SECOND AMENDMENT TO PURCHASE AGREEMENT
SECOND
AMENDMENT TO PURCHASE AGREEMENT
This
Second Amendment (this “Amendment”)
to
that certain Purchase Agreement (the “Original
Agreement”),
dated
as of September 30, 2006, by and among Turnaround Partners, Inc., a Nevada
corporation (f/k/a Emerge Capital Corp., the Delaware corporation and
hereinafter referred to as the “Purchaser”),
Kipling Holdings, Inc., a Delaware corporation (the “Company”)
and
Xxxxxxx X. Xxxxxxxx, an individual (the “Selling
Shareholder”,
and
together with the Purchaser and the Company, the “Parties”)
is
dated and made effective as of December 31, 2006.
RECITALS:
WHEREAS,
pursuant
to the Original Agreement,
the
Selling Shareholder sold to the Purchaser, and the Purchaser purchased from
the
Selling Shareholder, one hundred percent (100%) of the total issued and
outstanding capital stock of the Company in exchange for (a) the Purchaser’s
assumption of all of the liabilities of the Company, (b) the Purchaser expanding
the Existing Anti-Dilution Rights (as such term is defined in the Original
Agreement) in favor of the Selling Shareholder and (c) a nominal cash amount
equal to the direct costs incurred by the Selling Shareholder in connection
with
the Original Agreement, on the terms and conditions set forth
therein;
WHEREAS,
pursuant to the Original Agreement (a) the Selling Shareholder was to, within
five (5) business days following the Closing Date (as such term is defined
in
the Original Agreement) relinquish all Existing Dilution Rights (as such term
is
defined therein) by delivering those shares of Emerge Series B Preferred (as
defined in the Original Agreement) held by the Selling Shareholder and the
Selling Shareholder’s spouse and (b) the Purchaser was to, within five (5) days
following the execution of the Original Agreement, file with the Secretary
of
State of the State of Delaware the Certificate of Designation (as such term
is
defined in the Original Agreement) and receive confirmation from that State
of
the effectiveness of such Certificate of Designation;
WHEREAS,
effective as of October 5, 2006, the Parties entered into that certain First
Amendment to Purchase Agreement (the “First
Amendment”)
whereby the Parties amended the Original Agreement to extend the time in which
the Selling Shareholder was to relinquish its Existing Dilution Rights and
the
Purchaser was to file the Certificate of Designation on the terms set forth
therein;
WHEREAS,
on
December 28, 2006, the Company, formerly a Delaware corporation, completed
its
reincorporation in Nevada by way of a merger of the Company with and into its
wholly-owned subsidiary, Turnaround Partners, Inc., a newly-formed Nevada
corporation, thereby effecting a change in the Company’s legal domicile from
Delaware to Nevada; and
WHEREAS,
the
Parties desire to further amend the Original Agreement to (a) further extend
the
time in which the Selling Shareholder shall receive its Additional Anti-Dilution
Rights and the date that the Purchaser shall file the Certificate of Designation
with the Secretary of State of the State of Nevada and (b) modify the Additional
Anti-Dilution Rights as is more fully set forth herein.
AGREEMENT:
NOW,
THEREFORE,
in
consideration of the mutual promises, conditions and covenants contained herein,
and for other good and valuable consideration, receipt of which is hereby
acknowledged, the Parties hereto agree as follows:
1. Amendment
to Section 1.2 of the Original Agreement.
The
Original Agreement, as amended by the First Amendment, is hereby further amended
by deleting Section 1.2 as set forth in the First Amendment in its entirety
and
by inserting in lieu thereof the following:
“1.2
Additional
Anti-Dilution Rights.
As
partial consideration for the acquisition by the Purchaser of all of the
outstanding capital stock of the Company in accordance with Section 1.1(b)
above, the Selling Shareholder shall relinquish all Existing Anti-Dilution
Rights by delivering to the Purchaser those shares of Emerge Series B Preferred
held by the Emerge Shareholders and, in exchange therefore, the Purchaser shall
issue and deliver to the Emerge Shareholders, in the denominations set forth
opposite each Emerge Shareholder’s name on Schedule
A
attached
hereto, shares of its convertible Series D preferred stock, par value $0.01
per
share (the Emerge
Series D Preferred”)
in the
form of Exhibit
A
hereto
(the “Certificate
of Designation”)
and
amend and restate its Certificate of Designation of Emerge Series B Preferred
to
reflect the relinquishment of such Existing Anti-Dilution Rights in accordance
with the terms herein. The Emerge Series D Preferred shares will have
substantially the same powers, designations, preferences and relative,
participating, optional and other special rights except that holders of Emerge
Series D Preferred will receive those additional anti-dilution rights (the
“Additional
Anti-Dilution Rights”)
set
forth in Section 4 of the Certificate of Designation.”
2. Amendment
to Section 1.4.3 of the Original Agreement.
The
Original Agreement, as amended by the First Amendment, is hereby amended by
deleting Section 1.4.3 as set forth in the First Amendment its entirety and
by
inserting in lieu thereof the following:
“1.4.3 The
Purchaser shall file with the Secretary of State of the State of Nevada the
Certificate of Designation and receive confirmation from that State of the
effectiveness of such Certificate of Designation not later than April 19,
2007.”
3. Amendment
to Schedule A of the Original Agreement.
The
Original Agreement is hereby amended by deleting Schedule
A
in its
entirety and by inserting in lieu thereof that certain Schedule
A
attached
hereto as Exhibit
A.
4 Amendment
to Exhibits to the Original Agreement.
The
Original Agreement is hereby amended by deleting that form of Certificate of
Designation of Emerge Series D Preferred set forth as Exhibit
A
therein
and by inserting in lieu thereof that certain Certificate of Designation
attached hereto as Exhibit
B.
The
Original Agreement is hereby amended by adding, as Exhibit
B
thereto,
that certain Amended and Restated Certificate of Designation of Series B
Preferred attached hereto as Exhibit
C.
5. Amendment
to Second WHEREAS Clause.
The
Original Agreement is hereby amended by deleting the second “WHEREAS” clause in
its entirety and by inserting in lieu thereof the following:
2
“WHEREAS,
as of
the date of this Agreement, the Selling Shareholder beneficially owns 93,334
shares of the Purchaser’s Series B preferred stock, par value $0.01 per share
(the “Emerge
Series B Preferred”),
of
which 79,331 shares are held directly by the Selling Shareholder, 14,003 shares
are held by the Selling Shareholder’s spouse (together with the Selling
Shareholder, the “Emerge
Shareholders”)
and
One Hundred Thousand (100,000) shares of Emerge Series B Preferred are currently
issued and outstanding; and”
6. Full
Force and Effect.
Except
as expressly amended herein, all other terms and provisions of the Original
Agreement shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
7. Counterparts.
This
Amendment may be executed in one (1) or more counterparts, each of which such
counterparts shall be deemed an original and all of which together shall
constitute one and the same Amendment.
8. Further
Amendments.
The
Original Agreement shall further be amended wherever appropriate to reflect
the
changes indicated above.
9. Recitals.
The
Recitals hereto are hereby incorporated into this Amendment as if fully stated
herein.
10. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware. The parties hereto agree that any claim, suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby shall be submitted for adjudication exclusively in any
state
or federal court sitting in Houston, Texas and each party hereto expressly
agrees to be bound by such selection of jurisdiction and venue for purposes
of
such adjudication. Each party (a) waives any objection which it may have that
such court is not a convenient forum for any such adjudication, (b) agrees
and
consents to the personal jurisdiction of such court with respect to any claim
or
dispute arising out of or relating to this Agreement or the transactions
contemplated hereby and (c) agrees that process issued out of such court or
in
accordance with the rules of practice of such court shall be properly served
if
served personally or served by certified mail or other form of substituted
service, as provided under the rules of practice of such court.
11. Opportunity
to Hire Counsel; Role of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx
LLP.
The
Selling Shareholder and the Company expressly acknowledge that they have been
advised and have been given an opportunity to hire counsel with respect to
this
Amendment and the transactions contemplated hereby. The Selling Shareholder
and
the Company further acknowledge that the law firm of Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxx Xxxxx Xxxxx LLP
did
not
provide them with any legal advice with respect to the transactions contemplated
by this Agreement. The Selling Shareholder and the Company further acknowledge
that the law firm of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP
has
solely represented the Purchaser in connection with this Agreement and the
transactions contemplated hereby and no other person.
3
IN
WITNESS WHEREOF,
the
Parties have executed this Second Amendment as of the date first written
above.
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Purchaser:
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Emerge
Capital Corp.
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By: /s/
Xxxx
Xxxxxx
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Name:
Xxxx Xxxxxx
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Title:
Controller
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Company:
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Kipling
Holdings, Inc.
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By:
/s/
Xxxxxxx X.
Xxxxxxxx
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Name:
Xxxxxxx X. Xxxxxxxx
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Title:
Chief Executive Officer
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Selling
Shareholder:
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Xxxxxxx
X. Xxxxxxxx, an Individual
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By: /s/
Xxxxxxx X.
Xxxxxxxx
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Name:
Xxxxxxx X. Xxxxxxxx
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4
EXHIBIT
A
AMENDED
SCHEDULE
A
TO THE ORIGINAL AGREEMENT
Emerge
Series D Preferred Denominations
| Name of Series D Preferred Stockholder: | Number of Shares: | |
| Xxxxxxx X. Xxxxxxxx | 595 | |
| Jan Xxxxxx Xxxxxxxx | 105 |
A-1
EXHIBIT
B
FORM
OF
CERTIFICATE
OF DESIGNATION
OF
THE
SERIES
D PREFERRED STOCK
(Par
Value $0.01 Per Share)
OF
The
undersigned, a duly authorized officer of TURNAROUND
PARTNERS, INC.,
a
Nevada corporation (f/k/a Emerge Capital Corp., the Delaware corporation and
hereinafter referred to as the “Company”),
in
accordance with the provisions of Section 78.390
of
the Nevada Revised Statutes,
DOES
HEREBY CERTIFY
that the
following resolution was duly adopted by the Board of Directors of the Company
(the “Board”)
by
unanimous written consent pursuant to Section 78.315
of
the Nevada Revised Statutes on
or
about March 31, 2007:
WHEREAS,
that
effective September 25, 2006, the Board approved the designation of Series
D
convertible preferred stock, par value of $0.01 (the “Series
D Preferred Stock”),
to
consist of up to One Hundred Thousand (100,000) shares;
WHEREAS,
pursuant to that certain Purchase Agreement, originally dated September 30,
2006
(the “Original
Agreement”)
and as
amended on October 5, 2006 and further amended as of
December 30, 2006 (the “Second
Amendment”),
Xx.
Xxxxxxx X. Xxxxxxxx (the “Seller”)
sold
to the Company, and the Company purchased from the Seller, one hundred percent
(100%) of the total issued and outstanding capital stock of Kipling Holdings,
Inc., a Delaware corporation (“Kipling”),
in
exchange for (a) the Company’s assumption of all of the liabilities of Kipling,
(b) the Company expanding the Existing Anti-Dilution Rights (as such term is
defined in the Original Agreement) in favor of the Seller and (c) a nominal
cash
amount equal to the direct costs incurred by the Seller in connection with
the
Original Agreement, on the terms and conditions set forth therein;
WHEREAS,
pursuant to the Original Agreement, Seller had been entitled to receive and
beneficially own, directly and indirectly through his spouse (together, the
“Holders”),
approximately 93,334 shares of Series D Preferred Stock (which would be
equivalent to 933.4 shares of Series D Preferred Stock under the terms of this
newly-revised Certificate of Designation);
WHEREAS,
in
connection with the Second Amendment, the Holders are now entitled to receive
and beneficially own, as of December 31, 2006, a reduced amount equal to Seven
Hundred (700) shares of Series D Preferred Stock, which such beneficial
ownership shall, upon the effectiveness of this Certificate of Designation,
constitute One Hundred Percent (100%) of the total issued and outstanding shares
of Series D Preferred Stock;
B-1
WHEREAS,
no
shares of Series D Preferred Stock have been issued and the Board has determined
that it is in the best interests of the Company to create the powers,
designations, preferences and relative, participating, optional and other
special rights for the Series D Preferred Stock in favor of Seller pursuant
to
the Original Agreement;
RESOLVED
that the
Series D Preferred Stock shall have the following powers, designations,
preferences and relative, participating, optional and other special
rights:
SECTION
1
DESIGNATION
AND RANK
1.1. Designation.
This
resolution shall provide for a single series of preferred stock, the designation
of which shall be “Series D Preferred Stock”, par value of $0.01 per share. The
number of authorized shares constituting the Series D Preferred Stock is One
Hundred Thousand (100,000). The Series D Preferred Stock will have no
liquidation preference as set forth in Section 3.1 below.
1.2. Rank.
With
respect to the payment of dividends and other distributions on the capital
stock
of the Company, including the distribution of the assets of the Company upon
liquidation, the Series D Preferred Stock shall rank pari passu with the common
stock of the Company, par value $0.001 per share (the “Common
Stock”),
on an
“as converted” basis, senior to the Company’s Series A preferred stock, par
value $0.01 per share, senior to the Company’s Series B preferred stock, par
value $0.01 per share, senior to the Company Series C preferred stock, par
value
$0.01 per share and junior to all other series of preferred stock.
SECTION
2
DIVIDEND
RIGHTS
2.1. Dividends
or Distributions.
The
holders of Series D Preferred Stock shall be entitled to receive dividends
or
distributions on
a pro
rata basis according to their holdings of shares of Series D Preferred Stock
on
an as converted basis as provided in Section 4 hereof when and if dividends
are
declared on the Common Stock by the Board. Dividends shall
be
paid in cash or property, as determined by the Board.
SECTION
3
LIQUIDATION
RIGHTS
3.1. Liquidation
Preference.
The
Series D Preferred Stock shall have no liquidation preference.
B-2
SECTION
4
CONVERSION
RIGHTS
4.1. Subject
to the limitations set forth herein below, each share of Series D Preferred
Stock held by the Holders shall be convertible (the “Conversion
Rights”),
at
the option of the Holder of such share of Series D Preferred Stock, at any
time
and from time to time after December 31, 2006 through December 31, 2010,
into that number of shares of Common Stock equal to the greater of (a) one
tenth of one percent (0.1%) of the total number of shares of Common Stock issued
and outstanding as of the last day of the fiscal quarter immediately preceding
such date of conversation, calculated on a fully diluted basis after giving
effect to the conversion of such share(s) of Series D Preferred Stock and (b)
One Hundred Thousand (100,000) shares of Common Stock (“Conversion
Shares”)
at the
office of the Company or any transfer agent for the Series D Preferred Stock.
Each share of Series D Preferred Stock held by the Holders which has not been
converted on or before December 31, 2010 into shares of Common Stock shall
be
convertible, at the option of the Holder of such share, at any time and from
time to time after December 31, 2010 into one tenth of one percent (0.1%) of
the
total number of shares of Common Stock issued and outstanding on December 31,
2010, calculated on a fully diluted basis after giving effect to the conversion
of such share(s) of Series D Preferred Stock (such shares shall also be referred
to herein as “Conversion
Shares”).
The
shares of Common Stock received upon conversion shall be fully paid and
non-assessable shares of Common Stock.
4.2. Adjustments.
The
Conversion Rights of the Series D Preferred Stock as described in Section 4.1
above shall be adjusted from time to time as follows:
(a) In
the
event of any reclassification of the Common Stock or recapitalization involving
Common Stock (including a subdivision, or combination of shares or any other
event described in this Section 4.2) the holders of the Series D Preferred
Stock
shall thereafter be entitled to receive, and provision shall be made therefore
in any agreement relating to the reclassification or recapitalization, upon
conversion of the Series D Preferred Stock, the kind and number of shares of
Common Stock or other securities or property (including cash) to which such
holders of Series D Preferred Stock would have been entitled if they had held
the number of shares of Common Stock into which the Series D Preferred Stock
was
convertible immediately prior to such reclassification or recapitalization;
and
in any such case appropriate adjustment shall be made in the application of
the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of the Series D Preferred Stock, to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably may
be,
in relation to any shares, other securities, or property thereafter receivable
upon conversion of the Series D Preferred Stock. An adjustment made pursuant
to
this subparagraph (a) shall become effective at the time at which such
reclassification or recapitalization becomes effective.
(b) In
the
event the Company shall declare a distribution payable in securities of other
entities or persons, evidences of indebtedness issued by the Company or other
entities or persons, assets (excluding cash dividends) or options or rights
not
referred to in Section 4.2(a) above, the holders of the Series D Preferred
Stock
shall be entitled to a proportionate share of any such distribution as though
they were the holders of the number of shares of Common Stock of the Company
into which their shares of Series D Preferred Stock are convertible as of the
record date fixed for the determination of the holders of shares of Common
Stock
of the Company entitled to receive such distribution or if no such record date
is fixed, as of the date such distribution is made.
B-3
4.3. Procedures
for Conversion.
(a) In
order
to exercise the Conversion Rights pursuant to Section 4.1 above, the Seller
shall deliver an irrevocable written notice of such exercise to the Company,
at
its principal office. The Holders shall, upon any conversion of such Series
D
Preferred Stock in accordance with this Section 4, surrender certificates
representing such shares of Series D Preferred Stock to the Company, at its
principal office, and specify the name or names in which the Seller wishes
the
certificate or certificates for shares of Common Stock to be issued. In case
the
Seller shall specify a name or names other than that of the Holders, such notice
shall be accompanied by payment of all transfer taxes (if transfer is to a
person or entity other than the holder thereof) payable upon the issuance of
shares of Common Stock in such name or names. As promptly as practicable, and,
if applicable, after payment of all transfer taxes (if transfer is to a person
or entity other than the holder thereof), the Company shall deliver or cause
to
be delivered certificates representing the number of validly issued, fully
paid
and nonassessable shares of Common Stock to which the Holders shall be entitled.
Such conversion, to the extent permitted by law, shall be deemed to have been
effected as of the date of receipt by the Company of any notice of conversion
pursuant to this Section 4.3(a), upon the occurrence of any event specified
therein. Upon conversion of any shares of Series D Preferred Stock, such shares
shall cease to constitute shares of Series D Preferred Stock and shall represent
only a right to receive shares of common stock into which they have been
converted.
(b) In
connection with the conversion of any shares of Series D Preferred Stock, no
fractions of shares of Common Stock shall be issued, but the Company shall
pay
cash in lieu of such fractional interest in an amount equal to the product
such
fractional interest multiplied by the Reported Last Price of the Common Stock.
“Reported
Last Price”
means
the reported price, regular way, or, in case no sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, of the
Common Stock as reported on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation System
(“NASDAQ”)
or the
Over-the-Counter Bulletin Board (“OTCBB”),
as
the case may be; or, if the Common Stock is so not quoted, the average of the
closing bid and asked prices on such day as reported by NASDAQ or OTCBB, as
the
case may be; or, if bid and asked prices for the Common Stock on each such
day
shall not have been so reported, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member firm regularly
making a market in the Common Stock selected for such purpose by the Company
and
if no such quotations are available, the fair market value of a share of the
Common Stock, as determined by any New York Stock Exchange member firm regularly
making a market in the Common Stock selected for such purpose by the Company.
(c) The
Company shall at all times reserve and keep available out of its authorized
Common Stock the full number of shares of Common Stock of the Company issuable
upon the conversion of all outstanding shares of Series D Preferred Stock.
In
the event that the Company does not have a sufficient number of shares of
authorized but unissued Common Stock necessary to satisfy the full conversion
of
the shares of Series D Preferred Stock, then the Company shall call and hold
a
meeting of the stockholders within forty-five (45) days of such occurrence
for
the sole purpose of increasing the number of authorized shares of Common Stock.
The Board shall recommend to stockholders a vote in favor of such proposal
and
shall vote all shares held by them, in proxy or otherwise, in favor of such
proposal. This remedy is not intended to limit the remedies available to the
holders of the Series D Preferred Stock, but is intended to be in addition
to
any other remedies, whether in contract, at law or in equity.
B-4
4.4. Notices
of Record Date.
In the
event that the Company shall propose at any time: (i) to declare any dividend
or
distribution upon any class or series of capital stock, whether in cash,
property, stock or other securities; (ii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or (iii) to merge or consolidate with or into any other
corporation, or to sell, lease or convey all or substantially all of its
property or business, or to liquidate, dissolve or wind up; then, in connection
with each such event, the Company shall mail to each holder of Series D
Preferred Stock:
(a) at
least
twenty (20) days’ prior written notice of the date on which a record shall be
taken for such dividend or distribution (and specifying the date on which the
holders of the affected class or series of capital stock shall be entitled
thereto) or for determining the rights to vote, if any, in respect of the
matters referred to in clauses (ii) and (iii) in Section 4.4 above;
and
(b) in
the
case of the matters referred to in Section 4.4 (ii) and (iii) above, written
notice of such impending transaction not later than twenty (20) days prior
to
the stockholders’ meeting called to approve such transaction, or twenty (20)
days prior to the closing of such transaction, whichever is earlier, and shall
also notify such holder in writing of the final approval of such transaction.
The first of such notices shall describe the material terms and conditions
of
the impending transaction (and specify the date on which the holders of shares
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon the occurrence of such event) and the Company
shall thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after
the Company has given the first notice provided for herein or sooner than ten
(10) days after the Company has given notice of any material changes provided
for herein.
SECTION
5
VOTING
RIGHTS
5.1. General.
Except
as otherwise provided herein or required by law, the holders of Series D
Preferred Stock, on an “as converted” basis as of the time a vote is taken, and
the holders of Common Stock shall vote together and not as separate
classes.
5.2. Preferred
Stock.
Each
holder of shares of Series D Preferred Stock shall be entitled to cast a number
of votes equal to the number of Conversion Shares to which such holder is
entitled to receive in accordance with Section 4.1 hereof on all matters
submitted to the stockholders of the Company for approval, which votes shall
be
distributed between the holders on a pro rata basis based upon the number of
shares of Series D Preferred Stock held by the holders. Holders of Series D
Preferred Stock shall be entitled to vote on all matters on which the Common
Stock shall be entitled to vote. Each holder of Series D Preferred Stock shall
be entitled to notice of any stockholders meeting in accordance with the Bylaws
of the Company. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating
all
shares into which shares of Series D Preferred Stock held by each holder could
be converted), shall be disregarded.
B-5
SECTION
6
MISCELLANEOUS
6.1. Headings
of Subdivisions.
The
headings of the various Sections hereof are for convenience of reference only
and shall not affect the interpretation of any of the provisions
hereof.
6.2. Severability
of Provisions.
If any
right, preference or limitation of the Series D Preferred Stock set forth herein
(as this resolution may be amended from time to time) is invalid, unlawful
or
incapable of being enforced by reason of any rule of law or public policy,
all
other rights, preferences and limitations set forth in this resolution (as
so
amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain in
full force and effect, and no right, preference or limitation herein set forth
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
6.3. Stock
Transfer Taxes.
The
Corporation shall pay any and all stock transfer and documentary stamp taxes
that may be payable in respect of any issuance or delivery of shares of Series
D
Preferred Stock or shares of Common Stock or other securities issued on account
of Series D Preferred Stock pursuant hereto or certificates representing such
shares or securities.
6.4. Transfer
Agent.
The
Corporation may appoint, and from time to time discharge and/or replace, a
transfer agent of the Series D Preferred Stock. Upon any such appointment or
discharge of a transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of Series D
Preferred Stock.
6.5. Transferability.
Subject
to any transfer restriction agreements that my be entered into by the holders
of
Series D Preferred Stock, the Series D Preferred Stock shall be transferable
by
the holders, provided that such transfer is made in compliance with applicable
federal and state securities laws.
[Signature
Page to Follow]
B-6
IN
WITNESS WHEREOF,
the
Company has caused this amended and restated Certificate of Designation to
be
signed, under penalties of perjury, by W. Xxxxx Xxxxxxx, its Chief Financial
Officer.
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Dated: March
31, 2007
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By:
/s/
W. Xxxxx
Xxxxxxx
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Name: W.
Xxxxx Xxxxxxx
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Title: Chief
Financial Officer
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B-7
EXHIBIT
C
FORM
OF
AMENDED
AND RESTATED
CERTIFICATE
OF DESIGNATION
OF
THE
SERIES
B PREFERRED STOCK
(Par
Value $0.01 Per Share)
OF
The
undersigned, a duly authorized officer of TURNAROUND
PARTNERS, INC.,
a
Nevada corporation (f/k/a Emerge Capital Corp., the Delaware corporation and
hereinafter referred to as the “Company”),
in
accordance with the provisions of Section 78.390
of
the Nevada Revised Statutes,
DOES
HEREBY CERTIFY
that the
following resolution was duly adopted by the Board of Directors of the Company
(the “Board”)
by
unanimous written consent pursuant to Section 78.315
of
the Nevada Revised Statutes on
or
about March 31, 2007:
WHEREAS,
that
that
on July 18, 2005, the Board approved the designation of Series B convertible
preferred stock, par value of $0.01 (the “Series
B Preferred Stock”),
to
consist of up to One Hundred Thousand (100,000) shares, and fixed the powers,
designations, preferences, and relative, participating, optional and other
special rights of the shares of such Series B Preferred Stock;
WHEREAS,
pursuant to that certain Purchase Agreement, originally dated September 30,
2006
(the “Original
Agreement”)
and as
amended on October 5, 2006 and further amended as of
December 30, 2006, Xx. Xxxxxxx X. Xxxxxxxx (the “Seller”)
sold
to the Company, and the Company purchased from the Seller, one hundred percent
(100%) of the total issued and outstanding capital stock of Kipling Holdings,
Inc., a Delaware corporation (“Kipling”),
in
exchange for (a) the Company’s assumption of all of the liabilities of Kipling,
(b) the Company expanding the Existing Anti-Dilution Rights (as such term is
defined in the Original Agreement) in favor of the Seller and (c) a nominal
cash
amount equal to the direct costs incurred by the Seller in connection with
the
Original Agreement, on the terms and conditions set forth therein;
WHEREAS,
pursuant to the Original Agreement, as amended, the Seller relinquished to
the
Company 79,331 shares and Seller’s spouse relinquished to the Company 14,003
shares of Series B Preferred Stock to the Company in exchange for the issuance
to Seller and Seller’s spouse of shares of Series D convertible preferred stock
of the Company;
WHEREAS,
Xx.
Xxxxxxx X. Xxxxxx (“Xxxxxx”)
is the
beneficial owner of 6,666 shares of Series B Preferred Stock, which such 6,666
shares now constitute One Hundred Percent (100%) of the total issued and
outstanding shares of Series B Preferred Stock; and
WHEREAS,
the
Board has determined that it is in the best interests of the Company to amend
and restate the powers, designations, preferences and relative, participating,
optional and other special rights for the Series B Preferred Stock in favor
of
Seller pursuant to the Original Agreement.
C-1
RESOLVED
that the
Series B Preferred Stock shall have the following powers, designations,
preferences and relative, participating, optional and other special
rights:
SECTION
1
DESIGNATION
AND RANK
1.1. Designation.
This
resolution shall provide for a single series of preferred stock, the designation
of which shall be “Series B Preferred Stock”, par value of $0.01 per share. The
number of authorized shares constituting the Series B Preferred Stock is One
Hundred Thousand (100,000). The Series B Preferred Stock will have no
liquidation preference as set forth in Section 3.1 below.
1.2. Rank.
With
respect to the payment of dividends and other distributions on the capital
stock
of the Company, including the distribution of the assets of the Company upon
liquidation, the Series B Preferred Stock shall rank pari passu with the common
stock of the Company, par value $0.001 per share (the “Common
Stock”),
on an
“as converted” basis, senior to the Company’s Series C preferred stock, par
value $0.01 per share, and junior to all other series of preferred
stock.
SECTION
2
DIVIDEND
RIGHTS
2.1. Dividends
or Distributions.
The
holders of Series B Preferred Stock shall be entitled to receive dividends
or
distributions on
a pro
rata basis according to their holdings of shares of Series B Preferred Stock
on
an as converted basis as provided in Section 4 hereof when and if dividends
are
declared on the Common Stock by the Board. Dividends shall
be
paid in cash or property, as determined by the Board.
SECTION
3
LIQUIDATION
RIGHTS
3.1. Liquidation
Preference.
The
Series B Preferred Stock shall have no liquidation preference.
SECTION
4
CONVERSION
RIGHTS
4.1. Conversion.
Xxxxxx
is entitled to convert all of his 6,666 shares of Series B Preferred Stock,
collectively and not in part, at the option of Xxxxxx and at any time and from
time to time after the date of issuance of such shares into Four Million One
Hundred Ninety-five Thousand Four Hundred Forty-Five (4,195,445) shares of
Common Stock (sometimes referred to collectively as “Conversion
Shares”),
at
the office of the Company or any transfer agent for the Series B Preferred
Stock. The shares of Common Stock received upon conversion shall be fully paid
and non-assessable shares of Common Stock (the “Conversion
Rights”).
C-2
4.2. Adjustments.
The
Conversion Rights of the Series B Preferred Stock as described in Section 4.1
above shall be adjusted from time to time as follows:
(a) In
the
event of any reclassification of the Common Stock or recapitalization involving
Common Stock (including a subdivision, or combination of shares or any other
event described in Sections 4.2(a) or (b)) the holders of the Series B Preferred
Stock shall thereafter be entitled to receive, and provision shall be made
therefore in any agreement relating to the reclassification or recapitalization,
upon conversion of the Series B Preferred Stock, the kind and number of shares
of Common Stock or other securities or property (including cash) to which such
holders of Series B Preferred Stock would have been entitled if they had held
the number of shares of Common Stock into which the Series B Preferred Stock
was
convertible immediately prior to such reclassification or recapitalization;
and
in any such case appropriate adjustment shall be made in the application of
the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of the Series B Preferred Stock, to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably may
be,
in relation to any shares, other securities, or property thereafter receivable
upon conversion of the Series B Preferred Stock. An adjustment made pursuant
to
this subparagraph (a) shall become effective at the time at which such
reclassification or recapitalization becomes effective.
(b) In
the
event the Company shall declare a distribution payable in securities of other
entities or persons, evidences of indebtedness issued by the Company or other
entities or persons, assets (excluding cash dividends) or options or rights
not
referred to in Sections 4.2(a) above, the holders of the Series B Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of the
Company into which their shares of Series B Preferred Stock are convertible
as
of the record date fixed for the determination of the holders of shares of
Common Stock of the Company entitled to receive such distribution or if no
such
record date is fixed, as of the date such distribution is made.
4.3. Procedures
for Conversion.
(a) In
order
to exercise the Conversion Rights pursuant to Section 4.1 above, Xxxxxx shall
deliver an irrevocable written notice of such exercise to the Company, at its
principal office. Xxxxxx shall, upon any conversion of such Series B Preferred
Stock in accordance with this Section 4, surrender certificates representing
the
Series B Preferred Stock to the Company, at its principal office, and specify
the name or names in which Xxxxxx wishes the certificate or certificates for
shares of Common Stock to be issued. In case Xxxxxx shall specify a name or
names other than that of Xxxxxx, such notice shall be accompanied by payment
of
all transfer taxes (if transfer is to a person or entity other than the holder
thereof) payable upon the issuance of shares of Common Stock in such name or
names. As promptly as practicable, and, if applicable, after payment of all
transfer taxes (if transfer is to a person or entity other than the holder
thereof), the Company shall deliver or cause to be delivered certificates
representing the number of validly issued, fully paid and nonassessable shares
of Common Stock to which Xxxxxx shall be entitled. Such conversion, to the
extent permitted by law, shall be deemed to have been effected as of the date
of
receipt by the Company of any notice of conversion pursuant to this Section
4.3(b), upon the occurrence of any event specified therein. Upon conversion
of
any shares of Series B Preferred Stock, such shares shall cease to constitute
shares of Series B Preferred Stock and shall represent only a right to receive
shares of common stock into which they have been converted.
C-3
(b) In
connection with the conversion of any shares of Series B Preferred Stock, no
fractions of shares of Common Stock shall be issued, but the Company shall
pay
cash in lieu of such fractional interest in an amount equal to the product
such
fractional interest multiplied by the Reported Last Price of the Common Stock.
“Reported
Last Price”
means
the reported price, regular way, or, in case no sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, of the
Common Stock as reported on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ")
or the
Over-the-Counter Bulletin Board (“OTCBB”),
as
the case may be; or, if the Common Stock is so not quoted, the average of the
closing bid and asked prices on such day as reported by NASDAQ or OTCBB, as
the
case may be; or, if bid and asked prices for the Common Stock on each such
day
shall not have been so reported, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member firm regularly
making a market in the Common Stock selected for such purpose by the Company
and
if no such quotations are available, the fair market value of a share of the
Common Stock, as determined by any New York Stock Exchange member firm regularly
making a market in the Common Stock selected for such purpose by the Company.
(c) The
Company shall at all times reserve and keep available out of its authorized
Common Stock the full number of shares of Common Stock of the Company issuable
upon the conversion of all outstanding shares of Series B Preferred Stock.
In
the event that the Company does not have a sufficient number of shares of
authorized but unissued Common Stock necessary to satisfy the full conversion
of
the shares of Series B Preferred Stock, then the Company shall call and hold
a
meeting of the stockholders within forty-five (45) days of such occurrence
for
the sole purpose of increasing the number of authorized shares of Common Stock.
The Board shall recommend to stockholders a vote in favor of such proposal
and
shall vote all shares held by them, in proxy or otherwise, in favor of such
proposal. This remedy is not intended to limit the remedies available to the
holders of the Series B Preferred Stock, but is intended to be in addition
to
any other remedies, whether in contract, at law or in equity.
4.4. Notices
of Record Date.
In the
event that the Company shall propose at any time: (i) to declare any dividend
or
distribution upon any class or series of capital stock, whether in cash,
property, stock or other securities; (ii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or (iii) to merge or consolidate with or into any other
corporation, or to sell, lease or convey all or substantially all of its
property or business, or to liquidate, dissolve or wind up; then, in connection
with each such event, the Company shall mail to each holder of Series B
Preferred Stock:
C-4
(a) at
least
twenty (20) days’ prior written notice of the date on which a record shall be
taken for such dividend or distribution (and specifying the date on which the
holders of the affected class or series of capital stock shall be entitled
thereto) or for determining the rights to vote, if any, in respect of the
matters referred to in clauses (ii) and (iii) in Section 4.4 above;
and
(b) in
the
case of the matters referred to in Section 4.4 (ii) and (iii) above, written
notice of such impending transaction not later than twenty (20) days prior
to
the stockholders’ meeting called to approve such transaction, or twenty (20)
days prior to the closing of such transaction, whichever is earlier, and shall
also notify such holder in writing of the final approval of such transaction.
The first of such notices shall describe the material terms and conditions
of
the impending transaction (and specify the date on which the holders of shares
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon the occurrence of such event) and the Company
shall thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after
the Company has given the first notice provided for herein or sooner than ten
(10) days after the Company has given notice of any material changes provided
for herein.
SECTION
5
VOTING
RIGHTS
5.1. General.
Except
as otherwise provided herein or required by law, the holders of Series B
Preferred Stock, on an as converted basis as of the time a vote is taken, and
the holders of Common Stock shall vote together and not as separate
classes.
5.2. Preferred
Stock.
Series B
Preferred Stock holders shall, collectively, be entitled to cast a number of
votes equal to the number of Conversion Shares on all matters submitted to
the
stockholders of the Company for approval, which votes shall be distributed
among
the holders of Series B Preferred Stock on a pro rata basis based upon the
number of shares of Series B Preferred Stock held by such respective holders.
The holders of shares of the Series B Preferred Stock shall be entitled to
vote
on all matters on which the Common Stock shall be entitled to vote. Series
B
Preferred Stock holders shall be entitled to notice of any stockholders meeting
in accordance with the Bylaws of the Company. Fractional votes shall not,
however, be permitted and any fractional voting rights resulting from the above
formula (after aggregating all shares into which shares of Series B Preferred
Stock held by each holder could be converted), shall be disregarded.
SECTION
6
MISCELLANEOUS
6.1. Headings
of Subdivisions.
The
headings of the various Sections hereof are for convenience of reference only
and shall not affect the interpretation of any of the provisions
hereof.
C-5
6.2. Severability
of Provisions.
If any
right, preference or limitation of the Series B Preferred Stock set forth herein
(as this resolution may be amended from time to time) is invalid, unlawful
or
incapable of being enforced by reason of any rule of law or public policy,
all
other rights, preferences and limitations set forth in this resolution (as
so
amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain in
full force and effect, and no right, preference or limitation herein set forth
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
6.3. Stock
Transfer Taxes.
The
Corporation shall pay any and all stock transfer and documentary stamp taxes
that may be payable in respect of any issuance or delivery of shares of Series
B
Preferred Stock or shares of Common Stock or other securities issued on account
of Series B Preferred Stock pursuant hereto or certificates representing such
shares or securities.
6.4. Transfer
Agent.
The
Corporation may appoint, and from time to time discharge and/or replace, a
transfer agent of the Series B Preferred Stock. Upon any such appointment or
discharge of a transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of Series B
Preferred Stock.
6.5. Transferability.
Subject
to any transfer restriction agreements that my be entered into by the holders
of
Series B Preferred Stock, the Series B Preferred Stock shall be transferable
by
the holders, provided that such transfer is made in compliance with applicable
federal and state securities laws.
[Signature
Page to Follow]
C-6
IN
WITNESS WHEREOF,
the
Company has caused this amended and restated Certificate of Designation to
be
signed, under penalties of perjury, by W. Xxxxx Xxxxxxx, its Chief Financial
Officer.
|
Dated: _______________,
2007
|
||
|
By
____________________________________
|
||
|
Name: W.
Xxxxx Xxxxxxx
|
||
|
Title: Chief
Financial Officer
|
||
C-7
