CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF THE
SERIES B PREFERRED STOCK
OF
WHG RESORTS & CASINOS INC.
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PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
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WHG Resorts & Casinos Inc. (hereinafter the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of
Directors by the Amended and Restated Certificate of Incorporation of the
Corporation, and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors of the
Corporation by unanimous written consent dated March 20, 1997, adopted the
following resolutions providing for the designation of a series of 300,000
shares of Series B Preferred Stock, par value $.01 per share, which resolution
remains in full force and effect as of the date hereof:
WHEREAS, the Board of Directors of the Corporation is
authorized, within the limitations and restrictions stated in the
Amended and Restated Certificate of Incorporation, to fix by resolution
or resolutions the designation of each series of preferred stock and
the powers, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof,
including, without limiting the generality of the foregoing, such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and
such other subjects or matters as may be fixed by resolution or
resolutions of the Board of Directors under the General Corporation Law
of Delaware; and
WHEREAS, it is the desire of the Board of Directors
of the Corporation, pursuant to its authority as aforesaid, to
authorize and fix the terms of a series of preferred stock, to be
designated the Series B Preferred Stock of the Corporation, and the
number of shares constituting such series.
NOW, THEREFORE, BE IT
RESOLVED, that there is hereby created out of the
Corporation's class of Preferred Stock a Series B Preferred Stock (the
"Series B Preferred Stock") consisting of 300,000 shares, par value
$.01 per share, and, pursuant to the authority vested in the Board of
Directors of this Corporation (the "Board") in accordance with the
provisions of its Amended and Restated Certificate of Incorporation,
the powers, preferences, rights, qualifications, limitations, and
restrictions of the Series B Preferred Stock shall be, and the same
hereby are, fixed to be the same as the Corporation's voting common
stock, par value $.01 per share (the "Voting Common Stock"), in all
respects, as though shares of one class, except as follows:
1. Voting Rights.
1.1. In all matters as to which the vote or consent of stockholders
of the Corporation shall be required to be taken, the holders
of the shares of the Series B Preferred Stock shall be
entitled to 5 votes for each share of such stock held by them
and shall be entitled to vote together with the holders of
Voting Common Stock as a single class on all matters on which
the holders of Voting Common Stock are entitled to vote
including, without limitation, the election of directors of
the Corporation.
1.2. The Corporation shall not, without the affirmative vote of the
holders of at least 70% of the outstanding shares of Series B
Preferred Stock voting separately as a single class: (a)
increase or decrease the par value of the shares of such class
or alter or change the powers, preferences, or special rights
of the shares of such class so as to adversely affect the
Series B Preferred Stock; (b) issue any class or series of
capital stock having voting rights other than the 12,000,000
authorized shares of Voting Common Stock (or such greater
number of shares of Voting Common Stock or other voting stock
as may have been actually issued or which the Corporation may
be bound to issue as of the date of first issuance of shares
of Series B Preferred Stock) or stock with such limited voting
rights as may be
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required by law; or (c) issue any capital stock ranking with
respect to dividends or distribution of assets equal or senior
to the Series B Preferred Stock.
1.3. The holders of Series B Preferred Stock shall have such
additional voting rights to which they may be entitled under
the Delaware General Corporation Law.
2. Ranking.
The Series B Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding-up and dissolution,
rank: (i) senior to the Class A Preferred Stock, to Voting
Common Stock and Class A Common Stock and to each other class
of capital stock or series of preferred stock established
hereafter by the Board the terms of which do not expressly
provide that it ranks senior to, or on a parity with, the
Series B Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Corporation
(collectively referred to together as "Junior Stock"); (ii) on
a parity with each other class of capital stock or series of
preferred stock established hereafter by the Board the terms
of which expressly provide that such class or series will rank
on a parity with the Series B Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution
(collectively referred to as "Parity Stock"); and (iii) junior
to each class of capital stock or series of preferred stock
established hereafter by the Board the terms of which
expressly provide that such class or series will rank senior
to the Series B Preferred Stock as to dividend rights and
rights upon liquidation, winding-up and dissolution of the
Corporation (collectively referred to as "Senior Stock"). All
claims of the holders of the Series B Preferred Stock,
including, without limitation, claims with respect to dividend
payments, redemption payments or rights upon liquidation,
winding-up or dissolution, shall rank junior to the claims of
the holders of any indebtedness of the Corporation for
borrowed money and, except as to claims of holders of Series B
Preferred Stock for declared and unpaid dividends as to which
such holders will have whatever claims exist as a matter of
law, all other creditors of the Corporation.
3. Dividends.
3.1. The holder of each share of the Series B Preferred Stock shall
be entitled to receive, out of funds legally available
therefor, cumulative preferential cash dividends at the prime
rate announced in New York, New York by The Chase Manhattan
Bank, N.A. or any successor thereto (the "Prime Rate") plus
one-half percent per annum on the Liquidation Value (as
hereinafter defined) of each share of Series B Preferred Stock
then outstanding, payable on the first day of January, April,
July and October in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing
on the date of issuance of such share of Series B Preferred
Stock to holders of record at the close of business on the
business day immediately preceding the Quarterly Dividend Pay
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Date. The Prime Rate shall be determined once each quarter on
the first business day of that quarter. In the event that
sufficient funds for any such dividend shall not at any time
be otherwise legally available, the Corporation shall use its
best efforts to cause such availability to come into
existence. In determining whether sufficient assets are
legally available, the Corporation shall not be required to
restate any of its financial statements, obtain an appraisal
or do any revaluation of its assets. Dividends on each share
of Series B Preferred Stock shall be cumulative from the date
of issuance of such share of Series B Preferred Stock (whether
or not declared and whether or not in any dividend period or
dividend periods there shall be net profits or net assets of
the Corporation legally available for the payment of those
dividends). To the extent that sufficient funds become legally
available, additional dividends shall be paid on any
accumulated and unpaid dividends of the Series B Preferred
Stock. Such additional dividends shall be calculated to
include interest on the unpaid dividend amount at the Prime
Rate plus one-half percent per annum (such amount including
interest being referred to herein as "Accumulated Dividends").
All dividends shall be calculated on a 365-day basis, based on
the actual number of days elapsed.
3.2. So long as any shares of the Series B Preferred Stock remain
outstanding, no dividend shall be paid or declared on any
Junior Stock other than a dividend payable in Junior Stock or
rights or warrants to purchase Junior Stock, nor shall any
shares of Junior Stock be acquired for consideration by this
Corporation or any subsidiary unless all accrued and unpaid
dividends have been paid on the Series B Preferred Stock.
3.3. No dividend shall be paid on or declared and set apart for any
Parity Stock for any dividend period unless at the same time
the dividend on the Series B Preferred Stock for such period
and all prior periods are paid or declared and set apart;
provided that no dividends shall be paid or declared and set
apart for the shares of the Series B Preferred Stock until all
accumulated and unpaid dividends from all prior years with
respect to shares of all Senior Stock are paid or declared and
set aside.
4. Conversion Rights.
4.1. Each share of Series B Preferred Stock may, at the option of
the holder, be converted into fully-paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100
of a share) of Voting Common Stock. The conversion value of
the Series B Preferred Stock shall be equal to the Liquidation
Value of the Series B Preferred Stock, plus the aggregate
value of any Accumulated Dividends to the date of conversion.
The price at which shares of Voting Common Stock shall be
delivered upon conversion (herein called the "Conversion
Price") shall be the lower of: (1) the closing price of the
Voting Common Stock on its first day of official trading of
such shares on the New York
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Stock Exchange; or (2) the closing price on the New York Stock
Exchange (or if the Voting Common Stock is not listed for
trading on the New York Stock Exchange, such other recognized
market in which the Voting Common Stock is traded) on the
close of business on the business day immediately preceding
the date of issuance of the Series B Preferred Stock.
4.2. In order to exercise the conversion privilege, a holder of
Series B Preferred Stock shall surrender such stock to be
converted, duly endorsed or assigned to the Corporation or in
blank with signature guaranteed, to the executive office of
the Corporation, accompanied by written notice to the
Corporation at such office, that the holder elects to convert
such Series B Preferred Stock. Such Series B Preferred Stock
shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such
certificates for conversion in accordance with the foregoing
provisions (the "Conversion Date"), and at such time the
rights of the holder(s) of such Series B Preferred Stock shall
cease, and the person(s) entitled to receive the Voting Common
Stock issuable upon conversion shall be treated for all
purposes as the record holder(s) of such Voting Common Stock
at such time. As promptly as practicable on or after the
Conversion Date, the Corporation shall issue and shall deliver
to such person(s) a certificate or certificates for the number
of full shares of Voting Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a
share, as provided in paragraph 4.3 below.
4.3. No fractional shares of Voting Common Stock shall be issued
upon conversion of the Series B Preferred Stock. In lieu of
any fractional shares of Voting Common Stock (or specified
portion thereof), the Corporation shall pay a cash adjustment
in respect of such fraction in an amount equal to the same
fraction of the Conversion Price per share of Voting Common
Stock.
5. Redemption.
5.1. At any time after the expiration of three years after the date
of original issuance of a share of Series B Preferred Stock,
upon notice as provided in paragraph , the holder of such
share of Series B Preferred Stock may require the Corporation
to redeem, from any source of funds legally available
therefor, such share of Series B Preferred Stock at a
redemption price (the "Redemption Price") equal to the
Liquidation Value of such share plus all Accumulated Dividends
payable on such share up to the date fixed for redemption.
5.2. At any time and from time to time where dividends on a share
of Series B Preferred Stock shall remain unpaid by the
Corporation in respect of two quarters after the date of
original issuance of such share, then upon notice as provided
in paragraph 5.3, the holder of such share of Series B
Preferred Stock may require the Corporation to redeem, from
any source of funds legally available therefor,
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such share of the Series B Preferred Stock held by such
holder, at the Redemption Price.
5.3. Not less than 30 nor more than 90 days prior to any redemption
pursuant to paragraph 5.1 or 5.2, a notice fixing the date for
redemption shall be given by first class mail to the
Corporation addressed to the executive office of the
Corporation, by each such holder of the Series B Preferred
Stock to be redeemed. Any notice which was mailed in the
manner herein provided shall be conclusively presumed to have
been duly given whether or not the Corporation receives the
notice. Upon payment of the applicable Redemption Price each
holder of the share(s) redeemed shall cease to be a
stockholder with respect to such share(s) and shall have no
interest in or claim against the Corporation by virtue thereof
and shall have no voting, dividend or other rights with
respect to such share(s) except the right to receive the
monies payable upon such redemption from the Corporation or
otherwise. On or before the date fixed for redemption, the
holder of the Series B Preferred Stock put for redemption
shall surrender (and endorse, if required by the Corporation)
the certificate(s) representing such share(s) to the
Corporation at its executive office. If on or before the date
fixed for redemption in such notice, the funds necessary for
such redemption shall have been set aside by the Corporation
so as to be available for payment on demand to the holders of
the shares of Series B Preferred Stock to be redeemed, then,
notwithstanding that any certificate of Series B Preferred
Stock so put for redemption shall not have been surrendered
for cancellation, the dividends thereon shall cease to accrue
from and after the date so fixed for redemption and all rights
with respect to such Series B Preferred Stock so put for
redemption, including any right to vote or otherwise
participate in the determination of any proposed corporate
action, shall forthwith after such date fixed for redemption
cease, except only the right of the holder to receive the
Redemption Price but without interest.
5.4. In the event that there are insufficient funds legally
available for a redemption requested under paragraph 5.1 or
5.2, the Corporation shall redeem such lesser number of shares
of Series B Preferred Stock to the extent that there are funds
legally available therefor, and shall redeem all or part of
the remainder of the shares of Series B Preferred Stock
subject to redemption as soon as the Corporation has
sufficient funds which are legally available therefor until
all such shares requested for redemption pursuant to paragraph
5.1 or 5.2 have been redeemed. Such redemption under this
paragraph 5.4 shall be in order of such holder first giving
notice pursuant to paragraph 5.3; notices given within five
business days of each other shall be deemed to be given
simultaneously, with such redemption being given pro-rata to
the amount of shares elected for redemption by each such
holder giving simultaneous notice.
6. Liquidation, Dissolution, Winding Up.
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In the event of any liquidation, dissolution or winding-up of
the affairs of the Corporation, whether voluntary or
involuntary, the holders of all the then outstanding Series B
Preferred Stock shall be entitled to receive, out of the net
assets of the Corporation, after payment or provision for
payment of the debts and liabilities of the Corporation
(except debts and liabilities to stockholders of the
Corporation for other than monies loaned to the Corporation)
and after payment of all dividends and other amounts due any
Senior Stock, an amount in cash equal to $10.00 per share (the
"Liquidation Value") plus the aggregate value of any
Accumulated Dividends, and no more, before payment by the
Corporation of any dividends and other amounts due any Junior
Stock. In case the net assets of the Corporation are
insufficient to pay the holders of the Series B Preferred
Stock and the holders of any Parity Stock the full amount to
which they are respectively entitled, the entire net assets of
the Corporation remaining shall be distributed ratably to the
holders of all outstanding shares of Series B Preferred Stock
and Parity Stock. Neither the consolidation or merger of the
Corporation into or with any other corporation or
corporations, nor the sale or transfer by the Corporation of
all or any part of its assets shall be deemed a liquidation,
dissolution or winding-up of the affairs of the Corporation
within the meaning of any of the provisions of this Section 6.
7. Anti-Dilution.
7.1. The Conversion Price for the Series B Preferred Stock shall be
subject to adjustment from time to time as follows:
7.1.1. If the Corporation shall declare a dividend or make a
distribution on its Voting Common Stock in shares of its
Voting Common Stock, subdivide or reclassify the outstanding
shares of Voting Common Stock into a greater number of shares
of Voting Common Stock or combine or reclassify the
outstanding shares of Voting Common Stock into a smaller
number of shares of Voting Common Stock, the Conversion Price
at the time of the record date for such dividend or
distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the
Series B Preferred Holder would be entitled to receive for the
Conversion Price, the number of shares of Voting Common Stock
or other securities which such Series B Preferred Holder would
have owned or would have been entitled to receive immediately
after such dividend, distribution, subdivision, combination or
reclassification had such Series B Preferred Stock been
converted prior to the occurrence of (or applicable record
date for) such event. Successive adjustments in the Conversion
Price shall be made whenever any event specified above shall
occur. All calculations under this paragraph shall be made to
the nearest one hundredth (1/100th) of a share.
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7.1.2. In any case in which the provisions of paragraph 7.1.1
shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation
may defer until the occurrence of such event issuing to the
holder of any share of Series B Preferred Stock converted
after such record date and before the occurrence of such event
the additional shares of Voting Common Stock issuable upon
such conversion by reason of the adjustment required by such
event over and above the shares of Voting Common Stock
issuable upon such conversion before giving effect to such
adjustment and paying to such holder any amount of cash in
lieu of fractional shares of Voting Common Stock pursuant to
paragraph 4.3
7.1.3. Whenever the Conversion Price for the Series B
Preferred Stock shall be adjusted as provided in paragraph
7.1.1, the Corporation shall forthwith prepare and maintain at
the executive office of the Corporation, a statement showing
in detail the method of calculation of such adjustment, the
facts requiring such adjustment and the Conversion Price that
shall be in effect after such adjustment, and the Corporation
shall also cause a copy of such statement to be sent by mail,
first class postage prepaid, to each Series B Preferred holder
at the address appearing on the Corporation's records. Each
such statement shall be signed by the Corporation's chief
financial officer.
7.2. If the outstanding shares of Voting Common Stock of the
Corporation are exchanged for a different number or kind of
shares or other securities, of if new or different shares or
other securities are distributed with respect to such shares
of Voting Common Stock through a merger, consolidation, sale
of all or substantially all of the property of the
Corporation, reorganization, spin-off, stock split, stock
dividend, reverse stock split or other subdivision,
reclassification, recapitalization, recombination of shares or
similar corporate restructuring of the Corporation's Voting
Common Stock, or if the Corporation shall transfer securities
or other assets of the Corporation to the holders of Voting
Common Stock for less than fair market value of such
securities or other assets, excluding the distribution of cash
dividends amounting in the aggregate in any fiscal year to
less than fifteen percent of the aggregate book value of the
Corporation (such events described herein in this paragraph
7.2, a "Stock Event"), then as a condition of the Stock Event,
the Board shall make appropriate adjustment to the rights and
interests of the holders of Series B Preferred Stock,
including, without limitation, adjustments to the Conversion
Price and the number and type of shares or other securities or
assets issuable upon conversion of a share of Series B
Preferred Stock, so that the Series B Preferred Stock holders
are not adversely affected by such Stock Event.
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IN WITNESS WHEREOF, said WMS Hotel Corporation has caused this
Certificate to be signed by Brian Gamache, its President, this ____ day of
April, 1997.
WHG RESORTS & CASINOS INC.
By:
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Brian Gamache, President
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