CERTIFICATE OF DETERMINATION OF PREFERENCES
OF
SERIES D CONVERTIBLE PAY-IN-KIND PREFERRED STOCK,
OF
THE RIGHT START, INC.
(Pursuant to Section 401 of the General
Corporation Law of the State of California)
-------------------------------------------
The undersigned, Jerry R. Welch and Raymond P. Springer,
hereby certify that (1) they are the President and Chief Executive Officer, and
the Chief Financial Officer and Secretary, respectively, of The Right Start,
Inc., a California corporation (the "Corporation"), and (2) under authority
given by the Corporation's Second Amended and Restated Articles of Incorporation
(the "Restated Articles"), the Board of Directors of the Corporation has duly
adopted the following recitals and resolutions:
WHEREAS, the Restated Articles provide for a class of shares
known as "Preferred Stock," issuable from time to time in one or more series;
WHEREAS, the Board of Directors of the Corporation is
authorized to determine the rights, preferences, privileges, and restrictions
granted to or imposed on any wholly unissued series of Preferred Stock, to fix
the number of shares constituting any such series, and to determine the
designation thereof, or any of them;
WHEREAS, the Restated Articles provide that the Corporation is
authorized to issue Two Hundred and Fifty Thousand (250,000) shares of Preferred
Stock;
WHEREAS, the Corporation has issued 98,500 shares of Preferred
Stock and the Board of Directors of the Corporation desires to determine the
rights, preferences, privileges, and restrictions relating to one (1) additional
series of Preferred Stock and the number of shares constituting and the
designation of such series;
WHEREAS, the Board of Directors of the Corporation has
determined that eighty thousand (80,000) shares of Preferred Stock shall be
designated as Series D Convertible Pay-in-Kind Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to Article III
of the Restated Articles, the Board of Directors hereby creates the
Corporation's Series D Convertible Pay-in-Kind Preferred Stock and determines
the designation of, number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to the Series D Convertible Pay-in-Kind
Preferred Stock as follows:
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I. Designation and Amount. The number of shares constituting the
Series D Convertible Pay-in-Kind Preferred Stock, par value $.01 per share
(the "Series D Preferred Stock"), shall be eighty thousand (80,000) shares.
II. Dividends and Distributions.
A. Dividends. The holders of Series D Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors of the Corporation, out of funds of the Corporation
legally available therefor, on any shares of Series D Preferred
Stock that have not been converted pursuant to Section IV,
dividends, at the rate of eight dollars ($8.00) per share per
annum, or 8% per annum of the liquidation preference of one
hundred dollars ($100.00) per share, on the Series D Preferred
Stock, which dividends shall be cumulative, shall accrue on a
daily basis without interest from the date of issuance, and shall
be payable in cash or in kind, at the Corporation's option,
quarterly in arrears on December 1 and June 1 of each year (each a
"Series D Payment Date"), commencing December 1, 2000 (except that
if any such date is not a Business Day, then such dividend shall
be payable on the next succeeding day that is a Business Day) to
the holders of record as they appear on the stock transfer books
of the Corporation on such record dates as are fixed by the
Corporation's Board of Directors not more than 60 nor less than 10
days preceding the Series D Payment Dates for such dividends. The
accumulation and accrual of dividends on the Series D Preferred
Stock after December 1, 2000, shall occur regardless of whether or
not the Corporation shall have funds legally available for the
payment of dividends. The amount of dividends payable per share of
Series D Preferred Stock for the initial dividend period and any
period shorter than a full quarterly dividend period shall be
computed on the basis of a 360 day year consisting of twelve
30-day months. On each Series D Payment Date the Corporation may
pay, at its option and in its sole discretion, in lieu of the
payment of dividends in cash on the Series D Preferred Stock,
dividends on all outstanding shares of Series D Preferred Stock in
whole, or in part, through the issuance of additional shares of
Series D Preferred Stock ("PIK Shares"), having an aggregate
liquidation preference equal to the amount of such dividends. On
each such Series D Payment Date that the Company elects to deliver
PIK Shares, the Company shall issue and deliver PIK Shares to the
holders of Series D Preferred Stock entitled to such dividend
payments. The issuance of such PIK Shares shall constitute
"payment" of the related dividend for all purposes of this
Certificate of Designation.
In no event, so long as any Series D Preferred Stock shall remain
outstanding, shall (i) any dividend whatsoever be declared or paid
upon, nor shall any distribution be made upon, any Common Stock,
or any other capital stock of the Corporation ranking junior as to
the payment of dividends ("Junior Dividend Stock"), other than a
dividend or distribution payable in shares of Common Stock or
Junior Dividend Stock, unless and until all accrued and unpaid
dividends on the Series D Preferred Stock, including the full
dividend for the then current period, shall have been paid or
declared and set apart for payment, (ii) (A) except as set forth
in clause (B) following, any dividend whatsoever be declared or
paid upon, nor shall any distribution be made upon, any of the
Corporation's Series A Mandatorily Redeemable Preferred Stock, par
value $.01 per share (the "Series A Preferred Stock"), the
Corporation's Series B Convertible Preferred Stock, par value $.01
per share (the "Series B Preferred Stock") and the Corporation's
Series C Convertible Preferred Stock, par value $.01 per share
(the "Series C Preferred Stock," and, together with the Series A
Preferred Stock , the Series C Preferred Stock and any other
capital stock of the Corporation ranking on a parity as to the
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payment of dividends, the "Parity Dividend Stock"), for any period
unless and until cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for such
payment of the Series D Preferred Stock and such Parity Dividend
Stock for all dividend periods terminating on or prior to the date
of payment of such full cumulative dividends and (B) when
dividends are not paid in full upon the Series D Preferred Stock
and the Parity Dividend Stock, all dividends paid or declared and
set aside for payment upon shares of Series D Preferred Stock
shall be paid or declared and set aside for payment pro rata so
that the amount of dividends paid or declared and set aside for
payment per share on the Series D Preferred Stock and the Parity
Dividend Stock shall in all cases bear to each other the same
ratio that accrued and unpaid dividends per share on the shares of
Series D Preferred Stock and Parity Dividend Stock bear to one
another, (iii) without the written consent of the holders of not
less than 50% of the outstanding shares of Series D Preferred
Stock, any shares of Common Stock, Junior Dividend Stock or Parity
Dividend Stock be purchased or redeemed by the Corporation, nor
(iv) any moneys be paid to or made available for a sinking fund
for the purchase or redemption of any Common Stock, Junior
Dividend Stock or Parity Preferred Stock.
Dividends shall be payable to the holders of record on the record
date established by the Board of Directors of the Corporation (the
"Record Date"), which date shall be no less than 10 days prior to
each Series D Payment Date.
B. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Series D Preferred Stock shall be
entitled to receive with respect to each share, out of the assets
of the Corporation, whether such assets are stated capital or
surplus of any nature, an amount equal to the dividends accrued
and unpaid thereon to the date of final distribution to such
holders, whether or not declared, plus a sum equal to One Hundred
Dollars ($100.00) per share (the "Series D Preferred Liquidation
Preference"), and no more, before any payment shall be made or any
assets distributed to holders of Common Stock or any other capital
stock of the Corporation ranking junior as to the payment upon
liquidation, dissolution or winding up including, without
limitation, all series of Preferred Stock hereafter issued by the
Corporation (unless such later issued series has parity or is
senior in priority, and has been permitted under Section III)
(collectively, "Junior Liquidation Stock") and, after June 1,
2002, after all liquidation preference payments to which holders
of the Series A Preferred Stock are entitled shall have been made.
The Series D Preferred Stock shall be senior as to liquidation to
the Common Stock and all Junior Liquidation Stock and, after June
1, 2002, junior to the Series A Preferred Stock. In the event the
assets of the Corporation available for distribution to
shareholders upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to
the Series D Preferred Stock and any other class or series of the
Corporation's capital stock which has or may hereafter have parity
as to liquidation rights with the Series D Preferred Stock
(including, the Series A Preferred Stock (prior to June 1, 2002
only), the Series B Preferred Stock and the Series C Preferred
Stock, the "Parity Liquidation Stock"), the holders of the Series
D Preferred Stock and the holders of the Parity Liquidation Stock
shall share ratably in any distribution of assets of the
Corporation in proportion to the full respective preferential
amounts to which they are entitled (but only to the extent of such
preferential amounts). After payment in full of the liquidation
preferences of the Series D Preferred Stock, the holders of such
shares shall not be entitled to any further participation in any
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distribution of assets by the Corporation. Neither a merger,
consolidation, or other business combination of the Corporation
with or into another corporation or other entity nor a sale or
transfer of all or part of the Corporation's assets for cash,
securities or other property shall be considered a liquidation,
dissolution or winding up of the Corporation for purposes of this
Section II.B. (unless in connection therewith the liquidation of
the Corporation is specifically approved by the shareholders of
the Corporation). The holder of any shares of Series D Preferred
Stock shall not be entitled to receive any payment owed for such
shares under this Section II.B. until such holder shall cause to
be delivered to the Corporation (i) certificate(s) representing
such shares of Series D Preferred Stock and (ii) transfer
instruments satisfactory to the Corporation and sufficient to
transfer such shares to the Corporation free and clear of any
adverse interest.
III.Voting Rights. So long as any Series D Preferred Stock shall be
outstanding, consent of the holders of at least a majority of the shares of
Series D Preferred Stock (unless the consent of a greater percentage is
required by applicable law or the Corporation's articles of incorporation
as then in effect), voting together as a single class, will be required for
(a) each amendment of the Corporation's articles of incorporation as then
in effect which adversely affects the relative rights, preferences,
qualifications, limitations or restrictions of the Series D Preferred
Stock, (b) any action that, except as contemplated herein, creates any new
class or series of shares having preference over or being on a parity with
the Series D Preferred Stock in respect of the payment of dividends, upon
liquidation, dissolution or winding up of the Corporation, or (c) any
reclassification of the Series D Preferred Stock. Except for such consent
rights and such voting rights as may be provided by applicable law or
herein, the Series D Preferred Stock shall have no voting rights as a
separate series except the right to vote as a separate series within the
class of preferred stock as to any matters regarding the modification of
the rights, privileges or terms of the Series D Preferred Stock. Any
required vote of the Series D Preferred as a separate series will be
accomplished by the vote of a majority of the shares of such series. A
class vote on the part of the Series D Preferred Stock specifically shall
not be required (except as otherwise required by law or resolution of the
Corporation's Board of Directors) in connection with: (a) the
authorization, issuance or increase in the authorized amount of any shares
of any other class or series of stock that ranks junior to the Series D
Preferred Stock in respect of the payment of dividends, upon liquidation,
dissolution or winding up of the Corporation; or (b) the authorization,
issuance or increase in the amount of any notes, bonds, mortgages,
debentures or other obligations of the Corporation not convertible into or
exchangeable, directly or indirectly, for stock ranking prior to the Series
D Preferred Stock in respect of the payment of dividends, upon liquidation,
dissolution or winding up of the Corporation.
IV. Conversion
A. Voluntary Conversion.
(i) Right to Convert. Any time, and from time to time, each share
of Series D Preferred Stock shall, at the option of the holder
thereof, be convertible into that number of fully paid and
non-assessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by
dividing the Series D Preferred Liquidation Preference by two
dollars ($2.00), as adjusted from time to time as provided herein
(the "Conversion Rate") and by surrender of such share of Series
D Preferred Stock so to be converted in the manner provided in
Section IV.A.(ii). The Conversion Rate shall initially be two
dollars ($2.00) per share of Common Stock delivered in exchange
for Series D Preferred Stock as set forth above and shall be
subject to adjustment and readjustment from time to time as set
forth in Section IV.D.
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(ii) Mechanics of Conversion. In order to exercise the conversion
privilege, the holder of one or more shares of Series D Preferred
Stock to be converted shall surrender such shares to the
Secretary of the Corporation at the Corporation's principal
offices, accompanied by the funds, if any, required to pay
transfer or similar taxes and shall give written notice (the
"Conversion Notice") to the Corporation that such holder elects
to convert all or a specified number of such shares and stating
in such Conversion Notice, his name or the name or names of his
nominees in which he wishes the certificate or certificates for
Common Stock to be issued, together with instruments of transfer,
in form satisfactory to the Corporation, duly executed by the
holder or his duly authorized attorney. As promptly as
practicable after the surrender of such shares of Series D
Preferred Stock and the receipt of the Conversion Notice,
instruments of transfer and funds to pay any transfer or similar
tax, if any, as aforesaid, the Corporation shall issue and
deliver at such offices to such holder of Series D Convertible
Preferred Stock, or to his nominee or nominees, a certificate or
certificates representing the number of shares of Common Stock
and a check or cash with respect to any fractional interest in a
share of Common Stock to which he shall be entitled as aforesaid
in accordance with Section IV.C and, if less than the full number
of shares of Series D Preferred Stock evidenced by such
surrendered certificate or certificates are being converted, a
new certificate or certificates, of like tenor, for the number of
shares of Series D Preferred Stock evidenced by such surrendered
certificate less the number of such shares of Series D Preferred
Stock being converted. Any conversion made at the election of a
holder of Series D Preferred Stock shall be deemed to have been
made immediately prior to the close of business on the date of
such surrender of such shares to be converted, and the person or
persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock on such date.
B. Forced Conversion.
(i) Change of Control. The Series D Preferred Stock shall be
convertible in full by the Corporation at the Conversion Rate
upon the occurrence of a Change of Control. For purposes of this
Certificate of Determination, "Change of Control" shall be
defined as:
a. any merger or consolidation of the Corporation where
the Corporation is not the surviving entity or as a
result of which Kayne Anderson and its Affiliates cease
to beneficially own (as beneficial ownership is defined
in Rule 13d-3 of the Exchange Act) and control,
directly or indirectly, at least twenty-five (25%)
percent of the issued and outstanding shares of capital
stock of the Corporation entitled (without regard to
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the occurrence of any contingency) to vote for the
election of a majority of the members of the Board of
Directors of the Corporation; or
b. any sale or transfer of all or substantially all of the
Corporation's assets or stock.
(ii) Trading Price Level. On or after October 6, 2001, if the
Closing Price per share of the Corporation's Common Stock is
three dollars $3.00 or greater for 20 consecutive trading days,
the Corporation may, within 15 business days following such 20th
consecutive trading day, convert any or all of the outstanding
shares of Series D Preferred Stock into fully paid and
nonassessable shares of Common Stock at the Conversion Rate. For
purposes of this Certificate of Determination, the term "Closing
Price" on any day shall mean the last reported sales price on
such day or, in case no such sale takes place on such day, the
average of the reported closing high and low quotations, in each
case on the New York Stock Exchange or, if the Common Stock is
not listed on the New York Stock Exchange, on the principal
national securities market or quotation system on which the
Common Stock is then traded or quoted, or, if the Common Stock is
then not so traded or quoted, on the Nasdaq National Market, or,
if the Common Stock is not listed on the Nasdaq National Market,
the average of the high bid and low-asked quotations of the
Common Stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting
service, or, if no such quotations are available, the fair market
value of the Common Stock as determined by any New York Stock
Exchange member firm selected from time to time by the Board of
Directors for such purpose.
(iii) Mechanics of Conversion. Notice of any forced conversion of
the Series D Preferred Stock ("Forced Conversion Notice")
specifying the time of conversion, the Conversion Rate and the
fact of the occurrence of a Change of Control or the Closing
Price history of the Corporation's Common Stock, as applicable,
and the paragraph pursuant to which such conversion is required,
shall be mailed by certified or registered mail, return receipt
requested, at the address for such holder shown on the
Corporation's records not more than one hundred twenty (120) nor
less than thirty (30) days prior to the date on which such
conversion is to be made, with respect to the Series D Preferred
Stock. Upon mailing any Forced Conversion Notice, the Corporation
shall issue and deliver at its principal offices to such holder
of Series D Preferred Stock, or to his nominee or nominees, a
certificate or certificates representing the number of shares of
Common Stock and a check or cash with respect to any fractional
interest in a share of Common Stock to which he shall be entitled
as aforesaid in accordance with the Section IV.C. Any conversion
made at the election of the Corporation shall be deemed to have
been made immediately prior to the close of business on the date
of such mailing, and the person or persons entitled to receive
the Common Stock issuable upon conversion shall be treated for
all purposes as the record holder or holders of such Common Stock
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on such date. On the date of such mailing, the certificates
representing the Series D Preferred Stock shall be null and void
and shall no longer represent an interest in the Corporation and
dividends shall cease to accrue thereon. Any Forced Conversion
Notice that is mailed as provided in this subsection (iii) shall
be conclusively presumed to have been duly given, whether or not
the holder of the Series D Preferred Stock receives such notice;
and failure to give such notice or any defect in such notice
shall not affect the validity of the proceedings for the forced
conversion of Series D Preferred Stock.
C. Fractional Shares. No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon conversion of the
Series D Preferred Stock. If more than one share of Series D Preferred
Stock shall be surrendered for conversion at one time by the same holder,
the number of full shares of Common Stock issuable upon conversion thereof
shall be computed using the product of One Hundred Dollars ($100.00)
multiplied by each such share so surrendered. In lieu of any fractional
interest in a share of Common Stock which would otherwise be deliverable
upon the conversion of any shares of Series D Preferred Stock, the
Corporation shall pay to the holder of such shares an amount in cash
(computed to the nearest cent) equal to the closing price of the Common
Stock (as reported on the national exchange or quotation system on which
the Common Stock is then traded; or, if the Common Stock is not then traded
on such an exchange or system, as determined in good faith by the Board of
Directors of the Corporation) on the Business Day next preceding the day of
conversion, multiplied by the fractional interest that otherwise would have
been deliverable upon conversion of such shares.
D. Adjustments to Conversion Rate:
1. Stock Dividends, Subdivisions and Combinations. In case at any
time or from time to time after the Preferred Stock Issuance Date the
Corporation shall, subject to the restrictions set forth in Section
IV.D.:
(i) pay a dividend or make a distribution on its Common Stock in
shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares,
then in each such case the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the holder of any
share of Series D Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of
Common Stock or other capital stock of the Corporation which he
would have owned or been entitled to receive immediately
following such action had such share been converted immediately
prior to the occurrence of such event. An adjustment made
pursuant to this subsection shall become effective immediately
after the record date, in the case of a dividend or distribution,
or immediately after the effective date, in the case of a
subdivision or combination.
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E. No impairment. The Corporation will not through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at all
times in good faith assist in the carrying out of all the provisions
of this Section IV and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of
the holders of shares of Series D Preferred Stock against impairment.
Without limiting the generality of the foregoing, the Corporation (i)
will take all such action as may be necessary or appropriate in order
that the Corporation may validly and legally issue fully paid
nonassessable shares of stock on the conversion of the Series D
Preferred Stock, and (ii) will not take any action which results in
any adjustment of the Conversion Rate if the total number of shares of
Common Stock issuable after the action upon the conversion of all of
the shares of Series D Preferred Stock will exceed the total number of
shares of Common Stock then authorized by the Restated Articles and
available for the purpose of issue upon such conversion.
F. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this
Section IV, the Corporation shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each
holder of shares of Series D Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based, including a
statement of (i) the number of shares of Common Stock then outstanding
or deemed to be outstanding, and (ii) the Conversion Rate in effect
immediately prior to such issue or sale and as adjusted and readjusted
on account thereof, showing how such Conversion Rate was calculated.
The Corporation shall, as promptly as practicable following its
receipt of the written request of any holder of shares of Series D
Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) the Conversion Rate at the time in
effect, showing how it was calculated and (ii) the number of shares of
Common Stock which at the time would be received upon the conversion
of the Series D Preferred Stock.
G. Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend which is the same as
cash dividends paid in previous quarters) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, the Corporation shall mail to each holder of
Series D Preferred Stock at least ten days prior to the date specified
therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend or distribution.
V. Miscellaneous. This Certificate of Determination shall also be
governed by the following:
A. Amendment and Waiver. This Certificate of Determination may be
amended or otherwise altered in accordance with applicable law and
Section III. No amendment, modification or waiver of any provision
hereof shall extend to or affect any obligation not expressly amended,
modified or waived or impair any right consequent thereon. No course
of dealing, and no failure to exercise or delay in exercising any
right, remedy, power or privilege hereunder, shall operate as a
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waiver, amendment or modification of any provision of this Certificate
of Determination.
B. Reacquired Shares. Any shares of Series D Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall, upon their cancellation,
become authorized but unissued shares of Preferred Stock of the
Corporation, undesignated as to series.
C. Registration. The Corporation shall keep at its principal
office (or such other place as the Corporation reasonably designates)
a register for the registration of Series D Preferred Stock. Upon the
surrender of any certificate representing Series D Preferred Stock at
such place, the Corporation shall, at the request of the registered
holder of such certificate, execute and deliver a new certificate or
certificates in exchange therefor representing in the aggregate the
number of shares of Series D Preferred Stock represented by the
surrendered certificate (and the Corporation forthwith shall cancel
such surrendered certificate), subject to the requirements of
applicable securities laws and any other applicable restrictions. Each
such new certificate shall be registered in such name and shall
represent such number of shares of Series D Preferred Stock as shall
be requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate.
D. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit and indemnity of the registered
holder, including a bond if so requested by the Corporation, shall be
satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of Common
Stock, Series D Preferred Stock and, in the case of loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the registered holder is a financial
institution, its own agreement of indemnity shall be satisfactory),
or, in the case of mutilation, upon surrender of such certificate, the
Corporation shall (at its expense) execute and deliver in lieu of such
certificate a new certificate of like kind representing the number of
shares of Common Stock or Series D Preferred Stock represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate.
E. Definitions. The following terms shall have the following
meanings, which meanings shall be equally applicable to the singular
and plural forms of such terms:
"Affiliate" of a Person means a Person that directly or
indirectly controls, or is controlled by, or is under common control
with such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Business Day" means any day which is not a Saturday or a Sunday
or a public holiday or a day on which banks are required or permitted
to close under the laws of the State of California.
"Common Stock" means the Common Stock of the Corporation without
par value.
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"Conversion Rate" shall have the meaning set forth in Section
IV.A.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any similar or successor federal statute, and the rules
and regulations of the Commission promulgated thereunder, all as the
same shall be in effect at any applicable time.
"Person" shall include an individual, a corporation, a limited
liability company, an association, a partnership, a limited liability
partnership, a trust or estate, a government or any agency or
political subdivision thereof, or any other entity.
"Preferred Stock Issuance Date" means the date on which the
Corporation first issues any shares of Series D Preferred Stock.
F. Preemptive Rights. The Series D Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any
securities of the Corporation.
VI. Notices. All notices provided hereunder shall be in writing and
shall be delivered by courier, messenger, registered or certified mail,
return receipt requested, postage prepaid or by facsimile, receipt
confirmed by sender and will be deemed to have been given when so mailed
(or receipt confirmed in the case of a facsimile) (i) to the Corporation,
at its principal executive offices and (ii) to the holder of Preferred
Stock, at such holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by any such holder in notice to the
Corporation conforming with this Section VI).
VII. Common Stock Reserved. The Corporation shall at all times reserve
and keep available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be sufficient
to effect conversion of the Series D Preferred Stock.
The undersigned, Jerry R. Welch and Raymond P. Springer, further certify
that the number of shares of Series D Convertible Pay-in-Kind Preferred Stock is
80,000 shares, none of which shares have been issued.
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The undersigned declares under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of his or her own knowledge.
Date: October 4, 2000 /s/ Jerry R. Welch
Jerry R. Welch
President and Chief Executive Officer
Date: October 4, 2000 /s/ Raymond P. Springer
Raymond P. Springer
Secretary and Chief Financial Officer
