CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES A
PARTICIPATING PREFERRED STOCK
NEW ENGLAND BUSINESS SERVICE, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Richard H. Rhoads, Chairman of the Board, and Paul F. Robinson,
Secretary of New England Business Service, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the said Corporation, the said Board of
Directors on October 27, 1989, adopted the following resolution creating a
series of 400,000 share of Preferred Stock designed as Series A Participating
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Series A Participating Preferred Stock of the
Corporation of the par value of one dollar ($1.00) per share be and it hereby is
created, and that the amount thereof and the designation, powers, preferences
and rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount. The share of such series shall be
----------------------
designated as "Series A Participating Preferred Stock" and the initial number of
shares constituting such series shall be 400,000.
Section 2. Dividends and Distributions.
---------------------------
(A) The "quarterly dividend periods" for purposes of accrual and
payment of dividends upon Series A Participating Preferred Stock shall commence
on the 28th day following the fourth Friday of January, April, July and October
in each year (each such date being referred to herein as a "Quarterly Dividend"
"Payment Date"), or in the case of original issuance, on the date of original
issuance, and shall end on and include the day next preceding the first date of
the next quarterly dividend period. The dividend rate per share on the shares of
Series A Participating Preferred Stock for each quarterly dividend period shall
be equal to the greater of (a) $5.00 or (b) subject to adjustment as hereinafter
provided, 100 times the aggregate amount per share of all cash dividends and 100
times the aggregate per share amount (payable in cash based upon the fair market
value as of the time of payment of distribution) of all non-cash dividends or
other distributions (other than stock dividends or stock splits) declared on the
common stock, par value $1.00 per share, of this Corporation (the "Common
Stock") during the
immediately preceding quarterly dividend period, or, with respect to the first
quarterly dividend period, since the first issuance of any share or fraction of
a share of Series A Participating Preferred Stock. In the event the Corporation
shall at any time after October 27, 1989 (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of Series A
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue or such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 45 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the number
of votes per share to which holders of shares of Series A Participating
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
-2-
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, as from time to time amended, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Participating Preferred and the
holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth in Section 11 below or as otherwise
provided by law, holders of Series A Participating Stock shall have no
special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of Common Stock or other stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Participating Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Participating Preferred, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled; or
(iii) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after
-3-
consideration of the respective annual dividend rates and other
relative rights and preferences of such shares, shall determine in
good faith will result in fair and equitable treatment among them.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Participating
-----------------
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as shares of Series A
Participating Preferred Stock or as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth in any other
Certificate of Designation creating a series of Preferred Stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of Common Stock or other stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A
Participating Preferred Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of Series A
Participating Preferred Stock unless, prior thereto, the holders of share of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in Subparagraph C
below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock), hereinafter referred to as
the "Adjustment Number". Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Participating Preferred Stock and Common Stock, respectively,
holders of Series A Participating Preferred Stock and holders of share of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with respect
to such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed
-4-
ratably to the holders of the Series A Participating Preferred Stock and such
parity shares in proportion to their respective liquidation preferences. In the
event that there are sufficient assets to pay in full the Series A Liquidation
Preference and all liquidation preferences ranking on a parity with it, but not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
(C) In the event the Corporation shall at any time after the
October 27, 1989, (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or other property, then in any such case each share of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed into such other stock or securities, cash and/or other
property having value equal to 100 times the aggregate value of stock,
securities, cash and/or any other property into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination, consolidation or reclassification
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the exchange ratio of 100:1
provided for in the preceding sentence with respect to the exchange or change of
shares of Series A Participating Preferred Stock shall be adjusted by
multiplying such amount by a ratio, the numerator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Participating
-------------
Preferred Stock shall not be redeemable.
Section 9. Designation of Additional Preferred Stock. Nothing herein
-----------------------------------------
shall preclude the Board of Directors from increasing the number of authorized
shares of Preferred Stock of the Corporation designated as Series A
Participating Preferred Stock and having the voting powers, preferences and
relative, participating and other rights provided herein for such series.
Nothing herein shall preclude the Board of Directors from designating other
authorized shares of Preferred Stock as one of more other series ranking on a
parity with or prior to the Series A Participating Preferred Stock as to the
payment of dividends or the distribution of assets or otherwise.
-5-
Section 10. Fractional Shares. Series A Participating Preferred
-----------------
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the holders of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Series A Participating Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury as of the 27th day
of October, 1989.
/s/ Richard H. Rhoads
-----------------------------------
Richard H. Rhoads
Chairman of the Board
Attest:
/s/ Paul F. Robinson
------------------------------
Paul F. Robinson
Secretary
-6-