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EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
FIRST: The name of this corporation is Aames Financial Corporation (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 to
the Delaware Code (the "GCL").
FOURTH: The total number of shares which the Corporation shall have
authority to issue is 8,000,000 consisting of 7,000,000 shares of common
stock, par value $0.001 per share (the "Common Stock"), and 1,000,000 shares
of preferred stock, par value $0.001 per share (the "Preferred Stock").
Shares of the Preferred Stock of the Corporation may be issued from time
to time in one or more classes or series, each of which class or series shall
have such distinctive designation or title as shall be fixed by the Board of
Directors of the Corporation (the "Board of Directors") prior to the issuance
of any shares thereof. Each such class or series of Preferred Stock shall
have such voting powers, full or limited, or no voting powers, and such
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated
in such resolution or resolutions providing for the issue of such class or
series of Preferred Stock as may be adopted from time to time by the Board of
Directors prior to the issuance of any shares thereof pursuant to the
authority hereby expressly vested in it, all in accordance with the laws of
the State of Delaware.
FIFTH: All rights to vote and all voting power shall be vested in the
Common Stock and the holders thereof shall be entitled at all elections of
directors to one (1) vote per share. Special meetings of the stockholders for
any purpose or purposes may be called at any time only by the Board of
Directors, the Chairman of the Board or by the Chief Executive Officer or
President of the Corporation.
SIXTH: The directors of the Corporation shall be divided into three
classes, designated Class I, Class II and Class III. The term of the initial
Class I directors shall terminate on the date of the 1994 annual meeting of
stockholders; the term of the initial Class II directors shall terminate on
the date of the 1993 annual meeting of stockholders and the term of the
initial Class III directors shall terminate on the date of the 1992 annual
meeting of stockholders. At each annualmeeting of stockholders beginning in
1992, successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so
as to maintain the number of directors in each class as nearly equal as
reasonably possible, and any additional directors of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for
a term that shall coincide with the remaining term of that class, but in no
case will a decrease in the number of directors shorten the term of any
incumbent directors. A director shall hold office until the annual meeting
for the year in which his term expires and until his successor shall be
elected and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. Any vacancy on the Board
of Directors, howsoever resulting, shall be filled only by a majority of the
directors then in office, even if less than a quorum, or by a sole remaining
director and not by the stockholders. Any director elected to fill a vacancy
shall hold office for a term that shall coincide with the terms of the class
to which such director shall have been elected.
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Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, any or all of the directors of the Corporation may be
removed from office at any time, for cause only, by the affirmative vote of
the holders of a majority of the outstanding shares of the Corporation then
entitled to vote generally in the election of directors, considered for
purposes of this Article SIXTH as one class.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to the second paragraph of Article
FOURTH applicable thereto, and such directors so elected shall not be divided
into classes pursuant to this Article SIXTH unless expressly provided by such
terms.
SEVENTH: Elections of directors at an annual or special meeting of
stockholders need not be by written ballot unless the Bylaws of the
Corporation shall otherwise provide.
Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken only upon the vote of the stockholders
at an annual or special meeting duly noticed and called, as provided in the
Bylaws of the Corporation, and may not be taken by written consent of the
stockholders pursuant to the GCL.
EIGHTH: The officers of the Corporation shall be chosen in such a
manner, shall hold their offices for such terms and shall carry out such
duties as are determined solely by the Board of Directors, subject to the
right of the Board of Directors to remove any officer or officers at any time
with or without cause.
NINTH: (A) The Corporation shall indemnify to the full extent authorized
or permitted by law (as now or hereafter in effect) any person made, or
threatened to be made, a defendant or witness to any action, suit or
proceeding (whether civil or criminal or otherwise) by reason of the fact
that he, his testator or intestate, is or was a director or officer of the
Corporation or by reason of the fact that such director or officer, at the
request of the Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or enterprise, in
any capacity. Nothing contained herein shall affect any rights to
indemnification to which employees other than directors and officers may be
entitled by law. No amendment or repeal of this Section A of Article NINTH
shall apply to or have any effect on any right to indemnification provided
hereunder with respect to any acts or omissions occurring prior to such
amendment or repeal.
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(B) No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such a director as a director. Notwithstanding the
foregoing sentence, a director shall be liable to the extent provided by
applicable law (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the GCL, or (iv) for any transaction from which
such director derived an improper personal benefit. No amendment to or repeal
of this Section B of Article NINTH shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
(C) In furtherance and not in limitation of the powers conferred by
statute:
(i) the Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have
the power to indemnify against such liability under the provisions of law; and
(ii) the Corporation may create a trust fund, grant a
security interest and/or use other means (including, without limitation,
letters of credit, surety bonds and/or other similar arrangements), as well
as enter into contracts providing indemnification to the full extent
authorized or permitted by law and including as part thereof provisions with
respect to any or all of the foregoing to ensure the payment of such amounts
as may become necessary to effect indemnification as provided therein, or
elsewhere.
TENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal,
alter, amend or rescind the Bylaws of the Corporation.
ELEVENTH: The Corporation reserves the right to repeal, alter, amend or
rescind any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation.
TWELFTH: The name and mailing address for the Incorporator of the
Corporation is as follows: Barbara J. Gillen, 10940 Wilshire Boulevard,
Suite 600, Los Angeles, California 90024-3902.
IN WITNESS WHEREOF, the undersigned has executed the Certificate of
Incorporation this 2nd day of October, 1991.
/s/ Barbara J. Gillen
---------------------
Barbara J. Gillen
Incorporator
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
AAMES FINANCIAL CORPORATION, a corporation organized and existing under
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That a meeting of the Board of Directors of Aames Financial
Corporation (the "Corporation"), resolutions were duly adopted setting forth
a proposed amendment of the Certificate of Incorporation of the Corporation,
declaring the amendment to be advisable and calling a meeting of the
stockholders of the Corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by changing Article FOURTH to provide that the authorized number of
shares shall be 11,000,000, consisting of 10,000,000 shares of common stock,
par value $0.001 per shares, and 1,000,000 shares of preferred stock, par
value $0.001 per share.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary
number of shares as required by statute were voted in favor of the amendment.
THIRD: That the amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporate law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Gary K. Judis, its Chief Executive Officer, and Bobbie J.
Burroughs, its Secretary, this 25 day of April, 1994.
By: /s/ Gary K. Judis
------------------------------
Chief Executive Officer
ATTEST: /s/ Bobbie J. Burroughs
------------------------------
Secretary
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CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
The undersigned GARY JUDIS and BOBBIE BURROUGHS, the President and
Secretary, respectively, of Aames Financial Corporation (the "Corporation"),
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "DGCL"), do hereby certify
pursuant to Section 103 of the DGCL:
The text of Article FOURTH of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in full as follows:
FOURTH: The total number of shares which the Corporation shall have
authority to issue is 51,000,000, consisting of 50,000,000 shares of common
stock, par value $0.001 per share (the "Common Stock") and 1,000,000 shares
of preferred stock, par value $0.001 per share (the "Preferred Stock").
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this
17th day of January, 1996.
By: /s/ Gary K. Judis
------------------------------
Gary K. Judis, President
Attest: /s/ Bobbie J. Burroughs
------------------------------
Bobbie J. Burroughs, Secretary
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CERTIFICATE OF DESIGNATION OF
RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A PREFERRED STOCK
OF
AAMES FINANCIAL CORPORATION
Pursuant to Section 151 of the Delaware General Corporation law:
The undersigned hereby certifies that the following resolution has been
adopted by the Board of Directors of Aames Financial Corporation, a Delaware
corporation (the "Corporation") as required by Section 151 of the Delaware
General Corporation Law by unanimous written consent on June 21, 1996;
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors") in accordance with the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors hereby creates a new
series of the previously authorized Preferred Stock, par value $0.001 per
share (the "Preferred Stock") of the Corporation, and hereby states the
designation and number of shares, and fixes the, relative rights, preferences
and limitations thereof (in addition to any provision set forth in the
Certificate of Incorporation of the Corporation which are applicable to the
Preferred Stock of all classes and series) as follows:
Series A Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock" (the "Series A Preferred Stock") and
the number of shares constituting the Series A Preferred Stock shall be
500,000 shares of Series A Preferred Stock, having a par value of $0.001 per
share. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series
A Preferred Stock.
Section 2. Dividends and Distributions
(a) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $0.001 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, (i)
cash dividends in an amount per whole share (rounded to the nearest cent)
equal to the Formula Number (as defined below) then in effect, times the
aggregate per share amount of all cash dividends declared or paid on the
Common Stock, and (ii) a preferential cash dividend (a "Preferential
Dividend"), if any, on the first day of July, October, January and April in
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each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to $1.00
per share of Series A Preferred Stock less the per share amount of all cash
dividends declared on the Series A Preferred Stock pursuant to clause (i) of
this sentence since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred
Stock. In addition, if the Corporation shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities or other forms
of noncash consideration (other than dividends or distributions solely in
shares of Common Stock), then, in each such case, the Corporation shall
simultaneously pay or make on each whole outstanding share of Series A
Preferred Stock, a dividend or distribution in like kind equal to the Formula
Number then in effect times such dividend or distribution on each share of
the Common Stock. The dividends and distributions on the Series A Preferred
Stock to which holders thereof are entitled pursuant to clause (i) of the
first sentence of this paragraph and the second sentence of this paragraph
are hereinafter referred to as "Participating Dividends." As used herein, the
"Formula Number" shall be 100; provided, however, that if at any time after
June 21, 1996, the Corporation shall (i) declare or pay any dividend or make
any distribution on the Common Stock, payable in shares of Common Stock, (ii)
subdivide (by a stock split or otherwise), the outstanding shares of Common
Stock into a larger number of shares of Common Stock, or (iii) combine (by a
reverse stock split or otherwise) the outstanding shares of Common Stock into
a smaller number of shares of Common Stock, then in each such case the
Formula Number in effect immediately prior to such event shall be adjusted to
a number determined by multiplying the Formula Number then in effect by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event (and rounding the result to the nearest whole number); and
provided further, that, if at any time after June 21, 1996, the Corporation
shall issue any shares of its capital stock in a merger, reclassification, or
change of the outstanding shares of Common Stock, then in each such event the
Formula Number shall be appropriately adjusted to reflect such merger,
reclassification, or change so that each share of Series A Preferred Stock
continues to be the economic equivalent of a Formula Number of shares of
Common Stock prior to such merger, reclassification or change.
(b) The Corporation shall declare each Participating Dividend
immediately prior to or at the same time it declares any cash or non-cash
dividend or distribution on the Common Stock in respect of which a
Participating Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Participating
Dividend is required shall be paid or set aside for payment on the Common
Stock unless a Participating Dividend in respect of such dividend shall have
been paid.
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(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series A Preferred Stock held of record on each matter on which holders of
the Common Stock or stockholders generally are entitled to vote, multiplied
by the maximum number of votes per share which any holder of the Common Stock
or stockholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided herein, in any other Certificate of
Amendment creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
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Section 4. Certain Restrictions.
(a) Whenever Preferential Dividends or Participating Dividends are
in arrears or the Corporation shall be in default in payment thereof,
thereafter and until all accrued and unpaid Participating Dividends and
Preferential Dividends, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid or set aside for payment in
full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions
on or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on the shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior or on a parity (either as to
dividends or upon liquidation, dissolution or winding up) to or with the
Series A Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior or parity
stock in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other
Certificate of Amendment or Certificate of Designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (a) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock unless, prior thereto, the holders of
shares of Series A Preferred Stock shall have received an amount equal to the
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, plus an amount equal to the greater of
(i) $0.01 per whole share, or (ii) an aggregate amount per share equal to the
Formula Number then in effect times the aggregate amount to be distributed
per share to holders of Common Stock, or (b) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, unless
simultaneously therewith distributions are made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts
to which the holders of Series A Preferred Stock shares are entitled under
clause (a)(i) of this sentence and to which the holders of such parity shares
are entitled in each case upon such liquidation, dissolution or winding up.
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Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share equal to the Formula Number then in effect
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event that both this
Section 7 and Section 2 appear to apply to a transaction, this Section 7
shall control.
Section 8. Effective Time of Adjustments.
(a) Adjustments to the Series A Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(b) The Corporation shall give prompt written notice to each holder
of a share of Series A Preferred Stock of the effect on any such shares of
any adjustment to the dividend rights or rights upon liquidation, dissolution
or winding up of the Corporation required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Corporation to
give such notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment.
Section 9. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 10. Rank. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Designation relating to a subsequent series
of Preferred Stock of the Corporation, the Series A Preferred Stock shall
rank, with respect to the payment of dividends and the distribution of
assets, junior to all series of any other class of the Corporation's
Preferred Stock.
Section 11. Fractional Shares. The Series A Preferred Stock shall be
issuable upon exercise of the Rights issued pursuant to the Rights Agreement
in whole shares or in any fraction of a share that is one one-hundredth
(1/100th) of a share or any integral multiple of such fraction which shall
entitle the holder, in proportion to such holder's fractional shares, to
receive dividends, exercise voting rights, participate in distributions and
to have the benefit of all other rights of holders of Series A Preferred
Stock. In lieu of fractional shares, the Corporation, prior to the first
issuance of a share or a fraction of a share of Series A Preferred Stock, may
elect (1) to make a cash payment as provided in the Rights Agreement for
fractions of a share other than one one-hundredth (1/100th) of a share or any
integral multiple thereof, or (2) to issue depository receipts evidencing
such authorized fraction of a share of Series A Preferred Stock pursuant to
an appropriate agreement between the Corporation and a depository selected by
the Corporation; provided that such agreement shall provide that the holders
of such depository receipts shall have the rights, privileges and preferences
to which they are entitled as holders of the Series A Preferred Stock.
Section 12. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, AAMES FINANCIAL CORPORATION has caused this
Certificate to be signed and attested this 21st day of June, 1996.
/s/ Gary K. Judis
--------------------------------
Gary K. Judis,
Chief Executive Officer
Attest:
/s/ Audry Patterson
--------------------------
Audry Patterson, Secretary
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CERTIFICATE OF CORRECTION
FILED TO CORRECT A CERTAIN ERROR IN THE
CERTIFICATE OF AMENDMENT OF
AAMES FINANCIAL CORPORATION
Aames Financial Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
1. The name of the corporation is Aames Financial Corporation.
2. That a Certificate of Amendment was filed by the Secretary of State
of Delaware on January 19, 1996 and that said Certificate requires correction as
permitted by Section 103 of the General Corporation Law of the State of
Delaware.
3. The inaccuracy or defect of said Certificate to be corrected
is as follows: the second paragraph of Article FOURTH was inadvertently
deleted.
4. Article FOURTH of said Certificate is corrected to read in its
entirety as follows:
FOURTH: The total number of shares which the Corporation shall
have authority to issue is 51,000,000, consisting of 50,000,000
shares of common stock, par value $0.001 per share (the "Common
Stock") and 1,000,000 shares of preferred stock, par value
$0.001 per share (the "Preferred Stock").
Shares of the Preferred Stock of the Corporation may be issued
from time to time in one or more classes or series, each of
which class or series shall have such distinctive designation
or title as shall be fixed by the Board of Directors of the
Corporation (the "Board of Directors") prior to the issuance of
any shares thereof. Each such class or series of Preferred
Stock shall have such voting powers, full or limited, or no
voting powers, and such preferences and relative,
participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall
be stated in such resolution or resolutions providing for the
issue of such class or series of Preferred Stock as may be
adopted from time to time by the Board of Directors prior to
the issuance of any shares thereof pursuant to the authority
hereby expressly vested in it, all in accordance with the laws
of the State of Delaware.
Aames Financial Corporation has caused this Certificate of Correction to
be signed by Barbara S. Polsky, its authorized officer, this 26th day of
August, 1997.
By: /s/ Barbara S. Polsky
--------------------------------
Barbara S. Polsky
Executive Vice President,
General Counsel and Secretary
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CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES B CONVERTIBLE PREFERRED STOCK OF
AAMES FINANCIAL CORPORATION
-------------------------------------------------------------------------------
AAMES FINANCIAL CORPORATION, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolutions were adopted by the Board of
Directors of the Corporation (the "Board of Directors") pursuant to authority
of the Board of Directors as required by Section 151 of the Delaware General
Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors in accordance with the provisions of the Certificate of
Incorporation of the Corporation, as amended (the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of the
Corporation's previously authorized preferred stock, par value $0.001 per
share (the "Preferred Stock"), and hereby states the designation and number
thereof, and fixes the voting powers, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions thereof, as follows:
SERIES B CONVERTIBLE PREFERRED STOCK:
I. DESIGNATION AND AMOUNT
The designation of this series of shares shall be "Series B
Convertible Preferred Stock" (the "Series B Preferred Stock") par value $0.001
per share; the initial stated value per share shall be $1,000.00 (the "Initial
Stated Value"); and the number of shares constituting such series shall be
100,000. The number of shares of the Series B Preferred Stock may be decreased
from time to time by a resolution or resolutions of the Board of Directors;
provided, however, that such number shall not be decreased below the aggregate
number of shares of the Series B Preferred Stock then outstanding.
II. RANK
A. With respect to dividends, the Series B Preferred Stock
shall rank (i) senior to each other class or series of Preferred Stock,
except for the Series C Convertible Preferred Stock, par value $0.001 per
share, of the Corporation (the "Series C Preferred Stock"); (ii) on a parity
with the Series C Preferred Stock; and (iii) senior to the Corporation's
Common Stock, par value $.001 per share (the "Common Stock"), and, except as
specified above, all other classes and series of capital stock of the
Corporation hereafter issued by the Corporation. With respect to dividends,
all equity securities of the Corporation to which the Series B Preferred
Stock ranks senior, including the Common Stock, are collectively referred to
herein as the "Junior Dividend Securities"; all equity securities of the
Corporation with which the Series B Preferred Stock ranks on a parity,
including the Series C Preferred Stock, are collectively referred to herein
as the "Parity Dividend Securities"; and all equity securities of the
Corporation (other than convertible debt securities) to which the Series B
Preferred Stock ranks junior, with respect to dividends, are collectively
referred to herein as the "Senior Dividend Securities."
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B. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the Series B Preferred Stock shall rank (i) senior to each other
class or series of Preferred Stock of the Corporation, except for the Series
C Preferred Stock; (ii) on a parity with the Series C Preferred Stock; and
(iii) senior to the Common Stock, and, except as specified above, all other
classes and series of capital stock of the Corporation hereafter issued by
the Corporation. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, all equity securities of the Corporation to which the Series B
Preferred Stock ranks senior, including the Common Stock, are collectively
referred to herein as "Junior Liquidation Securities"; all equity securities
of the Corporation (other than convertible debt securities) to which the
Series B Preferred Stock ranks on parity, including the Series C Preferred
Stock, are collectively referred to herein as "Parity Liquidation
Securities"; and all equity securities of the Corporation to which the Series
B Preferred Stock ranks junior are collectively referred to herein as "Senior
Liquidation Securities."
C. The Series B Preferred Stock shall be subject to the creation of
Junior Dividend Securities and Junior Liquidation Securities (collectively,
"Junior Securities"), but no Parity Dividend Securities or Parity Liquidation
Securities (collectively, "Parity Securities") (other than the Series C
Preferred Stock) or Senior Dividend Securities or Senior Liquidation
Securities (collectively, "Senior Securities") shall be created except in
accordance with the terms hereof.
III. DIVIDENDS
A. DIVIDENDS. Subject to the terms of paragraph D below, shares of
Series B Preferred Stock shall accumulate dividends at a rate of 6.5% per
annum (the "Dividend Rate"), which dividends shall be paid quarterly in cash,
in four equal quarterly installments on the last day of March, June,
September and December of each year, or if any such date is not a Business
Day, the Business Day next preceding such day (each such date, regardless of
whether any dividends have been paid or declared and set aside for payment on
such date, a "Dividend Payment Date"), to holders of record (the "Registered
Holders") as they appear on the stock record books of the Corporation on the
fifteenth day prior to the relevant Dividend Payment Date; provided, however,
that during the Accrual Period (as defined in Article IX hereof) the
Corporation shall have the option to accrue such dividends, which dividends,
to the extent so accrued, shall compound quarterly. Prior to the consummation
of the Recapitalization, dividends shall accrue and accumulate on the Initial
Stated Value of each share of Series B Preferred Stock. Following the
consummation of the Recapitalization, dividends shall accrue and accumulate
on the Post-Recapitalization Stated Value of each share of Series B Preferred
Stock. Dividends shall be paid only when, as and if declared by the Board of
Directors out of funds at the time legally available for the payment of
dividends. Dividends shall begin to accumulate on outstanding shares of
Series B Preferred Stock from the date of issuance and shall be deemed to
accumulate from day to day whether or not earned or declared until paid.
Dividends shall accumulate on the basis of a 360-day year consisting of
twelve 30-day months (four 90-day quarters) and the actual number of days
elapsed in the period for which payable.
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B. ACCUMULATION. Dividends on the Series B Preferred Stock shall be
cumulative, and from and after (i) any Dividend Payment Date on which any
dividend that has accumulated or been deemed to have accumulated through such
date has not been paid in full (other than by reason of the election of the
Corporation to accrue dividends during the Accrual Period); or (ii) any
payment date set for a redemption on which such redemption payment has not
been paid in full, additional dividends shall accumulate in respect of the
amount of such unpaid dividends or unpaid redemption payment (the
"Arrearage") at 125% of the stated dividend rate (or such lesser rate as may
be the maximum rate that is then permitted by applicable law). Such
additional dividends in respect of any Arrearage shall be deemed to
accumulate from day to day whether or not earned or declared until the
Arrearage is paid, shall be calculated as of such successive Dividend Payment
Date, and shall constitute an additional Arrearage from and after any
Dividend Payment Date to the extent not paid on such Dividend Payment Date.
References in any Article herein to dividends that have accumulated or that
have been deemed to have accumulated with respect to the Series B Preferred
Stock shall include the amount, if any, of any Arrearage together with any
dividends accumulated or deemed to have accumulated on such Arrearage
pursuant to the immediately preceding two sentences. Additional dividends in
respect of any Arrearage may be declared and paid at any time, in whole or in
part, without reference to any regular Dividend Payment Date, to Registered
Holders as they appear on the stock record books of the Corporation on such
record date as may be fixed by the Board of Directors (which record date
shall be no less than 10 days prior to the corresponding payment date).
Dividends in respect of any Arrearage shall be paid in cash.
C. METHOD OF PAYMENT. Dividends paid on the shares of Series B Preferred
Stock in an amount less than the total amount of such dividends at the time
accumulated and payable on all outstanding shares of Series B Preferred Stock
shall be allocated pro rata on a share-by-share basis among all such shares
then outstanding. After the Second Anniversary Date, dividends that are
declared and paid in an amount less than the full amount of dividends
accumulated on the Series B Preferred Stock (and on any Arrearage) shall be
applied first to the earliest dividend which has not theretofore been paid.
All cash payments of dividends on the shares of Series B Preferred Stock
shall be made in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
D. SPECIAL DIVIDEND RIGHTS.
1. In addition to the dividend rights set forth in paragraph A above,
prior to the consummation of the Recapitalization, the holders of shares of
Series B Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for such
purpose, cash dividends in an amount per whole share (rounded to the nearest
cent) equal to the Formula Number then in effect times the aggregate per
share amount of all cash dividends declared or paid on the Common Stock. If,
prior to the consummation of the Recapitalization, the Corporation shall pay
any dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of non-cash consideration, then, in each such case,
the Corporation shall simultaneously pay or make on each whole outstanding
share of the Series B Preferred Stock a dividend or distribution in like kind
equal to the Formula Number then in effect times such dividend or
distribution on each share of the Common Stock. The dividends and
distributions on the Series B Preferred Stock pursuant to this paragraph are
hereinafter referred to as "Participating Dividends." The Corporation shall
declare each Participating Dividend immediately prior to or at the same time
it declares any cash or non-cash dividend or distribution on the Common Stock
in respect of which a Participating Dividend is required to be paid. No cash
or non-cash dividend or distribution on the Common Stock in respect of which
a Participating Dividend is required shall be paid or set aside for payment
on the Common Stock unless a Participation Dividend in respect of such
dividend shall be have been paid. Nothing contained in this paragraph D shall
obligate the Company to declare or pay any dividend or other distribution on
the Common Stock or (except pursuant to paragraph A of this Article III or in
connection with a dividend or distribution on the Common Stock as provided in
this paragraph D) the Series B Preferred Stock.
2. If the Recapitalization is not consummated prior to June 30, 1999,
the Dividend Rate shall be deemed to be 15% per annum during the period
commencing on such date and ending on the date the Recapitalization is
consummated.
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IV. LIQUIDATION PREFERENCE
A. PRIOR TO THE RECAPITALIZATION. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, occurring prior to the consummation of the Recapitalization, the
holders of then-outstanding shares of Series B Preferred Stock shall be
entitled to receive out of the assets of the Corporation, whether such assets
are capital or surplus of any nature, an amount per share equal to the sum of
(i) the dividends, if any, accumulated or deemed to have accumulated thereon,
to the date of final distribution to such holders, whether or not such
dividends are declared; and (ii) the Initial Stated Value thereof, before any
payment shall be made or any assets distributed to the holders of any Junior
Liquidation Securities (the "Initial Preferred Distribution"). After the
Initial Preferred Distribution has been made, the holders of Series B
Preferred Stock shall be entitled to share pro rata with the holders of
Common Stock in the distribution of any remaining assets of the Corporation
on the basis of each whole outstanding share of the Series B Preferred Stock
receiving an amount equal to the Formula Number then in effect times such
distribution on each share of the Common Stock. The distributions on the
Series B Preferred Stock pursuant to the immediately preceding sentence of
this paragraph A are hereinafter referred to as "Participating Liquidation
Distributions." No distribution on the Common Stock in respect of which a
Participating Liquidation Distribution is required shall be paid or set aside
for payment on the Common Stock unless a Participating Liquidation
Distribution in respect of such distribution is concurrently paid.
B. AFTER THE RECAPITALIZATION. Subsequent to the consummation of the
Recapitalization, the holders of the outstanding shares of Series B Preferred
Stock shall be entitled to receive out of the assets of the Corporation,
whether such assets are capital or surplus of any nature, an amount per share
equal to the sum of (i) the dividends, if any, accumulated or deemed to have
accumulated thereon to the date of final distribution to such holders,
whether or not such dividends are declared; and (ii) the
Post-Recapitalization Stated Value thereof, before any payment shall be made
or any assets distributed to the holders of any Junior Liquidation
Securities. After any such payment in full after the consummation of the
Recapitalization, the holders of Series B Preferred Stock shall not, as such,
be entitled to any further participation in any distribution of assets of the
Corporation.
C. PARITY SECURITIES. All the assets of the Corporation available for
distribution to stockholders after the liquidation preferences of any Senior
Liquidation Securities shall be distributed ratably (in proportion to the
full distributable amounts to which holders of Series B Preferred Stock and
Parity Liquidation Securities, if any, are respectively entitled upon such
dissolution, liquidation or winding up) among the holders of the
then-outstanding shares of Series B Preferred Stock and Parity Liquidation
Securities, if any, when such assets are not sufficient to pay in full the
aggregate amounts payable thereon.
D. MERGER NOT A LIQUIDATION. Neither a consolidation or merger of the
Corporation with or into any other Person or Persons, nor a sale, conveyance,
lease, exchange or transfer of all or part of the Corporation's assets for
cash, securities or other property to a Person or Persons shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes
of this Article IV, but the holders of shares of Series B Preferred Stock
shall nevertheless be entitled from and after any such consolidation, merger
or sale, conveyance, lease, exchange or transfer of all or part of the
Corporation's assets to the rights provided by this Article IV following any
such transaction. Notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, stating the payment date or
dates when, and the place or places where, the amounts distributable to each
holder of shares of Series B Preferred Stock in such circumstances shall be
payable, shall be given by first-class mail, postage prepaid, mailed not less
than 30 days prior to any payment date stated therein, to holders of record
as they appear on the stock record books of the Corporation as of the date
such notices are first mailed.
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V. REDEMPTION
A. INTENTIONALLY OMITTED
B. OPTIONAL REDEMPTION. Commencing on the earlier to occur of (x) the
tenth anniversary of the Issue Date and (y) the date on which fewer than 25%
of the shares of Series B Preferred Stock issued on the Issue Date remain
outstanding, and at all times thereafter, the Corporation may, at its option,
redeem all (but not less than all) outstanding shares of Series B Preferred
Stock on a date specified by the Corporation (the "Optional Redemption Date")
by paying the Redemption Price therefor in cash out of funds legally
available for such purpose.
C. NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption of shares
of Series B Preferred Stock pursuant to paragraph B of this Article V (a
"Notice of Redemption") shall be sent to the holders of record of the shares
of Series B Preferred Stock to be redeemed by first class mail, postage
prepaid, at each such holder's address as it appears on the stock record
books of the Corporation not more than 120 nor fewer than 90 days prior to
the Optional Redemption Date, which date shall be set forth in such notice
(the "Redemption Date"); provided that failure to give such Notice of
Redemption to any holder, or any defect in such Notice of Redemption to any
holder shall not affect the validity of the proceedings for the redemption of
any shares of Series B Preferred Stock held by any other holder. In order to
facilitate the redemption of shares of Series B Preferred Stock, the Board of
Directors may fix a record date for the determination of the holders of
shares of Series B Preferred Stock to be redeemed not more than 30 days prior
to the date the Notice of Redemption is mailed. On or after the Optional
Redemption Date, each holder of the shares called for redemption shall
surrender the certificate evidencing such shares to the Corporation at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price for such shares. From and after the Optional
Redemption Date, all dividends on shares of Series B Preferred Stock shall
cease to accumulate and all rights of the holders thereof as holders of
Series B Preferred Stock shall cease and terminate, except to the extent the
Corporation shall default in payment thereof on the Optional Redemption Date.
D. DEPOSIT OF FUNDS. The Corporation shall, on or prior to the Optional
Redemption Date, pursuant to paragraph C of this Article V, deposit with its
transfer agent or other redemption agent in the Borough of Manhattan, The
City of New York having a capital and surplus of at least $500,000,000
selected by the Board of Directors, as a trust fund for the benefit of the
holders of the shares of Series B Preferred Stock to be redeemed, cash that
is sufficient in amount to redeem the shares to be redeemed in accordance
with the Notice of Redemption, with irrevocable instructions and authority to
such transfer agent or other redemption agent to pay to the respective
holders of such shares, as evidenced by a list of such holders certified by
an officer of the Corporation, the Redemption Price for such shares upon
surrender of their respective share certificates. Such deposit shall be
deemed to constitute full payment of the Redemption Price for such shares to
the holders, and from and after the date of such deposit, all rights of the
holders of the shares of Series B Preferred Stock that are to be redeemed as
stockholders of the Corporation with respect to such shares, except the right
to receive the Redemption Price upon the surrender of their respective
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certificates, shall cease and terminate. No dividends shall accumulate on any
shares of Series B Preferred Stock after the Optional Redemption Date for
such shares (unless the Corporation shall fail to deposit cash sufficient to
redeem all such shares). In case holders of any shares of Series B Preferred
Stock called for redemption shall not, within two years after such deposit,
claim the cash deposited for redemption thereof, such transfer agent or other
redemption agent shall, upon demand, pay over to the Corporation the balance
so deposited. Thereupon, such transfer agent or other redemption agent shall
be relieved of all responsibility to the holders thereof and the sole right
of such holders, with respect to shares to be redeemed, shall be to receive
the Redemption Price as general creditors of the Corporation. Any interest
accrued on any funds so deposited shall belong to the Corporation, and shall
be paid to it from time to time on demand.
VI. RESTRICTIONS ON DIVIDENDS
So long as any shares of the Series B Preferred Stock are outstanding,
the Board of Directors shall not declare, and the Corporation shall not pay
or set apart for payment any dividend on any Junior Securities or make any
payment on account of, or set apart for payment money for a sinking or other
similar fund for, the repurchase, redemption or other retirement of, any
Junior Securities or Parity Securities or any warrants, rights or options
exercisable for or convertible into any Junior Securities or Parity
Securities (other than the repurchase, redemption or other retirement of
debentures or other debt securities that are convertible or exchangeable into
any Junior Securities or Parity Securities), or make any distribution in
respect of the Junior Securities, either directly or indirectly, and whether
in cash, obligations or shares of the Corporation or other property (other
than distributions or dividends in Junior Securities to the holders of Junior
Securities), and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any Junior
Securities or Parity Securities or any warrants, rights, calls or options
exercisable for or convertible into any Junior Securities or Parity
Securities (other than the repurchase, redemption or other retirement of
debentures or other debt securities that are convertible or exchangeable into
any Junior Securities or Parity Securities or the repurchase, redemption or
other retirement of Junior Securities or Parity Securities in exchange for
Junior Securities or Parity Securities) unless prior to or concurrently with
such declaration, payment, setting apart for payment, repurchase, redemption
or other retirement or distribution, as the case may be, all accumulated and
unpaid dividends on shares of the Series B Preferred Stock not paid on the
dates provided for in paragraph A of Article III hereof (including Arrearages
and accumulated dividends thereon) shall have been paid, except that when
dividends are not paid in full as aforesaid upon the shares of Series B
Preferred Stock, all dividends declared on the Series B Preferred Stock and
any series of Parity Dividend Securities shall be declared and paid pro rata
so that the amount of dividends so declared and paid on Series B Preferred
Stock and such series of Parity Dividend Securities shall in all cases bear
to each other the same ratio that accumulated dividends (including interest
accrued on or additional dividends accumulated in respect of such accumulated
dividends) on the shares of Series B Preferred Stock and such Parity Dividend
Securities bear to each other.
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VII. VOTING RIGHTS
A. On or prior to the consummation of the Recapitalization, the holders
of Series B Preferred Stock shall be entitled to one thousand (1,000) votes
per share of Series B Preferred Stock at each meeting of stockholders of the
Corporation with respect to any and all matters presented to the stockholders
of the Corporation for their action and consideration. After the consummation
of the Recapitalization, the holders of Series B Preferred Stock shall be
entitled to the number of votes per share of Series B Preferred Stock equal
to the number of shares of Common Stock for which such share of Series B
Preferred Stock is then convertible pursuant to Article VIII at each meeting
of stockholders of the Corporation with respect to any and all matters
presented to the stockholders of the Corporation for their action and
consideration.
B. So long as any shares of the Series B Preferred Stock are
outstanding, (i) each share of Series B Preferred Stock shall entitle the
holder thereof to vote on all matters voted on by holders of Common Stock;
and (ii) the shares of Series B Preferred Stock shall vote together with
shares of Common Stock (and any shares of Series C Preferred Stock entitled
to vote) as a single class.
C. At each annual meeting of the stockholders of the Corporation, the
holders of Series B Preferred Stock, voting as a separate class, shall have
the right to elect, by the written consent (if action by written consent is
permitted) or affirmative vote of the holders of a majority of the
outstanding shares of Series B Preferred Stock, four members of a separate
class of directors, each of whom shall serve until the next annual meeting of
the stockholders of the Corporation or until his or her successor is elected
and qualified. Such vote or consent shall be taken in accordance with the
procedures specified in paragraph F below. The initial directors shall be
Steven M. Gluckstern, Adam M. Mizel, Mani Sadeghi and David Spuria.
D. Without the written consent (if action by written consent is
permitted) or affirmative vote of the holders of a majority of the
outstanding shares of Series B Preferred Stock and Series C Preferred Stock,
voting together as a single class, the Corporation shall not (i) authorize,
create or issue, or increase the authorized amount of, (x) any Senior
Securities or Parity Securities or (y) any class or series of capital stock
or any security convertible into or exercisable for any class or series of
capital stock, redeemable mandatorily or redeemable at the option of the
holder thereof or (ii) enter into any Transaction (as defined in paragraph H
of Article VIII). Such vote or consent shall be taken in accordance with the
procedures specified in paragraph F below.
E. Without the written consent (if action by written consent is
permitted) or affirmative vote of the holders of at least a majority of the
outstanding shares of Series B Preferred Stock and Series C Preferred Stock,
voting together as a single class, the Corporation shall not (i) amend, alter
or repeal any provision of the Certificate of Incorporation or the Bylaws, if
the amendment, alteration or repeal alters or changes the powers, preferences
or special rights of the Series B Preferred Stock so as to affect them
materially and adversely or (ii) authorize or take any other action if such
action alters or changes any of the rights of the Series B Preferred Stock in
any respect or otherwise would be inconsistent with the provisions of this
Certificate of Designations and the holders of any class or series of the
capital stock of the Corporation is entitled to vote thereon. Such vote or
consent shall be taken in accordance with the procedures specified in
paragraph F below.
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F. The foregoing rights of holders of shares of Series B Preferred Stock
to take any actions as provided in this Article VII may be exercised at any
annual meeting of stockholders or at a special meeting of stockholders held
for such purpose as hereinafter provided or at any adjournment thereof, or by
the written consent, delivered to the Secretary of the Corporation, of the
holders of the minimum number of shares required to take such action, if
action by written consent of stockholders of the Corporation is then
permitted.
The Chairman of the Board of the Corporation may call, and upon written
request of holders of record of 35% of the outstanding shares of Series B
Preferred Stock, if the holders of Series B Preferred Stock are to vote
separately as a single class, or the holders of record of 35% of the
outstanding shares of Series B Preferred Stock and Series C Preferred Stock,
if the holders of shares of Series B Preferred Stock are to vote as a class
with the holders of shares of any Series C Preferred Stock, addressed to the
Secretary of the Corporation at the principal office of the Corporation shall
call, a special meeting of the holders of shares entitled to vote as provided
herein. Such meeting shall be held within 30 days after delivery of such
request to the Secretary, at the place and upon the notice provided by law
and in the By-laws of the Corporation for the holding of meetings of
stockholders.
At each meeting of stockholders at which the holders of shares of Series
B Preferred Stock shall have the right, voting separately as a single class
or as a class with the holders of shares of any Series C Preferred Stock, to
elect directors of the Corporation as provided in paragraph C above or to
take any action, the presence in person or by proxy of the holders of record
of one-third of the total number of shares of Series B Preferred Stock, if
the holders of shares of Series B Preferred Stock are to vote separately as a
single class, or the holders of record of one-third of the total number of
shares of Series B Preferred Stock and Series C Preferred Stock, if the
holder of shares of Series B Preferred Stock are to vote as a class with the
holders of shares of Series C Preferred Stock, then outstanding and entitled
to vote on the matter shall be necessary and sufficient to constitute a
quorum. At any such meeting or at any adjournment thereof:
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(A) the absence of a quorum of the holders of shares of Series B
Preferred Stock, if the holders of Series B Preferred Stock are to vote
separately as a single class, shall not prevent the election of
directors other than those to be elected by the holders of shares of
Series B Preferred Stock, and the absence of a quorum of the holders of
shares of any other class or series of capital stock shall not prevent
the election of directors to be elected by the holders of shares of
Series B Preferred Stock or the taking of any action as provided in this
Article VII; and
(B) in the absence of a quorum of the holders of shares of Series
B Preferred Stock, if the holders of Series B Preferred Stock are to
vote separately as a single class, or the holders of shares of Series B
Preferred Stock and Series C Preferred Stock, if the holders of Series B
Preferred Stock are to vote as a class with the holders of shares of
Series C Preferred Stock, a majority of the holders of such shares
present in person or by proxy shall have the power to adjourn the
meeting as to the actions to be taken by the holders of shares of Series
B Preferred Stock or the holders of Series B Preferred Stock and Series
C Preferred Stock, as the case may be, from time to time and place to
place without notice other than announcement at the meeting until a
quorum shall be present.
For taking of any action as provided in this Article VII by the holders
of shares of Series B Preferred Stock voting separately as a single class or
together with the holders of shares of Series B Preferred Stock and Series C
Preferred Stock as a single class, as the case may be, each such holder shall
have one vote for each share of such stock standing in his name on the
transfer books of the Corporation as of any record dated fixed for such
purpose or, if no such date be fixed, at the close of business on the
Business Day next preceding the day on which notice is given, or if notice if
waived, at the close of business on the Business Day next preceding the day
on which the meeting is held.
In case any vacancy shall occur among the directors elected by the
holders of shares of Series B Preferred Stock, as provided in paragraph C
above, such vacancy may be filled for the unexpired portion of the term by
vote of the remaining directors theretofore elected by such holders (if there
is a remaining director), or the last remaining director's successor in
office. If any such vacancy is not so filled within 20 days after the
creation thereof or if all directors so elected by the holders of Series B
Preferred Stock shall cease to serve as directors before their terms shall
expire, the holders of the Series B Preferred Stock then outstanding and
entitled to vote for such directors may, by written consent as herein
provided (if action by written consent is permitted), or at a special meeting
of such holders called as provided herein, elect successors to hold office
for the unexpired terms of the directors whose places shall be vacant.
Any director elected by the holders of shares of Series B Preferred
Stock voting separately as a single class may be removed from office with or
without cause by the vote or written consent (if action by written consent is
permitted) of the holders of at least a majority of the outstanding shares of
Series B Preferred Stock. A special meeting of the holders of shares of
Series B Preferred Stock may be called in accordance with the procedures set
forth in this paragraph F.
G. The Corporation shall not enter into any agreement or issue any
security that prohibits, conflicts or is inconsistent with, or would be
breached by, the Corporation's performance of its obligations hereunder.
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VIII. CONVERSION
The holders of the Series B Preferred Stock shall have conversion rights
as follows:
A. Each share of Series B Preferred Stock shall be convertible at
the direction of, and by notice to the Corporation from, the
holders of a majority of the outstanding shares of Series B
Preferred Stock, at any time, at the office of the Corporation or
any transfer agent for such Series, into one thousand (1,000)
fully paid and nonassessable shares of Common Stock subject (x)
to adjustment from time to time as provided below (as so
adjusted, the "conversion ratio") and (y) (prior to the
consummation of the Recapitalization) to limitations resulting
from the available number of shares of Common Stock which may be
reserved for issuance upon such conversion, provided ,that any
conversion pursuant to this paragraph A of less than all of the
outstanding shares of Series B Preferred Stock shall be on a pro
rata basis amongst all holders of Series B Preferred Stock. After
consummation of the Recapitalization, the number "1,000" in this
paragraph shall be "1", subject to adjustment as provided in
paragraph VIII.G.
B. If the holders of a majority of the outstanding shares of Series
B Preferred Stock give notice of conversion under paragraph A
above, the Corporation shall notify all other record holders of
Series B Preferred Stock (a "Conversion Notice"). Following
receipt of a Conversion Notice, the holders of Series B Preferred
Stock shall surrender the certificate or certificates therefor
duly endorsed, at the office of the Corporation or of any
transfer agent for such Series, and shall state therein the name
or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such
holder, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to
the close of business on the date of such Conversion Notice and
the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all
purposes as the recordholder or holders of such shares of Common
Stock as of such date. The issuance of certificates or shares of
Common Stock upon conversion of shares of Series B Preferred
Stock shall be made without charge for any issue, stamp or other
similar tax in respect of such issuance.
C. No fractional shares shall be issued upon conversion of any
shares of Series B Preferred Stock and the number of shares of
Common Stock to be issued shall be rounded down to the nearest
whole share, and the holder of Series B Preferred Stock shall be
paid in cash for any fractional share.
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D. In case at any time or from time to time the Corporation shall
pay any dividend or make any other distribution to the holders of
its Common Stock or other class of securities, or shall offer for
subscription pro rata to the holders of its Common Stock or other
class of securities any additional shares of stock of any class
or any other right, or there shall be any capital reorganization
or reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially
as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, then,
in any one or more of said cases the Corporation shall give at
least 20 days' prior written notice (the time of mailing of such
notice shall be deemed to be the time of giving thereof) to the
registered holders of the Series B Preferred Stock at the
addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (i)
the books of the Corporation shall close or a record shall be
taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be,
provided that in the case of any Transaction to which paragraph H
applies the Corporation shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution or subscription rights
or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or
winding up, as the case may be. Failure to give such notice shall
not invalidate any action so taken.
E. From and after the Recapitalization, the Corporation shall at all
times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series B Preferred
Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all
outstanding shares of Series B Preferred Stock, and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of Series B Preferred Stock, then in addition
to such other remedies as shall be available to the holder of
Series B Preferred Stock, the Corporation will take such
corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purposes.
F. Any notice required by the provisions of paragraph D to be given
the holders of shares of Series B Preferred Stock shall be deemed
given if sent by facsimile transmission, by telex, or if
deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his, her or its address
appearing on the books of the Corporation.
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G. The conversion ratio shall be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall at any time or from time
to time after the Issue Date (A) pay a dividend or make a
distribution, on the outstanding shares of Common Stock in shares
of Common Stock, (B) subdivide the outstanding shares of Common
Stock into a larger number of shares of Common Stock, (C) combine
the outstanding shares of Common Stock into a smaller number of
shares or (D) issue by reclassification of the shares of Common
Stock any shares of capital stock of the Corporation, then, and
in each such case, the conversion ratio in effect immediately
prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of
Series B Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock
or other securities of the Corporation which such holder would
have owned or have been entitled to receive after the happening
of any of the events described above, had such shares of Series B
Preferred Stock been surrendered for conversion immediately prior
to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this clause
(i) shall become effective (x) in the case of any such dividend
or distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common
Stock entitled to receive such dividend or distribution, or (y)
in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such
corporate action becomes effective.
(ii) In the case the Corporation shall, after the Issue
Date, issue shares of Common Stock at a price per share, or
securities convertible into or exchangeable for shares of Common
Stock ("Convertible Securities") having a "Conversion Price" (as
defined below) less than the Current Market Price (for a period
of 15 consecutive trading days prior to such date), then, and in
each such case, the conversion ratio shall be adjusted so that
the holder of each share of Series B Preferred Stock shall be
entitled to receive, upon the conversion thereof, the number of
shares of Common Stock determined by multiplying (A) the
applicable conversion ratio on the day immediately prior to such
date by (B) a fraction, the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding on the
date on which such shares or Convertible Securities are issued
and (2) the number of additional shares of Common Stock issued,
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or into which the Convertible Securities may convert, and the
denominator of which shall be the sum of (x) the number of shares
of Common Stock outstanding on such date and (y) the number of
shares of Common Stock which the aggregate consideration
receivable by the Corporation for the total number of shares of
Common Stock so issued, or the number of shares of Common Stock
which the aggregate of the Conversion Price of such Convertible
Securities so issued, would purchase at such Current Market price
on such date. An adjustment made pursuant to this clause (ii)
shall be made on the next Business Day following the date on
which any such issuance is made and shall be effective
retroactively immediately after the close of business on such
date. For purposes of this clause (ii), the aggregate
consideration receivable by the Corporation in connection with
the issuance of any securities shall be deemed to be the sum of
the aggregate offering price to the public (before deduction of
underwriting discounts or commissions and expenses payable to
third parties), and the "Conversion Price" of any Convertible
Securities is the total amount received or receivable by the
Corporation as consideration for the issue or sale of such
Convertible Securities (before deduction of underwriting
discounts or commissions and expenses payable to third parties)
plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion, exchange or
exercise of any such Convertible Securities. Neither (A) the
issuance of any shares of Common Stock (whether treasury shares
or newly issued shares) pursuant to a dividend or distribution
on, or subdivision, combination or reclassification of, the
outstanding shares of Common Stock requiring an adjustment in the
conversion ratio pursuant to clause (i) of this paragraph G, or
pursuant to any employee benefit plan or program of the
Corporation or pursuant to any option, warrant, right, or
Convertible Security outstanding as of the date hereof
(including, but not limited to, the Rights, the Series B
Preferred Stock, the Series C Preferred Stock and the Warrants)
nor (B) the issuance of shares of Common Stock pursuant thereto
shall be deemed to constitute an issuance of Common Stock or
Convertible Securities by the Corporation to which this clause
(ii) applies. Upon expiration of any Convertible Securities which
shall not have been exercised or converted and for which an
adjustment shall have been made pursuant to this clause (ii), the
Conversion Price computed upon the original issue thereof shall
upon expiration be recomputed as if the only additional shares of
Common Stock issued were such shares of Common Stock (if any)
actually issued upon exercise or conversion of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue
of such Convertible Securities (whether or not exercised or
converted) plus the consideration actually received by the
Corporation upon such exercise of conversion.
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(iii) In case the Corporation shall at any time or from
time to time after the Issue Date declare, order, pay or make a
dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or
rights or warrants to subscribe for securities of the Corporation
or any of its Subsidiaries by way of dividend or spin-off), on
its Common Stock, other than (A) regular quarterly dividends
payable in cash in an aggregate amount not to exceed 15% of net
income from continuing operations before extraordinary items of
the Corporation, determined in accordance with generally accepted
accounting principles, during the period (treated as one
accounting period) commencing on July 1, 1998, and ending on the
date such dividend is paid or (B) dividends or distributions of
shares of Common Stock which are referred to in clause (i) of
this paragraph G, then, and in each such case, the conversion
ratio shall be adjusted so that the holder of each share of
Series B Preferred Stock shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the applicable conversion ratio on
the day immediately prior to the record date fixed for the
determination of stockholders entitled to receive such dividend
or distribution by (2) a fraction, the numerator of which shall
be the then Current Market Price per share of Common Stock for
the period of 20 Trading Days preceding such record date, and the
denominator of which shall be such Current Market Price per share
of Common Stock for the period of 20 Trading Days preceding such
record date, less the Fair Market Value (as defined in Article
IX) per share of Common Stock (as determined in good faith by the
Board of Directors of the Corporation, a certified resolution
with respect to which shall be mailed to each holder of shares of
Series B Preferred Stock) of such dividend or distribution;
provided, however, that in the event of a distribution of shares
of capital stock of a Subsidiary of the Corporation (a
"Spin-Off") made to holders of shares of Common Stock, the
numerator of such fraction shall be the sum of the Current Market
Price per share of Common Stock for the period of 20 Trading Days
preceding the 35th Trading Day after the effective date of such
Spin-Off and the Current Market Price of the number of shares (or
the fraction of a share) of capital stock of the Subsidiary which
is distributed in such Spin-Off in respect of one share of Common
Stock for the period of 20 Trading Days preceding such 35th
Trading Day and the denominator of which shall be the current
market price per share of the Common Stock for the period of 20
Trading Days proceeding such 35th Trading Day. An adjustment made
pursuant to this clause (iii) shall be made upon the opening of
business on the next Business Day following the date on which any
such dividend or distribution is made and shall be effective
retroactively immediately after the close of business on the
record date fixed for the determination of stockholders entitled
to receive such dividend or distribution; provided, however, if
the proviso to the preceding sentence applies, then such
adjustment shall be made and be effective as of such 35th Trading
Day after the effective date of such Spin-Off.
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<PAGE>
(iv) For purposes of this paragraph G, the number of shares
of Common Stock at any time outstanding shall not include any
shares of Common Stock then owned or held by or for the account
of the Corporation.
(v) The term "dividend", as used in this paragraph G shall
mean a dividend or other distribution upon stock of the
Corporation except pursuant to the Rights Agreement (as defined
in Article IX). Notwithstanding anything in this Article VIII to
the contrary, the conversion ratio shall not be adjusted as a
result of any dividend, distribution or issuance of securities of
the Corporation pursuant to the Rights Agreement.
(vi) Anything in this paragraph G to the contrary
notwithstanding, the Corporation shall not be required to give
effect to any adjustment in the conversion ratio unless and until
the net effect of one or more adjustments (each of which shall be
carried forward), determined as above provided, shall have
resulted in a change of the conversion ratio by at least
one-hundredth of one share of Common Stock, and when the
cumulative net effect of more than one adjustment so determined
shall be to change the conversion ratio by at least one-hundredth
of one share of Common Stock, such change in conversion ratio
shall thereupon be given effect.
(vii) The certificate of any firm of independent public
accountants of recognized standing selected by the Board of
Directors of the Corporation (which may be the firm of
independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation
made under this paragraph G.
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter
and before the distribution to stockholders thereof legally
abandon its plan to pay or deliver such dividend or distribution,
then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted
by this paragraph G or in the conversion ratio then in effect
shall be required by reason of the taking of such record.
(ix) There shall be no adjustment of the conversion ratio
in case of the issuance of any stock of the Corporation in a
merger, reorganization, acquisition or other similar transaction
except as set forth in paragraph G(i), G(ii) and H of this
Article VIII.
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<PAGE>
H. In case of any reorganization or reclassification of outstanding
shares of Common Stock (other than a reclassification covered by
paragraph G(i) of this Article VIII, or in case of any
consolidation or merger of the Corporation with or into another
corporation, or in the case of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or
substantially as an entirety (each of the foregoing being
referred to as a "Transaction"), each share of Series B Preferred
Stock then outstanding shall thereafter be convertible into, in
lieu of the Common Stock issuable upon such conversion prior to
consummation of such Transaction, the kind and amount of shares
of stock and other securities and property receivable (including
cash) upon the consummation of such Transaction by a holder of
that number of shares of Common Stock into which one share of
Series B Preferred Stock was convertible immediately prior to
such Transaction (including, on a pro rata basis, the cash,
securities or property received by holders of Common Stock in any
tender or exchange offer that is a step in such Transaction). In
case securities or property other than Common Stock shall be
issuable or deliverable upon conversion as aforesaid, then all
reference in this paragraph H shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or
property.
I. Upon any adjustment of the conversion ratio then in effect and
any increase or decrease in the number of shares of Common Stock
issuable upon the operation of the conversion set forth in
Article VIII, then, and in each such case, the Corporation shall
promptly deliver to the registered holders of the Series B
Preferred and Common Stock, a certificate signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the
Corporation setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment
was calculated and specifying the conversion ratio then in effect
following such adjustment and the increased or decreased number
of shares issuable upon the conversion set forth in this Article
VIII.
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IX. ADDITIONAL DEFINITIONS
For the purposes of this Certificate of Designations of Series B
Preferred Stock, the following terms shall have the meanings indicated:
"Accrual Period" means the end of the first quarterly period following
the Second Anniversary Date.
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act as in effect on the date hereof, except that a
Person shall be deemed to Beneficially Own all such securities that such
Person has the right to acquire whether such right is exercisable immediately
or after the passage of time). The terms "Beneficial Ownership" and
"Beneficial Owner" have correlative meanings.
"Business Day" means any day, other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Bylaws" means the Bylaws of the Corporation, as amended.
"Current Market Price", when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing price per share
of Common Stock or such other securities on such date and, when used with
reference to shares of Common Stock or other securities for any period shall
mean the average of the daily closing prices per share of Common Stock or
such other securities for such period. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Common Stock or such other securities are not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Stock or such other securities are listed or admitted to trading or,
if the Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. National
Market System or such other securities are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Common Stock or such other
securities selected by the Board of Directors of the Corporation. If the
Common Stock or such other securities are not publicly held or so listed or
publicly traded, "Current Market Price" shall mean the Fair Market Value per
share of Common Stock or of such other securities as determined in good faith
by the Board of Directors of the Corporation based on an opinion of an
independent investment banking firm with an established national reputation
as a valuer of securities, which opinion may be based on such assumption as
such firm shall deem to be necessary and appropriate.
"Equity Securities" of any Person means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership
or limited liability company interests of such Person or any other similar
interests of any Person that is not a corporation, partnership or limited
liability company.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
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"Fair Market Value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's-length transaction.
"Formula Number" shall mean one thousand (1,000) prior to consummation
of the Recapitalization, provided, however, that if at any time prior to the
consummation of the Recapitalization, the Corporation shall (i) declare or
pay any dividend or make any distribution on the Common Stock, payable in
shares of Common Stock; (ii) subdivide (by a stock split or otherwise) the
outstanding shares of Common Stock into a larger number of shares of Common
Stock; or (iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then in each such case the Formula Number in effect immediately prior
to such event shall be adjusted to a number determined by multiplying the
Formula Number then in effect by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further, that, if prior to the
consummation of the Recapitalization the Corporation shall issue any shares
of its capital stock in a merger, reclassification, or change of the
outstanding shares of Common Stock, then in each such event the Formula
Number shall be appropriately adjusted to reflect such merger,
reclassification, or change so that each share of Series B Preferred Stock
continues to be the economic equivalent of a Formula Number of shares of
Common Stock immediately prior to such merger, reclassification, or change.
"Group" has the meaning set forth in Rule 13d-5 under the Exchange Act.
"Issue Date" shall mean the first date on which shares of Series B
Preferred Stock are issued.
"Person" means any individual, corporation, company, association,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Post-Recapitalization Stated Value" shall be equal to $1.00.
"Recapitalization" means the amendment of the Corporation's Certificate
of Incorporation to increase the authorized shares of Common Stock from
50,000,000 to 400,000,000, and the authorized shares of Preferred Stock from
1,000,000 to 200,000,000, and the subsequent one thousand-for-one split of
Series B Preferred Stock and Series C Preferred Stock.
"Redemption Price" of a share of Class B Preferred Stock shall mean the
sum of (a) the dividends, if any, accumulated or deemed to have accumulated
thereon to the Optional Redemption Date, whether or not such dividends are
declared plus (b) either (i) the Initial Stated Value thereof (if the
Recapitalization has not been consummated prior to June 30, 1999) or (ii) the
Post-Recapitalization Stated Value thereof (if the Recapitalization has been
consummated prior to June 30, 1999), in each case subject to adjustment for
splits, reclassifications, recombinations or other similar events.
"Rights" shall mean any rights to purchase securities of the Corporation
issued pursuant to any Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated as of June 21,
1996, between the Company and Wells Fargo Bank as rights agent, and all
amendments, supplements and replacements thereof.
29
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"Second Anniversary Date" means the second anniversary of the Issue Date.
"Subsidiary" means, as to any Person, any other Person of which more
than 50% of the shares of the Voting Securities or other voting interests are
owned or controlled, or the ability to select or elect 50% or more of the
directors or similar managers is held, directly or indirectly, by such first
Person and one or more of its Subsidiaries.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open
for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange a Business Day.
"Voting Securities" means, (i) with respect to the Company, the Equity
Securities of the Company entitled to vote generally for the election of
directors of the Company, and (ii) with respect to any other Person, any
securities of or interests in such Person entitled to vote generally for the
election of directors or any similar managing person of such Person.
X. MISCELLANEOUS
A. NOTICES. Any notice referred to herein shall be in writing and,
unless first-class mail shall be specifically permitted for such notices
under the terms hereof, shall be deemed to have been given upon personal
delivery thereof, upon transmittal of such notice by telecopy (with
confirmation of receipt by telecopy or telex) or five days after transmittal
by registered or certified mail, postage prepaid, addressed as follows:
(i) if to the Corporation, to its office at 2 California
Plaza, 350 South Grand Avenue, Los Angeles, California
90071 (Attention: General Counsel) or to the transfer
agent for the Series B Preferred Stock;
(ii) if to a holder of the Series B Preferred Stock, to such
holder at the address of such holder as listed in the
stock record books of the Corporation (which may
include the records of any transfer agent for the
Series B Preferred Stock); or
(iii) to such other address as the Corporation or such
holder, as the case may be, shall have designated by
notice similarly given.
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B. REACQUIRED SHARES. Any shares of Series B Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation, directly or indirectly,
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof (and shall not be deemed to be outstanding for any
purpose) and, if necessary to provide for the lawful redemption or purchase
of such shares, the capital represented by such shares shall be reduced in
accordance with the Delaware General Corporation Law. All such shares of
Series B Preferred Stock shall upon their cancellation and upon the filing of
an appropriate certificate with the Secretary of State of the State of
Delaware, become authorized but unissued shares of Preferred Stock, par value
$0.001 per share, of the Corporation and may be reissued as part of another
series of Preferred Stock, par value $0.001 per share, of the Corporation
subject to the conditions or restrictions on issuance set forth herein.
C. ENFORCEMENT. Any registered holder of shares of Series B Preferred
Stock may proceed to protect and enforce its rights and the rights of such
holders by any available remedy by proceeding at law or in equity to protect
and enforce any such rights, whether for the specific enforcement of any
provision in this Certificate of Designations or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.
D. TRANSFER TAXES. Except as otherwise agreed upon pursuant to the terms
of this Certificate of Designations, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect
of any issue or delivery of Common Stock on conversion of, or other
securities or property issued on account of, shares of Series B Preferred
Stock pursuant hereto or certificates representing such shares or securities.
The Corporation shall not, however, be required to pay any such tax or other
charge that may be imposed in connection with any transfer involved in the
issue or transfer and delivery of any certificate for Common Stock or other
securities or property in a name other than that in which the shares of
Series B Preferred Stock so exchanged, or on account of which such securities
were issued, 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 or is not payable.
E. TRANSFER AGENT. The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series B Preferred Stock. Upon
any such appointment or discharge of a transfer agent, the Corporation shall
send notice thereof by first-class mail, postage prepaid, to each holder of
record of shares of Series B Preferred Stock.
F. RECORD DATES. In the event that the Series B Preferred Stock shall be
registered under either the Securities Act of 1933, as amended, or the
Exchange Act, the Corporation shall establish appropriate record dates with
respect to payments and other actions to be made with respect to the Series B
Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Executive vice President, General Counsel
and Secretary and attested by its Assistant Secretary, this 10th day of
February , 1999.
AAMES FINANCIAL CORPORATION
By: /s/ Barbara S. Polsky
---------------------------------
Name: Barbara S. Polsky
Title: Executive Vice President, General
Counsel and Secretary
[Corporate Seal]
ATTEST:
/s/ John F. Madden, Jr.
------------------------------
John F. Madden Jr.
Assistant Secretary
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CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES C CONVERTIBLE PREFERRED STOCK OF
AAMES FINANCIAL CORPORATION
------------------------------------------------------------------------------
AAMES FINANCIAL CORPORATION, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolutions were adopted by the Board of
Directors of the Corporation (the "Board of Directors") pursuant to authority
of the Board of Directors as required by Section 151 of the Delaware General
Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors in accordance with the provisions of the Certificate of
Incorporation of the Corporation, as amended (the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of the
Corporation's previously authorized preferred stock, par value $0.001 per
share (the "Preferred Stock"), and hereby states the designation and number
thereof, and fixes the voting powers, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions thereof, as follows:
SERIES C CONVERTIBLE PREFERRED STOCK:
I. DESIGNATION AND AMOUNT
The designation of this series of shares shall be "Series C Convertible
Preferred Stock" (the "Series C Preferred Stock") par value $0.001 per share;
the initial stated value per share shall be $1,000.00 (the "Initial Stated
Value"); and the number of shares constituting such series shall be 100,000.
The number of shares of the Series C Preferred Stock may be decreased from
time to time by a resolution or resolutions of the Board of Directors;
provided, however, that such number shall not be decreased below the
aggregate number of shares of the Series C Preferred Stock then outstanding.
II. RANK
A. With respect to dividends, the Series C Preferred Stock shall rank
(i) senior to each other class or series of Preferred Stock, except for the
Series B Convertible Preferred Stock, par value $0.001 per share, of the
Corporation (the "Series B Preferred Stock"); (ii) on a parity with the
Series B Preferred Stock; and (iii) senior to the Corporation's Common Stock,
par value $.001 per share (the "Common Stock"), and, except as specified
above, all other classes and series of capital stock of the Corporation
hereafter issued by the Corporation. With respect to dividends, all equity
securities of the Corporation to which the Series C Preferred Stock ranks
senior, including the Common Stock, are collectively referred to herein as
the "Junior Dividend Securities"; all equity securities of the Corporation
with which the Series C Preferred Stock ranks on a parity, including the
Series B Preferred Stock, are collectively referred to herein as the "Parity
Dividend Securities"; and all equity securities of the Corporation (other
than convertible debt securities) to which the Series C Preferred Stock ranks
junior, with respect to dividends, are collectively referred to herein as the
"Senior Dividend Securities."
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B. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the Series C Preferred Stock shall rank (i) senior to each other
class or series of Preferred Stock, except for the Series B Preferred Stock;
(ii) on a parity with the Series B Preferred Stock; and (iii) senior to the
Common Stock, and, except as specified above, all other classes and series of
capital stock of the Corporation hereafter issued by the Corporation. With
respect to the distribution of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, all equity
securities of the Corporation to which the Series C Preferred Stock ranks
senior, including the Common Stock, are collectively referred to herein as
"Junior Liquidation Securities"; all equity securities of the Corporation
(other than convertible debt securities) to which the Series C Preferred
Stock ranks on parity, including the Series B Preferred Stock, are
collectively referred to herein as "Parity Liquidation Securities"; and all
equity securities of the Corporation to which the Series C Preferred Stock
ranks junior are collectively referred to herein as "Senior Liquidation
Securities."
C. The Series C Preferred Stock shall be subject to the creation of
Junior Dividend Securities and Junior Liquidation Securities (collectively,
"Junior Securities"), but no Parity Dividend Securities or Parity Liquidation
Securities (collectively, "Parity Securities") (other than the Series B
Preferred Stock) or Senior Dividend Securities or Senior Liquidation
Securities (collectively, "Senior Securities") shall be created except in
accordance with the terms hereof.
III. DIVIDENDS
A. DIVIDENDS. Subject to the terms of paragraph D below, shares of
Series C Preferred Stock shall accumulate dividends at a rate of 6.5% per
annum (the "Dividend Rate"), which dividends shall be paid quarterly in cash,
in four equal quarterly installments on the last day of March, June,
September and December of each year, or if any such date is not a Business
Day, the Business Day next preceding such day (each such date, regardless of
whether any dividends have been paid or declared and set aside for payment on
such date, a "Dividend Payment Date"), to holders of record (the "Registered
Holders") as they appear on the stock record books of the Corporation on the
fifteenth day prior to the relevant Dividend Payment Date; provided, however,
that during the Accrual Period (as defined in Article IX hereof) the
Corporation shall have the option to accrue such dividends, which dividends,
to the extent so accrued, shall compound quarterly. Prior to the consummation
of the Recapitalization, dividends shall accrue and accumulate on the Initial
Stated Value of each share of Series B Preferred Stock. Following the
consummation of the Recapitalization, dividends shall accrue and accumulate
on the Post-Recapitalization Stated Value of each share of Series B Preferred
Stock. Dividends shall be paid only when, as and if declared by the Board of
Directors out of funds at the time legally available for the payment of
dividends. Dividends shall begin to accumulate on outstanding shares of
Series C Preferred Stock from the date of issuance and shall be deemed to
accumulate from day to day whether or not earned or declared until paid.
Dividends shall accumulate on the basis of a 360-day year consisting of
twelve 30-day months (four 90-day quarters) and the actual number of days
elapsed in the period for which payable.
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B. ACCUMULATION. Dividends on the Series C Preferred Stock shall be
cumulative, and from and after (i) any Dividend Payment Date on which any
dividend that has accumulated or been deemed to have accumulated through such
date has not been paid in full (other than by reason of the election of the
Corporation to accrue dividends during the Accrual Period); or (ii) any
payment date set for a redemption on which such redemption payment has not
been paid in full, additional dividends shall accumulate in respect of the
amount of such unpaid dividends or unpaid redemption payment (the
"Arrearage") at 125% of the stated dividend rate (or such lesser rate as may
be the maximum rate that is then permitted by applicable law). Such
additional dividends in respect of any Arrearage shall be deemed to
accumulate from day to day whether or not earned or declared until the
Arrearage is paid, shall be calculated as of such successive Dividend Payment
Date, and shall constitute an additional Arrearage from and after any
Dividend Payment Date to the extent not paid on such Dividend Payment Date.
References in any Article herein to dividends that have accumulated or that
have been deemed to have accumulated with respect to the Series C Preferred
Stock shall include the amount, if any, of any Arrearage together with any
dividends accumulated or deemed to have accumulated on such Arrearage
pursuant to the immediately preceding two sentences. Additional dividends in
respect of any Arrearage may be declared and paid at any time, in whole or in
part, without reference to any regular Dividend Payment Date, to Registered
Holders as they appear on the stock record books of the Corporation on such
record date as may be fixed by the Board of Directors (which record date
shall be no less than 10 days prior to the corresponding payment date).
Dividends in respect of any Arrearage shall be paid in cash.
C. METHOD OF PAYMENT. Dividends paid on the shares of Series C Preferred
Stock in an amount less than the total amount of such dividends at the time
accumulated and payable on all outstanding shares of Series C Preferred Stock
shall be allocated pro rata on a share-by-share basis among all such shares
then outstanding. After the Second Anniversary Date, dividends that are
declared and paid in an amount less than the full amount of dividends
accumulated on the Series C Preferred Stock (and on any Arrearage) shall be
applied first to the earliest dividend which has not theretofore been paid.
All cash payments of dividends on the shares of Series C Preferred Stock
shall be made in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
D. SPECIAL DIVIDEND RIGHTS.
1. In addition to the dividend rights set forth in paragraph A
above, prior to the consummation of the Recapitalization, the holders of
shares of Series C Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for such
purpose, cash dividends in an amount per whole share (rounded to the nearest
cent) equal to the Formula Number then in effect times the aggregate per
share amount of all cash dividends declared or paid on the Common Stock. If,
prior to the consummation of the Recapitalization, the Corporation shall pay
any dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of non-cash consideration, then, in each such case,
the Corporation shall simultaneously pay or make on each whole outstanding
share of the Series C Preferred Stock a dividend or distribution in like kind
equal to the Formula Number then in effect times such dividend or
distribution on each share of the Common Stock. The dividends and
distributions on the Series C Preferred Stock pursuant to this paragraph D
are hereinafter referred to as "Participating Dividends." The Corporation
shall declare each Participating Dividend immediately prior to or at the same
time it declares any cash or non-cash dividend or distribution on the Common
Stock in respect of which a Participating Dividend is required to be paid. No
cash or non-cash dividend or distribution on the Common Stock in respect of
which a Participating Dividend is required shall be paid or set aside for
payment on the Common Stock unless a Participation Dividend in respect of
such dividend shall be have been paid. Nothing contained in this paragraph D
shall obligate the Company to declare or pay any dividend or other
distribution on the Common Stock or (except pursuant to paragraph A of this
Article III or in connection with a dividend or distribution on the Common
Stock as provided in this paragraph D) the Series B Preferred Stock.
2. If the Recapitalization is not consummated prior to June 30,
1999, the Dividend Rate shall be deemed to be 15% per annum during the period
commencing on such date and ending on the date the Recapitalization is
consummated.
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IV. LIQUIDATION PREFERENCE
A. PRIOR TO THE RECAPITALIZATION. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, occurring prior to the consummation of the Recapitalization, the
holders of then-outstanding shares of Series C Preferred Stock shall be
entitled to receive out of the assets of the Corporation, whether such assets
are capital or surplus of any nature, an amount per share equal to the sum of
(i) the dividends, if any, accumulated or deemed to have accumulated thereon,
to the date of final distribution to such holders, whether or not such
dividends are declared; and (ii) the Initial Stated Value thereof, before any
payment shall be made or any assets distributed to the holders of any Junior
Liquidation Securities (the "Initial Preferred Distribution"). After the
Initial Preferred Distribution has been made, the holders of Series C
Preferred Stock shall be entitled to share pro rata with the holders of
Common Stock in the distribution of any remaining assets of the Corporation
on the basis of each whole outstanding share of the Series C Preferred Stock
receiving an amount equal to the Formula Number then in effect times such
distribution on each share of the Common Stock. The distributions on the
Series C Preferred Stock pursuant to the immediately preceding sentence of
this paragraph A are hereinafter referred to as "Participating Liquidation
Distributions." No distribution on the Common Stock in respect of which a
Participating Liquidation Distribution is required shall be paid or set aside
for payment on the Common Stock unless a Participating Liquidation
Distribution in respect of such distribution is concurrently paid.
B. AFTER THE RECAPITALIZATION. Subsequent to the consummation of the
Recapitalization, the holders of the outstanding shares of Series C Preferred
Stock shall be entitled to receive out of the assets of the Corporation,
whether such assets are capital or surplus of any nature, an amount per share
equal to the sum of (i) the dividends, if any, accumulated or deemed to have
accumulated thereon to the date of final distribution to such holders,
whether or not such dividends are declared; and (ii) the
Post-Recapitalization Stated Value thereof, before any payment shall be made
or any assets distributed to the holders of any Junior Liquidation
Securities. After any such payment in full after the consummation of the
Recapitalization, the holders of Series C Preferred Stock shall not, as such,
be entitled to any further participation in any distribution of assets of the
Corporation.
C. PARITY SECURITIES. All the assets of the Corporation available for
distribution to stockholders after the liquidation preferences of any Senior
Liquidation Securities shall be distributed ratably (in proportion to the
full distributable amounts to which holders of Series C Preferred Stock and
Parity Liquidation Securities, if any, are respectively entitled upon such
dissolution, liquidation or winding up) among the holders of the
then-outstanding shares of Series C Preferred Stock and Parity Liquidation
Securities, if any, when such assets are not sufficient to pay in full the
aggregate amounts payable thereon.
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D. MERGER NOT A LIQUIDATION. Neither a consolidation or merger of the
Corporation with or into any other Person or Persons, nor a sale, conveyance,
lease, exchange or transfer of all or part of the Corporation's assets for
cash, securities or other property to a Person or Persons shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes
of this Article IV, but the holders of shares of Series C Preferred Stock
shall nevertheless be entitled from and after any such consolidation, merger
or sale, conveyance, lease, exchange or transfer of all or part of the
Corporation's assets to the rights provided by this Article IV following any
such transaction. Notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, stating the payment date or
dates when, and the place or places where, the amounts distributable to each
holder of shares of Series C Preferred Stock in such circumstances shall be
payable, shall be given by first-class mail, postage prepaid, mailed not less
than 30 days prior to any payment date stated therein, to holders of record
as they appear on the stock record books of the Corporation as of the date
such notices are first mailed.
V. REDEMPTION
A. INTENTIONALLY OMITTED
B. OPTIONAL REDEMPTION. Commencing on the earlier to occur of (x) the
tenth anniversary of the Issue Date and (y) the date on which fewer than 25%
of the shares of Series C Preferred Stock issued on the Issue Date remain
outstanding, and at all times thereafter, the Corporation may, at its option,
redeem all (but not less than all) outstanding shares of Series C Preferred
Stock on a date specified by the Corporation (the "Optional Redemption Date")
by paying the Redemption Price therefor in cash out funds legally available
for such purpose.
C. NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption of shares
of Series C Preferred Stock pursuant to paragraph B of this Article V (a
"Notice of Redemption") shall be sent to the holders of record of the shares
of Series C Preferred Stock to be redeemed by first class mail, postage
prepaid, at each such holder's address as it appears on the stock record
books of the Corporation not more than 120 nor fewer than 90 days prior to
the Optional Redemption Date, which date shall be set forth in such notice
(the "Redemption Date"); provided that failure to give such Notice of
Redemption to any holder, or any defect in such Notice of Redemption to any
holder shall not affect the validity of the proceedings for the redemption of
any shares of Series C Preferred Stock held by any other holder. In order to
facilitate the redemption of shares of Series C Preferred Stock, the Board of
Directors may fix a record date for the determination of the holders of
shares of Series C Preferred Stock to be redeemed not more than 30 days prior
to the date the Notice of Redemption is mailed. On or after the Optional
Redemption Date, each holder of the shares called for redemption shall
surrender the certificate evidencing such shares to the Corporation at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price for such shares. From and after the Optional
Redemption Date, all dividends on shares of Series C Preferred Stock shall
cease to accumulate and all rights of the holders thereof as holders of
Series C Preferred Stock shall cease and terminate, except to the extent the
Corporation shall default in payment thereof on the Optional Redemption Date.
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D. DEPOSIT OF FUNDS. The Corporation shall, on or prior to the Optional
Redemption Date, pursuant to paragraph C of this Article V, deposit with its
transfer agent or other redemption agent in the Borough of Manhattan, The
City of New York having a capital and surplus of at least $500,000,000
selected by the Board of Directors, as a trust fund for the benefit of the
holders of the shares of Series C Preferred Stock to be redeemed, cash that
is sufficient in amount to redeem the shares to be redeemed in accordance
with the Notice of Redemption, with irrevocable instructions and authority to
such transfer agent or other redemption agent to pay to the respective
holders of such shares, as evidenced by a list of such holders certified by
an officer of the Corporation, the Redemption Price upon surrender of their
respective share certificates. Such deposit shall be deemed to constitute
full payment of the Redemption Price for such shares to the holders, and from
and after the date of such deposit, all rights of the holders of the shares
of Series C Preferred Stock that are to be redeemed as stockholders of the
Corporation with respect to such shares, except the right to receive the
Redemption Price upon the surrender of their respective certificates, shall
cease and terminate. No dividends shall accumulate on any shares of Series C
Preferred Stock after the Optional Redemption Date, for such shares (unless
the Corporation shall fail to deposit cash sufficient to redeem all such
shares). In case holders of any shares of Series C Preferred Stock called for
redemption shall not, within two years after such deposit, claim the cash
deposited for redemption thereof, such transfer agent or other redemption
agent shall, upon demand, pay over to the Corporation the balance so
deposited. Thereupon, such transfer agent or other redemption agent shall be
relieved of all responsibility to the holders thereof and the sole right of
such holders, with respect to shares to be redeemed, shall be to receive the
Redemption Price as general creditors of the Corporation. Any interest
accrued on any funds so deposited shall belong to the Corporation, and shall
be paid to it from time to time on demand.
VI. RESTRICTIONS ON DIVIDENDS
So long as any shares of the Series C Preferred Stock are outstanding,
the Board of Directors shall not declare, and the Corporation shall not pay
or set apart for payment any dividend on any Junior Securities or make any
payment on account of, or set apart for payment money for a sinking or other
similar fund for, the repurchase, redemption or other retirement of, any
Junior Securities or Parity Securities or any warrants, rights or options
exercisable for or convertible into any Junior Securities or Parity
Securities (other than the repurchase, redemption or other retirement of
debentures or other debt securities that are convertible or exchangeable into
any Junior Securities or Parity Securities), or make any distribution in
respect of the Junior Securities, either directly or indirectly, and whether
in cash, obligations or shares of the Corporation or other property (other
than distributions or dividends in Junior Securities to the holders of Junior
Securities), and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any Junior
Securities or Parity Securities or any warrants, rights, calls or options
exercisable for or convertible into any Junior Securities or Parity
Securities (other than the repurchase, redemption or other retirement of
debentures or other debt securities that are convertible or exchangeable into
any Junior Securities or Parity Securities or the repurchase, redemption or
other retirement of Junior Securities or Parity Securities in exchange for
Junior Securities or Parity Securities) unless prior to or concurrently with
such declaration, payment, setting apart for payment, repurchase, redemption
or other retirement or distribution, as the case may be, all accumulated and
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unpaid dividends on shares of the Series C Preferred Stock not paid on the
dates provided for in paragraph A of Article III hereof (including Arrearages
and accumulated dividends thereon) shall have been paid, except that when
dividends are not paid in full as aforesaid upon the shares of Series C
Preferred Stock, all dividends declared on the Series C Preferred Stock and
any series of Parity Dividend Securities shall be declared and paid pro rata
so that the amount of dividends so declared and paid on Series C Preferred
Stock and such series of Parity Dividend Securities shall in all cases bear
to each other the same ratio that accumulated dividends (including interest
accrued on or additional dividends accumulated in respect of such accumulated
dividends) on the shares of Series C Preferred Stock and such Parity Dividend
Securities bear to each other.
VII. VOTING RIGHTS
A. On or prior to the consummation of the Recapitalization, the holders
of Series C Preferred Stock shall be entitled to one thousand (1,000) votes
per share of Series C Preferred Stock at each meeting of stockholders of the
Corporation with respect to any and all matters presented to the stockholders
of the Corporation for their action and consideration, other than the
election of directors. After the consummation of the Recapitalization, the
holders of Series C Preferred Stock shall be entitled to the number of votes
per share of Series C Preferred Stock equal to the number of shares of Common
Stock for which such share of Series C Preferred Stock is then convertible
pursuant to Article VIII at each meeting of stockholders of the Corporation
with respect to any and all matters presented to the stockholders of the
Corporation for their action and consideration, other than the election of
directors.
B. So long as any shares of the Series C Preferred Stock are
outstanding, (i) each share of Series C Preferred Stock shall entitle the
holder thereof to vote on all matters voted on by holders of Common Stock,
other than the election of directors; and (ii) the shares of Series C
Preferred Stock shall vote together with shares of Common Stock and shares of
Series B Preferred Stock as a single class.
C. Without the written consent (if action by written consent is
permitted) or affirmative vote of the holders of a majority of the
outstanding shares of Series C Preferred Stock and Series B Preferred Stock,
voting together as a single class, the Corporation shall not (i) authorize,
create or issue, or increase the authorized amount of, (x) any Senior
Securities or Parity Securities or (y) any class or series of capital stock
or any security convertible into or exercisable for any class or series of
capital stock, redeemable mandatorily or redeemable at the option of the
holder thereof or (ii) enter into any Transaction (as defined in paragraph H
of Article VIII). Such vote or consent shall be taken in accordance with the
procedures specified in paragraph E below.
D. Without the written consent (if action by written consent is
permitted) or affirmative vote of the holders of at least a majority of the
outstanding shares of Series C Preferred Stock and Series B Preferred Stock,
voting together as a single class, the Corporation shall not (i) amend, alter
or repeal any provision of the Certificate of Incorporation or the Bylaws, if
the amendment, alteration or repeal alters or changes the powers, preferences
or special rights of the Series C Preferred Stock so as to affect them
materially and adversely or (ii) authorize or take any other action if such
action alters or changes any of the rights of the Series C Preferred Stock in
any respect or otherwise would be inconsistent with the provisions of this
Certificate of Designations and the holders of any class or series of the
capital stock of the Corporation is entitled to vote thereon. Such vote or
consent shall be taken in accordance with the procedures specified in
paragraph E below.
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E. The foregoing rights of holders of shares of Series C Preferred Stock
to take any actions as provided in this Article VII may be exercised at any
annual meeting of stockholders or at a special meeting of stockholders held
for such purpose as hereinafter provided or at any adjournment thereof, or by
the written consent, delivered to the Secretary of the Corporation, of the
holders of the minimum number of shares required to take such action, if
action by written consent of stockholders of the Corporation is then
permitted.
The Chairman of the Board of the Corporation may call, and upon written
request of holders of record of 35% of the outstanding shares of Series C
Preferred Stock and Series B Preferred Stock, addressed to the Secretary of
the Corporation at the principal office of the Corporation shall call, a
special meeting of the holders of shares entitled to vote as provided herein.
Such meeting shall be held within 30 days after delivery of such request to
the Secretary, at the place and upon the notice provided by law and in the
By-laws of the Corporation for the holding of meetings of stockholders.
At each meeting of stockholders at which the holders of shares of Series
C Preferred Stock shall have the right to take any action, the presence in
person or by proxy of the holders of record of one-third of the total number
of shares of Series C Preferred Stock and Series B Preferred Stock then
outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
thereof:
(A) the absence of a quorum of the holders of shares of Series C
Preferred Stock shall not prevent the election of directors to be
elected by the holders of shares of Series B Preferred Stock or the
taking of any action as provided in this Article VII; and
(B) in the absence of a quorum of the holders of shares of Series
C Preferred Stock and Series B Preferred Stock, a majority of the
holders of such shares present in person or by proxy shall have the
power to adjourn the meeting as to the actions to be taken by the
holders of shares of Series C Preferred Stock and Series B Preferred
Stock, from time to time and place to place without notice other than
announcement at the meeting until a quorum shall be present.
For taking of any action as provided in this Article VII by the holders
of shares of Series C Preferred Stock and Series B Preferred Stock, each such
holder shall have one vote for each share of such stock standing in his name
on the transfer books of the Corporation as of any record dated fixed for
such purpose or, if no such date be fixed, at the close of business on the
Business Day next preceding the day on which notice is given, or if notice if
waived, at the close of business on the Business Day next preceding the day
on which the meeting is held.
F. The Corporation shall not enter into any agreement or issue any
security that prohibits, conflicts or is inconsistent with, or would be
breached by, the Corporation's performance of its obligations hereunder.
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VIII. CONVERSION
The holders of the Series C Preferred Stock shall have conversion rights
as follows:
A. Each share of Series C Preferred Stock shall be convertible at
the direction of, and by notice to the Corporation from, (i) the
holder thereof or (ii) the holders of a majority of the
outstanding shares of Series C Preferred Stock, at any time, at
the office of the Corporation or any transfer agent for such
Series, into one thousand (1,000) fully paid and nonassessable
shares of Common Stock subject (x) to adjustment from time to
time as provided below (as so adjusted, the "conversion ratio")
and (y) (prior to the consummation of the Recapitalization) to
limitations resulting from the available number of shares of
Common Stock which may be reserved for issuance upon such
conversion, provided, that any conversion pursuant to clause (ii)
above of less than all of the outstanding shares of Series C
Preferred Stock shall be on a pro rata basis amongst all holders
of Series C Preferred Stock. After consummation of the
Recapitalization, the number "1,000" in this paragraph shall be
"1", subject to adjustment as provided in paragraph VIII.G.
B. If a holder of Series C Preferred Stock gives notice (an
"Optional Conversion Notice") of conversion under paragraph A
above, such holder shall surrender with such Optional Conversion
Notice the duly endorsed certificate or certificates for the
Series C Preferred Stock being converted, at the office of the
Corporation or of any transfer agent for such Series, and shall
state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. If the
holders of a majority of the outstanding shares of Series C
Preferred Stock give notice of conversion under paragraph A
above, the Corporation shall notify all other record holders of
Series C Preferred Stock (a "Mandatory Conversion Notice").
Following receipt of a Mandatory Conversion Notice, the holders
of Series C Preferred Stock shall surrender the certificate or
certificates therefor duly endorsed, at the office of the
Corporation or of any transfer agent for such Series, and shall
state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable after the surrender of
a Series C Preferred Stock certificate or certificates pursuant
to an Optional Conversion Notice or Mandatory Conversion Notice,
issue and deliver at such office to such holder, or to the
nominee or nominees of such holder, a certificate or certificates
for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed
to have been made immediately prior to the close of business on
the date of such Optional Conversion Notice or Mandatory
Conversion Notice, as applicable, and the person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the recordholder
or holders of such shares of Common Stock as of such date. The
issuance of certificates or shares of Common Stock upon
conversion of shares of Series C Preferred Stock shall be made
without charge for any issue, stamp or other similar tax in
respect of such issuance.
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C. No fractional shares shall be issued upon conversion of any
shares of Series C Preferred Stock and the number of shares of
Common Stock to be issued shall be rounded down to the nearest
whole share, and the holder of Series C Preferred Stock shall be
paid in cash for any fractional share.
D. In case at any time or from time to time the Corporation shall
pay any dividend or make any other distribution to the holders of
its Common Stock or other class of securities, or shall offer for
subscription pro rata to the holders of its Common Stock or other
class of securities any additional shares of stock of any class
or any other right, or there shall be any capital reorganization
or reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially
as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, then,
in any one or more of said cases the Corporation shall give at
least 20 days' prior written notice (the time of mailing of such
notice shall be deemed to be the time of giving thereof) to the
registered holders of the Series C Preferred Stock at the
addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (i)
the books of the Corporation shall close or a record shall be
taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be,
provided that in the case of any Transaction to which paragraph H
applies the Corporation shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution or subscription rights
or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or
winding up, as the case may be. Failure to give such notice shall
not invalidate any action so taken.
E. From and after the Recapitalization, the Corporation shall at all
times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series C Preferred
Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all
outstanding shares of Series C Preferred Stock, and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of Series C Preferred Stock, then in addition
to such other remedies as shall be available to the holder of
Series C Preferred Stock, the Corporation will take such
corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purposes.
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F. Any notice required by the provisions of paragraph D to be given
the holders of shares of Series C Preferred Stock shall be deemed
given if sent by facsimile transmission, by telex, or if
deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his, her or its address
appearing on the books of the Corporation.
G. The conversion ratio shall be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall at any time or from time
to time after the Issue Date (A) pay a dividend or make a
distribution, on the outstanding shares of Common Stock in shares
of Common Stock, (B) subdivide the outstanding shares of Common
Stock into a larger number of shares of Common Stock, (C) combine
the outstanding shares of Common Stock into a smaller number of
shares or (D) issue by reclassification of the shares of Common
Stock any shares of capital stock of the Corporation, then, and
in each such case, the conversion ratio in effect immediately
prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of
Series C Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock
or other securities of the Corporation which such holder would
have owned or have been entitled to receive after the happening
of any of the events described above, had such shares of Series C
Preferred Stock been surrendered for conversion immediately prior
to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this clause
(i) shall become effective (x) in the case of any such dividend
or distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common
Stock entitled to receive such dividend or distribution, or (y)
in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such
corporate action becomes effective.
(ii) In the case the Corporation shall, after the Issue
Date, issue shares of Common Stock at a price per share, or
securities convertible into or exchangeable for shares of Common
Stock ("Convertible Securities") having a "Conversion Price" (as
defined below) less than the Current Market Price (for a period
of 15 consecutive trading days prior to such date), then, and in
each such case, the conversion ratio shall be adjusted so that
the holder of each share of Series C Preferred Stock shall be
entitled to receive, upon the conversion thereof, the number of
shares of Common Stock determined by multiplying (A) the
applicable conversion ratio on the day immediately prior to such
date by (B) a fraction, the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding on the
date on which such shares or Convertible Securities are issued
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<PAGE>
and (2) the number of additional shares of Common Stock issued,
or into which the Convertible Securities may convert, and the
denominator of which shall be the sum of (x) the number of shares
of Common Stock outstanding on such date and (y) the number of
shares of Common Stock which the aggregate consideration
receivable by the Corporation for the total number of shares of
Common Stock so issued, or the number of shares of Common Stock
which the aggregate of the Conversion Price of such Convertible
Securities so issued, would purchase at such Current Market price
on such date. An adjustment made pursuant to this clause (ii)
shall be made on the next Business Day following the date on
which any such issuance is made and shall be effective
retroactively immediately after the close of business on such
date. For purposes of this clause (ii), the aggregate
consideration receivable by the Corporation in connection with
the issuance of any securities shall be deemed to be the sum of
the aggregate offering price to the public (before deduction of
underwriting discounts or commissions and expenses payable to
third parties), and the "Conversion Price" of any Convertible
Securities is the total amount received or receivable by the
Corporation as consideration for the issue or sale of such
Convertible Securities (before deduction of underwriting
discounts or commissions and expenses payable to third parties)
plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion, exchange or
exercise of any such Convertible Securities. Neither (A)
the issuance of any shares of Common Stock (whether treasury
shares or newly issued shares) pursuant to a dividend or
distribution on, or subdivision, combination or reclassification
of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to clause (i) of this
paragraph G, or pursuant to any employee benefit plan or program
of the Corporation or pursuant to any option, warrant, right, or
Convertible Security outstanding as of the date hereof
(including, but not limited to, the Rights, the Series B
Preferred Stock, the Series C Preferred Stock and the Warrants)
nor (B) the issuance of shares of Common Stock pursuant thereto
shall be deemed to constitute an issuance of Common Stock or
Convertible Securities by the Corporation to which this clause
(ii) applies. Upon expiration of any Convertible Securities which
shall not have been exercised or converted and for which an
adjustment shall have been made pursuant to this clause (ii), the
Conversion Price computed upon the original issue thereof shall
upon such expiration be recomputed as if the only additional
shares of Common Stock issued were such shares of Common Stock
(if any) actually issued upon exercise of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue
of such Convertible Securities (whether or not exercised or
converted) plus the consideration actually received by the
Corporation upon such exercise of conversion.
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<PAGE>
(iii) In case the Corporation shall at any time or from
time to time after the Issue Date declare, order, pay or make a
dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or
rights or warrants to subscribe for securities of the Corporation
or any of its Subsidiaries by way of dividend or spin-off), on
its Common Stock, other than (A) regular quarterly dividends
payable in cash in an aggregate amount not to exceed 15% of net
income from continuing operations before extraordinary items of
the Corporation, determined in accordance with generally accepted
accounting principles, during the period (treated as one
accounting period) commencing on July 1, 1998, and ending on the
date such dividend is paid or (B) dividends or distributions of
shares of Common Stock which are referred to in clause (i) of
this paragraph G, then, and in each such case, the conversion
ratio shall be adjusted so that the holder of each share of
Series C Preferred Stock shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the applicable conversion ratio on
the day immediately prior to the record date fixed for the
determination of stockholders entitled to receive such dividend
or distribution by (2) a fraction, the numerator of which shall
be the then Current Market Price per share of Common Stock for
the period of 20 Trading Days preceding such record date, and the
denominator of which shall be such Current Market Price per share
of Common Stock for the period of 20 Trading Days preceding such
record date less the Fair Market Value (as defined in Article IX)
per share of Common Stock (as determined in good faith by the
Board of Directors of the Corporation, a certified resolution
with respect to which shall be mailed to each holder of shares of
Series C Preferred Stock) of such dividend or distribution;
provided, however, that in the event of a distribution of shares
of capital stock of a Subsidiary of the Corporation (a
"Spin-Off") made to holders of shares of Common Stock, the
numerator of such fraction shall be the sum of the Current Market
Price per share of Common Stock for the period of 20 Trading Days
preceding the 35th Trading Day after the effective date of such
Spin-Off and the Current Market Price of the number of shares (or
the fraction of a share) of capital stock of the Subsidiary which
is distributed in such Spin-Off in respect of one share of Common
Stock for the period of 20 Trading Days preceding such 35th
Trading Day and the denominator of which shall be the current
market price per share of the Common Stock for the period of 20
Trading Days proceeding such 35th Trading Day. An adjustment made
pursuant to this clause (iii) shall be made upon the opening of
business on the next Business Day following the date on which any
such dividend or distribution is made and shall be effective
retroactively immediately after the close of business on the
record date fixed for the determination of stockholders entitled
to receive such dividend or distribution; provided, however, if
the proviso to the preceding sentence applies, then such
adjustment shall be made and be effective as of such 35th Trading
Day after the effective date of such Spin-Off.
(iv) For purposes of this paragraph G, the number of shares
of Common Stock at any time outstanding shall not include any
shares of Common Stock then owned or held by or for the account
of the Corporation.
44
<PAGE>
(v) The term "dividend", as used in this paragraph G shall
mean a dividend or other distribution upon stock of the
Corporation except pursuant to the Rights Agreement (as defined
in Article IX). Notwithstanding anything in this Article VIII to
the contrary, the conversion ratio shall not be adjusted as a
result of any dividend, distribution or issuance of securities of
the Corporation pursuant to the Rights Agreement.
(vi) Anything in this paragraph G to the contrary
notwithstanding, the Corporation shall not be required to give
effect to any adjustment in the conversion ratio unless and until
the net effect of one or more adjustments (each of which shall be
carried forward), determined as above provided, shall have
resulted in a change of the conversion ratio by at least
one-hundredth of one share of Common Stock, and when the
cumulative net effect of more than one adjustment so determined
shall be to change the conversion ratio by at least one-hundredth
of one share of Common Stock, such change in conversion ratio
shall thereupon be given effect.
(vii) The certificate of any firm of independent public
accountants of recognized standing selected by the Board of
Directors of the Corporation (which may be the firm of
independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation
made under this paragraph G.
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter
and before the distribution to stockholders thereof legally
abandon its plan to pay or deliver such dividend or distribution,
then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted
by this paragraph G or in the conversion ratio then in effect
shall be required by reason of the taking of such record.
(ix) There shall be no adjustment of the conversion ratio
in case of the issuance of any stock of the Corporation in a
merger, reorganization, acquisition or other similar transaction
except as set forth in paragraph G(i), G(ii) and H of this
Article VIII.
45
<PAGE>
H. In case of any reorganization or reclassification of outstanding
shares of Common Stock (other than a reclassification covered by
paragraph G(i) of this Article VIII), or in case of any
consolidation or merger of the Corporation with or into another
corporation, or in the case of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or
substantially as an entirety (each of the foregoing being
referred to as a "Transaction"), each share of Series C Preferred
Stock then outstanding shall thereafter be convertible into, in
lieu of the Common Stock issuable upon such conversion prior to
consummation of such Transaction, the kind and amount of shares
of stock and other securities and property receivable (including
cash) upon the consummation of such Transaction by a holder of
that number of shares of Common Stock into which one share of
Series C Preferred Stock was convertible immediately prior to
such Transaction (including, on a pro rata basis, the cash,
securities or property received by holders of Common Stock in any
tender or exchange offer that is a step in such Transaction). In
case securities or property other than Common Stock shall be
issuable or deliverable upon conversion as aforesaid, then all
reference in this paragraph H shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or
property.
I. Upon any adjustment of the conversion ratio then in effect and
any increase or decrease in the number of shares of Common Stock
issuable upon the operation of the conversion set forth in
Article VIII, then, and in each such case, the Corporation shall
promptly deliver to the registered holders of the Series C
Preferred and Common Stock, a certificate signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the
Corporation setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment
was calculated and specifying the conversion ratio then in effect
following such adjustment and the increased or decreased number
of shares issuable upon the conversion set forth in this Article
VIII.
IX. ADDITIONAL DEFINITIONS
For the purposes of this Certificate of Designations of Series C
Preferred Stock, the following terms shall have the meanings indicated:
"Accrual Period" means the end of the first quarterly period following
the Second Anniversary Date.
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act as in effect on the date hereof, except that a
Person shall be deemed to Beneficially Own all such securities that such
Person has the right to acquire whether such right is exercisable immediately
or after the passage of time). The terms "Beneficial Ownership" and
"Beneficial Owner" have correlative meanings.
46
<PAGE>
"Business Day" means any day, other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Bylaws" means the Bylaws of the Corporation, as amended.
"Current Market Price", when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing price per share
of Common Stock or such other securities on such date and, when used with
reference to shares of Common Stock or other securities for any period shall
mean the average of the daily closing prices per share of Common Stock or
such other securities for such period. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Common Stock or such other securities are not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Stock or such other securities are listed or admitted to trading or,
if the Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. National
Market System or such other securities are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Common Stock or such other
securities selected by the Board of Directors of the Corporation. If the
Common Stock or such other securities are not publicly held or so listed or
publicly traded, "Current Market Price" shall mean the Fair Market Value per
share of Common Stock or of such other securities as determined in good faith
by the Board of Directors of the Corporation based on an opinion of an
independent investment banking firm with an established national reputation
as a valuer of securities, which opinion may be based on such assumption as
such firm shall deem to be necessary and appropriate.
"Equity Securities" of any Person means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership
or limited liability company interests of such Person or any other similar
interests of any Person that is not a corporation, partnership or limited
liability company.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
"Fair Market Value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's-length transaction.
47
<PAGE>
"Formula Number" shall mean one thousand (1,000) prior to consummation
of the Recapitalization; provided, however, that if at any time prior to the
consummation of the Recapitalization, the Corporation shall (i) declare or
pay any dividend or make any distribution on the Common Stock, payable in
shares of Common Stock; (ii) subdivide (by a stock split or otherwise) the
outstanding shares of Common Stock into a larger number of shares of Common
Stock; or (iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then in each such case the Formula Number in effect immediately prior
to such event shall be adjusted to a number determined by multiplying the
Formula Number then in effect by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further, that, if prior to the
consummation of the Recapitalization the Corporation shall issue any shares
of its capital stock in a merger, reclassification, or change of the
outstanding shares of Common Stock, then in each such event the Formula
Number shall be appropriately adjusted to reflect such merger,
reclassification, or change so that each share of Series C Preferred Stock
continues to be the economic equivalent of a Formula Number of shares of
Common Stock immediately prior to such merger, reclassification, or change.
"Group" has the meaning set forth in Rule 13d-5 under the Exchange Act.
"Issue Date" shall mean the first date on which shares of Series C
Preferred Stock are issued. "Person" means any individual, corporation,
company, association, partnership, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.
"Post-Recapitalization Stated Value" shall be equal to $1.00.
"Recapitalization" means the amendment of the Corporation's Certificate
of Incorporation to increase the authorized shares of Common Stock from
50,000,000 to 400,000,000, and the authorized shares of Preferred Stock from
1,000,000 to 200,000,000, and the subsequent one thousand-for-one split of
Series C Preferred Stock and Series B Preferred Stock.
"Redemption Price" of a share of Series C Preferred Stock shall mean the
sum of (a) the dividends, if any, accumulated or deemed to have accumulated
thereon to the Optional Redemption Date, whether or not such dividends are
declared plus (b) either (i) the Initial Stated Value thereof (if the
Recapitalization has not been consummated prior to June 30, 1999) or (ii) the
Post-Recapitalization Stated Value thereof (if the Recapitalization has been
consummated prior to June 30, 1999), in each case subject to adjustment for
splits, reclassifications, recombinations or similar events.
"Rights" shall mean any rights to purchase securities of the Corporation
issued pursuant to any Rights Agreement.
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<PAGE>
"Rights Agreement" shall mean the Rights Agreement, dated as of June 21,
1996, between the Company and Wells Fargo Bank as rights agent, and all
amendments, supplements and replacements thereof.
"Second Anniversary Date" means the second anniversary of the Issue Date.
"Subsidiary" means, as to any Person, any other Person of which more
than 50% of the shares of the Voting Securities or other voting interests are
owned or controlled, or the ability to select or elect 50% or more of the
directors or similar managers is held, directly or indirectly, by such first
Person and one or more of its Subsidiaries.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open
for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange a Business Day.
"Voting Securities" means, (i) with respect to the Company, the Equity
Securities of the Company entitled to vote generally for the election of
directors of the Company, and (ii) with respect to any other Person, any
securities of or interests in such Person entitled to vote generally for the
election of directors or any similar managing person of such Person.
X. MISCELLANEOUS
A. NOTICES. Any notice referred to herein shall be in writing and,
unless first-class mail shall be specifically permitted for such notices
under the terms hereof, shall be deemed to have been given upon personal
delivery thereof, upon transmittal of such notice by telecopy (with
confirmation of receipt by telecopy or telex) or five days after transmittal
by registered or certified mail, postage prepaid, addressed as follows:
(i) if to the Corporation, to its office at 2 California
Plaza, 350 South Grand Avenue, Los Angeles, California
90071 (Attention: General Counsel) or to the transfer
agent for the Series C Preferred Stock;
(ii) if to a holder of the Series C Preferred Stock, to such
holder at the address of such holder as listed in the
stock record books of the Corporation (which may
include the records of any transfer agent for the
Series C Preferred Stock); or
(iii) to such other address as the Corporation or such
holder, as the case may be, shall have designated by
notice similarly given.
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<PAGE>
B. REACQUIRED SHARES. Any shares of Series C Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation, directly or indirectly,
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof (and shall not be deemed to be outstanding for any
purpose) and, if necessary to provide for the lawful redemption or purchase
of such shares, the capital represented by such shares shall be reduced in
accordance with the Delaware General Corporation Law. All such shares of
Series C Preferred Stock shall upon their cancellation and upon the filing of
an appropriate certificate with the Secretary of State of the State of
Delaware, become authorized but unissued shares of Preferred Stock, par value
$0.001 per share, of the Corporation and may be reissued as part of another
series of Preferred Stock, par value $0.001 per share, of the Corporation
subject to the conditions or restrictions on issuance set forth herein.
C. ENFORCEMENT. Any registered holder of shares of Series C Preferred
Stock may proceed to protect and enforce its rights and the rights of such
holders by any available remedy by proceeding at law or in equity to protect
and enforce any such rights, whether for the specific enforcement of any
provision in this Certificate of Designations or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.
D. TRANSFER TAXES. Except as otherwise agreed upon pursuant to the terms
of this Certificate of Designations, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect
of any issue or delivery of Common Stock on conversion of, or other
securities or property issued on account of, shares of Series C Preferred
Stock pursuant hereto or certificates representing such shares or securities.
The Corporation shall not, however, be required to pay any such tax or other
charge that may be imposed in connection with any transfer involved in the
issue or transfer and delivery of any certificate for Common Stock or other
securities or property in a name other than that in which the shares of
Series C Preferred Stock so exchanged, or on account of which such securities
were issued, 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 or is not payable.
E. TRANSFER AGENT. The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series C Preferred Stock. Upon
any such appointment or discharge of a transfer agent, the Corporation shall
send notice thereof by first-class mail, postage prepaid, to each holder of
record of shares of Series C Preferred Stock.
F. RECORD DATES. In the event that the Series C Preferred Stock shall be
registered under either the Securities Act of 1933, as amended, or the
Exchange Act, the Corporation shall establish appropriate record dates with
respect to payments and other actions to be made with respect to the Series C
Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Executive Vice President, General Counsel
and Secretary and attested by its Assistant Secretary, this 10th day of
February , 1999.
AAMES FINANCIAL CORPORATION
By: /s/ Barbara S. Polsky
---------------------------------
Name: Barbara S. Polsky
Title: Executive Vice President,
General Counsel and Secretary
[Corporate Seal]
ATTEST:
/s/ John F. Madden, Jr.
------------------------------
John F. Madden Jr.
Assistant Secretary
50
<PAGE>
CERTIFICATE OF INCREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
AAMES FINANCIAL CORPORATION
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Aames Financial Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
That a Certificate of the Voting Powers, Designations, Preferences and
Relative, Participating, Optional or Other Special Rights, and
Qualifications, Limitations or Restrictions Thereof, of Series B Convertible
Preferred Stock was filed in the Office of the Secretary of State on February
10,1999.
That the Board of Directors of the Corporation adopted a resolution
authorizing and directing an increase in the authorized number of shares of
Series B Convertible Preferred Stock of the Corporation, from 100,000 shares
to 29,704,000 shares, all in accordance with the provisions of Section 151 of
The General Corporation Law of the State of Delaware and the Certificate of
Incorporation of the Corporation.
That the effective date and time of this Certificate of Increase is
September 30, 1999 at 11:59 p.m., eastern time.
IN WITNESS WHEREOF, Aames Financial Corporation has caused this
certificate to be signed by Barbara S. Polsky, its Executive Vice President,
General Counsel and Secretary, this 30th day of September, 1999.
AAMES FINANCIAL CORPORATION
By: /s/ BARBARA S. POLSKY
---------------------------------
Name: Barbara S. Polsky
Title: Executive Vice President,
General Counsel and Secretary
51
<PAGE>
CERTIFICATE OF INCREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
AAMES FINANCIAL CORPORATION
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Aames Financial Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
That a Certificate of the Voting Powers, Designations, Preferences and
Relative, Participating, Optional or Other Special Rights, and
Qualifications, Limitations or Restrictions Thereof, of Series C Convertible
Preferred Stock was filed in the Office of the Secretary of State on February
10,1999.
That the Board of Directors of the Corporation adopted a resolution
authorizing and directing an increase in the authorized number of shares of
Series C Convertible Preferred Stock of the Corporation, from 100,000 shares
to 107,122,664 shares, all in accordance with the provisions of Section 151
of The General Corporation Law of the State of Delaware and the Certificate
of Incorporation of the Corporation.
That the effective date and time of this Certificate of Increase is
September 30, 1999 at 11:59 p.m., eastern time.
IN WITNESS WHEREOF, Aames Financial Corporation has caused this
certificate to be signed by Barbara S. Polsky, its Executive Vice President,
General Counsel and Secretary, this 30th day of September, 1999.
AAMES FINANCIAL CORPORATION
By: /s/ BARBARA S. POLSKY
-------------------------------
Name: Barbara S. Polsky
Title: Executive Vice President,
General Counsel and Secretary
52
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
The undersigned Barbara S. Polsky the Executive Vice President,
General Counsel and Secretary, respectively, of Aames Financial Corporation
(the "Corporation"), a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "DGCL"), do
hereby certify that the following amendments were adopted in accordance with
the provisions of Section 242 of the DGCL:
The text of the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation is hereby amended and restated to read in full
as follows:
FOURTH: The total number of shares which the
Corporation shall have the authority to issue is 600,000,000,
consisting of 400,000,000 shares of common stock, par value
$0.001 per share (the "Common Stock") and 200,000,000 shares
of preferred stock, par value $0.001 per share (the "Preferred
Stock").
Simultaneously with the effective date of this
amendment (the "EFFECTIVE DATE"), each share of the
Corporation's Series B Convertible Preferred Stock having a
par value of $0.001 per share issued and outstanding
immediately prior to the Effective Date (the "PRE-SPLIT SERIES
B PREFERRED STOCK") shall automatically and without any action
on the part of the holder thereof be reclassified as and
changed into one thousand (1,000) shares of Series B
Convertible Preferred Stock, par value of $0.001 per share
(the "POST-SPLIT SERIES B STOCK"). Each holder of a
certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of Pre-Split
Series B Convertible Preferred Stock (the "PRE-SPLIT SERIES B
CERTIFICATES," whether one or more) shall be entitled to
receive upon surrender of such Pre-Split Series B Certificates
to the Corporation's Secretary for cancellation, a certificate
or certificates (the "POST-SPLIT SERIES B CERTIFICATES,"
whether one or more) representing the number of whole shares
of Post-Split Series B Convertible Preferred Stock into which
and for which the shares of Pre-Split Series B Convertible
Preferred Stock formerly represented by such Pre-Split Series
B Certificates so surrendered, are reclassified pursuant
<PAGE>
to the terms hereof. From and after the Effective Date,
Pre-Split Series B Certificates shall represent only the right
to receive Post-Split Series B Certificates pursuant to the
provisions hereof. If more than one Pre-Split Series B
Certificate shall be surrendered at one time for the account
of the same stockholder, the number of full shares of
Post-Split Series B Convertible Preferred Stock for which the
Post-Split Series B Certificates shall be issued shall be
computed on the basis of the aggregate number of shares
represented by the Pre-Split Series B Certificates so
surrendered. If any Post-Split Series B Certificate is to be
issued in a name other than that in which the Pre-Split Series
B Certificate surrendered for exchange are issued, the
Pre-Split Series B Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer,
and the person or persons requesting such exchange shall affix
any requisite stock transfer tax stamps to the Pre-Split
Series B Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the
Corporation's Secretary that such taxes are not payable;
Simultaneously with the Effective Date, each share of
the Corporation's Series C Convertible Preferred Stock having
a par value of $0.001 per share issued and outstanding
immediately prior to the Effective Date (the "PRE-SPLIT SERIES
C PREFERRED STOCK") shall automatically and without any action
on the part of the holder thereof be reclassified as and
changed into one thousand (1,000) shares of Series C
Convertible Preferred Stock, par value of $0.001 per share
(the "POST-SPLIT SERIES C STOCK"). Each holder of a
certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of Pre-Split
Series C Convertible Preferred Stock (the "PRE-SPLIT SERIES C
CERTIFICATES," whether one or more) shall be entitled to
receive upon surrender of such Pre-Split Series C Certificates
to the Corporation's Secretary for cancellation, a certificate
or certificates (the "POST-SPLIT SERIES C CERTIFICATES,"
whether one or more) representing the number of whole shares
of Post-Split Series C Convertible
Preferred Stock into which and for which the shares
of Pre-Split Series C Convertible Preferred Stock formerly
represented by such Pre-Split Series C Certificates so
surrendered, are reclassified pursuant to the terms hereof.
From and after the Effective Date, Pre-Split Series C
Certificates shall represent only the right to receive
Post-Split Series C Certificates pursuant to the provisions
hereof. If more than one Pre-Split Series C Certificate shall
be surrendered at one time for the account of the same
stockholder, the number of full shares of Post-Split Series C
Convertible Preferred Stock for which the Post-Split Series C
Certificates shall be issued shall be computed on the basis of
the aggregate number of shares represented by the Pre-Split
Series C Certificates so surrendered. If any Post-Split Series
C Certificate is to be issued in a name other than that in
which the Pre-Split Series C Certificate surrendered for
exchange are issued, the Pre-Split Series C Certificates so
surrendered shall be properly
<PAGE>
endorsed and otherwise in proper form for transfer, and the
person or persons requesting such exchange shall affix any
requisite stock transfer tax stamps to the Pre-Split Series C
Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the
Corporation's Secretary that such taxes are not payable;
The Corporation's Series A Preferred Stock shall not
be affected by the filing of this Amendment.
The text of Article III, Subsection D(2) of the Series B Certificate of
Designations of the Corporation is hereby amended and restated to read in full
as follows:
2. If the Recapitalization is not consummated prior
to the earlier to occur of September 30, 1999 and the date of
a meeting of the stockholders of the Company at which any
proposal necessary to consummate the Recapitalization is
defeated, the Dividend Rate shall be deemed to be 15% per
annum during the period commencing on such date and ending on
the date the Recapitalization is consummated.
The text of Article III, Subsection D(2) of the Series C Certificate of
Designations of the Corporation is hereby amended and restated to read in full
as follows:
2. If the Recapitalization is not consummated prior
to the earlier to occur of September 30, 1999 and the date of
a meeting of the stockholders of the Company at which any
proposal necessary to consummate the Recapitalization is
defeated, the Dividend Rate shall be deemed to be 15% per
annum during the period commencing on such date and ending on
the date the Recapitalization is consummated."
The Effective Date of this Certificate of Amendment is September 30,
1999 at 11:59 p.m., eastern time.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this 30th
of September, 1999.
By: /S/ BARBARA S. POLSKY
--------------------------------
Barbara S. Polsky
Executive Vice President,
General Counsel and Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
The undersigned John F. Madden, Jr. the Secretary of Aames Financial
Corporation (the "Corporation"), a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
("DGCL"), does hereby certify that the following amendments were adopted in
accordance with the provisions of Section 242 of the DGCL:
The text of the second paragraph of Article SEVENTH of the
Certificate of Incorporation of the Corporation is hereby amended and
restated to read in full as follows:
Any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken either upon the
vote of the stockholders at an annual or special meeting duly
noticed and called, as provided in the Bylaws of the
Corporation, or may be taken by written consent of the
stockholders pursuant to the GCL.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this 15th
day of March, 2000.
By: /s/ John F. Madden, Jr.
---------------------------
John F. Madden, Jr.
Secretary
56
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
The undersigned John F. Madden, Jr. the Secretary of Aames Financial
Corporation (the "Corporation"), a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware ("DGCL"), does
hereby certify that the following amendments were adopted in accordance with the
provisions of Section 242 of the DGCL:
The Certificate of the Voting Powers, Designations, Preferences and
Relative, Participating, Optional or Other Special Rights, and Qualifications,
Limitations or Restrictions thereof, of Series C Convertible Preferred Stock of
the Corporation is hereby amended as follows:
(i) the references to Series B Preferred Stock in the
twelfth and fourteenth lines of paragraph A of
Section III, each of which was in error, shall be
amended to instead refer to Series C Preferred Stock;
and
(ii) the definition of "Post-Recapitalization Stated
Value" shall be amended by inserting immediately
after "$1.00" and before the period at the end of the
sentence "; provided, however, that from and after
the effective date of the Reverse Series C Preferred
Stock Split approved by the stockholders of the
Company at the 1999 Annual Meeting of Stockholders
(the "Reverse Series C Preferred Stock Split") the
Post-Recapitalization Stated Value shall be equal to
$5.00, subject to subsequent adjustments for splits,
reclassifications, recombinations or similar events".
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this 15th
day of March, 2000.
By: /s/ John F. Madden, Jr.
---------------------------
John F. Madden, Jr.
Secretary
57
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
The undersigned John F. Madden, Jr. the Secretary of Aames Financial
Corporation (the "Corporation"), a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware ("DGCL"), do
hereby certify that the following amendments were adopted in accordance with the
provisions of Section 242 of the DGCL:
The first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation is amended and restated in its entirety to read
in full as follows:
FOURTH: The total number of shares which the
Corporation shall have the authority to issue is 600,000,000,
consisting of 400,000,000 shares of common stock, par value
$0.001 per share (the "Common Stock") and 200,000,000 shares
of preferred stock, par value $0.001 per share (the "Preferred
Stock").
The following two paragraphs are hereby added to Article FOURTH of the
Certificate of Incorporation of the Corporation after the first paragraph but
before the second paragraph:
Simultaneously with the effective date of this
amendment (the "EFFECTIVE DATE"), each share of the
Corporation's common stock, par value $0.001 per share issued
and outstanding immediately prior to the Effective Date (the
"PRE-SPLIT COMMON STOCK") shall automatically and without any
action on the part of the holder thereof be reclassified as
and changed (the "Reverse Common Stock Split") into 0.2 of one
share of common stock, par value of $0.001 per share (the
"POST-SPLIT COMMON STOCK"). Each holder of a certificate or
certificates which immediately prior to the Effective Date
represented outstanding shares of Pre-Split Common Stock (the
"PRE-SPLIT CERTIFICATES," whether one or more) shall be
entitled to receive upon surrender of such Pre-Split
Certificates to the Corporation's Secretary for cancellation,
a certificate or certificates (the "POST-SPLIT CERTIFICATES,"
whether one or more) representing the number of whole shares
of Post-Split Common Stock into which and for which the shares
of Pre-Split Common Stock formerly represented by such
Pre-Split Certificates so surrendered, are reclassified
pursuant to the terms hereof. No script or fractional shares
certificates will be issued for Pre-Split Common Stock in
connection with the Reverse Common Stock Split. Each holder of
shares of Old Common
58
<PAGE>
Stock not divisible by five as of the effective date of the
Reverse Common Stock Split will, in lieu of receiving
fractional shares, have the option for 60 days after such
effective date to either (a) purchase from other
stockholders otherwise entitled to fractional shares a
sufficient fractional share interest to 'round-up' to a
full share of New Common Stock, to the extent such
fractions of shares are available from other stockholders,
at a price equal to the product of (x) the fractional
shares to which a holder would otherwise be entitled,
multiplied by (y) five times the closing sale price per
share of the Old Common Stock as listed on the New York
Stock Exchange ("NYSE") on the business day prior to the
Effective Date, or (b) sell such holder's fractional share
interest to other stockholders at the same price (the
"Fractional Share Program"). The period during which
stockholders will be able to make the aforementioned
election will expire 60 days after the Effective Date. Any
stockholder whose transmittal form is not received by the
Exchange Agent selected by the Corporation within such
period will be deemed to have elected to sell any
fractional share interest held by such stockholder. Any
fractional share interests not purchased by other
stockholders will be aggregated and sold on the open market
by the Exchange Agent. From and after the Effective Date,
Pre-Split Certificates shall represent only the right to
receive Post-Split Certificates pursuant to the provisions
hereof. If more than one Pre-Split Certificate shall be
surrendered at one time for the account of the same
stockholder, the number of full shares of Post-Split Common
Stock for which the Post-Split Certificates shall be issued
shall be computed on the basis of the aggregate number of
shares represented by the Pre-Split Certificates so
surrendered. If any Post-Split Certificate is to be issued
in a name other than that in which the Pre-Split
Certificate surrendered for exchange are issued, the
Pre-Split Certificates so surrendered shall be properly
endorsed and otherwise in proper form for transfer, and the
person or persons requesting such exchange shall affix any
requisite stock transfer tax stamps to the Pre-Split
Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the
Corporation's Secretary that such taxes are not payable.
From and after the Effective Date the amount of capital
represented by the shares of Post-Split Common Stock into
which and for which the shares of the Pre-Split Common
Stock are reclassified pursuant to the terms hereof shall
be the same as the amount of capital represented by the
shares of Pre-Split Common Stock so reclassified, until
thereafter reduced or increased in accordance with
applicable law;
Simultaneously with the Effective Date, each share of
the Corporation's Series C Convertible Preferred Stock, par
value of $0.001 per share issued and outstanding immediately
prior to the Effective Date (the "PRE-SPLIT SERIES C PREFERRED
STOCK") shall automatically and without any action on the part
of the holder thereof be reclassified as and changed (the
"REVERSE SERIES C PREFERRED STOCK SPLIT")
59
<PAGE>
into 0.2 of one share of Post-Split Series C Convertible
Preferred Stock, par value $0.001 per share ("POST-SPLIT
SERIES C PREFERRED STOCK"). Each holder of a certificate or
certificates which immediately prior to the Effective Date
represented outstanding shares of Pre-Split Series C
Preferred Stock (the "PRE-SPLIT SERIES C PREFERRED
CERTIFICATES," whether one or more) shall be entitled to
receive upon surrender of such Pre-Split Series C Preferred
Certificates to the Corporation's Secretary for
cancellation, a certificate or certificates (the
"POST-SPLIT SERIES C CERTIFICATES," whether one or more)
representing the number of whole shares of Post-Split
Series C Preferred Stock into which and for which the
shares of Pre-Split Series C Preferred Stock formerly
represented by such Pre-Split Series C Preferred
Certificates so surrendered, are reclassified pursuant to
the terms hereof. No script or fractional shares
certificates will be issued for Pre-Split Series C
Preferred Stock in connection with the Reverse Series C
Preferred Stock Split. Each holder of shares of Old Series
C Preferred Stock not divisible by five as of the effective
date of the Reverse Series C Preferred Stock Split will, in
lieu of receiving fractional shares, have the option for 60
days after such effective date to either (a) purchase from
other stockholders otherwise entitled to fractional shares
a sufficient fractional share interest to 'round-up' to a
full share of New Series C Preferred Stock, to the extent
such fractions of shares are available from other
stockholders, at a price equal to the product of (x) the
fractional shares to which a holder would otherwise be
entitled, multiplied by (y) five times the closing sale
price per share of the Old Common Stock as listed on the
NYSE on the business day prior to the Effective Date, or
(b) sell such holder's fractional share interest to other
stockholders at the same price (the "Fractional Share
Program"). The period during which stockholders will be
able to make the aforementioned election will expire 60
days after the Effective Date. Any stockholder whose
transmittal form is not received by the Exchange Agent
selected by the Corporation within such period will be
deemed to have elected to sell any fractional share
interest held by such stockholder. Any fractional share
interests not purchased by other stockholders will be
aggregated and sold on the open market by the Exchange
Agent. From and after the Effective Date, Pre-Split Series
C Certificates shall represent only the right to receive
Post-Split Series C Certificates pursuant to the provisions
hereof. If more than one Pre-Split Series C Certificate
shall be surrendered at one time for the account of the
same stockholder, the number of full shares of Post-Split
Series C Preferred Stock for which the Post-Split Series C
Certificates shall be issued shall be computed on the basis
of the aggregate number of shares represented by the
Pre-Split Series C Certificates so surrendered. If any
Post-Split Series C Certificate is to be issued in a name
other than that in which the Pre-Split Series C Certificate
surrendered for exchange are issued, the Pre-Split Series C
Certificates so surrendered shall be properly endorsed and
otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix
60
<PAGE>
any requisite stock transfer tax stamps to the Pre-Split
Series C Certificates surrendered, or provide funds for
their purchase, or establish to the satisfaction of the
Corporation's Secretary that such taxes are not payable.
From and after the Effective Date the amount of capital
represented by the shares of Post-Split Series C Preferred
Stock into which and for which the shares of the Pre-Split
Series C Preferred Stock are reclassified pursuant to the
terms hereof shall be the same as the amount of capital
represented by the shares of Pre-Split Series C Preferred
Stock so reclassified, until thereafter reduced or
increased in accordance with applicable law;
The following paragraph is hereby added to the end of Article FOURTH of
the Certificate of Incorporation of the Corporation:
The Corporation's Series A Preferred Stock and Series
B Preferred Stock shall not be affected by the filing of this
Amendment.
The Effective Date of this Certificate of Amendment is April 14,
2000 at 12:01 a.m. eastern time.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this 13th
day of April, 2000.
By: /s/ John F. Madden, Jr.
---------------------------
John F. Madden, Jr.
Secretary
61
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AAMES FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
The undersigned John F. Madden, Jr., the Secretary of Aames Financial
Corporation (the "Corporation"), a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the "DGCL"),
does hereby certify that the following amendments were adopted in accordance
with the provisions of Sections 228 and 242 of the DGCL:
The Certificate of the Voting Powers, Designations, Preferences and
Relative, Participating, Optional or other Special Rights, and Qualifications,
Limitations or Restrictions Thereof, of Series B Convertible Preferred Stock of
Aames Financial Corporation (the "Series B Certificate of Designations") is
hereby amended as follows:
ARTICLE II, SUBSECTION (A) OF THE SERIES B CERTIFICATE OF DESIGNATIONS
Article II, Subsection (A) of the Series B Certificate of Designations
shall be deleted and replaced in its entirety with the following:
A. With respect to dividends, the Series B Preferred Stock
shall rank (i) senior to each other class or series of Preferred Stock,
except for the Series C Convertible Preferred Stock, par value $0.001
per share, of the Corporation (the "Series C Preferred Stock") and the
Series D Convertible Preferred Stock, par value $0.001 per share, of
the Corporation (the "Series D Preferred Stock"); (ii) on a parity with
the Series C Preferred Stock and the Series D Preferred Stock; and
(iii) senior to the Corporation's Common Stock, par value $.001 per
share (the "Common Stock"), and, except as specified above, all other
classes and series of capital stock of the Corporation hereafter issued
by the Corporation. With respect to dividends, all equity securities of
the Corporation to which the Series B Preferred Stock ranks senior,
including the Common Stock, are collectively referred to herein as the
"Junior Dividend Securities"; all equity securities of the Corporation
with which the Series B Preferred Stock ranks on a parity, including
the Series C Preferred Stock and the Series D Preferred Stock, are
collectively referred to herein as the "Parity Dividend Securities";
and all equity securities of the Corporation (other than convertible
debt securities) to which the Series B Preferred Stock ranks junior,
with respect to dividends, are collectively referred to herein as the
"Senior Dividend Securities."
62
<PAGE>
ARTICLE II, SUBSECTION (B) OF THE SERIES B CERTIFICATE OF DESIGNATIONS
Article II, Subsection (B) of the Series B Certificate of Designations
shall be deleted and replaced in its entirely with the following:
B. With respect to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the Series B Preferred Stock shall rank (i)
senior to each other class or series of Preferred Stock of the
Corporation, except for the Series C Preferred Stock and the Series D
Preferred Stock; (ii) on a parity with the Series C Preferred Stock and
the Series D Preferred Stock; and (iii) senior to the Common Stock,
and, except as specified above, all other classes and series of capital
stock of the Corporation hereafter issued by the Corporation. With
respect to the distribution of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, all
equity securities of the Corporation to which the Series B Preferred
Stock ranks senior, including the Common Stock, are collectively
referred to herein as "Junior Liquidation Securities"; all equity
securities of the Corporation (other than convertible debt securities)
to which the Series B Preferred Stock ranks on parity, including the
Series C Preferred Stock and the Series D Preferred Stock, are
collectively referred to herein as "Parity Liquidation Securities"; and
all equity securities of the Corporation to which the Series B
Preferred Stock ranks junior are collectively referred to herein as
"Senior Liquidation Securities."
ARTICLE VII, SUBSECTION (B) OF THE SERIES B CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (B) of the Series B Certificate of Designations
shall be deleted and replaced in its entirety with the following:
B. So long as any shares of the Series B Preferred Stock are
outstanding, (i) each share of Series B Preferred Stock shall entitle
the holder thereof to vote on all matters voted on by holders of Common
Stock; and (ii) the shares of Series B Preferred Stock shall vote
together with shares of Common Stock (and any shares of Series C
Preferred Stock and Series D Preferred Stock entitled to vote) as a
single class.
ARTICLE VII, SUBSECTION (D) OF THE SERIES B CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (D) of the Series B Certificate of Designations
shall be deleted and replaced in its entirety with the following:
D. Without the written consent (if action by written consent is
permitted) or affirmative vote of the holders of a majority of the
outstanding shares of Series B
63
<PAGE>
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, voting together as a single class, the Corporation shall not
(i) authorize, create or issue, or increase the authorized amount
of, (x) any Senior Securities or Parity Securities or (y) any class
or series of capital stock or any security convertible into or
exercisable for any class or series of capital stock, redeemable
mandatorily or redeemable at the option of the holder thereof at any
time on or prior to the Mandatory Redemption Date (whether or not
only upon the occurrence of a specified event) or (ii) enter into
any Transaction (as defined in paragraph H of Article VIII). Such
vote or consent shall be taken in accordance with the procedures
specified in paragraph F below.
ARTICLE VII, SUBSECTION (E) OF THE SERIES B CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (E) of the Series B Certificate of Designations
shall be deleted and replaced in its entirety with the following:
E. Without the written consent (if action by written consent is
permitted) or affirmative vote of the holders of at least a majority of
the outstanding shares of Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, voting together as a single class,
the Corporation shall not (i) amend, alter or repeal any provision of
the Certificate of Incorporation or the Bylaws, if the amendment,
alteration or repeal alters or changes the powers, preferences or
special rights of the Series B Preferred Stock so as to affect them
materially and adversely or (ii) authorize or take any other action if
such action alters or changes any of the rights of the Series B
Preferred Stock in any respect or otherwise would be inconsistent with
the provisions of this Certificate of Designations and the holders of
any class or series of the capital stock of the Corporation is entitled
to vote thereon. Such vote or consent shall be taken in accordance with
the procedures specified in paragraph F below.
ARTICLE VII, SUBSECTION (F) OF THE SERIES B CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (F) of the Series B Certificate of Designations
shall be deleted and replaced in its entirety with the following:
F. The foregoing rights of holders of shares of Series B
Preferred Stock to take any actions as provided in this Article VII may
be exercised at any annual meeting of stockholders or at a special
meeting of stockholders held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Corporation, of the holders of the minimum number
of shares required to take such action, if action by written consent of
stockholders of the Corporation is then permitted.
The Chairman of the Board of the Corporation may call, and
upon written request of holders of record of 35% of the outstanding
shares of Series B Preferred
64
<PAGE>
Stock, if the holders of Series B Preferred Stock are to vote
separately as a single class, or the holders of record of 35% of the
outstanding shares of Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, if the holders of shares of
Series B Preferred Stock are to vote as a class with the holders of
shares of any Series C Preferred Stock and Series D Preferred Stock,
addressed to the Secretary of the Corporation at the principal
office of the Corporation shall call, a special meeting of the
holders of shares entitled to vote as provided herein. Such meeting
shall be held within 30 days after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in
the By-laws of the Corporation for the holding of meetings of
stockholders.
At each meeting of stockholders at which the holders of shares
of Series B Preferred Stock shall have the right, voting separately as
a single class or as a class with the holders of shares of any Series C
Preferred Stock and Series D Preferred Stock, to elect directors of the
Corporation as provided in paragraph C above or to take any action, the
presence in person or by proxy of the holders of record of one-third of
the total number of shares of Series B Preferred Stock, if the holders
of shares of Series B Preferred Stock are to vote separately as a
single class, or the holders of record of one-third of the total number
of shares of Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock, if the holder of shares of Series B Preferred
Stock are to vote as a class with the holders of shares of Series C
Preferred Stock and Series D Preferred Stock, then outstanding and
entitled to vote on the matter shall be necessary and sufficient to
constitute a quorum. At any such meeting or at any adjournment thereof:
(A) the absence of a quorum of the holders of shares
of Series B Preferred Stock, if the holders of Series B
Preferred Stock are to vote separately as a single class,
shall not prevent the election of directors other than those
to be elected by the holders of shares of Series B Preferred
Stock, and the absence of a quorum of the holders of shares of
any other class or series of capital stock shall not prevent
the election of directors to be elected by the holders of
shares of Series B Preferred Stock or the taking of any action
as provided in this Article VII; and
(B) in the absence of a quorum of the holders of
shares of Series B Preferred Stock, if the holders of Series B
Preferred Stock are to vote separately as a single class, or
the holders of shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, if the holders
of Series B Preferred Stock are to vote as a class with the
holders of shares of Series C Preferred Stock and Series D
Preferred Stock, a majority of the holders of such shares
present in person or by proxy shall have the power to adjourn
the meeting as to the actions to be taken by the holders of
shares of Series B Preferred Stock or the holders of Series B
Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, as the case may be, from time to time and
place to place without notice other than announcement at the
meeting until a quorum shall be present.
65
<PAGE>
For taking of any action as provided in this Article VII by
the holders of shares of Series B Preferred Stock voting separately as
a single class or together with the holders of shares of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
as a single class, as the case may be, each such holder shall have one
vote for each share of such stock standing in his name on the transfer
books of the Corporation as of any record dated fixed for such purpose
or, if no such date be fixed, at the close of business on the Business
Day next preceding the day on which notice is given, or if notice if
waived, at the close of business on the Business Day next preceding the
day on which the meeting is held.
In case any vacancy shall occur among the directors elected by
the holders of shares of Series B Preferred Stock, as provided in
paragraph C above, such vacancy may be filled for the unexpired portion
of the term by vote of the remaining directors theretofore elected by
such holders (if there is a remaining director), or the last remaining
director's successor in office. If any such vacancy is not so filled
within 20 days after the creation thereof or if all directors so
elected by the holders of Series B Preferred Stock shall cease to serve
as directors before their terms shall expire, the holders of the Series
B Preferred Stock then outstanding and entitled to vote for such
directors may, by written consent as herein provided (if action by
written consent is permitted), or at a special meeting of such holders
called as provided herein, elect successors to hold office for the
unexpired terms of the directors whose places shall be vacant.
Any director elected by the holders of shares of Series B
Preferred Stock voting separately as a single class may be removed from
office with or without cause by the vote or written consent (if action
by written consent is permitted) of the holders of at least a majority
of the outstanding shares of Series B Preferred Stock. A special
meeting of the holders of shares of Series B Preferred Stock may be
called in accordance with the procedures set forth in this paragraph F.
ARTICLE VIII, SUBSECTION (G)(ii) OF THE SERIES B CERTIFICATE OF
DESIGNATIONS
The following sentence shall be added to the end of Article VIII,
Subsection G(ii) of the Series B Certificate of Designations:
"Notwithstanding anything to the contrary in this Article VIII,
Subsection G(ii), effective on July 12, 2000, the conversion ratio
shall be adjusted to eliminate as an adjustment to the "conversion
ratio", any adjustment arising from (x) the issuance of the Series C
Preferred Stock and the issuance of warrants to purchase shares of
Series C Preferred Stock (including the future exercise of such
warrants) pursuant to the Preferred Stock Purchase Agreement, by and
between Aames Financial Corporation and Specialty Finance Partners,
dated as of May 19, 2000, as amended, or (y) the issuance of Series D
Preferred Stock issued in exchange for the Series C Preferred Stock,
and any warrants for the purchase of Series D Preferred Stock
(including the future exercise of such warrants) issued in exchange for
the warrant to purchase Series C Preferred Stock, referred to in clause
(x) of this sentence."
66
<PAGE>
The Certificate of the Voting Powers, Designations, Preferences and
Relative, Participating, Optional or other Special Rights, and Qualifications,
Limitations or Restrictions Thereof, of Series C Convertible Preferred Stock of
Aames Financial Corporation (the "Series C Certificate of Designations") is
hereby amended as follows:
ARTICLE II, SUBSECTION (A) OF THE SERIES C CERTIFICATE OF DESIGNATIONS
Article II, Subsection (A) of the Series C Certificate of
Designations shall be deleted and replaced in its entirety with the following:
A. With respect to dividends, the Series C Preferred Stock
shall rank (i) senior to each other class or series of Preferred Stock,
except for the Series B Convertible Preferred Stock, par value $0.001
per share, of the Corporation (the "Series B Preferred Stock") and the
Series D Convertible Preferred Stock, par value $0.001 per share, of
the Corporation (the "Series D Preferred Stock"); (ii) on a parity with
the Series B Preferred Stock and the Series D Preferred Stock; and
(iii) senior to the Corporation's Common Stock, par value $.001 per
share (the "Common Stock"), and, except as specified above, all other
classes and series of capital stock of the Corporation hereafter issued
by the Corporation. With respect to dividends, all equity securities of
the Corporation to which the Series C Preferred Stock ranks senior,
including the Common Stock, are collectively referred to herein as the
"Junior Dividend Securities"; all equity securities of the Corporation
with which the Series C Preferred Stock ranks on a parity, including
the Series B Preferred Stock and the Series D Preferred Stock, are
collectively referred to herein as the "Parity Dividend Securities";
and all equity securities of the Corporation (other than convertible
debt securities) to which the Series C Preferred Stock ranks junior,
with respect to dividends, are collectively referred to herein as the
"Senior Dividend Securities."
ARTICLE II, SUBSECTION (B) OF THE SERIES C CERTIFICATE OF
DESIGNATIONS
Article II, Subsection (B) of the Series C Certificate of Designations
shall be deleted and replaced in its entirety with the following:
B. With respect to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the Series C Preferred Stock shall rank (i)
senior to each other class or series of Preferred Stock, except for the
Series B Preferred Stock and the Series D Preferred Stock; (ii) on a
parity with the Series B Preferred Stock and Series D Preferred Stock;
and (iii) senior to the Common Stock, and, except as specified above,
all other classes and series of capital stock of the Corporation
hereafter issued by the Corporation. With respect to the distribution
of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, all equity securities of
the Corporation to which the Series C Preferred Stock ranks senior,
including the
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Common Stock, are collectively referred to herein as "Junior
Liquidation Securities"; all equity securities of the Corporation
(other than convertible debt securities) to which the Series C
Preferred Stock ranks on parity, including the Series B Preferred
Stock and the Series D Preferred Stock, are collectively referred to
herein as "Parity Liquidation Securities"; and all equity securities
of the Corporation to which the Series C Preferred Stock ranks
junior are collectively referred to herein as "Senior Liquidation
Securities."
ARTICLE VII, SUBSECTION (B) OF THE SERIES C CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (B) of the Series C Certificate of Designations
shall be deleted and replaced in its entirety with the following:
B. So long as any shares of the Series C Preferred Stock are
outstanding, (i) each share of Series C Preferred Stock shall entitle
the holder thereof to vote on all matters voted on by holders of Common
Stock, other than the election of directors; and (ii) the shares of
Series C Preferred Stock shall vote together with shares of Common
Stock, shares of Series B Preferred Stock and shares of the Series D
Preferred Stock, as a single class.
ARTICLE VII, SUBSECTION (C) OF THE SERIES C CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (C) of the Series C Certificate of Designations
shall be deleted and replaced in its entirety with the following:
C. Without the written consent (if action by written consent
is permitted) or affirmative vote of the holders of a majority of the
outstanding shares of Series C Preferred Stock, Series B Preferred
Stock and Series D Preferred Stock, voting together as a single class,
the Corporation shall not (i) authorize, create or issue, or increase
the authorized amount of, (x) any Senior Securities or Parity
Securities or (y) any class or series of capital stock or any security
convertible into or exercisable for any class or series of capital
stock, redeemable mandatorily or redeemable at the option of the holder
thereof at any time on or prior to the Mandatory Redemption Date
(whether or not only upon the occurrence of a specified event) or (ii)
enter into any Transaction (as defined in paragraph H of Article VIII).
Such vote or consent shall be taken in accordance with the procedures
specified in paragraph E below.
ARTICLE VII, SUBSECTION (D) OF THE SERIES C CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (D) of the Series C Certificate of Designations
shall be deleted and replaced in its entirety with the following:
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D. Without the written consent (if action by written consent
is permitted) or affirmative vote of the holders of at least a majority
of the outstanding shares of Series C Preferred Stock, Series B
Preferred Stock and Series D Preferred Stock, voting together as a
single class, the Corporation shall not (i) amend, alter or repeal any
provision of the Certificate of Incorporation or the Bylaws, if the
amendment, alteration or repeal alters or changes the powers,
preferences or special rights of the Series C Preferred Stock so as to
affect them materially and adversely or (ii) authorize or take any
other action if such action alters or changes any of the rights of the
Series C Preferred Stock in any respect or otherwise would be
inconsistent with the provisions of this Certificate of Designations
and the holders of any class or series of the capital stock of the
Corporation is entitled to vote thereon. Such vote or consent shall be
taken in accordance with the procedures specified in paragraph E below.
ARTICLE VII, SUBSECTION (E) OF THE SERIES C CERTIFICATE OF DESIGNATIONS
Article VII, Subsection (E) of the Series C Certificate of Designations
shall be deleted and replaced in its entirety with the following:
E. The foregoing rights of holders of shares of Series C
Preferred Stock to take any actions as provided in this Article VII may
be exercised at any annual meeting of stockholders or at a special
meeting of stockholders held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Corporation, of the holders of the minimum number
of shares required to take such action, if action by written consent of
stockholders of the Corporation is then permitted.
The Chairman of the Board of the Corporation may call, and
upon written request of holders of record of 35% of the outstanding
shares of Series C Preferred Stock, Series B Preferred Stock and Series
D Preferred Stock, addressed to the Secretary of the Corporation at the
principal office of the Corporation shall call, a special meeting of
the holders of shares entitled to vote as provided herein. Such meeting
shall be held within 30 days after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in the
By-laws of the Corporation for the holding of meetings of stockholders.
At each meeting of stockholders at which the holders of shares
of Series C Preferred Stock shall have the right to take any action,
the presence in person or by proxy of the holders of record of
one-third of the total number of shares of Series C Preferred Stock,
Series B Preferred Stock and Series D Preferred Stock then outstanding
and entitled to vote on the matter shall be necessary and sufficient to
constitute a quorum. At any such meeting or at any adjournment thereof:
(A) the absence of a quorum of the holders of shares
of Series C Preferred Stock shall not prevent the election of
directors to be elected by the
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holders of shares of Series B Preferred Stock or the taking
of any action as provided in this Article VII; and
(B) in the absence of a quorum of the holders of
shares of Series C Preferred Stock, Series B Preferred Stock
and Series D Preferred Stock, a majority of the holders of
such shares present in person or by proxy shall have the power
to adjourn the meeting as to the actions to be taken by the
holders of shares of Series C Preferred Stock, Series B
Preferred Stock, and Series D Preferred Stock, from time to
time and place to place without notice other than announcement
at the meeting until a quorum shall be present.
For taking of any action as provided in this Article VII by the holders
of shares of Series C Preferred Stock, Series B Preferred Stock and Series D
Preferred Stock, each such holder shall have one vote for each share of such
stock standing in his name on the transfer books of the Corporation as of any
record dated fixed for such purpose or, if no such date be fixed, at the close
of business on the Business Day next preceding the day on which notice is given,
or if notice if waived, at the close of business on the Business Day next
preceding the day on which the meeting is held.
ARTICLE VIII, SUBSECTION (G)(ii) OF THE SERIES C CERTIFICATE OF
DESIGNATIONS
The following sentence shall be added to the end of Article VIII,
Subsection G(ii) of the Series C Certificate of Designations:
"Notwithstanding anything to the contrary in this Article
VIII, Subsection G(ii), effective on July 12, 2000 the conversion ratio
shall be adjusted to eliminate as an adjustment to the "conversion
ratio", any adjustment arising from (x) the issuance of the Series C
Preferred Stock and the issuance of warrants to purchase shares of
Series C Preferred Stock (including the future exercise of such
warrants) pursuant to the Preferred Stock Purchase Agreement, by and
between Aames Financial Corporation and Specialty Finance Partners,
dated as of May 19, 2000, as amended, or (y) the issuance of Series D
Preferred Stock issued in exchange for the Series C Preferred Stock,
and any warrants for the purchase of Series D Preferred Stock
(including the future exercise of such warrants) issued in exchange for
the warrant to purchase Series C Preferred Stock, referred to in clause
(x) of this sentence."
The effective date and time of this Certificate of Decrease is July 12,
2000 at 9:00 a.m., eastern time.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this 11th
of July, 2000.
By: /s/ John F. Madden, Jr.
---------------------------
John F. Madden, Jr.
Secretary
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CERTIFICATE OF DECREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
AAMES FINANCIAL CORPORATION
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Aames Financial Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
That a Certificate of the Voting Powers, Designations, Preferences and
Relative, Participating, Optional or Other Special Rights, and Qualifications,
Limitations or Restrictions Thereof, of Series C Convertible Preferred Stock was
filed in the Office of the Secretary of State on February 10, 1999.
That the Board of Directors of the Corporation adopted a resolution
authorizing and directing an increase in the authorized number of shares of
Series C Convertible Preferred Stock of the Corporation, from 107,122,664 shares
to 60,994,672 shares, all in accordance with the provisions of Section 151 of
The General Corporation Law of the State of Delaware and the Certificate of
Incorporation of the Corporation.
That the effective date and time of this Certificate of Decrease is
July 12, 2000 at 9:01 a.m., eastern time.
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IN WITNESS WHEREOF, Aames Financial Corporation has caused this
certificate to be signed by John F. Madden, Jr., its Senior Vice President,
General Counsel and Secretary, this 11th day of July, 2000
AAMES FINANCIAL CORPORATION
By: /s/ John F. Madden, Jr.
---------------------------
John F. Madden, Jr.
Title: Senior Vice President, General Counsel
and Secretary
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--------------------------------------------------------------------------------
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES D CONVERTIBLE PREFERRED STOCK OF
AAMES FINANCIAL CORPORATION
--------------------------------------------------------------------------------
AAMES FINANCIAL CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies that the following resolutions were adopted by
the Board of Directors of the Corporation (the "Board of Directors") pursuant to
authority of the Board of Directors as required by Section 151 of the Delaware
General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors in accordance with the provisions of the Certificate
of Incorporation of the Corporation, as amended (the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of the
Corporation's previously authorized preferred stock, par value $0.001 per share
(the "Preferred Stock"), and hereby states the designation and number thereof,
and fixes the voting powers, preferences and relative, participating, optional
and other special rights, and the qualifications, limitations and restrictions
thereof, as follows:
SERIES D CONVERTIBLE PREFERRED STOCK:
I. DESIGNATION AND AMOUNT
The designation of this series of shares shall be "Series D
Convertible Preferred Stock" (the "Series D Preferred Stock") par value $0.001
per share; the stated value per share shall be $0.85 (the "Stated Value"); and
the number of shares constituting such series shall be 108,801,328. The number
of shares of the Series D Preferred Stock may be decreased from time to time by
a resolution or resolutions of the Board of Directors; provided, however, that
such number shall not be decreased below the aggregate number of shares of the
Series D Preferred Stock then outstanding.
II. RANK
A. With respect to dividends, the Series D Preferred Stock
shall rank (i) senior to each other class or series of Preferred Stock, except
for the Series B Convertible Preferred Stock, par value $0.001 per share, of the
Corporation (the "Series B Preferred Stock") and the Series C Convertible
Preferred Stock, par value $0.001 per share, of the Corporation (the "Series C
Preferred Stock"); (ii) on a parity with the Series B Preferred Stock and the
Series C Preferred Stock; and (iii) senior to the Corporation's Common Stock,
par value $.001 per share (the "Common Stock"), and, except as specified above,
all other classes and series of capital stock of the Corporation hereafter
issued by the Corporation. With respect to dividends, all equity securities of
the Corporation to which the Series D Preferred Stock ranks senior, including
the Common Stock, are collectively referred to herein as the "Junior Dividend
Securities"; all equity securities of the Corporation with which the Series D
Preferred Stock ranks on a parity, including the Series B Preferred Stock and
the Series C Preferred Stock, are collectively referred to herein as the "Parity
Dividend Securities"; and all equity securities of the Corporation (other than
convertible debt securities) to which the Series D Preferred Stock ranks junior,
with respect to dividends, are collectively referred to herein as the "Senior
Dividend Securities."
B. With respect to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the Series D Preferred Stock shall rank (i) senior to each other
class or series of Preferred Stock, except for the Series B Preferred Stock and
the Series C Preferred Stock; (ii) on a parity with the Series B Preferred Stock
and the Series C Preferred Stock; and (iii) senior to the Common Stock, and,
except as specified above, all other classes and series of capital stock of the
Corporation hereafter issued by the Corporation. With respect to the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, all equity securities of the
Corporation to which the Series D Preferred Stock ranks senior, including the
Common Stock, are collectively referred to herein as "Junior Liquidation
Securities"; all equity securities of the Corporation (other than convertible
debt securities) to which the Series D Preferred Stock ranks on parity,
including the Series B Preferred Stock and the Series C Preferred Stock, are
collectively referred to herein as "Parity Liquidation Securities"; and all
equity securities of the Corporation to which the Series D Preferred Stock ranks
junior are collectively referred to herein as "Senior Liquidation Securities."
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C. The Series D Preferred Stock shall be subject to the
creation of Junior Dividend Securities and Junior Liquidation Securities
(collectively, "Junior Securities"), but no Parity Dividend Securities or Parity
Liquidation Securities (collectively, "Parity Securities") (other than the
Series B Preferred Stock) or Senior Dividend Securities or Senior Liquidation
Securities (collectively, "Senior Securities") shall be created except in
accordance with the terms hereof.
III. DIVIDENDS
A. DIVIDENDS. Subject to the terms of paragraph D below,
shares of Series D Preferred Stock shall accumulate dividends at a rate of 6.5%
per annum (the "Dividend Rate"), which dividends shall be paid quarterly in
cash, in four equal quarterly installments on the last day of March, June,
September and December of each year, or if any such date is not a Business Day,
the Business Day next preceding such day (each such date, regardless of whether
any dividends have been paid or declared and set aside for payment on such date,
a "Dividend Payment Date"), to holders of record (the "Registered Holders") as
they appear on the stock record books of the Corporation on the fifteenth day
prior to the relevant Dividend Payment Date; provided, however, that during the
Accrual Period (as defined in Article IX hereof) the Corporation shall have the
option to accrue such dividends, which dividends, to the extent so accrued,
shall compound quarterly. Dividends shall accrue and accumulate on the Stated
Value of each share of Series D Preferred Stock. Dividends shall be paid only
when, as and if declared by the Board of Directors out of funds at the time
legally available for the payment of dividends. Dividends shall begin to
accumulate on outstanding shares of Series D Preferred Stock from the date of
issuance and shall be deemed to accumulate from day to day whether or not earned
or declared until paid. Dividends shall accumulate on the basis of a 360-day
year consisting of twelve 30-day months (four 90-day quarters) and the actual
number of days elapsed in the period for which payable.
B. ACCUMULATION. Dividends on the Series D Preferred Stock
shall be cumulative, and from and after (i) any Dividend Payment Date on which
any dividend that has accumulated or been deemed to have accumulated through
such date has not been paid in full (other than by reason of the election of the
Corporation to accrue dividends during the Accrual Period); or (ii) any payment
date set for a redemption on which such redemption payment has not been paid in
full, additional dividends shall accumulate in respect of the amount of such
unpaid dividends or unpaid redemption payment (the "Arrearage") at 125% of the
stated dividend rate (or such lesser rate as may be the maximum rate that is
then permitted by applicable law). Such additional dividends in respect of any
Arrearage shall be deemed to accumulate from day to day whether or not earned or
declared until the Arrearage is paid, shall be calculated as of such successive
Dividend Payment Date, and shall constitute an additional Arrearage from and
after any Dividend Payment Date to the extent not paid on such Dividend Payment
Date. References in any Article herein to dividends that have accumulated or
that have been deemed to have accumulated with respect to the Series D Preferred
Stock shall include the amount, if any, of any Arrearage together with any
dividends accumulated or deemed to have accumulated on such Arrearage pursuant
to the immediately preceding two sentences. Additional dividends in respect of
any Arrearage may be declared and paid at any time, in whole or in part, without
reference to any regular Dividend Payment Date, to Registered Holders as they
appear on the stock record books of the Corporation on such record date as may
be fixed by the Board of Directors (which record date shall be no less than 10
days prior to the corresponding payment date). Dividends in respect of any
Arrearage shall be paid in cash.
C. METHOD OF PAYMENT. Dividends paid on the shares of Series D
Preferred Stock in an amount less than the total amount of such dividends at the
time accumulated and payable on all outstanding shares of Series D Preferred
Stock shall be allocated pro rata on a share-by-share basis among all such
shares then outstanding. After February 10, 2001, dividends that are declared
and paid in an amount less than the full amount of dividends accumulated on the
Series D Preferred Stock (and on any Arrearage) shall be applied first to the
earliest dividend which has not theretofore been paid. All cash payments of
dividends on the shares of Series D Preferred Stock shall be made in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
IV. LIQUIDATION PREFERENCE
A. LIQUIDATION PREFERENCE. The holders of the outstanding
shares of Series D Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets are capital or surplus of any
nature, an amount per share equal to the sum of (i) the dividends, if any,
accumulated or deemed to have accumulated thereon to the date of final
distribution to such holders, whether or not such dividends are declared; and
(ii) the Stated Value thereof, before any payment shall be
<PAGE>
made or any assets distributed to the holders of any Junior Liquidation
Securities. After any such payment in full after the consummation of the
Recapitalization, the holders of Series D Preferred Stock shall not, as such,
be entitled to any further participation in any distribution of assets of the
Corporation.
C. PARITY SECURITIES. All the assets of the Corporation
available for distribution to stockholders after the liquidation preferences of
any Senior Liquidation Securities shall be distributed ratably (in proportion to
the full distributable amounts to which holders of Series D Preferred Stock and
Parity Liquidation Securities, if any, are respectively entitled upon such
dissolution, liquidation or winding up) among the holders of the
then-outstanding shares of Series D Preferred Stock and Parity Liquidation
Securities, if any, when such assets are not sufficient to pay in full the
aggregate amounts payable thereon.
D. MERGER NOT A LIQUIDATION. Neither a consolidation or merger
of the Corporation with or into any other Person or Persons, nor a sale,
conveyance, lease, exchange or transfer of all or part of the Corporation's
assets for cash, securities or other property to a Person or Persons shall be
deemed to be a liquidation, dissolution or winding up of the Corporation for
purposes of this Article IV, but the holders of shares of Series D Preferred
Stock shall nevertheless be entitled from and after any such consolidation,
merger or sale, conveyance, lease, exchange or transfer of all or part of the
Corporation's assets to the rights provided by this Article IV following any
such transaction. Notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to each holder of
shares of Series D Preferred Stock in such circumstances shall be payable, shall
be given by first-class mail, postage prepaid, mailed not less than 30 days
prior to any payment date stated therein, to holders of record as they appear on
the stock record books of the Corporation as of the date such notices are first
mailed.
V. REDEMPTION
A. OPTIONAL REDEMPTION. Commencing on the earlier to occur of
(x) the February 10, 2009 and (y) the date on which fewer than 25% of the shares
of Series D Preferred Stock issued on the Issue Date remain outstanding, and at
all times thereafter, the Corporation may, at its option, redeem all (but not
less than all) outstanding shares of Series D Preferred Stock on a date
specified by the Corporation (the "Optional Redemption Date") by paying the
Redemption Price therefor in cash out funds legally available for such purpose.
B. NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption
of shares of Series D Preferred Stock pursuant to paragraph A of this Article V
(a "Notice of Redemption") shall be sent to the holders of record of the shares
of Series D Preferred Stock to be redeemed by first class mail, postage prepaid,
at each such holder's address as it appears on the stock record books of the
Corporation not more than 120 nor fewer than 90 days prior to the Optional
Redemption Date, as applicable, which date shall be set forth in such notice
(the "Redemption Date"); provided that failure to give such Notice of Redemption
to any holder, or any defect in such Notice of Redemption to any holder shall
not affect the validity of the proceedings for the redemption of any shares of
Series D Preferred Stock held by any other holder. In order to facilitate the
redemption of shares of Series D Preferred Stock, the Board of Directors may fix
a record date for the determination of the holders of shares of Series D
Preferred Stock to be redeemed not more than 30 days prior to the date the
Notice of Redemption is mailed. On or after the Optional Redemption Date, as
applicable, each holder of the shares called for redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated in
such notice and shall thereupon be entitled to receive payment of the Redemption
Price for such shares. From and after the Optional Redemption Date, as
applicable, all dividends on shares of Series D Preferred Stock shall cease to
accumulate and all rights of the holders thereof as holders of Series D
Preferred Stock shall cease and terminate, except to the extent the Corporation
shall default in payment thereof on the Optional Redemption Date, as applicable.
C. DEPOSIT OF FUNDS. The Corporation shall, on or prior to the
Optional Redemption Date, as applicable, pursuant to paragraph B of this Article
V, deposit with its transfer agent or other redemption agent in the Borough of
Manhattan, The City of New York having a capital and surplus of at least
$500,000,000 selected by the Board of Directors, as a trust fund for the benefit
of the holders of the shares of Series D Preferred Stock to be redeemed, cash
that is sufficient in amount to redeem the shares to be redeemed in accordance
with the Notice of Redemption, with irrevocable instructions and authority to
such transfer agent or other redemption agent to pay to the respective holders
of such shares, as evidenced by a list of such holders certified by an officer
of the Corporation, the Redemption Price upon surrender of their respective
share certificates. Such deposit shall be deemed to constitute full payment of
the Redemption Price for such shares to the holders, and from and after the date
of such deposit, all rights of
<PAGE>
the holders of the shares of Series D Preferred Stock that are to be redeemed
as stockholders of the Corporation with respect to such shares, except the
right to receive the Redemption Price upon the surrender of their respective
certificates, shall cease and terminate. No dividends shall accumulate on any
shares of Series D Preferred Stock after the Optional Redemption Date, as
applicable, for such shares (unless the Corporation shall fail to deposit
cash sufficient to redeem all such shares). In case holders of any shares of
Series D Preferred Stock called for redemption shall not, within two years
after such deposit, claim the cash deposited for redemption thereof, such
transfer agent or other redemption agent shall, upon demand, pay over to the
Corporation the balance so deposited. Thereupon, such transfer agent or other
redemption agent shall be relieved of all responsibility to the holders
thereof and the sole right of such holders, with respect to shares to be
redeemed, shall be to receive the Redemption Price as general creditors of
the Corporation. Any interest accrued on any funds so deposited shall belong
to the Corporation, and shall be paid to it from time to time on demand.
VI. RESTRICTIONS ON DIVIDENDS
So long as any shares of the Series D Preferred Stock are
outstanding, the Board of Directors shall not declare, and the Corporation shall
not pay or set apart for payment any dividend on any Junior Securities or make
any payment on account of, or set apart for payment money for a sinking or other
similar fund for, the repurchase, redemption or other retirement of, any Junior
Securities or Parity Securities or any warrants, rights or options exercisable
for or convertible into any Junior Securities or Parity Securities (other than
the repurchase, redemption or other retirement of debentures or other debt
securities that are convertible or exchangeable into any Junior Securities or
Parity Securities), or make any distribution in respect of the Junior
Securities, either directly or indirectly, and whether in cash, obligations or
shares of the Corporation or other property (other than distributions or
dividends in Junior Securities to the holders of Junior Securities), and shall
not permit any corporation or other entity directly or indirectly controlled by
the Corporation to purchase or redeem any Junior Securities or Parity Securities
or any warrants, rights, calls or options exercisable for or convertible into
any Junior Securities or Parity Securities (other than the repurchase,
redemption or other retirement of debentures or other debt securities that are
convertible or exchangeable into any Junior Securities or Parity Securities or
the repurchase, redemption or other retirement of Junior Securities or Parity
Securities in exchange for Junior Securities or Parity Securities) unless prior
to or concurrently with such declaration, payment, setting apart for payment,
repurchase, redemption or other retirement or distribution, as the case may be,
all accumulated and unpaid dividends on shares of the Series D Preferred Stock
not paid on the dates provided for in paragraph A of Article III hereof
(including Arrearages and accumulated dividends thereon) shall have been paid,
except that when dividends are not paid in full as aforesaid upon the shares of
Series D Preferred Stock, all dividends declared on the Series D Preferred Stock
and any series of Parity Dividend Securities shall be declared and paid pro rata
so that the amount of dividends so declared and paid on Series D Preferred Stock
and such series of Parity Dividend Securities shall in all cases bear to each
other the same ratio that accumulated dividends (including interest accrued on
or additional dividends accumulated in respect of such accumulated dividends) on
the shares of Series D Preferred Stock and such Parity Dividend Securities bear
to each other.
VII. VOTING RIGHTS
A. The holders of Series D Preferred Stock shall be entitled
to the number of votes per share of Series D Preferred Stock equal to the number
of shares of Common Stock for which such share of Series D Preferred Stock is
then convertible pursuant to Article VIII at each meeting of stockholders of the
Corporation with respect to any and all matters presented to the stockholders of
the Corporation for their action and consideration, other than the election of
directors.
B. So long as any shares of the Series D Preferred Stock are
outstanding, (i) each share of Series D Preferred Stock shall entitle the holder
thereof to vote on all matters voted on by holders of Common Stock, other than
the election of directors; and (ii) the shares of Series D Preferred Stock shall
vote together with shares of Common Stock and shares of Series B Preferred Stock
and the Series C Preferred Stock as a single class.
C. Without the written consent (if action by written consent
is permitted) or affirmative vote of the holders of a majority of the
outstanding shares of Series D Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, voting together as a single class, the Corporation
shall not (i) authorize, create or issue, or increase the authorized amount of,
(x) any Senior Securities or Parity Securities or (y) any class or series of
capital stock or any security convertible into or exercisable for any class or
series of capital stock, redeemable mandatorily or redeemable at the option of
the holder thereof or
<PAGE>
(ii) enter into any Transaction (as defined in paragraph H of Article VIII).
Such vote or consent shall be taken in accordance with the procedures
specified in paragraph E below.
D. Without the written consent (if action by written consent
is permitted) or affirmative vote of the holders of at least a majority of the
outstanding shares of Series D Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, voting together as a single class, the Corporation
shall not (i) amend, alter or repeal any provision of the Certificate of
Incorporation or the Bylaws, if the amendment, alteration or repeal alters or
changes the powers, preferences or special rights of the Series D Preferred
Stock so as to affect them materially and adversely or (ii) authorize or take
any other action if such action alters or changes any of the rights of the
Series D Preferred Stock in any respect or otherwise would be inconsistent with
the provisions of this Certificate of Designations and the holders of any class
or series of the capital stock of the Corporation is entitled to vote thereon.
Such vote or consent shall be taken in accordance with the procedures specified
in paragraph E below.
E. The foregoing rights of holders of shares of Series D
Preferred Stock to take any actions as provided in this Article VII may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose as hereinafter provided or at any adjournment
thereof, or by the written consent, delivered to the Secretary of the
Corporation, of the holders of the minimum number of shares required to take
such action, if action by written consent of stockholders of the Corporation is
then permitted.
The Chairman of the Board of the Corporation may call, and
upon written request of holders of record of 35% of the outstanding shares of
Series D Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
addressed to the Secretary of the Corporation at the principal office of the
Corporation shall call, a special meeting of the holders of shares entitled to
vote as provided herein. Such meeting shall be held within 30 days after
delivery of such request to the Secretary, at the place and upon the notice
provided by law and in the By-laws of the Corporation for the holding of
meetings of stockholders.
At each meeting of stockholders at which the holders of shares
of Series D Preferred Stock shall have the right to take any action, the
presence in person or by proxy of the holders of record of one-third of the
total number of shares of Series D Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock then outstanding and entitled to vote on the matter
shall be necessary and sufficient to constitute a quorum. At any such meeting or
at any adjournment thereof:
(A) the absence of a quorum of the holders of shares of Series
D Preferred Stock shall not prevent the election of directors to be
elected by the holders of shares of Series B Preferred Stock or the
taking of any action as provided in this Article VII; and
(B) in the absence of a quorum of the holders of shares of
Series D Preferred Stock, Series C Preferred Stock and Series B
Preferred Stock, a majority of the holders of such shares present in
person or by proxy shall have the power to adjourn the meeting as to
the actions to be taken by the holders of shares of Series D Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, from time
to time and place to place without notice other than announcement at
the meeting until a quorum shall be present.
For taking of any action as provided in this Article VII by
the holders of shares of Series D Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, each such holder shall have one vote for each share of
such stock standing in his name on the transfer books of the Corporation as of
any record dated fixed for such purpose or, if no such date be fixed, at the
close of business on the Business Day next preceding the day on which notice is
given, or if notice if waived, at the close of business on the Business Day next
preceding the day on which the meeting is held.
F. The Corporation shall not enter into any agreement or issue
any security that prohibits, conflicts or is inconsistent with, or would be
breached by, the Corporation's performance of its obligations hereunder.
VIII. CONVERSION
The holders of the Series D Preferred Stock shall have
conversion rights as follows:
ITEM 2. EACH SHARE OF SERIES D PREFERRED STOCK SHALL BE CONVERTIBLE AT THE
DIRECTION OF, AND BY NOTICE TO THE CORPORATION FROM, (i) THE HOLDER
THEREOF OR (ii) THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
SERIES D PREFERRED STOCK, AT ANY TIME, AT THE OFFICE OF THE CORPORATION
OR ANY TRANSFER AGENT FOR SUCH SERIES, INTO ONE (1) FULLY PAID AND
NONASSESSABLE SHARE OF COMMON STOCK SUBJECT TO ADJUSTMENT FROM TIME TO
TIME AS PROVIDED BELOW (AS SO ADJUSTED, THE "CONVERSION RATIO"),
PROVIDED, THAT ANY
<PAGE>
CONVERSION PURSUANT TO CLAUSE (ii) ABOVE OF LESS THAN ALL OF THE
OUTSTANDING SHARES OF SERIES D PREFERRED STOCK SHALL BE ON A PRO
RATA BASIS AMONGST ALL HOLDERS OF SERIES D PREFERRED STOCK.
ITEM 3. IF A HOLDER OF SERIES D PREFERRED STOCK GIVES NOTICE (AN "OPTIONAL
CONVERSION NOTICE") OF CONVERSION UNDER PARAGRAPH A ABOVE, SUCH HOLDER
SHALL SURRENDER WITH SUCH OPTIONAL CONVERSION NOTICE THE DULY ENDORSED
CERTIFICATE OR CERTIFICATES FOR THE SERIES D PREFERRED STOCK BEING
CONVERTED, AT THE OFFICE OF THE CORPORATION OR OF ANY TRANSFER AGENT
FOR SUCH SERIES, AND SHALL STATE THEREIN THE NAME OR NAMES IN WHICH THE
CERTIFICATE OR CERTIFICATES FOR SHARES OF COMMON STOCK ARE TO BE
ISSUED. IF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
SERIES D PREFERRED STOCK GIVE NOTICE OF CONVERSION UNDER PARAGRAPH A
ABOVE, THE CORPORATION SHALL NOTIFY ALL OTHER RECORD HOLDERS OF SERIES
D PREFERRED STOCK (A "MANDATORY CONVERSION NOTICE"). FOLLOWING RECEIPT
OF A MANDATORY CONVERSION NOTICE, THE HOLDERS OF SERIES D PREFERRED
STOCK SHALL SURRENDER THE CERTIFICATE OR CERTIFICATES THEREFOR DULY
ENDORSED, AT THE OFFICE OF THE CORPORATION OR OF ANY TRANSFER AGENT FOR
SUCH SERIES, AND SHALL STATE THEREIN THE NAME OR NAMES IN WHICH THE
CERTIFICATE OR CERTIFICATES FOR SHARES OF COMMON STOCK ARE TO BE
ISSUED. THE CORPORATION SHALL, AS SOON AS PRACTICABLE AFTER THE
SURRENDER OF A SERIES D PREFERRED STOCK CERTIFICATE OR CERTIFICATES
PURSUANT TO AN OPTIONAL CONVERSION NOTICE OR MANDATORY CONVERSION
NOTICE, ISSUE AND DELIVER AT SUCH OFFICE TO SUCH HOLDER, OR TO THE
NOMINEE OR NOMINEES OF SUCH HOLDER, A CERTIFICATE OR CERTIFICATES FOR
THE NUMBER OF SHARES OF COMMON STOCK TO WHICH SUCH HOLDER SHALL BE
ENTITLED AS AFORESAID. SUCH CONVERSION SHALL BE DEEMED TO HAVE BEEN
MADE IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE DATE OF SUCH
OPTIONAL CONVERSION NOTICE OR MANDATORY CONVERSION NOTICE, AS
APPLICABLE, AND THE PERSON OR PERSONS ENTITLED TO RECEIVE THE SHARES OF
COMMON STOCK ISSUABLE UPON SUCH CONVERSION SHALL BE TREATED FOR ALL
PURPOSES AS THE RECORDHOLDER OR HOLDERS OF SUCH SHARES OF COMMON STOCK
AS OF SUCH DATE. THE ISSUANCE OF CERTIFICATES OR SHARES OF COMMON STOCK
UPON CONVERSION OF SHARES OF SERIES D PREFERRED STOCK SHALL BE MADE
WITHOUT CHARGE FOR ANY ISSUE, STAMP OR OTHER SIMILAR TAX IN RESPECT OF
SUCH ISSUANCE.
ITEM 4. NO FRACTIONAL SHARES SHALL BE ISSUED UPON CONVERSION OF ANY
SHARES OF SERIES D PREFERRED STOCK AND THE NUMBER OF SHARES OF COMMON
STOCK TO BE ISSUED SHALL BE ROUNDED DOWN TO THE NEAREST WHOLE SHARE,
AND THE HOLDER OF SERIES D PREFERRED STOCK SHALL BE PAID IN CASH FOR
ANY FRACTIONAL SHARE.
ITEM 5. IN CASE AT ANY TIME OR FROM TIME TO TIME THE CORPORATION SHALL PAY
ANY DIVIDEND OR MAKE ANY OTHER DISTRIBUTION TO THE HOLDERS OF ITS
COMMON STOCK OR OTHER CLASS OF SECURITIES, OR SHALL OFFER FOR
SUBSCRIPTION PRO RATA TO THE HOLDERS OF ITS COMMON STOCK OR OTHER CLASS
OF SECURITIES ANY ADDITIONAL SHARES OF STOCK OF ANY CLASS OR ANY OTHER
RIGHT, OR THERE SHALL BE ANY CAPITAL REORGANIZATION OR RECLASSIFICATION
OF THE COMMON STOCK OF THE CORPORATION OR CONSOLIDATION OR MERGER OF
THE CORPORATION WITH OR INTO ANOTHER CORPORATION, OR ANY SALE OR
CONVEYANCE TO ANOTHER CORPORATION OF THE PROPERTY OF THE CORPORATION AS
AN ENTIRETY OR SUBSTANTIALLY AS AN ENTIRETY, OR THERE SHALL BE A
VOLUNTARY OR INVOLUNTARY DISSOLUTION, LIQUIDATION OR WINDING UP OF THE
CORPORATION, THEN, IN ANY ONE OR MORE OF SAID CASES THE CORPORATION
SHALL GIVE AT LEAST 20 DAYS' PRIOR WRITTEN NOTICE (THE TIME OF MAILING
OF SUCH NOTICE SHALL BE DEEMED TO BE THE TIME OF GIVING THEREOF) TO THE
REGISTERED HOLDERS OF THE SERIES D PREFERRED STOCK AT THE ADDRESSES OF
EACH AS SHOWN ON THE BOOKS OF THE CORPORATION MAINTAINED BY THE
TRANSFER AGENT THEREOF OF THE DATE ON WHICH (i) THE BOOKS OF THE
CORPORATION SHALL CLOSE OR A RECORD SHALL BE TAKEN FOR SUCH STOCK
DIVIDEND, DISTRIBUTION OR SUBSCRIPTION RIGHTS OR (ii) SUCH
REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER, SALE OR
CONVEYANCE, DISSOLUTION, LIQUIDATION OR WINDING UP SHALL TAKE PLACE, AS
THE CASE MAY BE, PROVIDED THAT IN THE CASE OF ANY TRANSACTION TO WHICH
PARAGRAPH H APPLIES THE CORPORATION SHALL GIVE AT LEAST 30 DAYS' PRIOR
WRITTEN NOTICE AS AFORESAID. SUCH NOTICE SHALL ALSO SPECIFY THE DATE AS
OF WHICH THE HOLDERS OF THE COMMON STOCK OF RECORD
<PAGE>
SHALL PARTICIPATE IN SAID DIVIDEND, DISTRIBUTION OR SUBSCRIPTION
RIGHTS OR SHALL BE ENTITLED TO EXCHANGE THEIR COMMON STOCK FOR
SECURITIES OR OTHER PROPERTY DELIVERABLE UPON SUCH REORGANIZATION,
RECLASSIFICATION, CONSOLIDATION, MERGER, SALE OR CONVEYANCE OR
PARTICIPATE IN SUCH DISSOLUTION, LIQUIDATION OR WINDING UP, AS THE
CASE MAY BE. FAILURE TO GIVE SUCH NOTICE SHALL NOT INVALIDATE ANY
ACTION SO TAKEN.
ITEM 6. THE CORPORATION SHALL AT ALL TIMES RESERVE AND KEEP AVAILABLE OUT OF
ITS AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK, SOLELY FOR THE
PURPOSE OF EFFECTING THE CONVERSION OF THE SHARES OF SERIES D PREFERRED
STOCK, SUCH NUMBER OF ITS SHARES OF COMMON STOCK AS SHALL FROM TIME TO
TIME BE SUFFICIENT TO EFFECT THE CONVERSION OF ALL OUTSTANDING SHARES
OF SERIES D PREFERRED STOCK, AND IF AT ANY TIME THE NUMBER OF
AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK SHALL NOT BE SUFFICIENT
TO EFFECT THE CONVERSION OF ALL THEN OUTSTANDING SHARES OF SERIES D
PREFERRED STOCK, THEN IN ADDITION TO SUCH OTHER REMEDIES AS SHALL BE
AVAILABLE TO THE HOLDER OF SERIES D PREFERRED STOCK, THE CORPORATION
WILL TAKE SUCH CORPORATE ACTION AS MAY, IN THE OPINION OF ITS COUNSEL,
BE NECESSARY TO INCREASE ITS AUTHORIZED BUT UNISSUED SHARES OF COMMON
STOCK TO SUCH NUMBER OF SHARES AS SHALL BE SUFFICIENT FOR SUCH
PURPOSES.
ITEM 7. ANY NOTICE REQUIRED BY THE PROVISIONS OF PARAGRAPH D TO BE
GIVEN THE HOLDERS OF SHARES OF SERIES D PREFERRED STOCK SHALL BE DEEMED
GIVEN IF SENT BY FACSIMILE TRANSMISSION, BY TELEX, OR IF DEPOSITED IN
THE UNITED STATES MAIL, POSTAGE PREPAID, AND ADDRESSED TO EACH HOLDER
OF RECORD AT HIS, HER OR ITS ADDRESS APPEARING ON THE BOOKS OF THE
CORPORATION.
ITEM 8. THE CONVERSION RATIO SHALL BE SUBJECT TO ADJUSTMENT FROM TIME TO
TIME AS FOLLOWS:
(1) In case the Corporation shall at any time or from time to
time after the Issue Date (A) pay a dividend or make a distribution, on the
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide the
outstanding shares of Common Stock into a larger number of shares of Common
Stock, (C) combine the outstanding shares of Common Stock into a smaller number
of shares or (D) issue by reclassification of the shares of Common Stock any
shares of capital stock of the Corporation, then, and in each such case, the
conversion ratio in effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the holder of any
shares of Series D Preferred Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock or other securities
of the Corporation which such holder would have owned or have been entitled to
receive after the happening of any of the events described above, had such
shares of Series D Preferred Stock been surrendered for conversion immediately
prior to the happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this clause (i) shall become effective
(x) in the case of any such dividend or distribution, immediately after the
close of business on the record date for the determination of holders of shares
of Common Stock entitled to receive such dividend or distribution, or (y) in the
case of any such subdivision, reclassification or combination, at the close of
business on the day upon which such corporate action becomes effective.
(2) In the case the Corporation shall, after the Issue Date,
issue shares of Common Stock at a price per share, or securities convertible
into or exchangeable for shares of Common Stock ("Convertible Securities")
having a "Conversion Price" (as defined below) less than the Current Market
Price (for a period of 15 consecutive trading days prior to such date), then,
and in each such case, the conversion ratio shall be adjusted so that the holder
of each share of Series D Preferred Stock shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock determined by
multiplying (A) the applicable conversion ratio on the day immediately prior to
such date by (B) a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on the date on which such shares or
Convertible Securities are issued and (2) the number of additional shares of
Common Stock issued, or into which the Convertible Securities may convert, and
the denominator of which shall be the sum of (x) the number of shares of Common
Stock outstanding on such date and (y) the number of shares of Common Stock
which the aggregate consideration receivable by the Corporation for the total
number of shares of Common Stock so issued, or the number of shares of Common
Stock which the aggregate of the Conversion Price of
<PAGE>
such Convertible Securities so issued, would purchase at such Current Market
price on such date. An adjustment made pursuant to this clause (ii) shall be
made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively immediately after the close of
business on such date. For purposes of this clause (ii), the aggregate
consideration receivable by the Corporation in connection with the issuance
of any securities shall be deemed to be the sum of the aggregate offering
price to the public (before deduction of underwriting discounts or
commissions and expenses payable to third parties), and the "Conversion
Price" of any Convertible Securities is the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities (before deduction of underwriting discounts or
commissions and expenses payable to third parties) plus the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon
the conversion, exchange or exercise of any such Convertible Securities.
Neither (A) the issuance of any shares of Common Stock (whether treasury
shares or newly issued shares) pursuant to a dividend or distribution on, or
subdivision, combination or reclassification of, the outstanding shares of
Common Stock requiring an adjustment in the conversion ratio pursuant to
clause (i) of this paragraph G, or pursuant to any employee benefit plan or
program of the Corporation or pursuant to any option, warrant, right, or
Convertible Security outstanding as of the date hereof (including, but not
limited to, the Rights, the Series B Preferred Stock, the Series D Preferred
Stock and the Warrants) nor (B) the issuance of shares of Common Stock
pursuant thereto shall be deemed to constitute an issuance of Common Stock or
Convertible Securities by the Corporation to which this clause (ii) applies.
Upon expiration of any Convertible Securities which shall not have been
exercised or converted and for which an adjustment shall have been made
pursuant to this clause (ii), the Conversion Price computed upon the original
issue thereof shall upon such expiration be recomputed as if the only
additional shares of Common Stock issued were such shares of Common Stock (if
any) actually issued upon exercise of such Convertible Securities and the
consideration received therefor was the consideration actually received by
the Corporation for the issue of such Convertible Securities (whether or not
exercised or converted) plus the consideration actually received by the
Corporation upon such exercise of conversion.
(3) In case the Corporation shall at any time or from time to
time after the Issue Date declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or spin-off), on its
Common Stock, other than (A) regular quarterly dividends payable in cash in an
aggregate amount not to exceed 15% of net income from continuing operations
before extraordinary items of the Corporation, determined in accordance with
generally accepted accounting principles, during the period (treated as one
accounting period) commencing on July 1, 1998, and ending on the date such
dividend is paid or (B) dividends or distributions of shares of Common Stock
which are referred to in clause (i) of this paragraph G, then, and in each such
case, the conversion ratio shall be adjusted so that the holder of each share of
Series D Preferred Stock shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by multiplying (1) the
applicable conversion ratio on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the then Current
Market Price per share of Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be such Current
Market Price per share of Common Stock for the period of 20 Trading Days
preceding such record date less the Fair Market Value (as defined in Article IX)
per share of Common Stock (as determined in good faith by the Board of Directors
of the Corporation, a certified resolution with respect to which shall be mailed
to each holder of shares of Series D Preferred Stock) of such dividend or
distribution; PROVIDED, HOWEVER, that in the event of a distribution of shares
of capital stock of a Subsidiary of the Corporation (a "Spin-Off") made to
holders of shares of Common Stock, the numerator of such fraction shall be the
sum of the Current Market Price per share of Common Stock for the period of 20
Trading Days preceding the 35th Trading Day after the effective date of such
Spin-Off and the Current Market Price of the number of shares (or the fraction
of a share) of capital stock of the Subsidiary which is distributed in such
Spin-Off in respect of one share of Common Stock for the period of 20 Trading
Days preceding such 35th Trading Day and the denominator of which shall be the
current market price per share of the Common Stock for the period of 20 Trading
Days proceeding such 35th Trading Day. An adjustment made pursuant to this
clause (iii) shall be made upon the opening of business on the next Business Day
following the date on which any such dividend or distribution is made and shall
be effective retroactively immediately after the close of business on the record
date fixed for the determination of stockholders entitled to receive such
dividend or distribution; PROVIDED, HOWEVER, if the proviso to the preceding
sentence applies, then such adjustment shall be made and be effective as of such
35th Trading Day after the effective date of such Spin-Off.
<PAGE>
(4) For purposes of this paragraph G, the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation.
(5) The term "dividend", as used in this paragraph G shall
mean a dividend or other distribution upon stock of the Corporation except
pursuant to the Rights Agreement (as defined in Article IX). Notwithstanding
anything in this Article VIII to the contrary, the conversion ratio shall not be
adjusted as a result of any dividend, distribution or issuance of securities of
the Corporation pursuant to the Rights Agreement.
(6) Anything in this paragraph G to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the conversion ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the conversion ratio by at least
one-hundredth of one share of Common Stock, and when the cumulative net effect
of more than one adjustment so determined shall be to change the conversion
ratio by at least one-hundredth of one share of Common Stock, such change in
conversion ratio shall thereupon be given effect.
(7) The certificate of any firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Corporation (which may be the firm of independent public accountants regularly
employed by the Corporation) shall be presumptively correct for any computation
made under this paragraph G.
(8) If the Corporation shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted by this
paragraph G or in the conversion ratio then in effect shall be required by
reason of the taking of such record.
(9) There shall be no adjustment of the conversion ratio in
case of the issuance of any stock of the Corporation in a merger,
reorganization, acquisition or other similar transaction except as set forth in
paragraph G(i), G(ii) and H of this Article VIII.
ITEM 9. IN CASE OF ANY REORGANIZATION OR RECLASSIFICATION OF OUTSTANDING
SHARES OF COMMON STOCK (OTHER THAN A RECLASSIFICATION COVERED BY
PARAGRAPH G(i) OF THIS ARTICLE VIII), OR IN CASE OF ANY CONSOLIDATION
OR MERGER OF THE CORPORATION WITH OR INTO ANOTHER CORPORATION, OR IN
THE CASE OF ANY SALE OR CONVEYANCE TO ANOTHER CORPORATION OF THE
PROPERTY OF THE CORPORATION AS AN ENTIRETY OR SUBSTANTIALLY AS AN
ENTIRETY (EACH OF THE FOREGOING BEING REFERRED TO AS A "TRANSACTION"),
EACH SHARE OF SERIES D PREFERRED STOCK THEN OUTSTANDING SHALL
THEREAFTER BE CONVERTIBLE INTO, IN LIEU OF THE COMMON STOCK ISSUABLE
UPON SUCH CONVERSION PRIOR TO CONSUMMATION OF SUCH TRANSACTION, THE
KIND AND AMOUNT OF SHARES OF STOCK AND OTHER SECURITIES AND PROPERTY
RECEIVABLE (INCLUDING CASH) UPON THE CONSUMMATION OF SUCH TRANSACTION
BY A HOLDER OF THAT NUMBER OF SHARES OF COMMON STOCK INTO WHICH ONE
SHARE OF SERIES D PREFERRED STOCK WAS CONVERTIBLE IMMEDIATELY PRIOR TO
SUCH TRANSACTION (INCLUDING, ON A PRO RATA BASIS, THE CASH, SECURITIES
OR PROPERTY RECEIVED BY HOLDERS OF COMMON STOCK IN ANY TENDER OR
EXCHANGE OFFER THAT IS A STEP IN SUCH TRANSACTION). IN CASE SECURITIES
OR PROPERTY OTHER THAN COMMON STOCK SHALL BE ISSUABLE OR DELIVERABLE
UPON CONVERSION AS AFORESAID, THEN ALL REFERENCE IN THIS PARAGRAPH H
SHALL BE DEEMED TO APPLY, SO FAR AS APPROPRIATE AND AS NEARLY AS MAY
BE, TO SUCH OTHER SECURITIES OR PROPERTY.
ITEM 10. UPON ANY ADJUSTMENT OF THE CONVERSION RATIO THEN IN EFFECT
AND ANY INCREASE OR DECREASE IN THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON THE OPERATION OF
<PAGE>
THE CONVERSION SET FORTH IN ARTICLE VIII, THEN, AND IN EACH SUCH
CASE, THE CORPORATION SHALL PROMPTLY DELIVER TO THE REGISTERED
HOLDERS OF THE SERIES D PREFERRED AND COMMON STOCK, A CERTIFICATE
SIGNED BY THE PRESIDENT OR A VICE PRESIDENT AND BY THE TREASURER OR
AN ASSISTANT TREASURER OR THE SECRETARY OR AN ASSISTANT SECRETARY OF
THE CORPORATION SETTING FORTH IN REASONABLE DETAIL THE EVENT
REQUIRING THE ADJUSTMENT AND THE METHOD BY WHICH SUCH ADJUSTMENT WAS
CALCULATED AND SPECIFYING THE CONVERSION RATIO THEN IN EFFECT
FOLLOWING SUCH ADJUSTMENT AND THE INCREASED OR DECREASED NUMBER OF
SHARES ISSUABLE UPON THE CONVERSION SET FORTH IN THIS ARTICLE VIII.
<PAGE>
IX. ADDITIONAL DEFINITIONS
For the purposes of this Certificate of Designations of
Series D Preferred Stock, the following terms shall have the meanings
indicated:
"Accrual Period" means the end of the first quarterly
period following February 10, 2001.
"Beneficially Own" with respect to any securities means
having "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act as in effect on the date hereof, except
that a Person shall be deemed to Beneficially Own all such securities that
such Person has the right to acquire whether such right is exercisable
immediately or after the passage of time). The terms "Beneficial Ownership"
and "Beneficial Owner" have correlative meanings.
"Business Day" means any day, other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Bylaws" means the Bylaws of the Corporation, as amended.
"Current Market Price", when used with reference to shares
of Common Stock or other securities on any date, shall mean the closing price
per share of Common Stock or such other securities on such date and, when
used with reference to shares of Common Stock or other securities for any
period shall mean the average of the daily closing prices per share of Common
Stock or such other securities for such period. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Common Stock or such other securities
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Common Stock or such other securities are listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. National Market System or such other securities are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Stock or such other securities selected by the Board of Directors of
the Corporation. If the Common Stock or such other securities are not
publicly held or so listed or publicly traded, "Current Market Price" shall
mean the Fair Market Value per share of Common Stock or of such other
securities as determined in good faith by the Board of Directors of the
Corporation based on an opinion of an independent investment banking firm
with an established national reputation as a valuer of securities, which
opinion may be based on such assumption as such firm shall deem to be
necessary and appropriate.
"Equity Securities" of any Person means any and all common
stock, preferred stock and any other class of capital stock of, and any
partnership or limited liability company interests of such Person or any
other similar interests of any Person that is not a corporation, partnership
or limited liability company.
"Exchange Act" means the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, from
time to time.
"Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction.
"Group" has the meaning set forth in Rule 13d-5 under the
Exchange Act.
"Issue Date" shall mean the first date on which shares of
Series D Preferred Stock are issued.
"Person" means any individual, corporation, company,
association, partnership, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.
"Redemption Price" of a share of Series D Preferred Stock
shall mean the sum of (a) the dividends, if any, accumulated or deemed to
have accumulated thereon to the Optional Redemption Date, as applicable,
whether or not such dividends are declared PLUS Stated Value thereof subject,
to adjustment for splits, reclassifications, recombinations or similar events.
"Rights" shall mean any rights to purchase securities of
the Corporation issued pursuant to any Rights Agreement.
82
<PAGE>
"Rights Agreement" shall mean the Rights Agreement, dated
as of June 21, 1996, between the Company and Wells Fargo Bank as rights
agent, and all amendments, supplements and replacements thereof.
"Stated Value" shall be equal to $0.85.
"Subsidiary" means, as to any Person, any other Person of
which more than 50% of the shares of the Voting Securities or other voting
interests are owned or controlled, or the ability to select or elect 50% or
more of the directors or similar managers is held, directly or indirectly, by
such first Person and one or more of its Subsidiaries.
"Trading Day" means a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business or, if the Common Stock is
not listed or admitted to trading on any national securities exchange a
Business Day.
"Voting Securities" means, (i) with respect to the Company,
the Equity Securities of the Company entitled to vote generally for the
election of directors of the Company, and (ii) with respect to any other
Person, any securities of or interests in such Person entitled to vote
generally for the election of directors or any similar managing person of
such Person.
X. MISCELLANEOUS
A. NOTICES. Any notice referred to herein shall be in
writing and, unless first-class mail shall be specifically permitted for such
notices under the terms hereof, shall be deemed to have been given upon
personal delivery thereof, upon transmittal of such notice by telecopy (with
confirmation of receipt by telecopy or telex) or five days after transmittal
by registered or certified mail, postage prepaid, addressed as follows:
(1) if to the Corporation, to its office at 2 California
Plaza, 350 South Grand Avenue, Los Angeles,
California 90071 (Attention: General Counsel)
or to the transfer agent for the Series D Preferred
Stock;
(2) if to a holder of the Series D Preferred Stock, to
such holder at the address of such holder as listed in
the stock record books of the Corporation (which may
include the records of any transfer agent for the
Series D Preferred Stock); or
(3) to such other address as the Corporation or such
holder, as the case may be, shall have designated by
notice similarly given.
B. REACQUIRED SHARES. Any shares of Series D Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation, directly
or indirectly, in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof (and shall not be deemed to be
outstanding for any purpose) and, if necessary to provide for the lawful
redemption or purchase of such shares, the capital represented by such shares
shall be reduced in accordance with the Delaware General Corporation Law. All
such shares of Series D Preferred Stock shall upon their cancellation and
upon the filing of an appropriate certificate with the Secretary of State of
the State of Delaware, become authorized but unissued shares of Preferred
Stock, par value $0.001 per share, of the Corporation and may be reissued as
part of another series of Preferred Stock, par value $0.001 per share, of the
Corporation subject to the conditions or restrictions on issuance set forth
herein.
C. ENFORCEMENT. Any registered holder of shares of Series D
Preferred Stock may proceed to protect and enforce its rights and the rights
of such holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the specific enforcement of
any provision in this Certificate of Designations or in aid of the exercise
of any power granted herein, or to enforce any other proper remedy.
D. TRANSFER TAXES. Except as otherwise agreed upon pursuant
to the terms of this Certificate of Designations, the Corporation shall pay
any and all documentary, stamp or similar issue or transfer taxes and other
governmental charges that may be imposed under the laws of the United States
of America or any political subdivision or taxing authority thereof or
therein in respect of any issue or delivery of Common Stock on conversion of,
or other securities or property issued on account of, shares of Series D
Preferred Stock pursuant hereto or certificates representing such shares or
securities. The Corporation shall not, however, be required to pay any such
tax or other charge that may be imposed in
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connection with any transfer involved in the issue or transfer and delivery
of any certificate for Common Stock or other securities or property in a name
other than that in which the shares of Series D Preferred Stock so exchanged,
or on account of which such securities were issued, 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 or is not payable.
E. TRANSFER AGENT. The Corporation may appoint, and from time
to time discharge and change, a transfer agent for the Series D Preferred Stock.
Upon any such appointment or discharge of a transfer agent, the Corporation
shall send notice thereof by first-class mail, postage prepaid, to each holder
of record of shares of Series D Preferred Stock.
F. RECORD DATES. In the event that the Series D Preferred
Stock shall be registered under either the Securities Act of 1933, as amended,
or the Exchange Act, the Corporation shall establish appropriate record dates
with respect to payments and other actions to be made with respect to the Series
D Preferred Stock.
The effective date and time of this Certificate of Designations is July
12, 2000 at 9:01 a.m.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Secretary, this 11th day of July,
2000.
AAMES FINANCIAL CORPORATION
By: /S/ JOHN F. MADDEN, JR.
----------------------------
John F. Madden, Jr.
Secretary
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CERTIFICATE OF CORRECTION TO
CERTIFICATE OF THE VOTING POWERS,
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS, AND
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF
SERIES D CONVERTIBLE PREFERRED STOCK OF
AAMES FINANCIAL CORPORATION
(Pursuant to Section 103(f) of the General Corporation Law of Delaware)
Aames Financial Corporation., a Delaware corporation, DOES HEREBY CERTIFY:
FIRST: The name of the corporation is Aames
Financial Corporation (the "Company").
SECOND: A Certificate of the Voting Powers,
Designations, Preferences and Relative, Participating, Optional or Other
Special Rights, and Qualifications, Limitations or Restrictions thereof, of
Series D Convertible Preferred Stock of Aames Financial Corporation (the
"Certificate of Designation"), was filed in the Office of the Secretary of
State of the State of Delaware on July 12, 2000, and said Certificate
requires correction as permitted by subsection (f) of Section 103 of the
General Corporation Law of the state of Delaware.
THIRD: The inaccuracy or defect of such
Certificate of Designation is that paragraph fifteen of Article IX of the
Certificate of Designation incorrectly recites that the "'Stated Value'"
shall be equal to [$0.90]."
FOURTH: Paragraph fifteen of Article IX of the
Certificate of Designation Certificate of Designation is hereby amended to
read as follows:
"'Stated Value'" shall be equal to $0.85."
IN WITNESS WHEREOF, The Company has caused
this certificate to be signed by John F. Madden, Jr., its Secretary, this 1st
day of August, 2000.
AAMES FINANCIAL CORPORATION
By: /S/ JOHN F. MADDEN, JR.
----------------------------
John F. Madden, Jr.
Secretary
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CERTIFICATE OF CORRECTION TO
CERTIFICATE OF THE VOTING POWERS,
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS, AND
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF
SERIES D CONVERTIBLE PREFERRED STOCK OF
ITEM 11. AAMES FINANCIAL CORPORATION
(Pursuant to Section 103(f) of the General Corporation Law of Delaware)
Aames Financial Corporation, a Delaware corporation, DOES HEREBY
CERTIFY:
FIRST: The name of the corporation is Aames Financial Corporation
(the "Company").
SECOND: A Certificate of the Voting Powers, Designations,
Preferences and Relative, Participating, Optional or Other Special Rights,
and Qualifications, Limitations or Restrictions thereof, of Series D
Convertible Preferred Stock of Aames Financial Corporations (the "Certificate
of Designation"), was filed in the Office of the Secretary of State of the
State of Delaware on July 12, 2000, and the Certificate of Designation
requires correction as permitted by subsection (f) of Section 103 of the
General Corporation Law of the State of Delaware.
THIRD: The inaccuracy or defect of the Certificate of Designation is
that the first sentence of Article I of the Certificate of Designation
incorrectly recites that the number of shares constituting the Series D
Convertible Preferred Stock is 108,801,328.
FOURTH: The first sentence of Article I of the Certificate of
Designation is hereby amended to read, in full, as follows:
"The designation of this series of shares shall be "Series D
Convertible Preferred Stock" (the "Series D Preferred Stock") par value
$0.001 per share; the stated value per share shall be $0.85 (the "Stated
Value"); and the number of shares constituting such series shall be
108,565,514."
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by John F. Madden, Jr., its Secretary, this 29th day of August, 2000.
AAMES FINANCIAL CORPORATION
By: /S/ JOHN F. MADDEN, JR.
---------------------------------
John F. Madden, Jr.
Secretary
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CERTIFICATE OF CORRECTION TO
CERTIFICATE OF DECREASE OF
AUTHORIZED NUMBER OF SHARES OF
SERIES C CONVERTIBLE PREFERRED STOCK
ITEM 12. OF AAMES FINANCIAL CORPORATION
(Pursuant to Section 103(f) of the General Corporation Law of Delaware)
Aames Financial Corporation, a Delaware corporation, DOES HEREBY
CERTIFY:
FIRST: The name of the Corporation is Aames Financial Corporation
(the "Company").
SECOND: A Certificate of Decrease of Authorized Number of Shares of
Series C Convertible Preferred Stock of Aames Financial Corporation (the
"Certificate of Decrease"), was filed in the Office of the Secretary of State
of the State of Delaware on July 12, 2000, and the Certificate of Decrease
requires correction as permitted by subsection (f) of Section 103 of the
General Corporation Law of the state of Delaware.
THIRD: The innacuracy or defect of the Certificate of Decrease is
that the second paragraph incorrectly recites that the Board of Directors
adopted a resolution authorizing and directing an decrease in the authorized
number of shares of Series C Convertible Preferred Stock of the Company, from
107,122,664 shares to 60,994,672 shares.
FOURTH: The second paragraph of the Certificate of Decrease is
hereby amended to read as follows:
"That the Board of Directors of the Corporation adopted a resolution
authorizing and directing a decrease in the authorized number of shares of
Series C Convertible Preferred Stock of the Corporation, from 107,122,664
shares to 61,230,486 shares, all in accordance with the provisions of Section
151 of The General Corporation Law of the State of Delaware and the
Certificate of Incorporation of the Corporation."
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by John F. Madden, Jr., its Secretary, this 29th day of August, 2000.
AAMES FINANCIAL CORPORATION
By: /S/ JOHN F. MADDEN, JR.
---------------------------------
John F. Madden, Jr.
Secretary
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