Exibit 4.1
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to the provisions of Sections 14A:7-2(4) and 14A:9-2(2),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The following resolution was adopted by the Board of Directors of
the Corporation:
Resolved that a new ARTICLE ELEVENTH relating to the designation,
number rights, preferences and limitation of a series of preferred stock shall
be added to the Restated Certificate of Incorporation, as amended, and shall
read in its entirety as follows:
"ARTICLE ELEVENTH
Section 1. Designation and Amount. There is hereby created out of
the authorized and unissued shares of preferred stock of the Corporation a
series of preferred stock, no par value, designated as the "8 3/4% Series B
Convertible Exchangeable Preferred Stock" (the "Series B Preferred"). The
number of shares constituting such series shall be 880,000. The liquidation
preference of the Series B Preferred (the "Liquidation Preference") shall be
$25.00 per share.
Section 2. Rank. The Series B Preferred shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank (i) senior to all classes of Common Stock
of the Corporation and to each other class of capital stock or series of
preferred stock established after the Series B Preferred Issue Date by the Board
of Directors, the terms of which do not expressly provide that it ranks senior
to or on a parity with the Series B Preferred as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Corporation (collectively referred to with the Common Stock of the Corporation
as "Junior Securities"); (ii) on a parity with the Corporation's Series A
Preferred Stock and, subject to certain conditions, with any class of capital
stock or series of preferred stock issued by the Corporation which was
established after the Series B Preferred Issue Date by the Board of Directors,
the terms of which expressly provide that such class or series will rank on a
parity with Series B Preferred as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Parity Securities"); and (iii) subject to certain
conditions, junior to each class of capital stock or series of preferred stock
issued by the Corporation which was established after the Series B Preferred
Issue Date by the Board of Directors, the terms of which expressly provide that
such class or series will rank senior to the Series B Preferred as to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation (collectively referred to as "Senior Securities"). The Series B
Preferred shall be subject to the issuance of series of Junior Securities,
Parity Securities and Senior Securities, provided that the Corporation may not
issue any new class of Parity Securities or Senior Securities without the
approval of the Holders of at lease a majority of the shares of Series B
Preferred then outstanding, voting or consenting, as the case may be, together
as one class unless the pro forma ratios for the latest twelve months of (i) net
income available for preferred dividends to preferred dividends is not less than
1:1 and (ii) EBITDA less capital expenditures, securities amortization and
redemption, cash taxes and changes in working capital to preferred dividends is
not less than 1.2:1. The Series B Preferred shall rank junior in right of
payment to all indebtedness and other debt obligations of the Corporation.
Section 3. Dividends.
(a) Beginning on the Series B Preferred Issue Date, the Holders
of the outstanding shares of Series B Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors, from any
source of funds legally available therefor, distribution in the form of
cash dividends on each share of Series B Preferred, at a rate per annum
equal to 8 3/4% of the Liquidation Preference per share of the Series B
Preferred plus accumulated and unpaid dividends thereon as of the last
Dividend Payment Date, payable quarterly; provided that if the Corporation
fails to register the Series B Preferred pursuant to the terms of, and
within the time periods set forth in, the Registration Rights Agreement
dated August 7, 1997 between the Corporation and Credit Research & Trading
LLC, then the dividend rate shall increase 0.5% per annum for each period
during which such registration is not effective. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the
Series B Preferred Issue Date and shall be payable quarterly in arrears on
each Dividend Payment Date, commencing on November 1, 1997. Each
distribution in the form of a dividend shall be payable to the Holders of
record as they appear on the stock register of the Corporation on the
record date for such purpose fixed by the Board of Directors, which shall
not be less than 10 nor more than 60 days preceding the related Dividend
Payment Date. Dividends shall cease to accumulate in respect of shares of
the Series B Preferred on the Exchange Date or on the date of their earlier
redemption unless the Company shall have failed to issue the appropriate
aggregate principal amount of Exchange Notes in respect of the Series B
Preferred on the Exchange Date or shall have failed to pay the relevant
redemption price on the date fixed for redemption.
(b) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any cash
dividends on shares of the Series B Preferred at any time.
(c) Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption pursuant to
Section 6(a) may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to Holders of record on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(d) Except as set forth in the following sentence, no dividends
shall be declared by the Board of Directors or paid or funds set apart for
the payment of dividends by the Corporation on any Parity Securities for
any period unless full cumulative dividends shall have been or
contemporaneously are declared and paid in cash or declared and a sum in
cash set apart sufficient for such payment of the Series B Preferred for
all Dividend Periods terminating on or prior to the date of payment of such
dividends on such Parity Securities. If full dividends in cash are not so
paid upon the shares of the Series B Preferred and any other Parity
Securities, all dividends declared upon the Series B Preferred and other
Parity Securities shall be declared pro rata so that the amount of
dividends declared on each class or series of the Series B Preferred and
such Parity Securities shall in all cases bear to each other the same ratio
that the aggregate accumulated dividends on the Series B Preferred and such
Parity Securities bear to each other.
(e) (i) Holders of shares of the Series B Preferred shall be
entitled to receive the dividends provided for in Section 3(a) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.
(ii) So long as any shares of Series B Preferred are
outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any Junior Securities or make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any
Junior Securities or any warrants, rights, calls or options
exercisable for or convertible into any Junior Securities, or make any
distribution in respect thereof, either directly or indirectly, and
whether in cash, obligations or shares of the Corporation or other
property (other than distributions or dividends in Junior Securities
to the holders of Junior Securities), and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any Junior Securities or any such
warrants, rights, calls or options unless full cumulative dividends
determined in accordance herewith have been paid or deemed paid in
full on the Series B Preferred for all past Dividend Periods.
(iii) So long as any shares of the Series B Preferred are
outstanding, the Corporation shall not make any payment on account of,
or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any Parity
Securities or any warrants, rights, calls or options exercisable for
or convertible into any Parity Securities, and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any Parity Securities or any such
warrants, rights, calls or options unless the dividends determined in
accordance herewith on the Series B Preferred have been paid or deemed
paid in full for all past Dividend Periods.
(f) Dividends payable on shares of the Series B Preferred for
any period of less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed in any
period of less than one month. If any Dividend Payment Date occurs on a
day that is not a Business Day, any accumulated dividends otherwise payable
on such Dividend Payment Date shall be paid on the next succeeding Business
Day.
Section 4. Liquidation Preference.
(a) Upon any voluntary or involuntary dissolution or winding-up
of the Corporation, the Holders of shares of Series B Preferred then
outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution, the Liquidation Preference, plus an
amount in cash equal to accumulated and unpaid dividends thereon as of the
last Dividend Payment Date prior to the date fixed for dissolution or
winding-up (including an amount in cash equal to a prorated dividend for
the period from the last Dividend Payment Date to the date fixed for
liquidation, dissolution or winding-up), before any payment shall be made
or any assets distributed to the holders of any Junior Securities,
including, without limitation, Common Stock of the Corporation. If, upon
any voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, the amount payable with respect to the Series B Preferred and
all other Parity Securities is not paid in full, then the Holders of the
Series B Preferred and the Parity Securities shall share equally and
ratably in any distribution of assets of the Corporation in proportion to
the full Liquidation Preference and accumulated and unpaid dividends
thereon as of the last Dividend Payment Date prior to the date of such
voluntary or involuntary dissolution or winding-up, to which each is
entitled. After payment of the full amount of the Liquidation Preferences
and accumulated and unpaid dividends thereon as of the last Dividend
Payment Date to which they are entitled, the Holders of shares of Series B
Preferred shall not be entitled to any further participation in any
distribution of assets of the Corporation.
(b) For the purposes of this Section 4 only, neither the sale,
lease, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with or into one or more entities shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
Section 5. Conversion.
(a) A Holder of shares of Series B Preferred may convert such
shares into Common Stock at any time. For the purposes of conversion, each
share of Series B Preferred shall be valued at the Liquidation Preference
plus accumulated and unpaid dividends thereon as of the last Dividend
Payment Date, which shall be divided by the Conversion Price in effect on
the Conversion Date to determine the number of shares issuable upon
conversion, except that the right to convert shares of Series B Preferred
called for redemption shall terminate at the close of business on the
Business Day preceding the Redemption Date and shall cease if not exercised
prior to that time (unless the Corporation shall default in making the
payment due upon redemption). Immediately following such conversion, the
rights of the Holders of converted Series B Preferred shall cease and the
persons entitled to receive the Common Stock upon the conversion of Series
B Preferred shall be treated for all purposes as having become the owners
of such Common Stock.
(b) To convert Series B Preferred, a Holder must (i) surrender
the certificate or certificates evidencing the shares of Series B Preferred
to be converted, duly endorsed in a form satisfactory to the Corporation,
at the office of the Corporation or the Corporation's transfer agent for
the Series B Preferred, (ii) notify the Corporation at such office that he
elects to convert Series B Preferred and the number of shares he wishes to
convert, (iii) state in writing the name or names in which he wishes the
certificate or certificates for shares of Common Stock to be issued, and
(iv) pay any transfer or similar tax if required. In the event that a
Holder fails to notify the Corporation of the number of shares of Series B
Preferred which he wishes to convert, he shall be deemed to have elected to
convert all shares represented by the certificate or certificates
surrendered for conversion. The date on which the Holder satisfies all
those requirements is the "Conversion Date." As soon as practical, the
Corporation shall deliver a certificate for the number of full shares of
Common Stock issuable upon the conversion, a payment in cash for any
fractional share and a new certificate representing the unconverted
portion, if any, of the shares of Series B Preferred represented by the
certificate or certificates surrendered for conversion. The person in
whose name the Common Stock certificate is registered shall be treated as
the shareholder of record on and after the Conversion Date. No payment or
adjustment will be made for accumulated and unpaid dividends on converted
shares of Series B Preferred or for dividends on any Common Stock issued
upon such conversion. A share of Series B Preferred surrendered for
conversion during the period from the close of business on any record date
for the payment of dividends to the opening of business of the
corresponding Dividend Payment Date must be accompanied by a payment in
cash in an amount equal to the dividend payable on such Dividend Payment
Date, unless such share of Series B Preferred has been called for
redemption on a Redemption Date occurring during the period from the close
of business on any record date for the payment of dividends to the close of
business on the Business Day immediately following the corresponding
Dividend Payment Date. The dividend payment with respect to a share of
Series B Preferred called for redemption on a date during the period from
the close of business on any record date for the payment of dividends to
the close of business on the Business Day immediately following the
corresponding Dividend Payment Date will be payable on such Dividend
Payment Date to the record Holder of such share on such record date,
notwithstanding the conversion of such share after such record date and
prior to such Dividend Payment Date, and the Holder converting such share
of Series B Preferred need not include a payment of such dividend amount
upon surrender of such share of Series B Preferred for conversion. If a
Holder of Series B Preferred converts more than one share at a time, the
number of full shares of Common Stock issuable upon conversion shall be
based on the total value of all shares of Series B Preferred converted. If
the last day on which Series B Preferred may be converted is not a Business
Day, Series B Preferred may be surrendered for conversion on the next
succeeding Business Day.
(c) The Corporation shall not issue a fractional share of Common
Stock upon conversion of Series B Preferred. Instead the Corporation shall
pay a cash adjustment for the current market value of the fractional share.
The current market value of a fraction of a share shall be determined as
follows: Multiply the current market price of a full share by the
fraction. Round the result to the nearest cent. The current market price
of a share of Common Stock is the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date.
(d) If a Holder converts shares of Series B Preferred, the
Corporation shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the conversion.
However, the Holder shall pay any such tax that is due because the shares
are issued in a name other than the Holder's name.
(e) The Corporation has reserved and shall continue to reserve
out of its authorized but unissued Common Stock or its Common Stock held in
treasury enough shares of Common Stock to permit the conversion of the
Series B Preferred in full. All shares of Common Stock that may be issued
upon conversion of Series B Preferred shall be fully paid and
nonassessable. The Corporation shall endeavor to comply with all
securities laws regulating the offer and delivery of shares of Common Stock
upon conversion of Series B Preferred and shall endeavor to list such
shares on each national securities exchange on which the Common Stock is
listed.
(f) In case the Corporation shall pay or make a dividend or
other distribution on any class of capital stock of the Corporation in
Common Stock, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator of
which shall be the sum of such number of shares and the total number shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination of the holders entitled to such
dividends and distributions. For the purposes of this Section 5(f), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation. The Corporation will not
pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Corporation.
(g) In case the Corporation shall issue rights, options or
warrants to all holders of its Common Stock entitling them to subscribe
for, purchase or acquire shares of Common Stock at a price per share less
than the current market price per share (determined as provided in Section
5(k) below) of Common Stock on the date fixed for the determination of
shareholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following
the date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription, purchase or acquisition would
purchase at such current market price and the denominator of which shall be
the number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription, purchase or acquisition, such
reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination of the holders
entitled to such rights, options or warrants. However, upon the expiration
of any right, option or warrant to purchase Common Stock, the issuance of
which resulted in an adjustment in the Conversion Price pursuant to this
Section 5(g), if any such right, option or warrant shall expire and shall
not have been exercised, the Conversion Price shall be recomputed
immediately upon such expiration and effectively immediately upon such
expiration shall be increased to the price it would have been (but
reflecting any other adjustments to the Conversion Price made pursuant to
the provisions of this Section 5 after the issuance of such rights, options
or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights, options or warrants been made on the basis of
offering for subscription or purchase only that number of shares of Common
Stock actually purchased upon the exercise of such rights, options or
warrants. No further adjustment shall be made upon exercise of any right,
option or warrant if any adjustment shall have been made upon the issuance
of such security. For the purposes of this Section 5(g), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Corporation. The Corporation will not issue
any rights, options or warrants in respect of shares of Common Stock held
in the treasury of the Corporation.
(h) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be reduced, and,
conversely, in case the outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be increased to equal
the product of the Conversion Price in effect on such date and a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such subdivision or combination, as the
case may be, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such subdivision or combination,
as the case may be. Such reduction or increase, as the case may be, shall
become effective immediately after the opening of business on the day
following the date upon which such subdivision or combination becomes
effective.
(i) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock (i) evidences of its
indebtedness or (ii) shares of any class of capital stock, cash or other
assets (including securities, but excluding (A) any rights, options or
warrants referred to in Section 5(g) above, (B) any dividend or
distribution referred to in Section 5(f) above and (C) cash dividends paid
from the Corporation's retained earnings, unless the sum of (1) all such
cash dividends and distributions made within the preceding 12 months in
respect of which no adjustment has been made and (2) any cash and the fair
market value of other consideration paid in respect of any repurchases of
Common Stock by the Corporation or any of its subsidiaries within the
preceding 12 months in respect of which no adjustment has been made,
exceeds 20% of the Corporation's market capitalization (being the product
of the then current market price per share (determined as provided in 5(k)
below) of the Common Stock times the aggregate number of shares of Common
Stock then outstanding) on the record date for such distribution), then in
each case, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
shall be the current market price per share (determined as provided Section
5(k) below) of the Common Stock on such date of determination (or, if
earlier, on the date on which the Common Stock goes "ex-dividend" in
respect of such distribution) less the then fair market value as determined
by the Board of Directors (whose determination shall be conclusive and
shall be described in a statement which shall be available upon request) of
the portion of the capital stock, cash or other assets or evidences of
indebtedness so distributed (and for which an adjustment to the Conversion
Price has not previously been made pursuant to the terms of this Section 5)
applicable to one share of Common Stock, and the denominator shall be such
current market price per share of the Common Stock, such adjustment to
become effective immediately after the opening of business on the day
following such date of determination of the holders entitled to such
distribution. The following transactions shall be excluded from the
foregoing clauses (1) and (2): (I) repurchases of Common Stock issued under
the Corporation's stock incentive programs and (II) dividends or
distributions payable-in-kind in additional shares of, or warrants, rights,
calls or options exercisable for or convertible into additional shares of
Junior Securities.
(j) The reclassification or change of Common Stock into
securities, including securities other than Common Stock, (other than any
reclassification upon a consolidation or merger to which Section 5(r) below
shall apply) shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date
fixed for the determination of holders of Common Stock entitled to receive
such distribution" within the meaning of Section 5(i) above), and (ii) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into
the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the
day upon which such subdivision becomes effective" or "the day upon which
such combination becomes effective," as the case may be, and "the day upon
which such subdivision or combination becomes effective" within the meaning
of Section 5(h) above).
(k) For the purpose of any computation under Section (g) or (i)
above, the current market price per share of Common Stock on any day shall
be deemed to be the average of the Closing Prices of the Common Stock for
the 10 consecutive Trading Days preceding such day.
(l) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made to the nearest cent or to the nearest 1/100th
of a share, as the case may be.
(m) For purposes of this Section 5, "Common Stock" includes any
stock of any class of the Corporation which has no preference in respect of
dividends or of amounts payable the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation and which is not
subject to redemption by the Corporation. However, subject to the
provisions of Section 5(r) below, shares issuable on conversion of shares
of Series B Preferred shall include only shares of the class designated as
Common Stock of the Corporation on the Series B Preferred Issue Date or
shares of any class or classes resulting from any reclassification thereof
and which have no preferences in respect of dividends or amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and which are not subject to redemption by
the Corporation; provided that, if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(n) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No
adjustment in the Conversion Price need be made under Sections 5(f), (g)
and (i) above if the Corporation issues or distributes to each Holder of
Series B Preferred the shares of Common Stock, evidences of indebtedness,
assets, rights, options or warrants referred to in those Sections which
each Holder would have been entitled to receive had Series B Preferred been
converted into Common Stock prior to the happening of such event or the
record date with respect thereto.
(o) Whenever the Conversion Price is adjusted, the Corporation
shall promptly mail to Holders of Series B Preferred, first class, postage
prepaid, a notice of the adjustment. The Corporation shall file with the
transfer agent for the Series B Preferred, if any, a certificate from the
Corporation's independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. Subject to
Section 5(p) below, the certificate shall be conclusive evidence that the
adjustment is correct.
(p) The Corporation from time to time may reduce the Conversion
Price if it considers such reductions to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the holders of Common Stock by any
amount, but in no event may the Conversion Price be less than the par value
of a share of Common Stock. Whenever the Conversion Price is reduced, the
Corporation shall mail to Holders of Series B Preferred a notice of the
reduction. The Corporation shall mail, first class, postage prepaid, the
notice at least 15 days before the date the reduced Conversion Price takes
effect. The notice shall state the reduced Conversion Price and the period
it will be in effect. A reduction of the Conversion Price does not change
or adjust the Conversion Price otherwise in effect for purposes of Sections
5(f), (g), (h) and (i) above.
(q) If:
(i) the Corporation takes any action which would require an
adjustment in the Conversion Price pursuant to Section 5(g), (i) or
(j) above;
(ii) the Corporation consolidates or merges with, or
transfers all or substantially all of its assets to, another
corporation, and shareholders of the Corporation must approve the
transaction; or
(iii) there is a dissolution or liquidation of the
Corporation;
the Corporation shall mail to Holders of the Series B Preferred, first
class, postage prepaid, a notice stating the proposed record or effective
date, as the case may be. The Corporation shall mail the notice at least
10 days before such date. However, failure to mail the notice or any
defect in it shall not affect the validity of any transaction referred to
in clause (i), (ii) or (iii) of this Section 5(q).
(r) In the case of any consolidation of the Corporation or the
merger of the Corporation with or into any other entity or the sale or
transfer of all or substantially all of the assets of the Corporation
pursuant to which the Corporation's Common Stock is converted into other
securities, cash or assets, upon consummation of such transaction, each
share of Series B Preferred shall automatically become convertible into the
kind and amount of securities, cash or other assets receivable upon the
consolidation, merger, sale or transfer by a holder of the of shares of
Common Stock into which such share of Series B Preferred might have been
converted immediately prior to such consolidation, merger, transfer or sale
(assuming such holder of Common Stock failed to exercise any rights of
election and received per share the kind and amount receivable per share by
a plurality of non-electing shares). Appropriate adjustment (as determined
by the Board of Directors of the Corporation) shall be made in the
application of the provisions herein set forth with respect to the rights
and interests thereafter of the Holders of Series B Preferred, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustment of the Conversion Price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other securities or property thereafter deliverable upon the
conversion of Series B Preferred. If this Section 5(r) applies, Sections
5(f), (g), (h), (i) and (j) do not apply.
(s) In any case in which this Section 5 shall require that an
adjustment as a result of any event become effective from and after a
record date, the Corporation may elect to defer until after the occurrence
of such event (A) the issuance to the Holder of any shares of Series B
Preferred converted after such record date and before the occurrence of
such event of the additional shares of Common Stock issuable upon such
conversion over and above the shares issuable on the basis of the
Conversion Price in effect immediately prior to adjustment and (B) a cash
payment for any remaining fractional shares of Common Stock as provided in
Section 3(c) above; provided, however, that if such event shall not have
occurred and authorization of such event shall be rescinded by the
Corporation, the Conversion Price shall be recomputed immediately upon such
recision to the price that would have been in effect had such event not
been authorized, provided that such recision is permitted by and effective
under applicable laws.
(t) All shares of Series B Preferred converted pursuant to this
Section 5 shall be restored to the status of authorized and unissued shares
of preferred stock, without designation as to series and may thereafter be
reissued as shares of any series of preferred stock.
Section 6. Redemption.
(a) Optional Redemption. (i) The Corporation may, at the
option of the Board of Directors, redeem at any time on or after August 15,
2000, from any source of funds legally available therefor, from time to
time, in whole or in part, in the manner provided in Section 6(c) hereof,
any or all of the shares of the Series B Preferred, at the redemption
prices set forth below if redeemed during the 12-month period beginning on,
August 15 of each of the years indicated below:
Year Redemption Prices
2000 . . . . . . . . . . . . . . . . $26.10 per share
2001 . . . . . . . . . . . . . . . . $25.73 per share
2002 . . . . . . . . . . . . . . . . $25.37 per share
2003 . . . . . . . . . . . . . . . . $25.00 per share
plus, in each case, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Redemption Date) (the "Optional Redemption Price"), provided, that no
optional redemption pursuant to this Section 6(a)(i) shall be authorized or
made unless prior to giving the applicable Redemption Notice all
accumulated and unpaid dividends for Dividend Periods ended prior to the
date of such Redemption Notice shall have been paid in cash.
(ii) Notwithstanding subsection (i) above, on or after
August 15, 1999, the Corporation may, at its option, redeem the Series
B Preferred at $26.47 per share plus accumulated and unpaid dividends
thereon as of the last Dividend Payment Date if the Common Stock bid
price has averaged not less than 1.5 times the Conversion Price during
the preceding 20 consecutive Trading Days.
(iii) In the event of a redemption pursuant to Section
6(a)(i) or Section 6(a)(ii) hereof of only a portion of the then
outstanding shares of the Series B Preferred, the Corporation shall
effect such redemption pro rata according to the number of shares held
by each Holder of the Series B Preferred or by lot, as may be
determined by the Corporation in its sole discretion; provided that
the Corporation may redeem all shares held by Holders of fewer than
100 shares of Series B Preferred (or by Holders that would hold fewer
than 100 shares of Series B Preferred following such redemption) prior
to its redemption of other shares of Series B Preferred.
(b) Mandatory Redemption. (i) On August 15, 2004, the
Corporation shall redeem from any source of funds legally available
therefor, in the manner provided in Section 6(c), all of the then
outstanding shares of Series B Preferred at a redemption price equal to
100% of the then effective Liquidation Preference per share, plus an amount
equal to all accumulated and unpaid dividends thereon as of the last
Dividend Payment Date (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Redemption Date) (the "Mandatory Redemption Price"). The Mandatory
Redemption Price shall be made at the option of the Corporation either in
(a) cash or (b) Common Stock valued at 95% of the average Closing Price of
the Common Stock during the 20 Trading Days prior to such redemption date.
(ii) If the Corporation is unable or shall fail to
discharge its obligation to redeem all outstanding shares of Series B
Preferred pursuant to this Section 6(b) (the "Mandatory Redemption
Obligation"), the Mandatory Redemption Obligation shall be discharged
as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as the Mandatory Redemption
Obligation with respect to the Series B Preferred shall not be fully
discharged, the Corporation shall not, directly or indirectly, redeem,
purchase or otherwise acquire any Parity Security or discharge any
mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Parity Securities.
(c) Procedures for Redemption. (i) At least 30 days and not
more than 60 days prior to the Redemption Date of the Series B Preferred,
the Corporation shall make a public announcement of the redemption, and
shall mail written notice (the "Redemption Notice") by first class mail,
postage prepaid, to each Holder of record on the record date fixed for such
redemption of the Series B Preferred at such Holder's address as the same
appears on the stock register of the Corporation, provided that no failure
to give such notice nor any deficiency therein shall affect the validity of
the procedure for the redemption of any shares of Series B Preferred to be
redeemed except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
(A) that the redemption is pursuant to Section 6(a)(i)
or 6(b)(i), as applicable hereof;
(B) the redemption price;
(C) whether all or less than all the outstanding
shares of the Series B Preferred are to be redeemed and the total
number of shares of the Series B Preferred being redeemed;
(D) the number of shares of Series B Preferred, held
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(E) the Redemption Date;
(F) that the Holder is to surrender to the
Corporation, at the place or places where certificates for shares
of Series B Preferred are to be surrendered for redemption, in
the manner and at the price designated, his certificate or
certificates representing the shares of Series B Preferred to be
redeemed;
(G) the name of any bank or trust company performing
the duties referred to in Section 6(c)(iv) hereof; and
(H) that dividends on the shares of the Series B
Preferred to be redeemed shall cease to accumulate on such
Redemption Date unless the Corporation defaults in the payment of
the redemption price.
(ii) Each Holder of Series B Preferred shall surrender the
certificate or certificates representing such shares of Series B
Preferred to the Corporation, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date
the full redemption price for such shares shall be payable in cash to
the Person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be canceled
and retired. In the event that less than all of the shares
represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(iii) Unless the Corporation defaults in the payment in
full of the applicable redemption price, dividends on the Series B
Preferred called for redemption shall cease to accumulate on the
Redemption Date, and the Holders of such redemption shares shall cease
to have any further rights with respect thereto on the Redemption
Date, other than the right to receive the redemption price without
interest.
(iv) If a Redemption Notice shall have been duly given or
if the Corporation shall have given to the bank or trust company
hereinafter referred to irrevocable authorization promptly to give
such notice, and if on or before the Redemption Date specified therein
an amount in cash equal to the full redemption price shall have been
segregated and irrevocably deposited by the Corporation with such bank
or trust company in trust for the pro rata benefit of the Holders of
the Series B Preferred called for redemption, then, notwithstanding
that any certificate for shares so called for redemption shall not
have been surrendered for cancellation, from and after the close of
business on the day on which such funds are so deposited, all shares
so called, or to be so called pursuant to such irrevocable
authorization, for redemption shall no longer be deemed to be
outstanding and all rights with respect of such shares shall forthwith
cease and terminate and, for the purposes of Section 6(c)(i)(H) and
6(c)(iii) above, the Corporation will be deemed to have paid the
redemption price on the Redemption Date, except only the right of
Holders thereof to receive from such bank or trust company at any time
after the time of such deposit the funds so deposited, without
interest, and the right of the Holders thereof to convert such shares
as provided in Section 5 hereof to the Business Day preceding the
Redemption Date. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the Unites States of
America or any state thereof, shall have capital, surplus and
undivided profits aggregating at least $100,000,000 according to its
last published statement of condition, and shall be identified in the
Redemption Notice. Any interest accrued on such funds shall be paid to
the Corporation from time to time. Any funds so set aside or
deposited, as the case may be, in respect of shares of the Series B
Preferred that are subsequently converted shall be promptly returned
to the Corporation. Any funds so set aside or deposited, as the case
may be, and unclaimed at the end of three years from such redemption
shall, to the extent permitted by law, be released or repaid to the
Corporation, after which repayment the Holders of the shares so called
for redemption shall look only to the Corporation for payment thereof.
Section 7. Voting Rights.
(a) The Holders of shares of Series B Preferred, except as
otherwise required under New Jersey law, the Restated Certificate of
Incorporation of the Corporation, as amended (the "Restated Certificate of
Incorporation"), or as set forth in Sections 7(b), (c) or (d) below, shall
not be entitled or permitted to vote on any matter required or permitted to
be voted upon by the shareholders of the Corporation.
(b) (i) So long as any shares of the Series B Preferred are
outstanding, the Corporation shall not authorize or issue any new class of
Parity Securities or Senior Securities, or increase the authorized number
of shares of any such class or series, or reclassify any authorized stock
of the Corporation into any such class or series, or authorize any
obligation or security convertible into or evidencing the right to purchase
any such Parity Securities or Senior Securities unless the pro forma ratios
for the latest twelve months of (A) net income available for preferred
dividends to preferred dividends is not less than 1:1 and (B) EBITDA less
capital expenditures, securities amortization and redemption, cash, taxes
and changes in working capital to preferred dividends is not less than
1.2:1 without the affirmative vote or consent of Holders of at least a
majority of the outstanding shares of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting.
(ii) So long as any shares of the Series B Preferred are
outstanding and without the affirmative vote or consent of Holders of
at least a majority of the issued and outstanding shares of Series B
Preferred, voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting, the Corporation shall not
amend the Restated Certificate of Incorporation so as to affect
adversely the voting rights, preferences, privileges or relative,
participating, optional or other specified rights of Holders of shares
of Series B Preferred or to authorize the issuance of any additional
shares of Series B Preferred; provided that any such amendment that
adversely changes the dividend payable on, or the Liquidation
Preference of, the Series B Preferred shall require the affirmative
vote or consent of all Holders of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(iii) and so long as any shares of the Series B Preferred
are outstanding, the Corporation shall not, amend or modify the
Exchange Note Indenture from the form as existing on the date of issue
of the Series B Preferred (except as expressly provided therein),
until the exchange of Series B Preferred for Exchange Notes) without
the affirmative vote or consent of Holders of at least a majority of
the issued and outstanding shares of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(c) (i) If the Corporation fails to (A) declare and pay in full
dividends accumulated and owing on any Dividend Payment Date for more than
four consecutive Dividend Payment Dates (a "Dividend Default"); or (B)
satisfy any Mandatory Redemption Obligation with respect to the Series B
Preferred or to make a Series B Preferred Change of Control Offer or to
repurchase all of the Series B Preferred validly tendered in a Series B
Preferred Change of Control Offer pursuant to the provisions of Section 9
hereof (a "Change of Control Default") (in each case, a "Voting Rights
Triggering Event"), then the number of directors consisting the Board of
Directors shall thereupon automatically be increased by one, in the case of
clause (A) above and two, in the case of clause (B) above, and the Holders
of a majority of the outstanding shares of Series B Preferred, voting
separately as one class (or as a class together with the holders of shares
of Parity Securities, if such holders are entitled to elect additional
directors pursuant to any provisions of the Restated Certificate of
Incorporation that are similar to those of the Holders of the Series B
Preferred), shall be entitled to elect such members to the Board of
Directors at a special meeting therefor called upon the occurrence of such
Voting Rights Triggering Event and at every subsequent meeting at which the
terms of office of the directors so elected expire. In no event shall the
holders of the Series B Preferred and the holders of Parity Securities
voting together as a class be entitled to elect a total of more than two
additional directors to the Board of Directors of the Corporation.
(ii) The right of the Holders of Series B Preferred voting
separately as one class to elect members of the Board of Directors as
set forth in Section 7(c)(i) above shall continue until such time as
(A) in the event such right arises due to a Dividend Default, all
accumulated dividends that are in arrears on the Series B Preferred
are paid in full; and (B) in the event such right arises because a
Change of Control Default, the Corporation remedies any such failure,
breach or default, at which time (Y) the special right of such Holders
so to vote for the election of directors and (Z) the term of office of
any directors elected pursuant to Section 7(c)(i) shall terminate, and
the directors elected by the holders of Common Stock shall constitute
the entire Board of Directors and the authorized number of directors
of the Corporation shall thereupon return to the number of authorized
directors otherwise in effect, but subject always to the same
provisions for the renewal and divestment of such special voting
rights in the case of any future Voting Rights Triggering Event. At
any time after voting power to elect directors shall have become
vested and be continuing in the Holders of shares of the Series B
Preferred pursuant to Section 7(c)(i) hereof or if vacancies shall
exist in the offices of directors elected by the Holders of shares of
the Series B Preferred, a proper officer of the Corporation may, and
upon the written request any Holder of record of shares of Series B
Preferred then outstanding addressed to the Secretary of the
Corporation shall, call a special meeting of the Holders of Series B
Preferred, for the purpose of electing the directors that such Holders
are entitled to elect. If such meeting shall not be called by the
proper officer of the Corporation within 30 days after personal
service of such written request upon the Secretary of the Corporation,
or within 30 days after mailing the same within the United States by
certified mail, addressed to the Secretary of the Corporation at its
principal executive offices, then any Holder of record of outstanding
shares of the Series B Preferred may designate in writing one of their
number to call such meeting at the expense of the Corporation, and
such meeting may be called by the Person so designated upon the notice
required for special meetings of shareholders of the Corporation and
shall he held at the place for holding the annual meetings of
shareholders or such other place in the United States as shall be
designated in such notice. Notwithstanding the provisions of this
Section 7(c)(ii), no such special meeting shall be called if any such
request is received less than 30 days before the date fixed for the
next ensuing annual or special meeting of shareholders of the
Corporation. Any Holder of shares of the Series B Preferred so
designated shall have, and the Corporation shall provide, access to
the lists of Holders of shares of the Series B Preferred for purposes
of calling a meeting pursuant to the provisions of this Section
7(c)(ii).
(iii) At any meeting held for the purpose of electing
directors at which the Holders of Series B Preferred shall have the
right, voting separately as one class, to elect directors as
aforesaid, the presence in person or by proxy of the Holders of at
least a majority of the outstanding Series B Preferred shall be
required to constitute a quorum of such Series B Preferred.
(iv) Directors elected pursuant to this Section 7 shall
serve until the earlier of (A) the next annual meeting of the
shareholders and until their successors are qualified or (B) the time
specified in Section 7(c)(ii) above. Any vacancy occurring in the
office of a director elected by the Holders of shares of the Series B
Preferred may be filled by the Board of Directors with a Person
nominated by the remaining director elected by the Holders of shares
of Series B Preferred (or such Holders and holders of such Parity
Securities) unless and until such vacancy shall be filled by the
Holders of shares of the Series B Preferred (or such Holders and
holders of such Parity Securities) by calling a special meeting of
such Holders as provided in Section 7(c)(ii).
(d) In any case in which the Holders of shares of the Series B
Preferred shall be entitled to vote pursuant to this Section 7 or pursuant
to New Jersey law, each Holder of shares of the Series B Preferred shall be
entitled to one vote for each share of Series B Preferred held.
Section 8. Exchange.
(a) (i) The Corporation at its option may exchange all, but not
less than all, of the then outstanding shares of Series B Preferred into
the Corporation's 8 3/4% Convertible Subordinated Notes due 2004 (the
"Exchange Notes") on any Dividend Payment Date, provided that within 60
days of the Exchange Date, the Corporation shall send a written notice (the
"Exchange Notice") of exchange by mall to each Holder, which notice shall
state: (A) that the Corporation is exercising its option to exchange the
Series B Preferred into Exchange Notes pursuant to the Restated Certificate
of Incorporation; (B) the date of the exchange (the "Exchange Date"), which
date shall not be less than 30 days nor more than 60 days following the
date on which the Exchange Notice is mailed; (C) that the Holder is to
surrender to the Corporation, at the place or places where certificates for
shares of Series B Preferred are to be surrendered for exchange, in the
manner designated in the Exchange Notice, his certificate or certificates
representing the shares of Series B Preferred to be exchanged; (D) that
dividends on the shares of Series B Preferred to be exchanged shall cease
to accumulate on the Exchange Date whether or not certificates for shares
of Series B Preferred are surrendered for exchange on the Exchange Date
unless the Corporation shall default in the delivery of Exchange Notes; and
(E) that interest on the Exchange Notes shall accrue from the Exchange Date
whether or not certificates for shares of Series B Preferred are
surrendered for exchange on the Exchange Date. On the Exchange Date, if the
conditions set forth in clauses (U) through (Y) below are satisfied, the
Corporation shall issue Exchange Notes in exchange for the Series B
Preferred as provided in Section 8(a)(ii), provided that on the Exchange
Date: (U) there are no accumulated and unpaid dividends on the Series B
Preferred (including the dividends payable on such date) or other
contractual impediment to such exchange; (V) there shall be legally
available funds sufficient therefor; (W) the Exchange Note Indenture and
the trustee thereunder shall have been qualified under the Trust Indenture
Act; (X) immediately after giving effect to such exchange, no Default or
Event of Default (each as defined in the Exchange Note Indenture) would
exist under the Exchange Note Indenture; and (Y) the Corporation shall have
delivered to the trustee under the Exchange Note Indenture a written
opinion of counsel, dated the Exchange Date, regarding the satisfaction of
the conditions set forth in clauses (U), (V), and (W). In the event that
the issuance of the Exchange Notes is not permitted on the Exchange Date or
any of the conditions set forth in clauses (U) through (X) of the preceding
sentence are not satisfied on the Exchange Date, the Corporation shall use
its best efforts to satisfy such conditions and effect such exchange as
soon as practicable.
(ii) Upon any exchange pursuant to Section 8(a)(i), Holders
of outstanding shares of Series B Preferred shall be entitled to
receive $1,000 principal amount of Exchange Notes for each 40 shares
of Series B Preferred, plus an amount in cash equal to accumulated and
unpaid dividends (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Exchange Date); provided, that the Corporation shall pay cash in lieu
of issuing an Exchange Note in a principal amount of less than $1,000.
On and after the Exchange Date, unless the Corporation defaults in the
issuance of Exchange Notes in exchange for the Series B Preferred,
dividends will cease to accumulate on the outstanding shares of Series
B Preferred, and all rights of the Holders of Series B Preferred
(except the right to receive the Exchange Notes, an amount in cash
equal to the accumulated and unpaid dividends to the Exchange Date and
cash in lieu of any Exchange Note that is in an amount that is not an
integral multiple of $1,000) will terminate. The Person entitled to
receive the Exchange Notes issuable upon such exchange will be treated
for all purposes as the registered holder of such Exchange Notes.
(b) (i) On or before the Exchange Date, each Holder of Series B
Preferred shall surrender the certificate or certificates representing such
shares of Series B Preferred, in the manner and at the place designated in
the Exchange Notice. The Corporation shall cause the Exchange Notes to be
executed on the Exchange Date and, upon surrender in accordance with the
Exchange Notice of the certificates for any shares of Series B Preferred so
exchanged (properly endorsed or assigned for transfer, if the notice shall
so state), such shares shall be exchanged by the Corporation into Exchange
Notes. The Corporation shall pay interest on the Exchange Notes at the
rate and on the dates specified therein from the Exchange Date.
(ii) If notice has been mailed as aforesaid, and if before
the Exchange Date specified in such notice (A) the Exchange Note
Indenture shall have been duly executed and delivered by the
Corporation and the trustee and (B) all Exchange Notes necessary for
such exchange shall have been duly executed by the Corporation and
delivered to the trustee with irrevocable instructions to authenticate
the Exchange Notes necessary for such exchange, then dividends shall
cease to accumulate on the outstanding shares of Series B Preferred,
and all rights of the Holders of Series B Preferred (except the right
to receive the Exchange Notes, an amount in cash equal to the
accumulated and unpaid dividends to the Exchange Date and cash in lieu
of any Exchange Note that is in an amount that is not an integral
multiple of $1,000) will terminate. The Person entitled to receive the
Exchange Notes issuable upon such exchange will be treated for all
purposes as the holder of such Exchange Notes.
Section 9. Change of Control.
(a) Subject to Section 9(e) hereof, upon the occurrence of a
Change of Control, at the option of the Holders of a majority of the Series
B Preferred, the Corporation shall be required to make an offer (a "Series
B Preferred Change of Control Offer") to each Holder of shares of Series B
Preferred to repurchase all or any part of such Holder's shares of Series B
Preferred at an offer price in cash equal to 100% of the aggregate
Liquidation Preference thereof plus an amount in cash equal to all
accumulated and unpaid dividends (including an amount in cash equal to a
prorated dividend for the period from the last Dividend Payment Date to the
Change of Control Payment Date) thereon to the date of repurchase (the
"Change of Control Payment").
(b) Within 30 days following any Change of Control, the
Corporation shall mail a notice to each Holder describing the transaction
that constitutes the Change of Control, together with such other
information as may be required pursuant to the securities laws, and
stating: (i) that the Change of Control Offer is being made pursuant to the
Restated Certificate of Incorporation and that, to the extent lawful, all
shares of Series B Preferred validly tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"); (iii) that any shares of Series B
Preferred not tendered will continue to accumulate dividends in accordance
with the terms of the Restated Certificate of Incorporation; (iv) that,
unless the Corporation defaults in the payment of the Change of Control
Payment, all shares of Series B Preferred accepted for payment pursuant to
the Change of Control Offer shall cease to accumulate dividends on the
Change of Control Payment Date; and (v) a description of the procedures to
be followed by such Holder in order to have its shares of Series B
Preferred repurchased.
(c) On the Change of Control Payment Date, (i) the Corporation
shall, to the extent lawful, (A) accept for payment shares of Series B
Preferred validly tendered pursuant to the Change of Control Offer and (B)
promptly mail to each Holder of shares of Series B Preferred so accepted
payment in an amount equal to the purchase price for such shares and (ii)
unless the Corporation defaults in the payment for the shares of Series B
Preferred tendered pursuant to the Series B Preferred Change of Control
Offer, dividends will cease to accumulate with respect to the shares of
Series B Preferred tendered and all rights of Holders of such tendered
shares will terminate, except for the right to receive payment therefor, on
the Change of Control Payment Date. The Corporation shall publicly
announce the results of the Series B Preferred Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
(d) The Corporation shall comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of shares of the Series B Preferred in connection with a Change
of Control.
(e) Notwithstanding the foregoing, prior to complying with this
Section 9, but in any event within 90 days following a Change of Control,
the Corporation shall either repay all outstanding indebtedness or obtain
the requisite consents, if any, under all agreements governing outstanding
indebtedness necessary to permit the repurchase of the Preferred stock
required by this Section 9.
(f) Notwithstanding the foregoing, the Corporation will not be
required to make a Change of Control Offer following a Change of Control if
a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in the Restated
Certificate of Incorporation applicable to a Change of Control Offer made
by the Corporation and purchases all of the Series B Preferred validly
tendered and not withdrawn under such Change of Control Offer.
Section 10. Preemptive Rights. No shares of Series B Preferred
shall have any rights of preemption whatsoever as to any securities of the
Corporation, or any warrants, rights or options issued or granted with respect
thereto, regardless of how such securities or such warrants, rights or options
may be designated, issued or granted.
Section 11. Reissuance of Series B Preferred. Shares of Series B
Preferred that have been issued and reacquired in any manner, including shares
purchased or redeemed or exchanged, shall (upon compliance with any applicable
provisions of the laws of the State of New Jersey) have the status of authorized
but unissued shares of preferred stock of the Corporation undesignated as to
series and may with any and all other authorized buy unissued shares of
preferred stock of the Corporation be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the
Corporation, except that any issuance or reissuance of such shares of Series B
Preferred must be in compliance with the terms hereof.
Section 12. Business Day. If any payment, redemption or exchange
shall be required by the terms hereof to be made on a day that is not a Business
Day, such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
Section 13. Merger, Consolidation and Sale of Assets. Without the
vote or consent of the Holders of a majority of the then outstanding shares of
Series B Preferred, the Corporation may not consolidate or merge with or into,
or sell, assign, transfer, lease, convey or otherwise dispose of 80% or more of
its assets to, any person unless (a) the entity formed by 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 (in any
such case, the "resulting entity") is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia;
(b) if the Corporation is not the resulting entity, the Series B Preferred is
converted into or exchanged for and becomes shares of such resulting entity,
having in respect of such resulting entity the same (or more favorable) powers,
preferences and relative, participating, optional or other special rights
thereof that the Series B Preferred had immediately prior to such transaction;
and (c) immediately after giving effect to such transaction, no Voting Rights
Triggering Event has occurred and is continuing. The resulting entity of such
transaction shall thereafter be deemed to be the "Corporation" for all purposes
of the Restated Certificate of Incorporation. If a Holder votes in favor of any
of the events specified above, such Holder may not exercise any rights such
Holder may have under Section 9 hereof as a result of the occurrence of such
event.
Section 14. Reports. Whether or not the Corporation is required to
do so by the rules and regulations of the Commission, the Corporation shall file
with the Commission (unless the Commission will not accept such a filing) and,
within 15 days of filing, or attempting to file, the same with the Commission,
furnish to the Holders of the Series B Preferred (a) all quarterly and annual
financial and other 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" and, with respect to the
annual information only, a report thereon by the Corporation's certified
independent accountants, and (b) 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 addition, the Corporation shall furnish to the Holders of
the Series B Preferred, prospective purchasers of shares of Series B Preferred
and securities analysts, upon their request, the information, if any, required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 15. Mutilated or Missing Series B Preferred Certificates. If
any of the Series B Preferred certificates shall be mutilated, lost, stolen or
destroyed, the Corporation shall issue, in exchange and in substitution for and
upon cancellation of the mutilated Series B Preferred certificate, or in lieu of
and substitution for the Series B Preferred certificate lost, stolen or
destroyed, a new Series B Preferred certificate of like tenor and representing
an equivalent amount of shares of Series B Preferred, but only upon receipt of
evidence of such loss, theft or destruction of such Series B Preferred
certificate and indemnity, if requested, satisfactory to the Corporation and the
transfer agent (if other than the Corporation).
Section 16. Headings of Subdivisions. The headings of various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions thereof.
Section 17. Severability of Provisions. If any right, preference or
limitation of the Series B Preferred set forth in the Restated Certificate of
Incorporation as amended hereby (or as the Restated Certificate of Incorporation
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule or law or public policy, all other rights,
preferences and limitations set forth in the Restated Certificate of
Incorporation, as amended, which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
Section 18. Notice of the Corporation. All notices other
communications required or permitted to be given to the Corporation hereunder
shall be made by first class mail, postage prepaid, to the Corporation at its
principal executive offices (currently located on the date of the adoption of
these resolutions at the following address: KTI, Inc., 7000 Boulevard East,
Guttenberg, New Jersey 07093, Attention: General Counsel). Minor imperfections
in any such notice shall not affect the validity thereof.
Section 19. Limitations. Except as may otherwise be required by law,
the shares of Series B Preferred shall not have any powers, preferences or
relative, participating, optional or other special rights other than those
specifically set forth in the Restated Certificate of Incorporation (as it may
be amended from time to time).
Section 20. Definitions. As used in the Restated Certificate of
Incorporation, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
"Affiliate" of any specified Person means an "affiliate" of such
Person, as such term is defined for purposes of Rule 144 under the Securities
Act.
"Business Day" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) or corporate stock or
partnership interests, whether common or preferred.
"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 is subsidiaries,
taken as a whole; (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 such terms are used in Section 13(d)(3) of
the Exchange Act), other than a group including any one of Nicholas Mennona Jr.,
Martin Sergi or Ross Piratesh, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of more than 50% of the voting
power of the outstanding voting stock of the Corporation, unless the Closing
Price per share of Common Stock for any five Trading Days within the period of
ten consecutive Trading Days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the Conversion Price in effect on
each such Trading Day; or (iv) the first day on which more than a majority of
the Board of Directors are not Continuing Directors; provided, however, that a
transaction in which the Corporation becomes a subsidiary of another entity
shall not constitute a Change of Control if (A) the shareholders of the
Corporation immediately prior to such transaction "beneficially own" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly through one or more intermediaries, at least a majority of the
voting power of the outstanding voting stock of the Corporation immediately
following the consummation of such transaction and (B) immediately following the
consummation of such transaction, no "person" or "group" (as such terms are
defined above), other than such other entity (but including holders of equity
interests of such other entity), "beneficially owns" (as such term is defined
above), directly or indirectly through one or more intermediaries, more than 50%
of the voting power of the outstanding voting stock of the Corporation.
"Change of Control Default" has the meaning set forth in Section 7(c)
hereof.
"Change of Control Payment" has the meaning set forth in Section 9(a)
hereof.
"Change of Control Payment Date" has the meaning set forth in Section
9(b) hereof.
"Closing Price" means, for each Trading Day, the last reported sale
price regular way on the principal exchange, including the Nasdaq National
Market, on which the applicable security is listed or quoted or, if the
applicable security is not so listed or quoted, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Corporation for
that purpose. In the event that the Closing Price cannot be determined as
aforesaid, the Board of Directors of the Corporation shall determine the Closing
Price on the basis of such quotations as it in good faith considers appropriate.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, no par value, of the
Corporation.
"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 the
Board of Directors on the date of original issuance of the Series B Preferred or
(ii) was nominated for election to the Board of Directors with the approval of,
or whose election to the Board of Directors was ratified by, at least two-thirds
of the Continuing Directors who were members of the Board of Directors at the
time of such nomination or election.
"Conversion Date" has the meaning set forth in Section 5(b) hereof.
"Conversion Price" shall initially mean $11.75 and thereafter shall be
subject to adjustment from time to time pursuant to the terms of Section 5
hereof.
"Dividend Default" has the meaning set forth in Section 7(c) hereof.
"Dividend Payment Date" means February 1, May 1, August 1 and November
1 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring items.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" has the meaning set forth in Section 8(a) hereof.
"Exchange Notes" has the meaning set forth in Section 8(a) hereof.
"Exchange Note Indenture" means that certain indenture under which the
Exchange Notes will be issued.
"Exchange Notice" has the meaning set forth in Section 8(a) hereof.
"Holder" means a holder of shares of Series B Preferred as reflected
in the stock records of the Corporation or the transfer agent for the Series B
Preferred.
"Initial Dividend Period" means the dividend period commencing on the
Series B Preferred Issue Date and ending on October 31, 1997.
"Junior Securities" has the meaning set forth in Section 2 hereof.
"Liquidation Preference" has the meaning set forth in Section 1
hereof.
"Mandatory Redemption Obligation" has the meaning set forth in Section
6(b) hereof.
"Mandatory Redemption Price" has the meaning set forth in Section 6(b)
hereof.
"Optional Redemption Price" has the meaning set forth in Section 6(a)
hereof.
"Parity Securities" has the meaning set forth in Section 2 hereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Quarterly Dividend Period" shall mean the quarterly period commencing
on each February 1, May 1, August 1 and November 1 and ending on the day before
the following Dividend Payment Date.
"Redemption Date" with respect to any shares of Series B Preferred,
means the date on which such shares of Series B Preferred are redeemed by the
Corporation.
"Redemption Notice" has the meaning set forth in Section 6(c) hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement with respect to the Series B Preferred, dated as of August 7, 1997, by
and between the Corporation and Credit Research & Trading LLC, as such agreement
may be amended, modified or supplemented from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Securities" has the meaning set forth in Section 2 hereof.
"Series B Preferred" has the meaning set forth in Section 1 hereof.
"Series B Preferred Change of Control Offer" has the meaning set forth
in Section 9(a) hereof.
"Series B Preferred Issue Date" means August 15, 1997.
"Trading Day" means any day on which (i) the Nasdaq National Market or
other applicable stock exchange or market is open for business and (ii) the
Common Stock is traded.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Voting Rights Triggering Event" has the meaning set forth in Section
7(c) hereof."
3. Such resolution was duly adopted by the Board of Directors of the
Corporation on August 7, 1997.
4. The Restated Certificate of Incorporation, as amended, is amended
so that the designation and number of shares of each class and series acted upon
in the resolution, and the relative rights, preferences and limitations of each
such class and series, are as stated in the resolution.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 7th day of August, 1997.
KTI, Inc.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President