EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CARRIAGE SERVICES, INC.
(Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware)
Carriage Services, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. The name of the Corporation is Carriage Services, Inc. and the name
under which the Corporation was originally incorporated was Carriage Funeral
Services, Inc. Th date of filing of the Corporation's original Certificate of
Incorporation was December 29, 1993.
2. This Amended and Restated Certificate of Incorporation (the "Restated
Certificate of Incorporation") restates and integrates and further amends the
Certificate of Incorporation of the Corporation.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read in full as set forth
herein and in Exhibits A, B, C and D hereto containing the Amended and Restated
Certificates of Designation, Preferences, Rights and Limitations of the
Corporation's Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, respectively:
ARTICLE I.
The name of the Corporation is Carriage Services, Inc.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
ARTICLE III
The purpose for which the Corporation is organized is to engage in any
and all lawful acts and activity for which corporations may be organized under
the General Corporation Law of Delaware. The Corporation will have perpetual
existence.
ARTICLE IV.
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The total number of shares of stock that the Corporation shall have
authority to issue is, 80,000,000 shares of capital stock, consisting of (i)
50,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"); (ii)15,000,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock"); and (iii) 15,000,000 shares of Class B Common Stock,
par value $.01 per share ("Class B Common Stock"; the Class A Common Stock and
the Class B Common Stock are collectively referred to as "Common Stock").
Effective upon filing of this Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware, 1996, each
issued and outstanding share of previously authorized common stock of the
Corporation ("Old Common Stock") shall represent one validly issued, fully paid
and non-assessable share of Class B Common Stock. Each certificate which
theretofore represented shares of Old Common Stock shall thereafter represent
that number of shares of Class B Common Stock; PROVIDED, HOWEVER, that each
person holding of record a stock certificate or certificates which represented
shares of Old Common Stock shall receive, upon surrender of such certificate or
certificates, a new certificate or certificates evidencing and representing the
number of shares of Class B Common Stock to which such person is entitled.
The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Common Stock and the Preferred Stock are as
follows:
1. Provisions Relating to the Common Stock.
(a) DIVIDENDS. Subject to the prior rights and preferences, if any,
applicable to shares of the Preferred Stock or any class or series thereof, each
share of Common Stock shall entitle the holder of record thereof to receive
dividends out of funds legally available therefor, when, as and if declared by
the board of directors of the Corporation with respect to any of such class of
stock. No dividend shall be declared or paid in respect of any Common Stock
unless the holders of both the Class A Common Stock and the Class B Common Stock
receive the same per share dividend, payable in the same amount and type of
consideration, as if such classes constituted a single class, except that if any
dividend is declared that is payable in shares of Class A Common Stock or Class
B Common Stock, such dividend shall be declared and paid at the same rate per
share with respect to the Class A Common Stock and the Class B Common Stock, and
the dividend payable on shares of Class A Common Stock shall be payable only in
shares of Class A Common Stock and the dividend payable on shares of Class B
Common Stock shall be payable only in shares of Class B Common Stock.
(b) LIQUIDATION RIGHTS. The holders of Common Stock shall be entitled to
participate in the net assets of the Corporation remaining after any
dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, and after payment or provision for the payment
of the debts and liabilities of the Corporation and payment of the liquidation
preference of any shares of capital stock of the Corporation having such a
preference, distributing such proceeds pro-rata among the holders of Common
Stock. The holders of the Class A Common Stock and the Class B Common Stock
shall participate in such assets as if such classes constituted a single class
of stock. A dissolution, liquidation or winding-up of the Corporation, as such
terms are used in this paragraph (b), shall not be deemed to be occasioned by or
to include any consolidation or merger of
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the Corporation with or into any other corporation or corporations or other
entity or a sale, lease, exchange, or conveyance of all or a part of the assets
of the Corporation.
(c) VOTING RIGHTS.
(i) Except as may otherwise be expressly required by the General
Corporation Law of Delaware, the holders of shares of Class A Common Stock and
the holders of shares of Class B Common Stock shall vote together as a single
class, provided, however, that with respect to each matter properly brought
before the shareholders for their consideration and vote, each share of Class A
Common Stock shall entitle the registered holder thereof to one vote on all
matters brought before the common stockholders of the Corporation for a vote and
each share of Class B Common Stock shall entitle the registered holder thereof
to ten votes on all matters brought before the common stockholders of the
Corporation for a vote.
(ii) In the case of each share of Class B Common Stock held of
record by a bank, voting trustee, broker, dealer, clearing agency, or any
nominee thereof, or by any other nominee of the beneficial owner of such share,
the registered holder of such share will be entitled, notwithstanding the
foregoing limitation, to cast ten votes with respect to such share if such
holder shall establish to the satisfaction of the Corporation that such share
has been beneficially owned continuously from the date of issuance by the
original beneficial owner (whose name and address must be specified to the
Corporation), or by a Permitted Transferee (as defined in paragraph 1(e) of
Article IV hereof) of such original beneficial owner. Any such registered holder
who wishes to cast ten votes per share shall file with the transfer agent for
the Class B Common Stock a certificate, on a form that will be mailed to such
holder by such transfer agent on request, certifying as to the information
specified in the preceding sentence and specifying the date on which such holder
desires to exercise voting rights (the "Voting Date"). Any such certificate
shall be deemed filed only if received by the transfer agent not less than ten
nor more than 30 days prior the Voting Date. If such certificate shall not
establish to the satisfaction of the Corporation that the registered holder is
entitled to cast ten votes per share, then, within five business days after the
receipt thereof by the transfer agent, the Corporation shall mail to the person
filing such certificate a notice that describes the deficiency and, unless the
Corporation determines that such person shall have a reasonable opportunity to
cure such deficiency prior to the Voting Date, notifies such person that such
person shall be entitled to only one vote per share on the Voting Date.
(d) CONVERSION BY REGISTERED HOLDER.
(i) Each share of Class B Common Stock shall be convertible at
any time, at the option of the registered holder thereof, into one fully paid
and nonassessable share of Class A Common Stock of the Corporation.
(ii) No fractional shares of Class A Common Stock shall be issued
upon such conversion, but in lieu thereof the Corporation shall pay to the
holder an amount in cash equal to the fair market value of such fractional
share.
(iii) To convert shares of Class B Common Stock under this
paragraph 1(d), the registered holder thereof shall surrender the certificate or
certificates representing such shares, duly
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endorsed to the Corporation or in blank (which endorsement shall correspond
exactly with the name or names of the registered holder or holders set forth on
the face of the certificates and on the stock transfer records of the
Corporation), at the office of the transfer agent for the shares of Class B
Common Stock (which may be either the Corporation or any third party retained by
it for such purpose), and shall give written notice to the transfer agent and
the Corporation that such holder elects to convert all or part of the shares
represented thereby, stating therein the names or names (with the address or
addresses) in which the certificate or certificates for shares of Class A Common
Stock are to be issued.
(iv) If the registered holder fully complies with paragraph
(iii), the Corporation shall, as soon as practicable thereafter, instruct the
transfer agent to deliver to such holder, or to such holder's nominee or
nominees, a certificate or certificates for the number of shares of Class A
Common Stock to which such holder shall be entitled, rounded to the nearest
whole number of shares, and a check for any amount payable hereunder in lieu of
a fractional share, along with a certificate representing any shares of Class B
Common Stock that the holder has not elected to convert hereunder but which
constituted part of the shares of Class B Common Stock represented by the
certificate or certificates surrendered.
(v) Shares of Class B Common Stock shall be deemed to have been
converted as of the close of business on the date of the due surrender of the
certificates representing the shares to be converted as provided above, and the
person or persons entitled to receive the shares of Class A Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Class A Common Stock at such time.
(vi) If the Corporation shall in any manner split or subdivide
the outstanding shares of Class A Common Stock or Class B Common Stock, the
outstanding shares of the other such class of Common Stock shall be split or
subdivided in the same manner, proportionately and on the same basis per share.
(vii) When shares of Class B Common Stock have been converted
pursuant to this paragraph (d), they shall be irrevocably canceled and not
reissued.
(e) AUTOMATIC CONVERSION. Any shares of Class B Common Stock outstanding
on December 31, 2001, without further action of the holder thereof, shall be
automatically converted into shares of Class A Common Stock and certificates
formerly representing outstanding shares of Class B Common Stock shall thereupon
and thereafter represent the like number of shares of Class A Common Stock.
(f) TRANSFERS OF CLASS B COMMON STOCK. No person holding any share of
Class B Common Stock shall transfer, and the Corporation shall not register (nor
permit the transfer agent for the Class B Common Stock to register) the transfer
of, any shares of Class B Common Stock or any interest therein, whether by sale,
assignment, gift, bequest, pledge, hypothecation, encumbrance, or any other
disposition, except to a "Permitted Transferee" of such person (as defined below
in this paragraph). If a holder of shares of Class B Common Stock transfers any
such shares to any person or entity other than a "Permitted Transferee," such
transfer, without any further action of the parties or the Corporation, shall
automatically and irrevocably convert such shares into an equal number of
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shares of Class A Common Stock from the date of such transfer. The term
"Permitted Transferee" shall mean only:
(i) the spouse and any lineal descendant (including adopted
children) of any person duly holding shares of Class A Common Stock (a
"Qualified Holder"), and any spouse of any such lineal descendant (all
such spouses and lineal descendants being hereinafter referred to as
"Family Members");
(ii) the trustee of a trust for the sole benefit of a Qualified
Holder or Family Members;
(iii) a partnership made up exclusively of Qualified Holders or
Family Members or a corporation or limited liability company wholly
owned by Qualified Holders or Family Members, provided, however, that as
of the date that such partnership, corporation or company no longer
comprised of or owned exclusively by Qualified Holders or Family
Members, such partnership, corporation or company will no longer be a
Permitted Transferee and any Class B Common Stock held by it shall
automatically and irrevocably be converted into Class A Common Stock
without any further action of the parties or the Corporation; or
(iv) the executor, administrator or personal representative of
the estate of a qualified holder or of any Family Member, or the
guardian or conservator of a Qualified Holder or any Family Member who
has been adjudged disabled by a court of competent jurisdiction.
2. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have any designations
and powers, preferences, and rights, and qualifications, limitations, and
restrictions thereof as are stated and expressed in this Article IV and in the
resolution or resolutions providing for the issue of such class or series
adopted by the board of directors of the Corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and vested in the board of
directors of the Corporation to authorize the issuance of the Preferred Stock
from time to time in one or more classes or series, and with respect to each
class or series of the Preferred Stock, to state by the resolution or
resolutions from time to time adopted providing for the issuance thereof the
following:
(i) whether or not the class or series is to have voting rights,
special, or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and
the designations thereof;
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(iii) the preferences and relative, participating, optional, or
other special rights, if any, and the qualifications, limitations, or
restrictions thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be
redeemable at the option of the Corporation or the holders thereof or upon the
happening of any specified event, and, if redeemable, the redemption price or
prices (which may be payable in the form of cash, notes, securities, or other
property), and the time or times at which, and the terms and conditions upon
which, such shares shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be
subject to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement, and, if such retirement or
sinking fund or funds are to be established, the periodic amount thereof, and
the terms and provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash,
stock of the Corporation, or other property, the conditions upon which and the
times when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative, and if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the
holders of any class or series thereof shall be entitled to receive upon the
voluntary or involuntary dissolution of, or upon any distribution of the assets
of, the Corporation;
(viii) whether or not the shares of any class or series, at the
option of the Corporation or the holder thereof or upon the happening of any
specified event, shall be convertible into or exchangeable for the shares of any
other class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
conversion or exchange may be made, with such adjustments, if any, as shall be
stated and expressed or provided for in such resolution or resolutions; and
(ix) any other special rights and protective provisions with
respect to any class or series as may to the board of directors of the
Corporation seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary
from the shares of any other class or series thereof in any or all of the
foregoing respects and in any other manner. The board of directors of the
Corporation may increase the number of shares of the Preferred Stock designated
for any existing class or series by a resolution adding to such class or series
authorized and unissued shares of the Preferred Stock not designated for any
other class or series. The board of directors of the Corporation may decrease
the number of shares of the Preferred Stock designated for any existing class or
series by a resolution subtracting from such class or series authorized and
unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued, and
undesignated shares of the Preferred Stock.
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3. General.
(a) Subject to the foregoing provisions of this Restated Certificate of
Incorporation, the Corporation may issue shares of its Preferred Stock and
Common Stock from time to time for such consideration (not less than the par
value thereof) as may be fixed by the board of directors of the Corporation,
which is expressly authorized to fix the same in its absolute discretion subject
to the foregoing conditions. Shares so issued for which the consideration shall
have been paid or delivered to the Corporation shall be deemed fully paid stock
and shall not be liable to any further call or assessment thereon, and the
holders of such shares shall not be liable for any further payments in respect
of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the board of
directors of the Corporation. The board of directors of the Corporation shall be
empowered to set the exercise price, duration, times for exercise, and other
terms of such rights or options; PROVIDED, HOWEVER, that the consideration to be
received for any shares of capital stock subject thereto shall not be less than
the par value thereof.
ARTICLE V.
The number, classification, and terms of the board of directors of the
Corporation and the procedures to elect directors, to remove directors, and to
fill vacancies in the board of directors shall be as follows:
(a) The number of directors that shall constitute the whole board of
directors shall from time to time be fixed exclusively by the board of directors
by a resolution adopted by a majority of the whole board of directors serving at
the time of that vote. In no event shall the number of directors that constitute
the whole board of directors be fewer than three. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Directors of the Corporation need not be elected by written ballot
unless the by-laws of the Corporation otherwise provide.
(b) The board of directors of the Corporation shall be divided into
three classes designated Class I, Class II, and Class III, respectively, all as
nearly equal in number as possible, with each director then in office receiving
the classification that at least a majority of the board of directors
designates. The initial term of office of directors of Class I shall expire at
the annual meeting of stockholders of the Corporation in 1997, of Class II shall
expire at the annual meeting of stockholders of the Corporation in 1998, and of
Class III shall expire at the annual meeting of stockholders of the Corporation
in 1999, and in all cases as to each director until his successor is elected and
qualified or until his earlier death, resignation or removal. At each annual
meeting of stockholders beginning with the annual meeting of stockholders in
1997, each director elected to succeed a director whose term is then expiring
shall hold his office until the third annual meeting of stockholders after his
election and until his successor is elected and qualified or until his earlier
death, resignation or removal. If the number of directors that constitutes the
whole board of directors is changed as permitted by this Article V, the majority
of the whole board of directors that adopts
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the change shall also fix and determine the number of directors comprising each
class; provided, however, that any increase or decrease in the number of
directors shall be apportioned among the classes as equally as possible.
(c) Vacancies in the board of directors resulting from death,
resignation, retirement, disqualification, removal from office, or other cause
and newly-created directorships resulting from any increase in the authorized
number of directors may be filled by no less than a majority vote of the
remaining directors then in office, though less than a quorum, who are
designated to represent the same class or classes of stockholders that the
vacant position, when filled, is to represent or by the sole remaining director
(but not by the stockholders except as required by law), and each director so
chosen shall receive the classification of the vacant directorship to which he
has been appointed or, if it is a newly-created directorship, shall receive the
classification that at least a majority of the board of directors designates and
shall hold office until the first meeting of stockholders held after his
election for the purpose of electing directors of that classification and until
his successor is elected and qualified or until his earlier death, resignation,
or removal from office.
(d) A director of any class of directors of the Corporation may be
removed before the expiration date of that director's term of office, only for
cause, by an affirmative vote of the holders of not less than eighty percent
(80%) of the votes of the outstanding shares of the class or classes or series
of stock then entitled to be voted at an election of directors of that class or
series, voting together as a single class, cast at the annual meeting of
stockholders or at any special meeting of stockholders called by a majority of
the whole board of directors for this purpose.
(e) Notwithstanding any other provisions of this Restated Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, but in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law or by
this Restated Certificate of Incorporation, the affirmative vote of the holders
of not less than eighty percent (80%) of the votes of the outstanding shares of
the Corporation then entitled to be voted in an election of directors, voting
together as a single class, shall be required to amend or repeal, or to adopt
any provision inconsistent with, this Article V.
ARTICLE VI.
All of the power of the Corporation, insofar as it may be lawfully
vested by this Restated Certificate of Incorporation in the board of directors,
is hereby conferred upon the board of directors of the Corporation. In
furtherance of and not in limitation of that power or the powers conferred by
law, (1) a majority of directors then in office (or such higher percentage as
may be specified in the by-laws with respect to any provision thereof) shall
have the power to adopt, amend, and repeal the by-laws of the Corporation; (2)
the stockholders of the Corporation shall have no power to appoint or remove
directors as members of committees of the board of directors, nor to abrogate
the power of the board of directors to establish any such committees or the
power of any such committee to exercise the powers and authority of the board of
directors; (3) the stockholders of the Corporation shall have no power to elect
or remove officers of the Corporation nor to abrogate the power of the board of
directors to elect and remove officers of the Corporation; and (4)
notwithstanding any other provision of this Restated Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, but in addition to any affirmative vote of the holders of any particular
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class or series of the capital stock of the Corporation required by law or by
this Restated Certificate of Incorporation, the by-laws of the Corporation shall
not be adopted, altered, amended or repealed by the stockholders of the
Corporation except in accordance with the provisions of the by-laws and by the
vote of the holders of not less than a majority of the outstanding shares of
stock then entitled to vote upon the election of directors, voting together as a
single class, or such higher vote as is set forth in the by-laws. In the event
of a direct conflict between the by-laws of the Corporation and this Restated
Certificate of Incorporation, the provisions of this Restated Certificate of
Incorporation shall be controlling. Notwithstanding any other provisions of this
Restated Certificate of Incorporation or any provision of law that might
otherwise permit a lesser or no vote, but in addition to any affirmative vote of
the holders of any particular class or series of the capital stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of not less than eighty percent (80%) of the
votes of the shares of the Corporation then entitled to be voted in an election
of directors, voting together as a single class, shall be required to amend or
repeal, or to adopt any provision inconsistent with, this Article VI.
ARTICLE VII.
Any action required or permitted to be taken by the stockholders of the
Corporation may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
ARTICLE VIII.
Special meetings of the stockholders of the Corporation, and any
proposals to be considered at such meetings, may be called and proposed
exclusively by the board of directors, pursuant to a resolution approved by a
majority of the members of the board of directors at the time in office, and no
stockholder of the Corporation shall require the board of directors to call a
special meeting of common stockholders or to propose business at a special
meeting of stockholders. Except as otherwise required by law or regulation, no
business proposed by a stockholder to be considered at an annual meeting of the
stockholders (including the nomination of any person to be elected as a director
of the Corporation) shall be considered by the stockholders at that meeting
unless, no later than sixty (60) days before the annual meeting of stockholders
or (if later) ten days after the first public notice of that meeting is sent to
stockholders, the Corporation receives from the stockholder proposing that
business a written notice that sets forth (1) the nature of the proposed
business with reasonable particularity, including the exact text of any proposal
to be presented for adoption, and the reasons for conducting that business at
the annual meeting; (2) with respect to each such stockholder, that
stockholder's name and address (as they appear on the records of the
Corporation), business address and telephone number, residence address and
telephone number, and the number of shares of each class of stock of the
Corporation beneficially owned by that stockholder; (3) any interest of the
stockholder in the proposed business; (4) the name or names of each person
nominated by the stockholder to be elected or re-elected as a director, if any;
and (5) with respect to each nominee, that nominee's name, business address and
telephone number, and residence address and telephone number, the number of
shares, if any, of each class of stock of the Corporation owned directly and
beneficially by that nominee, and all information relating to that nominee that
is required
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to be disclosed in solicitations of proxies for elections of directors, or is
otherwise required, pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") (or any provision of law subsequently
replacing Regulation 14A), together with a duly acknowledged letter signed by
the nominee stating his or her acceptance of the nomination by that stockholder,
stating his or her intention to serve as director if elected, and consenting to
being named as a nominee for director in any proxy statement relating to such
election. The person presiding at the annual meeting shall determine whether
business (including the nomination of any person as a director) has been
properly brought before the meeting and, if the facts so warrant, shall not
permit any business (or voting with respect to any particular nominee) to be
transacted that has not been properly brought before the meeting.
Notwithstanding any other provisions of this Restated Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, but in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law or by
this Restated Certificate of Incorporation, the affirmative vote of the holders
of not less than eighty percent (80%) of the shares of the Corporation then
entitled to be voted in an election of directors, voting together as a single
class, shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article VIII.
ARTICLE IX.
No contract or transaction between the Corporation and one or more of
its directors, officers, or stockholders or between the Corporation and any
person (as used herein "person" means any corporation, partnership, association,
firm, trust, joint venture, political subdivision, or instrumentality) or other
organization in which one or more of its directors, officers, or stockholders
are directors, officers, or stockholders, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the board or any
committee thereof which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or the committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by majority vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or of a
committee which authorizes the contract or transaction.
ARTICLE X
The Corporation shall indemnify and hold harmless any person who was,
is, or is threatened to be made a party to a proceeding (as hereinafter defined)
by reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partner ship, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the Delaware General Corporation Law, as the same
exists or may hereafter be amended. Such right shall be a contract right and as
such shall run to the benefit of any director or officer who is elected and
accepts the position of director or officer of the Corporation or elects to
continue to serve as a director or officer of the Corporation while this Article
X is in effect. Any repeal or amendment of this Article X shall be prospective
only and shall not limit the rights of any such director or officer or the
obligations of the Corporation with respect to any claim arising from or related
to the services of such director or officer in any of the foregoing capacities
prior to any such repeal or amendment to this Article X. Such right shall
include the right to be paid by the Corporation expenses incurred in defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the Delaware General Corporation Law, as the same exists or may
hereafter be amended. If a claim for indemnification or advancement of expenses
hereunder is not paid in full by the Corporation within sixty (60) days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense are not permitted under the Delaware General Corporation Law, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its board of directors, independent legal counsel,
or stockholders) to have made its determination prior to the commencement of
such action that in demnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
ARTICLE XI
Elections of directors need not be by written ballot unless the by-laws
of the Corporation shall so provide.
10
ARTICLE XII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (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 knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or amendment of this Article XI by the stockholders
of the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article XI, a
director shall not be liable to the Corporation or its stockholders to such
further extent as permitted by any law hereafter enacted, including, without
limitation, any subsequent amendment to the Delaware General Corporation Law.
4. This Amended and Restated Certificate of Incorporation was duly
adopted by vote of the stockholders in accordance with Sections 228, 242 and 245
of the General Corporation Law of the state of Delaware.
11
IN WITNESS WHEREOF, said Carriage Services, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by Melvin C. Payne, its
President, this 2nd day of July, 1996.
Carriage Services, Inc.
By: /s/ MELVIN C. PAYNE
Melvin C. Payne,
President
12
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES A PREFERRED STOCK
OF
CARRIAGE SERVICES, INC.
Pursuant to authority conferred upon the Board of Directors of the
Corporation by its Certificate of Incorporation, and pursuant to the provisions
of Section 151(g) of the General Corporation Law of Delaware, such Board of
Directors by written unanimous consent dated January 14, 1994, duly adopted a
resolution providing for the issuance of a series of Seven Million (7,000,000)
shares of the Corporation's Preferred Stock, $.01 par value per share, to be
designated "Series A Preferred Stock", and fixing the voting powers, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof. The following is a restatement of the
original Certificate of Designation, Preferences, Rights and Limitations to
reflect amendments to the original resolution that were adopted by the
stockholders of the Corporation, including the holders of the Series A Preferred
Stock, by written consent pursuant to Section 228 of the General Corporation Law
of Delaware:
There shall be established and authorized for issuance a series
of the Corporation's Preferred Stock, $.01 par value per share,
designated "Series A Preferred Stock" (herein referred to as "Series A
Preferred Stock"), consisting of Seven Million (7,000,000) shares, each
of the par value of $.01 per share, and having the voting powers,
preferences and relative, participating, optional and other rights, and
the qualifications, limitations or restrictions set forth below:
1. DEFINITIONS. For purposes hereof, the following terms shall have
the following definitions or shall be subject to the following
rules of construction:
(a) "Act" means the General Corporation Law of Delaware,
as amended, or any successor state statute.
(b) "Board of Directors" means the Board of Directors of
the Corporation.
(c) "Common Stock" means (i) shares of Class A Common
Stock, or (ii) shares of Class B Common Stock, as applicable.
"Class A Common Stock" means the Corporation's Class A Common
Stock, par value $.01 per share. "Class B Common Stock" means the
Corporation's Class B Common Stock, par value $.01 per share.
(d) "Fiscal Year" means the fiscal year of the Corporation
determined from time to time by the Board of Directors for
financial reporting purposes.
(e) "Initial Public Offering" means an underwritten public
offering of either Class A Common Stock or Class B Common Stock
pursuant to a registration statement filed under the Securities
Act (other than any registration statement relating to warrants,
options or shares of capital stock of the Corporation granted or
to be granted or sold primarily to employees, directors, or
officers of the Corporation, a registration statement filed
pursuant to Rule 145 under the Securities Act or any successor
rule, a registration statement relating to employee benefit plans
or interests therein or any registration statement covering
securities issued in connection with any debt financing of the
Corporation).
(f) "Major Transaction" means a single transaction
involving, or a series of transactions having the cumulative
effect of, the sale of all or substantially all of the assets or
the outstanding capital stock of the Corporation, or a merger or
consolidation of the Corporation with or into another corporation
or other entity in which the Corporation is not the survivor, or
any combination of the foregoing involving the Corporation or one
or more of its subsidiaries.
(g) The term "outstanding", when used with reference to
shares of capital stock, shall mean issued shares, excluding
shares held by the Corporation or a subsidiary of the
Corporation.
(h) "Preferred Stock" means shares of any series of the
Corpo ration's Preferred Stock, $.01 par value per share.
(i) "Return Amount" means an amount expressed in dollars
computed by multiplying the Return Percentage times $1.00 (in the
case of Series A Preferred Stock) or the initial Conversion Price
under Section 5(c) below (in the case of Class B Common Stock),
as the case may be.
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(j) "Return Percentage" means, for any given period of
time, the aggregate percentage computed at the rate of five
percent (5%) per annum from the date of issuance of the Series A
Preferred Stock through the date in question.
(k) "Securities Act" means the Securities Act of 1933, as
amended.
(l) "Series A Preferred Stock" means the series of
Preferred Stock designated by the Corporation as its Series A
Preferred Stock, $.01 par value per share.
(m) All accounting terms used herein and not expressly
defined herein shall have the meanings given to them in
accordance with generally accepted accounting principles
consistently applied and in effect as of the date of the relevant
calculation.
(n) Whenever any reference is made herein to the
outstanding shares of Common Stock determined "on a fully diluted
basis," such reference shall mean the total number of shares of
Common Stock which would be outstanding after giving effect to
the full conversion, exercise or exchange of all capital stock,
convertible notes, warrants, options and other securities
convertible or exercisable into or exchangeable with the Common
Stock, including (without limitation) the Series A Preferred
Stock, without regard to vesting rights and other similar
contingencies.
2. DIVIDENDS. The holders of shares of Series A Preferred Stock
shall be entitled to receive dividends on account of such shares
only when and as declared by the Board of Directors.
3. REDEMPTION.
(a) MANDATORY REDEMPTION. On December 31, 2003, the
Corporation shall redeem all of the shares of Series A Preferred
Stock then outstanding (subject, however, to the right of the
holders of the Series A Preferred Stock to convert their shares
pursuant to Section 5), at a redemption price of $1.50 per share.
(b) GENERAL. From and after the setting aside of the funds
necessary for redemption, notwithstanding that any certificate
for shares of Series A Preferred Stock so called for redemption
shall not have been sur rendered for cancellation, the shares to
be redeemed shall no longer be deemed outstanding, and the
holders of certificates representing such shares shall have with
respect to such shares no rights in or with respect to the
Corporation except the right to receive, upon the surrender of
such certificates, the redemption price therefor. Shares of
Series A Preferred Stock redeemed by the Corporation pursuant to
this Section 3, or shares of Series A
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Preferred Stock otherwise purchased by the Corporation, shall not
be reissued and shall be cancelled and retired in the manner
provided by the laws of the State of Delaware, and no shares of
Series A Preferred Stock shall be issued in lieu thereof.
4. PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) DEFINITION. A consolidation or merger of the
Corporation, a sale or transfer of substantially all of its
assets as an entirety, or any purchase or redemption of capital
stock of the Corporation of any class, shall not be regarded as
"liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 4, unless
pursuant to such event or transaction the Corporation is
permanently or indefinitely ceasing its business activities in
the funeral service industry.
(b) SERIES A PREFERRED STOCK. During any proceedings for
the voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, the holders of the Series A
Preferred Stock shall be entitled to receive, before any
distribution of the assets of the Corporation shall be made in
respect of the outstanding Common Stock, an amount in cash for
each share of Series A Preferred Stock equal to (i) $1.25, if
such proceedings occur on or before December 31, 1998, or (ii)
$1.00 plus the Return Amount, if such proceedings occur after
December 31, 1998 (in either event the "Liquidation Preference"),
or funds necessary for such payment shall have been set aside in
trust for the account of the holders of the out standing Series A
Preferred Stock so as to be and continue available therefor. If
upon such liquidation, dissolution or winding up, the assets
distributable to the holders of the Series A Preferred Stock
shall be insufficient to permit the payment to them of such
Liquidation Preference per share, the assets of the Corporation
shall be distributed to the holders of the Series A Preferred
Stock ratably until they shall have received the full amount to
which they would otherwise be entitled. If the assets of the
Corporation are sufficient to permit the payment of such amounts
to the holders of the Series A Preferred Stock, the remainder of
the assets of the Corporation, if any, after the dis tributions
as aforesaid shall be distributed and divided ratably among the
holders of the Common Stock then outstanding according to their
respective shares.
5. CONVERSION. The Series A Preferred Stock shall be convertible
into Class B Common Stock in accordance with the following
provisions of this Section 5.
(a) OPTIONAL CONVERSION. Subject to and upon compliance
with the provisions of this Section 5, each holder of shares of
Series A Preferred Stock shall have the right at such holder's
option, at any time prior to December 31, 2003, to convert all or
any portion of such holder's shares of Series A Preferred Stock
into fully paid and nonassessable shares of Class B Common Stock,
at the Conversion Price (hereafter defined) in effect on the
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Conversion Date (hereafter defined), upon the terms hereinafter
set forth. In the event of any mandatory redemption of Series A
Preferred Stock under Section 3, each holder of Series A
Preferred Stock may elect to convert all or any portion of such
holder's shares into Class B Common Stock pursuant to this
Section 5, in which case the provisions of this Section 5 shall
govern and control as to the shares so converted.
(b) AUTOMATIC CONVERSION. On the date that either (i) a
registration statement that has been filed with the Securities
and Exchange Commission with respect to an Initial Public
Offering shall become effective under the Securities Act, in
which the public offering price per share is at least equal to
one hundred twenty-five percent (125%) of the Conversion Price
then in effect, or (ii) a Major Transaction has occurred, in
which the net proceeds that the Board of Directors in good faith
determines will be paid to a holder of Common Stock therefrom is
anticipated to be at least equal to one hundred twenty-five
percent (125%) of the Conversion Price then in effect, then in
either such event each share of Series A Preferred Stock then
outstanding shall be automatically converted into shares of Class
B Common Stock in accordance with the following provisions of
this Section 5. In the case of net proceeds from a Major
Transaction other than in cash, the value of such proceeds shall
be determined by the Board of Directors, and for purposes of this
paragraph (b) and paragraph (f)(vii) below, the good faith
determination of the Board of Directors shall be conclusive.
Notwithstanding that any certificates for shares of Series A
Preferred Stock shall not have been surrendered for cancellation,
the shares of Series A Preferred Stock so converted shall no
longer be deemed outstanding, and the holders of certificates
representing such shares of Series A Preferred Stock shall have,
from and after the date referred to above, the same rights in or
with respect to the Corporation has holders of shares of the
number of shares of Class B Common Stock into which such shares
of Series A Preferred Stock have been so converted. Each such
holder shall have the right, upon surrender of such certificates,
to receive from the Corporation a certificate or certificates
representing the number of shares of Class B Common Stock
calculated in accordance with the following provisions of this
Section 5 registered in the name of such holder. Within 30 days
following the effective date of such registration statement or
the consummation of such Major Transaction, the Corporation shall
deliver to each holder whose shares of Series A Preferred Stock
have been converted into Class B Common Stock as provided
hereunder a written notice setting forth the fact and effective
date of such conversion, the number of shares of Class B Common
Stock into which such holder's shares of Series A Preferred Stock
were converted, and a statement that such holder is entitled to
receive a new certificate representing such number of shares of
Class B Common Stock in exchange for the certificates
representing such holder's shares of Series A Preferred Stock;
provided, however, that the failure of the Corporation to provide
such notice to any holder or any deficiency in any such notice
shall not impair or affect the
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automatic conversion of such holder's Series A Preferred Stock
into Class B Common Stock as provided herein.
(c) CONVERSION PRICE. The shares of Series A Preferred
Stock to be converted shall be convertible into the number of
shares of Class B Common Stock as is determined by multiplying
the number of shares of Series A Preferred Stock to be converted
by a fraction, the numerator of which is $1.00 and the
denominator of which is the Conversion Price in effect on the
Conversion Date. The Conversion Price at which shares of Class B
Common Stock shall initially be issuable upon conversion of
shares of Series A Preferred Stock shall be $3.57-1/7 per share
(subject to adjustment for certain events including subdivisions
and combinations of the Common Stock and as provided below,
hereafter the "Conversion Price").
(d) MECHANICS OF CONVERSION. The holder of any shares of
Series A Preferred Stock may exercise the conversion right
specified in paragraph (a) above by surrendering to the
Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted,
accompanied by written notice stating that the holder elects to
convert all or a specified portion of the shares represented
thereby. Optional conversion under paragraph (a) shall be deemed
to have been effected on the date when notice of an election to
convert and certificates for the shares to be converted has been
delivered, and automatic conversion under paragraph (b) shall be
deemed to have been effected as therein provided; any such date
is referred to herein as the "Conversion Date". As promptly as
practicable thereafter the Corporation shall issue and deliver to
or upon the written order of such holders a certificate or
certificates for the number of full shares of Class B Common
Stock to which such holders are entitled rounded down to the next
whole share as provided in paragraph (e) below. The person in
whose name the certificate or certificates of Class B Common
Stock are to be issued shall be deemed to have become a holder of
record of such Class B Common Stock on the Conversion Date.
(e) FRACTIONAL SHARES. No fractional shares of Class B
Common Stock or scrip shall be issued upon conversion of shares
of Series A Preferred Stock. Instead of any fractional shares of
Class B Common Stock which would otherwise be issuable upon
conversion of any shares of Series A Pre ferred Stock, the number
of full shares of Class B Common Stock issuable upon conversion
thereof shall be reduced to the next lowest number of whole
shares, and the Corporation will pay a cash adjustment in respect
of any surrendered shares of Series A Preferred Stock not
converted into Class B Common Stock in an amount equal to $1.00
per share of Series A Preferred Stock.
(f) CONVERSION PRICE ADJUSTMENTS. The Conversion Price
and the number of shares of Class B Common Stock issuable upon
conversion
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("Conversion Shares") shall be subject to adjustment from time
to time as follows:
(i) CERTAIN ISSUANCES OF EQUITY STOCK. If, at any
time following issuance of any Series A Preferred Stock,
the Corporation issues any Common Stock, or any security
or evidence of indebt edness which is convertible into or
exchangeable for Common Stock, or any warrant, option or
other right to subscribe for or purchase Common Stock or
any security or evidence of indebtedness which is
convertible or exchangeable for Common Stock (hereinafter,
"Equity Stock"), other than Excluded Stock (as defined in
clause (D) below), for a consideration per share less than
the Conversion Price in effect immediately prior to such
issuance, then the Conversion Price shall immediately be
reduced to a price per share determined by dividing (x) an
amount equal to the sum of (i) the number of shares of
Equity Stock of the Corporation outstanding immediately
prior to such issue or sale multiplied by the then
existing Conversion Price and (ii) the consideration, if
any, received by the Corporation upon such issue or sale,
by (y) the total number of shares of Equity Stock of the
Corporation outstanding immediately after such issue or
sale. The number of shares of Equity Stock outstanding at
any given time for the purposes of the foregoing
computation means the shares of Common Stock outstanding
together with all shares of Common Stock issuable upon
conversion or exercise of any such Equity Stock, excluding
any shares of Common Stock previously outstanding that
have been reacquired by the Corporation and constitute
treasury shares.
For purposes of any adjustment of the Conversion
Price pursuant to this subparagraph (i) of this Section
5(f), the following provisions shall be applicable:
(A) CASH. In the case of the issuance of
Equity Stock for cash, the amount of the
consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds
received by the Corporation for such Equity Stock
before deducting therefrom any discounts,
commissions, taxes, legal and accounting fees or
other expenses allowed, paid or incurred by the
Corporation in connection with the issuance and
sale thereof.
(B) CONSIDERATION OTHER THAN CASH. In the
case of the issuance of Equity Stock (other than as
described in clause (C) below) for a consideration
in whole or in part other than cash, including
securities acquired in exchange therefor (other
than securities by their terms so exchangeable),
the considera tion other than cash shall be deemed
to be the fair market
-7-
value thereof as reasonably determined by the
Board of Directors in good faith.
(C) OPTIONS AND CONVERTIBLE SECURITIES, ETC.
In the case of the issuance of (i) options,
warrants or other rights to purchase or acquire
Common Stock or other Equity Stock (whether or not
at the time exercisable), (ii) securities by their
terms convertible into or exchangeable for Common
Stock or other Equity Stock (whether or not at the
time so convertible or exercisable) or (iii)
options, warrants or rights to purchase such
convertible or exchangeable securities (whether or
not at the time exercisable):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon
exercise of such options, warrants or other
rights to purchase or acquire Common Stock
shall be deemed to have been issued at the
time such options, warrants or rights were
issued and for a consideration equal to the
aggre gate consideration (determined in the
manner provided in clauses (A) and (B)
above), if any, re ceived by the Corporation
upon the issuance of such options, warrants
or rights plus the aggregate mini mum
purchase price provided in such options,
warrants or rights for the Common Stock
covered thereby;
(2) the aggregate maximum number of
shares of Common Stock deliverable upon
conversion of or in exchange for any such
convertible or exchangeable securities, or
upon the exercise of options, warrants or
other rights to purchase or acquire such
convertible or exchangeable securities and
the subsequent conversion or exchange
thereof, shall be deemed to have been issued
at the time such securities were issued or
such options, warrants or rights were issued
and for a consideration equal to the
consideration, if any, received by the
Corporation for any such securities and
related options, warrants or rights
(excluding any cash received on account of
accrued interest or accrued dividends), plus
the addi tional consideration, if any, to be
received by the Corporation upon the
conversion or exchange of such securities
and the exercise of any related options,
warrants or rights (the consideration in
each case to be determined in the manner
provided in clauses (A) and (B) above);
-8-
(3) on any change in the number of
shares of Common Stock deliverable upon
exercise of any such options, warrants or
rights or conversion of or exchange for such
convertible or exchangeable securities or
any change in the consideration to be
received by the Corporation upon such
exercise, conversion or exchange, including,
but not limited to, a change resulting from
the anti-dilution provisions thereof, the
Conversion Price as then in effect shall
forthwith be readjusted to such Conversion
Price as would have been obtained had an
adjustment been made upon the issuance of
such options, warrants or rights not
exercised prior to such change, or
securities not converted or exchanged prior
to such change, on the basis of the terms of
such options, warrants, rights or
convertible or exchangeable securities as so
changed;
(4) on the expiration or
cancellation of any such options, warrants
or rights, or the termination of the right
to convert or exchange such convertible or
exchangeable securities, if the Conversion
Price shall have been adjusted upon the
issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion
Price as would have been obtained had an
adjustment been made upon the issuance of
such options, warrants, rights or securities
on the basis of the issuance of only the
number of shares of Common Stock actually
issued upon the exercise of such options,
warrants or rights, or upon the conversion
or exchange of such securities; and
(5) regardless of whether the
Conversion Price shall have been adjusted
upon the issuance of any such options,
warrants, rights or convertible or
exchangeable securities, no further
adjustment of the Conversion Price shall be
made for the actual issuance of Common Stock
upon the exercise, conversion or exchange
thereof;
PROVIDED, HOWEVER, that no adjustment
pursuant to this clause (C) shall have the effect
of increasing the Conversion Price above the
initial Conversion Price.
(D) EXCLUDED STOCK. For purposes hereof,
"Excluded Stock" means shares of Common Stock
issued or reserved for issuance by the Corporation
(i) upon conversion
-9-
of the Series A Preferred Stock, (ii) pursuant to a
stock dividend, subdivision or split-up covered by
paragraph (ii) of this Section 5(f), (iii) to any
one or more unaffiliated persons with whom the
Corporation or one or more of its subsidiaries
effect a business combination (however structured),
whether issued in shares of Common Stock or other
securities convertible into or exchangeable with
the Common Stock, and (iv) upon exercise of options
issued to employees of the Corporation or its
subsidiaries (other than employees who were the
record holders of any Common Stock on December 31,
1993) entitling them to acquire Common Stock at a
price per share less than the Conversion Price,
provided that such exercise price per share is not
less than the fair market value per share of Common
Stock determined in good faith by the Board of
Directors at the time such options are granted.
(ii) STOCK DIVIDENDS. If the number of shares of
Class B Common Stock outstanding at any time after the
issuance of any Series A Preferred Stock is increased by a
stock dividend payable in shares of Class B Common Stock
or by a subdivision or split-up of shares of Class B
Common Stock, then immediately after the record date fixed
for the determination of holders of Class B Common Stock
entitled to receive such stock dividend or the effective
date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately decreased and
the number of Conversion Shares proportionately increased
so that the holders of any shares of Series A Preferred
Stock shall be entitled to receive the number of shares of
Class B Common Stock of the Corporation which they would
have owned immediately following such action had such
shares of Series A Preferred Stock been converted
immediately prior thereto.
(iii) COMBINATION OF STOCK. If the number of shares
of Class B Common Stock outstanding at any time after
issuance of any class of Series A Preferred Stock is
decreased by a combination of the outstanding shares of
Class B Common Stock, then, immediately after the
effective date of such combination, the Conversion Price
shall be appropriately increased and the number of
Conversion Shares proportionately decreased so that the
holders of any shares of Series A Preferred Stock shall be
entitled to receive the number of shares of Class B Common
Stock of the Corporation which they would have owned
immediately following such action had such shares of
Series A Preferred Stock been converted immediately prior
thereto.
(iv) REORGANIZATIONS. In case of any capital
reorganization of the Corporation, or of any
reclassification of the Common Stock, or in case of the
consolidation of the Corporation with or the merger
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of the Corporation with or into any other corporation,
partnership or other business entity in which the
Corporation is not the survivor, or of the sale, lease or
other transfer of all or substantially all of the assets
of the Corporation to any other corporation, partnership
or other business entity, or in the case of any
distribution of cash (other than dividends not exceeding
net income earned in the current fiscal year to the date
on which such dividend is declared) or other assets or of
notes or other indebtedness of the Corporation or any
other securities of the Corporation (except Common Stock)
to the holders of its Common Stock, each share of Series A
Preferred Stock shall, after such capital reorganization,
reclassification, consolidation, mer ger, sale, lease or
other transfer or such distribution, be convertible into
the number of shares of stock or other securities or
property to which the Class B Common Stock issuable (at
the time of such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer or
such distribution) upon conversion of such share of Series
A Preferred Stock would have been entitled upon such
capital reorganization, reclassification, consolidation,
merger, sale, lease or other transfer or such distribution
in place of (or in addition to, in the case of any such
event after which Class B Common Stock remains
outstanding) the shares of Class B Common Stock into which
such share of Series A Preferred Stock would otherwise
have been convertible; and in any such case, if necessary,
the provisions set forth herein with respect to the rights
and interests thereafter of the holders of the shares of
Series A Preferred Stock shall be appropri ately adjusted
so as to be applicable, as nearly as may reasonably be, to
any share of stock or other securities or property
thereafter deliverable on the conversion of the shares of
Series A Preferred Stock. The subdivision or combination
of shares of Class B Common Stock issuable upon conversion
of shares of Series A Preferred Stock at any time
outstanding into a greater or lesser number of shares of
Class B Common Stock (whether with or without par value)
shall not be deemed to be a reclassification of the Class
B Common Stock of the Corporation for the purposes of this
subparagraph (iii).
(v) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT.
All calculations under this paragraph (f) shall be made to
the nearest cent or to the nearest one hundredth (1/100th)
of a share, as the case may be. Any provision of this
paragraph (f) to the contrary notwithstanding, no
adjustment in the Conversion Price shall be made if the
amount of such adjustment would be less than $0.10, but
any such amount shall be carried forward and an adjustment
with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together
with such amount and any other amount or amounts so
carried forward, shall aggregate $0.10 or more.
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(vi) TIMING OF ISSUANCE OF ADDITIONAL CLASS B
COMMON STOCK UPON CERTAIN ADJUSTMENTS. In any case in
which the provisions of this paragraph (f) requires that
an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until
the occurrence of such event issuing to the holder of any
shares of Series A Preferred Stock converted after such
record date and before the occurrence of such event the
additional shares of Class B Common Stock or other
property issuable or deliverable upon exercise by reason
of the adjustment required by such event over and above
the shares of Class B Common Stock or other property
issuable or deliverable upon such conversion before giving
effect to such adjustment; PROVIDED, HOWEVER that the
Corporation upon request shall deliver to such holder a
due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares or other
property, and such cash, upon the occurrence of the event
re quiring such adjustment.
(vii) ADJUSTMENT IF NO INITIAL PUBLIC OFFERING OR
MAJOR TRANSACTION. If on or before December 31, 2000 there
has not occurred an Initial Public Offering or a Major
Transaction in which the public offering price per share
in the Initial Public Offering, or the net proceeds that
the Board of Directors in good faith determines will be
paid to a holder of Common Stock from the Major
Transaction, as the case may be, is at least equal to the
Conversion Price then in effect plus the Return Amount,
then the Conversion Price then in effect for the Series A
Preferred Stock shall be automatically reduced effective
as of such date to a price per share determined by
reducing the initial Conversion Price under paragraph (c)
above to $2.65 per share, and then adjusting the initial
Conversion Price (as so reduced) to give effect to any
other adjustments to the Conversion Price under this
paragraph (f) which have occurred after the date of
issuance of the Series A Preferred Stock and prior to the
date of adjustment under this subparagraph (vii).
(g) STATEMENT REGARDING ADJUSTMENTS. Whenever the
Conversion Price shall be adjusted as provided in paragraph (f),
the Corporation shall forthwith file, at the office of any
transfer agent for the Series A Preferred Stock and at the
principal office of the Corporation, a statement showing in
detail the facts requiring such adjustment and the Conversion
Price that shall be in effect after such adjustment, and the
Corporation shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each holder of the
Series A Preferred Stock at his or its address appearing on the
Corporation's records. Each such statement shall be signed by the
Cor poration's chief financial officer. Where appropriate, such
copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of subparagraph
(g) below.
-12-
(h) NOTICE TO HOLDERS. In the event the Corporation
proposes to take any action of the type described in subparagraph
(i), (ii) or (iii) of paragraph (f) above, the Corporation shall
give notice to each holder of the Series A Preferred Stock in the
manner set forth in subparagraph (f) above, which notice shall
specify the record date, if any, with respect to any such action
and the approximate date on which such action is to take place.
Such notice shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of
such notice) on the Conversion Price and the number, kind or
class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Series A Preferred Stock. In
the case of any action which would require the fixing of a record
date, such notice shall be given at least 10 days prior to the
date so fixed, and in case of all other action, such notice shall
be given at least 15 days prior to the taking of such proposed
action.
(i) COSTS. The Corporation shall pay all documentary,
stamp, transfer or other transactional taxes attributable to the
issuance or delivery of shares of Class B Common Stock of the
Corporation or other securities or property upon conversion of
the shares of Series A Preferred Stock; PROVIDED, HOWEVER, that
the Corporation shall not be required to pay any taxes which may
be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares or securities in the
name other than that of the holder of the shares of Series A
Preferred Stock in respect of which such shares are being issued.
(j) RESERVATION OF SHARES. The Corporation shall reserve
at all times so long as any shares of Series A Preferred Stock
remain outstanding, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of Class B
Common Stock, or both, solely for the purpose of effecting the
conversion of shares of Series A Preferred Stock, sufficient
shares of Class B Common Stock to provide for the conversion of
all outstanding shares of Series A Preferred Stock and set aside
and keep available any other property deliverable upon conversion
of all outstanding shares of Series A Preferred Stock.
(k) APPROVALS. If any shares of Class B Common Stock or
other securities to be reserved for the purpose of conversion of
shares of Series A Preferred Stock require registration with or
approval of any governmental authority under any Federal or state
law before such shares or other securities may be validly issued
or delivered upon conversion, then the Corporation will in good
faith and as expeditiously as possible endeavor to secure such
regis tration or approval, as the case may be.
(l) VALID ISSUANCE. All shares of Class B Common Stock or
other securities which may be issued upon conversion of the
shares of Series A
-13-
Preferred Stock will upon issuance by the Corporation be duly and
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof and
the Corporation shall take no action which will cause a contrary
result.
6. VOTING RIGHTS.
(a) GENERAL. Except as otherwise provided by law and as
provided in paragraph (b) below, the holders of Series A
Preferred Stock shall have no right or power to vote on the
election of directors or on any other question or in any
proceedings involving the Corporation.
(b) SPECIAL VOTING REQUIREMENTS. Without the consent of
the holders of at least a majority of the outstanding shares of
Series A Preferred Stock, voting together as a single class, the
Corporation shall not (i) amend, alter or repeal any provision of
this Certificate of Designation so as to adversely affect the
rights or powers of any of the Series A Preferred Stock, or (ii)
issue any additional shares of another class or series of
Preferred Stock that has a liquidation preference which is
superior to the preference given to Series A Preferred Stock
under Section 4 herein.
(c) NOTICE OF CERTAIN STOCKHOLDER ACTIONS. If any action
is taken by the written consent of less than all of the
stockholders of the Corporation based upon any proposal submitted
for consideration by the Board of Directors, then the Corporation
shall, prior to the time such action by written consent is to
become effective, send a written notice, by mail, first class
postage prepaid, to each holder of the Series A Preferred Stock,
at his or its address appearing on the Corporation's records,
setting forth a description of the action to be so taken. The
failure of the Corporation to give the foregoing notice shall not
affect or impair the validity of the action so taken. The
foregoing notice requirement shall not confer upon any holder of
the Series A Preferred Stock any voting rights that are not
otherwise expressly granted herein.
7. EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
neither the shares of Series A Preferred Stock nor the shares of
Common Stock shall have any voting powers, preferences or
relative, participating, optional or other special rights other
than those specifically set forth herein.
-14-
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES B PREFERRED STOCK
OF
CARRIAGE SERVICES, INC.
Pursuant to authority conferred upon the Board of Directors of the
Corporation by its Certificate of Incorporation, and pursuant to the provisions
of Section 151(g) of the General Corporation Law of Delaware, such Board of
Directors by written unanimous consent dated October 26, 1994, duly adopted a
resolution providing for the issuance of a series of One Million (1,000,000)
shares of the Corporation's Preferred Stock, $.01 par value per share, to be
designated "Series B Preferred Stock", and fixing the voting powers, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof. The following is a restatement of the
original Certificate of Designation, Preferences, Rights and Limitations to
reflect amendments to the original resolution that were adopted by the
stockholders of the Corporation, including the holders of the Series B Preferred
Stock, by written consent pursuant to Section 228 of the General Corporation Law
of Delaware:
There shall be established and authorized for issuance a series
of the Corporation's Preferred Stock, $.01 par value per share,
designated "Series B Preferred Stock" (herein referred to as "Series B
Preferred Stock"), consisting of One Million (1,000,000) shares, each of
the par value of $.01 per share, and having the voting powers,
preferences and relative, participating, optional and other rights, and
the qualifications, limitations or restrictions set forth below:
1. DEFINITIONS. For purposes hereof, the following terms shall have
the following definitions or shall be subject to the following
rules of construction:
-1-
(a) "Act" means the General Corporation Law of Delaware,
as amended, or any successor state statute.
(b) "Board of Directors" means the Board of Directors of
the Corporation.
(c) "Common Stock" means (i) shares of Class A Common
Stock, or (ii) shares of Class B Common Stock, as applicable.
"Class A Common Stock" means the Corporation's Class A Common
Stock, par value $.01 per share. "Class B Common Stock" means the
Corporation's Class B Common Stock, par value $.01 per share.
(d) "Fiscal Year" means the fiscal year of the Corporation
determined from time to time by the Board of Directors for
financial reporting purposes.
(e) "Initial Public Offering" means an underwritten public
offering of either Class A Common Stock or Class B Common Stock
pursuant to a registration statement filed under the Securities
Act (other than any registration statement relating to warrants,
options or shares of capital stock of the Corporation granted or
to be granted or sold primarily to employees, directors, or
officers of the Corporation, a registration statement filed
pursuant to Rule 145 under the Securities Act or any successor
rule, a registration statement relating to employee benefit plans
or interests therein or any registration statement covering
securities issued in connection with any debt financing of the
Corporation).
(f) "Major Transaction" means a single transaction
involving, or a series of transactions having the cumulative
effect of, the sale of all or substantially all of the assets or
the outstanding capital stock of the Corporation, or a merger or
consolidation of the Corporation with or into another corporation
or other entity in which the Corporation is not the survivor, or
any combination of the foregoing involving the Corporation.
(g) The term "outstanding", when used with reference to
shares of capital stock, shall mean issued shares, excluding
shares held by the Corporation or a subsidiary of the
Corporation.
(h) "Preferred Stock" means shares of any series of the
Corpo ration's Preferred Stock, $.01 par value per share.
(i) "Securities Act" means the Securities Act of 1933, as
amended.
(j) "Senior Stock" means the series of Preferred Stock
designated by the Corporation as its Series A Preferred Stock,
$.01 par value per share,
-2-
and the series of Preferred Stock designated by the Corporation
as its Series C Preferred Stock, $.01 par value per share.
(k) "Series B Preferred Stock" means the series of
Preferred Stock designated by the Corporation as its Series B
Preferred Stock, $.01 par value per share.
(l) All accounting terms used herein and not expressly
defined herein shall have the meanings given to them in
accordance with generally accepted accounting principles
consistently applied and in effect as of the date of the relevant
calculation.
2. DIVIDENDS. The holders of shares of Series B Preferred Stock
shall be entitled to receive dividends on account of such shares
only when and as declared by the Board of Directors out of funds
legally available therefor. The declaration or payment of
dividends in respect of any other class or series of the
Corporation's stock by authority of the Board of Directors shall
not confer upon the holders of the Series B Preferred Stock any
right or preference to receive any dividend in respect of such
shares.
3. PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) DEFINITION. A consolidation or merger of the
Corporation, a sale or transfer of substantially all of its
assets as an entirety, or any purchase or redemption of capital
stock of the Corporation of any class, shall not be regarded as
"liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 3.
(b) SERIES B PREFERRED STOCK. During any proceedings for
the voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, the holders of the Series B
Preferred Stock shall be entitled to receive, before any
distribution of the assets of the Corporation shall be made in
respect of the outstanding Common Stock, but subject to any
distribution to the holders of the Senior Stock in respect of
such shares and any other preferential class or series of capital
stock of the Corporation, an amount in cash for each share of
Series B Preferred Stock equal to $1.00, or funds necessary for
such payment shall have been set aside in trust for the account
of the holders of the outstanding Series B Preferred Stock so as
to be and continue available therefor. If upon such liquidation,
dissolution or winding up, the assets distributable to the
holders of the Series B Preferred Stock as aforesaid shall be
insufficient to permit the payment to them (together with any
distributions to the holders of any other class or series of the
Corporation's stock which ranks pari passe with the Series B
Preferred Stock) of $1.00 per share, the assets of the
Corporation shall be distributed to the holders of the Series B
Preferred Stock ratably until they shall have received the full
amount to which they would otherwise be entitled but subject to
any distribution of the assets of the Corporation in respect of
the
-3-
Senior Stock and any other preferential class or series of
capital stock of the Corporation. If the assets of the
Corporation are sufficient to permit the payment of such amounts
to the holders of the Series B Preferred Stock, the remainder of
the assets of the Corporation, if any, after the distributions as
aforesaid shall be distributed and divided ratably among the
holders of the Common Stock (and any other shares of the
Corporation's stock which rank inferior to the Series B Preferred
Stock) then outstanding according to their respective shares.
4. CONVERSION. The Series B Preferred Stock shall be convertible
into Class B Common Stock in accordance with the following
provisions of this Section 4.
(a) OPTIONAL CONVERSION. Subject to and upon compliance
with the provisions of this Section 4, each holder of shares of
Series B Preferred Stock shall have the right at such holder's
option, at any time or from time to time, from and after the date
of original issuance to convert all or any part of his shares of
Series B Preferred Stock into fully paid and nonassessable shares
of Class B Common Stock, at the Conversion Price (hereafter
defined) in effect on the Conversion Date (hereafter defined),
upon the terms hereinafter set forth.
(b) AUTOMATIC CONVERSION. On the date that either (i) a
registration statement that has been filed with the Securities
and Exchange Commission with respect to an Initial Public
Offering shall become effective under the Securities Act, or (ii)
a Major Transaction has occurred, then in either such event each
share of Series B Preferred Stock then outstanding shall be
automatically converted into shares of Class B Common Stock in
accordance with the following provisions of this Section 4.
Notwithstanding that any certificates for shares of Series B
Preferred Stock shall not have been surrendered for cancellation,
the shares of Series B Preferred Stock so converted shall no
longer be deemed outstanding, and the holders of certificates
representing such shares of Series B Preferred Stock shall have,
from and after the date referred to above, the same rights in or
with respect to the Corporation as holders of shares of the
number of shares of Class B Common Stock into which such shares
of Series B Preferred Stock have been so converted. Each such
holder shall have the right, upon surrender of such certificates,
to receive from the Corporation a certificate or certificates
representing the number of shares of Class B Common Stock
calculated in accordance with the following provisions of this
Section 4 registered in the name of such holder. Within 30 days
following the effective date of such registration statement or
the consummation of such Major Transaction, the Corporation shall
deliver to each holder whose shares of Series B Preferred Stock
have been converted into Class B Common Stock as provided
hereunder a written notice setting forth the fact and effective
date of such conversion, the number of shares of Class B Common
Stock into which such holder's shares of Series B Preferred Stock
were converted, and a statement that such holder is entitled to
receive a new certificate representing such
-4-
number of shares of Class B Common Stock in exchange for the
certificates representing such holder's shares of Series B
Preferred Stock; provided, however, that the failure of the
Corporation to provide such notice to any holder or any
deficiency in any such notice shall not impair or affect the
automatic conversion of such holder's Series B Preferred Stock
into Class B Common Stock as provided herein.
(c) CONVERSION PRICE. The shares of Series B Preferred
Stock to be converted shall be convertible into the number of
shares of Class B Common Stock as is determined by multiplying
the number of shares of Series B Preferred Stock to be converted
by a fraction, the numerator of which is $1.00 and the
denominator of which is the Conversion Price in effect on the
Conversion Date. The Conversion Price at which shares of Class B
Common Stock shall initially be issuable upon conversion of
shares of Series B Preferred Stock shall be an amount per share
determined from time to time by the Board of Directors at the
time of issuance of any shares of Series B Preferred Stock
(subject to adjustment as provided below, hereafter the
"Conversion Price"). The initial Conversion Price upon issuance
of any given shares of Series B Preferred Stock shall be recorded
in the minutes of the Board of Directors at which such shares
were authorized to be issued, and the Conversion Price for such
shares shall be conclusively evidenced (absent manifest error) by
a notation to such effect on the face of each certificate
representing such shares.
(d) MECHANICS OF CONVERSION. The holder of any shares of
Series B Preferred Stock may exercise the conversion right
specified in paragraph (a) above by surrendering to the
Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted,
accompanied by written notice stating that the holder elects to
convert all or a specified portion of the shares represented
thereby. Optional conversion under paragraph (a) shall be deemed
to have been effected on the date when notice of an election to
convert and certificates for the shares to be converted has been
delivered, and automatic conversion under paragraph (b) shall be
deemed to have been effected as therein provided; any such date
is referred to herein as the "Conversion Date". As promptly as
practicable thereafter the Corporation shall issue and deliver to
or upon the written order of such holders a certificate or
certificates for the number of full shares of Class B Common
Stock to which such holders are entitled rounded down to the next
whole share as provided in paragraph (e) below. The person in
whose name the certificate or certificates of Class B Common
Stock are to be issued shall be deemed to have become a holder of
record of such Class B Common Stock on the Conversion Date.
(e) FRACTIONAL SHARES. No fractional shares of Class B
Common Stock or scrip shall be issued upon conversion of shares
of Series B Preferred Stock. Instead of any fractional shares of
Class B Common Stock which would otherwise be issuable upon
conversion of any shares of Series B Pre ferred Stock, the number
of full shares of Class B Common Stock issuable upon conversion
thereof shall be reduced to the next lowest number of whole
shares, and the Corporation will pay a cash adjustment in respect
of any surrendered shares of Series B Preferred Stock not
converted into Class B Common Stock in an amount equal to $1.00
per share of Series B Preferred Stock.
(f) CONVERSION PRICE ADJUSTMENTS. The Conversion Price and
the number of shares of Class B Common Stock issuable upon
conversion of the Series B Preferred Stock shall be subject to
adjustment from time to time as follows:
(i) STOCK DIVIDENDS. If the number of shares of
Class B Common Stock outstanding at any time after the
issuance of any Series B Preferred Stock is increased by a
stock dividend payable in shares of Class B Common Stock
or by a subdivision or split-up of shares of Class B
Common Stock, then immediately after the record date fixed
for the determination of holders of Class B Common Stock
entitled to receive such stock dividend or the effective
date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately decreased and
the number of shares of Class B Common Stock issuable upon
conversion of the Series B Preferred Stock shall be
proportionately increased so that the holders of any
shares of Series B Preferred Stock shall be entitled to
receive the number of shares of Class B Common Stock of
the Corporation which they would have owned immediately
following such action had such shares of Series B
Preferred Stock been converted immediately prior thereto.
(ii) COMBINATION OF STOCK. If the number of shares
of Common Stock outstanding at any time after issuance of
any class of Series B Preferred Stock is decreased by a
combination of the out standing shares of Class B Common
Stock, then, immediately after the effective date of such
combination, the Conversion Price shall be appropriately
increased and the number of shares of Common Stock
issuable upon conversion of the Series B Preferred Stock
shall be proportionately decreased so that the holders of
any shares of Series B Preferred Stock shall be entitled
to receive the number of shares of Class B Common Stock of
the Corporation which they would have owned immediately
following such action had such shares of Series B
Preferred Stock been converted immediately prior thereto.
(iii) REORGANIZATIONS. In case of any capital
reorganization of the Corporation, or of any
reclassification of the Class B Common Stock, or in case
of the consolidation of the Corporation with or the merger
of the Corporation with or into any other corporation,
partnership or other business entity in which the
Corporation is not
-5-
the survivor, or of the sale, lease or other transfer of
all or substantially all of the assets of the Corporation
to any other corporation, partnership or other business
entity, each share of Series B Preferred Stock shall,
after such capital reorganization, reclassification,
consolidation, merger, sale or lease, be convertible into
the number of shares of stock or other securities or
property to which the Class B Common Stock issuable (at
the time of such capital reorganization, reclassification,
consolidation, merger, sale or lease) upon conversion of
such share of Series B Preferred Stock would have been
entitled upon such capital reorganization,
reclassification, consolidation, merger, sale or lease in
place of (or in addition to, in the case of any such event
after which Class B Com mon Stock remains outstanding) the
shares of Class B Common Stock into which such share of
Series B Preferred Stock would otherwise have been
convertible; and in any such case, if necessary, the
provisions set forth herein with respect to the rights and
interests thereafter of the holders of the shares of
Series B Preferred Stock shall be appropriately adjusted
so as to be applicable, as nearly as may reasonably be, to
any share of stock or other securities or property
thereafter deliverable on the conversion of the shares of
Series B Preferred Stock. The subdivision or combination
of shares of Class B Common Stock issuable upon conversion
of shares of Series B Preferred Stock at any time
outstanding into a greater or lesser number of shares of
Class B Common Stock (whether with or without par value)
shall not be deemed to be a reclassification of the Class
B Common Stock of the Corporation for the purposes of this
subparagraph (iii).
(iv) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT.
All calculations under this paragraph (f) shall be made to
the nearest cent or to the nearest one hundredth (1/100th)
of a share, as the case may be. Any provision of this
paragraph (f) to the contrary notwithstanding, no
adjustment in the Conversion Price shall be made if the
amount of such adjustment would be less than $0.01, but
any such amount shall be carried forward and an adjustment
with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together
with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or more.
(v) TIMING OF ISSUANCE OF ADDITIONAL CLASS B
COMMON STOCK UPON CERTAIN ADJUSTMENTS. In any case in
which the provisions of this paragraph (f) requires that
an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until
the occurrence of such event issuing to the holder of any
shares of Series B Preferred Stock converted after such
record date and before the occurrence of such event the
additional shares of Class B Common Stock or other
property issuable or deliverable upon
-6-
exercise by reason of the adjustment required by such
event over and above the shares of Class B Common Stock or
other property issuable or deliverable upon such
conversion before giving effect to such adjustment;
PROVIDED, HOWEVER that the Corporation upon request shall
deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional shares or other property, and such cash, upon
the occurrence of the event re quiring such adjustment.
(g) STATEMENT REGARDING ADJUSTMENTS. Whenever the
Conversion Price shall be adjusted as provided in paragraph (f),
the Corporation shall forthwith file, at the office of any
transfer agent for the Series B Preferred Stock and at the
principal office of the Corporation, a statement showing in
detail the facts requiring such adjustment and the Conversion
Price that shall be in effect after such adjustment, and the
Corporation shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each holder of the
Series B Preferred Stock at his or its address appearing on the
Corporation's records. Each such statement shall be signed by the
Cor poration's chief financial officer. Where appropriate, such
copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of subparagraph
(h) below.
(h) NOTICE TO HOLDERS. In the event the Corporation
proposes to take any action of the type described in subparagraph
(i), (ii) or (iii) of paragraph (f) above, the Corporation shall
give notice to each holder of the Series B Preferred Stock in the
manner set forth in subparagraph (f) above, which notice shall
specify the record date, if any, with respect to any such action
and the approximate date on which such action is to take place.
Such notice shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of
such notice) on the Conversion Price and the number, kind or
class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Series B Preferred Stock. In
the case of any action which would require the fixing of a record
date, such notice shall be given at least 10 days prior to the
date so fixed, and in case of all other action, such notice shall
be given at least 15 days prior to the taking of such proposed
action.
(i) COSTS. The Corporation shall pay all documentary,
stamp, transfer or other transactional taxes attributable to the
issuance or delivery of shares of Class B Common Stock of the
Corporation or other securities or property upon conversion of
the shares of Series B Preferred Stock; PROVIDED, HOWEVER, that
the Corporation shall not be required to pay any taxes which may
be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares or securities in the
name other than that of
-7-
the holder of the shares of Series B Preferred Stock in respect
of which such shares are being issued.
(j) RESERVATION OF SHARES. The Corporation shall reserve
at all times so long as any shares of Series B Preferred Stock
remain outstanding, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of Class B
Common Stock, or both, solely for the purpose of effecting the
conversion of shares of Series B Preferred Stock, sufficient
shares of Class B Common Stock to provide for the conversion of
all outstanding shares of Series B Preferred Stock and set aside
and keep available any other property deliverable upon conversion
of all outstanding shares of Series B Preferred Stock.
(k) APPROVALS. If any shares of Class B Common Stock or
other securities to be reserved for the purpose of conversion of
shares of Series B Preferred Stock require registration with or
approval of any governmental authority under any Federal or state
law before such shares or other securities may be validly issued
or delivered upon conversion, then the Corporation will in good
faith and as expeditiously as possible endeavor to secure such
regis tration or approval, as the case may be.
(l) VALID ISSUANCE. All shares of Class B Common Stock or
other securities which may be issued upon conversion of the
shares of Series B Preferred Stock will upon issuance by the
Corporation be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof and the Corporation shall take no
action which will cause a contrary result.
5. VOTING RIGHTS. Except as provided by law, the holders of Series
B Preferred Stock shall have no right or power to vote on the
election of directors or on any other question or in any
proceedings involving the Corporation.
6. EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
neither the shares of Series B Preferred Stock nor the shares of
Common Stock shall have any voting powers, preferences or
relative, participating, optional or other special rights other
than those specifically set forth herein.
-8-
EXHIBIT C
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C PREFERRED STOCK
OF
CARRIAGE SERVICES, INC.
Pursuant to authority conferred upon the Board of Directors of the
Corporation by its Certificate of Incorporation, and pursuant to the provisions
of Section 151(g) of the General Corporation Law of Delaware, such Board of
Directors by written unanimous consent dated September 1, 1995, duly adopted a
resolution providing for the issuance of a series of Eight Million Five Hundred
Thousand (8,500,000) shares of the Corporation's Preferred Stock, $.01 par value
per share, to be designated "Series C Preferred Stock", and fixing the voting
powers, preferences and relative, participating, optional or other rights, and
the qualifications, limitations or restrictions thereof. The following is a
restatement of the original Certificate of Designation, Preferences, Rights and
Limitations to reflect amendments to the original resolution that were adopted
by the stockholders of the Corporation, including the holders of the Series C
Preferred Stock, by written consent pursuant to Section 228 of the General
Corporation Law of Delaware:
There shall be established and authorized for issuance a series
of the Corporation's Preferred Stock, $.01 par value per share,
designated "Series C Preferred Stock" (herein referred to as "Series C
Preferred Stock"), consisting of Eight Million Five Hundred Thousand
(8,500,000) shares, each of the par value of $.01 per share, and having
the voting powers, preferences and relative, participating, optional and
other rights, and the qualifications, limitations or restrictions set
forth below:
1. DEFINITIONS. For purposes hereof, the following terms shall have
the following definitions or shall be subject to the following
rules of construction:
-1-
(a) "Act" means the General Corporation Law of Delaware,
as amended, or any successor state statute.
(b) "Board of Directors" means the Board of Directors of
the Corporation.
(c) "Common Stock" means (i) shares of Class A Common
Stock, or (ii) shares of Class B Common Stock. "Class A Common
Stock" means the Corporation's Class A Common Stock, par value
$.01 per share. "Class B Common Stock" means the Corporation's
Class B Common Stock, par value $.01 per share.
(d) "Fiscal Year" means the fiscal year of the Corporation
determined from time to time by the Board of Directors for
financial reporting purposes.
(e) "Initial Public Offering" means an underwritten public
offering of either Class A Common Stock or Class B Common Stock
pursuant to a registration statement filed under the Securities
Act (other than any registration statement relating to warrants,
options or shares of capital stock of the Corporation granted or
to be granted or sold primarily to employees, directors, or
officers of the Corporation, a registration statement filed
pursuant to Rule 145 under the Securities Act or any successor
rule, a registration statement relating to employee benefit plans
or interests therein or any registration statement covering
securities issued in connection with any debt financing of the
Corporation).
(f) "Junior Stock" means the Common Stock, the Series B
Preferred Stock and any other class or series of the
Corporation's stock which by its terms is subordinate to the
Series C Preferred Stock in any distribution of the Corporation's
assets in connection with the liquidation, dissolution or winding
up of the affairs of the Corporation.
(g) "Major Transaction" means a single transaction
involving, or a series of transactions having the cumulative
effect of, the sale of all or substantially all of the assets or
the outstanding capital stock of the Corporation, or a merger or
consolidation of the Corporation with or into an other
corporation or other entity (other than a Nominal Transaction),
or any combination of the foregoing involving the Corporation or
one or more of its subsidiaries.
(h) "Nominal Transaction" means a merger, consolidation or
similar transaction involving the Corporation (regardless of
whether or not it is the surviving entity), such as the
reincorporation of the Corporation under the laws of another
state, in which the relative rights, preferences, powers,
qualifications, limitations and restrictions of the Series C
Preferred
-2-
Stock (or of the equivalent class or series of equity securities
of the surviving entity issued to the holders of the Series C
Preferred Stock) are not adversely affected.
(i) The term "outstanding", when used with reference to
shares of capital stock, shall mean issued shares, excluding
shares held by the Corporation or a subsidiary of the
Corporation.
(j) "Parity Stock" means the Series A Preferred Stock and
any other class or series of the Corporation's stock which by its
terms is neither subordinate nor superior to or in preference of
the Series C Preferred Stock in any distribution of the
Corporation's assets in connection with the liqui dation,
dissolution or winding up of the affairs of the Corporation.
(k) "Preferred Stock" means shares of any series of the
Corpo ration's Preferred Stock, $.01 par value per share.
(l) "Return Amount" means an amount expressed in dollars
computed by multiplying the Return Percentage times $1.00 (in the
case of Series C Preferred Stock) or the initial Conversion Price
under Section 5(c) below (in the case of Class B Common Stock),
as the case may be.
(m) "Return Percentage" means, for any given period of
time, the aggregate percentage computed at the rate of five
percent (5%) per annum from the date of issuance of the Series C
Preferred Stock through the date in question.
(n) "Securities Act" means the Securities Act of 1933, as
amended.
(o) "Series A Preferred Stock" means the series of
Preferred Stock designated by the Corporation as its Series A
Preferred Stock, $.01 par value per share.
(p) "Series B Preferred Stock" means the series of
Preferred Stock designated by the Corporation as its Series B
Preferred Stock, $.01 par value per share.
(q) "Series C Preferred Stock" means the series of
Preferred Stock designated by the Corporation as its Series C
Preferred Stock, $.01 par value per share.
(r) All accounting terms used herein and not expressly
defined herein shall have the meanings given to them in
accordance with generally accepted accounting principles
consistently applied and in effect as of the date of the relevant
calculation.
-3-
(s) Whenever any reference is made herein to the
outstanding shares of Common Stock determined "on a fully diluted
basis," such reference shall mean the total number of shares of
Common Stock which would be outstanding after giving effect to
the full conversion, exercise or exchange of all capital stock,
convertible notes, warrants, options and other securities
convertible or exercisable into or exchangeable with the Common
Stock, including (without limitation) each Series of the
Preferred Stock having conversion rights, without regard to
vesting rights and other similar contingencies.
2. DIVIDENDS. The holders of shares of Series C Preferred Stock
shall be entitled to receive dividends on account of such shares
only when and as declared by the Board of Directors.
3. REDEMPTION.
(a) MANDATORY REDEMPTION. On August 31, 2005, the
Corporation shall redeem all of the shares of Series C Preferred
Stock then outstanding (subject, however, to the right of the
holders of the Series C Preferred Stock to convert their shares
pursuant to Section 5), at a redemption price of $1.50 per share.
(b) GENERAL. From and after the setting aside of the funds
necessary for redemption, notwithstanding that any certificate
for shares of Series C Preferred Stock so called for redemption
shall not have been sur rendered for cancellation, the shares to
be redeemed shall no longer be deemed outstanding, and the
holders of certificates representing such shares shall have with
respect to such shares no rights in or with respect to the
Corporation except the right to receive, upon the surrender of
such certificates, the redemption price therefor. Shares of
Series C Preferred Stock redeemed by the Corporation pursuant to
this Section 3, or shares of Series C Preferred Stock otherwise
purchased by the Corporation, shall not be reissued and shall be
canceled and retired in the manner provided by the laws of the
State of Delaware, and no shares of Series C Preferred Stock
shall be issued in lieu thereof.
4. PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) DEFINITION. A consolidation or merger of the
Corporation or a sale or transfer of substantially all of its
assets as an entirety (except for any such transaction
constituting a Major Transaction meeting the criteria specified
in clause (ii) of Section 5(b), and except for a Nominal
Transaction), shall be included as "liquidation, dissolution or
winding up of the affairs of the Corporation" within the meaning
of this Section 4. A Major Transaction meeting such criteria, a
Nominal Transaction, or any purchase or redemption of capital
stock of the Corporation of any class, shall not be
-4-
regarded as a "liquidation dissolution or winding up of the
affairs of the Corporation" within the meaning of this Section 4.
(b) SERIES C PREFERRED STOCK. During any proceedings for
the voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, the holders of the Series C
Preferred Stock shall be entitled to receive, PARI PASSU with any
distribution of assets to the holders of outstanding Parity Stock
but before any distribution of the assets of the Corporation
shall be made in respect of the outstanding Junior Stock, an
amount in cash for each share of Series C Preferred Stock equal
to (i) $1.25, if such proceedings occur on or before August 31,
2000, or (ii) $1.00 plus the Return Amount, if such proceedings
occur after August 31, 2000 (in either event the "Liquidation
Preference"), or funds necessary for such payment shall have been
set aside in trust for the account of the holders of the out
standing Parity Stock and Series C Preferred Stock so as to be
and continue to be available therefor. If upon such liquidation,
dissolution or winding up, the assets distributable to the
holders of the Parity Stock and Series C Pre ferred Stock shall
be insufficient to permit the payment to them of such Liquidation
Preference per share, the assets of the Corporation shall be dis
tributed to the holders of the Parity Stock and Series C
Preferred Stock ratably until they shall have received the full
amount to which they would otherwise be entitled. If the assets
of the Corporation are sufficient to permit the payment of such
amounts to the holders of the Parity Stock and Series C Preferred
Stock, the remainder of the assets of the Corporation, if any,
after the distributions as aforesaid shall be distributed and
divided ratably among the holders of the Junior Stock and Common
Stock then outstanding according to their respective shares.
5. CONVERSION. The Series C Preferred Stock shall be convertible
into Class B Common Stock in accordance with the following
provisions of this Section 5.
(a) OPTIONAL CONVERSION. Subject to and upon compliance
with the provisions of this Section 5, each holder of shares of
Series C Preferred Stock shall have the right at such holder's
option, at any time prior to August 31, 2005, to convert all or
any portion of such holder's shares of Series C Preferred Stock
into fully paid and nonassessable shares of Class B Common Stock,
at the Conversion Price (hereafter defined) in effect on the
Conversion Date (hereafter defined), upon the terms hereinafter
set forth. In the event of any mandatory redemption of Series C
Preferred Stock under Section 3, each holder of Series C
Preferred Stock may elect to convert all or any portion of such
holder's shares into Class B Common Stock pursuant to this
Section 5, in which case the provisions of this Section 5 shall
govern and control as to the shares so converted.
(b) AUTOMATIC CONVERSION. On the date that either (i) a
registration statement that has been filed with the Securities
and Exchange
-5-
Commission with respect to an Initial Public Offering shall
become effective under the Securities Act, in which the public
offering price per share is at least equal to one hundred fifty
percent (150%) of the Conversion Price then in effect, or (ii) a
Major Transaction has occurred, in which the net proceeds that
the Board of Directors in good faith determines will be paid to a
holder of each share of Common Stock therefrom is anticipated to
be at least equal to one hundred fifty percent (150%) of the
Conversion Price then in effect, then in either such event each
share of Series C Preferred Stock then outstanding shall be
automatically converted into shares of Class B Common Stock in
accordance with the following provisions of this Section 5.
Conversion under clause (i) above shall be subject to the
condition subsequent that the Initial Public Offering shall have
been consummated within 45 days after the effective date of such
registration statement or any post-effective amendment thereto,
and if the Initial Public Offering is not so consummated within
such 45-day period, then the conversion of the Series C Preferred
Stock into Class B Common Stock shall thereupon be rescinded as
if such conversion had never occurred, subject, however, to
future automatic conversion pursuant to any subsequent Initial
Public Offering. In the case of net proceeds from a Major
Transaction other than in cash, the value of such proceeds shall
be determined by the Board of Directors, and for purposes of this
paragraph (b) and paragraph (f)(vii) below, the good faith
determination of the Board of Directors shall be conclusive.
Notwithstanding that any certificates for shares of Series C
Preferred Stock shall not have been surrendered for cancellation,
the shares of Series C Preferred Stock so converted shall no
longer be deemed outstanding, and the holders of certificates
representing such shares of Series C Preferred Stock shall have,
from and after the date referred to above, the same rights in or
with respect to the Corporation as holders of shares of the
number of shares of Class B Common Stock into which such shares
of Series C Preferred Stock have been so converted. Each such
holder shall have the right, upon surrender of such certificates,
to receive from the Corporation a certificate or certificates
representing the number of shares of Class B Common Stock
calculated in accordance with the following provisions of this
Section 5 registered in the name of such holder. Within 30 days
following the effective date of such registration statement or
the consummation of such Major Transaction, the Corporation shall
deliver to each holder whose shares of Series C Preferred Stock
have been converted into Class B Common Stock as provided
hereunder a written notice setting forth the fact and effective
date of such conversion, the number of shares of Class B Common
Stock into which such holder's shares of Series C Preferred Stock
were converted, and a statement that such holder is entitled to
receive a new certificate representing such number of shares of
Class B Common Stock in exchange for the certificates
representing such holder's shares of Series C Preferred Stock;
provided, however, that the failure of the Corporation to provide
such notice to any holder or any deficiency in any such notice
shall not impair or affect the automatic conversion of such
holder's Series C Preferred Stock into Class B Common Stock as
provided herein.
-6-
(c) CONVERSION PRICE. The shares of Series C Preferred
Stock to be converted shall be convertible into the number of
shares of Class B Common Stock as is determined by multiplying
the number of shares of Series C Preferred Stock to be converted
by a fraction, the numerator of which is $1.00 and the
denominator of which is the Conversion Price in effect on the
Conversion Date. The Conversion Price at which shares of Class B
Common Stock shall initially be issuable upon conversion of
shares of Series C Preferred Stock shall be $4.50 per share
(subject to adjustment for certain events including subdivisions
and combinations of the Common Stock and as provided below,
hereafter the "Conversion Price").
(d) MECHANICS OF CONVERSION. The holder of any shares of
Series C Preferred Stock may exercise the conversion right
specified in paragraph (a) above by surrendering to the
Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted,
accompanied by written notice stating that the holder elects to
convert all or a specified portion of the shares represented
thereby. Optional conversion under paragraph (a) shall be deemed
to have been effected on the date when notice of an election to
convert and certificates for the shares to be converted has been
delivered, and automatic conversion under paragraph (b) shall be
deemed to have been effected as therein provided; any such date
is referred to herein as the "Conversion Date". As promptly as
practicable thereafter the Corporation shall issue and deliver to
or upon the written order of such holders a certificate or
certificates for the number of full shares of Class B Common
Stock to which such holders are entitled rounded down to the next
whole share as provided in paragraph (e) below. The person in
whose name the certificate or certificates of Class B Common
Stock are to be issued shall be deemed to have become a holder of
record of such Class B Common Stock on the Conversion Date.
(e) FRACTIONAL SHARES. No fractional shares of Class B
Common Stock or scrip shall be issued upon conversion of shares
of Series C Preferred Stock. Instead of any fractional shares of
Class B Common Stock which would otherwise be issuable upon
conversion of any shares of Series C Pre ferred Stock, the number
of full shares of Class B Common Stock issuable upon conversion
thereof shall be reduced to the next lowest number of whole
shares, and the Corporation will pay a cash adjustment in respect
of any sur rendered shares of Series C Preferred Stock not
converted into Class B Common Stock in an amount equal to $1.00
per share of Series C Preferred Stock.
(f) CONVERSION PRICE ADJUSTMENTS. The Conversion Price and
the number of shares of Class B Common Stock issuable upon
conversion ("Conversion Shares") shall be subject to adjustment
from time to time as fol lows:
-7-
(i) CERTAIN ISSUANCES OF EQUITY STOCK. If, at any
time following issuance of any Series C Preferred Stock,
the Corporation issues any Common Stock, or any security
or evidence of indebt edness which is convertible or
exercisable into or exchangeable for Common Stock, or any
warrant, option or other right to subscribe for or
purchase Common Stock or any security or evidence of
indebtedness which is convertible or exchangeable for
Common Stock (hereinafter, "Equity Stock"), other than
Excluded Stock (as defined in clause (D) below), for a
consideration per share less than the Conversion Price in
effect immediately prior to such issuance, then the
Conversion Price shall immediately be reduced to a price
per share determined by dividing (x) an amount equal to
the sum of (i) the number of shares of Equity Stock of the
Corporation outstanding immediately prior to such issue or
sale multiplied by the then existing Conversion Price and
(ii) the consideration, if any, received by the
Corporation upon such issue or sale, by (y) the total
number of shares of Equity Stock of the Corporation
outstanding immediately after such issue or sale. The
number of shares of Equity Stock outstanding at any given
time for the purposes of the foregoing computation means
the shares of Common Stock outstanding together with all
shares of Common Stock issuable upon conversion or
exercise of any such Equity Stock, excluding any shares of
Common Stock previously outstanding that have been
reacquired by the Corporation and constitute treasury
shares.
For purposes of any adjustment of the Conversion
Price pursuant to this subparagraph (i) of this Section
5(f), the following provisions shall be applicable:
(A) CASH. In the case of the issuance of
Equity Stock for cash, the amount of the
consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds
received by the Corporation for such Equity Stock
before deducting therefrom any discounts,
commissions, taxes, legal and accounting fees or
other expenses allowed, paid or incurred by the
Corporation in connection with the issuance and
sale thereof.
(B) CONSIDERATION OTHER THAN CASH. In the
case of the issuance of Equity Stock (other than as
described in clause (C) below) for a consideration
in whole or in part other than cash, including
securities acquired in exchange therefor (other
than securities by their terms so exchangeable),
the considera tion other than cash shall be deemed
to be the fair market value thereof as reasonably
determined by the Board of Directors in good faith.
-8-
(C) OPTIONS AND CONVERTIBLE SECURITIES, ETC.
In the case of the issuance of (i) options,
warrants or other rights to purchase or acquire
Common Stock or other Equity Stock (whether or not
at the time exercisable), (ii) securities which by
their terms are convertible or exercisable into or
exchange able for Common Stock or other Equity
Stock (whether or not at the time so convertible,
exercisable or exchangeable) or (iii) options,
warrants or rights to purchase such convertible or
exchangeable securities (whether or not at the time
exer cisable):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon
exercise of such options, warrants or other
rights to purchase or acquire Common Stock
shall be deemed to have been issued at the
time such options, warrants or rights were
issued and for a consideration equal to the
aggre gate consideration (determined in the
manner provided in clauses (A) and (B)
above), if any, re ceived by the Corporation
upon the issuance of such options, warrants
or rights plus the aggregate mini mum
purchase price provided in such options, war
rants or rights for the Common Stock covered
thereby;
(2) the aggregate maximum number of
shares of Common Stock deliverable upon
conversion of or in exchange for any such
convertible or exchangeable securities, or
upon the exercise of options, warrants or
other rights to purchase or acquire such
convertible or exchangeable securities and
the subsequent conversion or exchange
thereof, shall be deemed to have been issued
at the time such securities were issued or
such options, warrants or rights were issued
and for a consideration equal to the
consideration, if any, received by the
Corporation for any such securities and
related options, warrants or rights
(excluding any cash received on account of
accrued interest or accrued dividends), plus
the addi tional consideration, if any, to be
received by the Corporation upon the
conversion or exchange of such securities
and the exercise of any related options,
warrants or rights (the consideration in
each case to be determined in the manner
provided in clauses (A) and (B) above);
(3) on any change in the number of
shares of Common Stock deliverable upon
exercise of any
-9-
such options, warrants or rights or
conversion of or exchange for such
convertible or exchangeable securities or
any change in the consideration to be
received by the Corporation upon such
exercise, conversion or exchange, including,
but not limited to, a change resulting from
the anti-dilution provisions thereof, the
Conversion Price as then in effect shall
forthwith be readjusted to such Conversion
Price as would have been obtained had an
adjustment been made upon the issuance of
such options, warrants or rights not
exercised prior to such change, or
securities not converted or exchanged prior
to such change, on the basis of the terms of
such options, warrants, rights or
convertible or exchangeable securities as so
changed;
(4) on the expiration or
cancellation of any such options, warrants
or rights, or the termination of the right
to convert or exchange such convertible or
exchangeable securities, if the Conversion
Price shall have been adjusted upon the
issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion
Price as would have been obtained had an
adjustment been made upon the issuance of
such options, warrants, rights or securities
on the basis of the issuance of only the
number of shares of Common Stock actually
issued upon the exercise of such options,
warrants or rights, or upon the conversion
or exchange of such securities; and
(5) regardless of whether the
Conversion Price shall have been adjusted
upon the issuance of any such options,
warrants, rights or convertible or
exchangeable securities, no further
adjustment of the Conversion Price shall be
made for the actual issuance of Common Stock
upon the exercise, conversion or exchange
thereof;
PROVIDED, HOWEVER, that no adjustment
pursuant to this clause (C) shall have the effect
of increasing the Conversion Price above the
initial Conversion Price.
(D) EXCLUDED STOCK. For purposes hereof,
"Excluded Stock" means shares of Common Stock
issued or reserved for issuance by the Corporation
(i) upon conversion of any of the Series A
Preferred Stock or the Series C Preferred Stock,
(ii) pursuant to a stock dividend, subdivision
-10-
or split-up covered by paragraph (ii) of this
Section 5(f), (iii) to any one or more unaffiliated
persons with whom the Corporation or one or more of
its subsidiaries effect a business combination
(however structured), whether issued in shares of
Common Stock or other securities convertible or
exercisable into or exchangeable with the Common
Stock, and (iv) upon exercise of options issued to
employees of the Corporation or its subsidiaries
(other than employees who were the record holders
of any Common Stock on December 31, 1993) entitling
them to acquire Common Stock at a price per share
less than the Conversion Price, provided that such
exercise price per share is not less than the fair
market value per share of Common Stock determined
in good faith by the Board of Directors at the time
such options are granted.
(ii) STOCK DIVIDENDS. If the number of shares of
Class B Common Stock outstanding at any time after the
issuance of any Series C Preferred Stock is increased by a
stock dividend payable in shares of Class B Common Stock
or by a subdivision or split-up of shares of Class B
Common Stock, then immediately after the record date fixed
for the determination of holders of Class B Common Stock
entitled to receive such stock dividend or the effective
date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately decreased and
the number of Conversion Shares proportionately increased
so that the holders of any shares of Series C Preferred
Stock shall be entitled to receive the number of shares of
Class B Common Stock of the Corporation which they would
have owned immediately following such action had such
shares of Series C Preferred Stock been converted
immediately prior thereto.
(iii) COMBINATION OF STOCK. If the number of shares
of Class B Common Stock outstanding at any time after
issuance of any class of Series C Preferred Stock is
decreased by a combination of the outstanding shares of
Class B Common Stock, then, immediately after the
effective date of such combination, the Conversion Price
shall be appropriately increased and the number of
Conversion Shares proportionately decreased so that the
holders of any shares of Series C Preferred Stock shall be
entitled to receive the number of shares of Class B Common
Stock of the Corporation which they would have owned
immediately following such action had such shares of
Series C Preferred Stock been converted immediately prior
thereto.
(iv) REORGANIZATIONS. In case of any capital
reorganization of the Corporation, or of any
reclassification of the Common Stock, or in case of the
consolidation of the Corporation with or the merger of the
Corporation with or into any other corporation,
partnership or other
-11-
business entity (other than a Nominal Transaction), or of
the sale, lease or other transfer of all or substantially
all of the assets of the Corporation to any other
corporation, partnership or other business entity, or in
the case of any distribution of cash (other than dividends
not exceeding net income earned in the current fiscal year
to the date on which such dividend is declared) or other
assets or of notes or other indebtedness of the
Corporation or any other securities of the Corporation
(except Common Stock) to the holders of its Common Stock,
each share of Series C Preferred Stock shall, after such
capital reorganization, reclassification, consolidation,
merger, sale, lease or other transfer or such
distribution, be convertible into the number of shares of
stock or other securities or property to which the Class B
Common Stock issuable (at the time of such capital
reorganization, reclassification, consolidation, merger,
sale, lease or other transfer or such distribution) upon
conversion of such share of Series C Preferred Stock would
have been entitled upon such capital reorganization,
reclassification, consolidation, merger, sale, lease or
other transfer or such distribution in place of (or in
addition to, in the case of any such event after which
Class B Common Stock remains outstanding) the shares of
Class B Common Stock into which such share of Series C
Preferred Stock would otherwise have been con vertible;
and in any such case, if necessary, the provisions set
forth herein with respect to the rights and interests
thereafter of the holders of the shares of Series C
Preferred Stock shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any
share of stock or other securities or property thereafter
deliverable on the conversion of the shares of Series C
Preferred Stock. The subdivision or combination of shares
of Class B Common Stock issu able upon conversion of
shares of Series C Preferred Stock at any time outstanding
into a greater or lesser number of shares of Class B
Common Stock (whether with or without par value) shall not
be deemed to be a reclassification of the Class B Common
Stock of the Corporation for the purposes of this
subparagraph (iii).
(v) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT.
All calculations under this paragraph (f) shall be made to
the nearest cent or to the nearest one hundredth (1/100th)
of a share, as the case may be. Any provision of this
paragraph (f) to the contrary notwithstanding, no
adjustment in the Conversion Price shall be made if the
amount of such adjustment would be less than $0.10, but
any such amount shall be carried forward and an adjustment
with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together
with such amount and any other amount or amounts so
carried forward, shall aggregate $0.10 or more.
(vi) TIMING OF ISSUANCE OF ADDITIONAL CLASS B
COMMON STOCK UPON CERTAIN ADJUSTMENTS. In any case in
which the provisions
-12-
of this paragraph (f) requires that an adjustment shall
become effective immediately after a record date for an
event, the Corporation may defer until the occurrence of
such event issuing to the holder of any shares of Series C
Preferred Stock converted after such record date and
before the occurrence of such event the additional shares
of Class B Common Stock or other property issuable or
deliverable upon exercise by reason of the adjustment
required by such event over and above the shares of Class
B Common Stock or other property issuable or deliverable
upon such conversion before giving effect to such
adjustment; PROVIDED, HOWEVER that the Corporation upon
request shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to
receive such additional shares or other property, and such
cash, upon the occurrence of the event re quiring such
adjustment.
(vii) ADJUSTMENT IF NO INITIAL PUBLIC OFFERING OR
MAJOR TRANSACTION. If on or before August 31, 2002 there
has not occurred an Initial Public Offering or a Major
Transaction in which the public offering price per share
in the Initial Public Offering, or the net proceeds that
the Board of Directors in good faith determines will be
paid to a holder of each share of Common Stock from the
Major Transaction, as the case may be, is at least equal
to the Conversion Price then in effect plus the Return
Amount, then the Conversion Price then in effect for the
Series C Preferred Stock shall be automatically reduced
effective as of such date to a price per share determined
by reducing the initial Conversion Price under paragraph
(c) above to $3.52 per share, and then adjusting the
initial Conversion Price (as so reduced) to give effect to
any other adjustments to the Conversion Price under this
paragraph (f) which have occurred after the date of
issuance of the Series C Preferred Stock and prior to the
date of adjustment under this subparagraph (vii).
(g) STATEMENT REGARDING ADJUSTMENTS. Whenever the
Conversion Price shall be adjusted as provided in paragraph (f),
the Corporation shall forthwith file, at the office of any
transfer agent for the Series C Preferred Stock and at the
principal office of the Corporation, a statement showing in
detail the facts requiring such adjustment and the Conversion
Price that shall be in effect after such adjustment, and the
Corporation shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each holder of the
Series C Preferred Stock at his or its address appearing on the
Corporation's records. Each such statement shall be signed by the
Cor poration's chief financial officer. Where appropriate, such
copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of subparagraph
(h) below.
(h) NOTICE TO HOLDERS. In the event the Corporation
proposes to take any action of the type described in subparagraph
(i), (ii) or (iii) of
-13-
paragraph (f) above, the Corporation shall give notice to each
holder of the Series C Preferred Stock in the manner set forth in
subparagraph (f) above, which notice shall specify the record
date, if any, with respect to any such action and the approximate
date on which such action is to take place. Such notice shall
also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to
the extent such effect may be known at the date of such notice)
on the Conversion Price and the number, kind or class of shares
or other securities or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable
upon conversion of the Series C Preferred Stock. In the case of
any action which would require the fixing of a record date, such
notice shall be given at least 10 days prior to the date so
fixed, and in case of all other action, such notice shall be
given at least 15 days prior to the taking of such proposed
action.
(i) COSTS. The Corporation shall pay all documentary,
stamp, transfer or other transactional taxes attributable to the
issuance or delivery of shares of Class B Common Stock of the
Corporation or other securities or property upon conversion of
the shares of Series C Preferred Stock; PROVIDED, HOWEVER, that
the Corporation shall not be required to pay any taxes which may
be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares or securities in the
name other than that of the holder of the shares of Series C
Preferred Stock in respect of which such shares are being issued.
(j) RESERVATION OF SHARES. The Corporation shall reserve
at all times so long as any shares of Series C Preferred Stock
remain outstanding, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of Class B
Common Stock, or both, solely for the purpose of effecting the
conversion of shares of Series C Preferred Stock, sufficient
shares of Class B Common Stock to provide for the conversion of
all outstanding shares of Series C Preferred Stock and set aside
and keep available any other property deliverable upon conversion
of all outstanding shares of Series C Preferred Stock.
(k) APPROVALS. If any shares of Class B Common Stock or
other securities to be reserved for the purpose of conversion of
shares of Series C Preferred Stock require registration with or
approval of any governmental authority under any Federal or state
law before such shares or other securities may be validly issued
or delivered upon conversion, then the Corporation will in good
faith and as expeditiously as possible endeavor to secure such
regis tration or approval, as the case may be.
(l) VALID ISSUANCE. All shares of Class B Common Stock or
other securities which may be issued upon conversion of the
shares of Series C Preferred Stock will upon issuance by the
Corporation be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges
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with respect to the issuance thereof and the Corporation shall
take no action which will cause a contrary result.
6. VOTING RIGHTS.
(a) GENERAL. Except as otherwise provided by law and as
provided in paragraph (b) below, the holders of Series C
Preferred Stock shall have no right or power to vote on the
election of directors or on any other question or in any
proceedings involving the Corporation.
(b) SPECIAL VOTING REQUIREMENTS. Without the consent of
the holders of at least a majority of the outstanding shares of
Series C Preferred Stock, voting together as a single class, the
Corporation shall not (i) amend, alter or repeal any provision of
the Corporation's Certificate of Incorporation or Bylaws or this
Certificate of Designation, in any event so as to adversely
affect the rights or powers of any of the Series C Preferred
Stock; (ii) issue after the date of this Certificate of
Designation any additional shares of another class or series of
Preferred Stock that has (x) a liquidation preference which is
superior to the preference given to Series C Preferred Stock
under Section 4 herein, or which requires or calls for the
Corporation to declare or pay dividends in respect of any such
class or series (other than Excluded Stock issued in connection
with business combinations pursuant to clause (iii) of Section
5(f)(i)(D) hereof), or (y) a liquidation preference which is pari
passu to the preference given to the Series C Preferred Stock
under Section 4 herein, except that the Corporation may hereafter
issue such Parity Stock having an aggregate liquidation
preference of up to $25 million without need for any such vote or
consent of the holders of the Series C Preferred Stock; or (iii)
pay or declare any dividends in respect of the Common Stock or
any class or series of Preferred Stock (other than Excluded Stock
as described above), unless, concurrently with the payment
thereof, the Corporation shall have declared and paid to the
holders of the Series C Preferred Stock a dividend in respect of
the Series C Preferred Stock in an equivalent amount per share,
determined on a fully diluted basis as if all stock and other
securities convertible or exercisable into or exchangeable for
the Common Stock (including the Series C Preferred Stock and, if
other than the Common Stock, the other class or series of
Preferred Stock in respect of which such dividend was declared or
paid) had been so converted or exercised into or exchanged for
the Common Stock.
(c) NOTICE OF CERTAIN STOCKHOLDER ACTIONS. If any action
is taken by the written consent of less than all of the
stockholders of the Corporation based upon any proposal submitted
for consideration by the Board of Directors, then the Corporation
shall, prior to the time such action by written consent is to
become effective, send a written notice, by mail, first class
postage prepaid, to each holder of the Series C Preferred Stock,
at his or its address appearing on the Corporation's records,
setting forth a description of the action to be so taken. The
failure of the Corporation to give the
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foregoing notice shall not affect or impair the validity of the
action so taken. The foregoing notice requirement shall not
confer upon any holder of the Series C Preferred Stock any voting
rights that are not otherwise expressly granted herein.
7. EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
neither the shares of Series C Preferred Stock nor the shares of
Common Stock shall have any voting powers, preferences or
relative, participating, optional or other special rights other
than those specifically set forth herein.
-16-
EXHIBIT D
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES D PREFERRED STOCK
OF
CARRIAGE SERVICES, INC.
Pursuant to authority conferred upon the Board of Directors of the
Corporation by its Certificate of Incorporation, and pursuant to the provisions
of Section 151(g) of the General Corporation Law of Delaware, such Board of
Directors by written unanimous consent dated March 4, 1996, duly adopted a
resolution providing for the issuance of a series of Twenty Million (20,000,000)
shares of the Corporation's Preferred Stock, $.01 par value per share, to be
designated "Series D Preferred Stock", and fixing the voting powers, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof. The following is a restatement of the
original Certificate of Designation, Preferences, Rights and Limitations to
reflect amendments to the original resolution that were adopted by the
stockholders of the Corporation, including the holders of the Series D Preferred
Stock, by written consent pursuant to Section 228 of the General Corporation Law
of Delaware:
There shall be established and authorized for issuance a series
of the Corporation's Preferred Stock, $.01 par value per share,
designated "Series D Preferred Stock" (herein referred to as "Series D
Preferred Stock"), consisting of Twenty Million (20,000,000) shares,
each of the par value of $.01 per share, and having the voting powers,
preferences and relative, participating, optional and other rights, and
the qualifications, limitations or restrictions set forth below:
1. DEFINITIONS. For purposes hereof, the following terms shall have
the following defi nitions or shall be subject to the following
rules of construction:
-1-
(a) "Affiliate" of any person shall mean (a) any member of
the immediate family of such person, including parents, siblings,
spouse and lineal descendants (including those by adoption); the
parents, siblings, spouse, or lineal descendants (including those
by adoption) of such immediate family member; and in any such
case any trust whose primary beneficiary is such person or one or
more members of such immediate family and/or such person's lineal
descendants; (b) the legal representative or guardian of such
person or of any such immediate family members in the event such
person or any such immediate family members becomes mentally
incompetent; and (c) any person, corporation or other entity
controlling, controlled by or under common control with such
person. As used in this definition, the term "control", including
the correlative terms "controlling", "controlled by" and "under
common control with" shall mean possession, directly or
indirectly, of the power to direct or cause the direction of
management or policies (whether through ownership of securities
or any partnership or other ownership interest, by contract or
otherwise) of a person, corporation or other entity.
(b) "Board of Directors" means the Board of Directors of
the Corporation.
(c) "Common Stock" means (i) shares of Class A Common
Stock, or (ii) shares of Class B Common Stock. "Class A Common
Stock" means the Corporation's Class A Common Stock, par value
$.01 per share. "Class B Common Stock" means the Corporation's
Class B Common Stock, par value $.01 per share.
(d) "Conversion Base Price" means:
(i) Until consummation of an Initial Public
Offering, the Initial Conversion Base Price;
(ii) From the date of consummation of an Initial
Public Offering until the date which is the last day of
the sixth full calendar month thereafter, the LESSER of
(x) Initial Conversion Base Price per share of Common
Stock, or (y) the Initial Public Offering Price.
(iii) From the first day of the seventh full
calendar month following consummation of an Initial Public
Offering until the last day of the twelfth full calendar
month after such consummation, the price calculated under
subparagraph (ii) above PLUS $.50.
(iv) From the first day of the thirteenth full
calendar month following consummation of an Initial Public
Offering until the last day of the eighteenth full
calendar month after such consummation, the price
calculated under subparagraph (ii) above PLUS $1.00.
-2-
(e) "Conversion Price" means:
(i) From the date of original issuance of the
Series D Preferred Stock until the last day of the
eighteenth full calendar month following consummation of
an Initial Public Offering, the Conversion Base Price.
(ii) From and after the first day of the
nineteenth full calendar month following consummation of
an Initial Public Offering, the Market Price.
(f) "Dividend Rate" shall mean an annual rate (expressed
in dollars or portions thereof) as shall be determined from time
to time by the Board of Directors at the time of issuance of any
shares of Series D Preferred Stock. The Dividend Rate applicable
to any shares of Series D Preferred Stock shall be recorded in
the minutes of the Board of Directors at which such shares are
authorized to be issued, and shall be conclusively evidenced
(absent manifest error) by a notation to such effect on the face
of each certificate representing such shares.
(g) "Initial Conversion Base Price" means an amount
(expressed in dollars or portions thereof) as shall be determined
from time to time by the Board of Directors at the time of
issuance of any shares of Series D Preferred Stock. The Initial
Conversion Base Price applicable to any shares of Series D
Preferred Stock shall be recorded in the minutes of the Board of
Directors at which such shares are authorized to be issued, and
shall be conclusively evidenced (absent manifest error) by a
notation to such effect on the face of each certificate
representing such shares.
(h) "Initial Public Offering" means (i) an underwritten
public offering of either Class A Common Stock or Class B Common
Stock by the Corporation for cash pursuant to a registration
statement filed under the Securities Act (other than any
registration statement relating solely to warrants, options or
shares of capital stock of the Corporation granted or to be
granted or sold primarily to employees, directors, or officers of
the Corporation, a registration statement filed pursuant to Rule
145 under the Securities Act or any successor rule, a
registration statement relating solely to employee benefit plans
or interests therein or any registration statement covering only
securities issued in connection with any debt financing of the
Corporation, or any combination of the foregoing), or (ii) the
consummation of a consolidation of the Corporation with or the
merger of the Corporation with or into any other corporation or
other business entity, as a consequence of which the holders of
the Common Stock immediately prior thereto receive shares of
common stock of the survivor that are covered by a registration
statement filed under the Securities Act.
(i) "Initial Public Offering Price" means the gross price
per share of Common Stock offered by the Corporation to the
public in an Initial Public Offering,
-3-
or in the case of a merger or consolidation the price per share
at which the Corporation's Common Stock is valued in accordance
with the applicable plan or agreement of merger or consolidation,
in either event without regard to underwriters discounts or
commissions, or other expenses of the Initial Public Offering.
(j) "Market Price" means the average Trading Price of a
share of Common Stock for the ten trading days of the Common
Stock preceding the date of delivery of a written conversion
notice under Section 5(c).
(k) The term "outstanding", when used with reference to
shares of capital stock, shall mean issued shares, excluding
shares held by the Corporation or a subsidiary of the
Corporation.
(l) "Parity Stock" means the Corporation's Series B
Preferred Stock, $.01 par value, the Corporation's Series E
Preferred Stock, $.01 par value, and any other class or series of
the Corporation's stock (other than Common Stock) which by its
terms is neither subordinate nor superior to or in preference of
the Series D Preferred Stock in any distribution of the
Corporation's assets in connection with the liquidation,
dissolution or winding up of the affairs of the Corporation.
(m) "Preferred Stock" means shares of any series of the
Corporation's Preferred Stock, $.01 par value per share.
(n) "Securities Act" means the Securities Act of 1933, as
amended.
(o) "Senior Stock" means the Corporation's Series A
Preferred Stock, $.01 par value, Series C Preferred Stock, $.01
par value, or any other class or series of the Corporation's
capital stock which by its terms is in preference to the Series D
Preferred Stock in any distribution of the Corporation's assets
in connection with the liquidation, dissolution or winding up of
the affairs of the Corporation.
(p) "Series D Preferred Stock" means the series of
Preferred Stock designated by the Corporation as its Series D
Preferred Stock, $.01 par value per share.
(q) "Trading Price" means, on any trading day for the
Common Stock, (i) if the Common Stock is traded on a national
securities exchange on such trading day, then the closing price
on such trading day as reflected in the consolidated trading
tables of the WALL STREET JOURNAL or any other appropriate
publication, (ii) if the Common Stock is traded over-the-counter
and reported on the NASDAQ National Market System, then the
average of the high and low sales prices on such trading day as
reported in such publication or, if not so published, then as
reported by the NASDAQ National Market System, or (iii) if the
Common Stock is not traded on a
-4-
national securities exchange or in the NASDAQ National Market
System on such trading day, then the representative bid and asked
prices at the end of such trading day in such market as reported
by NASDAQ.
(r) All accounting terms used herein and not expressly
defined herein shall have the meanings given to them in
accordance with generally accepted accounting principles
consistently applied and in effect as of the date of the relevant
calculation.
-5-
2. DIVIDENDS.
(a) SERIES D PREFERRED STOCK. The holders of Series D
Preferred Stock, in preference to the holders of Common Stock,
shall be entitled to receive, but only out of any funds legally
available for the declaration of dividends, cumulative,
preferential dividends in cash at an annual rate equal to the
Dividend Rate, payable quarter-annually on or before the last
calendar day of each March, June, September and December in each
year in which the Series D Preferred Stock is outstanding. Such
dividends shall commence to accrue on the shares of Series D
Preferred Stock and be cumulative from and after the date of
issuance of such shares of Series D Preferred Stock and shall be
deemed to accumulate and accrue from day to day thereafter. So
long as any shares of Series D Preferred Stock remain
outstanding, no dividends or distributions (other than dividends
or distributions on Common Stock payable in Common Stock) shall
be paid upon, or declared or set apart for, the Common Stock, nor
shall any Common Stock (other than Common Stock acquired in
exchange for, or out of cash proceeds of, the issue of other
Common Stock or out of cash contributions to the capital of the
Corporation) be purchased, redeemed, retired or otherwise
acquired by the Corporation, unless and until in either case all
past due, cumulative dividends on the then outstanding shares of
Series D Preferred Stock for all past dividend periods shall have
been or concurrently shall be paid.
(b) OTHER STOCK. Subject to paragraph (a) above, (i)
dividends may be declared and paid on the Common Stock and any
other class or series of the Corporation's capital stock, and
(ii) Common Stock or such other capital stock may be purchased,
retired or otherwise acquired, when and as determined by the
Board of Directors, out of any funds legally available for such
purposes.
3. REDEMPTION.
(a) MANDATORY REDEMPTION. On December 31, 2001, the
Corporation shall redeem all of the shares of Series D Preferred
Stock then outstanding (subject, however, to the right of the
holders of the Series D Preferred Stock to convert their shares
pursuant to Section 5 by providing the written conversion notice
referred to in Section 5(c) below on or before November 30,
2001), at a redemption price of $1.00 per share, together with
all accrued and unpaid dividends through the effective date of
redemption.
(b) OPTIONAL REDEMPTION. At any time during the period
commencing on the second anniversary of the date of consummation
of an Initial Public Offering and ending on December 31, 2001
(the "Optional Redemption Period"), the Corporation, at the
option of the Board of Directors, may redeem from the holders of
Series D Preferred Stock, at a redemption price of $1.00 per
share, together with accrued and unpaid dividends thereon to the
date fixed for redemption, all or any portion of the
-6-
shares of Series D Preferred Stock outstanding on such date.
Written notice of such redemption of the shares of Series D
Preferred Stock to be so redeemed, which shall include a
certification of an executive officer of the Corporation that the
Corporation is ready, willing and able (financially and
otherwise) to effect such redemption, shall be mailed, postage
prepaid, to the holders of record of the shares to be so redeemed
at their respective addresses then appearing on the books of the
Corporation, not less than 45 nor more than 75 days prior to the
date designated for such redemption, which shall occur during the
Optional Redemption Period. In case less than all of the
outstanding shares of Series D Preferred Stock are to be
redeemed, the Corporation's notice shall so state and such
redemption shall be made on or pro rata basis in accordance with
each holder's respective holdings of Series D Preferred Stock.
Such redemption by the Corporation shall be subject, however, to
the right of each such holder to convert such holder's shares of
Series D Preferred Stock into Class B Common Stock or Class A
Common Stock (as the case may be) pursuant to Section 5 by
delivering the written conversion notice referred to in Section
5(c) at least 15 days prior to the date fixed for redemption.
(c) GENERAL. From and after the effective date of
redemption and the setting aside of the funds necessary for
redemption, notwithstanding that any certificate for shares of
Series D Preferred Stock so called for redemption shall not have
been surrendered for cancellation, the shares to be redeemed
shall no longer be deemed outstanding, and the holders of
certificates representing such shares shall have with respect to
such shares no rights in or with respect to the Corporation
except the right to receive, upon the surrender of such
certificates, the redemption price therefor. Shares of Series D
Preferred Stock redeemed by the Corporation pursuant to this
Section 3, or shares of Series D Preferred Stock otherwise
purchased by the Corporation, shall not be reissued and shall be
cancelled and retired in the manner provided by the laws of the
State of Delaware, and no other shares of Series D Preferred
Stock shall be issued in lieu thereof.
4. PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) DEFINITION. A consolidation or merger of the
Corporation, a sale or transfer of substantially all of its
assets as an entirety, or any purchase or redemption of capital
stock of the Corporation of any class, shall not be regarded as
"liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 4.
(b) SERIES D PREFERRED STOCK. During any proceedings for
the voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, the holders of the Series D
Preferred Stock shall be entitled to receive, before any
distribution of the assets of the Corporation shall be made in
respect of the outstand ing Common Stock, PARI PASSU with any
distribution of assets to the holders of
-7-
outstanding Parity Stock but subject to any distribution to the
holders of the Senior Stock, an amount in cash for each share of
Series D Preferred Stock equal to $1.00 together with all accrued
and unpaid dividend through the effective date of such
liquidation, dissolution or winding up, or funds necessary for
such payment shall have been set aside in trust for the account
of the holders of the outstanding Series D Preferred Stock so as
to be and continue available therefor. If upon such liqui dation,
dissolution or winding up, the assets distributable to the
holders of the Series D Preferred Stock as aforesaid shall be
insufficient to permit the payment to them (together with any
distributions to the holders of Parity Stock) of $1.00 per share
(plus such accrued and unpaid dividends), the assets of the
Corporation shall be dis tributed to the holders of the Series D
Preferred Stock and the Parity Stock ratably until they shall
have received the full amount to which they would otherwise be
enti tled but subject to any distribution of the assets of the
Corporation in respect of the Senior Stock. If the assets of the
Corporation are sufficient to permit the payment of such amounts
to the holders of the Series D Preferred Stock and the Parity
Stock, the remainder of the assets of the Corporation, if any,
after the distributions as afore said shall be distributed and
divided ratably among the holders of the Common Stock then
outstanding according to their respective shares. In calculating
any amount distributable to the holders of the Series D Preferred
Stock as aforesaid, there shall be credited against such amount
any sums distributed or payable to such holders other than
pursuant to the terms hereof, whether under any letter of credit,
security or other similar right or interest.
5. CONVERSION. The Series D Preferred Stock shall be convertible
into Common Stock in accordance with the following provisions of
this Section 5.
(a) OPTIONAL CONVERSION. Subject to and upon compliance
with the provisions of this Section 5, each holder of shares of
Series D Preferred Stock shall have the right at such holder's
option, at any time or from time to time, from and after the date
of original issuance to convert all or any part of his shares of
Series D Preferred Stock into fully paid and nonassessable shares
of Class B Common Stock, provided however, that shares of Series
D Preferred Stock issued after the effective date of the
Registration Statement filed in connection with an Initial Public
Offering shall be convertible only into shares of Class A Common
Stock, at the Conversion Price in effect on the Conversion Date,
upon the terms hereinafter set forth. In any event, after
December 31, 2001, shares of Series D Preferred Stock will be
convertible only into shares of Class A Common Stock.
(b) CONVERSION PRICE. The shares of Series D Preferred
Stock to be converted shall be convertible into the number of
shares of Common Stock as is determined by multiplying the number
of shares of Series D Preferred Stock to be converted by a
fraction, the numerator of which is $1.00 and the denominator of
which is the Conversion Price in effect on the Conversion Date.
-8-
(c) MECHANICS OF CONVERSION. The holder of any shares of
Series D Pre ferred Stock may exercise the optional conversion
right specified in paragraph (a) above by surrendering to the
Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted,
accompanied by written notice stating that the holder elects to
convert all or a specified portion of the shares represented
thereby. Optional conversion under paragraph (a) shall be deemed
to have been effected on the date when notice of an election to
convert and certificates for the shares to be converted has been
delivered; any such date is referred to herein as the "Conversion
Date". As promptly as practicable thereafter the Corporation
shall issue and deliver to or upon the written order of such
holders a certificate or cer tificates for the number of full
shares of Common Stock to which such holders are entitled rounded
down to the next whole share as provided in paragraph (d) below.
The person in whose name the certificate or certificates of
Common Stock are to be issued shall be deemed to have become a
holder of record of such Common Stock on the Conversion Date.
(d) FRACTIONAL SHARES. No fractional shares of Common
Stock or scrip shall be issued upon conversion of shares of
Series D Preferred Stock. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of
any shares of Series D Preferred Stock, the number of full shares
of Common Stock issuable upon conversion thereof shall be reduced
to the next lowest number of whole shares, and the Corporation
will pay a cash adjustment in respect of any surrendered shares
of Series D Preferred Stock not converted into Common Stock in an
amount equal to $1.00 per share of Series D Preferred Stock.
(e) CONVERSION BASE PRICE ADJUSTMENTS. The Conversion Base
Price shall be subject to adjustment from time to time as
follows:
(i) CERTAIN ISSUANCES OF EQUITY STOCK. If, at any
time following issuance of any Series D Preferred Stock,
the Corporation issues any Common Stock, or any security
or evidence of indebtedness which is convertible or
exercisable into or exchangeable for Common Stock, or any
warrant, option or other right to subscribe for or
purchase Common Stock or any security or evidence of
indebtedness which is convertible or exchangeable for
Common Stock (hereinafter, "Equity Stock"), other than
Excluded Stock (as defined in clause (D) below), for a
consideration per share less than $4.50 per share, subject
to adjustment for certain events including subdivisions
and combinations of the Common Stock, ( the "Base Price"),
and if the Conversion Price is then based upon the
Conversion Base Price, then the Conversion Base Price
shall immediately be reduced to a price per share
determined by multiplying the Conversion Base Price then
in effect by a fraction, the numerator of which is an
amount equal to the sum of (x) the number of shares of
Equity Stock of the Corporation outstanding immediately
-9-
prior to such issue or sale multiplied by the Base Price
plus (y) the consideration, if any, received by the
Corporation upon such issue or sale, and the denominator
of which is the total number of shares of Equity Stock of
the Corporation outstanding immediately after such issue
or sale multiplied by the Base Price. The number of shares
of Equity Stock outstanding at any given time for the
purposes of the foregoing computation means the shares of
Common Stock outstanding together with all shares of
Common Stock issuable upon conversion or exercise of any
such Equity Stock, excluding any shares of Common Stock
previously outstanding that have been reacquired by the
Corporation and constitute treasury shares.
For purposes of any adjustment of the Conversion
Base Price pursuant to this subparagraph (i) of this
Section 5(e), the following provisions shall be
applicable:
(A) CASH. In the case of the issuance of
Equity Stock for cash, the amount of the
consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds
received by the Corporation for such Equity Stock
before deducting therefrom any discounts,
commissions, taxes, legal and accounting fees or
other ex penses allowed, paid or incurred by the
Corporation in connection with the issuance and
sale thereof.
(B) CONSIDERATION OTHER THAN CASH. In the
case of the issuance of Equity Stock (other than as
described in clause (C) below) for a consideration
in whole or in part other than cash, including
securities acquired in exchange therefor (other
than securities by their terms so exchangeable),
the consideration other than cash shall be deemed
to be the fair market value thereof as reasonably
determined by the Board of Directors in good faith.
(C) OPTIONS AND CONVERTIBLE SECURITIES, ETC.
In the case of the issuance of (i) options,
warrants or other rights to purchase or acquire
Common Stock or other Equity Stock (whether or not
at the time exercisable), (ii) securities which by
their terms are convertible or exercisable into or
exchangeable for Common Stock or other Equity Stock
(whether or not at the time so convertible,
exercisable or exchangeable) or (iii) options,
warrants or rights to purchase such convertible or
exchangeable securities (whether or not at the time
exercisable):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon
exercise of such options,
-10-
warrants or other rights to purchase or
acquire Common Stock shall be deemed to have
been issued at the time such options,
warrants or rights were issued and for a
consideration equal to the aggregate
consideration (determined in the manner
provided in clauses (A) and (B) above), if
any, received by the Corporation upon the
issuance of such options, warrants or rights
plus the aggregate minimum purchase price
provided in such options, warrants or rights
for the Common Stock cov ered thereby;
(2) the aggregate maximum number of
shares of Common Stock deliverable upon
conversion of or in ex change for any such
convertible or exchangeable securities, or
upon the exercise of options, warrants or
other rights to pur chase or acquire such
convertible or exchangeable securities and
the subsequent conversion or exchange
thereof, shall be deemed to have been issued
at the time such securities were issued or
such options, warrants or rights were issued
and for a consideration equal to the
consideration, if any, received by the
Corporation for any such securities and
related options, warrants or rights
(excluding any cash received on account of
accrued interest or accrued dividends), plus
the additional consideration, if any, to be
received by the Corporation upon the
conversion or exchange of such securities
and the exercise of any related options,
warrants or rights (the consideration in
each case to be determined in the manner
provided in clauses (A) and (B) above);
(3) on any change in the number of
shares of Common Stock deliverable upon
exercise of any such options, warrants or
rights or conversion of or exchange for such
convertible or exchangeable securities or
any change in the consideration to be
received by the Corporation upon such
exercise, conversion or exchange, including,
but not limited to, a change resulting from
the anti-dilution provisions there of, the
Conversion Base Price as then in effect
shall forthwith be readjusted to such
Conversion Base Price as would have been
obtained had an adjustment been made upon
the issu ance of such options, warrants or
rights not exercised prior to such change,
or securities not converted or exchanged
prior to such change, on the basis of the
terms of such options, war rants, rights or
convertible or exchangeable securities as so
changed;
-11-
(4) on the expiration or
cancellation of any such options, warrants
or rights, or the termination of the right
to convert or exchange such convertible or
exchangeable securities, if the Conversion
Base Price shall have been adjusted upon the
issuance thereof, the Conversion Base Price
shall forthwith be readjusted to such
Conversion Base Price as would have been
obtained had an adjustment been made upon
the issuance of such options, warrants,
rights or secur ities on the basis of the
issuance of only the number of shares of
Common Stock actually issued upon the
exercise of such options, warrants or
rights, or upon the conversion or exchange
of such securities; and
(5) regardless of whether the
Conversion Base Price shall have been
adjusted upon the issuance of any such
options, warrants, rights or convertible or
exchangeable securities, no further
adjustment of the Conversion Base Price
shall be made for the actual issuance of
Common Stock upon the exercise, conversion
or exchange thereof;
PROVIDED, HOWEVER, that no adjustment
pursuant to this clause (C) shall have the effect
of increasing the Conversion Base Price above the
Initial Conversion Base Price.
(D) EXCLUDED STOCK. For purposes hereof,
"Excluded Stock" means shares of Common Stock
issued or reserved for issu ance by the Corporation
(i) upon conversion of any Series A Preferred Stock
or Series C Preferred Stock; (ii) pursuant to a
stock dividend, subdivision or split-up covered by
paragraph (ii) of this Section 5(e); (iii) to any
one or more unaffiliated persons with whom the
Corporation or one or more of its subsidiaries
effect a business combination (however structured),
whether issued in shares of Common Stock or other
securities convertible or exercisable into or
exchangeable with the Common Stock and (iv) upon
exercise of options issued to employees of the
Corporation or its subsidiaries (other than
employees who were the record holders of any Common
Stock on December 31, 1993), provided that the
exercise price thereof is not less than the fair
market value per share of Common Stock determined
in good faith by the Board of Directors at the time
such options are granted.
(ii) STOCK DIVIDENDS. If the number of shares of
Common Stock outstanding at any time after the issuance of
any Series D Preferred Stock is
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increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up of shares of Common
Stock, and if the Conversion Price then in effect is based
upon the Conversion Base Price, then immediately after the
record date fixed for the determination of holders of
Common Stock entitled to receive such stock dividend or
the effective date of such subdivision or split-up, as the
case may be, the Conversion Base Price shall be
appropriately decreased so that the holders of any shares
of Series D Preferred Stock shall be entitled to receive
the number of shares of Common Stock of the Corporation
which they would have owned immediately fol lowing such
action had such shares of Series D Preferred Stock been
converted immediately prior thereto.
(iii) COMBINATION OF STOCK. If the number of
shares of Common Stock outstanding at any time after
issuance of any class of Series D Preferred Stock is
decreased by a combination of the outstanding shares of
Common Stock, and if the Conversion Price then in effect
is based upon the Conversion Base Price then, immediately
after the effective date of such combination, the
Conversion Base Price shall be appropriately increased so
that the holders of any shares of Series D Preferred Stock
shall be entitled to receive the number of shares of
Common Stock of the Corporation which they would have
owned immediately following such action had such shares of
Series D Preferred Stock been converted immediately prior
thereto.
(iv) REORGANIZATIONS. In case of any capital
reorganization of the Corporation, or of any
reclassification of the Common Stock, or in case of the
consolidation of the Corporation with or the merger of the
Corporation with or into any other corporation,
partnership or other business entity in which the
Corporation is not the survivor, or of the sale, lease or
other transfer of all or substantially all of the assets
of the Corporation to any other corporation, partnership
or other business entity, each share of Series D Preferred
Stock shall, after such capital reorganization,
reclassification, consolidation, mer ger, sale or lease,
be convertible into the number of shares of stock or other
securities or property to which the Common Stock issuable
(at the time of such capital reorganization,
reclassification, consolidation, merger, sale or lease)
upon conversion of such share of Series D Preferred Stock
would have been entitled upon such capital reorganization,
reclassification, consolidation, merger, sale or lease in
place of (or in addition to, in the case of any such event
after which Common Stock remains outstanding) the shares
of Common Stock into which such share of Series D
Preferred Stock would otherwise have been convertible; and
in any such case, if necessary, the provisions set forth
herein with respect to the rights and interests thereafter
of the holders of the shares of Series D Preferred Stock
shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any share
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of stock or other securities or property thereafter
deliverable on the conver sion of the shares of Series D
Preferred Stock. The subdivision or combination of shares
of Common Stock issuable upon conversion of shares of
Series D Preferred Stock at any time outstanding into a
greater or lesser number of shares of Common Stock
(whether with or without par value) shall not be deemed to
be a reclassification of the Common Stock of the
Corporation for the purposes of this subparagraph (iv).
(v) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT.
All cal culations under this paragraph (e) shall be made
to the nearest cent or to the nearest one hundredth
(1/100th) of a share, as the case may be. Any provision of
this paragraph (e) to the contrary notwithstanding, no
adjustment in the Conversion Base Price shall be made if
the amount of such adjustment would be less than $0.01,
but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time
of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts
so carried forward, shall aggregate $0.01 or more.
(vi) TIMING OF ISSUANCE OF ADDITIONAL COMMON
STOCK UPON CERTAIN ADJUSTMENTS. In any case in which the
provisions of this paragraph (e) requires that an
adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until
the occurrence of such event issuing to the holder of any
shares of Series D Preferred Stock converted after such
record date and before the occurrence of such event the
additional shares of Common Stock or other property
issuable or deliverable upon exercise by reason of the
adjustment required by such event over and above the
shares of Common Stock or other property issuable or
deliverable upon such conversion before giving effect to
such adjustment; PROVIDED, HOWEVER that the Corporation
upon request shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's
right to receive such additional shares or other property,
and such cash, upon the occurrence of the event requiring
such adjustment.
(f) STATEMENT REGARDING ADJUSTMENTS. Whenever the
Conversion Base Price shall be adjusted as provided in paragraph
(e), the Corporation shall forthwith file, at the office of any
transfer agent for the Series D Preferred Stock and at the
principal office of the Corporation, a statement showing in
detail the facts requiring such adjustment and the Conversion
Base Price that shall be in effect after such adjustment, and the
Corporation shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each holder of the
Series D Preferred Stock at his or its address appearing on the
Corporation's records. Each such statement shall be signed by the
Corporation's chief financial officer. Where appropriate, such
copy
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may be given in advance and may be included as part of a notice
required to be mailed under the provisions of subparagraph (g)
below.
(g) NOTICE TO HOLDERS. In the event the Corporation
proposes to take any action of the type described in subparagraph
(i), (ii), (iii) or (iv) of paragraph (e) above, the Corporation
shall give notice to each holder of the Series D Preferred Stock
in the manner set forth in subparagraph (f) above, which notice
shall specify the record date, if any, with respect to any such
action and the approximate date on which such action is to take
place. Such notice shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect
of such action (to the extent such effect may be known at the
date of such notice) on the Conversion Base Price and the number,
kind or class of shares or other securities or property which
shall be deliverable or purchasable upon the occurrence of such
action or deliverable upon conversion of the Series D Preferred
Stock. In the case of any action which would require the fixing
of a record date, such notice shall be given at least 10 days
prior to the date so fixed, and in case of all other action, such
notice shall be given at least 15 days prior to the taking of
such proposed action.
(h) COSTS. The Corporation shall pay all documentary,
stamp, transfer or other transactional taxes attributable to the
issuance or delivery of shares of Common Stock of the Corporation
or other securities or property upon conversion of the shares of
Series D Preferred Stock; PROVIDED, HOWEVER, that the Corporation
shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of
any certificate for such shares or securities in the name other
than that of the holder of the shares of Series D Preferred Stock
in respect of which such shares are being issued.
(i) RESERVATION OF SHARES. The Corporation shall reserve
at all times so long as any shares of Series D Preferred Stock
remain outstanding, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of Common
Stock, or both, solely for the purpose of effecting the
conversion of shares of Series D Preferred Stock, sufficient
shares of Common Stock to provide for the conversion of all
outstanding shares of Series D Preferred Stock and set aside and
keep available any other property deliverable upon conversion of
all outstanding shares of Series D Preferred Stock.
(j) APPROVALS. If any shares of Common Stock or other
securities to be reserved for the purpose of conversion of shares
of Series D Preferred Stock require registration with or approval
of any governmental authority under any Federal or state law
before such shares or other securities may be validly issued or
delivered upon conversion, then the Corporation will in good
faith and as expeditiously as possible use its commercially
reasonable efforts to secure such registration or approval, as
the case may be. The foregoing does not include registration of
such shares under the
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Securities Act or state securities laws, except to the extent and
in the manner described in Section 8.
(k) VALID ISSUANCE. All shares of Common Stock or other
securities which may be issued upon conversion of the shares of
Series D Preferred Stock will upon issuance by the Corporation be
duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance
thereof and the Corporation shall take no action which will cause
a contrary result.
6. VOTING RIGHTS.
(a) GENERAL. At any annual or special meeting of
shareholders or otherwise in respect of any matter submitted for
the vote of shareholders generally, the holders of the Series D
Preferred Stock shall be entitled to such number of votes (or
fractions thereof) as shall be determined by (i) multiplying (1)
vote for each share of Series D Preferred Stock held by a
fraction, the numerator of which is $1.00 and the denominator of
which is the Conversion Price in effect on the record date for
determining shareholders entitled to vote on such matter; and
(ii) dividing the resulting product by twenty (20).
(b) SPECIAL VOTING REQUIREMENTS. Without limiting the
generality of paragraph (a) above, the Corporation shall not,
without the consent of the holders of at least a majority of the
outstanding shares of Series D Preferred Stock, voting together
as a single class, amend, alter or repeal any provision of the
Corporation's Certificate of Incorporation or Bylaws or this
Certificate of Designation, in any event so as to adversely
affect the rights or powers of any of the Series D Preferred
Stock as provided herein. As to any record holder of Series D
Preferred Stock, the Corporation will not, without the consent of
such holder, alter or amend the Initial Conversion Base Price
applicable to the Series D Preferred Stock held by such holder,
the Dividend Rate applicable to the Series D Preferred Stock held
by such holder, or the date on which such holder's Series D
Preferred Stock is required to be redeemed under Section 3(a).
7. REGISTRATION RIGHTS. Subject to paragraph (h) below and the other
provisions of this Section 8, the holders of the Series D
Preferred Stock shall be entitled to have their respective shares
of Class A Common Stock, issuable upon conversion of their Series
D Preferred Stock into Class B Common Stock and subsequently
converted into shares of Class A Common Stock, included in any
registration of Class A Common Stock under the Securities Act
proposed by the Corporation.
(a) INCIDENTAL RIGHTS. If at any time or from time to time
the Corporation proposes to file with the Securities and Exchange
Commission (the "Commission") a registration statement (whether
on Form S-1, S-2 or S-3 or any equivalent form
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then in effect) for the registration under the Securities Act of
any shares of Class A Common Stock for sale to the public by the
Corporation or on behalf of a shareholder of the Corporation for
cash (excluding any shares of Class A Common Stock issuable by
the Corporation upon the exercise of employee or director stock
options or in con nection with the merger or consolidation of the
Corporation or one of its subsidiaries with one or more other
corporations if the Corporation is the surviving corporation),
the Corporation shall give each holder of the Series D Preferred
Stock at least 30 days' prior written notice of the filing of the
proposed registration statement. The notice shall include a list
of the states and foreign jurisdictions, if any, in which the
Corporation intends to qualify such shares, and shall also
include the Corporation's estimate of the range of the offering
price per share of Class A Common Stock. On the written request
of any holder of the Series D Preferred Stock received by the
Corporation within 15 days after the date of the Corporation's
notice, the Corporation shall, subject to the conditions and in
accordance with the procedures set forth in paragraphs (b) and
(c) below, and at its own expense as provided in paragraph (e)
below, include in the coverage of such registration statement and
qualify for sale under the blue sky or securities laws of the
various states, the number of shares (but not less than 5,000
shares, subject to adjustment to give effect to any stock
dividends, splits or combinations, recapitalizations or other
similar corporate events) of Class A Common Stock (herein called
the "Specified Shares") held and so requested to be registered by
each such holder; provided that if the managing underwriter for
the Corporation indicates its belief in writing that the effect
of including in the coverage of such registration statement all
or part of the Specified Shares and the shares of Class A Common
Stock requested to be so included by other stockholders having
contractual registration rights ("Other Requesting Stockholders")
will materially and adversely affect the sale of the shares of
Class A Common Stock proposed to be sold by the Corporation
(which statement of the managing underwriter shall also state the
maximum number of shares (herein called the "Maximum Shares"), if
any, which can be sold by such all such holders without
materially and adversely affecting the sale of the shares
proposed to be sold by the Corporation), then the number of
Specified Shares which the holders of the Series D Preferred
Stock and the Other Requesting Stockholders shall collectively
have the right to include in such registration statement shall be
reduced to the number of Maximum Shares set forth in such
statement of the managing underwriter, such reduction to be
effected on a pro rata basis in accordance with the number of all
such shares requested to be so registered by the holders of the
Series D Preferred Stock and the Other Requesting Stockholders.
Except as provided in paragraph (c) below, in no event
shall the Corporation be required to amend any registration
statement filed pursuant to this Section 8 after it has become
effective or to amend or supplement any prospectus to permit the
continued disposition of shares of Class A Common Stock
registered under any registration statement.
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The Corporation shall have the right to select any
underwriters, including the managing underwriter, of any public
offering of shares of Class A Common Stock subject to the
provisions of this paragraph (a). Nothing in this paragraph (a)
shall create any liability on the part of the Corporation to the
holders of the Series D Preferred Stock if the Corporation for
any reason should decide not to file such a registration
statement.
The Corporation may withdraw any registration statement
and abandon any proposed offering initiated by the Corporation
without the consent of any holder of the Series D Preferred
Stock, notwithstanding the request of any such holder to
participate therein in accordance with this paragraph (a), if the
Corporation determines that such action is in the best interests
of the Corporation.
(b) CERTAIN REGISTRATION CONDITIONS. Any holder of Series
D Preferred Stock requesting registration of Class A Common Stock
into which such holder's Series D Preferred Stock is convertible,
following conversion into Class B Common Stock, pursuant to
paragraph (a) of this Section 8 is hereafter referred to as a
"Selling Stockholder." Anything in this Agreement to the contrary
notwithstanding, the Corporation shall not be required to effect
a registration of any Class A Common Stock of any Selling
Stockholder pursuant to paragraph (a) of this Section 8, or file
any post-effective amendment thereto:
(i) unless such Selling Stockholder agrees (x) to
sell and distribute a portion or all of his Class A Common
Stock in accordance with the customary plan or plans of
distribution adopted by and through underwrit ers, if any,
acting for the Corporation, and (y) to bear a pro rata
share of underwriter's discounts and commissions;
(ii) unless the Corporation and the underwriters
for the Corporation shall have received from such Selling
Stockholder all such information as the Corporation and
such underwriters may reasonably request from him
concerning such Selling Stockholder to enable the
Corporation to include in the registration statement all
material facts required to be disclosed therein.
Notwithstanding the foregoing, a Selling Stockholder shall
not be required to furnish to the Corporation any personal
financial information of such Selling Stockholder
unrelated to his holdings of Class A Common Stock, Series
D Preferred Stock or other securities of the Corporation
held by him, provided that each Selling Stockholder shall
nonetheless be required to furnish all information
reasonably requested by any such underwriter;
(iii) unless such Selling Stockholder is then
entitled to convert his shares of Series D Preferred Stock
into Class B Common Stock and subsequently convert into
Class A Common Stock and such Selling
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Stockholder in fact delivers the notice to elect to
convert the Series D Preferred Stock into Class B Common
Stock with a subsequent conversion into Class A Common
Stock prior to or contemporaneously with the notice of
such Selling Stockholder under paragraph (a) hereof; and
(iv) unless such Selling Stockholder, at the
request of the Corporation or its managing underwriter,
agrees or acknowledges that such Selling Stockholder (x)
has a present intention to sell such shares; (y) agrees to
execute all consents, powers of attorney, registration
statements and other documents required in order to cause
such registration statement to become effective; and (z)
agrees, if the offering is at the market, to give the
Corporation written notice of the first bona fide offering
of such shares and to use the prospectus forming a part of
such registration statement for only a period of 90 days
(or such longer period provided for in paragraph (c)
below) unless such registration statement is on a form
that complies with Rule 415.
(c) COVENANTS AND PROCEDURES. If the Corporation becomes
obligated under the provisions of paragraph (a) of this Section 8
to effect registration of shares of Class A Common Stock on
behalf of any Selling Stockholder, the following shall apply:
(i) The Corporation, at its own expense as
provided in paragraph (e), shall prepare and file with the
Commission a registration statement covering such shares
of Class A Common Stock and use its best efforts to cause
such registration statement to become effective; and the
Corporation will file such post-effective amendments to
such registration statement (and use its best efforts to
cause them to become effective) and such supplements as
are necessary so that current prospectuses are at all
times available for a period of at least 90 days after the
effective date of such registration statement or for such
longer period, not to exceed 180 days, as may be required
by the Corporation or the managing underwriter under the
plan or plans of distribution set forth in such
registration statement. Each Selling Stockholder shall
promptly provide the Corporation with such information
with respect to such Selling Stockholder's shares of Class
A Common Stock to be so registered and, if applicable, the
proposed terms of the offering thereof as is required for
such registration. Further, if the shares of Class A
Common Stock to be covered by the registration statement
are not to be sold to or through underwriters acting for
the Corporation, the Corporation shall (x) deliver to each
Selling Stockholder as promptly as practicable as many
copies of preliminary prospectuses as such Selling
Stockholder may reasona bly request, and such Selling
Stockholder shall keep a written record of the
distribution of such preliminary prospectuses and shall
refrain from delivery of such preliminary prospectuses in
any manner or under any circumstances
-19-
which would violate the Securities Act or the securities
laws of any other jurisdiction, including the various
states of the United States, (y) deliver to each Selling
Stockholder, as soon as practicable after the effective
date of the registration statement, and from time to time
thereafter during such 90-day period, or such longer
period as is herein provided, as many copies of the
prospectuses required to be delivered in connection with
the sale of shares of Class A Common Stock registered
under the registration statement as such Selling
Stockholder may reasonably request, and (z) in case of the
happening, after the effective date of such registration
statement and during such 90-day period (or such longer
period specified above), of any event or occurrence which
would be set forth in an amendment of or supplement to
such pros pectus to make any statements therein not
misleading or to correct any misleading omissions, give
each Selling Stockholder written notice thereof and
prepare and furnish to such Selling Stockholder, in such
quantities as he may reasonably request, copies of such
amended prospectus or of such supplement to be attached to
the prospectus in order that the prospectus, as so amended
or supplemented, will not contain any untrue statement of
a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading.
(ii) On or prior to the date on which the
registration statement is declared effective, the
Corporation shall use its best efforts to register or
qualify, and cooperate with each Selling Stockholder, the
underwriter or underwriters, if any, and their counsel, in
connection with the registration or qualification of the
Class A Common Stock covered by the registration statement
for offer and sale under the securities or blue sky laws
of each state and other jurisdiction of the United States
as such Selling Stockholder or underwriter reasonably
requests, to use its best efforts to keep each such
registration or qualification effective, including through
new filings, or amendments or renewals, during the period
such registration statement is required to be kept
effective and to do any and all other acts or things
necessary or advisable to enable the disposition in all
such jurisdictions of the Class A Common Stock covered by
the applicable registration statement; provided that the
Corporation will not be required to qualify generally to
do business in any jurisdiction where it is not then so
qualified.
(iii) The Corporation shall use its best efforts
to cause all of each Selling Stockholder's Class A Common
Stock included in such registration statement to be
listed, by the date of the first sale of such Class A
Common Stock pursuant to such registration statement, on
each securities exchange on which the Class A Common Stock
of the Corporation is then listed or proposed to be
listed, if any.
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(iv) The Corporation shall make generally
available to each Selling Stockholder and any underwriter
participating in the offering conducted pursuant to the
registration statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act no
later than 45 days after the end of the 12-month period
beginning with the first day of the Corporation's first
fiscal quarter commencing after the effective date of the
registration statement, which earnings statement shall
cover said 12-month period, which requirement will be
deemed to be satisfied if the Corporation timely files
complete and accurate information on Forms 10-Q, 10-K, and
8- K under the Securities Exchange Act of 1934, as
amended, and otherwise complies with Rule 158 under the
Securities Act as soon as feasible.
(v) The Corporation shall cooperate with each
Selling Stockholder and the managing underwriter or
underwriters, if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive
legends) representing Class A Common Stock to be sold
under the registration statement, and enable such
securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if
any, or such Selling Stockholder may request, subject to
the underwriters' obligation to return any certificates
representing securities not sold.
(vi) The Corporation shall use its best efforts
to cause each Selling Stockholder's Class A Common Stock
covered by the registration statement to be registered
with or approved by such other governmental agencies or
authorities within the United States as may be necessary
to enable such Selling Stockholder or the underwriter or
underwriters, if any, to consummate the disposition of
such Class A Common Stock.
(vii) The Corporation shall make available for
inspection by each Selling Stockholder, any underwriter
participating in any disposition pursuant to such
registration statement, and any attorney, accountant or
other agent retained by such Selling Stockholder or any
such underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents
and properties of the Corporation, as shall be reasonably
necessary to enable them to exercise their due diligence,
responsibility, and cause the Corporation's officers,
directors and employees to supply all nonconfidential
information reasonably requested by any such Inspector in
connection with such registration statement. As a
condition to providing such access, the Corporation may
require that any and all Inspectors execute and deliver
confidentiality agreements, in form and substance
acceptable to the Corporation, and that confidentiality
procedures be observed, all with respect to such
information.
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(viii) The Corporation shall use its best efforts
to obtain a "cold comfort" letter from the Corporation's
independent public accountants, and an opinion of counsel
for the Corporation, each in customary form and covering
such matters of the type customarily covered by cold
comfort letters and opinions of counsel in connection with
public offerings of securities, as each Selling
Stockholder reasonably requests.
(d) INDEMNIFICATION.
(i) INDEMNIFICATION BY THE CORPORATION. In the
event of any registration under the Securities Act
pursuant to this Section 8 of shares of Class A Common
Stock held by any Selling Stockholder, the Corporation
will hold harmless each Selling Stockholder and each
underwriter of such securities and each other person, if
any, who controls each Selling Stockholder or such
underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities
(including legal fees and costs of court), joint or
several, to which such Selling Stockholder or such
underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any
registration statement under which such securities were
registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
and will reimburse each Selling Stockholder and each such
underwriter and each such controlling person for any legal
or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss,
claim, damage or liability; provided, however, that the
Corporation shall not be liable to any Selling Stockholder
or his underwriters or controlling persons in any such
case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or
alleged omission made in such registration statement,
preliminary prospectus or final prospectus or such
amendment or supplement in reliance upon and in con
formity with information furnished to the Corporation
through a written instrument duly executed by such Selling
Stockholder or such underwriter specifically for use in
the preparation thereof.
(ii) INDEMNIFICATION BY SELLING STOCK-HOLDERS. It
shall be a condition precedent to the obligation of the
Corporation to include in any registration statement any
shares of Class A Common Stock then held by a
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Selling Stockholder that the Corporation shall have
received an undertaking reasonably satisfactory to it and
its counsel from such Selling Stockholder to severally
indemnify and hold harmless (in the same manner and to the
same extent as set forth in subparagraph (i) above) the
Corporation, each director of the Corporation, each
officer of the Corporation who shall sign such regis
tration statement, each underwriter of such securities and
any person who controls the Corporation or such
underwriter within the meaning of the Securities Act, with
respect to any statement or omission from such
registration statement, any preliminary prospectus or
final prospectus contained therein, or any amendment or
supplement thereto, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Corporation through a written instrument
duly executed by such Selling Stockholder specifically for
use in the preparation of such regis tration statement,
preliminary prospectus or final prospectus or such
amendment or supplement thereto.
(iii) INDEMNIFICATION PROCEDURES. Promptly after
receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to
in the preceding subparagraphs (i) and (ii), such
indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party, give written
notice to the indemnifying party of the commencement of
such action. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled
to participate in and to assume the de fense thereof, with
counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, and provided that the indemnifying party in fact
assumes such defense, the indemnifying party will not be
liable to such indemnified party for any legal or other
expenses incurred after the date of such notice by the
latter in connection with the defense thereof. Whether or
not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability
for any settlement made without its consent. No
indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.
(iv) CONTRIBUTION. If the indemnification provided
for in this paragraph (d) from the indemnifying party is
unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute
to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages,
-23-
liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether
any action in question, including any untrue or alleged
untrue statement of a material fact or a material
omission, has been made by, or relates to information
supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party
as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or
proceeding. For purposes of the foregoing, it would not be
just and equitable if contribution pursuant to this
paragraph (d) were determined by pro rata allocation or by
any other method of allocation which does not take account
of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the
provisions of this subparagraph (iv), no Selling
Stockholder shall be required to contribute any amount in
excess of the amount by which the total price at which the
Class A Common Stock of such Selling Stockholder was
offered to the public exceeds the amount of any damages
which such Selling Stockholder has otherwise been required
to pay by reason of such untrue statement or omission. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) EXPENSES. All expenses incurred by the Corporation in
connection with any registration statement covering shares of
Class A Common Stock offered by the Selling Stockholders,
including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), printing expenses, fees
and disbursements of counsel for the Corporation and of its
independent certified public accountants, the reasonable fees and
disbursements of one counsel for collectively all Selling
Stockholders and Other Requesting Stockholders whose stock is
included in such registration, and the expense of qualifying such
shares under state blue sky laws, shall be borne by the
Corporation; provided, however, that all underwriter's discounts
and commissions relating to the shares of Class A Common Stock to
be sold by the Selling Stockholders shall be borne by the Selling
Stockholders.
(f) DISPOSITIONS DURING REGISTRATION. Upon written request
by the Corporation, the Selling Stockholders will agree, upon the
registration of any of each
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such Selling Stockholder's shares of Class A Common Stock or the
Class A Common Stock issued by the Corporation, not to sell or
otherwise dispose of any shares of Stock (other than Class A
Common Stock covered by such registration, which may be sold in
accordance with the plan or plans of distribution described in
the registration statement) owned by each such Selling
Stockholder for a period of 90 days following the effective date
of such registration statement, or for such longer period (not to
exceed 180 days) as may be required under the plan or plans of
distribution set forth in such registration statement. Each
holder of the Series D Preferred Stock shall comply with the
foregoing requirements even if his Class A Common Stock issuable
upon the conversion thereof is not being included in such
registration, if (i) at such time such holder (together with his
Affiliates) owns five percent (5%) or more of the fully diluted
Class A Common Stock and (ii) other holders of five percent or
more of the fully diluted Class A Common Stock are simi larly
bound.
(g) RIGHTS TRANSFERABLE. The foregoing registration rights
and benefits set forth in this Section 8, including
indemnification by the Corporation, shall be transferable by each
holder of the Series D Preferred Stock in connection with the
transfer by any such holder of Series D Preferred Stock
convertible into not less than 10,000 shares (subject to
adjustment to give effect to any stock dividends, splits or
combinations, recapitalization or other similar corporate events)
of Class A Common Stock, otherwise than pursuant to a
registration statement of the Corporation in connection with a
public offering of Class A Common Stock.
(h) TERM OF REGISTRATION RIGHTS. The registration rights
granted pursuant to this Section 8 shall be effective for a
period commencing upon the date of original issuance thereof and
ending on (i) as to any holder of Series D Preferred Stock, upon
either (A) such holder's written consent, (B) the date such
holder holds, together with such holder's Affiliates, less than
10,000 shares (subject to adjustment as described in paragraph
(g) above) of Class A Common Stock determined on a fully diluted
basis, or (c) the date such holder is able to dispose of all
shares of Class A Common Stock that such holder may acquire upon
conversion of the Series D Preferred Stock within a single
three-month period under Rule 144 promulgated under the
Securities Act; and (ii) as to all holders of the Series D
Preferred Stock, on December 31, 2005.
8. PERIODIC REPORTING. If the Corporation becomes subject to the
periodic reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, while any shares of
Series D Preferred Stock are outstanding, the Corporation shall
provide to each record holder of the Series D Preferred Stock a
copy of each report filed or delivered pursuant to said Section
13 or 15(d), to substantially the same extent, in substantially
the same manner and at substantially the same times as such
reports are delivered to the holders of the Corporation's Class
A Common Stock.
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9. EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law, the
shares of Series D Preferred Stock shall not have any voting
powers, preferences or relative, participating, optional or other
special rights other than those specifically set forth herein.
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