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 R. Fencl
Title: Vice President & General Counsel
CERTIFICATE OF AMENDMENT
TO THE
FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
OUTSOURCING SOLUTIONS INC.
OUTSOURCING SOLUTIONS INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (hereinafter
the "Corporation"), DOES HEREBY CERTIFY THAT:
1. The Corporation's Fourth Amended and Restated Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
December 10, 1999.
2. On March 30, 2001, the Board of Directors of the Corporation, duly
adopted resolutions setting forth proposed amendments to the Fourth Amended and
Restated Certificate of Incorporation, declaring said amendments 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 Section 228 of the General
Corporation Law of the State of Delaware. The resolutions setting forth the
proposed amendments are attached hereto as Exhibit A and incorporated herein by
reference.
3. Thereafter, pursuant to the resolutions of the Board of Directors, in
lieu of a meeting and vote of holders of the Corporation's common and preferred
stock, stockholders holding a majority of the issued and outstanding shares of
common stock of the Corporation adopted the amendments set forth in Exhibit A.
4. Said amendments were duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Outsourcing Solutions Inc. has caused this Certificate
of Amendment to be signed and attested by its duly authorized officer, this 16th
day of April, 2001.
OUTSOURCING SOLUTIONS INC.
By: /s/ Eric R. Fencl
----------------------------------
Name: Eric R. Fencl
Title: Secretary
EXHIBIT A
RESOLUTIONS OF THE BOARD OF DIRECTORS
OF OUTSOURCING SOLUTIONS INC.
1. RESOLVED, that the Preamble of ARTICLE FOURTH to the Corporation's
Fourth Amended and Restated Certificate of Incorporation be amended and restated
to read as follows:
"FOURTH: The total number of shares which the Corporation shall have the
authority to issue is 23,200,000 shares of capital stock as follows: 300,000
shares of Preferred Stock, no par value (the "Preferred Stock"), 900,000 shares
of Senior Common Stock, par value $.01 per share (the "Senior Common Stock"),
20,000,000 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 Senior
Common Stock is hereafter referred to as a "Senior Common Share" and
collectively as "Senior Common Shares." Each Senior Common Share and 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 "."
2. RESOLVED, that ARTICLE FOURTH, Paragraph B to the Corporation's Fourth
Amended and Restated Certificate of Incorporation be amended and restated to
read as follows:
"B. Senior Common Stock and Common Stock.
Except as otherwise provided in this paragraph B or as otherwise required
by applicable law, all shares of Senior Common Stock, Voting Common Stock and
Non-Voting Common Stock shall be identical in all respects and shall entitle the
holders thereof to the same voting powers, designations, preferences and
relative participating, optional or other special rights, and qualifications, or
restrictions thereof, as set forth herein:
3. 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 and 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 Senior Common Stock,
Voting Common Stock and Non-Voting Common Stock then outstanding.
As and when dividends are declared or paid thereon, whether in cash,
property or securities of the Corporation, the holders of the 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 shares of
Senior Common Stock, Voting Common Stock or Non-Voting Common Stock, dividends
will be declared which are payable at the same rate on all three classes of
stock and the dividends payable in shares of Senior Common Stock will be payable
to holders of such shares, the dividends payable in shares of Voting Common
Stock will be payable to holders of such shares and the dividends payable in
shares of Non-Voting Common Stock will be payable to holders of such shares and
(ii) if the dividends consist of other voting securities of the Corporation, the
Corporation will make available to each holder of shares of Non-Voting Common
Stock, 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 shares of Non-Voting Common Stock are convertible into shares
of Voting Common Stock.
4. Rights on Liquidation.
1. Senior Common Stock. In the event of the liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary (each a
"Liquidation"), each holder of a Senior Common Share shall be entitled to
receive with respect to such Senior Common 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 Preferred Shares), 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 the Original Purchase Price (as
defined below) per Senior Common Share (the "Liquidation Preference"). If the
assets of the Corporation available for distribution to holders of Senior Common
Stock shall be insufficient to permit the payment in full of the amount due such
holders pursuant to this paragraph B(2)(A), all assets of the Corporation
available for distribution to such holders shall be distributed pro rata 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 Senior Common 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 Senior Common Shares shall not be entitled to any
distribution in the event of a Liquidation. For the purposes of this paragraph,
the consolidation or merger of the Corporation into or with another corporation,
or the sale of all or substantially all of the assets of the Corporation
(determined on a consolidated basis) to another corporation or any other entity
shall be deemed a liquidation, dissolution or winding-up of the affairs of the
Corporation; provided, however, that the foregoing provision shall not apply to
any merger in which (i) the Corporation is the surviving entity, (ii) the
holders of the Corporation's outstanding capital stock possessing the voting
power to elect a majority of the Corporation's board of directors immediately
prior to the merger continue to own the Corporation's outstanding capital stock
possessing the voting power to elect a majority of the Corporation's board of
directors immediately after the merger and (iii) the surviving entity expressly
acknowledges and agrees that it shall assume the obligations of the Corporation
under this Certificate of Amendment. Notwithstanding anything herein to the
contrary, the Senior Common Stock ranks junior in all respects to the Preferred
Shares, and no dividend distributions or distributions upon Liquidation shall be
made with respect to the Senior Common Stock unless and until all dividend
distributions and distributions upon Liquidation with respect to the Preferred
Shares, have been made in full. The Senior Common Stock will, however, rank
senior to all other capital stock of the Corporation other than the Preferred
Shares.
For purposes of this paragraph B(2)(A) and paragraph B(4) below, "Original
Purchase Price" means $49.00 per share or $51.00 per share, as the case may be,
of Senior Common Stock paid by the purchasers pursuant to that certain Stock
Subscription Agreement, dated April 3, 2001, by and among the Corporation,
Gryphon Partners II, L.P., Gryphon Partners II-A, L.P. and the additional
purchasers named therein (as adjusted for any stock dividends, combinations,
stock splits, recapitalizations, or the like with respect to such shares).
2. Common Stock. In the event of any 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 and Senior Common Shares), the holders of Common Stock
(including, without limitation, the Voting Common Stock and the Non-Voting
Common Stock) and any other class of stock or series thereof ranking on a parity
with the Common Stock 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.
5. 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.
6. Conversion of Senior Common Stock.
1. Conversion Rights.
(1) Optional Conversion. Each holder of Senior Common Shares
shall have the right, at any time and at the option of the such holder, to
convert any of such holder's Senior Common Shares into a number of shares of
Voting Common Stock (the "Conversion Stock") equal to (a) the number of Senior
Common Shares to be converted multiplied by the Original Purchase Price
applicable for such Senior Common Shares, divided by (b) the Conversion Price
(as defined below).
(2) Mandatory Conversion. Upon consummation of the initial
underwritten public offering, registered under the Securities Act of 1933, of
Common Stock of the Corporation having an aggregate offering value of at least
$50 million (the "Initial Public Offering"), each Senior Common Share shall
automatically convert into a number of shares of Conversion Stock equal to (a)
the number of Senior Common Shares to be converted multiplied by the Original
Purchase Price applicable for such Senior Common Shares, divided by (b) the
Conversion Price. Except as otherwise provided herein, the conversion of Senior
Common Stock shall be deemed to have been effected at the time of consummation
of the Initial Public Offering.
2. Conversion Price.
(1) The initial conversion price shall be the Original Purchase
Price applicable for such Senior Common Shares (the "Conversion Price"). In
order to prevent dilution of the conversion rights granted under paragraph
B(4)(A), the Conversion Price shall be subject to adjustment from time to time
until on or before April 3, 2004 pursuant to this paragraph B(4)(B) and shall be
subject to adjustment for any stock dividends, combinations, stock splits,
recapitalizations, or the like with respect to the Senior Common Shares.
(2) If and whenever on April 3, 2001 or during the period between
such date and April 3, 2004, the Corporation issues or sells, or in accordance
with paragraph B(4)(C) is deemed to have issued or sold, Common Stock, in a
transaction involving the issuance of Common Stock or a Convertible Security (as
defined below) (a "Common Stock Financing Transaction"), for no consideration or
for a consideration per share less than the Conversion Price in effect
immediately prior to such time, then forthwith upon such issue or sale the
Conversion Price shall be reduced to the lowest net price per share at which any
such share of Common Stock has been issued or sold or is deemed to have been
issued or sold; provided, however, that notwithstanding anything herein to the
contrary, under no event or circumstance shall the Conversion Price be reduced
hereunder to a per share price less than $37.47 (as adjusted for any stock
dividends, combinations, stock splits, recapitalizations, or the like).
3. Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under paragraph B(4)(B), the following
shall be applicable:
(1) Issuance of Convertible Securities. If the Corporation in any
manner issues or sells any stock or other securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock or
securities being herein called "Convertible Securities") in a Common Stock
Financing Transaction and the price per share for which any one share of Common
Stock is issuable upon conversion or exchange thereof is less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then such share of Common Stock shall be deemed to have been issued and sold by
the Corporation at the time of the issuance or sale of such Convertible
Securities for such price per share. No further adjustment of the Conversion
Price shall be made upon the actual issue of such Common Stock upon conversion
or exchange of any Convertible Security.
(2) Change in Conversion Rate. If the additional consideration
(if any) payable upon the issue, conversion or exchange of any Convertible
Security, or the rate at which any Convertible Security is convertible into or
exchangeable for Common Stock changes at any time, the Conversion Price in
effect at the time of such change shall be readjusted to the Conversion Price
which would have been in effect at such time had such Convertible Security
originally provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time initially granted,
issued or sold; provided that if such adjustment would result in an increase of
the Conversion Price then in effect, such adjustment shall not increase the
Conversion Price higher than the Conversion Price in effect immediately prior to
the issuance of such Convertible Security.
(3) Treatment of Unexercised Convertible Securities. Upon the
termination of any right to convert or exchange any Convertible Security without
the exercise of any such right, the Conversion Price then in effect hereunder
shall be adjusted to the Conversion Price which would have been in effect at the
time of such termination had such Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
(4) Calculation of Consideration Received. If any Common Stock or
Convertible Security is issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor shall be deemed to be the net amount
received by the Corporation therefor plus, in the case of Convertible
Securities, the minimum amount to be paid to the Corporation upon the conversion
or exercise thereof. In case any Common Stock or Convertible Securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the fair value of the securities as determined by the
Corporation's board of directors in its reasonable good faith judgment as of the
date of receipt. If any Common Stock or Convertible Security is issued to the
owners of the non-surviving entity in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash and securities shall be determined jointly by the Corporation
and the holders of a majority of the outstanding Senior Common Stock. If such
parties are unable to reach agreement within a reasonable period of time, the
fair value of such consideration shall be determined by the Corporation's board
of directors in its reasonable good faith judgment.
(5) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Corporation or any of its subsidiaries, and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(6) Record Date. If the Corporation takes a record of the holders
of Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock or in Convertible Securities or (b)
to subscribe for or purchase Common Stock or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or upon the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
(7) Certain Issuances. Notwithstanding the foregoing, there shall
be no adjustment to the Conversion Price under paragraph B(4) with respect to
(a) the issuance of Common Stock (or options to purchase Common Stock) to the
Corporation's or its affiliates' current or former employees, officers,
directors or consultants pursuant to compensatory options or purchase rights
which have been granted or are granted in the future, (b) warrants issued to
underwriters in connection with a public offering registered under the
Securities Act of 1933, (c) the issuance of Common Stock (or warrants
exercisable into Common Stock) to financial institutions or lessors in
connection with the bona fide incurrence of indebtedness, equipment financings
or similar transactions, (d) the issuance of Common Stock to strategic investors
or in connection with acquisitions or corporate partnering transactions, (e) the
issuance of Common Stock as a dividend or distribution on Preferred Shares or
Senior Common Shares, (f) the issuance of shares of Common Stock upon conversion
of the Preferred Shares, Senior Common Shares and Non-Voting Common Shares in
accordance with their respective terms, (g) the issuance of shares of Common
Stock or other shares of the Corporation's capital stock upon conversion or
exercise of any outstanding warrants, options or other convertible instruments
or (h) the issuance of shares of Senior Common Stock, Voting Common Stock or
Non-Voting Common Stock issued in connection with a stock split or stock
dividend effected in accordance with this Article Fourth, paragraphs B(1) and
B(6).
4. Conversion Terms.
(1) At the time any such conversion has been effected pursuant to
paragraph B(4)(A), the rights of the holder of the Senior Common 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.
(2) As soon as possible after a conversion has been effected
pursuant to paragraph B(4)(A), the Corporation shall deliver to the converting
holder, or in accordance with such holder's written instructions, 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. The Corporation may, at
its option, pay cash in lieu of issuing fractional shares of Voting Common Stock
in connection with a conversion effected hereunder provided that no other
fractional shares of Common Stock are outstanding at the time of such
conversion.
(3) The issuance of certificates for shares of Conversion Stock
upon conversion of Senior Common Stock shall be made without charge to the
holders of such Senior Common 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 Senior
Common 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.
(4) The Corporation shall not close its books against the
transfer of Senior Common Stock or of Conversion Stock issued or issuable upon
conversion of Senior Common Stock in any manner which interferes with the timely
conversion of Senior Common Stock.
(5) The Corporation will at all times reserve and keep available
out of its authorized but unissued Conversion Stock, solely for the purpose of
issuance upon the conversion of the Senior Common Shares such number of shares
of Conversion Stock as are issuable upon the conversion of all outstanding
Senior Common Shares. All shares of Conversion Stock 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 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 notices of issuance which will be immediately transmitted by the
Corporation upon issuance).
7. Conversion of Non-Voting Common Shares.
1. Conversion of Rights.
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 paragraph 5(A), 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 Stock 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:
(1) the BHCA Act would not prohibit such holder from holding such
shares of Voting Common Stock; and
(2) such shares of Voting Common Stock 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 Stock into which
such shares were converted, such holder may convert the Voting Common Stock into
the Non-Voting Common Shares converted in anticipation of such distribution or
sale or other permitted holding.
2. Conversion Procedure.
(1) 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 Stock.
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 Stock are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the Voting Common Stock
represented thereby.
(2) 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
Stock 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.
(3) The issuance of certificates for Voting Common Stock 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 Stock.
(4) The Corporation will at all times reserve and keep available
out of its authorized but unissued Voting Common Stock, solely for the purpose
of issuance upon the conversion of the Non-Voting Common Shares such number of
Voting Common Stock 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).
(5) 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.
8. Stock Splits, Etc. 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.
9. 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.
10. Amendment and Waiver. No amendment, waiver or change to or with respect
to any of the rights, privileges, preferences or powers of the Senior Common
Stock shall be effective without the prior approval of the holders of a majority
of the Senior Common Shares then outstanding, voting as a separate class. No
amendment or waiver of any provision of paragraph B(5) of this Article FOURTH or
of this paragraph B(8)(ii) shall be effective without the prior approval of the
holders of a majority of the shares of Voting Common Stock then outstanding,
voting as a separate class, and the holders of a majority of the shares of
Non-Voting Common Stock then outstanding, voting as a separate class."
* * * * *
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 AND RESTRICTIONS 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 therefor 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 Senior 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) No dividends 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 winding up) 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
Preferred 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
CERTIFICATE OF DESIGNATION OF THE POWER, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS OF SERIES B 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, at a meeting held on April 3, 2002, 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 Series B Junior Preferred
Stock, no par value, consisting of 7,500 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 "Series B Junior Preferred Stock" (hereafter referred to as
the "Series B Junior Preferred"). The number of shares constituting such Series
B Junior Preferred shall be 7,500. Each share of Series B Junior Preferred is
hereafter referred to as a "Series B Junior Preferred Share."
(b) Voting Rights. The holders of the Series B Preferred shall be entitled
to notice of all stockholders meetings in accordance with the Corporation's
bylaws, and except as otherwise permitted by applicable law, the holders of the
Series B Junior Preferred shall be entitled to vote as of the record date for
such vote or, if no record date is specified, as of the date of such vote, on
all matters submitted to the stockholders for a vote together with the holders
of the Common Stock voting together as a single class with each share of Common
Stock entitled to one vote per share and each Series B Junior Preferred Share
entitled to a certain number of votes equal to the result of the Liquidation
Value divided by $49.00 per Series B Junior Preferred Share (as adjusted for any
stock split, stock dividend, recapitalization or similar transaction).
(c) Dividend Rights.
(1) The record holders shall be entitled to receive in preference to
all holders of Common Stock, the Senior Common Stock and any other shares of
capital stock of the Corporation other than the Senior Preferred Stock (as
defined below), when and as 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 in cash at the Dividend Rate set
forth in (c)(2) below on the Liquidation Value (as defined in (d) below) on each
Series B Junior Preferred Share.
(2) Dividends on each Series B Junior Preferred Share shall accrue
(whether or not declared by the Board of Directors) on a daily basis at the
Dividend Rate on the Liquidation Value thereof, and accumulate on a quarterly
basis if not paid on each Payment Date from and including the date of issuance
of such Series B Junior Preferred Share to and including the first to occur of
(i) the date on which the Liquidation Value of such Series B Junior Preferred
Share is paid to the holder thereof in connection with the liquidation of the
Corporation or the redemption of such Series B Junior Preferred Share by the
Corporation or (ii) the date on which such Series B Junior Preferred Share is
converted into shares of Capital Securities hereunder. The "Dividend Rate" shall
be an annual rate of eighteen percent (18%); provided, however, that the
Dividend Rate shall increase to twenty-three percent (23%) on and after the
ninety-first (91st) day following the occurrence of a (i) Change in Control or
(ii) a Qualified Public Offering.
(3) If at any time the Corporation pays less than the total amount of
dividends then accrued with respect to the Series B Junior Preferred, such
payment shall be distributed pro rata among the holders thereof based upon the
aggregate accrued but unpaid dividends on the Series B Junior Preferred Shares
held by each such holder.
(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 Series B Junior Preferred Share shall be entitled to receive with
respect to such Series B Junior Preferred Share, before any distribution is made
to or set aside for the holders of Common Stock, the Senior 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 Series B Junior Preferred Share, plus all
accumulated dividends which are unpaid with respect to such Series B Junior
Preferred Share (together, the "Liquidation Value") plus accrued dividends
thereon 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 Series B Junior Preferred 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 Series B Junior
Preferred shall be reasonably determined in good faith by a vote of the Board of
Directors of the Corporation. Notwithstanding the foregoing, in the event of a
liquidation, dissolution or winding-up of the affairs of the Corporation that
occurs in connection with or at any time after a Change in Control, the
Liquidation Value shall equal the Redemption Price. The Series B Junior
Preferred 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 Series B Junior Preferred (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 Certificates of Designation of the Senior
Preferred Stock. The Series B Junior Preferred will rank senior to all other
capital stock of the Corporation other than the Senior Preferred Stock.
(e) Redemption Rights.
(1) Optional Redemption. The Corporation may, at its option, at any
time and from time to time, redeem all or any portion of the outstanding Series
B Junior Preferred Shares (each a "Redemption") for a sum in cash equal to 150%
of the sum of the Liquidation Value plus accrued and unpaid dividends thereon
(the "Redemption Price"); provided, however, that the Redemption Price shall be
increased to two hundred percent (200%) of the sum of the Liquidation Value plus
accrued and unpaid dividends thereon on the ninety-first (91st) day following
the consummation of a (i) Change in Control or (ii) a Qualified Public Offering.
A date fixed by the Board of Directors for any such redemption shall be a
"Redemption Date."
(2) Mandatory Redemption. On March 11, 2008 (the"Mandatory Redemption
Date"), the Corporation shall redeem, in the manner provided for in paragraph
(e)(3) hereof, all or any portion of the outstanding Series B Junior Preferred
Shares then outstanding at the Redemption Price.
(3) Notice of Redemption. Not more than sixty (60) nor less than ten
(10) days prior to any redemption pursuant to paragraph (e)(1) or (e)(2) hereof,
the Corporation shall give written notice ("Redemption Notice") of a Redemption
to each holder of Series B 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 Series
B Junior Preferred are to be redeemed and the total number of shares of the
Series B Junior Preferred 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 Series B Junior Preferred
to be redeemed; and
(v) that dividends on the shares of the Series B Junior Preferred 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 Series B
Junior Preferred Share to be redeemed the Redemption Price thereof by wire
transfer in immediately available funds, but only upon each holder of Series B
Junior Preferred having surrendered the certificate representing such share of
Series B Junior Preferred 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 Series B
Junior Preferred Shares to be redeemed in any Redemption in which not all Series
B Junior Preferred Shares are able to be redeemed pursuant to this paragraph so
that the Series B Junior Preferred Shares of each holder selected for Redemption
shall bear the same proportion to the total Series B Junior Preferred Shares
owned by that holder as the proportion of all Series B Junior Preferred Shares
selected for Redemption bears to the total of all then outstanding Series B
Junior Preferred Shares, but adjusted as determined by the Board of Directors to
avoid the redemption of fractional Series B 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 Series B
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 Series B
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 Series B
Junior Preferred Shares thereafter shall continue to be only those of a holder
of Series B Junior Preferred Shares. Should any Series B 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 Series B Junior
Preferred Shares shall be redeemed on the earliest possible date thereafter that
the applicable Series B 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) Mandatory Conversion at Election of Majority Holders. In
connection with, or at any time after, a Future Offering, upon receipt of a
Conversion Notice the Corporation shall convert all Series B Junior Preferred
Shares into a number of shares of Capital Securities equal to (i) the Redemption
Price divided by (ii) the Conversion Price. The "Conversion Price" shall be the
price per share or unit of securities at which the Capital Securities are sold
in such Future Offering. The Corporation may, at its option, pay cash in lieu of
issuing fractional shares or units of Capital Securities in connection with such
conversion.
(2) Except as otherwise provided herein, the conversion of
Series B Junior Preferred shall be deemed to have been effected as of the date
the Conversion Notice is delivered. At the time any such conversion has been
effected, the rights of all holders of the Series B Junior Preferred Shares
shall cease and each Person or Persons shall be deemed to have become the holder
or holders of record of the shares of Capital Securities represented thereby and
shall become a party to and be bound by and subject to the terms and conditions
of the Stockholders Agreement.
(3) As soon as possible after a conversion has been effected
and the holders deliver the Series B Junior Preferred certificate(s) to the
Corporation for cancellation, the Corporation shall deliver to each holder a
certificate or certificates representing the number of shares of Capital
Securities 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 Capital
Securities upon conversion of Series B Junior Preferred shall be made without
charge to the holders of such Series B Junior Preferred 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 Capital Securities. Upon conversion of
each Series B Junior Preferred Share, the Corporation shall take all such
actions as are necessary in order to insure that the Capital Securities 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 Series B Junior Preferred or of Capital Securities issued or
issuable upon conversion of Series B Junior Preferred in any manner which
interferes with the timely conversion of Series B Junior Preferred. The
Corporation shall assist and cooperate with any holder of Series B Junior
Preferred required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of Series B Junior
Preferred hereunder (including, without limitation, making any filings required
to be made by the Corporation).
(6) The Corporation shall in connection with any Future Offering
reserve and keep available out of its authorized but unissued shares of Capital
Securities solely for the purpose of issuance upon the conversion of the Series
B Junior Preferred, such number of shares of Capital Securities as the
Corporation reasonably believes may be issuable upon the conversion of all
outstanding Series B Junior Preferred. All shares or units of Capital Securities
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 or units of Capital Securities may be
so issued without violation of any applicable law or governmental regulation or
any requirements of any domestic securities exchange upon which shares or units
of Capital Securities 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 Capital Securities to be less than
the number of such shares required to be reserved hereunder for issuance upon
conversion of the Series B Junior Preferred.
(h) Transfers of Series B Junior Preferred Shares. The Series B Junior
Preferred Shares may not be sold, assigned or transferred by the holders without
the prior written consent of the Corporation or the Majority Holders, and by
acceptance of any Series B Junior Preferred Shares, the holder agrees not to
sell, assign or transfer such shares without such consent.
(i) 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 Series B Junior Preferred.
(j) Amendment. Except as otherwise provided herein, the provisions set
forth in this Certificate of Designation of the Series B Junior Preferred Stock
may be amended and the Corporation may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Corporation has obtained the written consent of the Majority Holders.
(k) 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.
"Capital Securities" means any security or strip of securities issued
by the Corporation in a Future Offering.
"Certificates of Designation of the Senior Preferred Stock" means the
Certificate of Designation of the Class A 14% Senior Mandatorily Redeemable
Preferred Stock and Class B 14% Senior Mandatorily Redeemable Preferred Stock
and the Certificate of Designation of the Junior Preferred Stock.
"Change of Control" shall have the meaning ascribed to it in the
Certificate of Designation of the Class A 14% Senior Mandatorily Redeemable
Preferred Stock and Class B 14% Senior Mandatorily Redeemable Preferred Stock.
"Conversion Notice" means written notice delivered by the Majority
Holders demanding all Series B Junior Preferred Shares be converted into Capital
Securities in accordance with Section (f) hereof.
"Common Stock" means collectively the Senior Common Stock, Voting
Common Stock and the Non-Voting Common Stock.
"Future Offering" means any offering of more than $10.0 million of
capital securities pursuant to Section 7.2.9 of the Credit Agreement dated as of
November 30, 1999 (as amended from time to time) by and among the Corporation,
the various financial institutions and other persons party thereto, Harris Trust
and Savings Bank and Fleet National Bank.
"Junior Preferred Stock" means the Corporation's Junior Preferred
Stock.
"Majority Holders" means the holder or holders of a majority of the
voting power with respect to the outstanding Series B Junior Preferred Shares.
"Non-Voting Common Stock" means the Corporation's Non-Voting Common
Stock, par value $0.01.
"Payment Date" means every April 10, July 10, October 10 and January
10 during which any Series B Junior Preferred Shares are issued and outstanding
(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).
"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.
"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 Common Stock" means the Corporation's Senior Common Stock, par
value $0.01.
"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 (c) the Junior Preferred Stock and (d) any other
securities issued or issuable with respect to or in exchange for such Senior
Preferred Stock described in clauses (a), (b) or (c) 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.
"Stated Maturity Date" shall have the meaning ascribed to it in the
Certificate of Designation of the Class A 14% Senior Mandatorily Redeemable
Preferred Stock and Class B 14% Senior Mandatorily Redeemable Preferred Stock.
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement, dated as of April 16, 2001 among the Corporation and certain of the
Corporation's stockholders, as amended from time to time.
"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 April, 2002.
OUTSOURCING SOLUTIONS INC.
By: /s/ Eric R. Fencl
-----------------------------
Name: Eric R. Fencl
Title: Senior Vice President,
General Counsel & Secretary