AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SF HOLDINGS GROUP, INC.
SF HOLDINGS GROUP, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is SF Holdings Group, Inc.
2. The original Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") was filed with the Secretary of State of the
State of Delaware on December 24, 1997.
3. The Restated Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on March 6, 1998.
4. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates and amends the provisions of the Certificate of Incorporation, and such
amendments have been duly adopted in accordance with the above-referenced
Sections.
5. The text of the Certificate of Incorporation is hereby restated and
amended to read in its entirety as set forth in Exhibit A attached hereto.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been duly executed this 18th day of August, 1999.
SF HOLDINGS GROUP, INC.
By: /s/Hans Heinsen
-------------------
Name: Hans Heinsen
Title: Senior Vice President
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SF HOLDINGS GROUP, INC.
FIRST: The name of the Corporation is SF Holdings Group, Inc.
SECOND: The address of the registered office of the Corporation in
Delaware is 1013 Centre Road, Wilmington, 19805-1297, in New Castle County, and
the name of the registered agent of the Corporation at such address is
Corporation Service Corporation.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is one million nine hundred and
twenty thousand (1,920,000) shares, consisting of:
(a) one million eight hundred thousand (1,800,000) shares of
Common Stock, par value $.001 per share (hereinafter referred to
as "Common Stock");
(b) twenty thousand (20,000) shares of Exchangeable Preferred
Stock, par value $.001 per share (hereinafter referred to as
"Preferred Stock"); and
(c) one hundred thousand (100,000) shares of Class B Preferred
Stock, par value $.001 per share (hereinafter referred to as "Class
B Preferred Stock").
The designations, relative rights, preferences and limitations of
shares of each class and the authority of the Board of Directors to fix the
designations, relative rights, preferences and limitations of shares of each
class not fixed hereby shall be as follows:
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A. PREFERRED STOCK
The powers, preferences and rights, and the qualifications, limitations
and restrictions, of the Preferred Stock are as follows:
1. The Preferred Stock shall, with respect to dividend distributions
and distributions upon the liquidation, winding up or dissolution of the
Corporation, rank senior to all classes of Common Stock of the Corporation and,
except as provided in the following proviso, to each other class or series of
capital stock issued by the Corporation now or hereafter created (collectively,
"Junior Stock"); provided, however, that the Board of Directors may authorize a
class or series of preferred stock on a parity in powers, preferences and rights
to the Preferred Stock (collectively, "Parity Stock") or senior in powers,
preferences and rights to the Preferred Stock (collectively, "Senior Stock") if
approved by the holders of a majority of the shares of Preferred Stock.
2. (a) The holders of shares of Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of
funds of the Corporation legally available therefor, cumulative
dividends at an annual rate equal to 13.75%. Until March 15, 2003,
dividends on the Preferred Stock will be payable quarterly in arrears
on March 15, June 15, September 15 and December 15 of each year (each,
a "Dividend Payment Date"), commencing June 15, 1998, (i) in cash or,
at the option of the Corporation, (ii) by issuing shares of Preferred
Stock with an aggregate Liquidation Amount (as defined in subparagraph
3 below) equal to the amount of such dividends. From and after such
time, dividends on the Preferred Stock shall be payable quarterly in
arrears in cash except to the extent that the covenants applicable to
Indebtedness (as defined in subparagraph 9 below) of the Corporation
prohibit such cash payments or the covenants applicable to securities
and/or Indebtedness of the Corporation's subsidiaries prohibit such
subsidiaries from distributing the necessary cash to the Corporation.
Dividends in arrears on the Preferred Stock may be paid at any time,
without reference to any regular dividend payment date. Dividends will
accrue and be cumulative from the date of original issue of the
Preferred Stock, whether or not declared for any reason (including if
such declaration is prohibited under any outstanding indebtedness or
borrowing or other contractual provision binding on the Corporation or
any of its subsidiaries) and whether or not there will be funds of the
Corporation legally available for the payment thereof. Dividends
accruing and not declared until March 15, 2003 shall, when declared, be
payable in cash or additional shares of Preferred Stock as described
above. All accrued and unpaid dividends will be compounded at the
dividend rate on a quarterly basis. All dividends that accrue in
accordance with the foregoing provisions shall be cumulative from and
after March 15, 2003.
(b) No dividend or other distribution (payable other than in shares of
Junior Stock) shall be paid to the holders of Junior Stock, and no
shares of Junior Stock shall be purchased, redeemed or otherwise
acquired by the Corporation or any of its subsidiaries (except by
conversion into or in exchange for Junior Stock), nor shall any monies
be paid or made available for a purchase, redemption or sinking fund
for the purchase or
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redemption of any Junior Stock unless (i) all dividends on the
outstanding shares of Preferred Stock that shall have accrued through
any prior Dividend Payment Date shall have been paid or declared and
funds set apart for payment thereof; (ii) the Corporation shall not be
in default on any of its obligations to purchase or redeem the
Preferred Stock pursuant to subparagraphs 4, 5 or 6 of this Paragraph
A; and (iii) the Corporation shall not be in default on any of the
covenants included in subparagraph 9 of this Paragraph A. When
dividends are not paid in full upon the shares of Preferred Stock and
any Parity Stock, all dividends declared upon shares of Preferred
Stock and all Parity Stock shall be declared pro rata so that the
amount of dividends declared per share of Preferred Stock and all such
Parity Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the shares of Preferred Stock and all
such Parity Stock bear to each other.
3. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, no payment or distribution of
assets shall be made to or set apart for the holders of Junior Stock unless the
holders of shares of Preferred Stock shall have received, out of assets legally
available therefor, Ten Thousand Dollars ($10,000.00) per share of Preferred
Stock (the "Liquidation Amount") plus an amount of cash equal to the dividends,
whether or not earned or declared, accrued and unpaid thereon to the date of
final distribution to such holder. If upon any such distribution of assets in
liquidation or dissolution or upon the winding up of the affairs of the
Corporation the amount which would be distributed to the holders of the
outstanding shares of Preferred Stock would be less than this amount, then such
lesser amount shall be distributed pro rata to the holders of then outstanding
shares of Preferred Stock and to the holders of then outstanding shares of
Parity Stock, and no distribution shall be made to the holders of Junior Stock.
None of the consolidation or the merger of the Corporation, or the sale, lease
or transfer by the Corporation of all or any part of its assets, shall be deemed
to be a liquidation, dissolution or winding up of the Corporation for purposes
of this subparagraph 3.
4. The Corporation shall redeem the Preferred Stock on March 15, 2009,
out of funds legally available for such purpose, at a redemption price per
share, in cash, equal to the Liquidation Amount plus an amount of cash equal to
the dividends, whether or not earned or declared, accrued and unpaid thereon to
the date of redemption. Shares of Preferred Stock redeemed pursuant to this
subparagraph 4 shall be cancelled and shall not be reissued.
5. (a) Except as set forth below, the Preferred Stock shall not be
redeemable at the Corporation's option prior to March 15, 2003. From
and after March 15, 2003, the Corporation may, at its option, redeem
the Preferred Stock, in whole or in part, at the redemption prices
(expressed as percentages of the Liquidation Amount) set forth below,
plus an amount of cash equal to the dividends, whether or not earned or
declared, accrued and unpaid thereon to the date of redemption, if
redeemed during the twelve-month period beginning on March 15 of the
years indicated below:
Year Percentage
---- ----------
2003.................................. 106.875%
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2004.................................. 104.583%
2005.................................. 102.293%
2006 and thereafter................... 100.000%
(b) Prior to March 15, 2001, the Corporation may, at its option,
redeem up to one-half of the aggregate Liquidation Amount of Preferred
Stock at a redemption price of 113.75% of the Liquidation Amount, plus
an amount of cash equal to the dividends, whether or not earned or
declared, accrued and unpaid thereon to the date of redemption, with
the net cash proceeds of an Equity Offering (as defined below);
provided, however, that at least one-half of the aggregate Liquidation
Amount of Preferred Stock remains outstanding immediately after the
occurrence of such redemption (excluding Preferred Stock held by the
Corporation and its subsidiaries); and provided, further, that any
such redemption shall occur within 60 days of the date of the closing
of such Equity Offering. As used herein, "Equity Offering" means an
underwritten public offering of Common Stock (other than Disqualified
Stock (as defined below)) registered under the Securities Act (other
than a public offering registered on Form S-8 under the Securities
Act).
(c) If less than all outstanding shares of Preferred Stock are to
be redeemed, the shares to be redeemed shall be selected pro rata (with
any fractional shares being rounded to the nearest whole share)
according to the number of whole shares held by each holder of
Preferred Stock.
(d) In the event the Corporation shall redeem shares of
Preferred Stock pursuant to subparagraphs 4 or 5 hereof, notice of such
redemption shall be given by first class mail, postage prepaid, mailed
not less than 30 days nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the
Corporation. Each such redemption notice shall state: (i) the
redemption date; (ii) the number of shares of Preferred Stock to be
redeemed and , if fewer than all the shares held by such holder are to
be redeemed, the number of shares to be redeemed from such holder;
(iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease
to accrue on such redemption date. On or after the date so specified,
each holder of then outstanding shares of Preferred Stock so to be
redeemed shall surrender the certificate or certificates evidencing the
Preferred Stock held by such holder to the Corporation at its principal
office (or such other office or agency of the Corporation as the
Corporation may designate in such notice), in exchange for payment to
its order or that of its nominee, as such holder shall request, in an
aggregate amount equal to the aggregate redemption amount of the shares
of Preferred Stock so redeemed. The Corporation shall reissue to each
such holder a certificate for any shares of Preferred Stock surrendered
but not redeemed. All shares of Preferred Stock which are redeemed
pursuant to this subparagraph 5 shall be cancelled and shall not be
reissued.
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6. (a) In the event of a Change of Control (as defined below), the
Corporation shall be required to make an offer to each holder of shares
of Preferred Stock to repurchase such holder's shares of Preferred
Stock (a "Repurchase Offer") at a purchase price equal to 101% of the
Liquidation Amount, plus the cash value of any accrued and unpaid
dividends payable in kind and the amount of any accrued and unpaid cash
dividends (the "Change of Control Payment"). As used herein, "Change of
Control" means the occurrence of any of the following: (i) the sale,
lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Corporation and its
Restricted Subsidiaries (as defined in subparagraph 9 below) taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) or "group" (as defined in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act) other than the Principals (as defined below), (ii)
the adoption of a plan relating to the liquidation or dissolution of
the Corporation, (iii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is
that any "person" or "group" (as defined above), other than the
Principals, becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more of the voting power of the Voting Stock (as defined
below) of the Corporation than at that time is beneficially owned by
the Principals, or (iv) the first day on which more than a majority of
the directors on the Board of Directors of the Corporation are not
Continuing Directors (as defined below). For purposes of this
definition, any transfer of an equity interest of an entity that was
formed for the purpose of acquiring Voting Stock of the Corporation
will be deemed to be a transfer of such portion of such Voting Stock as
corresponds to the portion of the equity of such entity that has been
so transferred.
(b) Within ten days following any Change of Control, the Corporation
shall mail a notice to each holder of shares of Preferred Stock
describing the transaction or transactions that constitute the Change
of Control. Such notice shall state: (i) the date of repurchase, which
date shall be no earlier than 30 days and no later than 60 days from
the date such notice is mailed ("the Change of Control Payment Date");
(ii) the place or places where certificates for such shares are to be
surrendered (the "Paying Agent"); and (iii) that dividends on the
shares to be repurchased will cease to accrue on such Change of Control
Payment Date. The Corporation shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the shares of Preferred
Stock as a result of a Change of Control.
(c) At least three days before the Change of Control Payment Date, each
holder of then outstanding shares of Preferred Stock which elects to
have some or all of its shares of Preferred Stock repurchased pursuant
to the Repurchase Offer shall surrender the certificate or certificates
evidencing the Preferred Stock held by such holder to the Paying Agent,
with a request for payment to its order or that of its nominee in an
aggregate amount equal to the aggregate Change of Control Payment. On
the Change of Control Payment Date, the Corporation shall, to the
extent lawful, (i) accept for payment all shares of Preferred Stock
properly tendered pursuant to the Repurchase Offer, and (2)
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deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all shares of Preferred Stock so tendered. The
Paying Agent shall promptly mail to each holder of shares of Preferred
Stock so tendered the Change of Control Payment for such shares of
Preferred Stock. All shares of Preferred Stock which are repurchased
pursuant to this subparagraph 6 shall be cancelled and shall not be
reissued. The Corporation shall publicly announce the results of the
Repurchase Offer on or as soon as practicable after the Change of
Control Payment Date, but in no case more than five days (excluding
legal holidays) after the Change of Control Payment Date.
(d) Notwithstanding the foregoing, the Corporation shall not be
required to make a Repurchase Offer upon a Change of Control if such
Repurchase Offer would cause an event of default under any of the
agreements governing Indebtedness of the Corporation, or if a third
party makes the Repurchase Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this
subparagraph 6 applicable to a Repurchase Offer made by the Corporation
and purchases all shares of Preferred Stock validly tendered and not
withdrawn under such Repurchase Offer.
7. (a) The Corporation may, at its option, on any Dividend Payment
Date with respec to the Preferred Stock, redeem all, but not
less than all, of the then outstanding shares of Preferred Stock
in exchange for the Corporation's 13.75% Subordinated Notes due
March 15, 2009 to be issued pursuant to an indenture between the
Corporation and a trustee and having substantially the terms assigned
to the Preferred Stock as set forth in this Paragraph A of Article
FOURTH (the "Subordinated Notes"), at a rate of one dollar (or fraction
thereof) principal amount of Subordinated Notes for each dollar (or
fraction thereof) in Liquidation Amount plus, subject to the following
paragraph, the cash value of any accrued and unpaid dividends payable
in kind and the amount of any accrued and unpaid cash dividends,
whether or not earned or declared, accrued and unpaid thereon to the
date of exchange (provided that no event of default under the indenture
governing the Subordinated Notes shall have occurred and be
continuing).
(b) Cash dividends on any shares of Preferred Stock exchanged for
Subordinated Notes which have accrued but have not been paid as of
the date of exchange shall be paid, at the option of the Corporation,
in cash or in additional Subordinated Notes in an equivalent principal
amount of such accrued and unpaid dividends. In no event shall the
Corporation issue Subordinated Notes in denominations other than $1,000
or in an integral multiple thereof. Cash will be paid in lieu of any
such fraction of Subordinated Notes that would otherwise have been
issued (which shall be determined with respect to the aggregate
principal amount of Subordinated Notes to be issued to a holder upon
any such exchange). Interest will accrue on the Subordinated Notes from
the date of exchange.
(c) In the event the Corporation shall exchange shares of
Preferred Stock, notice of such exchange shall be given by first class
mail, postage prepaid, mailed not less than 30 days nor more than 60
days prior to the exchange date, to each holder of
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record of the shares of Preferred Stock to be exchanged at such
holder's address as the same appears on the stock register of
the Corporation. Each such exchange notice shall state: (A) the
exchange date; (B) the principal amount of Subordinated Notes
to be received by the exchanging holder; (C) the place or places
where the certificate or ertificates for such shares of Preferred
Stock are to be exchanged for notes evidencing the Subordinated
Notes to be received by the exchanging holder; and (D) that
dividends on the shares of Preferred Stock to be exchanged will
cease to accrue on such exchange date. On the date so specified, each
holder of then outstanding shares of Preferred Stock shall surrender
the certificate or certificates evidencing the Preferred Stock held by
such holder to the Corporation at its principal office (or such other
office or agency of the Corporation as the Corporation may designate in
such notice), in exchange for the Subordinated Notes to which such
holder is entitled, registered in such holder's name or that of its
nominee or payable to its order or that of its nominee, as such holder
shall request, and in such denominations as such holder shall request.
All shares of Preferred Stock which are redeemed pursuant to this
subparagraph 7 shall be cancelled and shall not be reissued.
(d) Prior to giving notice of intention to exchange, the
Corporation shall execute and deliver with a bank or trust company
selected by the Corporation an indenture having substantially the terms
assigned to the Preferred Stock as set forth in this Paragraph A of
Article FOURTH. The Corporation will cause the Subordinated Notes to be
authenticated on the Dividend Payment Date on which the exchange is
effective, and will pay interest on the Subordinated Notes at the rate
and on the dates specified in such indenture from the exchange date.
(e) The Corporation will not give notice of its intention to
exchange unless it shall file at the place or places (including a place
in the Borough of Manhattan, The City of New York) maintained for such
purpose an opinion of counsel (who may be an employee of the
Corporation) to the effect that (i) the indenture has been duly
authorized, executed and delivered by the Corporation, has been duly
qualified under the Trust Indenture Act of 1939 (or that such
qualification is not necessary) and constitutes a valid and binding
instrument enforceable against the Corporation in accordance with its
terms (subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles, and
subject to such other qualifications as are then customarily contained
in opinions of counsel experienced in such matters), (ii) the
Subordinated Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the indenture and
delivered in exchange for the shares of Preferred Stock, will
constitute valid and binding obligations of the Corporation entitled to
the benefits of the indenture (subject to the aforesaid), (iii) neither
the execution nor delivery of the indenture or the Subordinated Notes
nor compliance with the terms, conditions or provisions of such
instruments will result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust or agreement or instrument, known to such counsel, to
which the Corporation or any of its subsidiaries is a party or by which
it or any of them is bound, or any decree, judgment,
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order, rule or regulation, known to such counsel, of any court or
governmental agency or body having jurisdiction over the Corporation
and such subsidiaries or any of their properties, and (iv) the
Subordinated Notes have been duly registered for such exchange with
the Securities and Exchange Commission under a registration statement
that has become effective under the Securities Act of 1933 (the "Act")
or that the exchange of the Subordinated Notes for the shares of
Preferred Stock is exempt from registration under the Act.
(f) The exchange shall be deemed to have been effected immediately
prior to the close of business on the relevant Dividend Payment
Date on or prior to which the certificates for shares of Preferred
Stock shall have been surrendered, and the person in whose name
or names the Subordinated Notes shal be issuable upon such
exchange shall be deemed to have become the holder of record of the
Subordinated Notes represented thereby at such time on such Dividend
Payment Date.
(g) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon exchange of the
Preferred Stock, the Corporation shall comply with all applicable
federal and state laws and regulations that require action to be taken
by the Corporation. The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of notes evidencing Subordinated Notes on exchange of
the Preferred Stock pursuant hereto; provided that the Corporation
shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issue or delivery of notes evidencing
Subordinated Notes in a name other than that of the holder of the
Preferred Stock to be exchanged and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has
paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid.
8. (a) The holders of shares of Preferred Stock shall not be entitled
to any voting rights, except as described below or as otherwise
required by applicable law. In the event the Corporation fails
to (i) pay dividends for six or more quarters (whether or not
consecutive), (ii) satisfy any mandatory redemption obligation with
respect to the Preferred Stock (regardless of whether the reason for
such failure is lack of legally available funds), (iii) make a
Repurchase Offer within 30 days following a Change of Control or make
an Asset Sale Offer pursuant to paragraph (f) of subparagraph 9
(regardless of whether such offer is prohibited by the terms of any
Indebtedness of the Corporation) or (iv) comply with any of the
covenants set forth in subparagraph 9 of this Paragraph A for a period
of 30 days after the receipt of notice of such failure from the
registered holders of not less than twenty-five percent (25%) of the
shares of Preferred Stock then outstanding, the Board of Directors of
the Corporation shall be increased by two members and the holders of a
majority of the outstanding shares of Preferred Stock, voting as a
separate class, shall be entitled to elect two members to the Board of
Directors of the Corporation. The foregoing voting rights shall cease,
and the term of office of any directors elected pursuant to the
exercise of the foregoing voting rights shall terminate, if and when
the failure by the Corporation giving rise to such voting rights is
cured, but
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subject always to the vesting of such right in the case of a
similar future event. The foregoing voting rights may be exercised
initially either by written consent or at a special meeting of the
holders of the Preferred Stock, called as hereinafter provided, or at
any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each subsequent annual meeting. At any
time when such voting rights shall have vested, and if such right shall
not already have been exercised by written consent, a proper officer of
the Corporation may call, and, upon the written request, addressed to
the Secretary of the Corporation, of the record holders of shares
representing twenty-five percent (25%) of the voting power of the
shares then outstanding of the Preferred Stock, shall call a special
meeting of the holders of the Preferred Stock. Such meeting shall be
held at the earliest practicable date upon the notice required for
annual meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation, or, if none, at a place
designated by the Board of Directors. Notwithstanding the foregoing, no
such special meeting shall be called during a period within 60 days
immediately preceding the date fixed for the next annual meeting of
stockholders. At any meeting held for the purpose of electing directors
at which the holders of Preferred Stock shall have the right to elect
directors as provided herein, the presence in person or by proxy of the
holders of shares representing more than fifty percent (50%) in voting
power of the then outstanding shares of the Preferred Stock having such
right shall be required and shall be sufficient to constitute a quorum
of such class for the election of directors by such class. Any director
elected by holders of Preferred Stock pursuant to such voting rights
shall hold office until the next annual meeting of stockholders (unless
such term has previously terminated as described above) and any vacancy
in respect of any such director shall be filled only by vote of the
remaining director so elected or, if there be no such remaining
director, by the holders of Preferred Stock by written consent or at a
special meeting called in accordance with the procedures set forth
above or, if no special meeting is called or written consent executed,
at the next annual meeting of stockholders.
(b) The approval of the holders of a majority of the outstanding
shares of Preferred Stock, voting as a separate class, shall also
be required for (i) the authorization by the Corporation of any
series of preferred stock ranked senior or on a parity in powers,
preferences and rights to the Preferred Stock (including any additional
shares of Preferred Stock), (ii) the amendment or modification of any
provisions of the Certificate of Incorporation of the Corporation in
any manner that would adversely affect the voting powers, designations,
preferences and rights of the Preferred Stock and (iii) any merger or
consolidation or sale of all or substantially all of the assets of the
Corporation if the terms of such transaction do not provide for the
repurchase or redemption of all of the shares of Preferred Stock upon
consummation of such merger, consolidation or sale. Notwithstanding the
foregoing, upon a refinancing of the Corporation's 12.75% Senior
Secured Discount Notes due 2008 (the "Discount Notes"), the Certificate
of Incorporation of the Corporation may be amended or modified without
any approval of the holders of the Preferred Stock to reflect covenants
in the new notes which are more favorable to the Corporation than those
contained in the Discount Notes.
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9. (a) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any
shares of Preferred Stock are outstanding, the Corporation shall
furnish to the holders of record of shares of Preferred Stock (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the
Corporation were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of
operations of the Corporation and its consolidated Subsidiaries (as
defined below) (showing in reasonable detail, either on the face of the
financial statements or in the footnotes thereto and in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," the financial condition and results of operations of the
Corporation and its Restricted Subsidiaries (as defined below) separate
from the financial condition and results of operations of the
Unrestricted Subsidiaries (as defined below) of the Corporation) and,
with respect to the annual information only, a report thereon by the
Corporation's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form
8-K if the Corporation were required to file such reports, in each case
within the time periods specified in the Commission's rules and
regulations. In addition, following the consummation of the exchange
offer contemplated by the Registration Rights Agreement (as defined
below), whether or not required by the rules and regulations of the
Commission, the Corporation shall file a copy of all such information
and reports with the Commission for public availability within the time
periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon
request. The Corporation shall also furnish to the holders of Preferred
Stock and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A
under the Act.
(b) So long as any shares of Preferred Stock are outstanding,
the Corporation shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the
Corporation's or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any
merger or consolidation involving the Corporation or any of its
Restricted Subsidiaries), other than a dividend on the Preferred Stock,
or to the direct or indirect holders of the Corporation's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Corporation or to the
Corporation or any Restricted Subsidiary of the Corporation); (ii)
purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving the Corporation) any Equity Interests of the Corporation or
any direct or indirect parent of the Corporation or other Affiliate of
the Corporation (other than any such Equity Interests owned by the
Corporation or any Restricted Subsidiary of the Corporation); (iii)
make any principal payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Senior Secured Discount Notes,
11
except a payment of principal at Stated Maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth
in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect
to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof; and
(B) the Corporation would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of paragraph (d) of this
subparagraph 9; and
(C) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Corporation and
its Restricted Subsidiaries after March 12, 1998 (excluding Restricted
Payments permitted by clauses (ii), (iii) and (iv) of the next
succeeding paragraph), is less than the sum, without duplication, of
(i) 50% of the Consolidated Net Income of the Corporation for the
period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after March 12, 1998 to the end of the
Corporation's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
net cash proceeds received by the Corporation since March 12, 1998 as
a contribution to its common equity capital or from the issue or sale
of Equity Interests of the Corporation (other than Disqualified Stock)
or from the issue or sale of Disqualified Stock or debt securities of
the Corporation that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Restricted Subsidiary of the Corporation),
plus (iii) to the extent that any Restricted Investment that was made
after March 12, 1998 is sold for cash or otherwise liquidated or
repaid for cash, 100% of the net cash proceeds thereof (less the cost
of disposition, if any), but only to the extent not included in
subclause (i) of this clause (C).
The foregoing provisions shall not prohibit (i) the payments and
applications of the proceeds to be received by the Corporation from
the issuance of the Units as described under the caption "Use of
Proceeds" of the Offering Memorandum governing the issuance of the
Units (ii) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this subparagraph 9; (iii) the
redemption, repurchase, retirement, defeasance or
12
other acquisition of any Equity Interests of the Corporation in
exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary of the
Corporation) of, other Equity Interests of the Corporation (other than
any Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from
clause (C) of the preceding paragraph; (iv) the defeasance,
redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness or the substantially concurrent
sale (other than to a Restricted Subsidiary of the Corporation) of
Equity Interests of the Corporation (other than Disqualified Stock);
provided that the amount of any such net cash proceeds that are
utilized for any such defeasance, redemption or repurchase shall be
excluded from clause (C) of the preceding paragraph; (v) the payment
of any dividend by a Restricted Subsidiary of the Corporation to the
holders of its Equity Interests on a pro rata basis; and (vi) so long
as no Default or Event of Default shall have occurred and be
continuing immediately after such transaction, the repurchase,
redemption or other acquisition or retirement for value of any Equity
Interests of the Corporation or any Restricted Subsidiary of the
Corporation held by any member of the Corporation's (or any of its
Restricted Subsidiaries') management; provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any twelve-month
period plus the aggregate cash proceeds received by the Corporation
(or any of its Restricted Subsidiaries) during any such twelve-month
period from any issuance of Equity Interests by the Corporation (or
any of its Restricted Subsidiaries) to members of management of the
Corporation (or an of its Restricted Subsidiaries) (provided that
such proceeds are excluded from clause (C) of the preceding paragraph;
and provided, further, that such repurchase, redemption or other
acquisition or retirement may not include any Equity Interests owned,
directly or indirectly, by the Principals.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a
Default. For purposes of making such determination, all outstanding
Investments by the Corporation and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated shall be
deemed to be Restricted Payments at the time of such designation and
shall reduce the amount available for Restricted Payments under the
first paragraph of this covenant. All such outstanding Investments
shall be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of
such designation, (ii) the fair market value of such Investments at the
time of such designation and (iii) the original fair market value of
such Investments at the time they were made. Such designation shall
only be permitted if such Restricted Payment would be permitted at such
time and if such Restricted Subsidiary otherwise meets the definition
of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the
asset(s) or securities proposed to be transferred or issued by the
Corporation or such Restricted Subsidiary, as the case may be, pursuant
to the Restricted Payment. The fair market value of any non-cash
Restricted Payment shall be determined by the Board of Directors, such
determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing
if such fair market value exceeds $1.0 million.
13
(c) So long as any shares of Preferred Stock are outstanding,
the Corporation shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or
make any other distributions to the Corporation or any of its
Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to
any other interest or participation in, or measured by, its profits, or
(b) pay any Indebtedness owed to the Corporation or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Corporation
or any of its Restricted Subsidiaries or (iii) transfer any of its
properties or assets to the Corporation or any of its Restricted
Subsidiaries. However, the foregoing restrictions shall not apply to
encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on March 12, 1998 and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof; provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more
restrictive, with respect to such dividend and other payment
restrictions, than those as in effect on March 12, 1998, (b) the
Indenture and the Senior Secured Discount Notes, (c) applicable law,
(d) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Corporation or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired;
provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of paragraph (d) of this subparagraph 9 to be
incurred, (e) customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past
practices, (f) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (iii) above on the property so acquired, (g)
restrictions relating to a Restricted Subsidiary formed for the sole
purpose of engaging in accounts receivable financing, (h) any agreement
for the sale of a Restricted Subsidiary that restricts distributions by
that Restricted Subsidiary pending its sale, (i) Permitted Refinancing
Indebtedness; provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no
more restrictive, taken as a whole, than those contained in the
agreements governing the Indebtedness being refinanced and (j) secured
Indebtedness otherwise permitted to be incurred pursuant to the
provisions of paragraph (d) of this subparagraph 9 that limits the
right of the debtor to dispose of the assets securing such
Indebtedness.
(d) So long as any shares of Preferred Stock are outstanding,
the Corporation shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and the Corporation shall not
permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that so long as no Default or Event
of Default has occurred or is continuing, the Corporation and its
14
Restricted Subsidiaries may incur Indebtedness (including Acquired
Debt) if the Fixed Charge Coverage Ratio for the Corporation's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred is issued would have been at least
1.75 to 1, if such additional Indebtedness is incurred prior to March
15, 2000, or at least 2.0 to 1, if such additional Indebtedness is
incurred on or after March 15, 2000, in each case, determined on a pro
forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period.
The provisions of the immediately preceding paragraph shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Corporation and its Restricted
Subsidiaries of Indebtedness from a bank or other financial institution
in an aggregate principal amount not to exceed $200.0 million at any
one time outstanding, less any Net Proceeds of Asset Sales applied to
permanently reduce any such Indebtedness pursuant to paragraph (f) of
this subparagraph 9;
(ii) the incurrence by the Corporation and its Restricted
Subsidiaries of the Existing Indebtedness, other than pursuant to the
Fonda Credit Facility or the Sweetheart Credit Facilities;
(iii) the incurrence by the Corporation of Indebtedness
represented by the Senior Secured Discount Notes and the Indenture;
(iv) the incurrence by the Corporation or any of its
Restricted Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligations, in each
case incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property,
plant or equipment used in the business of the Corporation or such
Restricted Subsidiary, in an aggregate principal amount not to exceed
$5.0 million at any time outstanding;
(v) the incurrence by the Corporation or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of
assets or a new Restricted Subsidiary; provided that such Indebtedness
was incurred by the prior owner of such assets or such Restricted
Subsidiary prior to such acquisition by the Corporation or one of its
Restricted Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by the Corporation or one of its
Restricted Subsidiaries; and provided further that the principal amount
(or accreted value, as applicable) of such Indebtedness, together with
any other outstanding Indebtedness incurred pursuant to this clause (v)
and any Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(v), does not exceed $5.0 million;
(vi) the incurrence by the Corporation or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for,
or the net proceeds of which are
15
used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted to be incurred under the
first paragraph hereof or clauses (ii), (iii), (iv) or (v) of this
paragraph;
(vii) the incurrence by the Corporation or any of its
Restricted Subsidiaries of intercompany Indebtedness between or among
the Corporation and any of its Restricted Subsidiaries; provided,
however, that (a) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Corporation or a Restricted Subsidiary thereof and (b)
any sale or other transfer of any such Indebtedness to a Person that is
not either the Corporation or a Restricted Subsidiary thereof shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by the Corporation or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (vii);
(viii) the incurrence by the Corporation or any of its
Restricted Subsidiaries of Hedging Obligations that are incurred for
the purpose of fixing or hedging interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of the
Indenture to be outstanding; and
(ix) the incurrence by the Corporation or any of its
Restricted Subsidiaries of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) not to exceed $25.0
million at any one time outstanding.
For purposes of determining compliance with this paragraph (d),
in the event that an item of Indebtedness meets the criteria of
more than one of the categories of Permitted Debt described in clauses
(i) through (ix) above or is entitled to be incurred pursuant to the
first paragraph of this paragraph (d), the Corporation shall, in its
sole discretion, classify such item of Indebtedness in any manner that
complies with this paragraph (d). Accrual of interest, accretion or
amortization of original issue discount, and the payment of interest on
any Indebtedness in the form of additional Indebtedness with the same
terms shall not be deemed to be an incurrence of Indebtedness for
purposes of this paragraph (d); provided, in each such case, that the
amount thereof is included in Fixed Charges of the Corporation as
accrued.
(e) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Corporation
or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Corporation or such
Restricted Subsidiary with an unrelated Person and (ii) (a) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0
million, the Board of
16
Directors shall have passed a resolution certifying that such
Affiliate Transaction complies with clause (i) above and that such
Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect
to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0
million, the Board of Directors shall have received an opinion as to
the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or
investment banking firm of national standing with total assets in
excess of $1.0 billion, except with respect to transactions in the
ordinary course of business and consistent with past practice between
the Corporation or any of its Restricted Subsidiaries and Four M, CEG
or any of their respective subsidiaries; provided that the following
shall not be deemed to be Affiliate Transactions: (1) the Indenture of
Lease dated as of January 1, 1995, between Dennis Mehiel and Fonda
relating to the Jacksonville Facility except for any purchases of
property by Fonda that may arise thereunder; (2) any employment
agreement entered into by the Corporation or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with
the past practice of the Corporation or such Restricted Subsidiary in
an amount not to exceed $1.00 million per annum; (3) transactions
between or among the Corporation and its Restricted Subsidiaries; (4)
Restricted Payments and Permitted Investments that are permitted by
paragraph (b) of this subparagraph 9; and (5) transactions entered
into in connection with the Transactions.
(f) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Corporation
(or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors) of
the assets or Equity Interests issued or sold or otherwise disposed of
and (ii) at least 75% of the consideration therefor received by the
Corporation or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the
Corporation's or such Restricted Subsidiary's most recent balance
sheet), of the Corporation or any Restricted Subsidiary (other than
contingent liabilities) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the
Corporation or such Restricted Subsidiary from further liability and
(y) any securities, notes or other obligations received by the
Corporation or any such Restricted Subsidiary from such transferee that
are contemporaneously (subject to ordinary settlement periods)
converted by the Corporation or such Restricted Subsidiary into cash
(to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
Within 365 days after the Corporation's or any Restricted
Subsidiary's receipt of any Net Proceeds from an Asset Sale, the
Corporation or such Restricted Subsidiary may apply such Net Proceeds
(a) to permanently repay Indebtedness of a Restricted Subsidiary of the
Corporation (and, in the case of revolving borrowings, to
correspondingly reduce commitments with respect thereto), or (b) to the
acquisition of a majority of the assets of, or a majority of the Voting
Stock of, another Permitted Business, the making of a capital
expenditure or the acquisition of other long-term assets that are used
or useful in a
17
Permitted Business. Pending the final application of any such Net
Proceeds, the Corporation may temporarily reduce revolving credit
borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by this Certificate of Incorporation. Any Net
Proceeds from Asset Sales that are not applied or invested as provided
in the first sentence of this paragraph shall be deemed to constitute
Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds
$10.0 million (an "Excess Proceeds Offer Triggering Event"), the
Corporation shall be required to make an offer to each holders of
shares of Preferred Stock (an "Asset Sale Offer") to repurchase the
maximum number of such holder's shares of Preferred Stock that may be
purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the Liquidation Amount, plus an amount of cash
equal to the amount of any accrued and unpaid dividends, in accordance
with the procedures set forth in subparagraph 6 of this Paragraph A
with respect to a Change of Control; provided however, that such offer
will not be required if the application of such Excess Proceeds to
repurchase shares of Preferred Stock would cause an Event of Default
under any of the agreements governing Indebtedness of the Corporation.
If the aggregate purchase price of the shares of Preferred Stock
tendered into such Asset Sale Offer surrendered by the holders thereof
is less than the amount of Excess Proceeds, the Corporation may use
such Excess Proceeds for general corporate purposes (subject to the
provisions of this Certificate of Incorporation). If the aggregate
purchase price of the shares of Preferred Stock tendered into such
Asset Sale Offer surrendered by the holders thereof exceeds the amount
of Excess Proceeds, the Corporation shall select the Shares of
Preferred Stock to be purchased on a pro rata basis. Upon completion of
such Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero.
(g) So long as any shares of Preferred Stock are outstanding, the
Corporation (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Corporation to, transfer, convey, sell,
lease or otherwise dispose of any Capital Stock in any Wholly Owned
Restricted Subsidiary of the Corporation to any Person (other than the
Corporation or a Wholly Owned Restricted Subsidiary of the
Corporation), unless (a) such transfer, conveyance, sale, lease or
other disposition is of all the Capital Stock in such Wholly Owned
Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance
with paragraph (f) hereof, and (ii) shall not permit any Wholly Owned
Restricted Subsidiary of the Corporation to issue any of its Equity
Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to
the Corporation or a Wholly Owned Restricted Subsidiary of the
Corporation.
(h) So long as any shares of Preferred Stock are outstanding,
neither the Corporation nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of shares
of Preferred Stock for or as an inducement to any amendment or
modification of any of the terms or provisions of this Certificate of
Incorporation unless such consideration is offered to be paid or is
paid to all holders of shares of Preferred
18
Stock that amend or modify, or agree to amend or modify, in the time
frame set forth in the solicitation documents relating to such
amendment or modification.
(i) So long as any shares of Preferred Stock are outstanding,
the Corporation may not consolidate or merge with or into (whether or
not the Corporation is the surviving entity), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) the Corporation is the
surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the
Corporation) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia; (ii) immediately after such
transaction no Default or Event of Default exists; and (iii) except in
the case of a merger of the Corporation with or into a Wholly Owned
Restricted Subsidiary of the Corporation, the Corporation or the entity
or Person formed by or surviving any such consolidation or merger (if
other than the Corporation), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made
(A) shall have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Corporation
immediately preceding the transaction and (B) shall, at the time of
such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in the first paragraph of paragraph (d) of this subparagraph 9.
(j) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired,
or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
(k) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any Subsidiary to,
engage in any business other than Permitted Businesses (as defined
below), except to such extent as would not be material to the
Corporation and its Restricted Subsidiaries taken as a whole.
(l) So long as any shares of Preferred Stock are outstanding,
the Corporation shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate existence,
and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective
organizational documents (as they may be amended from time to time) of
the Corporation or any such Restricted Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Corporation and
its Restricted Subsidiaries; provided, however, that the Corporation
-------- -------
shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its
Restricted Subsidiaries, if the Board of
19
Directors of the Corporation shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the
Corporation and its Restricted Subsidiaries, taken as a whole, and
that the loss thereof is not adverse in any material respect to the
holders of the shares of Preferred Stock.
(m) The restrictions set forth in the preceding paragraphs (a)
through (l) of this subparagraph 9 shall in no way limit the power and
authority of the Corporation to take any of the actions restricted
thereby. Rather, a violation of any such paragraphs shall have the
consequences set forth in paragraph (a) of subparagraph 8 of this
Paragraph A, and only such consequences.
(n) As used herein, the following terms are ascribed with the
following meanings:
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging
with or into or becoming a Restricted Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person (as
described below) directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the Voting Stock (as
described below) of a Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by
way of a sale and leaseback) other than (x) sales of inventory in the
ordinary course of business consistent with past practices, and (y) the
sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Corporation and its Restricted Subsidiaries
taken as a whole, and (ii) the issue or sale by the Corporation or any
of its Restricted Subsidiaries of Equity Interests of any of the
Corporation's Restricted Subsidiaries, in the case of either clause (i)
or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $2.5
million or (b) for net proceeds in excess of $2.5 million.
Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Corporation to a
Restricted Subsidiary or by a Restricted Subsidiary to the Corporation
or to another Restricted Subsidiary and (ii) a Restricted Payment that
is permitted by paragraph (b) of this subparagraph 9.
20
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on
a balance sheet in accordance with GAAP (as defined below).
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (iii) in the case
of a partnership or limited liability company, partnership or
membership interests (whether general or limited) and (iv) any other
interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of assets of,
the issuing Person, excluding stock appreciation rights issued in the
ordinary course of business.
"CEG" means Creative Expressions Group, Inc and CEG Holdings, LLC.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person and its
Restricted Subsidiaries for such period plus (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income
or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash charges (excluding
any such non-cash charge to the extent that it represents an accrual of
or reserve for cash charges in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person
and its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, in each case,
on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash
charges of, a Restricted Subsidiary of the referent Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent that a corresponding amount would be permitted at the
date of determination to be dividend to the Corporation by such
21
Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to
the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations
applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that (i) the Net Income
(but not loss) of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without
any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change
in accounting principles shall be excluded and (v) income of any
Unrestricted Subsidiary shall be excluded whether or not distributed to
the Corporation or any of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common
stockholders of such Person and its Restricted Subsidiaries as of such
date plus (ii) the respective amounts reported on such Person's balance
sheet as of such date with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to
the payment of dividends unless such dividends may be declared and paid
only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person
upon issuance of such preferred stock, less (x) all write-ups (other
than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to March 12,
1998 in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such
date in unconsolidated Subsidiaries and in Persons that are not
Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with
GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Corporation who (i) was a
member of such Board of Directors on March 12, 1998 or (ii) was
nominated for election or
22
elected to such Board of Directors with the approval of a majority of
the Continuing Directors who were members of the Board at the time of
such nomination or election.
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible, or
for which it is exchangeable, at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to
June 14, 2008; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have
the right to require the Corporation to repurchase such Capital Stock
upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Capital Stock
provide that the Corporation may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with paragraph (b) of this subparagraph 9.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Event of Default" is ascribed the meaning set forth in Section
6.01 of the Indenture.
"Existing Indebtedness" means Indebtedness of the Corporation and
its Restricted Subsidiaries in existence on March 12, 1998,
including Indebtedness represented by the demand notes issued to the
stockholders of Sweetheart, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations) and (ii) the
consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period, and (iii) any interest expense
on Indebtedness of another Person that is Guaranteed by such Person or
one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) the product of (a) all
dividend payments, whether or not in cash, on any series of preferred
stock of such Person, other than dividend payments on Equity Interests
payable solely in Equity Interests of the Corporation (other than
Disqualified Stock) or to the Corporation or a Restricted Subsidiary of
the Corporation, times (b) a fraction, the numerator of which is
23
one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In
the event that the referent Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness
(other than revolving credit borrowings) or issues or redeems preferred
stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance
or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition,
for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Corporation or any of its
Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash
Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to
the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations
of the referent Person or any of its Subsidiaries following the
Calculation Date.
"Fonda" means The Fonda Group, Inc.
"Fonda Credit Facility" means the credit facility between Fonda
and IBJ Schroder Bank & Trust Corporation, as agent, providing for
available borrowings of up to $50.0 million.
"Four M" means Four M Corporation.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which
are in effect on March 12, 1998.
24
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, by way of a pledge of assets or through letters of credit
or reimbursement agreements in respect thereof), of all or any part of
any Indebtedness (as defined below).
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Holder" means a Person in whose name a Senior Secured Discount
Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien (as defined below) on any
asset of such Person (whether or not such Indebtedness is assumed by
such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted
value thereof, in the case of any Indebtedness issued with original
issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of
any other Indebtedness.
"Indenture" means the Indenture, dated as of March 12, 1998,
between the Corporation and The Bank of New York, as trustee (the
"Trustee"), governing the Corporation's 12.75% Senior Secured Discount
Notes due 2008.
"Investments" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the
forms of direct or indirect loans (including guarantees of
Indebtedness or other obligations), advances or capital contributions
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance
with GAAP. If the Corporation or any Restricted Subsidiary of the
Corporation sells or otherwise disposes of any Equity Interests of any
direct or indirect Subsidiary of the Corporation such that, after
giving effect to any such sale or disposition, such Person is no longer
a Subsidiary
25
of the Corporation, the Corporation shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Subsidiary not sold
or disposed of in an amount determined as provided in the final
paragraph of paragraph (b) of this subparagraph 9.
"Lien" means, with respect to any asset, any mortgage, lien, ledge,
charge, security interest or encumbrance of any kind in respect
of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding,
however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection
with (a) any Asset Sale or (b) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment
of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received in any
Asset Sale), net of the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and
any tax sharing arrangements), amounts required to be applied to the
repayment of Indebtedness secured by a Lien on the asset or assets that
were the subject of such Asset Sale, and any reserve for adjustment in
respect of the sale price of such asset or assets established in
accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Corporation nor any of its Restricted Subsidiaries (a) provides
credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or
indirectly liable (as a guarantor or otherwise), or (c) constitutes the
lender; and (ii) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness (other than the Senior
Secured Discount Notes (as defined below)) of the Corporation or any of
its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders
26
have been notified in writing that they will not have any recourse to
the stock or assets of the Corporation or any of its Restricted
Subsidiaries.
"Offering" means the Offering of the Units by the Corporation.
"Offering Memorandum" means the Offering Memorandum, dated
March 5, 1998, governing the Offering of the Units by the Corporation.
"Permitted Business" means the business of producing and selling
food service, packaging, tissue and party goods products and such
other businesses as the Corporation and its Restricted Subsidiaries
are engaged in on the date of the Indenture, and reasonable expansions
and extensions thereof.
"Permitted Investment" means a) any Investment in the Corporation
or in a Restricted Subsidiary of the Corporation; (b) any Investment
in Cash Equivalents; (c) any Investment by the Corporation or any
Restricted Subsidiary of the Corporation in a Person, if as a
result of such Investment (i) such Person becomes a Restricted
Subsidiary of the Corporation or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the
Corporation or a Restricted Subsidiary of the Corporation; (d) any
Investment made as a result of the receipt of non-cash consideration
from an Asset Sale made in accordance with the provisions of paragraph
(f) of this paragraph 9; (e) a $2.6 million loan from Fonda to CEG, as
in effect on March 12, 1998 as such loan may be amended or refinanced
in a manner not adverse to Fonda, the Corporation or the Holders of the
Senior Secured Discount Notes; and (f) other Investments in a Permitted
Business in an aggregate amount not to exceed $5.0 million.
"Permitted Liens" means (i) Liens on Indebtedness of the
Corporation's Restricted Subsidiaries that was permitted by the terms
of this subparagraph 9 to be incurred; (ii) Liens in favor of the
Corporation or any of its Restricted Subsidiaries; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Corporation or any Restricted Subsidiary of the
Corporation; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
the Corporation or any Restricted Subsidiary; (iv) Liens on property
existing at the time of acquisition thereof by the Corporation or any
Restricted Subsidiary of the Corporation; provided that such Liens were
in existence prior to the contemplation of such acquisition; (v) Liens
to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of the
second paragraph of paragraph (d) of this subparagraph 9 covering only
the assets acquired with such Indebtedness; (vii) Liens existing on
March 12, 1998; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted
and diligently concluded, provided that any
27
reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) Liens
incurred in the ordinary course of business of the Corporation or any
Restricted Subsidiary of the Corporation with respect to obligations
that do not exceed $2.5 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair
the use thereof in the operation of business by the Corporation or
such Restricted Subsidiary; (x) Liens in favor of the holders of
Senior Secured Discount Notes; and (xi) renewals or refundings of any
Liens referred to in clauses (iii) through (x) above; provided that
any such renewal or refunding does not extend to any assets or secure
any Indebtedness not securing or secured by the Liens being renewed or
refinanced.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Corporation or any of its Restricted Subsidiaries issued in exchange
for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund other Indebtedness of the
Corporation or any such Restricted Subsidiary; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Senior Secured Discount Notes,
such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of
payment to, the Senior Secured Discount Notes on terms at least as
favorable to the Holders of Senior Secured Discount Notes as those
contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv)
such Indebtedness is incurred either by the Corporation or by the
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or agency or political
subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business).
"Principals" means Dennis Mehiel, his lineal descendants and any
trust, corporation, partnership, association, limited liability
company or other entity in which Dennis Mehiel and/or his lineal
descendants hold at least 80% of the total, combined outstanding voting
power or similar controlling interest.
28
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 12, 1998, by and among the Corporation and
the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Senior Secured Discount Notes" means the Corporation's 12.75%
Senior Secured Discount Notes due 2008.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such Person
or of one or more Subsidiaries of such Person (or any combination
thereof); provided, however, that Sweetheart (as defined below) shall
be deemed to be a Subsidiary of the Corporation for so long as the
Corporation directly or indirectly owns at least 50% of Sweetheart's
aggregate outstanding common stock.
"Sweetheart" means Sweetheart Holdings Inc. and its Subsidiaries.
"Sweetheart Credit Facilities" means Sweetheart's revolving credit
facility with BankAmerica in the amount of up to $135.0 million, and
Sweetheart's term and revolving credit facilities with The Bank of
Nova Scotia, which provides for (i) a term loan facility in the amount
of up to Cdn. $14.0 million; (ii) a revolving credit facility in the
amount of up to Cdn. $7.0 million; and (iii) a revolving overdraft
credit facility with standby or guarantee letters of credit in the
amount of up to Cdn. $1.0 million.
"Transactions" is ascribed the meaning set forth in the Offering
Memorandum.
"Units" means the Units offered in the Offering consisting of
$1,000 in aggregate principal amount at maturity of the Senior Secured
Discount Notes and two (2) shares of Class C Common Stock, par value
$.001 per share of the Corporation.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than
Fonda or Sweetheart or any successor to any of them) that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a
resolution of the Board of Directors; but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b)
is not party to any agreement, contract, arrangement or understanding
with the
29
Corporation or any Restricted Subsidiary of the Corporation unless the
terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Corporation or such Restricted
Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Corporation; (c) is a Person
with respect to which neither the Corporation nor any of its Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any
specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any
Indebtedness of the Corporation or any of its Restricted Subsidiaries;
and (e) has at least one director on its board of directors that is not
a director or executive officer of the Corporation or any of its
Restricted Subsidiaries and has at least one executive officer that is
not a director or executive officer of the Corporation or any of its
Restricted Subsidiaries. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary
and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Corporation as of such date. The
Board of Directors of the Corporation may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that
such designation shall be deemed to be an incurrence of Indebtedness by
a Restricted Subsidiary of the Corporation of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall
only be permitted if (i) such Indebtedness is permitted under paragraph
(d) of this subparagraph 9, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference
period, and (ii) no Default or Event of Default would be in existence
following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election
of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i)
the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by (ii) the then outstanding principal amount of such
Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital
Stock or other ownership interests of which (other than directors'
qualifying shares) shall at the time be owned by such Person or by one
or more Wholly Owned Restricted Subsidiaries of such Person and one or
more Wholly Owned Restricted Subsidiaries of such Person.
B. CLASS B PREFERRED STOCK
30
Shares of Class B Preferred Stock may be issued from time to time in
one or more series, as may from time to time be determined by the Board of
Directors, each of said series to be distinctly designated. All shares of any
one series of Class B Preferred Stock shall be alike in every particular, except
that there may be different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting rights, if any, and the preferences
and relative, participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding; and,
subject to the provisions of Paragraph A of this Article FOURTH and subparagraph
2 of Paragraph E of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular series
of Class B Preferred Stock, the voting rights, if any, and the designations,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(a) The distinctive designation of, and the number of shares of
Class B Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by the Board
of Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(b) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Class B Preferred Stock of such series
shall be paid, the extent of the preference or relation, if any, of
such dividends to the dividends payable on any other class or classes
or series of the same or other classes of stock and whether such
dividends shall be cumulative or non-cumulative;
(c) The right, if any, of the holders of Class B Preferred Stock
of such series to convert the same into, or exchange the same
for, shares of any other class or classes or of any series of the same
or any other class or classes of stock of the Corporation and the terms
and conditions of such conversion or exchange;
(d) Whether or not Class B Preferred Stock of such series shall
be subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on which,
Class B Preferred Stock of such series may be redeemed;
(e) The rights, if any, of the holders of Class B Preferred Stock
of such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets, dissolution or
winding-up of the Corporation;
(f) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Class B Preferred Stock of such
series; and
(g) The voting powers, if any, of the holders of such series of
Class B Preferred Stock which may, without limiting the generality
of the foregoing, include the right, voting as a series by itself or
together with other series of Class B Preferred Stock
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or all series of Class B Preferred Stock as a class, to vote on such
matters or under such circumstances and on such conditions as the
Board of Directors may determine.
C. CLASS B SERIES 1 PREFERRED STOCK
Pursuant to the authority granted to the Board of Directors in
Paragraphs B and C of this Article FOURTH, fifteen thousand (15,000) of the
authorized shares of Class B Preferred Stock are hereby designated as Class B
Series 1 Preferred Stock. The powers, preferences and rights, and the
qualifications, limitations and restrictions, of the Class B Series 1 Preferred
Stock are as follows:
1. The holder of shares of Class B Series 1 Preferred Stock shall not
be entitled to receive any dividends whatsoever.
2. The Class B Series 1 Preferred Stock shall, with respect to
distributions upon the liquidation, winding up or dissolution of the
Corporation, rank junior to the Preferred Stock and senior to all classes of
Common Stock of the Corporation and, except as provided in the following
proviso, to each other class or series of capital stock issued by the
Corporation now or hereafter created (collectively, together with the Common
Stock, "Series 1 Junior Stock"); provided, however, that the Board of Directors
-------- -------
may authorize a class or series of preferred stock on a parity in powers,
preferences and rights to the Class B Series 1 Preferred Stock (collectively,
"Series 1 Parity Stock") or senior in powers, preferences and rights to the
Class B Series 1 Preferred Stock (collectively, "Series 1 Senior Stock") if
approved by the holders of a majority of the shares of Class B Series 1
Preferred Stock; provided, however, that no such class or series of Series 1
Senior Stock shall be senior in powers, preferences and rights to the Preferred
Stock except as provided in subparagraph 1 of Paragraph A of this Article
FOURTH.
3. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, no payment or distribution of
assets shall be made to or set apart for the holders of Series 1 Junior Stock
unless the holders of shares of Class B Series 1 Preferred Stock shall have
received, out of assets legally available therefor, one thousand dollars
($1,000) per share of Class B Series 1 Preferred Stock (the "Liquidation
Value"). If upon any such distribution of assets in liquidation or dissolution
or upon the winding up of the affairs of the Corporation the amount which would
be distributed to the holder of the outstanding shares of Class B Series 1
Preferred Stock would be less than this amount, then such lesser amount shall be
distributed pro rata to the holders of then outstanding shares of Class B Series
1 Preferred Stock and to the holders of then outstanding shares of Series 1
Parity Stock, and no distribution shall be made to the holders of Series 1
Junior Stock. None of the consolidation or the merger of the Corporation, or the
sale, lease or transfer by the Corporation of all or any part of its assets,
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this subparagraph 3.
4. (a) The Corporation shall redeem all, but not less than all, of the
Class B Series 1 Preferred Stock on March 13, 2010, out of funds
legally available for such purpose, at a redemption price per share, in
cash, equal to the aggregate Liquidation Value. Notice of such
redemption shall be given by first class mail, postage prepaid, mailed
not less than
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30 days nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the
Corporation. Each such redemption notice shall state: (i) the
redemption date; (ii) the number of shares of Class B Series 1
Preferred Stock to be redeemed; and (iii) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price. On or after the date so specified, each holder of
then outstanding shares of Class B Series 1 Preferred Stock so to be
redeemed shall surrender the certificate or certificates evidencing the
Class B Series 1 Preferred Stock held by such holder to the Corporation
at its principal office (or such other office or agency of the
Corporation as the Corporation may designate in such notice), in
exchange for payment to its order or that of its nominee, as such
holder shall request, in an aggregate amount equal to the aggregate
redemption amount of the shares of Class B Series 1 Preferred Stock so
redeemed. All shares of Preferred Stock which are redeemed pursuant to
this subparagraph 4 shall be cancelled and shall not be reissued.
(b) No dividend or other distribution (payable other than in
shares of Series 1 Junior Stock) shall be paid to the holders of Series
1 Junior Stock, and no shares of Series 1 Junior Stock shall be
purchased, redeemed or otherwise acquired by the Corporation or any of
its subsidiaries (except by conversion into or in exchange for Series 1
Junior Stock), nor shall any monies be paid or made available for a
purchase, redemption or sinking fund for the purchase or redemption of
any Series 1 Junior Stock unless the Corporation shall not be in
default on any of its obligations to purchase or redeem the Class B
Series 1 Preferred Stock pursuant to this subparagraph 4.
5. (a) The shares of Class B Series 1 Preferred Stock may, at the
option of the holder, at any time and from time to time, be converted
into shares of fully paid and non-assessable shares of Class A Common
Stock or Class B Common Stock, at the conversion ratio of one (1) share
of Class B Series 1 Preferred Stock for 8.89963 shares of Class A
Common Stock or Class B Common Stock, subject to adjustment for any
subdivision or combination of, or stock dividend on, the Class A Common
Stock or Class B Common Stock. The fifteen thousand (15,000) shares of
Class B Series 1 Preferred Stock authorized shall, initially, be
convertible into one million three hundred thirty four thousand nine
hundred and forty five (133,494.5) shares of Class A Common Stock or
Class B Common Stock.
(b) Upon receipt by the Corporation from the record holder of the
shares of Class B Series 1 Preferred Stock of a written request to
convert its shares of Class B Series 1 Preferred Stock, the shares of
Class B Series 1 Preferred Stock shall be converted into shares of
Class A Common Stock or Class B Common Stock, as specified in such
written request, at the conversion ratio specified in subparagraph 5(a)
above. The conversion of shares hereunder shall be effective, subject
to the terms of this subparagraph 5, as of the close of business on the
date of the receipt by the Corporation of such request to convert, and
the holder entitled to receive the shares issuable upon such conversion
shall be treated for all purposes as the record holder of such shares
on such date.
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(c) The conversion of shares of Class B Series 1 Preferred Stock
shall be exercised by the surrender by the holder of the certificates
representing the shares being converted accompanied by a written
notice of conversion signed by such holder or its duly authorized
agent, at the principal office of the Corporation (or such other
office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of Class B Series 1
Preferred Stock) at any time during its usual business hours, and
stating the name or names in which such holder wishes the certificates
for Class A Common Stock or Class B Common Stock to be received upon
conversion to be issued and the address to which such certificates
shall be delivered. In case such notice shall specify a name or names
other than that of the holder, such notice shall be accompanied by
payment of any and all transfer taxes payable upon the issuance of the
Class A Common Stock or Class B Common Stock upon conversion and all
instruments of transfer appropriately completed to permit such
issuance. Subject to the foregoing, the issuance of certificates for
shares of Class A Common Stock or Class B Common Stock upon conversion
of shares of Class B Series 1 Preferred Stock shall be made without
charge to the holder of such converted shares for any costs incurred by
the Corporation in connection with such conversion and related issuance
of shares. As soon as practicable after such surrender of such
certificates, the Corporation shall issue and deliver at such address
as is specified by such holder the certificates for the number of
shares of Class A Common Stock or Class B Common Stock to which such
holder shall be entitled as aforesaid.
(d) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares, solely for the purpose
of issue upon the conversion of shares of Class B Series 1
Preferred Stock as herein provided, such number of shares of Class A
Common Stock and Class B Common Stock as shall then be issuable upon
the conversion of the shares of Class B Series 1 Preferred Stock. All
shares of Class A Common Stock and Class B Common Stock issuable upon
any conversion described herein shall, when issued, be duly and validly
issued and fully paid and non-assessable. The Corporation will take
such action as may be necessary to assure that all such shares of Class
A Common Stock and Class B Common Stock may be so issued without
violation of any applicable requirements of any national stock exchange
upon which the shares of Common Stock of the Corporation may be listed.
6. The holder of shares of Class B Series 1 Preferred Stock shall not
be entitled to any voting rights whatsoever, except as provided in subparagraph
2 of this Paragraph C and except to the extent otherwise required by applicable
law.
7. In case at any time or from time to time the Corporation shall take
any action in respect of the Common Stock, then unless such action will not have
a materially adverse effect upon the conversion rights of the holders of Class B
Series 1 Preferred Stock, the conversion rights set forth in subparagraph 5 of
this Paragraph C shall, in the good faith judgment of the Board of Directors of
the Corporation, be adjusted in such manner as shall be equitable in the
circumstances.
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8. In the even that the Corporation shall propose (a) to pay any
stock dividend to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock, or (b) to offer to the holders
of its Common Stock rights, warrants or options to subscribe for or to purchase
any additional shares of Common Stock or shares of stock of any class or any
other securities, rights or options, or (c) to effect any reclassification of
its Common Stock (other than a reclassification involving only the subdivision
or combination of outstanding shares of Common Stock), or (d) to effect any
consolidation, merger or sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, or (e) to effect the
liquidation, dissolution or winding-up of the Corporation, or (f) to effect any
transaction that would constitute or effect a Change of Control, then, in each
such case, the Corporation shall give to the holders of the Class B Series 1
Preferred Stock a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution or offer of rights,
warrants or options, or the date on which such reclassification, consolidation,
merger, sale, transfer, disposition, liquidation, dissolution, winding-up or
Change of Control is to take place and the date of participation therein by the
holders of Common Stock, if any such date is to be fixed. Such notice shall be
so given at least 20 days prior to (i) the record date for the purposes of any
action covered by clause (a) or (b) above or (ii) the earlier of the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock, for the purposes of any action covered by clause (c),
(d), (e) or (f) above.
D. COMMON STOCK
The Common Stock shall be divided into one million four hundred
thousand (1,400,000) shares of Class A Common Stock, two hundred thousand
(200,000) shares of Class B Common Stock and two hundred thousand (200,000)
shares of Class C Common Stock. The powers, preferences and rights, and the
qualifications, limitations and restrictions, of the Class A Common Stock, Class
B Common Stock and Class C Common Stock are as follows:
1. Except to the extent expressly set forth in subparagraph 4 or
subparagraph 5 of this Paragraph D, none of the Class A Common Stock, the Class
B Common Stock or the Class C Common Stock has any preference over, or with
respect to, any other such class of Common Stock, and each share of Class A
Common Stock, Class B Common Stock and Class C Common Stock is vested with all
of the same dividend and liquidation rights.
2. After the requirements with respect to preferential dividends on
the Preferred Stock or the Class B Preferred Stock (fixed in accordance with the
the provisions of Paragraphs A and B of this Article FOURTH), if any, shall have
been met and after the Corporation shall have complied with all the
requirements, if any, with respect to the setting aside of sums as sinking funds
or repurchase, redemption or purchase accounts (fixed in accordance with the
provisions of Paragraphs A and B of this Article FOURTH), and subject further to
any other conditions which may be fixed in accordance with the provisions of
Paragraphs A and B of this Article FOURTH, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends as may be declared from
time to time by the Board of Directors out of funds legally available therefor.
When and as dividends are declared thereon, whether payable in cash, property or
securities of the Corporation, holders of Class A Common Stock, Class B Common
Stock and
35
Class C Common Stock will be entitled to share in such dividends ratably
according to the number of shares of Class A Common Stock, Class B Common Stock
and Class C Common Stock held by them. If dividends are declared which are
payable in shares of Class A Common Stock, Class B Common Stock or Class C
Common Stock, such dividends will be declared payable at the same rate on each
class of Common Stock, and the dividends payable in shares of Class A Common
Stock will be payable to the holders of Class A Common Stock, the dividends
payable in shares of Class B Common Stock will be payable to the holders of
Class B Common Stock and the dividends payable in shares of Class C Common Stock
will be payable to the holders of Class C Common Stock. If a holder of Class B
or Class C Common Stock, as the case may be, shall convert any of its respective
shares of Class B or Class C Common Stock into shares of Class A Common Stock
pursuant to subparagraph 5 of this Paragraph D at a time which falls after the
record date, but before the payment date, of any dividend declared by the
Corporation, the holder shall be entitled to the receipt of such declared
dividend as though such conversion had not taken place.
3. After distribution in full of the preferential amount (fixed in
accordance with the provisions of Paragraphs A, B and C of this Article FOURTH),
if any, to be distributed to the holders of Preferred Stock and to the holders
of any series of Class B Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or
winding-up of the Corporation, the holders of Class A Common Stock, Class B
Common Stock and Class C Common Stock shall be entitled to share, ratably
according to the number of shares of Class A Common Stock, Class B Common Stock
and/or Class C Common Stock, respectively, held by them, in all the remaining
assets of the Corporation, tangible and intangible, of whatever kind available
for distribution to stockholders.
4. Except as may otherwise be required by law, each holder of Class A
Common Stock shall have one vote in respect of each share of Class A Common
Stock held by it on all matters voted upon by the stockholders, including the
election of directors. Except as may otherwise be required by law, each holder
of Class B Common Stock shall have one-tenth (.1) of a vote in respect of each
share of Class B Common Stock held by it on all matters voted upon by the
stockholders, including the election of directors, and shall vote together with
the Class A Common Stock as a single class; provided, however, that the approval
of the holders of a majority of the outstanding shares of Class B Common Stock,
voting as a separate class, shall be required for the amendment or modification
of any provisions of the Certificate of Incorporation of the Corporation in any
manner that would adversely affect the powers, preferences and rights of the
Class B Common Stock. The holders of Class C Common Stock shall not be entitled
to any vote whatsoever, except to the extent otherwise required by applicable
law.
5. (a) Any share of Class B Common Stock may, at any time, be
converted into one fully paid and non-assessable share of Class A Common Stock
(x) at the option of any holder other than a Non-Converting Holder (as defined
below) or (y) at the option of any Non-Converting Holder concurrently with a
sale or other transfer of such shares of Class B Common Stock to any person,
firm or corporation other than a Non-Converting Holder, subject to the
conditions hereinafter set forth. For the purpose of this subparagraph 5, the
term "Non-Converting Holder" shall mean The Equitable Life Assurance Society of
the United States and
36
any of its affiliates, or any other person, firm or corporation that elects to
be treated as a Non-Converting Holder by written notice delivered to the
Corporation on or before the date of acquisition of shares of Class B Common
Stock by such person, firm or corporation, which notice refers to this sentence
and states that such person, firm or corporation is irrevocably electing to be
treated as a Non-Converting Holder. Such written notice shall be filed with the
minutes of the proceedings of the Board of Directors of the Corporation.
(b) Any share of Class C Common Stock may, following either (i) an
underwritten initial public offering of shares of Common Stock of the
Corporation or (ii) a refinancing of the Senior Secured Discount Notes, be
converted into one fully paid and non-assessable share of Class A Common Stock
(x) at the option of any holder or (y) at the option of the Corporation.
(c) Upon receipt by the Corporation from a record holder of shares
of Class B or Class C Common Stock, as the case may be, of a written request to
convert its shares of Class B or Class C Common Stock, the shares of Class B or
Class C Common Stock requested to be converted shall be converted into shares of
Class A Common Stock, on the basis of one share of Class A Common Stock for each
share of Class B or Class C Common Stock, as the case may be. The conversion of
shares hereunder shall be effective, subject to the terms of this subparagraph
5, as of the close of business on the date of the receipt by the Corporation of
such request to convert, and the holder entitled to receive the shares issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares on such date. All shares of Class B or Class C Common Stock
converted into shares of Class A Common Stock as provided in this subparagraph 5
may be reissued by the Corporation.
(d) Upon receipt by a record holder of shares of Class C Common
Stock from the Corporation of written notice of mandatory conversion of its
shares of Class C Common Stock, the shares of Class C Common Stock to be
converted shall be converted into shares of Class A Common Stock, on the basis
of one share of Class A Common Stock for each share of Class C Common Stock. The
conversion of shares hereunder shall be effective, subject to the terms of this
subparagraph 5, as of the close of business on the date of the receipt by the
record holder of Class C Common Stock of such notice from the Corporation of
mandatory conversion, and the holder entitled to receive the shares issuable
upon such mandatory conversion shall be treated for all purposes as the record
holder of such shares on such date. For purposes of this section (d) of this
subparagraph 5, such notice shall be deemed to be received by the record holder
of Class C Common Stock ten (10) business days following mailing of the notice
by the Corporation. All shares of Class C Common Stock converted into shares of
Class A Common Stock as provided in this subparagraph 5 may be reissued by the
Corporation.
(e) Any conversion of shares of Class B or Class C Common Stock
shall be exercised by the surrender by the holder of the certificate or
certificates representing the shares being converted accompanied, if the
conversion is at the option of the holder, by a written notice of conversion
signed by such holder or its duly authorized agent, at the principal office of
the Corporation (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holder or holders of Class
B or Class C Common Stock, as the case may be) at any time during its usual
business hours, and stating the name or names in which such
37
holder wishes the certificate or certificates for Class A Common Stock to be
received upon conversion to be issued and the address to which such certificate
or certificates shall be delivered. In case such notice shall specify a name or
names other than that of the holder, such notice shall be accompanied by payment
of any and all transfer taxes payable upon the issuance of the Class A Common
Stock upon conversion and all instruments of transfer appropriately completed to
permit such issuance. Subject to the foregoing, the issuance of certificates for
shares of Class A Common Stock upon conversion of shares of Class B or Class C
Common Stock shall be made without charge to the holder of such converted shares
for any costs incurred by the Corporation in connection with such conversion and
related issuance of shares. As soon as practicable after such surrender of such
certificate or certificates, the Corporation shall issue and deliver at such
address as is specified by such holder a certificate or certificates for the
number of shares of Class A Common Stock to which such holder shall be entitled
as aforesaid.
(f) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares, solely for the purpose of issue upon
the conversion of shares of Class B Common Stock as herein provided, such number
of shares of Class A Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Class B Common Stock. The Corporation shall,
following an underwritten initial public offering of the shares of Common Stock
of the Corporation, reserve and keep available, out of its authorized and
unissued shares, solely for the purpose of issue upon the conversion of shares
of Class C Common Stock as herein provided, such number of shares of Class A
Common Stock as shall then be issuable upon conversion of all outstanding shares
of Class C Common Stock. All shares of Class A Common Stock issuable upon any
conversion described herein shall, when issued, be duly and validly issued and
fully paid and non-assessable. The Corporation will take such action as may be
necessary to assure that all such shares of Class A Common Stock may be so
issued without violation of any applicable requirements of any national stock
exchange upon which the shares of Common Stock of the Corporation may be listed.
(g) If the Corporation in any manner subdivides or combines the
outstanding shares of any class of Common Stock, the outstanding shares of the
other classes will be proportionately subdivided or combined.
E. OTHER PROVISIONS
1. Except as may be otherwise provided in an agreement between the
Corporation and one or more holders of the shares of stock or of options,
warrants or other rights to purchase share of stock or other securities of the
Corporation, no holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any preemptive
right to purchase or subscribe for any unissued stock of any class or series or
any additional shares of any class or series to be issued by reason of any
increase of the authorized capital stock of the Corporation of any class or
series, or bonds, certificates of indebtedness, debentures or other securities
convertible into or
38
exchangeable for stock of the Corporation of any class or series, or carrying
any right to purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any right to
purchase stock, may be issued and disposed of pursuant to resolution of the
Board of Directors to such persons, firms, corporations or associations, whether
one or more of such holders or others, and upon such terms as may be deemed
advisable by the Board of Directors.
2. The relative powers, preferences and rights of each series of Class
B Preferred Stock in relation to the powers, preferences and rights of each
other series of Class B Preferred Stock shall, in each case, be as fixed from
time to time by the Board of Directors in the resolution or resolutions adopted
pursuant to authority granted in Paragraph B of this Article FOURTH and the
consent, by class or series vote or otherwise, of the holders of Preferred Stock
or the holders of such of the series of Class B Preferred Stock as are from time
to time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Class B Preferred Stock; provided, however,
that the approval of the holders of a majority of the shares of the Preferred
Stock, voting as a separate class, shall be required for the matters described
in the first sentence of subparagraph 8(b) of Paragraph A of this Article FOURTH
and the approval of the holders of a majority of the shares of Class B Series 1
Preferred Stock, voting as a separate class, shall be required for the matters
described in subparagraph 2 of Paragraph C of this Article FOURTH; and provided,
however, that the Board of Directors may expressly provide in the resolution or
resolutions as to any series of Class B Preferred Stock adopted pursuant to
Paragraph B of this Article FOURTH that the consent of the holders of a majority
(or such greater proportion as shall be therein fixed) of the outstanding shares
of such series voting thereon shall be required for the issuance of any or all
other series of Class B Preferred Stock.
3. Subject to the provisions of subparagraph 2 of this Paragraph E,
shares of any series of Class B Preferred Stock, in an aggregate amount not
exceeding the total number of shares of Class B Preferred Stock authorized in
this Amended and Restated Certificate of Incorporation, may be issued from time
to time as the Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of Directors,
and shares of Preferred Stock, in an aggregate amount not exceeding the total
number of shares of Preferred Stock authorized in this Amended and Restated
Certificate of Incorporation, may be issued from time to time pursuant to
subparagraph 2(a) of Paragraph A of this Article FOURTH.
4. Shares of Class A Common Stock, Class B Common Stock and Class C
Common Stock, in an aggregate amount not exceeding the respective total number
of shares of Class A Common Stock, Class B Common Stock and Class C Common
Stock, as applicable, authorized in this Amended and Restated Certificate of
Incorporation, may be issued from time to time as the Board of Directors of the
Corporation shall determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
5. The authorized amount of shares of Class B Preferred Stock and
Common Stock may, without a class or series vote, be increased or decreased (but
not below the number of such shares then outstanding) from time to time by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon.
39
FIFTH: Except as required in the By-laws of the Corporation, no
election of directors need be by written ballot.
SIXTH: The Board of Directors shall have the power to make,
alter, or repeal By-laws of the Corporation, subject to the power of the
stockholders entitled to vote thereon to alter or repeal By-laws made by the
Board of Directors.
SEVENTH: A. 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; provided, however, that subject to the immediately
following sentence, this Article SEVENTH shall not eliminate or limit the
liability of a director to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived any improper personal benefit. If the Delaware General
Corporation Law is amended after this Amended and Restated Certificate of
Incorporation becomes effective to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
B. Any repeal or modification of the foregoing Section A
by the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation with respect to any acts or
omissions of such director occurring prior to such repeal or modification.
EIGHTH: The Corporation shall, to the fullest extent permitted
from time to time under the law of the State of Delaware, indemnify, and upon
request shall advance expenses to, any and all persons whom it shall have power
to indemnify under such law to the extent that such indemnification and
advancement of expenses is permitted under such law, as such law may from time
to time be in effect; provided, however, that the foregoing shall not require
the Corporation to indemnify or advance expenses to any person in connection
with any action, suit, proceeding, claim or counterclaim initiated by or on
behalf of such person. Such indemnification shall not be deemed exclusive of
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of directors or stockholders or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person. To the extent permitted by applicable law, any
person seeking indemnification under this Article EIGHTH shall be deemed to have
met the standard of conduct required for such indemnification unless the
contrary shall be established. Any repeal or modification of the foregoing
provisions of this Article EIGHTH shall not adversely affect any right or
protection of a person with respect to any acts or omissions of such person
occurring prior to such repeal or modification.
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NINTH: The books of the Corporation may (subject to any statutory
requirements) be kept outside the State of Delaware as may be designated by the
Board of Directors or in the By-laws of the Corporation.
TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provisions contained in this Amended and Restated Certificate of
Incorporation, as such may from time to time be in effect, in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein are
granted subject to this reservation.
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