Holders of Series A Preferred Stock. So long as any shares of Series A Preferred Stock shall be outstanding, the Company shall not without first obtaining the affirmative vote or written consent of the holders of not less than fifty percent (50%) of the outstanding shares of Series A Preferred Stock voting together as a class:
(i) amend or repeal any provision of, or add any provision to, the Articles or the Company’s By-laws if such action would alter or change the preferences, rights, privileges or powers of or the restrictions provided for the benefit of the Series A Preferred Stock, or increase or decrease the authorized number of shares of Series A Preferred Stock.
(ii) authorize or issue shares of any class or series of stock not authorized in the Articles having any liquidation preference or priority as to assets superior to any such liquidation preference or priority of the Series A Preferred Stock; or authorize or issue shares of stock of any class or series of any bonds, debentures, notes or other obligations convertible into or exchangeable for, or having option rights to purchase, any shares of stock of this Company having any liquidation preference or priority as to assets superior to any such liquidation preference or priority of the Series A Preferred Stock;
(iii) reclassify any class or series of any Common Stock into shares having any liquidation preference or priority as to assets superior to or on a parity with any such liquidation preference or priority of the Series A Preferred Stock; or
(iv) apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through subsidiaries or otherwise, of any shares of any class or series of Common Stock, except from employees, advisors, officers, directors and consultants of, and persons performing services for the Company or its subsidiaries on terms approved by the Board of Directors upon termination of employment or association.
Holders of Series A Preferred Stock are entitled to cumulative dividends at a minimum rate of 7.5% per annum, quarterly in arrears, as set forth in our Charter. Commencing on the 66-month anniversary of the date on which any shares of Series A Preferred Stock are first issued (the “Original Issuance Date”), and on each monthly anniversary thereafter, the dividend rate will increase by 100 basis points, until the dividend rate reaches 17.5% per annum, subject to our right to defer the increase for up to three consecutive months on the terms set forth in our Charter. The dividends are payable at our election in kind, through the issuance of additional shares of Series A Preferred Stock, or in cash, provided no dividend payment failure has occurred and is continuing and that there has not previously occurred two or more dividend payment failures. The Series A Preferred Stock also participate in any dividends on the common stock on an as-converted basis.
Holders of Series A Preferred Stock will remain intact as preferred shareholders of GBA, Inc. under the terms of the documents governing such preferred stock. Holders of Series B Preferred Stock Obligations and Secured Debt Obligations – will in the aggregate beneficially own at least approximately 70.38% of the outstanding equity in Newcos. This aggregate beneficial ownership percentage will increase proportionally if holders of Other Debt Obligations holding less than the full amount (in the aggregate) indicated in the introduction to this Term Sheet participate in the exchange outlined in subparagraph (b) of Section 1 above.
