EXHIBIT XI
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 8.0%
CONVERTIBLE PAID-IN-KIND PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Marketing Specialists Corporation (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that, pursuant to authority
conferred upon the board of directors of the Corporation by its Certificate
of Incorporation, as amended and restated (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, the
Independent Committee of said Board of Directors, by unanimous written
consent dated as of June 20, 2000, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board
of Directors of the Corporation by its Certificate of
Incorporation, and pursuant to authority delegated to the
Executive Committee of the Board of Directors of the Corporation,
the Board of Directors does hereby create, authorize and provide
for the issuance of 8.0% Convertible Paid-In-Kind Preferred Stock,
par value $0.01 per share, with a stated value of $1,000.00 per
share, consisting of 10,000 shares, having the designations,
preferences and relative, participating, optional and other
special rights and the qualifications, limitations and
restrictions thereof that are set forth in the Certificate of
Incorporation and in this Resolution as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Corporation a class of Preferred
Stock designated as the "8.0% Convertible Paid-In-Kind Preferred Stock."
The number of shares constituting such class shall be 10,000 and are
referred to herein as the "Preferred Stock."
(b) Rank. The Preferred Stock shall, with respect to dividend
distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation, rank (i) senior (to the extent set forth
herein) to all classes of Common Stock of the Corporation and to each other
class of Capital Stock of the Corporation or series of Preferred Stock of
the Corporation hereafter created the terms of which do not expressly
provide that it ranks senior to, or on a parity with, the Preferred Stock
as to dividend distributions and distributions upon liquidation, winding-up
and dissolution of the Corporation (collectively referred to, together with
all classes of Common Stock of the Corporation, as "Junior Securities");
(ii) on a parity with any class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation hereafter created the terms of
which expressly provide that such class or series will rank on a parity
with the Preferred Stock as to dividend distributions and distributions
upon liquidation, winding-up and dissolution (collectively referred to as
"Parity Securities"); provided that any such Parity Securities that were
not approved by the Holders in accordance with paragraph (i)(ii)(A) hereof
shall be deemed to be Junior Securities and not Parity Securities; and
(iii) junior to each other class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation hereafter created and the
terms of which expressly provide that such class or series will rank senior
to the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation (collectively
referred to as "Senior Securities").
(c) Dividends.
(i) From the Issue Date, the Holders of the outstanding
shares of Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of funds legally
available therefor, dividends on each share of Preferred Stock at
a rate per annum equal to $80.00 per share of the Preferred Stock,
payable quarterly. All dividends shall be cumulative, whether or
not earned or declared, on a daily basis from the Issue Date and
shall be payable quarterly in arrears on each Dividend Payment
Date, commencing on the first Dividend Payment Date after the
Issue Date. All unpaid dividends will compound on a quarterly
basis at a rate per annum equal to the then applicable dividend
rate. Dividends may be paid, at the Corporation's option, either
in cash or by the issuance of additional shares of Preferred Stock
(including fractional shares) having an aggregate liquidation
preference equal to the amount of such dividends (but not less
than $1.00); provided, however, that the payment by the
Corporation of any cash dividends shall be subject to the terms of
the Senior Subordinated Notes Indenture and any other indebtedness
of the Corporation. In the event that dividends are declared and
paid through the issuance of additional shares of Preferred Stock,
as provided in the previous sentence, such dividends shall be
deemed paid in full and shall not accumulate. Each dividend shall
be payable to the Holders of record as they appear on the stock
books of the Corporation on the Dividend Record Date immediately
preceding the related Dividend Payment Date.
(ii) All dividends paid with respect to shares of the
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro
rata to the Holders entitled thereto.
(iii) In the event that the Board of Directors shall
declare and pay any dividend or distribution on the Common Stock
payable in cash, securities of the Corporation or any other
Person, evidences of indebtedness issued by the Corporation or any
other Person, assets or options or rights to purchase any such
securities or evidences of indebtedness, then, in each case the
Holders of the Preferred Stock shall be entitled to a
proportionate share of any such distribution as though the Holders
of the Preferred Stock were the holders of the number of shares of
Common Stock of the Corporation into which their shares of
Preferred Stock are convertible as of the record date fixed for
the determination of the holders of the Common Stock of the
Corporation entitled to receive such distribution, out of funds of
the Corporation legally available therefor. The day on which any
such dividend is paid to the holders of Common Stock shall be the
day on which it is paid to the Holders of Preferred Stock.
Dividends shall be payable to Holders of the Preferred Stock in
such form as paid to holders of Common Stock.
(iv) Dividends in connection with any optional redemption
pursuant to paragraph (h)(i) may be declared and paid at any time,
without reference to any Dividend Payment Date, to Holders of
record on such date, not more than forty-five (45) days prior to
the payment thereof, as may be fixed by the Board of Directors.
(v) (A) No full dividends shall be declared by the Board
of Directors or paid or set apart for payment by the Corporation
on any Parity Securities for any period unless full cumulative
dividends have been or contemporaneously are declared and paid (or
are deemed declared and paid) in full, or declared and, if payable
in cash, a sum in cash set apart sufficient for such payment, on
the Preferred Stock for all Dividend Periods terminating on or
prior to the date of payment of such full dividends on such Parity
Securities. If any dividends are not so paid, all dividends
declared upon shares of the Preferred Stock and any other Parity
Securities shall be declared pro rata so that the amount of
dividends declared per share on the Preferred Stock and such
Parity Securities shall in all cases bear to each other the same
ratio that accrued dividends per share on the Preferred Stock and
such Parity Securities bear to each other.
(B) So long as any share of the Preferred Stock
is outstanding, the Corporation shall not declare, pay or set
apart for payment any dividend on any of the Junior Securities
(other than dividends in Junior Securities to the holders of
Junior Securities), or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for,
the purchase, redemption or other retirement of, any of the Junior
Securities (other than shares of Common Stock issued pursuant to
the exercise of warrants granted under the First Union Warrant
Agreement and repurchased by the Corporation in accordance with
the terms thereof) or any warrants (other than warrants issued
pursuant to the First Union Warrant Agreement), rights, calls or
options exercisable for or convertible into any of the Junior
Securities whether in cash, Obligations or shares of the
Corporation or other property (other than in exchange for Junior
Securities), and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase
or redeem any of the Junior Securities or any such warrants,
rights, calls or options (other than in exchange for Junior
Securities) unless full cumulative dividends determined in
accordance herewith on the Preferred Stock have been paid (or are
deemed paid) in full for all full quarterly Dividend Periods ended
prior to the date of such payment in respect of Junior Securities.
(C) So long as any share of the Preferred Stock
is outstanding, the Corporation shall not (except with respect to
dividends as permitted by paragraph (c)(v)(A)) make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of,
any of the Parity Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Parity
Securities, and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase
or redeem any of the Parity Securities or any such warrants,
rights, calls or options unless full cumulative dividends
determined in accordance herewith on the Preferred Stock have been
or contemporaneously are paid (or are deemed paid) in full.
(vi) Dividends payable on the Preferred Stock for any
period less than a year shall be computed on the basis of a
360-day year of twelve 30-day months and, for periods not
involving a full calendar month, the actual number of days elapsed
(but not to exceed 30 days).
(d) Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the Holders of shares of 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 greater
of (x) $1,000 per share or (y) the amount to which such Holders would be
entitled to receive as though the Holders of the Preferred Stock were the
holders of the number of shares of Common Stock of the Corporation into
which their shares of Preferred Stock are convertible as of the date of
such liquidation, dissolution or winding up, plus, in each case, without
duplication, an amount in cash equal to accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding up
(including an amount equal to a pro-rated dividend for the period from the
last Dividend Payment Date to the date fixed for liquidation, dissolution
or winding up), and no more, before any distribution shall be made or any
assets distributed in respect of Junior Securities to the holders of any
Junior Securities including, without limitation, Common Stock of the
Corporation. If upon any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, the amounts payable with respect to the
Preferred Stock and all other Parity Securities are not paid in full, the
holders of the Preferred Stock and the Parity Securities will share equally
and ratably in any distribution of assets of the Corporation first in
proportion to the full liquidation preference to which each is entitled
until such preferences are paid in full, and then in proportion to their
respective amounts of accumulated but unpaid dividends.
(e) Conversion Rights.
(i) Each share of Preferred Stock shall be convertible at
any time, or from time to time, unless previously redeemed by the
Corporation pursuant to Section (g) hereof, at the option of the
Holder thereof, into such number of shares of Common Stock as
described below; provided, however, that a Holder of Preferred
Stock may not convert its shares of Preferred Stock into shares of
Common Stock prior to the later of the expiration or termination
of any waiting period (and any extension thereof) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"). The number of shares of Common Stock issuable
upon conversion of each share of Preferred Stock shall be equal to
the result obtained by dividing (a) $1,000 by (b) the Conversion
Price then in effect and (c) in the case of any fraction of a
share of Preferred Stock, by multiplying such result by such
fraction.
(ii) To convert shares of Preferred Stock, a Holder must
(A) surrender the certificate or certificates evidencing such
Holder's shares of Preferred Stock to be converted, duly endorsed
in a form satisfactory to the Corporation, at the office of the
Corporation or transfer agent for the Convertible Preferred Stock,
if any, (B) notify the Corporation at such office that such Holder
elects to convert Preferred Stock and the number of shares such
holder wishes to convert, (C) state in writing the name or names
in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued, and (D) pay any transfer or
similar tax, if required. Such notice referred to in clause (B)
above shall be delivered substantially in the following form:
"NOTICE TO EXERCISE CONVERSION RIGHT
The undersigned, being a holder of the Convertible Preferred Stock
of Marketing Specialists Corporation (the "Preferred Stock") irrevocably
exercises the right to convert ____________ outstanding shares of Preferred
Stock on ___________, ____, into shares of Common Stock of Marketing
Specialists Corporation in accordance with the terms of the shares of
Preferred Stock, and directs that the shares issuable and deliverable upon
the conversion, together with any check in payment for fractional shares,
be issued and delivered in the denominations indicated below to the
registered holder hereof unless a different name has been indicated below.
If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Dated: [At least one Business Day prior to the date fixed for conversion]
Fill in for registration of
shares of Common Stock
if to be issued otherwise
than to the registered holder:
-------------------------------
Name
-------------------------------
Address
------------------------------- -------------------------
Please print name and (Signature)
address, including postal
code number
Denominations: "
----------------
(iii) Shares of the Preferred Stock shall be deemed to
have been converted immediately prior to the close of business on
the day of the surrender of such shares for conversion in
accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Corporation shall
issue and shall deliver at such office a certificate or
certificates for the number of full shares of Common
Stock issuable upon such conversion, together with payment in lieu
of any fraction of a share, as hereinafter provided, to the person
or persons entitled to receive the same.
(iv) The Corporation shall at all times reserve and keep
available, free from pre-emptive rights, out of its authorized but
unissued Common Stock, for the purpose of effecting the conversion
of the Preferred Stock, the full number of shares of Common Stock
then issuable upon the conversion of all shares of Preferred Stock
then outstanding and shall take all such action and obtain all
such permits or orders as may be necessary to enable the
Corporation lawfully to issue such Common Stock upon such
conversion.
(v) The Corporation will pay any and all taxes that may
be payable in respect of the issue or delivery of shares of Common
Stock on conversion of the Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that
in which the shares of Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Corporation
the amount of any such tax, or has established to the satisfaction
of the Corporation that such tax has been paid.
(f) Anti-Dilution Adjustments
(i) Issuance of Common Stock. If and whenever after the
date hereof the Corporation shall issue or sell any shares of its
Common Stock (except shares of Common Stock issued (x) to
employees, officers, directors of the Corporation upon the
exercise of options granted under the Corporation's Employee Stock
Option Plan (not to exceed 13% of the total shares of Common Stock
outstanding on any given date) or (y) upon the exercise of
warrants granted under the First Union Warrant Agreement) without
consideration or for a consideration per share less than the
greater of the fair market value of the Common Stock and
Conversion Price in effect immediately prior to the time of such
issue or sale, or shall be deemed under the provisions of this
paragraph (f) to have effected any such issuance or sale, then,
concurrently with such issue or sale, the Conversion Price shall
be reduced to the price (calculated to the nearest $0.0001)
obtained by multiplying the Conversion Price in effect immediately
prior to the time of such issue or sale by a fraction
(A) the numerator of which shall be the sum of (i) the
number of shares of Common Stock outstanding immediately prior to such
issue or sale multiplied by the Conversion Price immediately prior to such
issue or sale plus (ii) the consideration received by the Corporation upon
such issue or sale, and
(B) the denominator of which shall be the product of (i) the
total number of shares of Common Stock outstanding immediately after such
issue or sale, multiplied by (ii) the Conversion Price immediately prior to
such issue or sale.
Notwithstanding the foregoing, no adjustment of the
Conversion Price shall be made in an amount less than $0.0001 per share,
but any such lesser adjustment shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to $0.0001
per share or more.
(ii) Option Grants. In the event that at any time, other
than the issuance of options pursuant to the Corporation's
Employee Stock Option Plan, the Corporation shall in any manner
grant (directly, by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (such rights or options
being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities"),
whether or not such Options or the right to convert or exchange
any such Convertible Securities are immediately exercisable, and
the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the
case of any such Options which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and
upon the conversion or exchange thereof, by (ii) the total number
of shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be
less than the greater of (x) the fair market value of the shares
of Common Stock at the time of such issuance and (y) the
Conversion Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as of
the date of granting such Options) be deemed to be outstanding and
to have been issued for such price per share. Except as otherwise
provided in paragraph (iv), no further adjustment of the
Conversion Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(iii) Convertible Security Grants. In the event that the
Corporation shall in any manner issue (directly, by assumption in
a merger or otherwise) or sell any Convertible Securities (other
than pursuant to the exercise of Options to purchase such
Convertible Securities covered by subparagraph (ii)), whether or
not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing
(i) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less that the greater
of (x) the fair market value of the shares of Common Stock at the
time of such issuance and (y) the Conversion Price in effect
immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon con-
version or exchange of all such Convertible Securities shall (as
of the date of the issue or sale of such Convertible Securities)
be deemed to be outstanding and to have been issued for such price
per share. Except as otherwise provided in paragraph (iv), no
further adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of
such Convertible Securities.
(iv) Effect of Alteration to Option or Convertible
Security Terms. In connection with any change in, or the
expiration or termination of, the purchase rights under any Option
or the conversion or exchange rights under any Convertible
Securities, the following provisions shall apply:
(A) If the purchase price provided for in any Option
referred to in subparagraph (ii), the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities
referred to in subparagraph (ii) or (iii), or the rate at which any
Convertible Securities referred to in subparagraph (ii) or (iii) are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), then the Conversion Price in effect at the time of such change
shall concurrently be increased or decreased to the Conversion Price which
would be in effect immediately after such change if (i) the adjustments
which were made upon the issuance of such Options or Convertible Securities
had been made upon the basis of (and taking into account the total
consideration received for) (A) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such Options or upon the
conversion or exchange of any such Convertible Securities before such
change, and (B) the issuance at that time of all such Options or
Convertible Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (ii) the Conversion
Price as adjusted pursuant to clause (i) preceding had been used as the
basis for the adjustments required hereunder in connection with all other
issues or sales of Common Stock, Options or Convertible Securities by the
Corporation subsequent to the issuance of such Options or Convertible
Securities.
(B) On the partial or complete expiration of any Options or
termination of any right to convert or exchange Convertible Securities, the
Conversion Price then in effect hereunder shall concurrently be increased
or decreased to the Conversion Price which would be in effect at the time
of such expiration or termination if (i) the adjustments which were made
upon the issuance of such Options or Convertible Securities had been made
upon the basis of (and taking into account the total consideration received
for) (A) the issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities before such expiration or termination, and (B)
the issuance at that time of only those such Options or Convertible
Securities which remain outstanding after such expiration or termination,
and (ii) the Conversion Price as adjusted pursuant to clause (i) preceding
had been used as the basis for adjustments required hereunder in connection
with all other issues or sales of Common Stock, Options or Convertible
Securities by the Corporation subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any Option
referred to in subparagraph (ii) or the rate at which any Convertible
Securities referred to in subparagraph (iii) are convertible into or
exchangeable for Common Stock shall be reduced at any time under or by
reason of provisions with respect thereto designed to protect against
dilution, and the event causing such reduction is one that did not also
require an adjustment in the Conversion Price under other provisions of
this paragraph (f), then in case of the delivery of shares of Common Stock
upon the exercise of any such Option or upon conversion or exchange of any
such Convertible Securities, the Conversion Price then in effect hereunder
shall concurrently be adjusted to such amount as would have obtained if
such Option or Convertible Securities had never been issued and if the
adjustments made upon the issuance of such Option or Convertible Securities
had been made upon the basis of the issuance of (and taking into account
the total consideration received for) the shares of Common Stock delivered
as aforesaid (provided that the Conversion Price used in such determination
shall be the Conversion Price on the date of issue of such shares);
provided that no such adjustment shall be made unless the Conversion Price
then in effect would be reduced thereby.
(D) No readjustment provision pursuant to paragraphs (A) or
(B) above shall have the effect of increasing the Conversion Price by an
amount in excess of the adjustment originally made thereto in respect of
the issue, sale or grant of such Options or Convertible Securities.
(v) Stock Splits and Reverse Splits. In case outstanding
shares of Common Stock shall be subdivided into a greater number
of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced,
and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock,
the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(vi) Other Dilutive Events. In case any event shall occur
as to which the provisions of this paragraph (f) are not strictly
applicable but the failure to make any adjustment would not fairly
protect the rights of the Holders of the Preferred Stock in
accordance with the essential intent and principal of this
paragraph, then, in each such case, the Corporation shall appoint
a firm of independent public accountants of recognized national
standing (which may be the regular auditors of the Corporation),
which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles
established in this paragraph (f), necessary to preserve, without
dilution, the rights of the Holders of the Preferred Stock. Upon
receipt of such opinion, the Corporation will promptly mail a copy
thereof to the Holder of the Preferred Stock and shall make the
adjustments to the Conversion Price described in such opinion.
(vii) Determination of Consideration Received. For
purposes of this paragraph (f), the amount of consideration
received by the Corporation in connection with the issuance or
sale of Common Stock, Options or Convertible Securities shall be
determined in accordance with the following:
(A) In the event that shares of Common Stock, Options or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount payable to the
Corporation therefor, without deduction therefrom of any expenses incurred
or any underwriting commissions or concessions or discounts paid or allowed
by the Corporation in connection therewith.
(B) In the event that any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash payable to the
Corporation shall be deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors, without deduction of any
expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Corporation in connection therewith.
(C) In the event that any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger in
which the Corporation is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as reasonably
determined by the Board of Directors of such portion of the assets and
business of the non-surviving corporation as such Board shall determine to
be attributable to such Common Stock, Options or Convertible Securities, as
the case may be.
(D) In the event that any Common Stock, Options and/or
Convertible Securities shall be issued in connection with the issue and
sale of other securities or property of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Common Stock, Options or Convertible Securities by the
parties thereto, such Common Stock, Options and/or Convertible Securities
shall be deemed to have been issued without consideration.
(x) Record Date as Date of Issue or Sale. In the event
that at any time the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i)
to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for
or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(ix) Treasury Stock. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the disposition
of any such shares (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this paragraph (f).
(g) Extraordinary Corporate Events. Subject to the terms of the
Senior Subordinated Notes Indenture and other indebtedness of the Company,
upon the occurrence of any Extraordinary Corporate Event, the Holders of
the Preferred Stock shall be entitled to receive for each share of
Preferred Stock held the greater of (x) the liquidation preference or (y)
the amount such Holder would be entitled to receive upon such Extraordinary
Corporate Event as though such Holder of the Preferred Stock was the holder
of the number of shares of Common Stock of the Corporation into which such
holder's shares of Preferred Stock are convertible as of the date of such
Extraordinary Corporate Event.
(h) Redemption.
(i) Optional Redemption. The Corporation may, at its
option, redeem at any time or from time to time from any source of
funds legally available therefor, in whole but not in part, in the
manner provided for in paragraph (h)(iii) hereof, all of the
shares of the Preferred Stock, at the redemption prices in cash
equal to 100% of the liquidation preference (set forth in
paragraph (d) hereof) per share; provided that no redemption
pursuant to this paragraph (h)(i) shall be made unless prior
thereto or contemporaneously therewith full accumulated and unpaid
regular dividends are declared and paid in full, or are deemed
paid, on the Preferred Stock for all Dividend Periods terminating
on or prior to the Redemption Date; and, further, provided that
any optional redemption by the Corporation shall be subject to the
terms of the Senior Subordinated Notes Indenture and any other
indebtedness of the Corporation.
(ii) Mandatory Redemption. On June 22, 2010, the
Corporation shall redeem, to the extent of funds legally available
therefor, all of the shares of the Preferred Stock then
outstanding at a redemption price equal to 100% of the liquidation
preference per share.
(iii) Procedures for Redemption. (A) At least 30 days and
not more than 60 days prior to the date fixed for any redemption
of the Preferred Stock pursuant to paragraph (h)(i) or (h)(ii)
hereof, written notice (the "Redemption Notice") shall be given by
first class mail, postage prepaid, to each Holder of record on the
record date fixed for such redemption of the Preferred Stock at
such Holder's address as it appears on the stock books of the
Corporation, provided that no failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for
the redemption of any shares of the Preferred Stock to be redeemed
except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders
whose notice was defective. The Redemption Notice shall state:
(1) the redemption price;
(2) the date fixed for redemption;
(3) that the Holder is to surrender to the
Corporation, in the manner, at the place or places and at
the price designated, such Holder's certificate or
certificates representing the shares of Preferred Stock
to be redeemed; and
(4) that dividends on the shares of the
Preferred Stock to be redeemed shall cease to accumulate
on such Redemption Date unless the Corporation defaults
in the payment of the redemption price.
(B) Each Holder of Preferred Stock shall surrender the
certificate or certificates representing such shares of Preferred Stock to
the Corporation, duly endorsed (or otherwise in proper form for transfer,
as determined by the Corporation), in the manner and at the place
designated in the Redemption Notice, and on the Redemption Date the full
redemption price for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired. In
the event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares.
(C) Unless the Corporation defaults in the payment in full
of the applicable redemption price, dividends on the Preferred Stock called
for redemption shall cease to accumulate on the Redemption Date, and all
rights of the holders of redeemed shares shall terminate with respect
thereto on the Redemption Date, other than the right to receive the
redemption price; provided, however, that if a notice of redemption shall
have been given as provided in paragraph (iii)(A) above and the funds
necessary for redemption (including an amount in cash in respect of all
dividends that will accumulate to the Redemption Date) shall have been
segregated and set aside for the equal and ratable benefit for the holders
of the shares to be redeemed, then, at the close of business on the day on
which such funds are segregated and set aside, the holders of the shares to
be redeemed shall cease to be stockholders of the Corporation and shall be
entitled only to receive the redemption price.
(i) Voting Rights.
(i) The Holders of the Preferred Stock, except as
otherwise required under Delaware law or as set forth in paragraph
(ii) below, shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the stockholders
of the Corporation.
(ii) (A) So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not authorize or issue any
class of Parity Securities without the affirmative vote or consent
of Holders of at least two-thirds of the then outstanding shares
of the Preferred Stock, voting or consenting, as the case may be,
as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting; provided,
however, that no such vote or consent shall be necessary in
connection with the issuance of additional shares of Preferred
Stock pursuant to the provisions of paragraph (c) of this
Certificate of Designation.
(B) So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not take any action so as to affect
adversely the specified rights, preferences, privileges or voting rights of
holders of shares of the Preferred Stock without the affirmative vote or
consent of Holders of at least a majority of the issued and outstanding
shares of Preferred Stock (other than in any amendment which affects the
rights of Holders provided in paragraphs (i)(ii)(A) which shall require the
affirmative vote or consent of holders of at least two-thirds of the issued
and outstanding shares of Preferred Stock) voting or consenting, in each
case, as the case may be, as one class, given in person or by proxy, either
in writing or by resolution adopted at an annual or special meeting.
(j) Reissuance of Preferred Stock. Shares of Preferred Stock that
have been issued and reacquired in any manner, including shares purchased
or redeemed, shall (upon compliance with any applicable provisions of the
laws of Delaware) have the status of authorized and unissued shares of
Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock.
(k) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business
Day, such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
(l) 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:
"Board of Directors" means the Board of Directors of the
Corporation or a duly authorized committee thereof (a "Board
Committee").
"Business Day" means any day except a Saturday, a Sunday,
or any day on which banking institutions in New York, New York are
required or authorized by law or other governmental action to be
closed.
"Capital Stock" means (i) with respect to any Person that
is a corporation, any and all shares, interests, participations or
other equivalents (however designated) of capital stock, including
each class of Common Stock and Preferred Stock of such Person and
warrants or options to purchase any of the foregoing and (ii) with
respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents
(however designated and whether voting or non-voting) of, such
Person's Common Stock, whether outstanding on the Issue Date or
issued after the Issue Date, and includes, without limitation, all
series and classes of such Common Stock.
"Conversion Price" shall initially mean $1.5238 per share
of Preferred Stock and thereafter shall be subject to adjustment
from time to time pursuant to the terms of Section (f) hereof.
"Corporation" shall have the meaning provided in the
first paragraph.
"Dividend" shall have the meaning provided in paragraph
(c).
"Dividend Payment Date" means September 30 of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each quarterly period from a Dividend Payment Date to
the next following Dividend Payment Date (but without including
such Dividend Payment Date).
"Dividend Record Date" means September 15 of each year.
"Employee Stock Option Plan" means the Corporation's 1998
Stock Option and Incentive Plan, as amended from time to time.
"Extraordinary Corporate Event" means a share exchange or
consolidation or merger of the Corporation with or into one or
more entities (other than (A) a merger with or into a Subsidiary
of the Corporation or (B) a merger in which the Corporation is the
surviving corporation (other a merger after which the stockholders
of the Corporation on the Issue Date cease to beneficially own
shares of the Corporation representing at least 51% of the total
voting power of securities of the Corporation).
"First Union Warrant Agreement" means that certain
Warrant Agreement, dated as of March 30, 2000, by and among the
Corporation and First Union Investors, Inc.
"Holder" means a holder of shares of Preferred Stock as
reflected in the stock books of the Corporation.
"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 the date of original issuance of the
Preferred Stock.
"Junior Securities" shall have the meaning provided in
paragraph (b).
"Obligations" means all obligations for principal,
premium, interest (including post-petition interest), penalties,
fees, costs, indemnifications, reimbursements, repurchase,
redemption, retirement or defeasance obligations, damages and
other liabilities and obligations payable under the documentation
governing, or otherwise relating to, any Indebtedness.
"Parity Securities" shall have the meaning provided in
paragraph (b).
"Person" means an individual, partnership, corporation,
unincorporated organization, joint stock company, limited
liability company, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Preferred Stock" means the 8.0% Convertible Paid-In-Kind
Preferred Stock, initial liquidation preference $1,000 per share
of the Corporation, issued pursuant to this Certificate of
Designation.
"Redemption Date", with respect to any shares of
Preferred Stock, means the date on which such shares of Preferred
Stock are redeemed by the Corporation.
"Redemption Notice" shall have the meaning provided in
paragraph (h).
"Resolution" shall have the meaning provided in the first
paragraph.
"Senior Securities" shall have the meaning provided in
paragraph (b).
"Senior Subordinated Notes" means the 101/8% Senior
Subordinated Notes due 2007.
"Senior Subordinated Notes Indenture" means the indenture
governing the Senior Subordinated Notes dated December 19, 1997
between the Corporation and Texas Commerce Bank National
Association, as trustee.
"Subsidiary" with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least
a majority of the votes entitled to be cast in the election of
directors under ordinary circumstances shall at the time be owned,
directly or indirectly, by such Person or (ii) any other Person of
which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by
such Person.
