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EXHIBIT (d)(3)
SECURITIES PURCHASE AND CONTRIBUTION AGREEMENT
THIS IS A SECURITIES PURCHASE AND CONTRIBUTION AGREEMENT dated as of
November 15, 2000, amended as of January 9, 2001, and further amended as of May
1, 2001 (as so amended, the "Agreement"), by and among Manhattan Acquisition
Corp., a Delaware corporation (the "Company"), Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co.
II, L.P., a Delaware limited partnership ("BRS"), and the entities and
individuals other than BRS set forth on Schedule I hereto, as amended from time
to time (the "▇▇▇▇▇ Investors" and, together with BRS, the "Investors"). As used
herein, the term "Management Investor" means any of the ▇▇▇▇▇ Investors so
designated as a Management Investor on Schedule I hereto.
Background
A. The Investors as a group desire to invest an aggregate of $38 million
in the Company and/or the Surviving Corporation referred to below.
B. The Investors entered into the Securities Purchase and Contribution
Agreement, dated as of November 15, 2000 and amended as of January 9, 2001 (as
so amended the "First Amended Agreement"), in connection with the execution and
delivery of the Agreement and Plan of Merger, dated as of November 15, 2000 and
amended as of January 9, 2001 (as so amended, the "First Amended Merger
Agreement"), between the Company and Il Fornaio (America) Corporation, a
Delaware corporation ("▇▇▇▇▇"). The parties to the First Amended Agreement
desire to amend certain provisions of the First Amended Agreement. In connection
with the parties' entry into this Agreement, the parties to the First Amended
Merger Agreement are entering into an amendment thereof (as so amended and as it
may hereafter be amended, the "Merger Agreement") to amend certain terms and
provisions thereto. Pursuant to the Merger Agreement, the Company will be merged
with and into ▇▇▇▇▇ (the "Merger"), and ▇▇▇▇▇ will be the surviving corporation
in such Merger (the "Surviving Corporation").
C. Subject to the terms hereof, the investment will be effected (i) in the
case of any ▇▇▇▇▇ Investor, through such Investor's exchange of shares of ▇▇▇▇▇
Common Stock (as defined herein) for shares of ▇▇▇▇▇ Preferred Stock (as defined
herein), which securities will remain outstanding as, or be converted in the
Merger into, Surviving Corporation Securities (as defined herein) or the
cancellation of ▇▇▇▇▇ Options (as defined herein) in exchange for options to
purchase Surviving Corporation Securities, or through the purchase of Surviving
Corporation Securities or (iii) in the case of any Investor, through the
purchase of shares of the Company, which securities will be converted in the
Merger into Surviving Corporation Securities, as provided in the Merger
Agreement.
Terms
In consideration of the mutual representations, warranties and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
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ARTICLE I
PURCHASE OF SECURITIES
1.1. Rollover of Shares and Options by ▇▇▇▇▇ Investors.
(a) Immediately prior to the Effective Time, each of the ▇▇▇▇▇
Investors who owns or controls shares of common stock, par value $.001 per share
("▇▇▇▇▇ Common Stock"), of ▇▇▇▇▇ will exchange the number of shares of ▇▇▇▇▇
Common Stock set forth opposite his name on Schedule II hereto for the number of
shares of Series A Preferred Stock, par value $.001 per share ("▇▇▇▇▇ Series A
Preferred Stock"), of ▇▇▇▇▇, Series B Preferred Stock, par value $.001 per share
("▇▇▇▇▇ Series B Preferred Stock"), of ▇▇▇▇▇ and Series C Preferred Stock, par
value $.001 per share ("▇▇▇▇▇ Series C Preferred Stock", and together with the
▇▇▇▇▇ Series A Preferred Stock and the ▇▇▇▇▇ Series B Preferred Stock, the
"▇▇▇▇▇ Preferred Stock"), of ▇▇▇▇▇ (such ▇▇▇▇▇ Preferred Stock having the
respective terms, rights and preferences set forth in Schedule VI hereto), in
each case as set forth opposite his name on Schedule II hereto.
(b) Upon the Effective Time, each of the ▇▇▇▇▇ Investors who owns
options to purchase shares of ▇▇▇▇▇ Common Stock ("▇▇▇▇▇ Options") will accept
the cancellation of the number of ▇▇▇▇▇ Options set forth opposite his name on
Schedule III hereto having the fair market value set forth opposite his name on
Schedule III hereto in exchange for (i) an option ("Surviving Corporation Series
A Option") to purchase the number of shares of Series A Cumulative Compounding
Preferred Stock, par value $.001 per share ("Surviving Corporation Series A
Preferred Stock") of the Surviving Corporation (such series having the same
terms, rights and preferences of the ▇▇▇▇▇ Series A Preferred Stock) set forth
opposite his name on Schedule III hereto and (ii) an option ("Surviving
Corporation Series B Option") to purchase the number of shares of Series B
Cumulative Compounding Preferred Stock, par value $.001 per share ("Surviving
Corporation Series B Preferred Stock") of the Surviving Corporation (such series
having the same terms, rights and preferences of the ▇▇▇▇▇ Series B Preferred
Stock) set forth opposite his name on Schedule III hereto; provided, however,
that the number of shares subject to any option canceled, and the number of
shares subject to any substitute options received, may be varied pursuant to the
terms of footnote 1 to Schedule III hereto. It is agreed that the "fair market
value" of an option will equal the difference between $12.00 and the exercise
price times the number of shares for which such option is exercisable. The
Surviving Corporation Series A Options and the Surviving Corporation Series B
Options issued to ▇▇▇▇▇ Investors, as provided in this Section 1.1(b), shall
have the same fair market value, term and other material economic terms as the
▇▇▇▇▇ Options that have been cancelled and, reflecting the acceleration of
vesting occurring upon the Merger under the terms of the ▇▇▇▇▇ Options that have
been cancelled, shall be fully vested.
(c) Upon the Effective Time, each of the ▇▇▇▇▇ Investors set forth on
Schedule IV hereto will purchase, with cash received in consideration for the
cancellation pursuant to Section 1.11 of the Merger Agreement of any ▇▇▇▇▇
Options held by each of the
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▇▇▇▇▇ Investors set forth on Schedule IV hereto that are not cancelled in
exchange for substitute options, pursuant to Section 1.1(b) of this Agreement,
the number of shares of Class A Common Stock, par value $.001 ("Surviving
Corporation Common Stock", and together with the Surviving Corporation Series A
Preferred Stock, the Surviving Corporation Series B Preferred Stock, the
Surviving Corporation Series A Options and the Surviving Corporation Series B
Options, the "Surviving Corporation Securities")(1) of the Surviving Corporation
set forth opposite his name on Schedule IV hereto for the purchase price set
forth opposite his name on Schedule IV hereto.
1.2. Purchase By Investors Other than ▇▇▇▇▇ Investors. Subject to
Section 2.2, prior to the Effective Time, BRS will purchase equity securities of
the Company ("Company Securities") for the aggregate purchase price set forth on
Schedule V hereto, which Company Securities will be converted upon the Effective
Time into Surviving Corporation Series A Preferred Stock, Surviving Corporation
Series B Preferred Stock and Surviving Corporation Common Stock as set forth on
Schedule V hereto.
1.3. Closing. The closing of the purchase and sale of the ▇▇▇▇▇
Preferred Stock and the Company Securities contemplated hereby (the "Closing")
will take place immediately preceding the closing of the Merger as determined by
Section 1.12 of the Merger Agreement or on such other date as may be determined
by the Company upon not less than 5 days prior written notice to the Investors
(the date such Closing occurs, the "Closing Date"). At the Closing, each of the
Investors will execute a Securities Holders Agreement (the "Securities Holders
Agreement") and a Registration Rights Agreement (the "Registration Rights
Agreement") having the terms set forth on Schedule VII hereto.
1.4. ▇▇▇▇▇ Securities. In order to facilitate any cancellation or
exchange of any shares of ▇▇▇▇▇ Common Stock and any ▇▇▇▇▇ Options by the ▇▇▇▇▇
Investors contemplated hereby, if requested by the Company, each ▇▇▇▇▇ Investor
shall deliver within five business days after such request one or more
certificates representing all of the shares of ▇▇▇▇▇ Common Stock and any
granting instruments with respect to all of the ▇▇▇▇▇ Options in either case to
be cancelled or exchanged in accordance with this Agreement, together with stock
powers or other instruments duly endorsed or otherwise sufficient for transfer
of such certificates or instruments, as the case may be. The Company shall hold
such instruments in escrow pending the Closing Date. On the Closing Date, the
Company is authorized to present such instruments to the transfer agent for
▇▇▇▇▇ and instruct the transfer agent to register the shares of ▇▇▇▇▇ Common
Stock in the name of the Company or its designee (or, in the case of the
certificates representing ▇▇▇▇▇ Options, to ▇▇▇▇ and record such options as
cancelled, as contemplated by the Merger Agreement).
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(1) The Surviving Corporation's Certificate of Incorporation will be
substantially in the form set forth on Exhibit A to the Merger
Agreement.
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1.5. Representations, Warranties and Covenants of the Management
Investors, the ▇▇▇▇▇ Investors and the Company.
(a) Each of the Management Investors, the ▇▇▇▇▇ Investors and the
Company shall use reasonable efforts to cooperate to enhance the tax efficiency
of the purchase of securities contemplated hereby and to achieve treatment of
the transactions contemplated by the Merger Agreement as a recapitalization for
financial reporting purposes.
(b) Each of the Management Investors and the ▇▇▇▇▇ Investors
represent and warrant to the Company that no registration rights that may
pertain to any of the securities of ▇▇▇▇▇ that are tendered by such Management
Investor or such ▇▇▇▇▇ Investor, as the case may be, as consideration under this
Agreement shall survive the Closing and no such registration rights shall
pertain to any of the ▇▇▇▇▇ Preferred Stock or Surviving Corporation Securities.
(c) Each of the Management Investors and the ▇▇▇▇▇ Investors
acknowledges that (i) an affiliate of BRS will be receiving from the Surviving
Corporation following the Merger a per annum management fee equal to the greater
of (x) $150,000 or (y) 1% of the Company's or the Surviving Corporation's EBITDA
(as such term is defined in the Company's or the Surviving Corporation's senior
credit agreement), (ii) the Company or the Surviving Corporation may create a
stock option plan or other employee incentive program, with the number and type
of securities subject to any such plan to be determined by BRS and (iii) BRS or
its designated affiliate will receive from ▇▇▇▇▇ a closing fee equal to
$1,000,000 at the Effective Time.
(d) Each of the ▇▇▇▇▇ Investors represents and warrants that he has
sufficient control over the shares of ▇▇▇▇▇ Common Stock set forth opposite his
name on Schedule I hereto to consummate the transactions to be consummated by
him in this Agreement.
(e) Each of the ▇▇▇▇▇ Investors hereby waives any rights of appraisal
or rights to dissent from the Merger.
(f) Each of the ▇▇▇▇▇ Investors (i) represents and warrants that the
purchase of securities contemplated hereby is being made by such ▇▇▇▇▇ Investor
for investment, and not with a view to any distribution thereof that would
violate the Securities Act of 1933, as amended (the "Securities Act"), or the
applicable state securities laws of any state having jurisdiction over any such
distribution and (ii) shall not distribute the securities purchased hereby in
violation of the Securities Act or the applicable securities laws of any state
having jurisdiction over any such distribution.
1.6. Conditions to Investor's Obligations. The obligation of each Investor
to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing of the following conditions:
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(a) The Company shall have delivered to each of the Investors which
is purchasing Company Securities hereunder certificates for the Company
Securities so purchased.
(b) No preliminary or permanent injunction or order, decree or ruling
of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(c) All of the conditions to effecting the Merger under Article VI of
the Merger Agreement (including the debt financing condition set forth in
Section 6.2(e), but excluding the conditions set forth in Section 6.3) shall
have been fulfilled or waived in accordance with the Merger Agreement; provided,
however, that Section 6.2(e) of the Merger Agreement shall be deemed to have
been satisfied if the debt financing referred to therein is not available solely
because of the refusal or inability of the Investors to provide in the aggregate
$38,000,000 of equity financing to the Company (including by delivery of ▇▇▇▇▇
Common Stock or ▇▇▇▇▇ Options as permitted by Section 1.1(b)).
1.7. Conditions to the Company's Obligations. The obligations of the
Company to issue and sell the Company Securities or Surviving Corporation
Securities, as the case may be, to each Investor as set forth herein at the
Closing are subject to the satisfaction on or prior to the Closing of the
following conditions:
(a) Each of the Investors purchasing Company Securities or Surviving
Corporation Securities, as the case may be, hereunder shall have delivered the
consideration provided for herein for the securities to be acquired by him or it
pursuant to this Article I.
(b) No preliminary or permanent injunction or order, decree or ruling
of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(c) All of the conditions to effecting the Merger under Article VI of
the Merger Agreement (including the debt financing condition set forth in
Section 6.2(e), but excluding the conditions set forth in Section 6.3) shall
have been fulfilled or waived in accordance with the Merger Agreement; provided,
however, that Section 6.2(e) of the Merger Agreement shall be deemed to have
been satisfied if the debt financing referred to therein is not available solely
because of the refusal or inability of the Investors to provide in the aggregate
$38,000,000 of equity financing to the Company (including by delivery of ▇▇▇▇▇
Common Stock or ▇▇▇▇▇ Options as permitted by Section 1.1(b)).
(d) Each of the Investors shall have executed the Securities Holders
Agreement and the Registration Rights Agreement.
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ARTICLE II
MISCELLANEOUS
2.1. Definitions. Capitalized terms used but not otherwise defined in this
Agreement have the meanings assigned to such terms in the Merger Agreement.
2.2. Amendment and Modification.
(a) (i) It is understood and agreed that the Company shall have the
right, following execution of this Agreement, to amend this Agreement by adding
additional parties to this Agreement (and Schedule I hereto) who desire to
receive shares of the Surviving Corporation pursuant to the Merger upon not less
than three business days' prior written notice delivered to ▇▇▇▇▇, and,
effective upon any such amendment, such additional parties will be considered
"Investors" for all purposes of this Agreement; provided, however, that no such
party will be deemed to be a "▇▇▇▇▇ Investor" unless such party owns shares of
▇▇▇▇▇ Common Stock or ▇▇▇▇▇ Options on or after the date hereof (but prior to
the Closing), and no such party will be deemed to be a "Management Investor"
unless such party (i) is an employee or director of ▇▇▇▇▇ on or after the date
hereof (but prior to the Closing) and (ii) owns shares of ▇▇▇▇▇ Common Stock or
▇▇▇▇▇ Options on or after the date hereof (but prior to the Closing). In the
event any such party is added as an Investor under this Agreement, the aggregate
amount reflected on Schedule V as being invested in the Company by BRS will be
reduced by the amount proposed to be invested or rolled over by such additional
Investor, with such reduction being allocated from and among the types of
Surviving Corporation Securities as agreed between BRS and such party, and
Schedule V will be deemed to have been amended accordingly. Notwithstanding the
immediately preceding sentence, BRS will be permitted to reduce its investment
in Company Securities or Surviving Corporation Common Stock, as the case may be,
in amounts to be agreed between BRS and certain Management Investors (other than
Messrs. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇) and allocate the amount of such
reduction to such Management Investors as agreed between BRS and such Management
Investors.
(ii) It is understood and agreed that the Company (but only
with the prior written consent of the party being removed) shall have the right,
following execution of this Agreement, to amend this Agreement by removing
parties from this Agreement (and Schedule I hereto) upon not less than three
business days' prior written notice delivered to ▇▇▇▇▇, and, effective upon any
such amendment, such removed parties will no longer be considered "Investors"
for all purposes of this Agreement. In the event any such party is removed as an
Investor under this Agreement, the aggregate amount proposed to have been
invested or rolled over by such removed party will be added to the aggregate
amount being invested in the Company by BRS or its designee, with such
additional amount being allocated to and among the types of Surviving
Corporation Securities in the sole discretion of BRS, and the appropriate
schedule to this Agreement will be deemed to have been amended accordingly.
(b) Except for amendments contemplated by paragraph (a)(i) above,
which may be unilaterally effected by the Company in its discretion and
amendments
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contemplated by paragraph (a)(ii) above, which may be effected as described
therein, any of the provisions of this Agreement may be amended or modified
pursuant to a writing executed by the Company and those Investors who together
will be purchasing a majority of the equity interests of the Company to be
purchased hereunder (based on the total dollar amounts committed by such
Investors as reflected on Schedule I); provided, however, that (i) Sections 1.6,
2.3, 2.2(b)(i), 2.2(b)(ii) and 2.12 cannot be amended in a manner adverse in any
material respect to the Management Investors, and (ii) no amendment of the terms
set forth on Schedule VI or Schedule VII that adversely affects the Management
Investors in a manner different from other Investors will be effective, in
either case without the written consent of those Management Investors (as such
group is constituted on the date of this Agreement) who will be purchasing a
majority of the equity interests of the Company to be purchased hereunder by the
Management Investors (based on the total dollar amounts committed by such
Management Investors as reflected on Schedule I).
(c) Any party hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance by the other parties hereto with any of their agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only as against such party and only if
set forth in an instrument in writing signed by such party.
(d) The failure of any party hereto to exercise any right, power, or
remedy provided under this Agreement or otherwise available in respect hereof at
law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, any custom or practice of the parties at variance
with the terms hereof shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
2.3. Termination. This Agreement will terminate and be of no further force
and effect (i) by the written mutual consent of the parties hereto, (ii) upon
termination of the Merger Agreement in accordance with its terms or (iii) unless
otherwise determined by BRS, on June 30, 2001 or, if the Stockholders Meeting
has not occurred by June 22, 2001, the earlier of (x) the sixth business day
after the Stockholders Meeting and (y) July 15, 2001. No such termination of
this Agreement shall relieve any party hereto from any liability for any breach
of this Agreement prior to termination.
2.4. Assignment; Successors and Assigns; Entire Agreement. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns, executors and
administrators, but no party hereunder may assign its rights or obligations
hereunder without the prior written consent of BRS. This Agreement constitutes
the entire agreement and supersedes any and all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, including the Original Agreement, and this
Agreement is not
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intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
2.5. Severability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
2.6. Notices. All notices provided for or permitted hereunder shall be
made in writing by hand-delivery, registered or certified first-class mail,
telex, fax or air courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to the Company:
c/o Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Dechert
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to any Investor to its address as listed on the signature pages hereof.
All such notices shall be deemed to have been duly given: when delivered
by hand, if personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if faxed; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
2.7. Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
substantive laws of the State of New York, regardless of the laws that might
otherwise govern under principles of conflicts of law applicable thereto.
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2.8. Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect. Unless otherwise specified, section
references herein refer to sections of this Agreement and schedules and exhibits
refer to schedules and exhibits attached hereto.
2.9. Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
2.10. Further Assurances. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
2.11. Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
2.12. Maximum Liability. The maximum liability of any Investor for a
breach of this Agreement shall be limited to the amount set forth next to its
name on Schedule I hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MANHATTAN ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
BRUCKMANN, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & CO. II, L.P.
By BRSE, L.L.C., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Il Fornaio
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Il Fornaio
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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/s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Address: San Tomo Group
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: InterWest Partners
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇. ▇▇▇▇▇ ▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ Carlo Veggetti
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Carlo Veggetti
Address: c/o ▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
C.S. ▇.▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇
Suisse
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12
SCHEDULE I
Investors and Purchase Price
Name of Investor Purchase Price
---------------- --------------
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co. II, L.P.(1) $30,236,242
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇(2)(3) $ 1,200,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇(2)(3)(4) $ 2,216,251
F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇(2)(3) $ 1,710,873
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇(2)(3) $ 1,480,653
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇(2)(3) $ 215,673
Carlo Veggetti(2) $ 940,308
----------
(1) Includes $2,000,000 to be invested by BancBoston
(2) Denotes ▇▇▇▇▇ Investor
(3) Denotes Management Investor
(4) Denotes employee investor for purposes of Schedule VII
13
SCHEDULE II
Section 1.1(a)
Shares of ▇▇▇▇▇ Shares of ▇▇▇▇▇ Shares of ▇▇▇▇▇
Shares of ▇▇▇▇▇ Series A Series B Series C
Name of ▇▇▇▇▇ Common Stock Preferred Stock Preferred Stock Preferred Stock
Investor Being Exchanged Being Received Being Received Being Received
-------- --------------- -------------- -------------- --------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 71,597 47,368 11,071 13,158
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 24,301 0 0 24,301
F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 137,854 67,534 51,560 18,760
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 117,794 58,447 43,112 16,235
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 14,879 8,513 4,001 2,365
Carlo Veggetti 78,359 37,117 30,931 10,310
14
SCHEDULE III
Section 1.1(b)
Number of Shares Number of Shares
of Surviving of Surviving
Corporation Corporation
Series A Series B
Name of ▇▇▇▇▇ Preferred Stock Preferred Stock Average Exercise
Investor ▇▇▇▇▇ Options Value of for which the for which the Price
------------- Being Options Surviving Surviving ----------------
Exchanged Being Exchanged Corporation Corporation
------------- --------------- Series A Option Series B Option
is Exercisable(2) is Exercisable(2)
----------------- -----------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇(1) 81,514 $340,833 0 81,514 $7.82
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇(1) 256,619 $1,924,639 139,974 116,645 $4.50
F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 10,500 $56,625 0 10,500 $6.61
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 12,000 $67,125 0 12,000 $6.41
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 7,500 $37,125 0 7,500 $7.05
----------
(1) The number of options being exchanged, but not the aggregate value,
may vary, which would cause (i) the number of shares of Surviving
Corporation Series A Preferred Stock for which the Surviving Corporation
Series A Option is exercisable and the number of shares of Surviving
Corporation Series B Preferred Stock for which the Surviving Corporation
Series B Option is exercisable to be adjusted so that the number of
options being exchanged and the number of shares for which the options to
be received are exercisable would maintain a ratio of 1:1 and (ii) the
average exercise price set forth above to be adjusted so that it would
represent a weighted average of the exercise prices of the options
actually being exchanged.
(2) A right to payment from the Surviving Corporation shall accrue with
respect to each of the Surviving Corporation Series A Options and the
Surviving Corporation Series B Options (collectively, "Options") (such
accrual, the "Special Accrual") at a rate equal to the dividend rate (as
set forth for the applicable series of preferred stock in the certificate
of incorporation of the Surviving Corporation) per share of the applicable
series of preferred stock of the Surviving Corporation (an "Option Share")
issuable upon exercise of such Option on the amount equal to (i) the
Liquidation Preference (as defined in the certificate of incorporation of
the Surviving Corporation) for each such Option Share less (ii) the
exercise price of such Option, in each case as in effect from time to
time. The Special Accrual will accrue at the same time and in the same
manner as the dividends which accrue after the date hereof on each
outstanding share of Surviving Corporation Series A Preferred Stock or of
Series B Preferred Stock, as the case may be, as set forth in the
certificate of incorporation of the Surviving Corporation. Subject to the
terms of any loan, indenture, or other credit agreement for indebtedness
for borrowed money incurred by the Surviving Corporation, the Special
Accrual for each Option shall be paid to the holder upon the exercise of
such Option, such payment to be made, at the option of the Surviving
Corporation, in the form of cash or a reduction in the exercise price
otherwise payable by the holder to the Surviving Corporation, in
connection with such exercise. For the avoidance of doubt, the amount of
the Special Accrual on any Option shall not exceed the amount theretofore
paid on the underlying share of preferred stock.
15
SCHEDULE IV
Section 1.1(c)
Shares of Surviving
Corporation Common Stock Aggregate
Name of ▇▇▇▇▇ Investor Being Purchased Purchase Price
---------------------- ------------------------ --------------
----- ----- -----
16
SCHEDULE V
Section 1.2
-----------
Shares of Surviving Shares of Surviving
Corporation Series A Corporation Series B Shares of Surviving
Preferred Stock Preferred Stock Corporation Common
Received upon Received upon Stock Received upon
Conversion of Certain Conversion of Conversion of Certain Aggregate
Name of Other Company Securities Certain Company Company Securities Purchase
Investors Being Purchased Securities Being Purchased Being Purchased Price
------------- --------------------- -------------------------- --------------------- ---------
BRS(1) 1,193,536 994,613 331,538 30,236,242
----------
(1) It is currently expected that, subject to the satisfaction of certain
conditions, BancBoston Capital, Inc. or its affiliate will invest $2,000,000 in
the Surviving Corporation, which investment would consist of 78,947 shares of
Surviving Corporation Series A Preferred, 65,789 shares of Surviving Corporation
Series B Preferred and 21,930 shares of Surviving Corporation Common; BancBoston
Capital, Inc. will have the right to receive shares of Class B Common Stock of
the Surviving Corporation, par value $.001 per share, (i.e., non-vesting shares,
except as required by law) in lieu of some or all shares of Surviving
Corporation Common. If such investment is completed, BRS' holdings in the
Surviving Corporation, which arise upon conversion of the securities listed
above in the Merger, and its purchase price therefor, would be reduced
accordingly.
17
SCHEDULE VI
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A 13.0% CUMULATIVE COMPOUNDING PREFERRED STOCK,
SERIES B 13.5% CUMULATIVE COMPOUNDING PREFERRED STOCK AND
SERIES C PREFERRED STOCK
OF
IL FORNAIO (AMERICA) CORPORATION
Il Fornaio (America) Corporation, a Delaware corporation (the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that pursuant to Article IV of the Certificate of Incorporation,
as amended (which authorizes 5,000,000 shares of Preferred Stock, par value
$.00l per share, none of which shares is issued and outstanding), the Board of
Directors hereby fixes the designations and preferences and relative
participating, optional and other special rights, qualifications, limitations
and restrictions of three series of Preferred Stock, consisting of 2,000,000
shares to be designated Series A 13.0% Cumulative Compounding Preferred Stock
and 1,500,000 shares to be designated Series B 13.5% Cumulative Compounding
Preferred Stock and 1,000,000 shares to be designated Series C Preferred Stock.
RESOLVED, that the holders of Series A 13.0% Cumulative Compounding
Preferred Stock, Series B 13.5% Cumulative Compounding Preferred Stock and
Series C Preferred Stock, except as otherwise provided by law, shall have and
possess the following rights and preferences. Certain capitalized terms used in
this Certificate of Designation are defined in paragraph D hereof.
A. Series A 13.0% Cumulative Compounding Preferred Stock.
1. Designation of Series, Number of Shares. The first series of
Preferred Stock shall be designated as Series A 13.0% Cumulative Compounding
Preferred Stock ("Series A Preferred Stock"), and the number of shares which
shall constitute such series shall be 2,000,000. The par value of Series A
Preferred Stock shall be $.001 per share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series A Preferred Stock shall
rank (a) senior to (i) all classes of Common Stock of the Corporation; (ii) the
Series B 13.5% Cumulative Compounding Preferred Stock, par value $.001 per share
("Series B Preferred Stock"); (iii) the
18
Series C Preferred Stock, par value $.001 per share ("Series C Preferred
Stock"); and (iv) each other class of capital stock or class or series of
preferred stock issued by the Corporation after the date hereof the terms of
which specifically provide that such class or series shall rank junior to Series
A Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up and dissolution of the Corporation (each of the
securities in clauses (i), (ii), (iii) and (iv) collectively referred to as
"Series A Junior Securities"), (b) on a parity with each other class of capital
stock or class or series of preferred stock issued by the Corporation after the
date hereof the terms of which do not specifically provide that they rank junior
to Series A Preferred Stock or senior to Series A Preferred Stock as to dividend
distributions or distributions upon liquidation, winding up and dissolution of
the Corporation (collectively referred to as "Series A Parity Securities"), and
(c) junior to each other class of capital stock or other class or series of
preferred stock issued by the Corporation after the date hereof the terms of
which specifically provide that such class or series shall rank senior to Series
A Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up and dissolution of the Corporation (collectively
referred to as "Series A Senior Securities").
3. Dividends.
(a) Each Holder of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cash dividends on each share of Series A Preferred
Stock at a rate per annum equal to 13.0% of the Liquidation Preference of such
share. All dividends shall be cumulative, whether or not earned or declared, and
shall accrue on a daily basis from the date of issuance of Series A Preferred
Stock, and shall be payable annually in arrears on each Dividend Payment Date,
commencing on the first Dividend Payment Date after the date of issuance of such
Series A Preferred Stock. Each dividend on Series A Preferred Stock shall be
payable to the Holders of record of Series A Preferred Stock as they appear on
the stock register of the Corporation on such record date as may be fixed by the
Board of Directors, which record date shall not be less than ten nor more than
60 days prior to the applicable Dividend Payment Date. In the event of the
repurchase of any shares of Series A Preferred Stock, dividends shall cease to
accrue in respect of shares of Series A Preferred Stock on the date of their
repurchase by the Corporation unless the Corporation shall have failed to pay
the relevant repurchase price on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and until such dividends are
declared by the Board of Directors, there shall be no obligation to pay such
dividends in cash; provided, that such dividends shall continue to cumulate and
shall be paid at the time of repurchase, in the event of their repurchase, as
provided herein if not earlier declared and paid.
(b) All dividends paid with respect to shares of Series A Preferred
Stock pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders
entitled thereto.
(c) Dividends on account of arrears for any past Dividend Period may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to the
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Holders of record on any date as may be fixed by the Board of Directors, which
date is not more than 30 days prior to the payment of such dividends.
(d) No full dividends shall be declared by the Board of Directors or
paid or funds set apart for the payment of dividends or other distributions on
any Series A Parity Securities for any period, and no Series A Parity Securities
may be repurchased, redeemed or otherwise retired, nor may funds be set apart
for such payment, unless (i) full Accumulated Dividends have been paid or set
apart for such payment on the Series A Preferred Stock and Series A Parity
Securities for all Dividend Periods terminating on or prior to the date of
payment of such full dividends or distributions on, or such repurchase or
redemption of, such Series A Parity Securities (the "Series A Parity Payment
Date") and (ii) an amount equal to a prorated dividend on the Series A Preferred
Stock and Series A Parity Securities at the customary dividend rates for such
securities for the period from the Dividend Payment Date immediately prior to
the Series A Parity Payment Date to the Series A Parity Payment Date have been
paid or set apart for payment. In the event that such dividends are not paid in
full or set apart for payment with respect to all outstanding shares of Series A
Preferred Stock and of any Series A Parity Securities and funds available for
payment of dividends shall be insufficient to permit payment in full to the
holders of all such stock of the full preferential amounts to which they are
then entitled, then the entire amount available for payment of dividends shall
be distributed ratably among all such holders of Series A Preferred Stock and of
any Series A Parity Securities in proportion to the full amount to which they
would otherwise be respectively entitled.
(e) The Holders of Series A Preferred Stock shall be entitled to
receive the dividends provided for in paragraph A(3)(a) hereof in preference to
and in priority over any dividends upon any of the Series A Junior Securities,
so that if at any time full Accumulated Dividends on all shares of Series A
Preferred Stock then outstanding have not been paid for all Dividend Periods
then elapsed and a prorated dividend on the Series A Preferred Stock at the rate
aforesaid from the Dividend Payment Date immediately preceding the Series A
Junior Payment Date (as defined below) to the Series A Junior Payment Date have
not been paid or set aside for payment, the amount of such unpaid dividends
shall be paid before any sum shall be set aside for or applied by the
Corporation to the purchase, redemption or other acquisition for value of any
shares of Series A Junior Securities (either pursuant to any applicable sinking
fund requirement or otherwise) or any dividend or other distribution shall be
paid or declared and set apart for payment on any Series A Junior Securities
(the date of any such actions to be referred to as the "Series A Junior Payment
Date"); provided, however, that the foregoing shall not (i) prohibit the
Corporation from repurchasing shares of Series A Junior Securities from a Holder
who is, or was, a director or employee of the Corporation (or an affiliate of
the Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series A
Junior Securities payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities.
(f) Dividends payable on Series A Preferred Stock for any period less
than one year shall be computed on the basis of a 360-day year consisting of
twelve 30-day
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20
months and the actual number of days elapsed in the period for which such
dividends are payable.
(g) The Corporation shall not claim any deduction from gross income for
dividends paid on Series A Preferred Stock in any Federal income tax return,
claim for refund, or other statement, report or submission made to the Internal
Revenue Service, and shall make any election or take any similar action to
effectuate the foregoing except, in each case, if there shall be a change in law
such that the Corporation may claim such dividends as deductions from gross
income without affecting the ability of the Holders to claim the dividends
received deduction under Section 243(a)(1) of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision). At the reasonable request
of any Holder (and at the expense of such Holder), the Corporation shall join in
the submission to the Internal Revenue Service of a request for a ruling that
the dividends paid on Series A Preferred Stock shall be eligible for the
dividends received deduction under Section 243(a)(1) of the Code (or any
successor provision). In addition, the Corporation shall cooperate with any
Holder (at the expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received deduction
under Section 243(a)(l) of the Code (or any successor provision) of any
dividends (within the meaning of Section 316(a) of the Code or any successor
provision) paid on Series A Preferred Stock. To the extent possible, the
principles of this paragraph A(3)(g) shall also apply with respect to state and
local income taxes.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to the Liquidation Preference per share, plus an amount equal to a
prorated dividend from the last Dividend Payment Date to the date fixed for
liquidation, dissolution, or winding up, before any distribution is made on any
Series A Junior Securities. If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the application of all amounts
available for payments with respect to Series A Preferred Stock and all other
Series A Parity Securities would not result in payment in full of Series A
Preferred Stock and such other Series A Parity Securities, the Holders of Series
A Preferred Stock and holders of Series A Parity Securities shall share equally
and ratably in any distribution of assets of the Corporation in proportion to
the full Liquidation Preference to which each is entitled. After payment in full
pursuant to this paragraph A(4)(a), the Holders of Series A Preferred Stock
shall not be entitled to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of paragraph A(4)(a), neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with one or more corporations shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, unless
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such sale, conveyance, exchange or transfer is in connection with a dissolution
or winding up of the business of the Corporation; provided, however, that any
consolidation or merger of the Corporation in which the Corporation is not the
surviving entity shall be deemed to be a liquidation, dissolution or winding up
of the business of the Corporation within the meaning of this paragraph A(4)(b)
if, (i) in connection therewith, the holders of Common Stock of the Corporation
receive as consideration, whether in whole or in part, for such Common Stock (1)
cash, (2) notes, debentures or other evidences of indebtedness or obligations to
pay cash or (3) preferred stock of the surviving entity (whether or not the
surviving entity is the Corporation) which ranks on a parity with or senior to
the preferred stock received by Holders of the Series A Preferred Stock with
respect to liquidation or dividends or (ii) the Holders of the Series A
Preferred Stock do not receive preferred stock of the surviving entity with
rights, powers and preferences equal to (or more favorable to the holders than)
the rights, powers and preferences of the Series A Preferred Stock.
5. Redemption. (a) The Company shall not have the right nor the power
to, and the Holders shall not have the right to require the Company to, redeem
any shares of Series A Preferred Stock. Notwithstanding the foregoing, this
paragraph A(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series A Preferred Stock held
by such Holder.
(b) Subject to the proviso in paragraph A(3)(e), no sum shall be set
aside for or applied by the Corporation to the purchase, redemption, or other
acquisition for value of any shares of Series A Junior Securities (either
pursuant to any applicable sinking fund requirement or otherwise) at any time
when any shares of Series A Preferred Stock or any Series A Parity Securities
are outstanding unless, prior to the Corporation's setting aside or applying
such sum to the purchase, redemption, or other acquisition of any shares of
Series A Junior Securities, all shares of Series A Preferred Stock and Series A
Parity Securities shall have been purchased or otherwise acquired for value by
the Corporation (and the price in respect thereof paid or set aside for
payment).
6. Voting Rights.
(a) The Holders of Series A Preferred Stock shall not be entitled or
permitted to vote on any matter required or permitted to be voted upon by the
shareholders of the Corporation, except as otherwise required by Delaware law or
this Certificate of Designation and except that without the written consent of
the Holders of a majority of the outstanding shares of Series A Preferred Stock
or the vote of the Holders of a majority of the outstanding shares of Series A
Preferred Stock at a meeting of the Holders of Series A Preferred Stock called
for such purpose, the Corporation shall not (a) create, authorize or issue any
other class or series of stock entitled to a preference prior to Series A
Preferred Stock upon any dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of the Corporation, or
increase the authorized amount of any such other class or series, (b) except as
permitted in the proviso to paragraph A(3)(e), pay or declare any dividend or
distribution on any Series A Junior Securities or set aside or make available
funds for a dividend or distribution on any Series A Junior
-5-
22
Securities, or permit a subsidiary of the Corporation to do any of the
foregoing, or (c) amend, alter or repeal any provision of the Corporation's
Certificate of Incorporation so as to adversely affect the relative rights and
preferences of the Series A Preferred Stock; provided, however, that any such
amendment that changes the dividend payable on, or Liquidation Preference of,
the Series A Preferred Stock shall require the affirmative vote of the Holder of
each share of Series A Preferred Stock at a meeting of such Holders called for
such purpose or the written consent of the Holder of each share of Series A
Preferred Stock.
(b) In any case in which the Holders of Series A Preferred Stock shall
be entitled to vote, each Holder of Series A Preferred Stock shall be entitled
to one vote for each share of Series A Preferred Stock held unless otherwise
required by applicable law.
7. Conversion or Exchange. The Holders of Series A Preferred
Stock shall not have any rights hereunder to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Corporation.
8. Reissuance of Series A Preferred Stock. Shares of Series A Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock, it being understood that the Corporation may reissue
shares of Series A Preferred Stock which are reacquired by the Corporation from
a Holder who is, or was, an employee or director of the Corporation (or a
subsidiary of the Corporation) so long as such reissued shares of Series A
Preferred Stock are reissued to a person who is an employee or director of the
Corporation (or a subsidiary of the Corporation) at the time of such reissue.
B. Series B 13.5% Cumulative Compounding Preferred Stock.
1. Designation of Series, Number of Shares. The second series of Preferred
Stock shall be designated as Series B 13.5% Cumulative Compounding Preferred
Stock ("Series B Preferred Stock"), and the number of shares which shall
constitute such series shall be 1,500,000. The par value of Series B Preferred
Stock shall be $.00l per share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series B Preferred Stock shall
rank (a) senior to (i) all classes of Common Stock of the Corporation; (ii) the
Series C Preferred Stock; and (iii) each other class of capital stock or class
or series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to Series B Preferred Stock as to dividend distributions or distributions upon
the liquidation, winding up and dissolution of the Corporation (each of the
securities in clauses (i), (ii) and (iii) collectively referred to as "Series B
Junior Securities"), (b) on a parity with each other class of
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capital stock or class or series of preferred stock issued by the Corporation
after the date hereof the terms of which do not specifically provide that they
rank junior to Series B Preferred Stock or senior to Series B Preferred Stock as
to dividend distributions or distributions upon liquidation, winding up and
dissolution of the Corporation (collectively referred to as "Series B Parity
Securities"), and (c) junior to (i) the Series A Preferred Stock and (ii) each
other class of capital stock or other class or series of preferred stock issued
by the Corporation after the date hereof the terms of which specifically provide
that such class or series shall rank senior to Series B Preferred Stock as to
dividend distributions or distributions upon the liquidation, winding up and
dissolution of the Corporation (collectively referred to as "Series B Senior
Securities").
3. Dividends.
(a) Each Holder of 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, cash dividends on each share of Series B Preferred
Stock at a rate per annum equal to 13.5% of the Liquidation Preference of such
share. All dividends shall be cumulative, whether or not earned or declared, and
shall accrue on a daily basis from the date of issuance of Series B Preferred
Stock, and shall be payable annually in arrears on each Dividend Payment Date,
commencing on the first Dividend Payment Date after the date of issuance of such
Series B Preferred Stock. Each dividend on Series B Preferred Stock shall be
payable to the Holders of record of Series B Preferred Stock as they appear on
the stock register of the Corporation on such record date as may be fixed by the
Board of Directors, which record date shall not be less than ten nor more than
60 days prior to the applicable Dividend Payment Date. In the event of the
repurchase of any shares of Series B Preferred Stock, dividends shall cease to
accrue in respect of shares of Series B Preferred Stock on the date of their
repurchase by the Corporation unless the Corporation shall have failed to pay
the relevant repurchase price on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and until such dividends are
declared by the Board of Directors, there shall be no obligation to pay such
dividends in cash; provided, that such dividends shall continue to cumulate and
shall be paid at the time of repurchase, in the event of their repurchase, as
provided herein if not earlier declared and paid.
(b) All dividends paid with respect to shares of Series B Preferred
Stock pursuant to paragraph B(3)(a) shall be paid pro rata to the Holders
entitled thereto.
(c) Dividends on account of arrears for any past Dividend Period may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to the Holders of record on any date as may be fixed by the Board of
Directors, which date is not more than 30 days prior to the payment of such
dividends.
(d) No full dividends shall be declared by the Board of Directors or
paid or funds set apart for the payment of dividends or other distributions on
any Series B Parity Securities for any period, and no Series B Parity Securities
may be repurchased, redeemed or otherwise retired, nor may funds be set apart
for such payment, unless (i) full Accumulated Dividends have been paid or set
apart for such payment on the Series B Preferred Stock and
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24
Series B Parity Securities for all Dividend Periods terminating on or prior to
the date of payment of such full dividends or distributions on, or such
repurchase or redemption of, such Series B Parity Securities (the "Series B
Parity Payment Date") and (ii) an amount equal to a prorated dividend on the
Series B Preferred Stock and Series B Parity Securities at the customary
dividend rates for such securities for the period from the Dividend Payment Date
immediately prior to the Series B Parity Payment Date to the Series B Parity
Payment Date have been paid or set apart for payment. In the event that such
dividends are not paid in full or set apart for payment with respect to all
outstanding shares of Series B Preferred Stock and of any Series B Parity
Securities and funds available for payment of dividends shall be insufficient to
permit payment in full to the holders of all such stock of the full preferential
amounts to which they are then entitled, then the entire amount available for
payment of dividends shall be distributed ratably among all such holders of
Series B Preferred Stock and of any Series B Parity Securities in proportion to
the full amount to which they would otherwise be respectively entitled.
(e) The Holders of Series B Preferred Stock shall be entitled to
receive the dividends provided for in paragraph B(3)(a) hereof in preference to
and in priority over any dividends upon any of the Series B Junior Securities,
so that if at any time full Accumulated Dividends on all shares of Series B
Preferred Stock then outstanding have not been paid for all Dividend Periods
then elapsed and a prorated dividend on the Series B Preferred Stock at the rate
aforesaid from the Dividend Payment Date immediately preceding the Series B
Junior Payment Date (as defined below) to the Series B Junior Payment Date have
not been paid or set aside for payment, the amount of such unpaid dividends
shall be paid before any sum shall be set aside for or applied by the
Corporation to the purchase, redemption or other acquisition for value of any
shares of Series B Junior Securities (either pursuant to any applicable sinking
fund requirement or otherwise) or any dividend or other distribution shall be
paid or declared and set apart for payment on any Series B Junior Securities
(the date of any such actions to be referred to as the "Series B Junior Payment
Date"); provided, however, that the foregoing shall not (i) prohibit the
Corporation from repurchasing shares of Series B Junior Securities from a Holder
who is, or was, a director or employee of the Corporation (or an affiliate of
the Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series B
Junior Securities payable in Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities.
(f) Dividends payable on Series B Preferred Stock for any period less
than one year shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and the actual number of days elapsed in the period for
which such dividends are payable.
(g) The Corporation shall nor claim any deduction from gross income for
dividends paid on Series B Preferred Stock in any Federal Income tax return,
claim for refund, or other statement, report or submission made to the Internal
Revenue Service, and shall make any election or take any similar action to
effectuate the foregoing except, in each case, if there shall be a change in law
such that the Corporation may claim such dividends as deductions from gross
income without affecting the ability of the Holders to claim the dividends
received
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25
deduction under Section 243(a)(l) of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision). At the reasonable request of
any Holder (and at the expense of such Holder), the Corporation shall join in
the submission to the Internal Revenue Service of a request for a ruling that
the dividends paid on Series B Preferred Stock shall be eligible for the
dividends received deduction under Section 243(a)(l) of the Code (or any
successor provision). In addition, the Corporation shall cooperate with any
Holder (at the expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received deduction
under Section 243(a)(1) of the Code (or any successor provision) of any
dividends (within the meaning of Section 316(a) of the Code or any successor
provision) paid on Series B Preferred Stock. To the extent possible, the
principles of this paragraph B(3)(g) shall also apply with respect to state and
local income taxes.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all shares of Series B Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to the Liquidation Preference per share, plus an amount equal to a
prorated dividend from the last Dividend Payment Date to the date fixed for
liquidation, dissolution or winding up, before any distribution is made on any
Series B Junior Securities. If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the application of all amounts
available for payments with respect to Series B Preferred Stock and all other
Series B Parity Securities would not result in payment in full of Series B
Preferred Stock and such other Series B Parity Securities, the Holders of Series
B Preferred Stock and holders of Series B Parity Securities shall share equally
and ratably in any distribution of assets of the Corporation in proportion to
the full Liquidation Preference to which each is entitled. After payment in full
pursuant to this paragraph B(4)(a), the Holders of Series B Preferred Stock
shall not be entitled to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of paragraph B(4)(a), neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with one or more corporations shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, unless
such sale, conveyance, exchange or transfer is in connection with a dissolution
or winding up of the business of the Corporation; provided, however, that any
consolidation or merger of the Corporation in which the Corporation is not the
surviving entity shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation within the meaning of this paragraph B(4)(b)
if, (i) in connection therewith, the holders of Common Stock of the Corporation
receive as consideration, whether in whole or in part, for such Common Stock (1)
cash, (2) notes, debentures or other evidences of indebtedness or obligations to
pay cash or (3) preferred stock of the surviving entity (whether or not the
surviving entity is the Corporation) which ranks on a parity with or senior to
the preferred stock received by holders of the Series B
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26
Preferred Stock with respect to liquidation or dividends or (ii) the holders of
the Series B Preferred Stock do not receive preferred stock of the surviving
entity with rights, powers and preferences equal to (or more favorable to the
holders than) the rights, powers and preferences of the Series B Preferred
Stock.
5. Redemption. (a) The Company shall not have the right nor the power to,
and the Holders shall not have the right to require the Company to, redeem any
shares of Series B Preferred Stock. Notwithstanding the foregoing, this
paragraph B(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series B Preferred Stock held
by such Holder.
(b) Subject to the proviso in paragraph B(3)(e), no sum shall be set
aside for or applied by the Corporation to the purchase, redemption, or other
acquisition for value of any shares of Series B Junior Securities (either
pursuant to any applicable sinking fund requirement or otherwise) at any time
when any shares of Series B Preferred Stock or any Series B Parity Securities
are outstanding unless, prior to the Corporation's setting aside or applying
such sum to the purchase, redemption, or other acquisition of any shares of
Series B Junior Securities, all shares of Series B Preferred Stock and Series B
Parity Securities shall have been purchased or otherwise acquired for value by
the Corporation (and the price in respect thereof paid or set aside for
payment).
6. Voting Rights.
(a) The Holders of Series B Preferred Stock shall not be entitled or
permitted to vote on any matter required or permitted to be voted upon by the
shareholders of the Corporation, except as otherwise required by Delaware law or
this Certificate of Designation and except that without the written consent of
the Holders of a majority of the outstanding shares of Series B Preferred Stock
or the vote of the Holders of a majority of the outstanding shares of Series B
Preferred Stock at a meeting of the Holders of Series B Preferred Stock called
for such purpose, the Corporation shall not (a) create, authorize or issue any
other class or series of stock entitled to a preference prior to Series B
Preferred Stock upon any dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of the Corporation, or
increase the authorized amount of any such other class or series, (b) except as
permitted in the proviso to paragraph B(3)(e), pay or declare any dividend or
distribution on any Series B Junior Securities or set aside or make available
funds for a dividend or distribution on any Series B Junior Securities, or
permit a subsidiary of the Corporation to do any of the foregoing, or (c) amend,
alter or repeal any provision of the Corporation's Certificate of Incorporation
so as to adversely affect the relative rights and preferences of the Series B
Preferred Stock; provided, however, that any such amendment that changes the
dividend payable on, or Liquidation Preference of, the Series B Preferred Stock
shall require the affirmative vote of the Holder of each share of Series B
Preferred Stock at a meeting of such Holders called for such purpose or the
written consent of the Holder of each share of Series B Preferred Stock.
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27
(b) In any case in which the Holders of Series B Preferred Stock shall
be entitled to vote, each Holder of Series B Preferred Stock shall be entitled
to one vote for each share of Series B Preferred Stock held unless otherwise
required by applicable law.
7. Conversion or Exchange. The Holders of Series B Preferred Stock shall
not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Corporation.
8. Reissuance of Series B Preferred Stock. Shares of Series B Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock, it being understood that the Corporation may reissue
shares of Series B Preferred Stock which are reacquired by the Corporation from
a Holder who is, or was, an employee or director of the Corporation (or a
subsidiary of the Corporation) so long as such reissued shares of Series B
Preferred Stock are reissued to a person who is an employee or director of the
Corporation (or a subsidiary of the Corporation) at the time of such reissue.
C. Series C Preferred Stock.
1. Designation of Series, Number of Shares. The third series of Preferred
Stock shall be designated as Series C Preferred Stock ("Series C Preferred
Stock"), and the number of shares which shall constitute such series shall be
1,000,000. The par value of Series C Preferred Stock shall be $.001 per share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series C Preferred Stock shall
rank (a) senior to (i) all classes of Common Stock of the Corporation; and (ii)
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which specifically provide
that such class or series shall rank junior to Series C Preferred Stock as to
dividend distributions or distributions upon the liquidation, winding up and
dissolution of the Corporation (each of the securities in clauses (i) and (ii)
collectively referred to as "Series C Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which do not specifically
provide that they rank junior to Series C Preferred Stock or senior to Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as
"Series C Parity Securities"), and (c) junior to (i) the Series A Preferred
Stock, (ii) the Series B Preferred Stock and (iii) each other class of capital
stock or other class or series of preferred stock issued by the Corporation
after the date hereof the terms of which specifically provide that such class or
series shall rank senior to Series C Preferred Stock as to dividend
distributions or distributions upon the liquidation,
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winding up and dissolution of the Corporation (collectively referred to as
"Series C Senior Securities").
3. Dividends.
(a) Each Holder of Series C Preferred Stock shall be entitled to
receive such dividends as may be declared from time to time by the Board of
Directors, out of funds legally available therefor. All dividends declared with
respect to shares of Series C Preferred Stock pursuant to this paragraph C(3)(a)
shall be paid pro rata to the Holders entitled thereto.
(b) The Holders of Series C Preferred Stock shall be entitled to
receive the dividends provided for in paragraph C(3)(a) hereof in preference to
and in priority over any dividends upon any of the Series C Junior Securities,
so that if at any time full Accumulated Dividends on shares of Series C
Preferred Stock then outstanding have been declared but not paid or set aside
for payment, the amount of such unpaid dividends shall be paid before any sum
shall be set aside for or applied by the Corporation to the purchase, redemption
or other acquisition for value of any shares of Series C Junior Securities
(either pursuant to any applicable sinking fund requirement or otherwise) or any
dividend or other distribution shall be paid or declared and set apart for
payment on any Series C Junior Securities (the date of any such actions to be
referred to as the "Series C Junior Payment Date"); provided, however, that the
foregoing shall not (i) prohibit the Corporation from repurchasing shares of
Series C Junior Securities from a Holder who is, or was, a director or employee
of the Corporation (or an affiliate of the Corporation) and (ii) prohibit the
Corporation from making dividends, other distributions, redemptions, repurchases
or acquisitions in respect of Series C Junior Securities payable in Series C
Junior Securities and cash in lieu of fractional shares of such Series C Junior
Securities.
(c) The Corporation shall not claim any deduction from gross income for
dividends paid on Series C Preferred Stock in any Federal Income tax return,
claim for refund, or other statement, report or submission made to the Internal
Revenue Service, and shall make any election or take any similar action to
effectuate the foregoing except, in each case, if there shall be a change in law
such that the Corporation may claim such dividends as deductions from gross
income without affecting the ability of the Holders to claim the dividends
received deduction under Section 243(a)(l) of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision). At the reasonable request
of any Holder (and at the expense of such Holder), the Corporation shall join in
the submission to the Internal Revenue Service of a request for a ruling that
the dividends paid on Series C Preferred Stock shall be eligible for the
dividends received deduction under Section 243(a)(l) of the Code (or any
successor provision). In addition, the Corporation shall cooperate with any
Holder (at the expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received deduction
under Section 243(a)(1) of the Code (or any successor provision) of any
dividends (within the meaning of Section 316(a) of the Code or any successor
provision) paid on Series C Preferred Stock. To the extent possible, the
principles of this paragraph C(3)(c) shall also apply with respect to state and
local income taxes.
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4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all shares of Series C Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to the Liquidation Preference per share, before any distribution is made
on any Series C Junior Securities. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the application of
all amounts available for payments with respect to Series C Preferred Stock and
all other Series C Parity Securities would not result in payment in full of
Series C Preferred Stock and such other Series C Parity Securities, the Holders
of Series C Preferred Stock and holders of Series C Parity Securities shall
share equally and ratably in any distribution of assets of the Corporation in
proportion to the full Liquidation Preference to which each is entitled. After
payment in full pursuant to this paragraph C(4)(a), the Holders of Series C
Preferred Stock shall not be entitled to any further participation in any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Corporation.
(b) For the purposes of paragraph C(4)(a), neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with one or more corporations shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, unless
such sale, conveyance, exchange or transfer is in connection with a dissolution
or winding up of the business of the Corporation; provided, however, that any
consolidation or merger of the Corporation in which the Corporation is not the
surviving entity shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation within the meaning of this paragraph C(4)(b)
if, (i) in connection therewith, the holders of Common Stock of the Corporation
receive as consideration, whether in whole or in part, for such Common Stock (1)
cash, (2) notes, debentures or other evidences of indebtedness or obligations to
pay cash or (3) preferred stock of the surviving entity (whether or not the
surviving entity is the Corporation) which ranks on a parity with or senior to
the preferred stock received by holders of the Series C Preferred Stock with
respect to liquidation or dividends or (ii) the holders of the Series C
Preferred Stock do not receive preferred stock of the surviving entity with
rights, powers and preferences equal to (or more favorable to the holders than)
the rights, powers and preferences of the Series C Preferred Stock.
5. Redemption. (a) The Company shall not have the right nor the power to,
and the Holders shall not have the right to require the Company to, redeem any
shares of Series C Preferred Stock. Notwithstanding the foregoing, this
Paragraph C(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series C Preferred Stock held
by such Holder.
(b) Subject to the proviso in paragraph C(3)(b), no sum shall be set
aside for or applied by the Corporation to the purchase, redemption, or other
acquisition for value of
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any shares of Series C Junior Securities (either pursuant to any applicable
sinking fund requirement or otherwise) at any time when any shares of Series C
Preferred Stock or any Series C Parity Securities are outstanding unless, prior
to the Corporation's setting aside or applying such sum to the purchase,
redemption, or other acquisition of any shares of Series C Junior Securities,
all shares of Series C Preferred Stock and Series C Parity Securities shall have
been purchased or otherwise acquired for value by the Corporation (and the price
in respect thereof paid or set aside for payment).
6. Voting Rights.
(a) The Holders of Series C Preferred Stock shall not be entitled or
permitted to vote on any matter required or permitted to be voted upon by the
shareholders of the Corporation, except as otherwise required by Delaware law or
this Certificate of Designation and except that without the written consent of
the Holders of a majority of the outstanding shares of Series C Preferred Stock
or the vote of the Holders of a majority of the outstanding shares of Series C
Preferred Stock at a meeting of the Holders of Series C Preferred Stock called
for such purpose, the Corporation shall not (a) create, authorize or issue any
other class or series of stock entitled to a preference prior to Series C
Preferred Stock upon any dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of the Corporation, or
increase the authorized amount of any such other class or series, (b) except as
permitted in the proviso to paragraph C(3)(b), pay or declare any dividend or
distribution on any Series C Junior Securities or set aside or make available
funds for a dividend or distribution on any Series C Junior Securities, or
permit a subsidiary of the Corporation to do any of the foregoing, or (c) amend,
alter or repeal any provision of the Corporation's Certificate of Incorporation
so as to adversely affect the relative rights and preferences of the Series C
Preferred Stock; provided, however, that any such amendment that changes the
dividend payable on, or Liquidation Preference of, the Series C Preferred Stock
shall require the affirmative vote of the Holder of each share of Series C
Preferred Stock at a meeting of such Holders called for such purpose or the
written consent of the Holder of each share of Series C Preferred Stock.
(b) In any case in which the Holders of Series C Preferred Stock
shall be entitled to vote, each Holder of Series C Preferred Stock shall be
entitled to one vote for each share of Series C Preferred Stock held unless
otherwise required by applicable law.
7. Conversion or Exchange. Except as otherwise set forth in the Agreement
and Plan of Merger between the Corporation and Manhattan Acquisition Corp.,
dated as of November 15, 2000, amended as of January 9, 2001 and further amended
as of May 1, 2001, the Holders of Series C Preferred Stock shall not have any
rights hereunder to convert such shares into or exchange such shares for shares
of any other class or classes or of any other series of any class or classes of
Capital Stock of the Corporation.
8. Reissuance of Series C Preferred Stock. Shares of Series C Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution
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or resolutions of the Board of Directors or as part of any other series of
Preferred Stock, all subject to the conditions or restrictions on issuance set
forth in any resolution or resolutions adopted by the Board of Directors
providing for the issuance of any series of Preferred Stock, it being understood
that the Corporation may reissue shares of Series C Preferred Stock which are
reacquired by the Corporation from a Holder who is, or was, an employee or
director of the Corporation (or a subsidiary of the Corporation) so long as such
reissued shares of Series C Preferred Stock are reissued to a person who is an
employee or director of the Corporation (or a subsidiary of the Corporation) at
the time of such reissue.
D. Certain Additional Provisions.
1. Business Day. If any payment shall be required by the terms hereof to
be made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
2. Reports. So long as any shares of Preferred Stock remain outstanding,
the Corporation shall send to the Holders of such Preferred Stock at their
addresses as set forth on the stock register of the Corporation all quarterly
and annual reports sent to holders of Common Stock of the Corporation.
3. Method of Payment. Preferred Stock shall be payable as to Liquidation
Preference, dividends, redemption payments, cash in lieu of fractional shares or
other payments at the office of the Corporation maintained for such purpose or,
at the option of the Corporation, payment of dividends may be made by check
mailed to the Holders at their addresses set forth in the stock register of the
Corporation.
4. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of Series A Senior Securities, Series B Senior
Securities, Series C Senior Securities or any contract or instrument to which
the Corporation is a party in respect of the incurrence of indebtedness, such
Corporation's actions shall be delayed until such time as such prohibition or
restriction is no longer in force.
5. Reservation of Right. The Board of Directors of the Corporation
reserves the right by subsequent amendment of this resolution from time to time
to increase or decrease the number of shares which constitute the Preferred
Stock (but not below the number of shares thereof then outstanding) and in other
respects to amend this resolution within the limitations provided by law, this
resolution and the Certificate of Incorporation of the Corporation.
E. Definitions. As used in this Certificate of Designation, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of Series A
Preferred Stock, the dividends that have accrued on such share as of such
specific date for
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Dividend Periods ending on or prior to such date and that have not previously
been paid in cash, (ii) with respect to any share of Series B Preferred Stock,
the dividends that have accrued on such share as of such specific date for
Dividend Periods ending on or prior to such date and that have not previously
been paid in cash, (iii) with respect to any share of Series C Preferred Stock,
the dividends that have been declared on such share as of such specific date and
that have not previously been paid in cash and (iv) with respect to any Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Annual Dividend Period" means the annual period commencing on each
_______ and ending on the following Dividend Payment Date, respectively.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Dividend Payment Date" means ________ of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter, each
Annual Dividend Period.
"Holder" means a holder of shares of Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means (i) with respect to the Series A Preferred Stock, the
date on which shares of Series A Preferred Stock are first issued by the
Corporation, and (ii) with respect to the Series B Preferred Stock, the date on
which shares of Series B Preferred Stock are first issued by the Corporation.
"Liquidation Preference" means, on any specific date, with respect to any
share of Preferred Stock, the sum of (i) $12.00 per share plus (ii) the
Accumulated Dividends with respect to such share.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock.
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"Series A Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series A Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series A Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series A Parity Securities" has the meaning given to such term in
paragraph A(2).
"Series A Preferred Stock" has the meaning given to such term in paragraph
A(1).
"Series A Senior Securities" has the meaning given to such term in
paragraph A(2).
"Series B Junior Payment Date" has the meaning given to such term in
B(3)(e).
"Series B Junior Securities" has the meaning given to such term in
paragraph B(2).
"Series B Parity Payment Date" has the meaning given to such term in
paragraph B(3)(d).
"Series B Parity Securities" has the meaning given to such term in
paragraph B(2).
"Series B Preferred Stock" has the meaning given to such term in paragraph
B(1).
"Series B Senior Securities" has the meaning given to such term in
paragraph B(2).
"Series C Junior Securities" has the meaning given to such term in
paragraph C(2).
"Series C Parity Securities" has the meaning given to such term in
paragraph C(2).
"Series C Preferred Stock" has the meaning given to such term in paragraph
C(1).
"Series C Senior Securities" has the meaning given to such term in
paragraph C(2).
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IN WITNESS WHEREOF, Il Fornaio (America) Corporation. has caused this
Certificate of Designation, Preferences and Rights of Series A 13.0% Cumulative
Compounding Preferred Stock, Series B 13.5% Cumulative Compounding Preferred
Stock and Series C Preferred Stock to be duly executed by its President this ___
day of ___________, 2001.
By
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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SCHEDULE VII
Terms of Securities Holders and Registration Rights Agreements
Restrictions on Transfer: Except for Permitted Transfers, securities of
the Surviving Corporation may not be
transferred (including by assignment, pledge,
hypothecation, by operation of law, proxy or
voting agreement or similar arrangement)
without the prior written consent of the
holders of 50% of the then outstanding Common
Stock of the Surviving Corporation (the
"Requisite Holders").
Permitted Transfers: Permitted Transfers will include (i) sales
pursuant to an Approved Sale, (ii) sales
pursuant to the exercise of Tag-Along Rights,
(iii) sales or other transfers to affiliated
individuals or entities (in respect of
stockholders who are entities) or for estate
planning purposes or (iv) pursuant to
exercise of registration rights or, following
an Initial Public Offering, sales under Rule
144 under the Securities Act.
Approved Sale: In the event the Requisite Holders approve
the sale of the Company, each holder of
securities of the Surviving Corporation will
consent to and cooperate with the sale and,
if such sale is structured as a sale of
stock, will sell its shares of stock and
other equity securities on the terms approved
by the Requisite Holders.
Tag Along Rights: Subject to customary exceptions, BRS will not
sell any shares of Common Stock without
offering other stockholders of the Surviving
Corporation the opportunity to sell shares on
a pro rata basis and on equal terms.
Voting Agreement: Each holder of securities will agree to vote
all shares of voting capital stock or other
voting securities so as to maintain a board
of directors of
36
the Surviving Corporation (and any
subsidiaries) having a majority of directors
designated by BRS.
Vesting: Shares of Preferred or Common Stock (and/or
options to purchase such shares or other
securities) granted to employee investors
(not to include any shares or options
purchased under Section 1.1 of this
Agreement) will be subject to vesting
restrictions to include, in the case of
restricted shares, a purchase option in favor
of the Surviving Corporation in the event of
termination of the investor's employment at a
price equal to the investor's original cost
(or, if lower, fair market value (determined
by the Surviving Corporation in good faith))
with respect to unvested shares.
Management Buy-Back: The Surviving Corporation will have the
option to purchase any vested securities of
an employee investor following termination of
employment for a fair market value price
(determined by the Surviving Corporation in
good faith, it being understood that any such
valuation will be without any discount based
on minority ownership).
Right of First Refusal: The Surviving Corporation will have a right
of first refusal on any transfer of
securities by an employee investor, except
for Permitted Transfers.
Initial Public Offering: An Initial Public Offering will be defined as
an underwritten public offering of shares of
Common Stock by the Surviving Corporation
(other than an offering to employees or
existing investors or in connection with any
acquisition or business combination, or an
offering of a combination of debt and equity
securities where the aggregate consideration
received by the Surviving Corporation in
respect of such equity securities does not
exceed 20% of the aggregate consideration
received by the Surviving Corporation in such
offering) where the Surviving Corporation
receives aggregate net proceeds of not less
than $30,000,000.
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37
Demand Registration Rights: BRS will have demand registration rights.
Piggy-Back Registration Rights: Following an Initial Public Offering or a
demand registration by BRS, all Investors
will have piggyback registration rights
having equal priority in the event of a
cutback by the managing underwriter (except
that if the managing underwriter determines
such a cutback is reasonably required for the
success of the offering, shares of employee
investors and investors who are directors at
such time will be cutback before shares of
other investors).
Lock-Up: In the event of any public offering by the
Surviving Corporation, no investor will sell
or otherwise transfer (including by pledge,
short sale or other hedging transaction) any
equity securities for a period of 180 days or
such shorter period as is agreed to by the
underwriter for such offering.
Modifications for Financing: The foregoing shareholder arrangements may be
modified at the Company's discretion in
connection with any debt financing incurred
by the Company, including to provide for
redemption rights in respect of warrants
issued to lenders. It is understood that some
of the above provisions may not apply to
equity securities issued to the Company's
lenders.
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