successor provisions of the Corporation's Certificate of
Incorporation, as the same may have been amended prior to or concurrently with
the Closing Time and thereafter may be amended.
"Series C Director" means any director of the Corporation elected by
the holders of the Series C Shares voting as a separate class.
"Series C Preferred Stock" means the Series C Senior Cumulative
Compounding Redeemable Convertible Preferred Stock, par value $1.00 per share,
of the Corporation.
"Series C Share" means any issued and outstanding share of Series C
Preferred Stock. In no event shall shares of Series C Preferred Stock owned or
held by or for the account of the Corporation or any subsidiary thereof be
deemed to be issued and outstanding for any purpose.
"TFC Series C Purchase Agreement" means the Stock Purchase Agreement
among the Corporation, the Purchasers and Pulitzer Publishing Company pursuant
to which the Purchasers and Pulitzer Publishing Company first acquired Series C
Shares, as the same may be amended from time to time in accordance with its
terms.
17. Subsections (a), (b) and (c) of Section 3 are amended to read in
their entirety as follows:
"(a) Rank. The Series B Preferred Stock shall, with respect to
dividend rights, rights on liquidation, winding up and dissolution and rights
upon redemption (i) rank on a parity basis with the Series C Preferred Stock and
(ii) rank prior to (A) the Common Stock, (B) the Series A Preferred Stock and
(C) any other class or series of capital stock of the Corporation, whether now
existing or hereafter created, except (in the case of this subclause (ii)(C)
only) the Series B Preferred Stock or any other class or series of Parity Stock
or Senior Stock hereafter created and issued with the prior approval of the
Majority Senior Holders, to the extent otherwise provided for by the terms of
such other class or series of Parity Stock or Senior Stock set forth in the
instrument creating and authorizing such Parity Stock or Senior Stock, provided
that such terms shall have been furnished in writing to and approved by the
Majority Senior Holders.
"(b) Certain Restrictions on Payments in Respect of Capital
Stock. Except if and to the extent expressly authorized by Section
3(e) or with the prior approval of the Majority Senior Holders so
long as any Series B Preferred Stock is outstanding, the Corporation
shall not, and shall cause each of the Subsidiaries not to:
(i) declare or pay dividends on, or declare or make any
other distribution, whether in cash, property, securities or
any other form of consideration, to the holders of or
otherwise with respect to, the Common Stock, the Series A
Preferred Stock or any other class or series of capital stock
of the Corporation now existing or hereafter created other
than the Series B Preferred Stock or the Series C Preferred
Stock;
(ii) redeem, purchase or otherwise acquire for cash,
property, securities or any other form of consideration any
Common Stock, Series A Preferred Stock or any other class or
series of capital stock of the Corporation now existing or
hereafter created other than the Series B Preferred Stock or
the Series C Preferred Stock;
(iii) declare or pay dividends on, or make any other
distribution to the holders of or otherwise with respect to any Parity Stock,
whether in cash, property, securities or any other form of consideration, except
dividends declared and paid ratably on the Series B Preferred Stock and each
class or series of Parity Stock as to which dividends are payable or in arrears
so that the amount of dividends declared and paid per share of the Series B
Preferred Stock and per share of each class or series of such Parity Stock are
in proportion to the respective total amounts of unpaid dividends accrued with
respect to the Series B Preferred Stock and all such classes and series of
Parity Stock;
(iv) subject to Section 3(c) hereof, redeem, purchase or
otherwise acquire for cash, property, securities or any other
form of consideration any Series B Shares or Series C Shares
otherwise than in accordance with the respective terms
thereof, but conversion of any Series B Shares or Series C
Shares in accordance with their respective terms shall not be
deemed to be a redemption, purchase or other acquisition
subject to this clause or Section 3(c) hereof; or
(v) set aside, pursuant to a sinking fund or otherwise,
any cash, property, securities or other form of consideration
for any of the foregoing purposes.
"(c) Pro Rata Redemptions and Purchases. If any date or
event shall occur that requires the Corporation to redeem any
Series B Shares or Series C Shares and the Corporation has
insufficient legally available funds to redeem all Series B
Shares and Series C Shares then required to be redeemed, then:
(i) the Corporation shall give written notice to such effect
to the holders of Investor Preferred Shares as soon as
practicable (and in any event not later than ten Business
Days) prior to the applicable Redemption Date; and (ii)
subject to the third sentence of this subsection, (A) the
funds legally available for such purpose shall be applied to
redeem the Series B Shares and Series C Shares then required
to be redeemed ratably in proportion to the respective full
amounts to which the holders of shares of each such series
would be entitled if the Corporation had sufficient legally
available funds to redeem all Series B Shares and Series C
Shares then required to be redeemed and (B) as and when the
Corporation has additional legally available funds, it shall
apply such funds to redeem the balance of the Series B Shares
and Series C Shares required to be redeemed proportionately as
provided in subclause (ii)(A) of this sentence. In the event
of any such partial redemption, the shares of either series to
be redeemed shall be selected on a pro rata basis from among
all holders of the shares that series required to be redeemed.
At any time after a notice from the Corporation is given
pursuant to the first sentence of this subsection and before
the applicable Redemption Date, either the Majority Holders or
the holders of a majority of the
shares of Series C Preferred Stock then outstanding (the
'Majority Series C Holders') may notify the Corporation in
writing that such Majority Holders or Majority Series C
Holders, as the case may be, object to partial redemptions as
provided in the first sentence of this subsection. If such a
written objection is given, the Corporation shall not make any
such redemption of any Series B Shares or Series C Shares
unless or until it is otherwise instructed in writing by both
the Majority Holders and the Majority Series C Holders. Unless
otherwise determined by the Majority Senior Holders, the
Corporation shall not, and shall cause each of the
Subsidiaries not to, otherwise purchase or acquire for value
any shares of Series B Preferred Stock or Series C Preferred
Stock unless (i) such purchase or other acquisition is made
pursuant to an offer made on the same terms to all holders of
shares of Series B Preferred Stock and all holders of Series C
Preferred Stock, except for differences in price proportionate
to any differences in the respective Liquidation Prices of the
two series and (ii) there are simultaneously purchased or
otherwise acquired on such terms all shares which such holders
elect to tender for purchase or other acquisition; provided,
that if the aggregate purchase price for all shares tendered
for purchase exceeds the aggregate amount offered by the
Corporation, the purchase shall be made proportionately
between the Series B Shares and the Series C Shares tendered
so that the aggregate amount received by the holders of
tendered shares of either series shall be proportionate to the
ratio that the aggregate Liquidation Price of all tendered
shares of that series bears to the aggregate Liquidation Price
of all shares of both series tendered for purchase, and the
shares of either series purchased by the Corporation shall be
selected on a pro rata basis from among all holders who
tendered shares of that series. Nothing contained in this
Section 3(c) is intended to eliminate, qualify, modify or
limit the rights of the holders of any Investor Preferred
Shares under any provision of this resolution, including
Section 3(i), or the Series C Certificate of Designation,
including the provisions thereof corresponding to Section 3(i)
hereof, or any other rights or remedies which such holders may
have at law, in equity, by contract or otherwise in the event
of the failure of the Corporation to redeem any Investor
Preferred Shares as and at the times that would be required
but for the provisions of this Section 3(c)."
18. Subsection (d) of Section 3 is amended by (i) substituting
"Majority Senior Holders" for the term "Majority Holders" in each place such
term appears in such subsection, (ii) adding "or Series C Preferred Stock"
immediately after the term "Series B Preferred Stock" in each place such term
appears in such subsection, (iii) deleting the phrase "in accordance with
Section 8" in each place such term appears in such subsection and (iv) deleting
the words "by the terms hereof" that appear therein immediately before
"provided" in the first sentence thereof.
19. Subsection (e) of Section 3 is amended by (i) deleting the
phrase "Subject to Section 3(f)," and capitalizing the first letter of the word
"if" immediately following such phrase, (ii) deleting "clause (i), (ii) or (iv)
of" therefrom, (iii) deleting the phrase "in accordance with Section 8" in each
place such phrase appears in such subsection, and (iv) substituting "Majority
Senior Holders" for the term "Majority Holders" appearing in such subsection.
20. Section 3 is further amended by deleting the entire text of
subsection (f) thereof and substituting "[Intentionally Omitted]", so that
subsection (f) reads in its entirety as "(f)[Intentionally Omitted]."
21. Subsection (g) of Section 3 is amended by substituting "Series B
Preferred Stock" for the term "Series A Preferred Stock" appearing in the second
sentence thereof.
22. Subsection (h) of Section 3 is amended to read in its entirety
as follows:
"(h) Certain Notices and Other Obligations Relating to
Participation Event or Reorganization Events. If the
Corporation agrees or the Board of Directors passes a
resolution authorizing the Corporation to voluntarily
consummate or take, or assist any one or more of the holders
of its Common Stock in consummating or taking, any transaction
or action which would, if consummated, result in a
Participation Event, or if the Corporation receives formal
written notice that one or more of the holders of its Common
Stock have agreed to engage in any such transaction, then it
shall send to each holder of Series C Preferred Stock and each
holder of the Series B Preferred Stock, at least 15 days prior
to the scheduled or anticipated closing of such transaction
(or, in the case where the Corporation receives formal written
notice of such transaction, immediately upon receiving such
formal written notice if such notice is received less than 15
days prior to the scheduled or anticipated closing of such
transaction), a written notice which will summarize the
material terms of such transaction, and if any of such terms
change in any material respect prior to such closing, the
Corporation shall promptly notify the holders of the Series C
Preferred Stock and the holders of the Series B Preferred
Stock in writing. If any Participation Event occurs, the
Corporation shall give the holders of the Series C Preferred
Stock and the holders of the Series B Preferred Stock written
notice thereof promptly, and in any event not later than the
fifth Business Day after the Corporation has knowledge of such
occurrence, and such notice shall summarize the material facts
relating to such Participation Event. If the Corporation plans
or the Board of Directors passes a resolution authorizing the
Corporation, or any Significant Subsidiary's Board of
Directors or other governing body plans or authorizes such
Significant Subsidiary, to take any voluntary action intended
to result in any Reorganization Event, or if the Corporation
receives formal written notice that any other Person plans to
take or has taken any action intended to result in an
involuntary Reorganization Event, then it shall immediately
send to each holder of Series C Preferred Stock and each
holder of the Series B Preferred Stock (or, in the case where
the Corporation receives formal written notice of such action,
immediately upon receiving such formal written notice), a
written notice to that effect stating the material relevant
facts relating thereto and shall thereafter keep each such
holder apprised on a current basis of all related material
developments. If any Reorganization Event occurs, the
Corporation shall give the holders of the Series C Preferred
Stock and the holders of the Series B Preferred Stock written
notice thereof promptly, and in any event not later than the
next Business Day after the Corporation has knowledge of such
occurrence, and such notice shall summarize the material facts
relating to such Reorganization Event. Each notice given by
the Corporation pursuant to the second or fourth sentence of
this Section 3(h) shall be accompanied by an appropriate form
(an 'Election Form') by which the holders of the Series C
Preferred Stock and the holders of the Series B Preferred
Stock may elect whether or not to require the Corporation to
redeem their shares of the Series B Preferred Stock in
accordance with the terms of Section 6(c) or their shares of
the Series C Preferred Stock in accordance with the terms
thereof (as the case may be). If, at any time within a period
of 15 days after Election Forms are mailed, the Corporation
shall have received completed Election Forms from the Majority
Senior Holders electing to require the Corporation to redeem
the Series B Shares, Series C Shares or both held by them, the
Corporation shall promptly thereafter redeem from all holders
of Series C Preferred Stock and all holders of Series B
Preferred Stock, in accordance with Section 6(c) and the other
applicable provisions of this resolution and the applicable
provisions of the Series B Certificate of Designation,
respectively, all outstanding shares of Series C Preferred
Stock and Series B Preferred Stock; provided, however, that
the Corporation shall not voluntarily consummate or take, or
assist any of the holders of its Common Stock in consummating
or taking, any transaction or action which would result in a
Participation Event unless (i) prior to the date such
transaction is closed or such action is taken, the procedures
specified in this Section 3(h) shall have been followed and
the period of 15 days referred to in this sentence shall have
expired; (ii) if the Corporation would be required to redeem
all shares of Series B Preferred Stock and all shares of
Series C Preferred Stock by virtue of such Participation
Event, the Corporation shall have (A) deposited with a
Redemption Agent funds sufficient to redeem on the applicable
Redemption Date all Series B
Shares required to be redeemed at the applicable Redemption
Price and (B) deposited with a 'Redemption Agent' funds
sufficient to redeem on the applicable 'Redemption Date' all
Series C Shares required to be redeemed at the applicable
'Redemption Price,' as such quoted terms are defined in and
determined in accordance with the Series C Certificate of
Designation; and (iii) the Corporation shall have given
written notice of its compliance with clause (ii) of this
sentence to each holder of Series C Preferred Stock or Series
B Preferred Stock. The provisions of this Section 3(h) shall
apply successively to each Change of Control or Reorganization
Event which may occur."
23. Subsection (i) of Section 3 is amended as follows:
(i) by replacing the words "If, at any time that any redemption of
shares of Series B Preferred Stock is" which appear at the beginning
of the first sentence of such subsection with the words "If, at any
time that any redemption of any shares of Investor Preferred Stock
is";
(ii) by adding the words "and the holders of the Series C Preferred
Stock" immediately after the term "Series B Preferred Stock"
appearing in clause (i) of the first sentence of such subsection;
(iii) substituting the term "Majority Senior Holders" for the term
"Majority Holders" in each place that such term appears in such
subsection;
(iv) by adding the words "and the holders of the Series C Preferred
Stock" immediately after the term "Series B Preferred Stock"
appearing in the second sentence of such subsection;
(v) by adding or "Series C Preferred Stock" immediately after the
term "Series B Preferred Stock" in the fifth sentence of such
subsection; and
(vi) amending the last sentence of such subsection amended to read
in its entirety as follows:
"Nothing contained in this Section 3(i) is intended to
eliminate, qualify, modify or limit the rights of the holders
of the Series B Preferred Stock or the holders of the Series C
Preferred Stock under any provision of Series B Certificate of
Designation or the Series C Preferred Certificate of
Designation, respectively, or any other rights or remedies
which such holders may have at law, in equity or by contract
in the event of the failure of the Corporation to redeem
shares of Series B Preferred Stock or Series C Preferred Stock
as and when required by the Series B Certificate of
Designation or the Series C Certificate of Designation."
24. The first sentence of subsection (a) of Section 4 is amended to read
in its entirety as follows:
"The holders of the Series B Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, cumulative cash dividends, in
preference and priority to dividends on any Junior Stock, that shall
accrue on the Liquidation Price of each share of the Series B
Preferred Stock at the rate of fourteen and eight-tenths percent
(14.8%) per annum, from and including the Issue Date of such share
to and including the date on which the Liquidation Price (plus
unpaid dividends as described in Section 5(a) hereof) or Redemption
Price of such share is made available pursuant to Section 5 or
Section 6, respectively or such share is converted pursuant to
Section 9 or Section 10."
25. The third sentence of Section 4(a) is amended by deleting the phrase
"or Accrual Date" therefrom.
26. Section 4(a) is further amended by deleting the fourth sentence
thereof.
27. Subsection (b) of Section 4 is amended to read in its entirety as
follows:
"(b) Compounding of Dividends. On each Dividend Payment Date,
all dividends that have accrued on each share of Series B Preferred
Stock during the immediately preceding Dividend Period shall, to the
extent not paid on such Dividend Payment Date for any reason
(whether or not such unpaid dividends have been earned or declared
or there are any unrestricted funds of the Corporation legally
available for the payment of dividends), be added to the Liquidation
Price of such share effective as of such Dividend Payment Date and
shall remain a part thereof to and including the date on which the
Liquidation Price (plus unpaid dividends as described in Section
5(a) hereof) or Redemption Price of such share is made available
pursuant to Section 5 or Section 6, respectively. No accrued
dividends (or dividends accrued thereon) which have been added to
Liquidation Price of any Series B Share may be subsequently declared
or, except in accordance with Section 5 or Section 6, paid by the
Corporation without the consent of the Majority Senior Holders."
28. Section 5 is amended to read in its entirety as follows:
"5. Distributions Upon Liquidation, Dissolution or Winding Up.
"(a) Payment of Liquidation Price. In the event of any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of shares of the Investor
Preferred Stock shall be entitled to receive
from the assets of the Corporation available for distribution to
stockholders, before any payment or distribution to the holders of
any Junior Stock (in their capacities as holders of such Junior
Stock) shall be declared, made or provided for or any cash, property
or other consideration shall be set aside for such purpose, an
amount in cash or property at its Fair Market Value, as reasonably
determined by the Board of Directors in good faith, or a combination
thereof, for each share of Investor Preferred Stock, equal to the
sum of the Liquidation Price of such share of Investor Preferred
Stock as of the date of the payment or distribution thereof to the
holders of the Investor Preferred Stock plus all unpaid dividends
accrued on such share during the period from and including the
applicable Dividend Date immediately preceding such date (or the
Issue Date for such share if there was no prior Dividend Date)
through and including such date of payment or distribution (whether
or not such unpaid dividends have been earned or declared).
"(b) Participating Distributions. Subject to Section 5(c), if,
in connection with any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment in full
to the holders of the Series C Preferred Stock, the Series B
Preferred Stock and the holders of all other classes or series of
Parity Stock, if any, which rank on a parity basis with the Investor
Preferred Stock with respect to distributions upon such liquidation,
dissolution or winding up of the respective preferential amounts to
which they are entitled, the Corporation shall at any time
distribute to the holders of its shares of Common Stock or any other
class or series of Junior Stock any cash, property or other
consideration, the holders of the Investor Preferred Stock shall be
entitled to receive, for each share of Investor Preferred Stock
held, an amount per share of the Investor Preferred Stock equal to
the amount that a holder of one share of the Investor Preferred
Stock would have been entitled to receive as a record holder of the
number of shares of Common Stock or such class or series of other
Junior Stock (as the case may be) had such share of Investor
Preferred Stock been converted in accordance with Section 9 hereof,
in the case of the Series B Preferred Stock, or in accordance with
the Series C Certificate of Designation, in the case of the Series C
Preferred Stock, immediately prior to the record date for such
distribution (or, if no such record date is fixed, immediately prior
to any other time as of which the holders of Common Stock or such
other Junior Stock entitled to participate in such distribution was
determined). The holders of the Investor Preferred Stock shall be
entitled to a distribution of fractional shares or interests in any
securities or other property distributed as contemplated by this
subsection to the extent that holders of Common Stock are entitled
to receive the same. The holders of shares of the Investor Preferred
Stock on the applicable record date (or other effective time) shall
be entitled to receive in lieu of such fractional shares or
interests the same consideration as is payable to holders of the
Common Stock or other Junior Stock in respect of which such
distribution is made. If there are no fractional shares or interests
payable to holders of the
Common Stock or such other Junior Stock, the holders of shares of
the Investor Preferred Stock on the applicable record date (or other
effective time) shall receive in lieu of such fractional shares or
interests the Fair Market Value thereof as determined by the Board
of Directors in good faith. If the holders of Common Stock or such
other Junior Stock are entitled to make any election with respect to
the kind or amount of securities or other property receivable by
them in any distribution that is subject to this subsection, the
kind and amount of securities or other property that shall be
distributable to each holder of shares of Investor Preferred Stock
shall be based on (i) the election, if any, made by such holder of
Investor Preferred Stock in writing to the Corporation on or prior
to the last date on which a holder of Common Stock or such other
Junior Stock may make such an election or (ii) if no such election
is timely made, an assumption that such holder failed to exercise
any such rights (provided that if the kind or amount of securities
or other property is not the same for each nonelecting holder, then
the kind and amount of securities or other property receivable by
holders of shares of Investor Preferred Stock who do not make such
election on a timely basis shall be based on the kind or amount of
securities or other property receivable by a plurality of the shares
held by the nonelecting holders of Common Stock or such other Junior
Stock). Concurrently with the delivery to holders of Common Stock or
such other Junior Stock of any document pursuant to which such
holders may make an election of the type referred to in this
subsection, the Corporation shall deliver a copy thereof to the
holders of record of shares of the Investor Preferred Stock as of
the date used for determining the holders of record of Common Stock
or such other Junior Stock entitled to such delivery, which document
shall be used by the holders of record of shares of the Investor
Preferred Stock to make such an election. Distributions to which
holders of Investor Preferred Stock are entitled to receive pursuant
to this Section 5(b) are in addition to those distributions to which
they are entitled pursuant to Section 5(a).
"(c) Limit on Participating Payments. The right of the holders
of Investor Preferred Stock to participate in distributions to
holders of the Common Stock or any other class or series of Junior
Stock pursuant to Section 5(b) shall terminate at such time as the
total amount distributed to the holders of the Investor Preferred
Stock pursuant to Section 5(a) and Section 5(b) equal, for each
share of Investor Preferred Stock held, Three Hundred and Eight
Dollars ($308) per share.
"(d) Pro Rata Distributions to Senior Holders. If, upon
distribution of the Corporation's assets in liquidation, dissolution
or winding up, the assets of the Corporation available for
distribution to its stockholders shall be insufficient to permit
payment in full to the holders of the Investor Preferred Stock and
the holders of all other classes or series of Parity Stock, if any,
which rank on a parity basis with the Investor Preferred Stock with
respect to distributions upon such liquidation, dissolution or
winding up of the respective preferential amounts
to which they are entitled, then the entire assets of the
Corporation available for distribution to stockholders shall be
distributed ratably to such holders in proportion to the respective
full preferential amounts to which the shares of Investor Preferred
Stock and all such other classes and series of Parity Stock would
otherwise be entitled. For purposes of this subsection (d), the
'preferential amounts' to which the holders of the Series C
Preferred Stock or the Series B Preferred Stock are entitled shall
be the amounts determined pursuant to Section 5(a) and shall not
include any amounts to which they are or may become entitled
pursuant to Section 5(b).
"(e) Merger, Sale of Assets, Etc. For purposes of this Section
5, no Participation Event shall in and of itself be considered to be
a liquidation or winding up of the Corporation; provided, however,
that if the Corporation shall fail to redeem, as and when required
by Section 6 hereof and the corresponding provisions of the Series C
Certificate of Designation, all shares of Investor Preferred Stock
required to be redeemed as a result of such Participation Event,
then the Majority Senior Holders may elect, by written notice to the
Corporation at any time (either before, after or during any
proceedings initiated under Section 3(i) hereof or the corresponding
provisions of the Series C Certificate of Designation), to require
that such Participation Event be treated as a liquidation,
dissolution or winding up of the Corporation entitling the holders
of the Series B Preferred Stock and the Series C Preferred Stock and
the holders of the Common Stock and other Junior Stock, if any, to
receive, at the closing, the respective amounts specified above in
this Section 5. Nothing contained in this Section 5(e) is intended
to eliminate, qualify, modify or limit the rights of the holders of
the Series C Preferred Stock or the holders of the Series B
Preferred Stock under any provision of the Series C Certificate of
Designation or the Series B Certificate of Designation,
respectively, or any other rights or remedies which such holders may
have at law, in equity or by contract in the event of the failure of
the Corporation to redeem shares of Series C Preferred Stock or
Series B Preferred Stock as and when required by the Series C
Certificate of Designation or the Series B Certificate of
Designation.
"(f) Record Date and Notice. Unless the Majority Senior
Holders otherwise agree in writing, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary:
"(i) Any distribution to the holders of capital stock of the
Corporation of any class or series of assets of the
Corporation available for distribution to its stockholders
will be made to the holders of record of such class or series
on a record date that is not less than 10 days nor more than
30 days prior to the date such distribution is proposed to be
made (each, a 'Distribution Date').
"(ii) The Corporation shall give to each holder of
Investor Preferred Stock at least 20 days' prior written notice of the
record date to be fixed for any payment or distribution to any of the
holders of any capital stock of the Corporation of any class or series. In
addition to any other information required by this resolution, the Series
B Certificate of Designation, any contract or applicable law, such notice
shall describe in reasonable detail each payment or distribution proposed
to be made, identify all classes and series of capital stock that will
participate in such payment or distribution and the relative
participations of the holders of each such class or series and state the
record date and Distribution Date for such payment or distribution. Such
notice shall be accompanied by a statement, in reasonable detail, showing
the amount, kind and value of all assets of the Corporation available for
payment or distribution to its stockholders. After any such notice is
given, the Corporation shall promptly furnish to each holder of Investor
Preferred Stock any information that such holder may reasonably request
relating to the liquidation, dissolution or winding up of the Corporation
and its assets and liabilities, including any information reasonably
requested and in the possession of the Corporation in order to assist such
holder in determining whether to exercise any right to convert any or all
of such holder's shares of Investor Preferred Stock into Common Stock or
other Junior Stock.
"(iii)The Investor Preferred Shares shall continue to be
convertible into Common Stock in accordance with the respective terms
thereof unless and until such holders have received indefeasible payment
of the full preferential amounts to which they are entitled pursuant to
Section 5(a). Once such payment in full has been indefeasibly made, the
Investor Preferred Shares no longer shall be convertible, but the holders
thereof shall continue to be entitled to participating distributions
pursuant to Section 5(b)."
29. Subsection (a) of Section 6 is amended by (i) deleting from the
first sentence the phrase "Unless otherwise approved by the Majority Holders in
accordance with Section 8," and capitalizing the first letter of the word "at"
immediately following such phrase and (ii) deleting the first word of the second
sentence and adding at the beginning of such second sentence the phrase "Unless
otherwise approved by the Majority Holders in accordance with Section 8, the".
30. Subsection (b) of Section 6 is amended by substituting "Dividend
Payment Date" for the term "Accrual Dates" appearing in such subsection.
31. Section 6(c) is amended to read in its entirety as follows:
"(c) Redemption at Option of Holders Upon Participation
Event or Reorganization Event. In the event of the occurrence
of a Participation Event or any Reorganization Event, the
Majority Senior Holders shall have the right to require the
Corporation to redeem, on the applicable Redemption Date, all
of the outstanding shares of the Investor Preferred
Stock. Such right may be exercised by one or more Election
Forms or any other written notices (collectively, a 'Section
6(c) Election Notice') to such effect which, collectively,
have been signed by the Majority Senior Holders and given to
the Corporation at any time after the date of occurrence of
such Participation Event or Reorganization Event (as the case
may be) and prior to the expiration of the period of 15 days
after written notice of such occurrence is given to the
holders of the Investor Preferred Stock pursuant to Section
3(h) or, if the penultimate sentence of Section 3(h) is
applicable, at any time within the period of 15 consecutive
days after the written notice referred to in clause (iii) of
such sentence is given; provided, however, that in the case of
any Reorganization Event, such 15-day period shall be extended
by a number of days equal to the number of days, if any,
during which either the exercise of such right or the
redemption by the Corporation of the Investor Preferred Stock
shall be enjoined, stayed or otherwise prevented or delayed by
order or decree of any court or tribunal. In the case of a
redemption of the Investor Preferred Stock pursuant to this
Section 6(c) in connection with a Reorganization Event or in
connection with a Participation Event under clause (v) of the
definition of "Change in Control" in Section 2 resulting
solely from the death of Gerard Joyce or Thomas Pugliese, the
Redemption Price per share of the Series B Preferred Stock
shall be equal to the sum of the Liquidation Price of such
share determined as of the applicable Redemption Date plus all
unpaid dividends (whether or not earned or declared) accrued
on such share during the period from and including the
Dividend Payment Date immediately preceding the applicable
Redemption Date (or the Issue Date of such share, if the first
Dividend Payment Date for such share has not yet occurred)
through and including such Redemption Date. In the case of a
redemption of the Investor Preferred Stock pursuant to this
Section 6(c) in connection with a Participation Event other
than any under clause (v) of the definition of "Change in
Control" in Section 2 resulting solely from the death of
Gerard Joyce or Thomas Pugliese, the Redemption Price per
share of the Series B Preferred Stock shall be equal to the
lesser of (i) Three Hundred and Eight Dollars ($308) or (ii)
the sum of (x) the Liquidation Price of such share determined
as of the applicable Redemption Date, plus (y) all unpaid
dividends (whether or not earned or declared) accrued on such
share during the period from and including the Dividend
Payment Date immediately preceding the applicable Redemption
Date (or the Issue Date of such share, if the first Dividend
Payment Date for such share has not yet occurred) through and
including such Redemption Date plus (z) the Participation
Amount calculated as of the Redemption Date."
32. Subsections (e) and (f) of Section 6 are amended by substituting
the term "Investor Preferred Stock" for the term "Series B Preferred Stock" in
each place that such term
appears in either subsection.
33. Subsection (f) of Section 7 is amended by substituting "Majority
Senior Holders" for the term "Majority Holders" in each place in which such term
appears in such Section. The last sentence of Section 7(f) is amended to read in
its entirety as follows:
"For purposes hereof, an 'independent director' is an individual who
(unless otherwise approved by the Series B Director or, if there is
no Series B Director, by the Series C Director or, if there is no
Series C Director, by the Majority Senior Holders) (i) has either a
significant financial investment in the Corporation or a significant
strategic position or expertise relative to the business of the
Corporation and (ii) is not (A) an officer or employee of the
Corporation or any of its Subsidiaries, (B) a director, employee,
partner, manager or other member of management of any of Affiliate
of the Corporation (except a director of a Subsidiary of the
Corporation), (C) a relative of any Person described in subclause
(ii)(A) or (ii)(B) or (D) a trustee of any trust or estate in which
any Person described in subclause (ii)(A), (ii)(B) or (ii)(C) is a
beneficiary has a substantial beneficial interest. "
34. Subsection (a) of Section 8 is amended by (i) substituting
"General" for "Business" in the last sentence and (ii) adding the following two
sentences at the end of such subsection:
"With respect to actions by the holders of the Series B Preferred
Stock and the Series C Preferred Stock upon those matters on which
such holders are entitled to vote as a single series or class
(including any action which this resolution states is within the
authority or discretion of the Majority Senior Holders), such
actions may be taken either at a meeting of such holders or without
a stockholder meeting by the written consent of holders of shares of
Investor Preferred Stock having an aggregate Liquidation Price
representing more than 50% of the total Liquidation Price of all
Series B Shares and Series C Shares then outstanding. Notice shall
be given in accordance with the applicable provisions of the
Delaware General Corporation Law of the taking of corporate action
without a meeting by less than unanimous written consent to those
holders of Investor Preferred Stock whose shares were not
represented on the written consent."
35. The first sentence of subsection (b) of Section 8 is amended to
read in its entirety as follows:
"At any meeting having as a purpose either the election of a Series
B Director or any action upon any other matter on which the holders
of the Series B Preferred Stock are entitled to vote as a separate
series or class, the presence, in person or by proxy, of the holders
of record of at least a majority of the Series B Shares then
outstanding, shall be required and be sufficient to constitute a
quorum of
such series or class for any such purpose, and the affirmative vote
of the holders of a majority of the shares of Series B Preferred
Stock then outstanding and entitled to vote at such meeting shall be
the act of the Series B Preferred Stock."
36. Subsection (b) of Section 8 is further amended by adding the
following at the end of such subsection:
"At any meeting having as a purpose any vote or action by holders of
the Series B Preferred Stock and the Series C Preferred Stock as a
single series or class (including any action which this resolution
states is within the authority or discretion of the Majority Senior
Holders), the presence, in person or by proxy, of the holders of
record of shares of Investor Preferred Stock having an aggregate
Liquidation Price representing more than 50% of the total
Liquidation Price of all Series B Shares and Series C Shares then
outstanding shall be required and be sufficient to constitute a
quorum of such class for any such purpose, and the affirmative vote
of the shares of Investor Preferred Stock having an aggregate
Liquidation Price representing more than 50% of the total
Liquidation Price of all Series B Shares and Series C Shares then
outstanding and entitled to vote at such meeting shall be the act of
the Investor Preferred Stock. At any such meeting or adjournment
thereof, (A) the absence of a quorum of such holders of Investor
Preferred Stock shall not prevent the taking of any action by the
holders of shares other than the Investor Preferred Stock which they
are entitled to take, and the absence of a quorum of holders of
shares other than the Investor Preferred Stock shall not prevent the
holders of the Investor Preferred Stock from taking of any action
which they are entitled to take and (B) in the absence of such
quorum, either of holders of the Investor Preferred Stock or of
shares other than the Investor Preferred Stock (or both), a majority
of the holders, present in person or by proxy, of the class or
classes of stock which lack a quorum shall have power to adjourn the
meeting for the election of directors which they are entitled to
elect or the taking of any other action which they are entitled to
take, from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
37. Subsection (a) of Section 9 is amended by deleting the last two
sentences thereof.
38. Subsection (a) of Section 9 is further amended by substituting
the following for the second sentence thereof:
"The number of whole or fractional shares of Common Stock into which
each share of Series B Preferred Stock shall be convertible as of
any time shall be equal to the quotient determined by dividing (i)
the sum of (A) the Liquidation Price of such share plus (B) an
amount equal to all unpaid dividends accrued on such share of Series
B Preferred Stock from and including the Dividend Payment
Date immediately preceding such date (or the Issue Date if there was
no prior Dividend Payment Date) through and including such time,
whether or not such unpaid dividends have been earned or declared or
there are any unrestricted funds of the Corporation legally
available for the payment of dividends; by (ii) the Conversion Price
determined as of such time."
39. The penultimate sentence of subsection (b) of Section 9 is
amended by adding the following immediately after the last word in such
sentence: "and the holder of the share or shares of Series B Preferred Stock so
converted shall no longer have any rights or obligations pursuant to the Series
B Certificate of Designation (except the right of such holder to receive, and
the obligation of the Corporation to issue and deliver, such shares of Common
Stock and all other securities, cash or other property, if any, issuable upon
such conversion)."
40. Subsection (j) of Section 9 is amended to read in its entirety
as follows:
"(j) Certain Other Distributions. Subject to the second and
third sentences of this Section 9(j), if the Corporation shall at any time
declare or make any distribution, by dividend or otherwise, to all holders of
outstanding shares of Common Stock of any cash (subject to the last sentence of
this subsection) or other assets or property of any nature whatsoever, any debt
securities or other evidences of its indebtedness, any capital stock, any other
securities of any nature whatsoever or any warrants, options or other Rights to
subscribe for, purchase or otherwise acquire any assets, property, capital
stock, debt or other securities or evidences of indebtedness (excluding
dividends, distributions or issuances referred to in Section 9(i), Rights
referred to in Section 9(l) and Convertible Securities referred to in Section
9(m)), or shall take a record of such holders for the purpose of entitling them
to receive such a distribution, then the Conversion Rate shall be adjusted to
equal the product of the Conversion Rate determined as of immediately prior to
such adjustment multiplied a fraction the numerator of which shall be the
Current Market Price per share of the Outstanding Common Shares at the date of
taking such record or, if no record is taken, at the date as of which the
holders of Common Stock entitled to participate in such distribution were
determined or if no such determination is made, on the date of such
distribution, and the denominator of which shall be the excess of (x) such
Current Market Price per share of the Outstanding Common Shares at such date
over (y) the amount allocable to one share of the Outstanding Common Shares at
such date of any such cash so distributable and of the Fair Market Value (as
determined as of such date in good faith by the Board of Directors) of any and
all such evidences of indebtedness, shares of capital stock, debt securities,
other securities, property, assets or Rights so distributable. No adjustment
pursuant to the foregoing provisions of this Section 9(j) shall be made if such
adjustment would result in a Conversion Rate that is lower than the Conversion
Rate in effect prior to such adjustment or in a Conversion Price higher than
that in effect prior to such adjustment. In the event that, with respect to any
such distribution, the result of subtracting the amount referred to in clause
(y) of the first sentence of this Section from the Current Market Price referred
to in clause (x) of such sentence is less than one-half of such Current Market
Price or such amount referred to in such clause (y) is greater than the amount
of such Current Market Price referred to in such clause (x), then the adjustment
provided for above
in this Section shall not be made and in lieu thereof the Conversion Rate and
the Conversion Price determined as of immediately prior to the applicable time
referred to in clause (i) or (ii) of this sentence shall be adjusted so that the
Holder of any Series B Share thereafter surrendered for conversion shall be
entitled to receive the kind and number or amount of shares of Common Stock (or
other capital stock of the Corporation), other Conversion Securities and other
property or assets which such Holder would have received had such Series B Share
been converted prior to the record date for the determination of the
stockholders entitled to receive such distribution or, if no such record date is
fixed, as of any other time as of which the holders of Common Stock entitled to
participate in such distribution was determined, plus the kind and amount of
cash, other assets or property, debt securities, other evidences of
indebtedness, other securities or Rights which such Holder would have been
entitled to receive by virtue of being the record holder, as of such record date
or other time, of such kind and number or amount of shares of Common Stock or
other Conversion Securities (assuming that such holder of Common Stock or other
Conversion Securities failed to exercise rights of election, if any, as to the
kind or amount of shares or stock, other securities or property receivable in
such distribution, provided that if the kind or amount of shares of stock, other
securities or property receivable in such distribution is not the same for each
non-electing share, then the kind and amount of shares of stock, other
securities or property receivable upon consummation of such transaction for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). An adjustment made pursuant to
this Section 9(j) shall become effective, subject to Section 9(p)(D) and Section
9(p)(E), immediately after such record date or, if no such record date is fixed,
immediately after the time as of which holders of Common Stock entitled to
participate in such distribution were determined or, if no such time is fixed,
as of the date of such distribution. No adjustment pursuant to this subsection
(j) shall be required for any cash dividend paid out of current or retained
earnings to the extent the sum of the cash dividends payable after the Issue
Date does not exceed the aggregate net income (determined in accordance with
generally accepted accounting principles consistently applied) of the
Corporation since the Issue Date."
41. Subsection (m) of Section 9 is amended by (i) deleting the "If"
appearing as the first word of the first sentence of such Section and
substituting therefor the phrase "Subject to the last sentence of this Section
9(m), if" and (ii) by adding the following sentence at the end of such Section:
"No adjustment under this Section 9(m) shall be required by reason
of the issuance of any shares of the Series C Preferred Stock that
(i) is expressly provided for in (A) the TFC Series C Purchase
Agreement or the Co-Investment Agreement referred to therein, (B)
Section 2.4 of the TFC Series C Purchase Agreement or (C) in the
Pugliese Employment Agreement; or (ii) with the prior consent of the
Majority Senior Holders given in a written instrument that expressly
states that no such adjustment shall be required."
42. Clause (A) of subsection (n) of Section 9 is amended by adding
the following, immediately after the term "Convertible Securities" in the first
place that such term
appears in such clause:
"other than shares of the Series C Preferred Stock referred to in
the last sentence of Section 9(m):"
43. The last sentence of clause (A) of subsection (p) of Section 9
is amended by adding the phrase "except shares of Series C Preferred Stock
issued to Thomas Pugliese pursuant to the Pugliese Employment Agreement"
immediately after the term "Subsidiary" appearing in such sentence.
44. Section 9(p)(F) is amended by (i) substituting "Majority Senior
Holders" for the term "Majority Holders" in each place such term appears
therein, (ii) adding "or during any period that no shares of Series B Preferred
Stock shall be outstanding, the Series C Director" immediately after the term
"Series B Director" in each place such term appears therein and (iii)
substituting "this resolution" for the words "this Agreement" appearing in the
first sentence of such Section.
45. Subsection (w) of Section 9 is amended by (i) substituting the
words "receive or purchase (as the case may be)" for the word "purchase" in the
first place that such word appears; (ii) adding the words "or purchasable (as
the case may be)" immediately after the word "receivable" in each place that
such word appears; and (iii) adding the following sentence at the end thereof:
"The provisions of this Section 9(w) are supplemental to, and are
not intended to eliminate, qualify, modify or limit the rights of
the holders of any Investor Preferred Shares under any other
provision of this resolution, including Sections 3(i), 6(c) and
5(e), or the Series C Certificate of Designation, including the
provisions thereof corresponding to Sections 3(i), 6(c) and 5(e)
hereof, or any other rights or remedies which such holders may have
at law, in equity, by contract or otherwise in the event of any
transaction referred to in this Section 9(w)."
46. Subsection (y) of Section 9 is amended by (i) substituting
"Majority Holders" for the word "Representative" in each place that such word
appears therein and (ii) amending the last sentence of clause C of such
subsection to read in its entirety as follows:.
"Without limiting the generality of the immediately preceding
sentence, no decision of any arbitrator appointed pursuant to this
Section 9(y) shall have or be given any res judicata or similar
effect in any action, suit or proceeding in which any claim by any
holder of any Series B Share or Conversion Securities or any holder
of Series C Shares or of any securities into which any Series C
Share is converted of any breach or inaccuracy of any representation
or warranty of, or any breach or failure to perform any covenant,
agreement or obligation, of the Corporation contained herein or in
the Series C Certificate of Designation, the
TFC Series C Purchase Agreement, any Purchase Agreement or any other
agreement or instrument is to be adjudicated."
47. The first sentence of Section 9(y)(A) is amended to read in its
entirety as follows:
"If there shall arise any dispute between the Corporation and the
Majority Holders concerning the calculation of the Redemption Price
in the case of a redemption pursuant to Section 6(c), the
interpretation, application or operation of the adjustment
provisions of Section 9 (other than any such dispute referred to in
the second sentence of Section 9(p)(F), which shall be resolved as
stated therein) or the interpretation, application or operation of
the provisions of Section 10, the Corporation and the Majority
Holders will promptly attempt to settle such dispute through
consultation and negotiation in good faith and in a spirit of mutual
cooperation."
48. The last sentence of Section 11 is amended to read in its
entirety as follows:
"The word 'property' and the word 'assets' shall each include assets
or property of any kind, whether real, personal, tangible or
intangible."
49. Section 14 is amended to read in its entirety as follows:
"14. Waivers.
"(a) Any provision of this resolution which, for the
benefit of the holders of Series B Preferred Stock, prohibits,
limits or restricts actions by the Corporation, or imposes
obligations on the Corporation, may be waived in whole or in
part, or the application of all or any part of such provision
in any particular circumstance or generally may be waived, in
each case with the consent of the Majority Holders, either in
writing or by vote at a meeting called for such purpose at
which the holders of Series B Preferred Stock shall vote as a
separate class, unless such waiver, by its terms, has an
adverse effect upon the shares of Series B Preferred Stock of
any holder that does not affect all shares of Series B
Preferred Stock on an equal per share basis, in which case
such waiver shall require the prior approval of such holder.
"(b) Any provision of this resolution which, for the
benefit of the holders of Investor Preferred Stock without
distinction as to series or class, prohibits, limits or
restricts actions by the Corporation, or imposes obligations
on the Corporation, may be waived in whole or in part, or the
application of all or any part of such provision in any
particular
circumstance or generally may be waived, in each case with the
consent of the Majority Senior Holders, either in writing or
by vote at a meeting called for such purpose at which the
holders of the Investor Preferred Stock shall vote as a
separate, single class, unless such waiver, by its terms, has
an adverse effect upon the shares of the Series B Preferred
Stock or the Series C Preferred Stock of any holder that does
not affect all shares of the other series on an equal per
share basis, in which case such waiver shall require the prior
approval of the holders of a majority of the shares of the
affected series.
"(c) Any waiver given as provided in subsection (a) of
this Section shall be binding on all holders of the Series B
Preferred Stock. Any waiver given as provided in subsection
(b) of this Section shall be binding on all holders of the
Investor Preferred Stock."
50. Section 15 is amended to read in its entirety as follows:
"All notices, requests, consents, demands, elections and other
communications required or permitted hereunder shall be in
writing and shall be given or delivered to the intended
recipient at: (i) in the case of any holder of shares of
Investor Preferred Stock, to such holder at his address
appearing on the books of the Corporation or supplied by him
in writing to the Corporation for the purpose of such notice;
and (ii) in the case of the Corporation, to the Corporation at
its principal office at 9531 West 78th Street, Minneapolis,
Minnesota, or at such changed address as the Corporation may
from time to time specify in writing to each holder of shares
of Investor Preferred Stock. Any such notice, request,
consent, demand, election or other communication shall be
deemed to have been duly given or delivered if personally
delivered or sent by registered or certified mail, return
receipt requested, Express Mail, Federal Express or similar
overnight delivery service for next Business Day delivery or
by telegram, telex or facsimile transmission and will be
deemed given or delivered, unless earlier received: (1) if
sent by certified or registered mail, return receipt
requested, five calendar days after being deposited in the
United States mail, postage prepaid; (2) if sent by Express
Mail, Federal Express or similar overnight delivery service
for next Business Day delivery, the next Business Day after
being entrusted to such service, with delivery charges prepaid
or charged to the sender's account; (3) if sent by telegram or
telex or facsimile transmission, on the date sent and (4) if
delivered by hand, on the date of delivery. No failure on the
part of the Corporation to give any notice required by any
provision of this resolution, nor any delay or defect in any
such notice which is given or delivered or in the giving or
delivery thereof, shall adversely affect the rights which the
holders of the Series B Preferred Stock or the holders of
the Investor Preferred Stock would have if such notice had
been duly given on a timely basis, and such holders shall be
entitled to exercise such rights from and at any time after
they acquire actual knowledge of the matters required to be
set forth in such notice."
51. The last sentence of Section 15 is amended by adding the words
"or the holders of the Investor Preferred Stock" immediately after the term
"Series B Preferred Stock appearing therein.
52. Section 17 is amended to read in its entirety as follows:
"17. Amendment; Voting Rights.
"(a) This resolution may be amended from time to
time by the Board of Directors with the affirmative vote
or written consent of the Majority Holders; provided,
however, any such amendment which, by its terms, would
have an adverse effect upon the shares of Series B
Preferred Stock of any holders that does not affect all
shares of Series B Preferred Stock on an equal per share
basis shall also require the prior approval of such
holder. Unless otherwise required by mandatory
provisions of applicable law or the Series C Certificate
of Designation, no vote or consent of the holders of any
other class or series of the Corporation's stock shall
be necessary.
"(b) The Series B Shares shall not carry voting
rights except as provided in this resolution and except
for any voting rights to which the holders thereof may
be or become entitled under the General Corporation Law
of the State of Delaware as in effect from time to time
(or any successor statutory provisions) or other
applicable law. The foregoing shall not prevent the
Corporation from granting, by contract (including the
Stockholders Agreement) or otherwise, to any Holder or
Holders of any Series B Shares any consent or approval,
veto or similar rights of any nature whatsoever.
"(c) Without the consent of the holders of a
majority of the number of shares of Series B Preferred
Stock then outstanding, the Corporation shall not amend,
alter or repeal any provision of the Corporation's
Certificate of Incorporation, this resolution or any
resolution of the Board of Directors establishing and
designating any series or class of capital stock and
determining the relative rights and preferences thereof,
so as to
effect any adverse change in the rights, privileges,
powers or preferences of the holders of the Series B
Preferred Stock."
53. Section 18 is amended to read in its entirety as follows:
"18. Decisions by Holders Generally. Unless otherwise
expressly provided herein, all decisions and determinations
required or permitted to be made hereunder by the Holders
(including any decision as to whether to give any consent or
approval) shall be made by the Majority Holders. To the
maximum extent permitted by law, each Person who is or shall
become a holder of any Series B Share waives all fiduciary
duties to such Person, if any, that the Majority Holders, the
Majority Senior Holders, any other Holder of any Series B
Share or any holder of any Series C Share otherwise would or
might have."
54. The Certificate of Designation for the Corporation's Series B
Senior Cumulative Compounding Convertible Redeemable Preferred Stock is hereby
further amended by (i) renumbering Sections 10, 11, 12, 13, 14, 15, 16, 17 and
18 as Sections 11, 12, 13, 14, 15, 16, 17, 18 and 19, respectively, and (ii) by
adding thereto, immediately after the end of Section 9, the following new
Section 10:
10. Initial Public Offering.
"(a) Qualified IPO. Subject to Section 6(e), upon the
occurrence of a Qualified IPO or on such date or dates as of
which holders of more than 75% of the total number of shares
of Series B Preferred Stock issued pursuant to the Purchase
Agreements have converted their shares of Series B Preferred
Stock into Common Stock in accordance with the provisions of
Section 9, the Corporation may elect, by written notice to
that effect given to each holder of Series B Preferred Stock
within 10 Business Days after the date of such closing, to
require that all, but not less than all, outstanding shares of
Series B Preferred Stock be converted, effective as of such
tenth Business Days, into duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock at the
Conversion Rate determined as of such tenth Business Day and
otherwise in accordance with Section 9 and the applicable
provisions of this Section 10 (after giving effect or pro
forma effect to all adjustments, if any, to the Conversion
Rate and the Conversion Price required by the provisions of
Section 9 as a result of any issuances or deemed issuances of
shares of Common Stock in or in connection with the Qualified
IPO, including all issuances or sales of shares of Common
Stock, Rights or Convertible Securities to the public, to any
underwriter as compensation or otherwise for such
underwriter's own account and not for resale to the public,
and all 'over-allotment options' and similar rights granted to
any underwriter).
"(b) Other IPO. Subject to Section 10(e), if the
Corporation, with the prior consent of the Majority Senior
Holders, consummates an initial public offering of the
Corporation's Common Stock at a price to the public reflecting
a pre-money common equity valuation of less than $231 per
share of Common Stock on a fully diluted basis (as such price
per share shall be appropriately adjusted for stock splits,
reverse splits, stock dividends or other reclassifications,
reorganizations or similar events affecting the capital stock
of the Corporation, the record date for which occurs after the
Closing Date), other than an initial public offfering that is
initiated by a demand for registration made in acordance with
the provisions of Article II of the Registration Rights
Agreement by the Investors (as defined therein), then unless
the Majority Senior Holders and the Corporation otherwise
agree in writing, effective as of the date of the closing of
the consummation of such initial public offering, all Series B
Shares (other than any Series B Shares as to which a notice of
conversion has been given prior to such date and not revoked
by the holders thereof) shall be converted into duly
authorized, validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 9 hereof and
the applicable provisions of this Section 10. The number of
shares into which each outstanding Series B Share shall be
converted shall be the greater of (i) the Conversion Rate
determined as of the date of the closing of the consummation
of such public offering (after giving effect or pro forma
effect to all adjustments, if any, to the Conversion Rate and
the Conversion Price required by the provisions of Section 9
as a result of any issuances or deemed issuances of shares of
Common Stock in or in connection with such initial public
offering, including all issuances or sales of shares of Common
Stock, Rights or Convertible Securities to the public, to any
underwriter as compensation or otherwise for such
underwriter's own account and not for resale to the public,
and all 'over-allotment options' and similar rights granted to
any underwriter); or (ii) the quotient obtained by dividing
the lesser of "A" or "B" by "C" where
A = Two Hundred and Thirty-One Dollars ($231),
B = the sum of (x) the Liquidation Price of such share
of Series B Preferred Stock as of the date of the
closing of the consummation of such public offering,
plus (y) all unpaid dividends accrued on such share
during the period from and including the applicable
Dividend Payment Date immediately preceding such date
(or the Issue Date for such share if there was no prior
Dividend Date) through and including such date of
payment or distribution (whether or not such unpaid
dividends
have been earned or declared), plus (z) the
Participation Amount of such share of Series B Preferred
Stock as of the date of the closing of the consummation
of such public offering, and
C = the pre-money value per share of the Common Stock on
a fully diluted basis implied by such initial public
offering.
"(c) Effect of Closing of IPO. Except as otherwise
expressly provided in this Section 10, the conversion of the
Series B Shares into Common Stock pursuant to subsection (a)
or (b) of this Section 10 shall, for purposes of Section 9
hereof, have the same effect as if each holder of Series B
Shares gave a notice of conversion pursuant to Section 9(b).
Upon the effective date for such conversion determined in
accordance with this Section 10 as specified in the notice to
each holder of Series B Preferred Stock, each share of Series
B Preferred Stock will be deemed to be converted into the
number of shares of Common Stock of the Corporation determined
as set forth in this Section 10 and the holder of such share
of Series B Preferred Stock shall no longer have any rights or
obligations pursuant to the Series B Certificate of
Designation (except the right of such holder to receive, and
the obligation of the Corporation to issue and deliver, such
shares of Common Stock and all other securities, cash or other
property, if any, issuable upon such conversion), but shall
instead have all the rights and obligations of holders of the
Corporation's Common Stock.
"(d) Notices; Continued Convertibility; Effective Date
of Conversion. In the case of any initial public offering of
the Common Stock (or any Rights or Convertible Securities),
the Corporation shall, promptly after the price to the public
is determined, the Corporation shall give written notice to
each holder of any Investor Preferred Shares of such price to
the public and shall also give each such holder at least three
Business Days advance notice of the date of the closing of the
consummation of such public offering. The calculations
required by Section 10(a) or Section 10(b) (whichever is
applicable) shall be made promptly after the exercise,
expiration or termination of any "over-allotment option"
granted to the underwriters, and the Corporation shall
promptly provide each holder of Investor Preferred Shares with
a written statement of the number of shares of Common Stock
into which each Series B Share and each Series C Share is
convertible in sufficient detail to permit such holder to
confirm the Corporation's calculations. Each Series B Share
shall continue to be convertible, at the election of the
holder thereof, into Common Stock in accordance with Section 9
through and including the eighth Business Day after such
holder receives the written statement of the Corporation's
calculations referred to in the
immediately preceding sentence. If such holder does not elect
to so convert any Series B Share, such share shall be
converted into shares of Common Stock pursuant to Section
10(a) or Section 10(b) (whichever is applicable) and such
conversion shall be effective as of the date of the closing of
the consummation of the initial public offering.
"(e) Simultaneous Conversion of Series C Shares. Unless
the Majority Senior Holders otherwise agree in writing, the
Corporation may not require the conversion of the Series B
Preferred Stock pursuant to Section 10(a) by reason of the
occurrence of a Qualified IPO or pursuant to Section 10(b)
unless all shares of the Series C Preferred Stock are
simultaneously required to be converted in accordance with the
corresponding provisions of the Series C Certificate of
Designation."
SECOND: That the appropriate stockholders of the Corporation approved such
amendment by written consent in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That such amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by duly authorized officers of the Corporation this ___ day of
__________, 1997.
By:
Name:
Title:
By:
Name:
Title: