CERTIFICATE OF DESIGNATION
ESTABLISHING
SERIES D CONVERTIBLE PREFERRED STOCK
OF
FIRSTPLUS FINANCIAL GROUP, INC.
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Pursuant to Section 78.1955 of
the Nevada Revised Statutes
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1. The name of the Corporation is FIRSTPLUS Financial Group, Inc., a Nevada
corporation (the "Corporation").
2. The Board of Directors of the Corporation duly adopted the following
resolutions at a meeting of the Board of Directors held on June 25, 2002:
WHEREAS, the Corporation's directors have reviewed and approved the
Designation of Preferences, Limitations and Rights of Series D Convertible
Preferred Stock of FIRSTPLUS Financial Group, Inc. (the "Certificate"), attached
hereto as Exhibit A and incorporated herein by reference, delineating the number
of shares, the voting powers, designations, preferences and relative,
participating, optional, redemption, conversion, exchange, dividend or other
special rights and qualifications, limitations or restrictions of a series of
Preferred Stock to be issued by the Corporation and designated Series D
Convertible Preferred Stock, par value $1.00 per share (the "Series D
Preferred");
RESOLVED, that 25,639 shares of authorized but unissued Preferred Stock of
the Corporation be designated Series D Preferred and authorized for issuance and
that the Series D Preferred have the rights, preferences, limitations and
restrictions set forth herein.
FURTHER RESOLVED, that the Chief Executive Officer, President or any Vice
President of the Corporation, individually or collectively, and the Secretary or
Assistant Secretary of the Corporation, individually or collectively, be, and
such officers hereby are, authorized, empowered and directed to execute,
acknowledge, attest, record and file with the Secretary of State of the State of
Nevada a Certificate of Designation in accordance with Nevada General Corporate
Law and to take all other actions that such officers deem necessary to
effectuate the Certificate of Designation and establish the Series D Preferred.
3. The authorized number of shares of Preferred Stock of the Corporation is
2,600,000 and the number of shares of the Series D Preferred, none of which has
been issued, is 25,639.
4. The resolutions set forth above have been duly adopted by all necessary
action on the part of the Corporation.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation Establishing Series D Convertible Preferred Stock to be duly adopted
in accordance with the provisions of Section 78.1955 of the Nevada Revised
Statutes and the Articles of Incorporation of the Corporation and to be executed
in its corporate name on the 27th day of June, 2002.
FIRSTPLUS FINANCIAL GROUP, INC.
By: /s/ Daniel T. Phillips
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Name: Daniel T. Phillips
Title: President and Chief Executive Officer
By: /s/ Daniel T. Phillips
-------------------------------------
Name: Daniel T. Phillips
Title: Secretary
State of Texas )
)
County of Dallas )
The foregoing instrument was acknowledged before me, on the 27th day of
June 2002, by Daniel T. Phillips, President and Daniel T. Phillips, Secretary of
FIRSTPLUS Financial Group, Inc., a Nevada corporation, on behalf of the
corporation.
By: /s/
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Exhibit A
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DESIGNATION OF PREFERENCES, LIMITATIONS AND RIGHTS
OF
SERIES D CONVERTIBLE PREFERRED STOCK
OF
FIRSTPLUS FINANCIAL GROUP, INC.
1. Series D Preferred Stock. The Series D Convertible Preferred Stock, par
value $1.00 per share (the "Series D Preferred"), will consist of 25,639 shares
and will have the designations, preferences, voting powers, relative,
participating, optional or other special rights and privileges, and the
qualifications, limitations and restrictions as follows:
2. Dividends and Distributions. The holders of record of shares of Series D
Preferred shall be entitled to receive, when and if declared by the Board of
Directors of the Corporation, dividends out of funds legally available therefor,
which shall be prior and in preference to any declaration or payment of any
dividend or other distribution on any other class or series of Preferred Stock
or the common stock of the Corporation, par value $0.01 per share (the "Common
Stock"). In no event shall the holders of Series D Preferred ever be entitled to
share in the Residuals (as defined in Section 3(e)), by dividend or otherwise,
or have any rights whatsoever with respect thereto.
3. Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a
"Liquidation"), distributions shall be made in the following manner:
(a) Series D Preferred. The holders of Series D Preferred shall be
entitled to be paid (i) after the distribution of the Residuals (as defined
in Section 3(e)) into a trust or other entity for the benefit of the
Corporation's current shareholders and (ii) before any amount shall be paid
to the holders of Common Stock or any other class or series of capital
stock of the Corporation ranking junior to the Series D Preferred, out of
the assets of the Corporation available for distribution to holders of its
capital stock an amount per share equal to the Original Purchase Price for
such share as appropriately adjusted to reflect any stock split, stock
dividend, combination, recapitalization and the like (the "Liquidation
Amount"). If the proceeds from a Liquidation are not sufficient to pay to
the holders of Series D Preferred the full preference amount set forth
above, then such holders shall instead be entitled to receive the entire
assets and funds of the Corporation legally available for distribution to
the holders of capital stock (after the distribution of the Residuals into
a trust or other entity for the benefit of the Corporation's current
shareholders), which assets and funds shall be distributed ratably among
the holders of the Series D Preferred in proportion to the relative
aggregate liquidation value of the number of shares of Series D Preferred
held by each holder.
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(b) Remaining Assets. If assets are remaining after (i) distribution
of the Residuals into a trust or other entity for the benefit of the
Corporation's current shareholders and (ii) payment of the full
preferential amount with respect to the Series D Preferred, then the
holders of the Common Stock shall be entitled to share ratably in all such
remaining assets and surplus funds based on the number of shares of Common
Stock held by each.
(c) Events Deemed a Liquidation. For purposes of this Section 3, the
sale or other transfer in a single transaction or a series of related
transactions of all or substantially all of the assets of the Corporation,
or any other reorganization involving the merger or consolidation of the
Corporation shall be treated as a Liquidation, except for any merger or
consolidation in which (i) solely the Corporation and one or more of its
wholly owned subsidiaries is involved, (ii) the Corporation is the sole
surviving corporation, (iii) the holders of Series D Preferred outstanding
immediately prior to such transaction will hold the same number of shares
of Series D Preferred, with substantially identical designations,
preferences, limitations, and relative rights, immediately after such
transaction as they held immediately prior to such transaction, or (iv) the
voting power of the number of Series D Preferred outstanding immediately
before such transaction will be at least 51% of the total number of Series
D Preferred issued and outstanding immediately following such transaction
(whether by conversion of securities issued pursuant to such transaction or
the exercise of rights to purchase securities issued pursuant to such
transaction).
(d) Valuation of Securities and Property. In the event the Corporation
proposes to distribute assets other than cash in connection with any
Liquidation, the value of the assets to be distributed to the holders of
shares of Series D Preferred shall be determined in good faith by the Board
of Directors. Any securities not subject to an investment letter or similar
restrictions on free marketability shall be valued as follows:
(i) if traded on a national securities exchange or the NASDAQ
National Market System ("NASDAQ"), the value shall be deemed to be the
average of the security's closing prices on such exchange or NASDAQ
over the thirty (30) trading day period ending three (3) days prior to
the distribution;
(ii) if actively traded over-the-counter (other than NASDAQ), the
value shall be deemed to be the average of the closing bid prices over
the thirty (30) day period ending three (3) days prior to the
distribution; or
(iii) if there is no active public market, the value shall be the
fair market value thereof as determined in good faith by the Board of
Directors.
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The method of valuation of securities subject to an investment letter or
other restrictions on free marketability shall be adjusted to make an
appropriate discount from the market value determined as above in clauses (i),
(ii) or (iii) to reflect the fair market value thereof as determined in good
faith by the Board of Directors. The holders of at least two-thirds of the
issued and outstanding Series D Preferred shall have the right to challenge any
determination by the Board of Directors of fair market value pursuant to this
Section 3(d), in which case the determination of fair market value shall be made
by an independent appraiser or investment banker selected jointly by the Board
of Directors and the challenging parties, the cost of such appraisal to be borne
(a) by the challenging parties, if the fair market value as determined by such
appraisal does not exceed the determination of fair market value by the Board of
Directors by more than twenty-five percent (25%) and (b) by the Corporation, if
the fair market value as determined by such appraisal exceeds the determination
of fair market value by the Board of Directors by more than twenty-five percent
(25%).
(e) "Residuals" shall mean the Corporation's interest in those certain
derivative interests in mortgage-backed or asset-backed securitization
transactions which are assets of, or the cash flow rights owned by, the
Corporation and are held in a trust or other entity for the benefit of the
Corporation's creditors and current shareholders.
4. Conversion. The holders of Series D Preferred shall have conversion
rights as follows:
(a) Right to Convert. Each Share of Series D Preferred shall initially
be convertible, at the option of the holder thereof, at any time on or
after the first anniversary date of issuance thereof, into 1,800 shares of
fully paid and nonassessable Common Stock (the "Conversion Ratio"), subject
to adjustment in accordance with Section 4.
(b) Mechanics of Conversion. Before any holder of Series D Preferred
shall be entitled to convert the same into shares of Common Stock and to
receive certificates therefor, such holder shall surrender the certificate
or certificates therefor, duly endorsed, at the principal office of the
Corporation or of any transfer agent for the Series D Preferred, and shall
give written notice to the Corporation at such office that such holder
elects to convert the same. The Corporation shall as soon as practicable
after such delivery, or after such agreement and indemnification, issue and
deliver at such office to such holder of Series D Preferred, a certificate
or certificates for the number of shares of Common Stock to which it, he or
she shall be entitled as aforesaid and, at the option of the Corporation,
either a check payable to the holder in the amount of any declared but
unpaid dividends then owed pursuant to Section 2 hereof, if any, or the
number of fully paid and nonassessable shares of Common Stock which results
from dividing the fair market value of a share of Common Stock (as
determined in good faith by the Board of Directors) in effect at such time
into the aggregate of all such declared but unpaid dividends then owed.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of the shares of Series D
Preferred to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares of Common
Stock on such date.
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(c) Adjustments to Conversion Ratio.
(i) Subdivisions, Combinations, or Consolidations of Common
Shares. In the event the outstanding Common Stock shall be subdivided,
combined or consolidated, by share split, dividend, combination or
like event, into a greater or lesser number of Common Shares, the
Conversion Ratio of the Series D Preferred in effect immediately prior
to such subdivision, combination, consolidation, share split or share
dividend shall, concurrently with the effectiveness of such
subdivision, combination, consolidation, share split or dividend be
proportionately adjusted.
(ii) Reclassifications. In the case, at any time after the date
hereof, of any capital reorganization or any reclassification of the
stock of the Corporation (other than as a result of a stock dividend
or subdivision, split-up or combination of shares), or the
consolidation or merger of the Corporation with or into another person
(other than a consolidation or merger in which the Corporation is the
continuing entity and which does not result in any change in the
Common Stock, the shares of Series D Preferred shall, after such
reorganization, reclassification, consolidation or merger be
convertible into the kind and number of shares of stock or other
securities or property of the Corporation or otherwise to which such
holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation or merger such holder
had converted his shares of Series D Preferred into Common Stock. The
provisions of this Section 4(c)(ii) shall similarly apply to
successive reorganizations, reclassifications, consolidations or
mergers.
(iii) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series D
Preferred pursuant to this Section 4, the Corporation, at its expense,
shall promptly thereafter compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each holder of Series
D Preferred a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Series D Preferred,
furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, if any and (ii)
the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of
the Series D Preferred.
(d) Status of Converted Stock. In case any shares of Series D
Preferred shall be converted pursuant to Section 4 hereof, the shares so
converted shall be canceled, shall not be reissuable and shall cease to be
a part of the authorized capital stock of the Corporation.
(e) Fractional Shares. In lieu of any fractional shares in the
aggregate to which the holder of Series D Preferred would otherwise be
entitled upon conversion, the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of one share of Common Stock
as determined by the Board of Directors in the good faith exercise of its
reasonable business judgment.
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(f) No Impairment. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 4 and in the taking of all action as may be necessary or
appropriate in order to protect the conversion rights of the holders of
Series D Preferred against impairment.
(g) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series D Preferred, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series D Preferred. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of
Series D Preferred, the Corporation will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
5. Voting Rights. Except as otherwise required by law, the holder of each
share of Series D Preferred issued and outstanding shall be entitled to vote on
all matters with the Common Stock as a single class, and not as a separate class
or series. Each share of Series D Preferred will entitle the holder to the
number of votes per share equal to the full number of shares of Common Stock
into which each share of Series D Preferred is convertible on the record date
for such vote, or, if no such record date is established, at the date such vote
is taken or any written consent of shareholders is solicited. Except as
otherwise expressly provided herein or as required by law, the holders of Series
D Preferred and Common Stock shall vote together and not as a separate class on
all matters to come before the shareholders of the Corporation. Fractional votes
by the holders of Series D Preferred shall not, however, be permitted, and any
fractional voting rights shall (after aggregating all shares into which shares
of Series D Preferred held by each holder could be converted) be rounded to the
nearest whole number.
6. Notices. Any notice required by the provisions of this Certificate of
Designations to be given to the holders of Series D Preferred shall be deemed to
have been sufficiently received (except as otherwise provided herein) (a) upon
receipt when personally delivered, (b) or one (1) day after sent by overnight
delivery or telecopy providing confirmation or receipt of delivery, or (c) three
(3) days after being sent by certified or registered mail, postage and charges
prepaid, return receipt requested, and addressed to each holder of record at
such holder's address appearing on the books of the Corporation.
7. Transferability. The Series D Preferred are expressly transferable in
whole or in part. Any transfer of the rights represented by this Certificate of
Designations shall be effected by the surrender of the Series D Preferred stock
certificate (the "Stock Certificate"), along with an assignment, properly
completed and executed by the registered holder thereof, at the principal
executive office of the Corporation, together with an appropriate investment
letter, if deemed reasonably necessary by counsel to the Corporation. Thereupon,
the Corporation shall issue in the name or names specified by the registered
holder of the Series D Preferred and, in the event of a partial transfer, in the
name of the registered holder of the Series D Preferred, a new Stock
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Certificate or Stock Certificates evidencing the right to purchase such number
of shares of Series D Preferred as shall be equal to the number of shares of
Series D Preferred then purchasable thereunder.
[Signature page follows]
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IN WITNESS WHEREOF, said FIRSTPLUS Financial Group, Inc. has caused this
Certificate to be executed by its President and Chief Executive Officer, and
attested by its Secretary, this 27th day of June, 2002.
FIRSTPLUS FINANCIAL GROUP, INC.
By: /s/ Daniel T. Phillips
-------------------------------------
Name: Daniel T. Phillips
President and Chief Executive Officer
ATTESTED:
By: /s/ Daniel T. Phillips
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Name: Daniel T. Phillips
Secretary
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