FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OUTSOURCING SOLUTIONS INC.
Outsourcing Solutions Inc., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Outsourcing Solutions Inc.
(the "Corporation"). The Corporation was originally incorporated as OSI Holdings
Corp. in the State of Delaware on the 21st day of September, 1995 pursuant to a
Certificate of Incorporation filed with the Secretary of State of the State of
Delaware on that date.
2. This Fourth Amended and Restated Certificate of Incorporation
amends and restates the Third Amended and Restated Certificate of Incorporation
of the Corporation filed with the Secretary of State of the State of Delaware on
January 13, 1999, as amended on November 29, 1999. This Fourth Amended and
Restated Certificate of Incorporation has been adopted by the Corporation and by
its stockholders pursuant to Sections 242 and 245 of the General Corporation Law
of the State of Delaware.
3. On December 3, 1999, Directors of the Corporation duly
adopted resolutions authorizing the following amendment and restatement of the
Certificate of Incorporation of the Corporation, declaring such amendment and
restatement to be advisable and in the best interests of the Corporation and its
stockholders and authorizing the appropriate officers to solicit written
consents of the stockholders of the Corporation in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware. Thereafter, pursuant to resolutions of the Board of Directors, in lieu
of a meeting and vote of holders of the Corporation's common stock and preferred
stock, stockholders holding a majority of the issued and outstanding shares of
common stock of the Corporation and holders of a majority of the issued and
outstanding shares of each of the (i) preferred stock, (ii) Class A Non-Voting
Common Stock, (iii) Class B Non-Voting Common Stock and (iv) Class C Non-Voting
Common Stock of the Corporation adopted the following amendment and restatement
of the Certificate of Incorporation of the Corporation.
4. The text of Certificate of Incorporation, is hereby restated
and amended to read in its entirety as follows:
FIRST: The name of the Corporation is Outsourcing Solutions Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware 19805, County of New Castle.
The name of its registered agent in the State of Delaware at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage, directly or
indirectly, in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware as from
time to time in effect.
FOURTH: The total number of shares which the Corporation shall
have the authority to issue is 17,300,000 shares of capital stock as follows:
300,000 shares of Preferred Stock, no par value (the "Preferred Stock"),
15,000,000 shares of Voting Common Stock, par value $.01 per share (the "Voting
Common Stock") and 2,000,000 shares of Non-Voting Stock, par value $.01 per
share (the "Non-Voting Common Stock", and together with the Voting Common Stock,
the "Common Stock"). Each share of Preferred Stock is hereafter referred to as a
"Preferred Share" and collectively as "Preferred Shares." Each share of Voting
Common Stock is hereafter referred to as a "Voting Common Share" and
collectively as "Voting Common Shares". Each share of Non-Voting Common Stock is
hereafter referred to as a "Non-Voting Common Share" and collectively as
"Non-Voting Common Shares". The Voting Common Shares and Non-Voting Common
Shares are hereafter collectively referred to as "Common Shares".
A. Preferred Stock.
Authorized but unissued shares of Preferred Stock may be issued
from time to time in one or more series or classes. The Board of Directors is
hereby authorized to determine and fix by resolution all rights, preferences,
and privileges and qualifications, limitations and restrictions (including,
without limitation, voting rights, dividend rights, redemption features,
conversion rights or protective features, and the limitation and exclusion
thereof) applicable to any such series or class of Preferred Stock and the
number of shares constituting any such series or class and the designation
thereof, and, subject to the terms of any such series or class, to increase or
decrease (but not below the number of shares of such series or class then
outstanding) the number of shares of any series or class subsequent to the issue
of shares of that series or class then outstanding. In the event that the number
of shares of any series or class is so decreased, the shares constituting such
reduction shall resume the status which such shares had prior to the adoption of
the resolution originally fixing the number of such series or class.
B. Common Stock.
The voting powers, designations, preferences and relative
participating, optional or other special rights, and qualifications, or
restrictions thereof, of the Common Stock are as follows:
1. Dividend Rights. Subject to the preferential rights of the
Preferred Shares, the Board of Directors of the Corporation may, in its
discretion, out of funds legally available for the payment of dividends and at
such times and in such manner as determined by the Board of Directors, declare
and pay dividends on the Common Shares of the Corporation.
No dividend (other than a dividend in capital stock ranking on a
parity with the Common Shares or cash in lieu of fractional shares with respect
to such stock dividend) shall be declared or paid on any share or shares of any
class of stock or series thereof ranking on a parity with the Common Shares in
respect of payment of dividends for any dividend period unless there shall have
been declared, for the same dividend period, like proportionate dividends on all
shares of Common Shares then outstanding.
As and when dividends are declared or paid thereon, whether in
cash, property or securities of the Corporation, the holders of the Voting
Common Shares and of the Non-Voting Common Shares will be entitled to share
ratably, on a share for share basis, in such dividends, provided, that (i) if
dividends are declared which are payable in Voting Common Shares or Non-Voting
Common Shares, dividends will be declared which are payable at the same rate on
both classes of stock and the dividends payable in Voting Common Shares will be
payable to holders of such shares and the dividends payable in Non-Voting Common
Shares will be payable to holders of such shares and (ii) if the dividends
consist of other voting securities of the Corporation, (a) the Corporation will
make available to each holder of Non-Voting Common Shares, at such holder's
request, dividends consisting of non-voting securities of the Corporation which
are otherwise identical to the voting securities and which are convertible into
or exchangeable for such voting securities on the same terms as the Non-Voting
Common Shares are convertible into Voting Common Shares.
2. Rights on Liquidation. In the event of any liquidation,
dissolution, distribution of assets or winding up of the Corporation, whether
voluntary or involuntary (collectively, a "Liquidation"), after payment or
provision for payment of the debts and other liabilities of the Corporation and
the setting aside for payment of any preferential amount due to the holders of
any other class or series of stock (including, without limitation, the holders
of Preferred Shares), the holders of Common Shares (including, without
limitation, the Voting Common Shares and the Non-Voting Common Shares) and any
other class of stock or series thereof ranking on a parity with the Common
Shares in respect of distributions on Liquidation shall be entitled to receive
ratably on a share for share basis, any or all assets remaining to be paid or
distributed.
3. Voting Rights. Except as may be otherwise required by law,
all voting rights shall be vested in the Voting Common Shares and each holder of
Voting Common Shares shall have one vote in respect of each Voting Common Share
held by such holder on all matters to be voted upon by the stockholders of the
Corporation. The holders of the Non-Voting Shares will have no right to vote on
any matters to be voted on by the stockholders of the Corporation; provided,
that the holders of the Non-Voting Common Shares shall have the right to vote as
a separate class on any matter on which the Non-Voting Common Shares are
required to vote as a class pursuant to the General Corporation Law of the State
of Delaware.
4. Conversion.
A. Conversion of Non-Voting Common Shares.
Any holder of Non-Voting Common Shares shall have the right, at
its option, at any time and from time to time, to convert, subject to the terms
and provisions of this Section 4A, any or all of such holder's Non-Voting Common
Shares into an equal number of shares of fully paid and non-assessable shares of
Voting Common Shares as provided below; provided, however, if the holder in any
such conversion is subject to the Bank Holding Company Act of 1956, as amended
(12 U.S.C. ss.1841, et. seq.) and the regulations promulgated thereunder
(collectively and including any successor provisions, the "BHCA Act"), such
conversion may be made only if:
(i) the BHCA Act would not prohibit such holder from
holding such shares of Voting Common Shares; and
(ii) such shares of Voting Common Shares to be received
upon such conversion will be (A) distributed or sold in connection with any
public equity offering registered under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "1933 Act"), (B)
distributed or sold in a "broker's transaction" (as defined in Rule 144(g) under
the 1933 Act) pursuant to Rule 144 under the 1933 Act or any similar rule then
in force, (C) distributed or sold to a person or group (within the meaning of
the Securities Exchange Act of 1934, as amended (the "1934 Act")) of persons if,
after such distribution or sale, such person or group of persons would not, in
the aggregate, own, control or have the right to acquire more than 2% of the
outstanding securities of the Corporation entitled to vote on the election of
directors of the Corporation, (D) distributed or sold to a person or group
(within the meaning of the 1934 Act) of persons if, prior to such sale, such
person or group of persons had control of the Corporation, (E) distributed,
sold, or held in any other manner permitted under the BHCA, including after
giving effect to the amendment of the BHCA by the Gramm-Leach-Bliley Financial
Services Act;
provided, further, that if the holder converts any Non-Voting Common Shares as
provided in clauses (i) and (ii) above and any distribution or sale of the
Non-Voting Common Shares fails to occur for any reason or such holder is not
otherwise permitted to hold the Voting Common Shares into which such shares were
converted, such holder may convert the Voting Common Shares into the Non-Voting
Common Shares converted in anticipation of such distribution or sale or other
permitted holding.
B. Conversion Procedure.
(i) Unless otherwise provided herein, each conversion of shares
of Non-Voting Common Stock into shares of Voting Common Stock will be effected
by the surrender of the certificate or certificates representing the Non-Voting
Common Shares to be converted at the principal office of the Corporation at any
time during normal business hours, together with a written notice by the holder
of such Non-Voting Common Shares stating that such holder desires to convert
such Non-Voting Common Shares, or a stated number of such Non-Voting Common
Shares, represented by such certificate(s) into shares of Voting Common Shares.
Unless otherwise provided herein, each conversion will be deemed to have been
effected as of the close of business on the date on which such certificate(s)
have been surrendered and such notice has been received, and at such time the
rights of the holder of the converted Non-Voting Common Shares, as such holder,
will cease and the person or persons in whose name or names the certificate(s)
for Voting Common Shares are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the Voting Common Shares
represented thereby.
(ii) Promptly after the surrender of certificates and the receipt
of written notice, the Corporation will issue and deliver in accordance with the
surrendering holder's instructions (a) the certificate(s) for the Voting Common
Shares issuable upon such conversion and (b) a certificate representing any
Non-Voting Common Shares that was represented by the certificate(s) delivered to
the Corporation in connection with such conversion but that was not converted.
(iii) The issuance of certificates for Voting Common Shares upon
conversion of Non-Voting Common Shares will be made without charge to the
holders of such shares for any issuance tax in respect thereof (other than any
tax in connection with the issuance of shares in a different name) or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of Voting Common Shares.
(iv) The Corporation will at all times reserve and keep available
out of its authorized but unissued Voting Common Shares, solely for the purpose
of issuance upon the conversion of the Non-Voting Common Shares such number of
Voting Common Shares as are issuable upon the conversion of all outstanding
Non-Voting Common Shares. All Common Shares which are so issuable will, when
issued, be duly and validly issued, fully paid and nonassessable. The
Corporation will take all such actions as may be necessary to assure that all
such Common Shares may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which Common Shares may be listed (except for official notices of issuance
which will be immediately transmitted by the Corporation upon issuance).
(v) The Corporation will not close its books against the transfer
of Common Shares in any manner which would interfere with the timely conversion
of any Non-Voting Common Shares.
5. Stock Splits. If the Corporation in any manner subdivides or
combines the outstanding shares of one class of Common Shares, the outstanding
shares of the other class of Common Shares will be proportionately subdivided or
combined in a similar manner.
6. Notices. All notices referred to in this Article FOURTH
shall be in writing, shall be delivered personally, by facsimile or by first
class mail, postage prepaid, and shall be deemed to have been given when so
delivered or mailed to the Corporation at its principal office and to any
stockholder at such holder's address as it appears in the stock records of the
Corporation.
7. Amendment and Waiver. No amendment or waiver of any
provision of paragraph 4 of this Article FOURTH or of this paragraph 7 shall be
effective without the prior approval of both the holders of a majority of the
Voting Common Shares then outstanding, voting as a separate class, and the
holders of a majority of the Non-Voting Common Shares then outstanding, voting
as a separate class.
FIFTH: The business of the Corporation shall be managed under the
direction of the Board of Directors except as otherwise provided by law. The
number of Directors of the Corporation shall be fixed from time to time by, or
in the manner provided in, the By-Laws. Election of Directors need not be by
written ballot unless the By-Laws of the Corporation shall so provide.
SIXTH: The Board of Directors may make, alter or repeal the
By-Laws of the Corporation except as otherwise provided in the By-Laws adopted
by the Corporation's stockholders.
SEVENTH: The Directors of the Corporation shall be protected from
personal liability, through indemnification or otherwise, to the fullest extent
permitted under the General Corporation Law of the State of Delaware as from
time to time in effect.
1. A Director of the Corporation shall under no circumstances
have any personal liability to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director except for those breaches and
acts or omissions with respect to which the General Corporation Law of the State
of Delaware, as from time to time amended, expressly provides that this
provision shall not eliminate or limit such personal liability of Directors.
Neither the modification or repeal of this paragraph 1 of Article SEVENTH nor
any amendment to said General Corporation Law that does not have retroactive
application shall limit the right of Directors hereunder to exculpation from
personal liability for any act or omission occurring prior to such amendment,
modification or repeal.
2. The Corporation shall indemnify each Director and Officer of
the Corporation to the fullest extent permitted by applicable law, except as may
be otherwise provided in the Corporation's By-Laws, and in furtherance hereof
the Board of Directors is expressly authorized to amend the Corporation's
By-Laws from time to time to give full effect hereto, notwithstanding possible
self interest of the Directors in the action being taken. Neither the
modification or repeal of this paragraph 2 of Article SEVENTH nor any amendment
to the General Corporation Law of the State of Delaware that does not have
retroactive application shall limit the right of Directors and Officers to
indemnification hereunder with respect to any act or omission occurring prior to
such modification, amendment or repeal.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, said Outsourcing Solutions Inc. has caused
this Amended and Restated Certificate of Incorporation of Outsourcing Solutions
Inc. to be executed by its officer thereunto duly authorized this 7th day of
December, 1999.
OUTSOURCING SOLUTIONS INC.
By:/s/ Eric R. Fencl
--------------------------
Name: Eric Fencl
Title: Vice President and General Counsel
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF CLASS A 14%
SENIOR MANDATORILY REDEEMABLE PREFERRED STOCK,
SERIES A, AND CLASS B 14% SENIOR MANDATORILY
REDEEMABLE PREFERRED STOCK, SERIES A, AND QUALIFICATIONS,
LIMITATIONS ANDRESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
Outsourcing Solutions Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of
Directors, by unanimous written consent dated December 10, 1999, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors
does hereby designate and authorize 50,000 shares of Class A 14%
Senior Mandatorily Redeemable Preferred Stock, no par value, of which
25,000 shares shall be designated Class A 14% Senior Mandatorily
Redeemable Preferred Stock, Series A, no par value; and futher
resolved that the Board of Directors does hereby designate and
authorize 150,000 shares of Class B 14% Senior Mandatorily Redeemable
Preferred Stock, no par value, of which 75,000 shares shall be
designated as Class B 14% Senior Mandatorily Redeemable Preferred
Stock, Series A, no par value, each having the designations,
preferences, relative, participating, optional and other special
rights and the qualifications, limitations and restrictions thereof
that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
(a) Designation. There is hereby created out of the authorized
and unissued shares of Preferred Stock of the Corporation a class of
Preferred Stock designated as the "Class A 14% Senior Mandatorily
Redeemable Preferred Stock." The number of shares constituting such
class shall be 50,000 and are referred to herein as the "Class A
Senior Preferred Stock." 25,000 shares of Class A Senior Preferred
Stock, designated as the "Class A 14% Senior Mandatorily Redeemable
Preferred Stock, Series A," shall be initially issued. There is hereby
created out of the authorized and unissued shares of Preferred Stock
of the Corporation a class of Preferred Stock designated as the "Class
B 14% Senior Mandatorily Redeemable Preferred Stock." The number of
shares constituting such class shall be 150,000 and are referred to
herein as the "Class B Senior Preferred Stock." 75,000 shares of Class
B Senior Preferred Stock, designated as the "Class B 14% Senior
Mandatorily Redeemable Preferred Stock, Series A," shall be initially
issued. The Class A Senior Preferred Stock and the Class B Senior
Preferred Stock are collectively referred to herein as the "Senior
Preferred Stock." The Corporation may issue up to one additional
series of the Class A Senior Preferred Stock (designated as the "Class
A 14% Mandatorily Redeemable Preferred Stock, Series B") and one
additional series of the Class B Senior Preferred Stock (designated as
the "Class B 14% Mandatorily Redeemable Preferred Stock, Series B")
pursuant to this Certificate of Designation (without complying with
paragraph (f)(ii)(A) hereof) solely to Holders of the Senior Preferred
Stock, in exchange for shares of the Class A 14% Senior Mandatorily
Redeemable Preferred Stock, Series A, or the Class B 14% Senior
Mandatorily Redeemable Preferred Stock, Series A, as applicable, as is
necessary to comply with the registration provisions of the
Registration Rights Agreement.
(b) Rank. The Senior Preferred Stock shall, with respect to
dividend distributions and distributions upon liquidation, winding-up
and dissolution of the Corporation, rank (i) senior (to the extent set
forth herein) to all classes of Common Stock of the Corporation and to
each other class or series of Capital Stock (including Capital Stock
issuable upon exercise of any options, warrants or rights to purchase
Capital Stock) of the Corporation now authorized (including the Junior
Preferred Stock) or hereafter created the terms of which do not
expressly provide that it ranks senior to, or on a parity with, the
Senior Preferred Stock as to dividend distributions and distributions
upon liquidation, winding-up and dissolution of the Corporation
(collectively referred to, together with all classes of Common Stock
of the Corporation, as "Junior Securities"); (ii) on a parity with any
class or series of Capital Stock (including Capital Stock issuable
upon exercise of any options, warrants or rights to purchase Capital
Stock) of the Corporation hereafter created the terms of which
expressly provide that such class or series will rank on a parity with
the Senior Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution
(collectively referred to as "Parity Securities"), provided that any
such Parity Securities that were not approved by the Holders in
accordance with paragraph (f)(ii)(A) hereof shall be deemed to be
Junior Securities and not Parity Securities; and (iii) junior to each
other class or series of Capital Stock (including Capital Stock
issuable upon exercise of any options, warrants or rights to purchase
Capital Stock) of the Corporation hereafter created the terms of which
expressly provide that such class or series will rank senior to the
Senior Preferred Stock as to dividend distributions and distributions
upon liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Senior Securities"), provided that any
such Senior Securities that were not approved by the Holders in
accordance with paragraph (f)(ii)(B) hereof shall be deemed to be
Junior Securities and not Senior Securities.
(c) Dividends.
(i) From the Issue Date, the Holders of the outstanding shares of
Senior Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available
therefor, dividends on each share of Senior Preferred Stock at a rate
per annum equal to 14% of the Liquidation Preference per share of
Senior Preferred Stock in effect from time to time. All dividends
shall accrue, whether or not earned or declared, on a daily basis from
the Issue Date, shall be cumulative and shall be payable quarterly in
arrears on each Dividend Payment Date, commencing on the first
Dividend Payment Date after the Issue Date. If any dividend payable on
any Dividend Payment Date on or prior to December 1, 2004 is not
declared or paid in full in cash on such Dividend Payment Date then,
to the extent of legally available funds therefor, the Liquidation
Preference of each share shall be increased on such Dividend Payment
Date by an amount (the "Accrued Dividend Amount") equal to the product
of (A) the amount payable as dividends on such share on such Dividend
Payment Date that is not paid in cash divided by the total amount
payable as dividends on such share on such Dividend Payment Date, and
(B)one-quarter (or, if the Issue Date was less than 90 days prior to
the applicable Dividend Payment Date, a fraction the numerator of
which is the number of days elapsed from the Issue Date to the
applicable Dividend Payment Date and the denominator of which is 360)
of the Accrued Dividend Rate times the then Liquidation Preference.
The amount of the dividend otherwise payable in cash that is so added
to the Liquidation Preference shall be deemed for all purposes to have
been paid in full in cash, shall not be deemed to be arrearages or in
arrears and shall not accumulate. In the event that any portion of the
Accrued Dividend Amount may not be so added to the Liquidation
Preference because of the lack of legally available funds therefor
(such portion, the "Default Dividends") and any portion of the Accrued
Dividend Amount not so added to the Liquidation Preference because of
the lack of legally available funds therefo shall be accumulated and
payable in cash. Any Default Dividends shall thereafter accrue
dividends at an annual rate equal to the Accrued Dividend Rate. All
dividends accumulating and accruing after December 1, 2004 must be
paid in cash (when, as and if declared by the Board of Directors out
of funds legally available therefor). If, at any time, any Voting
Rights Triggering Event described in clause (1), (2) or (3) of
paragraph (f)(iii)(A) shall have occurred, the per annum dividend rate
will be increased by (x) 2% per annum in the case of clause (1) or (2)
of paragraph (f)(iii)(A) during the continuance of any such Voting
Rights Triggering Event and (y) 6% per annum in the case of clause (3)
of paragraph (f)(iii)(A) beginning on the date of such Change of
Control; provided, that upon the occurrence of a Voting Rights
Triggering Event described in clause (3)(x) of paragraph (f)(iii)(A)
the Corporation may, at its option, offer to redeem the Senior
Preferred Stock pursuant to paragraph (e)(i)(C) within 30 days of the
occurrence of such Change of Control, in which case the dividend rate
will not increase by 6% per annum. After the date on which the right
of the Holders to elect and to be represented by members of the Board
of Directors ceases to exist in accordance with paragraph (f)(iii)(B),
the dividend rate will revert to the rate originally borne by the
Senior Preferred Stock. Each dividend shall be payable to the Holders
of record as they appear on the stock books of the Corporation on the
Dividend Record Date immediately preceding the related Dividend
Payment Date. Dividends shall cease to accrue and, if applicable,
accumulate in respect of the enior Preferred Stock on the date of
their redemption unless the Corporation shall have failed to pay the
relevant redemption price on Senior Preferred Stock to be redeemed on
the date fixed for redemption.
(ii) All dividends paid with respect to shares of the Senior
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to
the Holders entitled thereto.
(iii) Dividends accruing after December 1, 2004 on the Senior
Preferred Stock for any past Dividend Period and dividends in
connection with any optional redemption pursuant to paragraph (e) (i)
may be declared and paid at any time, without reference to any
Dividend Payment Date, to Holders of record on such date, not more
than forty-five (45) days prior to the payment thereof, as may be
fixed by the Board of Directors.
(iv) (A) Nodividends shall be declared by the Board of Directors
or paid or set apart for payment by the Corporation on any Parity
Securities for any period unless full cumulative dividends have been
or contemporaneously are declared and paid in full, or declared and,
if payable in cash, a sum in cash set apart sufficient for such
payment, on the Senior Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of such dividends on
such Parity Securities; provided, that with respect to dividends
payable on the Senior Preferred Stock on or prior to December 1, 2004,
any such dividends that are added to the Liquidation Preference
pursuant to paragraph (c)(i) shall be deemed to have already been paid
in full. If any dividends are not so paid, all dividends declared upon
shares of the Senior Preferred Stock and any other Parity Securities
shall be declared pro rata so that the amount of dividends declared
per share on the Senior Preferred Stock and such Parity Securities
shall in all cases bear to each other the same ratio that accrued
dividends per share on the Senior Preferred Stock and such Parity
Securities bear to each other.
(B) So long as any share of Senior Preferred Stock is
outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Securities (other than
dividends in Junior Securities to the holders of Junior Securities,
including with respect to the Junior Preferred Stock), 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 of the Junior Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Junior
Securities whether in cash, obligations or shares of the Corporation
or other property (other than in exchange for Junior Securities or
pursuant to clause (ii), (vi), (vii) or (ix) of paragraph (j)(ii)(B)),
and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of
the Junior Securities or any such warrants, rights, calls or options
(other than in exchange for Junior Securities or pursuant to clause
(ii), (vi), (vii) or (ix) of paragraph (j)(ii)(B)).
(C) So long as any share of the Senior Preferred Stock is
outstanding, the Corporation shall not (except with respect to
dividends as permitted by paragraph (c)(iv)(A)) 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
of the Parity Securities or any warrants, rights, calls or options
exercisable for or convertible into any of the Parity Securities
whether in cash, obligations or shares of the Corporation or other
property, and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase or
redeem any of the Parity Securities or any such warrants, rights,
calls or options unless full cumulative dividends determined in
accordance herewith on the Senior Preferred Stock have been or
contemporaneously are paid in full; provided, that with respect to
dividends payable on the Senior Preferred Stock on or prior to
December 1, 2004, any such dividends that are added to the Liquidation
Preference pursuant to paragraph (c)(i) shall be deemed to have
already been paid in full.
(v) Dividends payable on the Senior Preferred Stock for any
period less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months and, for periods not involving a full
calendar month, the actual number of days elapsed (not to exceed 30
days).
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation, the
Holders of shares of Senior Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to the
Liquidation Preference for each share outstanding, plus, without
duplication, an amount in cash equal to accrued and, if applicable,
accumulated and unpaid dividends thereon (including, without
limitation, Default Dividends) to the date fixed for Liquidation,
dissolution or winding-up (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the
date fixed for liquidation, dissolution or windingup) before any
distribution shall be made or any assets distributed in respect of
Junior Securities 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 amounts available for payment with respect to the
Senior Preferred Stock and all other Parity Securities are not
sufficient to pay the Holders thereof, the Holders of the Senior
Preferred Stock and the Parity Securities will share equally and
ratably in any distribution of assets of the Corporation in proportion
to the amounts that would be payable on such distribution if the
amounts to which the Holders of the Senior Preferred Stock and any
Parity Securities are entitled were paid in full.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange, assignment 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 in
accordance with paragraph (j)(viii) shall be deemed to be a
liquidation, dissolution or winding-up of the affairs of the
Corporation.
(e) Redemption.
(i) Optional Redemption. (A) The Corporation may redeem the
Senior Preferred Stock at its option, in whole at any time or in part
from time to time, from any source of funds legally available
therefor, in the manner provided for in paragraph (e) (iii) hereof, at
the redemption prices in cash (expressed as a percentage of the
Liquidation Preference) set forth below for each of the Class A Senior
Preferred Stock and the Class B Senior Preferred Stock, plus, without
duplication, an amount in cash equal to all accrued and, if
applicable, accumulated and unpaid dividends (including an amount in
cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the
Redemption Date) if redeemed during the 12-month period beginning on
December 15 of each year listed below (unless otherwise specified):
Class A Senior Preferred Stock
1999 through June 15, 2001................................. 110.0%
June 16, 2001 through December 14, 2003.................... 114.0%
2003....................................................... 107.0%
2004....................................................... 103.5%
2005 and thereafter........................................ 100.0%
Class B Senior Preferred Stock
1999 and thereafter........................................ 100.0%
; provided that (I) no redemption pursuant to this paragraph (e)(i)(A)
shall be authorized or made unless prior thereto full accrued and, if
applicable, accumulated and unpaid dividends are declared and paid in
full, or declared and a sum in cash is set apart sufficient for such
payment, on the Senior Preferred Stock for all Dividend Periods
terminating on or prior to the Redemption Date, (II) any redemption
pursuant to this paragraph (e)(i)(A) must be made pro rata among the
Class A Senior Preferred Stock and the Class B Senior Preferred Stock
outstanding at such time, except that the Corporation may redeem such
shares held by Holders of fewer than ten shares (or shares held by
Holders who would hold less than ten shares as a result of such
redemption), as may be determined by the Corporation, and (III) any
redemption pursuant to this paragraph (e)(i)(A) must be for at least
$15.0 million; provided, that if less than $15.0 million of Senior
Preferred Stock is outstanding at the time of such redemption, such
redemption pursuant to this paragraph (e)(i)(A) must be for all of the
outstanding Senior Preferred Stock.
(B) [Intentionally Omitted].
(C) In addition to the foregoing paragraph (e)(i)(A), upon the
occurrence of a Change of Control, the Corporation may, at its option,
offer to redeem all but not less than all of the outstanding shares of
Senior Preferred Stock, upon not less than 30 nor more than 60 days
prior notice (but in no event may any such redemption occur more than
120 days after the occurrence of the Change of Control), such offer to
remain open for not less than 30 days, mailed by first-class mail to
each Holder's registered address, at a redemption price equal to 100%
of the Liquidation Preference thereof, plus, without duplication, 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 Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date); provided, that no redemption
pursuant to this paragraph (e)(i)(C) shall be authorized or made
unless prior thereto full accumulated and unpaid dividends are
declared and paid in full, or declared and a sum in cash is set apart
sufficient for such payment, on the Senior Preferred Stock for all
Dividend Periods terminating on or prior to the Redemption Date.
(D) In the event of a redemption pursuant to paragraph (e)(i)(A)
hereof of only a portion of the then outstanding shares of Senior
Preferred Stock, the Corporation shall effect such redemption on a pro
rata basis according to the number of shares held by each Holder of
Senior Preferred Stock, except that the Corporation may redeem such
shares held by Holders of fewer than ten shares (or shares held by
Holders who would hold less than ten shares as a result of such
redemption), as may be determined by the Corporation.
(ii) Mandatory Redemption. On December 10, 2007 (the "Mandatory
Redemption Date"), the Corporation shall redeem, to the extent of
funds legally available therefor, in the manner provided for in
paragraph (e) (iii) hereof, all of the shares of Senior Preferred
Stock then outstanding at a redemption price equal to 100% of the
Liquidation Preference per share, plus, without duplication, 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 Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date).
(iii) Procedures for Redemption. (A) At least 30 days and not
more than 60 days prior to the date fixed for any redemption of the
Senior Preferred Stock, written notice (the "Redemption Notice") shall
be given by first-class mail, postage prepaid, to each Holder of
record on the record date fixed for such redemption of the Senior
Preferred Stock at such Holder's address as it appears in the register
maintained by the Transfer Agent for the Senior Preferred Stock,
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 Senior Preferred Stock 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:
(1) whether the redemption is pursuant to paragraph (e)
(i)(A) or (C) or paragraph (e)(ii)hereof;
(2) the redemption price;
(3) whether all or less than all the outstanding shares
of Senior referred Stock are to be redeemed and the total
number of shares of Senior Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the Holder is to surrender to the Corporation,
in the manner, at the place or places and at the price
designated, his certificate or certificates representing the
shares of Senior Preferred Stock to be redeemed; and
(6) that dividends on the shares of Senior Preferred
Stock to be redeemed shall cease to accumulate and accrue on
such Redemption Date unless the Corporation defaults in the
payment of the redemption price.
(B) Each Holder shall surrender the certificate or certificates
representing such shares of Senior Preferred Stock to the Corporation,
duly endorsed (or otherwise in proper form for transfer, as determined
by the Corporation), 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.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption price,
dividends on Senior Preferred Stock called for redemption shall cease
to accumulate on the Redemption Date, and all rights of the Holders of
redeemed shares shall terminate with respect thereto on the Redemption
Date, other than the right to receive the redemption price; provided,
however, that if a Redemption Notice shall have been given as provided
in paragraph (iii)(A) above and the funds necessary for redemption
(including an amount in cash in respect of all dividends that will
accumulate to the Redemption Date) shall have been irrevocably
deposited in trust for the equal and ratable benefit for the Holders
of the shares of Senior Preferred Stock to be redeemed, then, at the
close of business on the Business Day on which such funds are
segregated and set aside, the Holders of the shares to be redeemed
shall cease to be stockholders of the Corporation and shall be
entitled only to receive the redemption price.
(D) All of the shares of the Senior Preferred Stock referenced in
and created by this Certificate of Designation shall at all times
(including during any bankruptcy proceeding) be treated as and deemed
to be equity interests in the Corporation.
(f) Voting Rights.
(i) The Holders of Senior Preferred Stock, except as otherwise
required under Delaware law or as set forth in paragraphs (ii), (iii)
and (iv) below, shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the stockholders of
the Corporation.
(ii) (A) So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall not authorize or issue any Parity
Securities (except pursuant to the Registration Rights Agreement or in
connection with the refinancing and concurrent redemption of all, but
not less than all, of the outstanding Senior Preferred Stock) without
the affirmative vote or consent of Holders of at least 60% of the then
outstanding shares of Senior Preferred Stock, 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.
(B) So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall not authorize or issue any Senior
Securities without the affirmative vote or consent of Holders of at
least 60% of the then outstanding shares of Senior Preferred Stock,
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) So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall not amend this Resolution or
Certificate of Designation so as to affect adversely the specified
rights, preferences, privileges or voting rights of Holders of shares
of Senior Preferred Stock without the affirmative vote or consent of
Holders of at least a majority of the then outstanding shares of
Senior Preferred Stock, 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; provided, however,
that no such amendment or waiver may, without the prior written
consent of (x) the Holder of each share of Senior Preferred Stock then
outstanding and affected thereby, (i) reduce the dividend rate on any
share of Senior Preferred Stock, (ii) postpone the Mandatory
Redemption Date or any Dividend Payment Date with respect to any share
of Senior Preferred Stock, (iii) change the percentage of the
aggregate outstanding number of shares of Senior Preferred Stock the
Holders of which shall be required to consent or take any other action
under this Certificate of Designation or (iv) make any change to
clauses (1), (2) or (4) of the definition of Voting Rights Triggering
Event and (y) at least 66 2/3% of the Holders of the then outstanding
shares of Senior Preferred Stock, (i) subject any Holder to any
additional obligation hereunder or (ii) make any change to clauses (3)
or (5) of the definition of Voting Rights Triggering Event.
(iii) (A) If (1) dividends accruing and, if applicable,
accumulating on the Senior Preferred Stock after December 1, 2004 are
in arrears and not paid in cash for one or more quarterly Dividend
Periods (whether or not consecutive) (a "Dividend Default"); (2) the
Corporation fails to redeem all of the then outstanding shares of
Senior Preferred Stock on the Mandatory Redemption Date or otherwise
fails to discharge any redemption obligation with respect to the
Senior Preferred Stock; (3) a Change of Control occurs and either (x)
the Corporation does not make an offer pursuant to paragraph (e)(i)(C)
within 30 days after such Change of Control or (y) the Corporation
fails to redeem any shares validly tendered in connection with such
offer in accordance with paragraph (e)(i)(C); (4) the Corporation
breaches or violates one or more of the provisions set forth in
paragraph (j) hereof and the breach or violation continues for a
period of 60 days or more after the Corporation receives notice
thereof specifying the default from the Holders of at least 50% of the
shares of Senior Preferred Stock then outstanding; or (5) a payment
default occurs under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of the Corporation or any of the Restricted Subsidiaries
(or payment of which is guaranteed by the Corporation or any of the
Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date hereof and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which a payment default
has occurred, aggregates $10.0 million or more (other than any such
payment default being contested in good faith by the Corporation),
then in the case of any of clauses (1) through (5) (each of such
clauses (1) through (5) a "Voting Rights Triggering Event"), the
number of directors constituting the Board of Directors shall be
adjusted by the number, if any, necessary to permit the Holders of the
Senior Preferred Stock, voting separately and as one class, to elect
that number of directors constituting at least 25% (rounded to the
nearest whole number) of the Board of Directors; provided, that such
number of directors shall not be less than two; provided, further,
that, in the event more than one of the above defaults occurs, at the
same or at different times, the maximum number of directors that such
Holders shall be entitled to elect is that number of directors
constituting at least 25% (rounded to the nearest whole number) of the
Board of Directors; provided, that such number of directors shall not
be less than two. Such members of the Board of Directors shall be
elected by a plurality vote of the Holders of the Senior Preferred
Stock at a 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 by the Holders of Senior
Preferred Stock expire (other than as described in paragraph
(f)(iii)(B) below). Such Holders shall be entitled to cumulative
voting rights in connection with the election of such members of the
Board of Directors. In addition to the voting rights provided herein,
any Significant Holder shall be entitled to an injunction or
injunctions to prevent material breaches of the provisions of this
Certificate of Designation and to enforce specifically the remedies
under this Certificate of Designation in any court of the United
States or any state thereof having jurisdiction, this being in
addition to any other remedy to which such Holder may be entitled at
law or in equity; provided that, notwithstanding the foregoing,
Holders holding at least a majority of the then outstanding Senior
Preferred Stock may by written consent waive any such material breach
and such Significant Holder shall thereafter terminate its enforcement
action with respect to such material breach. No such waiver or consent
shall extend to any subsequent or other material breach or impair any
right consequent thereon except to the extent expressly so waived.
(B) The right of the Holders of the Senior Preferred Stock voting
together as a separate class to elect members of the Board of
Directors as set forth in paragraph (f)(iii)(A) above shall continue
until such time as (x) in the event such right arises due to a
Dividend Default, all such accrued dividends that are in arrears on
the Senior Preferred Stock are paid in full in cash; (y) in the event
such right arises due to a Change of Control, an offer pursuant to
paragraph (e)(i)(C) is made and the related redemption is consummated
at any time within 120 days after such Change of Control; and (z) in
all other cases, the event, failure, breach or default giving rise to
such Voting Rights Triggering Event is remedied or cured by the
Corporation or waived by the Holders of at least a majority of the
shares of Senior Preferred Stock then outstanding and entitled to vote
thereon, at which time (1) the special right of the Holders of Senior
Preferred Stock so to vote as a class for the election of directors,
(2) the term of office of the directors elected by the Holders of
Senior Preferred Stock shall each terminate and the directors elected
by the holders of Common Stock or Capital Stock (other than the Senior
Preferred Stock) shall constitute the entire Board of Directors and
(3) such Voting Rights Triggering Event shall be deemed to cease to
exist or be continuing. At any time after voting power to elect
directors shall have become vested and be continuing in the Holders of
Senior Preferred Stock pursuant to paragraph (f)(iii) hereof, or if
vacancies shall exist in the offices of directors elected by the
Holders of Senior Preferred Stock, a proper officer of the Corporation
may, and upon the written request of the Holders of record of at least
25% of the shares of Senior Preferred Stock then outstanding addressed
to the secretary of the Corporation shall, call a special meeting of
the Holders of Senior Preferred Stock, for the purpose of electing the
directors which such Holders are entitled to elect. If such meeting
shall not be called by a proper officer of the Corporation within 20
days after personal service of said written request upon the secretary
of the Corporation, or within 20 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 the Holders of
record of at least 25% of the outstanding shares of Senior Preferred
Stock may designate in writing one Holder 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 the annual meetings
of stockholders of the Corporation and shall be held at the place for
holding the annual meetings of stockholders. Any Holder of Senior
Preferred Stock so designated shall have, and the Corporation shall
provide, access to the lists of stockholders to be called pursuant to
the provisions hereof.
(C) At any meeting held for the purpose of electing directors at
which the Holders of Senior Preferred Stock shall have the right,
voting together as a separate class, to elect directors as aforesaid,
the presence in person or by proxy of the Holders of at least a
majority of the outstanding shares of Senior Preferred Stock entitled
to vote thereat shall be required to constitute a quorum of the Senior
Preferred Stock.
(D) Any vacancy occurring in the office of a director elected by
the Holders of the Senior Preferred Stock may be filled by the
remaining director elected by the Holders of the Senior Preferred
Stock unless and until such vacancy shall be filled by the Holders of
the Senior Preferred Stock.
(E) Notwithstanding anything to the contrary in this paragraph
(f), DB Capital Investors, L.P., First Union Investors, Inc. and
Heller Financial, Inc. or any of their respective direct or indirect
transferees of shares of the Class B Senior Preferred Stock, or any
other Holder that is a bank holding company or any affiliate thereof
(each, a "Regulated Holder"), shall not be entitled to vote with the
other Holders of Senior Preferred Stock unless, until and to the
extent (x) permitted by the Bank Holding Company Act of 1956, as
amended, and Section 225.2(q)(2)(i) of Regulation Y promulgated
thereunder, and (y) such Regulated Holder provides written notice
thereof to the Corporation. Notwithstanding the foregoing the
Corporation shall send to each Regulated Holder any information,
consent solicitation documents, notices or any other documents or
correspondence that is sent to the Holders. Each such Regulated Holder
shall have 10 days after receipt of such information, documents or
notices to provide the Corporation with notice that it is permitted to
vote on any such matter set forth therein; provided, that if any
Regulated Holder does not give the Corporation notice within such 10
days such Regulated Holder shall be deemed not to be permitted to vote
on any such matter.
(iv) In any case in which the Holders of the Senior Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or
pursuant to Delaware law, each Holder of Senior Preferred Stock
entitled to vote with respect to such matter shall be entitled to one
vote for each share of Senior Preferred Stock held.
(v) Any action required or permitted to be taken at a meeting of
Holders may be taken without a meeting, without prior notice and
without a vote, if one or more written consents, setting forth the
action so taken, shall be signed by the Holders of outstanding Senior
Preferred Stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shares of Senior Preferred Stock entitled to vote thereon
were present and voted.
(g) Conversion or Exchange; Registration Rights. The Holders of
shares of Senior Preferred Stock shall not have any rights hereunder
to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes
of Capital Stock of the Corporation other than as provided in the
Registration Rights Agreement. The Holders of shares of Senior
Preferred Stock shall have the rights described in the Registration
Rights Agreement.
(h) Reissuance of Senior Preferred Stock. Shares of Senior
Preferred Stock 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 Delaware)
have the status of authorized and unissued shares of Preferred Stock
undesignated as to series and may be redesignated and reissued as part
of any series of Preferred Stock; provided that any issuance of such
shares of Preferred Stock must be in compliance with the terms hereof.
(i) 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.
(j) Certain Covenants.
(i) Intentionally Omitted.
(ii) Restricted Payments.
(A) The Corporation shall not, and shall not cause or permit any
of the Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of Capital Stock or options, warrants or
rights to purchase Capital Stock of the Corporation (other than (x)
dividends or distributions payable solely in shares of Qualified
Capital Stock of the Corporation or in options, warrants or other
rights to acquire shares of such Qualified Capital Stock, and (y)
subject to paragraph (c)(iv), dividends or distributions in respect of
Senior Securities or Parity Securities of the Corporation that were
issued in accordance with paragraph (f)(ii)(A) or (B), as applicable);
(ii) purchase, redeem, defease or otherwise acquire or retire for
value, directly or indirectly (including through the purchase of
Capital Stock or options, warrants or rights to purchase Capital Stock
of any Person that directly or indirectly owns Capital Stock of the
Corporation), the Capital Stock or options, warrants or rights to
purchase Capital Stock of the Corporation (other than (x) any such
Capital Stock owned by the Corporation (other than Redeemable Capital
Stock) or (y) subject to paragraph (c)(iv), Senior Securities or
Parity Securities of the Corporation that were issued in accordance
with paragraph (f)(ii)(A) or (B), as applicable, or options, warrants
or other rights to acquire such Capital Stock); or
(iii) make any Investment (other than any Permitted Investment)
in any Person;
(any of the foregoing actions described in clauses (i) through (iii),
collectively, "Restricted Payments"), unless (1) immediately before and
immediately after giving effect to such Restricted Payment on a pro forma basis,
no Voting Rights Triggering Event (other than a Voting Rights Triggering Event
described in clause (3) or (5) of paragraph (f)(iii)(A)) shall have occurred and
be continuing; (2) immediately before and immediately after giving effect to
such Restricted Payment on a pro forma basis, the Corporation could incur $1.00
of additional Indebtedness (other than Permitted Indebtedness) under paragraph
(j)(iv); and (3) after giving effect to the proposed Restricted Payment, the
aggregate amount of all such Restricted Payments declared or made (or deemed
made) after the Issue Date, does not exceed the sum of:
(I) 50% of the cumulative Consolidated Net Income of the
Corporation during the period (treated as one accounting period)
beginning on the Issue Date and ending on the last day of the
Corporation's most recently ended fiscal quarter for which internal
financial statements are available at or prior to the time of such
Restricted Payment (or, if such cumulative Consolidated Net Income
shall be a deficit, minus 100% of such deficit); plus
(II) 100% of the aggregate net cash proceeds received after the
Issue Date by the Corporation from the issuance or sale (other than to
any of its Subsidiaries) of Qualified Capital Stock of the Corporation
or from the exercise of any options, warrants or rights to purchase
such Qualified Capital Stock of the Corporation or of Redeemable
Capital Stock or debt securities of the Corporation that have been
converted into such Qualified Capital Stock or any options, warrants
or rights to purchase such Qualified Capital Stock (except, in each
case, to the extent such proceeds are used to purchase, redeem or
otherwise retire Capital Stock as set forth below in clause (ii) or
(iv) of paragraph (B) below); plus
(III) in the case of the disposition or repayment of any
Investment (other than a Permitted Investment) made after the Issue
Date, an amount (to the extent not included in Consolidated Net
Income) equal to the lesser of (x) the return of capital with respect
to such Investment, less the cost of disposition of such Investment
and (y) the initial amount of such Investment; plus
(IV) so long as the Designation thereof was treated as a
Restricted Payment made after the Issue Date, with respect to any
Unrestricted Subsidiary that has been redesignated as a Restricted
Subsidiary after the Issue Date in accordance with paragraph
(j)(xi),the lesser of (x) the net book value of the Corporation's
Investment in such Unrestricted Subsidiary at the time of such
redesignation and (y) the Fair Market Value of such Investment at the
time of such redesignation; plus
(V) 100% of the aggregate amounts contributed to the capital of
the Corporation since the Issue Date; plus
(VI) 50% of any dividends received by the Corporation or a Wholly
Owned Restricted Subsidiary (except to the extent that such dividends
were already included in Consolidated Net Income) after the Issue Date
from an Unrestricted Subsidiary.
(B) Notwithstanding the foregoing clause (A), and in the case of
clauses (iii),(iv) and (vi) below, so long as no Voting Rights Triggering Event
(other than a Voting Rights Triggering Event described in clause (3) or (5)of
paragraph (f)(iii)(A)) shall have occurred and be continuing or would arise
therefrom, the foregoing provisions of clause (A) shall not prohibit the
following actions, which shall, however, be subject to paragraph (c)(iv), (each
of clauses (i) through (ix) being referred to as a "Permitted Payment"):
(i) the payment of any dividend or redemption payment within 60
days after the date of declaration thereof, if at such date of
declaration such payment was permitted by the provisions of this
Certificate of Designation, including as described under paragraph (A)
of this paragraph (j)(ii);
(ii) the repurchase, redemption, or other acquisition or
retirement of any shares of Capital Stock (or any options, warrants or
rights to purchase Capital Stock) of the Corporation or any Restricted
Subsidiary in exchange for (including any such exchange pursuant to
the exercise of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of fractional shares), or
out of the net cash proceeds of a substantially concurrent issue and
sale for cash to any Person (other than to a Restricted Subsidiary of
the Corporation) of, shares of Qualified Capital Stock (or options,
warrants or rights to purchase such Qualified Capital Stock) of the
Corporation; provided that the net cash proceeds that are utilized for
any such repurchase, redemption or other acquisition or retirement are
excluded from clause (II) of paragraph (A) of this paragraph (j)(ii);
(iii) Restricted Payments in an aggregate amount not to exceed
$10.0 million;
(iv) Investments (in addition to Permitted Investments) in
Persons engaged in a Permitted Business that are made out of the net
cash proceeds of the issuance of Qualified Capital Stock of the
Corporation; provided, that (x) such Investment is made within 30 days
of the receipt of the proceeds of the issuance of such Qualified
Capital Stock and (y) such Investment together with all other
Investments made pursuant to this clause (iv) does not exceed an
aggregate amount of $15.0 million; provided, further, that the net
cash proceeds from the sale of such shares of Qualified Capital Stock
are excluded from clause (II) of paragraph (A) of this paragraph
(j)(ii);
(v) subject to paragraph (c)(iv), any dividends or other payments
on or with respect to the Senior Preferred Stock or Parity Securities
issued in accordance with paragraph (f)(ii);
(vi) the repurchase, redemption, retirement or other acquisition
for value of any shares of Capital Stock (or options, warrants or
rights to purchase Capital Stock) of the Corporation or any Restricted
Subsidiary (other than any such repurchase, redemption, retirement or
other acquisition in connection with the Recapitalization) held by any
director, officer or employee of the Corporation or any of its
Restricted Subsidiaries pursuant to any employment agreement,
management equity subscription agreement, stock option or acquisition
agreement; provided, that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Capital Stock (or options,
warrants or rights to purchase Capital Stock) (x) from current
employees of the Corporation or any of its Restricted Subsidiaries
shall not exceed $1.0 million or (y) from former directors, officers
or employees of the Corporation or any of its Restricted Subsidiaries
shall not exceed $3.0 million, in each case in the aggregate in any
twelve-month period (other than any such repurchase, redemption,
retirement or other acquisition in connection with the
Recapitalization);
(vii) repurchases of Capital Stock (or options, warrants or
rights to purchase Capital Stock) deemed to occur upon cashless
exercise of stock options to the extent such Capital Stock (or
options, warrants or rights to purchase Capital Stock) represents a
portion of the exercise price of such options or related withholding
taxes (but only to the extent such withholding taxes do not exceed
$250,000 in any twelve-month period);
(viii) any payments on Redeemable Capital Stock issued in
accordance with this Certificate of Designation; and
(ix) payments of up to $3.0 million with respect to which the
Corporation has no indemnification rights under the agreements
governing the Recapitalization in connection with the final resolution
of any disputes existing as of the Issue Date regarding stock
ownership.
In computing the amount of Restricted Payments previously made
for purposes of clause (3) of paragraph (A) of this paragraph (j)(ii),
Restricted Payments under the immediately preceding clauses (i) and (vi) shall
be included.
The amount of all Restricted Payments (other than cash) shall be
the Fair Market Value (evidenced by a resolution of the Board of Directors set
forth in an officers' certificate delivered to the Significant Holders) on the
date of the Restricted Payment of the asset(s) proposed to be transferred by the
Corporation or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. Not later than the date of making any Restricted Payment,
the Corporation shall deliver to the Significant Holders an officers'
certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this paragraph (j)(ii) were
computed, which calculations may be based upon the Corporation's latest
available financial statements. No payment made in connection with the
Recapitalization shall be deemed to be a Restricted Payment hereunder.
(iii) Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Corporation shall not, and shall not cause or permit any of
the Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective or enter into any agreement with
any Person that would cause to become effective, any consensual encumbrance or
restriction of any kind, on the ability of any Restricted Subsidiary to (A)(i)
pay dividends, in cash or otherwise, or make any other distributions to the
Corporation or any of the Restricted Subsidiaries (x) on or in respect its
Capital Stock or (y) with respect to any other interest or participation in, or
measured by, its profits, or (ii) pay any Indebtedness owed to the Corporation
or any of the Restricted Subsidiaries, (B) make any Investment in the
Corporation or any of the Restricted Subsidiaries or (C) sell, lease or transfer
any of its properties or assets to the Corporation or any of the Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of: (i) any encumbrance or restriction existing under the Credit
Agreement or the Indenture and any other agreement, in each case as in effect on
the Issue Date, (ii) customary non-assignment provisions in leases, licenses and
other agreements entered into in the ordinary course of business and consistent
with past practices, (iii) Purchase Money Obligations for property acquired in
the ordinary course of business that impose restrictions of the nature described
in clause (C) above on the property so acquired, (iv) any encumbrance or
restriction, with respect to a Person that is not a Restricted Subsidiary on the
Issue Date in existence at the time such Person becomes a Restricted Subsidiary
and not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary; provided, however, that such encumbrances and
restrictions are not applicable to the Corporation or any other Restricted
Subsidiary, or the properties or assets of the Corporation or any other
Restricted Subsidiary, (v) customary restrictions with respect to a Restricted
Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary; provided, however, that any such restriction relates only
to the Capital Stock or assets being sold pursuant to such agreement, (vi) any
customary restriction in an agreement governing Indebtedness of a Restricted
Subsidiary incurred after the Issue Date in compliance with paragraph (j)(iv);
(vii) any encumbrance or restriction existing under any agreement that extends,
renews, refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clause (i), (iii) or (iv), or in this clause
(vii); provided, however, that the terms and conditions of any such encumbrances
or restrictions are no more restrictive than those under or pursuant to the
agreement so extended, renewed, refinanced or replaced; and (viii) applicable
law.
(iv) Incurrence of Indebtedness.
(A) The Corporation shall not, and shall not cause or permit any
of the Restricted Subsidiaries to, directly or indirectly, create, incur,
assume, issue, guarantee or in any manner become liable for or with respect to,
contingently or otherwise (in each case, to "incur"), the payment of, any
Indebtedness (including any Acquired Indebtedness); provided, however, that the
Corporation or any Restricted Subsidiary may incur Indebtedness (including
Acquired Indebtedness), if, in either case, immediately after giving pro forma
effect thereto, the Consolidated Fixed Charge Coverage Ratio of the Corporation
is at least equal to 2.0:1.0.
(B) Notwithstanding the foregoing, to the extent specifically
set forth below, the Corporation and the Restricted Subsidiaries may incur each
and all of the following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Corporation and its Restricted
Subsidiaries under the Senior Subordinated Notes and guarantees
thereof in an aggregate principal amount, when taken together with any
refinancings thereof pursuant to clause (ix), not to exceed $100.0
million at any one time outstanding;
(ii) Indebtedness of the Corporation and its Restricted
Subsidiaries under the Credit Agreement (and guarantees thereof) in an
aggregate principal amount not to exceed $475.0 million at any time
outstanding, less the principal amount of any scheduled or mandatory
payments made under the Credit Agreement to the extent the commitments
thereunder are reduced in connection therewith;
(iii) Indebtedness of the Corporation or any Restricted
Subsidiary outstanding on the Issue Date (other than under the Credit
Agreement and the Senior Subordinated Notes);
(iv) Indebtedness of the Corporation owing to a Wholly Owned
Restricted Subsidiary for so long as such Indebtedness is owing to a
Wholly Owned Restricted Subsidiary; provided that the disposition,
pledge or transfer of any such Indebtedness to a Person (other than a
disposition, pledge or transfer to a Wholly Owned Restricted
Subsidiary) shall be deemed to be an incurrence of such Indebtedness
by the Corporation not permitted by this clause (iv);
(v) Indebtedness of a Restricted Subsidiary owing to and held by
the Corporation or another Restricted Subsidiary; provided that (a)
any disposition, pledge or transfer of any such Indebtedness to a
Person (other than the Corporation or a Restricted Subsidiary) shall
be deemed to be an incurrence of such Indebtedness by the obligor not
permitted by this clause (v), and (b) any transaction pursuant to
which any Restricted Subsidiary, which has Indebtedness owing to the
Corporation or any other Restricted Subsidiary, ceases to be a
Restricted Subsidiary shall be deemed to be the incurrence of
Indebtedness by such Restricted Subsidiary that is not permitted by
this clause (v);
(vi) the incurrence by the Corporation or any Restricted
Subsidiary of Hedging Obligations that are incurred (a) for the
purpose of fixing or hedging interest rate risk with respect to any
Indebtedness that is permitted to be incurred by the terms of this
Certificate of Designation or (b) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges, in
either case not for speculative purposes;
(vii) Indebtedness of the Corporation or any Restricted
Subsidiary represented by Capitalized Lease Obligations or Purchase
Money Obligations or other Indebtedness incurred or assumed in
connection with the acquisition or development of real or personal
(tangible or intangible) property in each case incurred for the
purpose of financing or refinancing all or any part of the purchase
price, or cost of installation, construction or improvement of
property used in the business of the Corporation or such Restricted
Subsidiary, in an aggregate principal amount, when taken together with
any refinancings thereof pursuant to clause (ix), not to exceed $10.0
million at any one time outstanding;
(viii) letters of credit to support workers compensation
obligations and bankers acceptances and performance bonds, surety
bonds and performance guarantees, of the Corporation or any Restricted
Subsidiary, in each case, in the ordinary course of business
consistent with past practice;
(ix) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any
Indebtedness incurred under paragraph (j)(iv)(A) above or described in
clauses (B)(i), (ii), (iii) and (vii), including any successive
refinancings so long as the aggregate principal amount (or accreted
value, if applicable) of Indebtedness represented thereby is not
increased by such refinancing plus the amount of any premium or other
payment required to be paid in connection with such a refinancing
pursuant to the terms of the Indebtedness being refinanced plus the
amount of expenses of the Corporation or a Restricted Subsidiary
incurred in connection with such refinancing and such refinancing does
not reduce the Average Life to Stated Maturity or the Stated Maturity
of such Indebtedness;
(x) guarantees by the Corporation or any Restricted Subsidiary of
Indebtedness incurred by the Corporation or a Restricted Subsidiary so
long as the incurrence of such Indebtedness by the primary obligor
thereon was permitted under the terms of this Certificate of
Designation;
(xi) the incurrence by the Corporation's Unrestricted
Subsidiaries of Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Corporation; and
(xii) Indebtedness of the Corporation or any Restricted
Subsidiary in addition to that described in clauses (i) through (xi)
above, and any refinancing thereof, so long as the aggregate principal
amount of all such additional Indebtedness shall not exceed $20.0
million outstanding at any one time in the aggregate (all or part of
which may, but need not, be incurred under the Credit Agreement).
(C) For purposes of determining compliance with this paragraph
(j)(iv), in the event that an item of Indebtedness meets the criteria of more
than one of the categories of Indebtedness described in clauses (i) through
(xii) of the immediately preceding paragraph (B), the Corporation shall, in its
sole discretion, classify such item of Indebtedness in any manner that complies
with this paragraph (j)(iv) and will only be required to include the amount and
type of such Indebtedness in one of such clauses or pursuant to paragraph
(j)(iv)(A); provided that (1) Indebtedness outstanding on the Issue Date (other
than under the Credit Agreement or the Senior Subordinated Notes) will be deemed
outstanding under clause (B)(iii), and (2) Indebtedness under the Credit
Agreement (including amounts outstanding on the Issue Date) of up to $475.0
million (as reduced under clause (B)(ii)) will be deemed incurred under clause
(B)(ii). Accrual of interest, accretion of accreted value and the payment of
interest through the issuance of securities paid-in-kind shall not be deemed to
be an incurrence of Indebtedness for purposes of this paragraph (j)(iv).
(v) Transactions with Affiliates. The Corporation shall not, and
shall not cause or permit any of the Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate of the Corporation or of a
Restricted Subsidiary (other than transactions between or among the Corporation
and/or any of its Restricted Subsidiaries) unless (A) such transaction is on
terms that are no less favorable to the Corporation or such Restricted
Subsidiary, as the case may be, than those that might reasonably have been
obtained in a comparable transaction with an unrelated Person, (B) with respect
to any transaction or series of related transactions involving aggregate value
in excess of $2.5 million, the Corporation delivers to each Significant Holder
an Officers' Certificate describing such transaction or transactions, certifying
that such transaction or transactions have been approved by a majority of the
Disinterested Directors of the Corporation, or in the event there is only one
Disinterested Director, by such Disinterested Director, and certifying that such
transaction or transactions comply with clause (A) above and (C) with respect to
any transaction or series of related transactions involving aggregate payments
in excess of $7.5 million, the Corporation delivers to each Holder a written
opinion of an Independent Financial Advisor stating that the transaction or
series of related transactions is fair to the Corporation or such Restricted
Subsidiary from a financial point of view (it being agreed that an opinion from
an Independent Financial Advisor stating that the transaction is at Fair Market
Value shall be sufficient); provided, however, that this provision shall not
apply to: (I) any transaction with an officer or director of the Corporation
(acting in such capacity) entered into in the ordinary course of business
(including compensation and employee benefit arrangements with any officer,
director or employee of the Corporation, including under any stock option or
stock incentive plans); (II) any Restricted Payment or Permitted Investment
otherwise permitted by the terms of this Certificate of Designation; (III) those
agreements and arrangements existing and as in effect on the Issue Date; (IV)
the payment of reasonable and customary fees and compensation to, and
indemnification agreements (and payments thereunder) for the benefit of,
officers, directors and employees entered into in the ordinary course of
business; (V) the agreements and arrangements pursuant to or referred to in the
Purchase Agreement, this Certificate of Designation, the Registration Rights
Agreement and the other documents entered into in connection with the
Recapitalization; (VI) so long as no Voting Rights Triggering Event has occurred
and is continuing, the payment of management, consulting, monitoring and
advisory fees and related expenses to the Equity Investor and its Affiliates not
to exceed $500,000 in any calendar year (other than the fees and unrelated
expenses incurred by and paid to or on behalf of the Equity Investor and its
Affiliates in connection with the Recapitalization, which fees and expenses are
exempt from the terms hereof); and (VII) any transaction with OSI Funding Corp.
(or any other Person engaged in business with the Corporation or any of its
Restricted Subsidiaries similar to OSI Funding Corp.'s business) entered into in
the ordinary course of business consistent with past practices.
(vi) Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries. The Corporation shall not, and shall not cause or
permit any of the Restricted Subsidiaries to, transfer, convey, sell, issue or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted
Subsidiaries to any Person (other than the Corporation or a Wholly Owned
Restricted Subsidiary), unless such transfer, conveyance, sale, issue or other
disposition (x) is pursuant to and in accordance with the provisions of
paragraphs (j)(viii), (j)(ix) or, with respect to the transfer, conveyance,
sale, lease or other disposition of all of the Capital Stock of a Wholly Owned
Restricted Subsidiary, (j)(xv) or (y) is of directors' qualifying shares to the
extent required by applicable law; provided, however, that this covenant shall
not apply to any pledge of and foreclosure on Capital Stock of any Restricted
Subsidiary to secure Indebtedness under the Credit Agreement.
(vii) Payments for Consents. Neither the Corporation nor any of
its Subsidiaries shall, directly or indirectly, pay or cause to be paid any
economic consideration, whether by way of interest, fee or otherwise, to any
Holder in consideration for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Certificate of Designation
unless such economic consideration is concurrently offered to be paid or is
concurrently paid to all Holders that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
(viii) Merger, Consolidation, or Sale of Assets. The Corporation
shall not consolidate or merge with or into (whether or not the Corporation is
the surviving corporation), or directly and/or indirectly through its
Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of the properties and assets of the Corporation and its
Restricted Subsidiaries taken as a whole in one or more related transactions, to
any other Person unless (A)(i) the Corporation is the surviving corporation or
(ii) the entity or the Person formed by or surviving any such consolidation or
merger (if other than the Corporation) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (the
entity or Person described in this clause (ii), the "Successor Corporation") is
a corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (B) the Successor Corporation assumes
all the obligations of the Corporation under this Certificate of Designation and
the Purchase Agreement pursuant to an amendment or supplement hereto or thereto,
as applicable, and each other instrument, document or agreement entered into by
the Corporation in connection therewith, in each case in a form reasonably
satisfactory to the Required Holders; (C) immediately after such transaction no
Voting Rights Triggering Event (other than a Voting Rights Triggering Event
described in clause (1) (so long as, on a pro forma basis after giving effect to
such transaction, the Corporation will pay any accrued and unpaid dividends
since December 1, 2004 in cash, (3) or (5) of paragraph (f)(iii)(A)) exists; and
(D) the Corporation will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio
test set forth in paragraph (j)(iv)(A) hereof.
(ix) Successor Corporation Substituted. Upon any consolidation
of the Corporation with, or merger of the Corporation into, any other Person or
any transfer, conveyance, sale, lease or other disposition of all or
substantially all of the properties and assets of the Corporation and its
Subsidiaries taken as a whole in one or more related transactions in accordance
with paragraph (j)(viii), the Successor Corporation shall succeed to, and be
substituted for, and may exercise every right and power of, the Corporation
under this Certificate of Designation and the Purchase Agreement with the same
effect as if such Successor Corporation had been named as the Corporation herein
or therein, and thereafter, except in the case of a lease, the predecessor
Corporation shall be relieved of all obligations and covenants under this
Certificate of Designation and the Purchase Agreement.
(x) Intentionally Omitted.
(xi) Limitations on Unrestricted Subsidiaries. The Corporation
may designate after the Issue Date any Subsidiary as an "Unrestricted
Subsidiary" under this Certificate of Designation (a "Designation") only if:
(A) no Voting Rights Triggering Event (other than a Voting Rights
Triggering Event described in clause (1), (3) or (5) of paragraph
(f)(iii)(A)) shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(B) the Corporation would be permitted to make an Investment at
the time of Designation (assuming the effectiveness of such
Designation) pursuant to this Certificate of Designation in an amount
(the "Designation Amount") equal to the Fair Market Value of the
interest of the Corporation and the Restricted Subsidiaries in such
Subsidiary on such date; provided, that the Fair Market Value of
securities of such Subsidiary shall be deemed to be the cash purchase
price paid by the Corporation or such Restricted Subsidiary therefor;
and
(C) the Corporation would be permitted under this Certificate of
Designation to incur $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio test set forth in paragraph
(j)(iv)(A) at the time of such Designation (assuming the effectiveness
of such Designation).
In the event of any such Designation, the Corporation shall be
deemed to have made an Investment for all purposes of this Certificate of
Designation in the Designation Amount.
Except to the extent permitted by paragraph (j)(ii), the
Corporation shall not, and shall not cause or permit any Restricted Subsidiary
to, at any time (x) provide credit support for or subject any of its property or
assets (other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary. All Subsidiaries of Unrestricted Subsidiaries shall automatically be
deemed to be Unrestricted Subsidiaries.
The Corporation may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(A) no Voting Rights Triggering Event (other than a Voting Rights
Triggering Event described in clause (1), (3) or (5) of paragraph
(f)(iii)(A)) shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and
(B) all Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if incurred at such time,
be permitted to be incurred for all purposes of this Certificate of
Designation.
All Designations and Revocations must be evidenced by resolutions
of the Board of Directors of the Corporation delivered to each Significant
Holder certifying compliance with the foregoing provisions.
(xii) Conduct of Business. The Corporation and the Restricted
Subsidiaries shall not engage in any business other than a Permitted Business.
(xiii) Sale and Leaseback. The Corporation will not, and will not
permit any of its Restricted Subsidiaries to, enter into any Sale and Leaseback
Transaction unless (a) the Corporation or its Restricted Subsidiaries entering
into such Sale and Leaseback Transaction could have incurred the Indebtedness
relating to such Sale and Leaseback pursuant to paragraph (j)(iv) and (b) the
net cash proceeds of such Sale and Leaseback Transaction are at least equal to
the Fair Market Value of such property as determined by the Board of Directors
of the Corporation and are applied in accordance with paragraph (j)(xv).
(xiv) Reports; Books, Records and Access. So long as the
Corporation is subject to the periodic reporting requirements of the Exchange
Act, it will file the information required thereby with the Commission and will
furnish such information to Holders upon filing thereof with the Commission. If
the Corporation is entitled under the Exchange Act not to file such information
with the Commission, it will nonetheless file such information with the
Commission to the extent permitted by the Commission and further will furnish
such information to Holders on the date on which filing with the Commission
would have been required.
(xv) Asset Sales. (A) The Corporation shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly, consummate
an Asset Sale, unless (i) at least 85% of the consideration from such Asset Sale
is received in cash or Cash Equivalents and (ii) the Corporation or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the shares or assets subject to such
Asset Sale; provided, however, that the amount of (x) any liabilities (as shown
on the Corporation's or such Restricted Subsidiary's most recent balance sheet)
of the Corporation or any Restricted Subsidiary that are assumed by the
transferee of such assets pursuant to any arrangement releasing the Corporation
or such Restricted Subsidiary from further liability and (y) any notes or other
obligations received by the Corporation or any such Restricted Subsidiary from
such transferee that are immediately converted by the Corporation or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision. Notwithstanding anything to
the contrary contained herein, any Asset Sale to OSI Funding Corp. (or any
successor entity thereof) in the ordinary course of business consistent with
past practices shall be deemed to have complied with clause (ii) above.
(B) Within 365 days after the receipt of any net cash proceeds
from an Asset Sale, the Corporation or the applicable Restricted Subsidiary
shall apply such net cash proceeds (i) to repay Indebtedness of the Corporation
or any Restricted Subsidiary and permanently reduce any related commitment
and/or (ii) to the acquisition of a controlling interest in any Permitted
Business, the making of a capital expenditure or the acquisition of Purchased
Portfolios or any other long-term assets, in each case, in, or that is used or
useful in, a Permitted Business and/or (iii) to make an Investment in properties
or assets that replace the properties or assets that are the subject of such
Asset Sale. Pending the final application of any such net cash proceeds, the
Corporation may invest such net cash proceeds in any manner that is not
prohibited by this Certificate of Designation and in any event may temporarily
reduce Indebtedness under a revolving credit facility otherwise permitted to be
entered into under this Certificate of Designation, or otherwise may invest such
proceeds in Cash Equivalents.
(k) Transfer Agent and Registrar. The Corporation is the transfer
agent (the "Transfer Agent") and registrar for the Senior Preferred Stock.
(l) Definitions. As used in this Certificate of Designation, 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:
"Accrued Dividend Amount" shall have the meaning provided in
paragraph (c)(i).
"Accrued Dividend Rate" means an annual rate equal to 14%.
"Acquired Indebtedness" means Indebtedness of a Person (i)
assumed in connection with an Asset Acquisition from such Person or (ii)
existing at the time such Person is merged with or into or otherwise becomes a
Restricted Subsidiary of any other Person (including, without limitation, any
Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person merging with or into or otherwise becoming such a
Restricted Subsidiary). Acquired Indebtedness shall be deemed to be incurred on
the date of the related Asset Acquisition from any Person or the date the
acquired Person is merged with or into or otherwise becomes a Restricted
Subsidiary, as the case may be.
"Advisory Services Agreement" means the Advisory Services
Agreement, dated as of September 21, 1995, between the Company and Madison
Dearborn Capital Partners III, L.P. (as successor to MDC Management Company III,
L.P.), as amended from time to time.
"Affiliate" means with respect to any specified Person: (i) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 10% or more of such specified Person's
Capital Stock; or (iii) any other Person 10% or more of the Voting Stock of
which is beneficially owned or held directly or indirectly by such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Notwithstanding
anything to the contrary contained herein, no portfolio company of Madison
Dearborn Capital Partners III, L.P., nor any portfolio company of a fund managed
by or affiliated with Madison Dearborn Partners, Inc., shall be deemed an
Affiliate of the Corporation. None of Ares, DB, First Union, Abbott Capital 1330
Investors II, L.P., Abbott Capital Private Equity Fund III, L.P., BNY Partners
Fund, L.L.C., Heller Financial, Inc. or Magnetite Asset Investors L.L.C. shall
be deemed to be an Affiliate of the Corporation.
"Ares" means Ares Leveraged Investment Fund, L.P. and Ares
Leveraged Investment Fund II, L.P. and/or any of their Affiliates.
"Asset Acquisition" means (i) an Investment by the Corporation or
any Restricted Subsidiary in any other Person pursuant to which such Person will
become a Restricted Subsidiary or will be merged or consolidated with or into
the Corporation or any Restricted Subsidiary or (ii) the acquisition by the
Corporation or any Restricted Subsidiary of the assets of any Person which
constitute substantially all of the assets of such Person, or any division or
line of business of such Person, or which is otherwise outside of the ordinary
course of business.
"Asset Sale" means any sale, issuance, conveyance, transfer or
other disposition (including pursuant to a Sale and Leaseback Transaction)
(collectively, a "transfer"), in one or a series of related transactions, of:
(i) any Capital Stock of any Restricted Subsidiary (other than to the
Corporation or any other Restricted Subsidiary); or (ii) any other properties or
assets of the Corporation or any Restricted Subsidiary other than in the
ordinary course of business. For the purposes of this definition, the term
"Asset Sale" shall not include: (a) the transfer of all or substantially all of
the assets of the Corporation in a manner permitted pursuant to and in
accordance with the provisions of paragraph (j)(viii) hereof or any transfer
that constitutes a Change of Control pursuant to this Certificate of
Designation; (b) any transfer that is a Restricted Payment or Permitted
Investment that is permitted under the provisions of paragraph (j)(ii) hereof;
(c) any transfer or related series of transfers of assets with an aggregate Fair
Market Value of less than $1.0 million; or (d) any sale of a Purchased Portfolio
in the ordinary course of business.
"Average Life to Stated Maturity" means, when applied to any
Indebtedness at any date of determination, the number of years obtained by
dividing (a) the then outstanding aggregate principal amount of such
Indebtedness into (b) the sum of the total of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) which will elapse between such date and the making of
such payment.
"Board of Directors" shall have the meaning provided in the first
paragraph of this Certificate of Designation.
"Business Day" means any day except a Saturday, a Sunday, or a
day on which banking institutions in The City of New York or at a place of
payment are authorized by law, regulation or executive order to remain closed.
"Capital Stock" means, (i) with respect to any Person that is a
corporation, corporate stock; (ii) with respect to any Person that is an
association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated and whether or not voting) of
corporate stock, including each class of Common Stock and Preferred Stock of
such Person; (iii) with respect to any Person that is not a corporation, any and
all partnership, membership or other equity interests of such Person; and (iv)
any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of the assets of,
the issuing Person.
"Capitalized Lease Obligation" means, at the time determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Cash Equivalents" means, at any time, (i) United States dollars,
(ii) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than one year from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500.0 million and a Thomson Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (ii)
and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper rated
A-1 or higher by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. and in each case maturing within one year after the date of
acquisition.
"Certificate of Designation" means this Certificate of
Designation creating the Senior Preferred Stock.
"Certificate of Incorporation" shall have the meaning provided in
the first paragraph of this Certificate of Designation.
"Change of Control" means the occurrence, after the date of the
Recapitalization, of any of the following events (whether or not approved by the
Board of Directors of the Corporation): (i) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 50% or more of the total voting power of
the then outstanding Voting Stock of the Corporation; (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Corporation (together with any new
directors whose election to such board or whose nomination for election by the
stockholders of the Corporation was approved by a vote of at least a majority of
the directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of such Board of
Directors then in office; (iii) the Corporation consolidates with or merges with
or into any Person (other than a Wholly Owned Restricted Subsidiary) or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person (other than a Wholly Owned
Restricted Subsidiary), or any corporation consolidates with or merges into or
with the Corporation, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Corporation is changed into or exchanged for
cash, securities or other property, other than any such transaction where the
outstanding Voting Stock of the Corporation is not changed or exchanged at all
(except to the extent necessary solely to reflect a change in the jurisdiction
of incorporation of the Corporation) or where (A) the outstanding Voting Stock
of the Corporation is changed into or exchanged for (x) Voting Stock of the
surviving corporation which is not Redeemable Capital Stock or (y) cash,
securities and other property (other than Capital Stock of the surviving
corporation) in an amount which could be paid by the Corporation as a Restricted
Payment as described under paragraph (j)(ii) (and such amount shall be treated
as a Restricted Payment subject to the provisions described under paragraph
(j)(ii)) and (B) no "person" or "group" owns immediately after such transaction,
directly or indirectly, more of the total voting power of the then outstanding
Voting Stock of the surviving corporation than the total voting power of the
then outstanding Voting Stock of the surviving corporation held by the Permitted
Holders; or (iv) any order, judgment or decree shall be entered against the
Corporation decreeing the dissolution or split-up of the Corporation and such
order shall remain undischarged or unstayed for a period in excess of sixty
days.
"Class A Senior Preferred Stock" shall have the meaning provided
in paragraph (a).
"Class B Senior Preferred Stock" shall have the meaning provided
in paragraph (a).
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any time
after the Issue Date such Commission is not existing and performing the duties
now assigned to it under the Exchange Act, the body performing such duties at
such time.
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to:
(i) vote in the election of directors of such Person
or
(ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers
or others that will control the management and policies of such
Person.
"Consolidated Cash Flow Available for Fixed Charges" means, for
any period, the Consolidated Net Income of the Corporation for such period plus
(i) an amount equal to any extraordinary loss plus any net loss realized in
connection with all Asset Sales (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of the Corporation and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was deducted in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of the
Corporation and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capitalized Lease Obligations, imputed interest
with respect to Indebtedness attributable to any Sale and Leaseback Transaction,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) any Consolidated Non-Cash
Charges that were deducted in computing such Consolidated Net Income, less (v)
the aggregate amount of contingent and "earnout" payments in respect of any
Permitted Business acquired by the Corporation or any Restricted Subsidiary that
are paid in cash during such period and less (vi) any non-cash items increasing
Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of the
aggregate amount of Consolidated Cash Flow Available for Fixed Charges of the
Corporation for the four full fiscal quarters immediately preceding the date of
the transaction (the "Calculation Date") giving rise to the need to calculate
the Consolidated Fixed Charge Coverage Ratio for which consolidated financial
information of the Corporation is available (such four full fiscal quarter
period being referred to herein as the "Four Quarter Period") to the aggregate
amount of Consolidated Fixed Charges of the Corporation for such Four Quarter
Period. In the event that the Corporation or any of its Restricted Subsidiaries
incurs, assumes, guarantees or redeems any Indebtedness (other than revolving
credit or other similar borrowings which may be repaid and reborrowed)
subsequent to the commencement of the period for which the Consolidated Fixed
Charge Coverage Ratio is being calculated but prior to the Calculation Date,
then the Consolidated Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee or redemption of
Indebtedness, as if the same had occurred at the beginning of the applicable
Four Quarter Period. In addition, for purposes of making the computation
referred to above, (i) acquisitions (including Asset Acquisitions) that have
been made by the Corporation or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the Four Quarter Period or subsequent to such period and on
or prior to the Calculation Date shall be deemed to have occurred on the first
day of the Four Quarter Period and Consolidated Cash Flow Available For Fixed
Charges and Consolidated Fixed Charges for such period shall be calculated
giving pro forma effect (excluding any pro forma increase in revenues but
including any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act) to such Asset
Acquisition and without giving effect to clause (iii) of the proviso set forth
in the definition of Consolidated Net Income, and (ii) the Consolidated Cash
Flow Available for Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and to operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Consolidated
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and to operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Consolidated Fixed Charges shall not be obligations of the
Corporation or any of its Restricted Subsidiaries following the Calculation
Date.
"Consolidated Fixed Charges" means, for any period, the sum of
(i) the consolidated interest expense of the Corporation and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capitalized Lease Obligations, imputed interest with respect to Indebtedness
attributable to any Sale and Leaseback Transaction, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding amortization of those deferred financing costs
reflected on the Corporation's combined consolidated balance sheet as of the
date of this Certificate of Designation) and (ii) the consolidated interest
expense of the Corporation and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is guaranteed by the Corporation or one of its Restricted
Subsidiaries or secured by a Lien on assets of the Corporation or one of its
Restricted Subsidiaries (whether or not such guarantee or Lien is called upon)
and (iv) the product of (a) all cash dividend payments (and non-cash dividend
payments in the case of a Person that is a Restricted Subsidiary) on any series
of Preferred Stock of such Person, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate of
the Net Income of the Corporation and its Restricted Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the Corporation or a Wholly Owned Restricted Subsidiary thereof, (ii)
the Net Income of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by the
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interest transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income of any Unrestricted Subsidiary shall be excluded, except to the
extent set forth in clause (i) above.
"Consolidated Non-cash Charges" means, for any period, the
aggregate depreciation and amortization (including (i) amortization of goodwill,
(ii) amortization of Purchased Portfolios, (iii) amortization of amounts
reflected on the Corporation's combined consolidated balance sheet as of the
date of this Certificate of Designation related to "in-process technology," (iv)
any incremental increase in amortization of account inventory resulting from
write-ups of such inventory in connection with the purchase accounting treatment
of an acquisition and (v) amortization of other intangibles and other non-cash
charges (excluding any such intangible and non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period)) of the
Corporation and its Restricted Subsidiaries for such period, in each case,
determined on a consolidated basis in accordance with GAAP.
"Corporation" shall have the meaning provided in the first
paragraph of this Certificate of Designation.
"Credit Agreement" means the Senior Secured Credit Facility dated
as of November 30, 1999 among the Corporation, certain subsidiaries of the
Corporation, as guarantors, DLJ Capital Funding, Inc., as Syndication Agent,
Fleet National Bank, N.A., as Administrative Agent, and Harris Trust & Savings
Bank, as Documentation Agent, and the other financial institutions from time to
time party thereto, together with the related documents (including notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith), and in each case as amended (including any amendment and
restatement thereof), modified, renewed, refunded, replaced or refinanced from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder or adding Restricted Subsidiaries of the
Corporation as additional borrowers or guarantors thereunder) all or any portion
of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
creditors.
"DB" means DB Capital Investors, L.P. and/or any of its
Affiliates.
"Default Dividends" shall have the meaning provided in paragraph
(c)(i).
"Designation" shall have the meaning provided in
paragraph(j)(xi).
"Designation Amount" shall have the meaning provided in
paragraph(j)(xi).
"Disinterested Director" means, with respect to any transaction
or series of related transaction, a member of the Board of Directors of the
Corporation who does not have any material direct or indirect financial interest
in or with respect to such transaction or series of related transactions.
"Dividend Default" shall have the meaning provided in paragraph
(f)(iii)(A).
"Dividend Payment Date" means March 1, June 1, September 1 and
December 1 of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each quarterly period from a Dividend Payment Date to the next
following Dividend Payment Date (but without including such Dividend Payment
Date).
"Dividend Record Date" means February 15, May 15, August 15 and
November 15 of each year.
"Equity Investor" means collectively, Madison Dearborn Capital
Partners III, L.P., Madison Dearborn Special Equity III, L.P. and Special
Advisers Fund I, L.L.C.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length, free market transaction,
for cash, between an informed and willing seller under no compulsion to sell and
an informed and willing buyer, neither of which is under pressure or compulsion
to complete the transaction. Fair Market Value shall be determined by the Board
of Directors of the Corporation or the applicable Restricted Subsidiary acting
reasonably and in good faith.
"First Union" means First Union Investors, Inc. and/or any of its
Affiliates.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange agreements, interest rate
swap agreements, interest rate cap agreements or interest rate collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in currency exchange or interest rates.
"Holder" means a holder of shares of Senior Preferred Stock as
reflected in the register maintained by the Transfer Agent for the Senior
Preferred Stock.
"incur" shall have the meaning provided in paragraph (j)(iv).
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capitalized Lease Obligations or the balance
deferred and unpaid of the purchase price of any property (other than contingent
or "earnout" payment obligations) or representing any Hedging Obligations
(except any such balance that constitutes an accrued expense or trade payable)
or any Redeemable Capital Stock of such Person, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all indebtedness of others secured by a Lien on
any asset of such Person in an amount equal to the lesser of the aggregate
amount of such indebtedness secured by such Lien and the value of all of the
assets of such Person securing such indebtedness (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the guarantee by such Person of any indebtedness of any other Person.
"Indenture" means the indenture dated as of November 6, 1996, by
and between the Corporation and Wilmington Trust Company, as trustee, governing
the Senior Subordinated Notes, as amended (including any amendment and
restatement thereof), modified, renewed, refunded, replaced or refinanced from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring all or any portion of the Indebtedness
under such agreement or any successor or replacement agreement.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm which is nationally recognized within the United States
of America
(i) which does not, and whose directors, officers and employees
or Affiliates do not, have a direct or indirect financial interest in
the Corporation or any of its Subsidiaries or Affiliates, and
(ii) which, in the judgment of the Board of Directors of the
Corporation, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Initial Dividend Period" means the dividend period commencing on
the Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Investment" means, with respect to any Person, any direct or
indirect advance, loan or other extension of credit (including by means of a
guarantee) or capital contribution (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business) to
(by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others or otherwise), or any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by any other
Person and all other items that would be classified as investments on a balance
sheet prepared in accordance with GAAP. Investments shall exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices. If the Corporation or any Restricted Subsidiary of the Corporation
sells or otherwise disposes of any Capital Stock of any direct or indirect
Restricted Subsidiary of the Corporation such that, after giving effect to any
such sale or disposition, the Corporation no longer owns, directly or
indirectly, a majority of the outstanding Capital Stock of such Restricted
Subsidiary, the Corporation shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the Fair Market Value of the
Capital Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means December 10, 1999.
"Junior Preferred Stock" means the Company's Junior Preferred
Stock issued in connection with the Recapitalization, with terms and conditions
thereof as set forth in the Certificate of Designation of the Power, Preferences
and Relative, Participating, Optional and Other Special Rights of Junior
Preferred Stock, and Qualifications, Limitations and Restrictions thereof filed
on the Issue Date.
"Junior Securities" shall have the meaning provided in paragraph
(b).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidation Preference" means, initially, $1,000.00 per share of
Senior Preferred Stock subject to increase as provided under paragraph (c)(i)
hereof and, thereafter, means the Liquidation Preference as so increased.
"Mandatory Redemption Date" shall have the meaning provided in
paragraph (e)(ii).
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to Sale and Leaseback Transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Corporation nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; and (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Corporation or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders have been
notified in writing that they shall not have any recourse to the stock or assets
of the Corporation or any of its Restricted Subsidiaries.
"Parity Securities" shall have the meaning provided in paragraph
(b).
"Permitted Business" means the business of the Corporation and
its Subsidiaries as of the Issue Date and any other business reasonably related,
ancillary or complementary thereto.
"Permitted Holders" means Ares, DB, First Union, Abbott Capital
1330 Investors II, L.P., Abbott Capital Private Equity Fund III, L.P., BNY
Partners Fund, L.L.C., Heller Financial, Inc., Magnetite Asset Investors L.L.C.
and Madison Dearborn Capital Partners III, L.P. and any of their respective
Affiliates.
"Permitted Investments" means: (i) any Investment (a) by the
Corporation or any Restricted Subsidiary in the Corporation or in a Restricted
Subsidiary or (b) by Unrestricted Subsidiaries in other Unrestricted
Subsidiaries; (ii) any Investment in cash and Cash Equivalents; (iii) any
Investment by the Corporation or any Restricted Subsidiary in a Person, if as a
result of such Investment (a) such Person becomes a Restricted Subsidiary or (b)
such Person is merged, consolidated or amalgamated with or into, or transfers or
conveys all or substantially all of its assets to, or is liquidated into, the
Corporation or a Restricted Subsidiary; (iv) any Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with the provisions of paragraph (j)(xv) hereof; (v) other
Investments in any Person (other than a Restricted Subsidiary) having an
aggregate Fair Market Value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (v) that are at the time
outstanding, not to exceed $7.5 million; (vi) loans and advances to employees,
directors and officers of the Corporation and the Restricted Subsidiaries in the
ordinary course of business not to exceed $5.0 million at any one time
outstanding; (vii) Investments acquired by the Corporation or any of its
Restricted Subsidiaries (A) in exchange for any other Investment or receivable
held by the Corporation or any such Restricted Subsidiary in connection with or
as a result of a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other Investment or receivable or (B) as a result of a
foreclosure by the Corporation or any of its Restricted Subsidiaries with
respect to any secured Investment or other transfer of title with respect to any
secured Investment in default; (viii) Investments represented by Hedging
Obligations; (ix) any Investment existing on the Issue Date; (x) any acquisition
by the Corporation or any of its Restricted Subsidiaries of Purchased
Portfolios; (xi) any acquisition of assets, Capital Stock, options, warrants or
other rights to acquire shares of Capital Stock or other securities by the
Corporation for consideration consisting of Common Stock or options, warrants or
other rights to acquire shares of Common Stock of the Corporation; and (xii)
subject to paragraph (f)(ii), Investments the payment for which consists
exclusively of Capital Stock (exclusive of Redeemable Capital Stock) or options,
warrants or other rights to acquire shares of Qualified Capital Stock.
"Permitted Payment" shall have the meaning provided in paragraph
(j)(ii).
"Person" means any individual, corporation, partnership, limited
liability corporation, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, Capital
Stock of any class or classes (however designated) of such Person which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Capital Stock of any other class of such
Person. With respect to the Corporation, the term "Preferred Stock" shall
include the Senior Preferred Stock.
"property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchase Agreement" means the Purchase Agreement dated December
10, 1999 by and among the Corporation, Ares Leveraged Investment Fund, L.P.,
Ares Leveraged Investment Fund II, L.P., DB Capital Investors, L.P., First Union
Investors, Inc., Abbott Capital 1330 Investors II, L.P., Abbott Capital Private
Equity Fund III, L.P., BNY Partners Fund, L.L.C., Heller Financial, Inc. and
Magnetite Asset Investors L.L.C.
"Purchase Money Obligation" means Indebtedness of a Person
incurred in the normal course of business of such Person for the purpose of
financing all or any part of the purchase price, or the cost of installation,
construction or improvement of any property or assets.
"Purchased Portfolios" means account receivable portfolios
purchased by the Corporation or any of its Restricted Subsidiaries in the
ordinary course of business.
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
"Recapitalization" means the recapitalization of the Corporation
pursuant to the Stock Subscription and Redemption Agreement dated as of October
8, 1999 among the Corporation, Madison Dearborn Capital Partners III, L.P., and
the stockholders, optionholders, and warrantholders of the Corporation party
thereto, which shall be consummated on the Issue Date.
"Redeemable Capital Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily reedemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date that is 91 days after the Stated Maturity of the Senior
Preferred Stock.
"Redemption Date" with respect to any shares of Senior Preferred
Stock, means the date on which such shares of Senior Preferred Stock are
redeemed by the Corporation.
"Redemption Notice" shall have the meaning provided in paragraph
(e)(iii).
"refinancing" shall have the meaning provided in paragraph (j)
(iv).
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date among the Corporation, Ares Leveraged
Investment Fund, L.P., Ares Leveraged Investment Fund II, L.P., DB Capital
Investors, L.P., First Union Investors, Inc., Abbott Capital 1330 Investors II,
L.P., Abbott Capital Private Equity Fund III, L.P., BNY Partners Fund, L.L.C.,
Heller Financial, Inc., and Magnetite Asset Investors L.L.C. as initial
purchasers of the Senior Preferred Stock, relating to the registration of the
Senior Preferred Stock.
"Required Holders" means holders of more than 50% of the
outstanding shares of Senior Preferred Stock.
"Resolution" shall have the meaning provided in the first
paragraph of this Certificate of Designation.
"Restricted Payments" shall have the meaning provided in
paragraph (j)(ii).
"Restricted Subsidiary" means any Subsidiary of the Corporation
that has not been designated by the Board of Directors of the Corporation, by a
board resolution delivered to the Significant Holders, as an Unrestricted
Subsidiary or a direct or indirect Subsidiary of an Unrestricted Subsidiary
pursuant to and in compliance with paragraph (j)(xi). Any such designation may
be revoked by a board resolution of the Board of Directors of the Corporation
delivered to the Significant Holders subject to the provisions of paragraph
(j)(xi).
"Revocation" shall have the meaning provided in paragraph
(j)(xi).
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Corporation or a Restricted Subsidiary of any property,
whether owned by the Corporation or any Restricted Subsidiary on the Issue Date
or later acquired, which has been or is to be sold or transferred by the
Corporation or such Restricted Subsidiary to such Person or to any other Person
from whom funds have been or are to be advanced by such Person on the security
of such Property.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Securities" shall have the meaning provided in paragraph
(b).
"Senior Preferred Stock" shall have the meaning provided in
paragraph (a).
"Senior Subordinated Notes" means the Corporation's 11% Senior
Subordinated Notes due 2006.
"Significant Holder" means (x) any Holder which, together with
its Affiliates, holds at least 20% of the outstanding shares of Senior Preferred
Stock and (y) Ares Leveraged Investment Fund, L.P., Ares Leveraged Investment
Fund II, L.P. and any of their respective Affiliates so long as such entities
described in this clause (y) hold in the aggregate at least 15% of the
outstanding shares of Senior Preferred Stock.
"Stated Maturity" means (a) with respect to any share of Senior
Preferred Stock, the Mandatory Redemption Date, (b) with respect to any dividend
on the Senior Preferred Stock, the dates specified in this Certificate of
Designation as the fixed date on which the principal of such share of Senior
Preferred Stock or such dividend is due and payable and (c) with respect to any
other Indebtedness, the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness or
any installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which the outstanding shares of Voting Capital Stock having at
least a majority of the votes entitled to be cast in the election of directors
shall at the time be owned, directly or indirectly, by such Person, (b) any
partnership, limited liability company, association, joint venture or other
entity in which such Person and/or one or more of its Subsidiaries has at least
a majority of the shares of Voting Stock of such entity at the time or (c) any
partnership (i) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (ii) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof).
"Successor Corporation" shall have the meaning provided in
paragraph (j)(xiii).
"Transfer Agent" shall have the meaning provided in paragraph
(k).
"Unrestricted Subsidiary" means each Subsidiary of the
Corporation designated as such pursuant to and in compliance with paragraph
(j)(xi). Any such designation may be revoked by a resolution of Board of
Directors of the Corporation delivered to the Significant Holders, subject to
the provisions of such paragraph (j)(xi).
"Voting Rights Triggering Event" shall have the meaning provided
in paragraph (f)(iii).
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors,
managers or trustees of any Person (irrespective of whether or not, at the time,
stock of any other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 100% of the outstanding Capital Stock is owned by the
Corporation and/or another Wholly Owned Restricted Subsidiary. For purposes of
this definition, any directors' qualifying shares shall be disregarded in
determining the ownership of a Restricted Subsidiary.
IN WITNESS WHEREOF, said Outsourcing Solutions Inc. has caused
this Certificate of Designation to be signed by Timothy M. Hurd, its Secretary,
this 10th day of December, 1999.
OUTSOURCING SOLUTIONS INC.
By: /s/ Timothy M. Hurd
-------------------------------------
Name: Timothy M. Hurd
Title: Secretary
CERTIFICATE OF DESIGNATION OF THE POWER, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS OF JUNIOR PREFERRED STOCK, AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the General Corporate Law of the State of Delaware
- --------------------------------------------------------------------------------
Outsourcing Solutions Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of
Directors, by unanimous written consent dated December 10, 1999, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors
does hereby create, authorize and provide for the issuance of Junior
Preferred Stock, no par value, consisting of 50,000 shares, having the
designations, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in
this Resolution as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Corporation a class of Preferred Stock
designated as the "Junior Preferred Stock." The number of shares constituting
such Junior Preferred Stock shall be 50,000. Each share of Junior Preferred
Stock is hereafter referred to as a "Junior Preferred Share."
(b) Voting Rights.
The record holders of the issued and outstanding Junior Preferred
Shares shall have no voting rights, unless (and then only to the extent)
otherwise expressly provided by law or as set forth below.
In addition to any other vote required by this paragraph (b),
without the affirmative vote of the holders of a majority of the Junior
Preferred Stock, voting separately as a class, the Corporation shall not amend
the Certificate of Incorporation of the Corporation, including this Certificate
of Designation, if the amendment would alter or change the powers, preferences
or special rights of the shares of Junior Preferred Stock so as to affect them
adversely (within the meaning of Section 242(b)(2) of the Delaware General
Corporate Law).
(c) Dividend Rights.
(1) The record holders shall be entitled to receive in
preference to all holders of Common Stock and any other shares of capital stock
of the Corporation other than the Senior Preferred Stock (as defined below),
when, as and if declared by the Corporation's Board of Directors or a duly
authorized committee thereof, out of funds legally available for the payment
thereof, fully cumulative dividends at the Dividend Rate set forth in (c)(2)
below on the Liquidation Preference (as defined in (d) below) on each Junior
Preferred Share, to be payable in arrears in additional Junior Preferred Shares
(such dividends paid in kind being herein referred to as "PIK Dividends") on the
day immediately succeeding the last day of a Payment Period (as such term is
defined below in (c)(5)) (except that if any such date is a Saturday, Sunday or
legal holiday, then such dividends shall be payable on the next day that is not
a Saturday, Sunday or legal holiday) (each a "Dividend Payment Date"). Dividends
shall cease to accrue on each Junior Preferred Share on its date of redemption
or conversion, unless the Corporation defaults in its obligations to convert or
redeem such shares.
(2) The "Dividend Rate" shall be an annual rate of five
percent (5%) until December 10, 2003, and an annual rate of eight percent (8%)
thereafter; provided, however, that the Dividend Rate shall be increased to
twenty percent (20%) upon the consummation of (i) a Change in Control, (ii) an
Approved Sale or (iii) a Major Public Offering.
(3) PIK Dividends with respect to any Payment Period shall be
paid by delivering to the record holders of Junior Preferred Stock a number of
Junior Preferred Shares determined by dividing the Dividend Payment Amount with
respect to such Payment Period (as defined in (c)(4) below) by the Liquidation
Preference (as defined in (d) below) per share. The issuance of any such PIK
Dividend in such number of shares shall constitute full payment of such
dividend. Fractional Junior Preferred Shares payable as PIK Dividends may be
paid by the Corporation, at its option, in cash. Any additional Junior Preferred
Shares issued pursuant to this section shall be subject in all respects, except
as to issue date and the date from which dividends accrue and cumulate as set
forth below, to the same terms as the Junior Preferred Shares originally issued
hereunder.
(4) Dividends shall accrue (whether or not declared by the
Board of Directors) on the Liquidation Preference on each Junior Preferred Share
during each Payment Period and be fully cumulative on a daily basis from the
first day of each Payment Period to the last day of such Payment Period (with
the amount of accrued dividends per share, as expressed in dollars, with respect
to any Payment Period determined in accordance with the applicable Dividend Rate
or Rates being herein referred to as the "Dividend Payment Amount"). In the case
of Junior Preferred Stock issued and/or accumulated as a PIK Dividend, dividends
shall accrue (whether or not declared by the Board of Directors) on the
Liquidation Preference and be fully cumulative on a daily basis from the
Dividend Payment Date in respect of which such shares were issued as a dividend.
Dividends shall be paid to the holders of record of Junior Preferred Stock at
the close of business on the date specified by the Board of Directors of the
Corporation or a duly authorized committee thereof at the time such dividend is
declared in accordance with the Delaware General Corporation Law (each of such
dates being a "Record Date"). A Record Date shall not be more than sixty (60)
days nor less than ten (10) days prior to the applicable Dividend Payment Date.
(5) The term "Payment Period" shall mean the one year period
commencing on December 10, 1999 and each one year period thereafter during which
any Junior Preferred Shares are issued and outstanding; provided, that, for the
purpose of determining any Dividend Payment Amount, a Payment Period shall
commence on the last Dividend Payment Date on which dividends were actually
paid.
(d) Rights on Liquidation and Ranking.
In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary (each a "Liquidation"), each
holder of a Junior Preferred Share shall be entitled to receive with respect to
such Junior Preferred Share, before any distribution is made to or set aside for
the holders of Common Stock (or any other shares of capital stock of the
Corporation, other than the Senior Preferred Stock), payable in cash or, if the
amount of cash available to the Corporation is insufficient, out of the other
assets of the Corporation, whether such assets are stated capital or surplus of
any nature, an amount equal to One Thousand Dollars ($1,000.00) per Junior
Preferred Share (the "Liquidation Preference"), plus all dividends accrued and
unpaid on such Junior Preferred Share on the date of final distribution to such
holder, whether or not authorized or declared. If the assets of the Corporation
available for distribution to holders of Junior Preferred Stock shall be
insufficient to permit the payment in full of the amount due such holders
pursuant to this paragraph (d), all assets of the Corporation available for
distribution to such holders shall be distributed pari passu among such holders.
The fair market value of any assets of the Corporation and the proportion of
cash and other assets distributed by the Corporation to the holders of Junior
Preferred Stock shall be reasonably determined in good faith by a vote of the
Board of Directors of the Corporation. Except as provided in this paragraph, the
holders of Junior Preferred Shares shall not be entitled to any distribution in
the event of a Liquidation. For the purposes of this paragraph, neither the
consolidation or merger of the Corporation into or with another corporation, nor
the sale of all or substantially all of the assets of the Corporation to another
corporation or any other entity shall be deemed a liquidation, dissolution or
winding-up of the affairs of the Corporation. Notwithstanding anything herein to
the contrary, the Junior Preferred Stock ranks junior in all respects to the
Senior Preferred Stock, and no dividend distributions or distributions upon
Liquidation shall be made with respect to the Junior Preferred Stock (i) unless
and until all dividend distributions and distributions upon Liquidation with
respect to the Senior Preferred Stock have been made in full, and (ii) unless
otherwise made in accordance with the limitations in the Certificate of
Designation of the Senior Preferred Stock. The Junior Preferred Stock will rank
senior to all other capital stock of the Corporation other than the Senior
Preferred Stock.
(e) Redemption Rights.
(1) Optional Redemption. To the extent that the Corporation
shall have funds legally available therefor, the Corporation may, at its option,
at any time and from time to time, and subject to the limitations in the
Certificate of Designation for the Senior Preferred Stock, redeem all or any
portion of the outstanding Junior Preferred Shares (each a "Redemption") for a
sum in cash equal to One Thousand Dollars ($1,000.00) per Junior Preferred Share
plus an amount in cash equal to all accrued and unpaid dividends on such shares
through the date fixed by the Board of Directors for such redemption (a
"Redemption Date"), whether or not authorized and declared (such sum being
referred to as the "Redemption Price").
(2) Mandatory Redemption . On January 10, 2008 (the "Mandatory
Redemption Date"), the Corporation shall redeem, to the extent of funds legally
available therefor, in the manner provided for in paragraph (e)(3) hereof, all
or any portion of the outstanding Junior Preferred Shares then outstanding at
the Redemption Price. Notwithstanding the foregoing, the Junior Preferred Stock
shall not be redeemed pursuant to this paragraph (e)(2) at any time during which
the Corporation has failed to redeem the Senior Preferred Stock in accordance
with its terms.
(3) Notice of Redemption. Not more than sixty (60) nor less
than ten (10) days prior to any Redemption Date or the Mandatory Redemption
Date, as appropriate, the Corporation shall give written notice ("Redemption
Notice") of a Redemption to each holder of Junior Preferred Shares to be
redeemed at its address as it appears on the stock records of the Corporation by
deposit thereof in first class U.S. mail, postage prepaid. The Redemption Notice
shall state:
(i) the Redemption Price;
(ii) whether all or less than all the outstanding shares of the
Junior Preferred Stock are to be redeemed and the total number of shares of the
Junior Preferred Stock being redeemed;
(iii) the date fixed for redemption;
(iv) that the holder is to surrender to the Corporation, in the
manner, at the place or places and at the Redemption Price designated, his
certificate or certificates representing the shares of Junior Preferred Stock to
be redeemed; and
(v) that dividends on the shares of the Junior Preferred Stock to
be redeemed shall cease to accumulate on such Redemption Date or Mandatory
Redemption Date unless the Corporation defaults in the payment of the Redemption
Price.
On the Redemption Date or the Mandatory Redemption Date, as the case may be, the
Corporation shall transfer to an account designated by each holder of a Junior
Preferred Share to be redeemed the Redemption Price thereof by wire transfer in
immediately available funds, but only upon each holder of Junior Preferred Stock
having surrendered the certificate representing such share of Junior Preferred
Stock to the Corporation, duly endorsed (or otherwise in proper form for
transfer, as determined by the Corporation), in the manner and at the place
designated in the Redemption Notice. In the event that less than all of the
shares represented by any certificate so surrendered are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(4) Selection of Shares. The Corporation shall select the
Junior Preferred Shares to be redeemed in any Redemption in which not all Junior
Preferred Shares are able to be redeemed pursuant to this paragraph so that the
Junior Preferred Shares of each holder selected for Redemption shall bear the
same proportion to the total Junior Preferred Shares owned by that holder as the
proportion of all Junior Preferred Shares selected for Redemption bears to the
total of all then outstanding Junior Preferred Shares, but adjusted as
determined by the Board of Directors to avoid the redemption of fractional
Junior Preferred Shares. Notice having been given as provided above, if, on the
date fixed for Redemption, funds necessary for the redemption shall be available
therefor and shall have been irrevocably deposited or set aside in trust for the
holders of the Junior Preferred Shares, then, notwithstanding that the
certificates representing any shares so called for Redemption shall not have
been surrendered, dividends with respect to the shares so called shall cease to
accrue after the date fixed for Redemption, such shares will no longer be deemed
outstanding, the holders thereof shall cease to be stockholders of the
Corporation and all rights whatsoever with respect to such shares (except the
right of the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate. If funds legally
available for such purpose are not sufficient for redemption of the Junior
Preferred Shares to be redeemed pursuant to a Redemption, then the certificates
representing such shares shall be deemed not to be surrendered, such shares
shall remain outstanding and the rights of holders of Junior Preferred Shares
thereafter shall continue to be only those of a holder of Junior Preferred
Shares. Should any Junior Preferred Shares required to be redeemed under the
terms of any Redemption not be redeemed solely by reason of limitations imposed
by law, the applicable Junior Preferred Shares shall be redeemed on the earliest
possible date thereafter that the applicable Junior Preferred Shares may be
redeemed to the maximum extent permitted by law. Except as set forth above, the
Board of Directors shall prescribe the manner in which any Redemption shall be
effected.
(f) Conversion.
(1) At the consummation of a Qualified Public Offering, each
holder of Junior Preferred Shares shall have the right to convert all, but not
less than all, of such holder's Junior Preferred Shares into a number of shares
of Voting Common Stock (the "Conversion Stock") equal to (i) the sum of (A) the
number of Junior Preferred Shares to be converted multiplied by $1,000 plus (B)
the amount of all accrued and unpaid dividends on the Junior Preferred Shares to
be converted (whether or not declared) from the last Dividend Payment Date
through the effective date of the conversion, divided by (ii) the Conversion
Price. The "Conversion Price" shall be the price per share at which the
Corporation's Voting Common Stock is sold to the public in such Qualified Public
Offering. The Corporation may, at its option, pay cash in lieu of issuing
fractional shares of Voting Common Stock in connection with such conversion. At
least 30 days prior to the effectiveness of a Qualified Public Offering, the
Corporation shall provide written notification (the "Notice") to each holder of
Junior Preferred Stock that the Corporation intends to consummate a Qualified
Public Offering. The Notice shall include the expected date of the consummation
of the Qualified Public Offering (the "Expected Date") and the expected range of
offering price to the public. At least 10 days prior to the Expected Date, each
holder of Junior Preferred Stock who elects to convert such holder's Junior
Preferred Shares into Conversion Stock shall provide written notice of such
election to the Corporation. Any holder of Junior Preferred Stock who does not
provide written notice to the Corporation shall be deemed to have elected not to
convert such holder's Junior Preferred Shares into Conversion Stock. The
Conversion Stock issued in connection with such conversion shall be entitled to
piggyback registration rights (including with respect to such Qualified Public
Offering) as set forth in the Stockholders Agreement.
(2) Except as otherwise provided herein, the conversion of
Junior Preferred Stock shall be deemed to have been effected at the time of
consummation of the Qualified Public Offering. At the time any such conversion
has been effected, the rights of the holder of the Junior Preferred Shares
converted shall cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
(3) As soon as possible after a conversion has been effected,
the Corporation shall deliver to the converting holder a certificate or
certificates representing the number of shares of Conversion Stock issuable by
reason of such conversion in such name or names and such denomination or
denominations as the converting holder has specified.
(4) The issuance of certificates for shares of Conversion
Stock upon conversion of Junior Preferred Stock shall be made without charge to
the holders of such Junior Preferred Stock for any issuance tax (other than in
connection with a transfer into a different name) in respect thereof or other
cost incurred by the Corporation in connection with such conversion and the
related issuance of shares of Conversion Stock. Upon conversion of each Junior
Preferred Share, the Corporation shall take all such actions as are necessary in
order to insure that the Conversion Stock issuable with respect to such
conversion shall be validly issued, fully paid and nonassessable.
(5) The Corporation shall not close its books against the
transfer of Junior Preferred Stock or of Conversion Stock issued or issuable
upon conversion of Junior Preferred Stock in any manner which interferes with
the timely conversion of Junior Preferred Stock. The Corporation shall assist
and cooperate with any holder of Junior Preferred Stock required to make any
governmental filings or obtain any governmental approval prior to or in
connection with any conversion of Junior Preferred Stock hereunder (including,
without limitation, making any filings required to be made by the Corporation).
(6) The Corporation shall in connection with any Qualified
Public Offering reserve and keep available out of its authorized but unissued
shares of Conversion Stock, solely for the purpose of issuance upon the
conversion of the Junior Preferred Stock, such number of shares of Conversion
Stock as the Corporation reasonably believes may be issuable upon the conversion
of all outstanding Junior Preferred Stock. All shares of Conversion Stock which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable. The Corporation shall take all such actions as may be necessary
to assure that all such shares of Conversion Stock may be so issued without
violation of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Conversion Stock may be
listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance). The Corporation shall not
take any action which would cause the number of authorized but unissued shares
of Conversion Stock to be less than the number of such shares required to be
reserved hereunder for issuance upon conversion of the Junior Preferred Stock.
(g) Transfers of Junior Preferred Shares. The Junior Preferred
Shares may not be sold, assigned or transferred by the holders without the prior
written consent of the Corporation, and by acceptance of any Junior Preferred
Shares, the holder agrees not to sell, assign or transfer such shares without
such consent.
(h) Merger, Consolidation, or Sale of Assets. The Corporation shall
not consolidate or merge with or into (whether or not the Corporation is the
surviving corporation), or directly and/or indirectly through its subsidiaries
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the properties and assets of the Corporation and its
subsidiaries taken as a whole in one or more related transactions, to any other
Person unless (A) (i) the Corporation is the surviving corporation or (ii) the
entity or the Person formed by or surviving any such consolidation or merger (if
other than the Corporation) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (the entity or Person
described in this clause (ii), the "Successor Corporation ") is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; and (B) the Successor Corporation assumes all the
obligations of the Corporation under this Certificate of Designation pursuant to
an amendment or supplement hereto or thereto, as applicable, in a form
reasonably satisfactory to the holders of a majority of the then issued and
outstanding shares of Junior Preferred Stock.
(i) Definitions. As used in this Certificate of Designation, 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" means with respect to any specified Person: (i) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 10% or more of such specified Person's
capital stock; or (iii) any other Person 10% or more of the voting capital stock
of which is beneficially owned or held directly or indirectly by such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Approved Sale" shall have the meaning ascribed to it in the
Stockholders Agreement (as in effect on the date hereof).
"Change of Control" shall have the meaning ascribed to it in the
Certificate of Designation for the Senior Preferred Stock.
"Common Stock" means collectively the Voting Common Stock and the
Non-Voting Common Stock.
"Qualified Public Offering" means any underwritten primary public
offering registered under the Securities Act of 1933 of capital stock of the
Corporation having an aggregate offering value of at least $50 million.
"Major Public Offering" means an underwritten primary public
offering registered under the Securities Act of 1933 of capital stock of the
Corporation in which the Corporation receives in excess of $200 million in net
proceeds (after deducting any underwriting fees or commissions).
"Non-Voting Common Stock" means the Corporation's Non-Voting
Common Stock, par value $0.01.
"Person" means any individual, corporation, partnership, limited
liability corporation, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof.
"Senior Preferred Stock" shall mean (a) the Class A 14% Senior
Mandatorily Redeemable Preferred Stock, (b) the Class B 14% Senior Mandatorily
Redeemable Preferred Stock and (c) any other securities issued or issuable with
respect to or in exchange for such Senior Preferred Stock described in clauses
(a) or (b) by way of share exchange, stock dividend, stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or pursuant to any registration agreement applicable
thereto or otherwise.
"Stockholders Agreement" means the Stockholders Agreement, dated
as of December 10, 1999, by and among the Corporation and the Persons signatory
thereto.
"Voting Common Stock" means the Corporation's Voting Common
Stock, par value $0.01.
IN WITNESS WHEREOF, said Outsourcing Solutions Inc. has caused
this Certificate of Designation of Outsourcing Solutions Inc. to be executed by
its officer thereunto duly authorized this 10th day of December, 1999.
OUTSOURCING SOLUTIONS INC.
By:/s/ Timothy M. Hurd
---------------------------------
Name: Timothy M. Hurd
Title: Secretary