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Exhibit 3.1
AURORA FOODS INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND OTHER SPECIAL RIGHTS OF SERIES A
CUMULATIVE CONVERTIBLE PREFERRED STOCK
Aurora Foods Inc., a company organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant to the authority contained in its Certificate of Incorporation (the
"Certificate of Incorporation") and its By-Laws (the "By-Laws"), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the board of directors of the Company (the "Board of Directors") at a
meeting duly called and held on September 6, 2000, duly approved and adopted the
following resolution, which resolution remains in full force and effect on the
date hereof:
"RESOLVED: That the Board of Directors, pursuant to authority vested
in it by the provisions of the Corporation's Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), hereby authorizes the issuance of
a series of convertible preferred stock to be designated "Series A Preferred
Stock" consisting of 3,750,000 shares ("Series A Preferred Stock") of the
Corporation and hereby establishes the powers, designations, preferences, and
the relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions appertaining thereto in addition to
those set forth in such Certificate of Incorporation (or otherwise provided by
law) as set forth in the Certificate of Designation submitted to this board of
directors (the "Certificate of Designation"), and to be filed with the Secretary
of State of Delaware under Section 151(g) of the General Corporation Law of the
State of Delaware), and hereby approves the terms of the Certificate of
Designation, such Certificate of Designation to be attached to the minutes of
this meeting as Exhibit A."
Capitalized terms used herein are defined in Section 12.
1. Number and Designation. The Company shall have a series of
Preferred Stock, which shall be designated as its Series A Cumulative
Convertible Preferred Stock (the "Series A Preferred Stock"), par value $0.01
per share, with 3,750,000 shares initially authorized and, subject to the
limitations set forth herein, such number of additional shares as are authorized
from time to time by resolution of the Board of Directors for payment of
dividends on the Series A Preferred Stock in accordance with Section 8 hereof.
Unless otherwise specified, references herein to any "Section" refer to the
Section number specified in this Certificate of Designation.
2. Issuance. The Company may issue up to 3,750,000 shares of Series
A Preferred Stock and may issue additional shares of Series A Preferred Stock as
dividends on the Series A Preferred Stock as may be determined from time to time
by the Board of Directors, in accordance with the terms of this Certificate of
Designation.
3. Registration; Transfer. Shares of the Series A Preferred Stock
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be resold, pledged or otherwise transferred prior
to the date when they may be resold pursuant to Rule 144 under the Securities
Act other than (i) to the Company, (ii) pursuant to an exemption from
registration under the Securities Act or (iii) pursuant to an effective
registration statement under the Securities Act, in each case in accordance with
any applicable securities laws of any
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state of the United States. Until such time as it is no longer required pursuant
to the Securities Act, certificates evidencing the Series A Preferred Stock
shall contain a legend (the "Restricted Shares Legend") evidencing the foregoing
restrictions in substantially the form set forth on the form of Series A
Preferred Stock attached hereto as Exhibit A.
4. Dividend Rights. (a) The Company shall pay, and the Holders of
the shares of Series A Preferred Stock shall be entitled to receive, when, as,
and if authorized by the Board of Directors (or any authorized committee
thereof), cumulative dividends from the date of initial issuance of such shares
of Series A Preferred Stock at a rate of 8% per annum on the amount of the then
effective Liquidation Preference of the shares of Series A Preferred Stock
("Coupon Dividends").
(b) Coupon Dividends will be computed on the basis of a 360 day year
of twelve 30 day months and will be payable (to the extent not accumulated in
accordance with the terms hereof) in (i) cash, (ii) delivery of shares of Series
A Preferred Stock, or (iii) any combination of the foregoing. Coupon Dividends
will be paid or accrued semi-annually in arrears on each Dividend Payment Date,
commencing December 15, 2000, for so long as the shares of Series A Preferred
Stock are Outstanding. The Company may elect not to declare dividend payments
on any Dividend Payment Date; provided, however, that Coupon Dividends on shares
of the Series A Preferred Stock will accrue whether or not the Company has
earnings or profits, whether or not there are funds legally available for the
payment of such dividends and whether or not dividends are declared. Coupon
Dividends will accumulate to the extent they are not paid on the Dividend
Payment Date for the period to which they relate. Arrearages of unpaid Coupon
Dividends ("Accumulated Dividends") will cumulate and compound semi-annually at
the rate of 8% per annum and such cumulated and compounded dividends shall
thereafter constitute Accumulated Dividends. The Company will take all actions
required or permitted under the General Corporation Law of the State of Delaware
to permit the payment, whether in additional shares of Series A Preferred Stock
or in cash of dividends on the shares of Series A Preferred Stock.
5. Payment of Dividend; Mechanics of Payment; Dividend Rights
Preserved. (a) Coupon Dividends on any share of Series A Preferred Stock that
are payable, and are punctually paid or duly provided for, on any Dividend
Payment Date shall be paid in arrears to the Person in whose name such share of
Series A Preferred Stock (or one or more predecessor shares of Series A
Preferred Stock) is registered at the close of business on the next preceding
June 1st and December 1st (each, together with any record date established for
the payment of Accumulated Dividends, a "Dividend Record Date").
(b) Unless full cumulative dividends on all Outstanding shares of
Series A Preferred Stock for all past dividend periods shall have been declared
and paid in cash, or declared and a sufficient sum for the payment thereof set
apart or paid in kind pursuant to Section 8, then:
(i) no dividend (other than (A), with respect to Junior Shares or
Parity Shares, a dividend payable solely in any Junior Shares or Parity
Shares, respectively, or (B) with respect to Parity Shares, a partial
dividend paid pro rata on such Parity Shares and the shares of Series A
Preferred Stock) shall be declared or paid upon, or any sum set apart for
the payment of dividends upon, any Junior Shares or Parity Shares,
respectively;
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(ii) no other distribution shall be declared or made upon, or any sum
set apart for the payment of any distribution, upon, any Junior Shares or
Parity Shares, other than a distribution consisting solely of Junior Shares
or Parity Shares, respectively;
(iii) no Junior Shares or Parity Shares or any warrants, rights,
calls or options (other than any cashless exercises of options or option
buybacks) exercisable for or convertible into any Parity Share or Junior
Share shall be purchased, redeemed or otherwise acquired or retired for
value (other than in exchange for other Junior Shares or Parity Shares,
respectively) by the Company or any of its subsidiaries; and
(iv) no monies shall be paid into or set apart or made available for a
sinking or other like fund for the purchase, redemption or other
acquisition of any Junior Shares or Parity Shares or any warrants, rights,
calls or options exercisable for or convertible into any Parity Shares or
Junior Shares by the Company or any of its subsidiaries (other than any
cashless exercises of options or option buybacks).
(c) Subject to the foregoing provisions of this Section 5, each share
of Series A Preferred Stock delivered under this Certificate of Designation upon
registration of transfer of or in exchange for or in lieu of any other share of
Series A Preferred Stock shall carry the rights to unpaid Accumulated Dividends,
that were carried by such other shares of Series A Preferred Stock.
(d) The Holder of record of a share of Series A Preferred Stock at the
close of business on a Dividend Record Date with respect to the payment of
dividends on the shares of Series A Preferred Stock will be entitled to receive
such dividends with respect to such share of Series A Preferred Stock on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date.
6. Voting Rights. (a) The Holders of record of shares of Series A
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 6 or as otherwise provided by law.
(b) The approval of the Holders of at least a majority of the then
Outstanding shares of Series A Preferred Stock voting or consenting, as the case
may be, as one class, will be required for the Company to:
(i) amend the Certificate of Incorporation, this Certificate of
Designation or the By-Laws so as to (A) affect adversely the rights,
preferences (including, without limitation, liquidation preferences,
conversion price, and dividend rate), privileges or voting rights of
Holders of the shares of Series A Preferred Stock, or (B) increase or
decrease the number of authorized shares of Series A Preferred Stock;
(ii) in a single transaction or series of related transactions,
consolidate or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, any
Person, agree to any plan of recapitalization, consent to, approve or
recommend any tender offer for any class or series of the Company's Capital
Stock or consent to, approve or recommend any Change of Control of, or
action which is expected to result in a Change of Control of, the Company
or adopt a plan of
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liquidation or make any payments in liquidation or with respect to the
winding up of the Company;
(iii) enter into, or permit any of its subsidiaries to enter into,
any agreement that would impose material restrictions on the Company's
ability to honor the exercise of any rights of the Holders of the Series A
Preferred Stock;
(iv) issue or sell any equity securities of the Company which ranks
senior to, or pari passu with, the Series A Preferred Stock in right of
distribution or dividend or right of liquidation or issue or sell any class
or series of equity securities which are convertible or exchangeable into
or exercisable for any equity securities of the Company which rank senior
to, or pari passu with, the Series A Preferred Stock in right of
distribution, dividend or right of liquidation; and
(v) subdivide, consolidate, convert, reclassify or modify any
Outstanding shares of the Company to the extent it would impair or reduce
the rights of Holders of the Series A Preferred Stock.
(c) In exercising the voting rights set forth in this Section 6, each
share of Series A Preferred Stock is entitled to the number of votes per share
of Series A Preferred Stock equal to the number of shares of Common Stock
issuable upon conversion, except that when any other series of preferred stock
shall have the right to vote with the Series A Preferred Stock as a single class
on any matter, then the Series A Preferred Stock shall have with respect to such
matters one vote per $4 (or fraction thereof) of the aggregate Liquidation
Preference plus all Accumulated Dividends.
(d) Except as otherwise required by applicable law or as set forth
herein, the shares of Series A Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers and the
consent of the Holders thereof shall not be required for the taking of any
corporate action.
7. Ranking. (a) The shares of Series A Preferred Stock will, with
respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to all shares of Common Stock (whether issued in
one or more classes) and to each other class of Capital Stock or series of
Preferred Stock of the Company, the terms of which do not expressly provide that
it ranks on a parity with, or senior to, the shares of Series A Preferred Stock
as to dividend rights and rights on liquidation, winding-up and dissolution of
the Company (collectively referred to, together with all shares of Common Stock
(whether issued in one or more classes) of the Company, as "Junior Shares");
(ii) on a parity with additional shares of Series A Preferred Stock issued by
the Company and each other class of Capital Stock or series of Preferred Stock
of the Company issued by the Company in compliance with the terms of Section 6,
the terms of which expressly provide that such class or series will rank on a
parity with the shares of Series A Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Shares"); and (iii) junior to each class of Capital Stock
or series of Preferred Stock of the Company issued by the Company in compliance
with Section 6, the terms of which expressly provide that such class or series
will rank senior to the shares of Series A Preferred Stock as to dividend rights
and rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Shares").
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(b) In the event of any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the Holders of the shares of Series A
Preferred Stock then Outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Company to the
Holders of shares of Common Stock or Junior Shares by reason of their ownership
thereof, the greater of (i) an amount equal to the then effective Liquidation
Preference, plus all Accumulated Dividends, if any, plus an amount equal to all
dividends accrued and unpaid from the last Dividend Payment Date to the date
fixed for liquidation, dissolution or winding-up (the "Liquidation Amount") and
(ii) an amount equal to (x) the amount which would be payable with respect to
one share of Common Stock (assuming the conversion of all Outstanding shares of
Series A Preferred Stock immediately prior to such liquidation, dissolution or
winding-up) multiplied by (y) the number of shares of Common Stock into which
(x) all issued and Outstanding shares of Series A Preferred Stock plus (y) all
Accumulated Dividends, if any, in respect thereof, plus (z) all accrued and
unpaid dividends in respect thereof from the last Dividend Payment Date to the
date of such liquidation, conversion or winding up, could be converted
immediately prior to such liquidation, dissolution or winding-up. If upon the
occurrence of such event the assets of the Company shall be insufficient to
permit the payment to such Holders of the full preferential amount described in
the immediately preceding sentence and all liquidating payments on all Parity
Securities, the entire assets of the Company legally available for distribution
shall be distributed among the Holders of the shares of Series A Preferred Stock
and the Holders of all Parity Shares ratably in accordance with the respective
amounts that would be payable on such shares of Series A Preferred Stock and any
such Parity Securities if all amounts payable thereon were paid in full.
8. Method of Payments. (a) At the option of the Company, the Company
shall make any Coupon Dividend payments (to the extent not accumulated in
accordance with terms hereof) (i), by shares of Series A Preferred Stock, (ii)
in cash, or (iii) through any combination of the foregoing. Dividends paid in
shares of Series A Preferred Stock are deemed to have been paid, and do not
constitute Accumulated Dividends, as of the Dividend Payment Date if the Company
elects to pay such dividends in kind.
(b) No fractional shares of Series A Preferred Stock will be delivered
to the Holders, but the Company will instead pay a cash adjustment to each
Holder that would otherwise be entitled to a fraction of a shares of such Series
A Preferred Stock. The amount of such cash adjustment will be determined based
on the then effective Liquidation Preference.
9. Conversion. (a) (i) Subject to and upon compliance with the
provisions of this Certificate of Designation, at the option of the Holder
thereof, any share of Series A Preferred Stock may be converted at any time,
into that number of fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100 of a share) equal to (i)
the sum of (x) the then effective Liquidation Preference thereof, plus (y) all
Accumulated Dividends in respect thereof, if any, plus (z) all accrued and
unpaid dividends in respect thereof from the last Dividend Payment Date to the
date of conversion, divided by (ii) the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion.
(iii) Subject to and upon compliance with the provisions of this
Certificate of Designation, if the Closing Price of one share of Common Stock
for 10 consecutive Trading Days is in excess of 200% of the Conversion Price on
the relevant day, at the option of the Company, all (but not less than all)
shares of Series A Preferred Stock may be converted into that
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number of fully paid and nonassessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100 of a share) equal to (i) the sum of (x) the
then effective Liquidation Preference thereof, plus (y) all Accumulated
Dividends in respect thereof, if any, plus (z) all accrued and unpaid dividends
in respect thereof from the last Dividend Payment Date to the date of
conversion, divided by (ii) the Conversion Price, determined as hereinafter
provided, in effect at the time of conversion.
(b) The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall initially be the Initial
Conversion Price. The Conversion Price shall be adjusted in certain instances
as provided in Section 9(f) and Section 9(g).
(c) In order for the Holder to exercise its conversion privilege, the
Holder of any share of Series A Preferred Stock to be converted shall surrender
the certificate for such share, duly endorsed or assigned to the Company or in
blank, to the Company, accompanied by written notice to the Company, in
substantially the form attached hereto as Exhibit B, that the Holder elects to
convert such share or, if fewer than all the shares of Series A Preferred Stock
represented by a single share certificate are to be converted, the number of
shares represented thereby to be converted. In the case of a Holder exercising
its conversion privilege, shares of Series A Preferred Stock shall be deemed to
have been converted immediately prior to the close of business on the day of
surrender of such shares for conversion in accordance with the foregoing
provisions, and at such time the rights of the Holders of such shares as Holders
shall cease, and the Person or Persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
Holder or Holders of such shares of Common Stock at such time. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in Section 9(e). In the case of any
conversion of fewer than all the shares of Series A Preferred Stock evidenced by
a certificate, upon such conversion the Company shall execute and deliver to the
Holder thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series A Preferred Stock.
(d) In order for the Company to exercise its conversion privilege, the
Company shall, within ten days of the last day of the relevant consecutive 10
day period, prepare a notice of determination of the Company's right to exercise
its conversion privilege setting forth the Conversion Price and shall mail such
notice to each Holder of shares of Series A Preferred Stock at such Holder's
last address appearing on the register of Holders maintained for that purpose.
Upon the Company's compliance with the foregoing, the Holder of any share of
Series A Preferred Stock to be converted shall surrender the certificate for
such share, duly endorsed or assigned to the Company or in blank, to the
Company. In the case of the Company exercising its conversion privilege, shares
of Series A Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the day the Company mails the notice to
Holders required by this Section 9(d), and at such time the rights of the
Holders of such shares as Holders shall cease, and the Person or Persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record Holder or Holders of such shares of
Common Stock at such time. As promptly as practicable on or after the
conversion date, the Company shall issue and shall deliver to the Holders a
certificate or certificates for the number of
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full shares of Common Stock issuable upon conversion, together with payment in
lieu of any fraction of a share, as provided in Section 9(e). In the case of any
conversion of fewer than all the shares of Series A Preferred Stock evidenced by
a certificate, upon such conversion the Company shall execute and deliver to the
Holder thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series A Preferred Stock.
(e) No fractional shares of Common Stock shall be issued upon the
conversion of a share of Series A Preferred Stock. If more than one share of
Series A Preferred Stock shall be surrendered for conversion at one time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
share of Series A Preferred Stock, the Company shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the Closing
Price per Common Share at the close of business on the Business Day prior to the
day of conversion.
(f) The Conversion Price shall be adjusted from time to time by the
Company as follows:
(i) If the Company shall hereafter pay a dividend or make a
distribution to Holders of the Outstanding shares of Common Stock, the
Conversion Price in effect at the opening of business on the date following
the date fixed for the determination of shareholders entitled to receive
such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock Outstanding at the close of business on the
Common Stock Record Date (as defined in Section 9(f)(v)) fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the
opening of business on the day following the Common Stock Record Date. If
any dividend or distribution of the type described in this Section 9(f)(i)
is declared but not so paid or made, the Conversion Price shall again be
adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared;
(ii) If the Company shall issue, sell or distribute any shares of
Common Stock or issue, sell or distribute options, rights or warrants to
any Person entitling them to subscribe for or purchase shares of Common
Stock or issue, sell or distribute convertible or exchangeable securities
which are convertible or exchangeable for shares of Common Stock, in each
case, at a price per share less than the then Conversion Price, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date immediately prior to such sale, issuance or
distribution of shares, options, rights, warrants or exchangeable or
convertible securities by a fraction of which the numerator shall be the
number of shares of Common Stock Deemed Outstanding (as defined in Section
9(f)(v)) at the close of business on such date plus the number of shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock to be issued, sold or distributed or subject to such
options, rights, warrants or exchangeable or
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convertible securities would purchase at a price of then Conversion Price
in effect at such opening of business per share and of which the
denominator shall be the number of shares of Common Stock Deemed
Outstanding at the close of business on such date plus the total number of
additional shares of Common Stock to be issued, sold or distributed or
subject to such options, rights, warrants or exchangeable or convertible
securities for subscription or purchase. Such adjustment shall become
effective immediately after the opening of business on the day following
the issuance, sale or distribution of such shares, options, rights,
warrants or exchangeable or convertible securities. In determining whether
any shares, options, rights, warrants or exchangeable or convertible
securities entitle the Holders to subscribe for or purchase shares of
Common Stock at less than the then Conversion Price per share, and in
determining the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received for such
options, rights, warrants or exchangeable or convertible securities, with
the value of such consideration, if other than cash, to be determined in
good faith by the Board of Directors and the amount of any exercise price
or subscription price required to be paid upon exercise of such options,
rights, warrants or exchangeable or convertible securities;
(iii) If the Outstanding shares of Common Stock shall be subdivided
or reclassified 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, if the Outstanding shares of
Common Stock shall 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;
(iv) If any event occurs as to which the foregoing provisions of this
Section 9(f) are not strictly applicable or, if strictly applicable, would
not, in the good faith judgment of the Board of Directors, fairly and
adequately protect the conversion rights of the Holders in accordance with
the essential intent and principles of such provisions, then the Board of
Directors shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as
shall be reasonably necessary, in the good faith opinion of such Board of
Directors, to protect such purchase rights as aforesaid, but in no event
shall any such adjustment have the effect of increasing the Conversion
Price or decreasing the number of shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock.
(v) For purposes of this Section 9(f), the following term shall have
the meaning indicated:
"Common Stock Deemed Outstanding" means, at any given time, the number
of shares of Common Stock actually Outstanding at such time, plus the
number of shares of Common Stock issuable upon exercise of options and
warrants and other convertible securities are actually exercisable or
convertible at such time.
"Common Stock Record Date" shall mean with respect to any dividend,
distribution or other transaction or event in which the Holders of Common
Stock have the right
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to receive any cash, securities or other property or in which the Common
Stock (or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or
other property (whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(vi) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 9(f)(vi) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 9 shall be made by the Company and shall be made to the
nearest cent. No adjustment need be made for a change in the par value or
no par value of the Common Stock.
(vii) The Company shall promptly prepare an Officers' Certificate
setting forth the Initial Conversion Price after such determination and
setting forth a brief statement of the facts concerning such determination
and delivers to each holder of Series A Preferred Stock at such Holder's
last address appearing on the register of Holders maintained for that
purpose within 20 days of the effective date of such determination.
Failure to deliver such notice shall not affect the legality or validity of
any such determination.
(viii) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date
on which each adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to each Holder of shares of Series
A Preferred Stock at such Holder's last address appearing on the register
of Holders maintained for that purpose within 20 days of the effective date
of such adjustment. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
(ix) In any case in which this Section 9(f) provides that an
adjustment shall become effective immediately after a Common Stock Record
Date for an event, the Company may defer until the occurrence of such event
issuing to the Holder of any share of Series A Preferred Stock converted
after such Common Stock Record Date and before the occurrence of such event
the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the shares
of Common Stock issuable upon such conversion before giving effect to such
adjustment.
(x) For purposes of this Section 9(f), the number of shares of Common
Stock at any time Outstanding shall not include shares held in the treasury
of the Company. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(xi) Notwithstanding anything to the contrary set forth herein, this
Section 9 shall not apply, and no adjustment to the Conversion Price shall
be made with respect to (A) compensatory or incentive stock options (or any
shares of Common Stock issued upon the exercise thereof) issued pursuant to
employee stock option plans of the Company which have been approved by the
Board of Directors of the Company, (B) issuances of Common Stock to
employees, officers, directors and consultants of the
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Company, approved by the Board of Directors of the Company, (C) shares of
Common Stock issued upon the conversion of the Series A Preferred Stock,
(D) issuance of securities (or any shares of Common Stock issued upon the
exercise thereof) pursuant to any options, warrants, notes or other rights
to acquire securities of the Company in existence prior to the date of this
Certificate of Designation, (E) issuance of Consent Shares, (F) the
issuance of securities in connection with the settlement of the Specified
Litigation, (G) issuance of securities in connection with an acquisition by
the Company or its subsidiaries approved by the Board of Directors of the
Company, (H) issuance of securities to vendors or suppliers of the Company
approved by the Board of Directors of the Company, and (I) any other
issuance of securities with respect to which the Company receives written
notice from the Holders of at least 75% of the outstanding Series A
Preferred Stock agreeing that no such adjustment shall be made as a result
of such issuance or sale.
(g) Subject to Section 10, in case of any consolidation of the Company
with, or merger of the Company into, any other corporation, or in case of any
merger of another corporation into the Company (other than a merger that does
not result in any reclassification, conversion, exchange or cancellation of
Outstanding shares of Common Stock of the Company), or in case of any sale,
conveyance or transfer of all or substantially all the assets of the Company,
the Holder of each share of Series A Preferred Stock shall have the right
thereafter, during the period such share of Series A Preferred Stock shall be
convertible as specified in Section 9(a), to convert such share of Series A
Preferred Stock into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by a Holder
of the number of shares of shares of Common Stock of the Company into which such
share of Series A Preferred Stock might have been converted immediately prior to
such consolidation, merger, conveyance or transfer, assuming such Holder of
shares of Common Stock of the Company failed to exercise his rights of election,
if any, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer (provided
that, if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance or transfer is not the same for each
Common Share of the Company in respect of which such rights of election shall
not have been exercised ("nonelecting share"), then for the purpose of this
Section 9 the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance or transfer by each nonelecting
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares). Such securities shall provide for
adjustments which, for events subsequent to the effective date of the triggering
event, shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The above provisions of this Section 9 shall
similarly apply to successive consolidations, mergers, conveyances or transfers.
(h) If the Company shall take any action requiring an adjustment to
the Conversion Price pursuant to Section 9(f) or 9(g), then the Company shall
cause to be mailed to all Holders at their last addresses as they shall appear
on the register of Holders maintained for that purpose at least 10 Business Days
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the Holders of shares of Common Stock of record to be entitled to
such dividend, distribution, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it
<PAGE>
is expected that Holders of shares of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give the notice required by
this Section 9(h) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale transfer, dissolution, liquidation or winding-up, or
the vote upon any such action.
(i) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of shares of Series A
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all Outstanding shares of Series A Preferred Stock.
(j) The Company 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
shares of Series A Preferred Stock pursuant hereto.
10. Consolidation, Merger, Conveyance or Transfer. Without the vote
or consent of the Holders of the Series A Preferred Stock as set forth in
Section 6(b), the Company may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any Person.
11. SEC Reports, Reports by Company. So long as any shares of Series
A Preferred Stock are Outstanding, the Company shall, if requested, furnish to
each Holder of shares of Series A Preferred Stock all annual and quarterly
reports and the information, documents, and other reports that the Company is
required to file with the SEC pursuant to Section 12(a) or 15(d) of the Exchange
Act ("SEC Reports").
12. Definitions. For purposes of this Certificate of Designation,
the following terms shall have the meaning set forth below:
"Accumulated Dividends" has the meaning set forth in Section 4(b).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Board of Directors" has the meaning set forth in the Recitals
"Business Day" means any day other than a Saturday, a Sunday, or a day
when banks in The City of New York are authorized to be closed.
"By-Laws" has the meaning set forth in the Recitals.
"Capital Stock" means (a) as to any Person that is a corporation, the
authorized capital stock of such Person, including all classes and series of
common, preferred, voting and
<PAGE>
nonvoting capital stock, and (b) as to any Person that is not a corporation or
an individual, the ownership interests in such Person, including, without
limitation, the right to share in profits and losses, the right to receive
distributions of cash and property, and the right to receive allocations of
items of income, gain, loss, deduction and credit and similar items from such
Person, whether or not such interests include voting or similar rights entitling
the holder thereof to exercise control over such Person.
"Certificate of Incorporation" has the meaning set forth in the
Recitals.
"Change of Control" means the occurrence of any of the following
events: (a) any "Person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
Voting Capital Stock of the Company, other than any Person or group which
beneficially owned more than 15% of the total Voting Capital Stock of the
Company as of September 1, 2000 or (b) the Company consolidates with, or merges
with or into, another Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person, or
any Person consolidates with, or merges with or into the Company, in any such
event pursuant to a transaction in which the holders of the Outstanding Voting
Capital Stock of the Company immediately prior to such transaction hold less
than 50% of the Outstanding Voting Capital Stock of the surviving or transferee
company or its parent company immediately after the transaction or immediately
after such transaction any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), is the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 50% of
the total Voting Capital Stock of the surviving or transferee company or its
parent company immediately after the transaction as applicable or (c) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office or (d) any transaction subject to Rule 13e-3 under the
Exchange Act if following such Rule 13e-3 transaction a Person owns more than
50% of the total Voting Capital Stock of the Company, other than such a
transaction with any Person or group which beneficially owned more than 15% of
the total Voting Capital Stock of the Company as of September 1, 2000.
"Closing Price" means the price per share of Common Stock as reported
on the New York Stock Exchange Composite Tape.
"Common Stock Record Date" has the meaning set forth in Section
9(f)(v).
"Common Stock" means the common stock, par value $.01 per share, of
the Company.
<PAGE>
"Company" has the meaning set forth in the Recitals.
"Consent Effective Date" means the "Effective Date" as defined in the
Company's confidential Consent Solicitation Statement.
"Consent Shares" has the meaning set forth in the Consent Solicitation
Statement.
"Consent Solicitation Statement" means the Company's confidential
consent solicitation statement dated August 31, 2000.
"Conversion Price" has the meaning set forth in Section 9(b).
"Coupon Dividends" has meaning set forth in Section 4(a).
"Dividend Payment Date" means each June 15th and December 15,
provided, however, that if such date shall not be a Business Day, then the
Dividend Payment Date shall be the next Business Day.
"Dividend Record Date" has the meaning set forth in Section 5(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means the Person in whose name the Series A Preferred Stock
is registered.
"Initial Conversion Price" means the average Closing Price per share
of Common Stock for the 10 consecutive Trading Days commencing 5 Business Days
following the Consent Effective Date as reported on the New York Stock Exchange
Composite Tape, provided that the Initial Conversion Price shall not be greater
than $5.00 nor less than $3.00.
"Issuance Price" of each share of Series A Preferred Stock means,
$4.00 which is the original purchase price of such share.
"Junior Shares" has the meaning set forth in Section 7(a).
"Liquidation Amount" has the meaning set forth in Section 7(b).
"Liquidation Preference" means the liquidation preference equal to the
Issuance Price per share of Series A Preferred Stock.
"nonelecting share" has the meaning set forth in Section 9(g).
"Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.
"Outstanding" means when used with respect to shares of Series A
Preferred Stock, as of the date of determination, all shares of Series A
Preferred Stock theretofore authenticated and delivered under this Certificate
of Designation, except (a) shares of Series A Preferred Stock theretofore
converted into shares of Common Stock in accordance with Section 9
<PAGE>
and shares of Series A Preferred Stock theretofore canceled by the Company or
delivered to the Company for cancellation; and (b) shares of Series A Preferred
Stock (x) that are mutilated, destroyed, lost or stolen which the Company has
decided to pay or (y) in exchange for or in lieu of which other shares of Series
A Preferred Stock have been authenticated and delivered pursuant to this
Certificate of Designation; provided, however, that, in determining whether the
Holders of the shares of Series A Preferred Stock have given any request,
demand, authorization, direction, notice, consent or waiver or taken any other
action hereunder, shares of Series A Preferred Stock owned by the Company shall
be disregarded and deemed not to be Outstanding. Shares of Series A Preferred
Stock so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Company the
pledgee's right so to act with respect to such shares of Series A Preferred
Stock and that the pledgee is not the Company.
"Parity Shares" has the meaning set forth in Section 7(a).
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now Outstanding or issued after the date hereof, including all series
and classes of such preferred or preference stock.
"Restricted Shares Legend" has the meaning set forth in Section 3.
"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the adoption of this Certificate of Designation such commission
is not existing and performing the duties now assigned to it, then the body
performing such duties at such time.
"SEC Reports" has the meaning set forth in Section 11.
"Securities Act" has the meaning set forth in Section 3.
"Senior Shares" has the meaning set forth in Section 7(a).
"Series A Preferred Stock" has the meaning set forth in Section 1.
"Specified Litigation" means the lawsuits filed by or on behalf of
past or present securities holders of the Company alleging, among other things,
as a result of accounting irregularities, the Company's financial statements
issued prior to April 14, 2000 and related actions constituted violations of
federal and state laws.
"Trading Day" means a day on which the New York Stock Exchange is open
for trading.
"Voting Capital Stock" means with respect to any Person, securities of
any class or classes of Capital Stock in such Person ordinarily entitling the
Holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the election of members of the board of directors or comparable governing body
of such Person.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed by James T. Smith, President and Chief Executive
Officer of the Company, and attested by Christopher T. Sortwell, Chief Financial
Officer, Executive Vice-President and Secretary of the Company, this 7th day of
September 2000.
AURORA FOODS INC.
By: /s/ James T. Smith
________________________________________
Name: James T. Smith
Title: President and Chief Executive Officer
ATTEST:
By: /s/ Christopher T. Sortwell
_____________________________________
Name: Christopher T. Sortwell
Title: Chief Financial Officer, Executive
Vice-President and Secretary
<PAGE>
EXHIBIT A
FACE OF SECURITY
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OF THE UNITED
STATES. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS."
Number of Shares
Number: __________ ________ Shares
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
AURORA FOODS INC.
Aurora Foods Inc., a company organized under the laws of Delaware (the
"Company"), hereby certifies that [HOLDERS] (the "Holders") is the registered
owner of [_____________] fully paid and non-assessable shares of preferred stock
of the Company designated the Series A Cumulative Convertible Preferred Stock,
par value $0.01 (the "Series A Preferred Stock") having a liquidation value
equal the sum of (x) to the Issuance Price per share plus (y) all Accumulated
Dividends, if any, in respect thereof, plus (z) all accrued and unpaid dividends
from the last Dividend Payment Date. The shares of Series A Preferred Stock are
transferable on the books and records of the Company, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Series A Preferred Stock
represented hereby are issued and shall in all respects be subject to the
provisions of the Certificate of Designation of the Company dated September ___,
2000, as the same may be amended from time to time in accordance with its terms
(the "Series A Preferred Stock Certificate of Designation"). Capitalized terms
used herein but not defined shall have the meaning given them in the Series A
Preferred Stock Certificate of Designation. The Company will provide a copy of
the Series A Preferred Stock Certificate of Designation to a Holder without
charge upon written request to the Company at its principal place of business.
Reference is hereby made to select provisions of the Preferred Stock
set forth on the reverse hereof, and to the Series A Preferred Stock Certificate
of Designation, which select provisions and the Series A Preferred Stock
Certificate of Designation shall for all purposes have the same effect as if set
forth at this place.
Upon receipt of this certificate, the Holder is bound by the Series A
Preferred Stock Certificate of Designation and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, the Company has executed this certificate as of
the date set forth below.
AURORA FOODS INC.
By _________________________________________
Name:
Title:
By _________________________________________
Name:
Title:
Dated:
<PAGE>
EXHIBIT A
REVERSE OF SECURITY
AURORA FOODS INC.
Series A Cumulative Convertible Preferred Stock
Dividends on each share of Series A Preferred Stock shall be payable
at a rate per annum as provided in the Series A Preferred Stock Certificate of
Designation. Dividends may be paid, at the option of the Company, in cash, or
in shares of Series A Preferred Stock of the Company, or a combination of cash
and shares of Series A Preferred Stock of the Company to the extent not
cumulated in accordance with the terms of the Series A Preferred Stock
Certificate of Designation.
The shares of Series A Preferred Stock shall be convertible into the
Company's Common Stock in the manner and according to the terms set forth in the
Series A Preferred Stock Certification of Designation.
The Company shall furnish to any Holder upon request and without
charge, a full summary statement of the designations, voting rights preferences,
limitations and special rights of the shares of each class or series authorized
to be issued by the Company so far as they have been fixed and determined and
the authority of the Board of Directors to fix and determine the designations,
voting rights, preferences, limitations and special rights of the class and
series of shares of the Company.
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series A
Preferred Stock)
The undersigned hereby irrevocably elects to convert (the
"Conversion") shares of Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"), represented by stock certificate No(s). __________
(the "Series A Preferred Stock Certificates") into shares of common stock, par
value $.01 per share ("Common Stock"), of Aurora Foods Inc. (the "Company")
according to the conditions of the Certificate of Designation establishing the
terms of the Preferred Stock (the "Series A Preferred Stock Certificate of
Designation"), as of the date written 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 and is delivering herewith such
certificates. No fee will be charged to the Holder for any conversion. A copy
of each Series A Preferred Stock Certificate is attached hereto (or evidence of
loss, theft or destruction thereof)./1/
The undersigned represents and warrants that all offers and sales by
the undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Series A Preferred Stock shall be made pursuant to
registration of the Common Stock under the Securities Act of 1933 (the "Act"),
or pursuant to an exemption from registration under the Act.
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in or pursuant to the Series A Preferred Stock Certificate of
Designation.
Date of Conversion:
Applicable Conversion Price:
Number of shares of Series A Preferred Stock to be Converted:
Number of shares of Common Stock to be Issued:
Signature:
Name:
Address:/2/
Fax No.:
/1/ The Company is not required to issue shares of Common Stock until the
original Series A Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company. The Company
shall issue and deliver shares of Common Stock to an overnight courier not later
than three business days following receipt of the original Series A Preferred
Stock Certificate(s) to be converted.
/2/ Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.
