<Page>
Exhibit 3.72
RNB
FILED
JUL 12 1994
7-12-94
LONNA R. HOOKS
Secretary of State
0937089
RESTATED CERTIFICATE OF INCORPORATION
OF
KTI ENVIRONMENTAL GROUP, INC.
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of N.J.S.A. 14A:9-5, the undersigned
corporation hereby executes the following Restated Certificate of Incorporation:
ARTICLE FIRST
The name of the corporation is KTI, Inc. (the "Corporation").
ARTICLE SECOND
The purpose of the Corporation is to engage in any activity within the
purposes for which corporations may be organized under the New Jersey Business
Corporation Act.
ARTICLE THIRD
The total number of shares of Common Stock which the Corporation shall
have authority to issue is forty million (40,000,000) shares without par value.
The Corporation shall also have authority to issue ten million (10,000,000)
shares of Preferred Stock.
The following is a statement of the designations and the powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, in respect of each class of stock of the Corporation:
I. UNDESIGNATED PREFERRED STOCK
Subject to the limitations prescribed by law, the Board of Directors
of the Corporation shall have the authority to cause the issuance of one or more
series of Preferred Stock and with respect to each such series, to fix by
resolution or resolutions providing for the issuance of such series, the number
of shares of such series, the voting powers, full or limited, if any, of the
shares of such series and the designations, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof. The Board of Directors shall have all
<Page>
powers and rights with respect to the Preferred Stock which are not inconsistent
with any limitations prescribed by law or this Article Third, including, but not
limited to, the determination or fixing of the following:
(i) The designation and number of shares of such series.
(ii) The dividend rate of such series, the conditions and dates upon
which such dividends shall be payable, the relation which such dividends shall
bear to the dividends payable on any other class or classes of stock, and
whether such dividends shall be cumulative or noncumulative.
(iii) Whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to such redemption, the
times, prices and other terms and conditions of such redemption.
(iv) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series.
(v) Whether or not the shares of such series shall be convertible
into or exchangeable for shares of any other class or classes or of any other
series of any class or classes of stock of the Corporation, and, if provision be
made for conversion or exchange, the times, prices, rates, adjustments, and
other terms and conditions of such conversion or exchange.
(vi) The extent, if any, to which the holders of the shares of such
series shall be entitled to vote with respect to the election of directors or
otherwise.
(vii) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock.
(viii) Notwithstanding any other provision of this Article Third, the
rights of the holders of the shares of such series upon the dissolution of, or
upon the distribution of assets of, the Corporation.
Unless and except to the extent otherwise required by law or provided
in the resolution or resolutions of the Board of Directors creating any series
of Preferred Stock, the holders of Preferred Stock shall have no voting power
with respect to any matter whatsoever.
- 2 -
<Page>
II. COMMON STOCK
The Common Stock shall rank junior to the Preferred Stock with respect
to payment of dividends and distribution on liquidation, dissolution or winding
up of the Corporation.
Except as required by law or as otherwise provided in the resolution
or resolutions of the Board of Directors creating any series of Preferred Stock,
all voting rights shall be vested in the holders of the Common Stock. At each
meeting of stockholders of the Corporation, each holder of Common Stock shall be
entitled to one vote for each share on each matter to come before the meeting.
ARTICLE FOURTH
The address of the Corporation's current registered office is 7000
Boulevard East, Guttenberg, New Jersey 07093 and the name of its current
registered agent at such address is Nicholas Menonna, Jr.
ARTICLE FIFTH
A. The business affairs of the Corporation shall be managed by or
under the direction of the Board of Directors consisting of not less than three
directors with the actual number to be fixed from time to time by a vote of the
majority of the directors then in office.
B. The current total number of directors is three. The names and
addresses of the current directors is as follows:
Name Address
- ---- -------
Nicholas Menonna, Jr. c/o KTI, Inc.
7000 Boulevard East
Guttenberg, NJ 07093
Martin J. Sergi c/o KTI, Inc.
7000 Boulevard East
Guttenberg, NJ 07093
Marshall S. Sterman c/o KTI, Inc.
7000 Boulevard East
Guttenberg, NJ 07093
- 3 -
<Page>
ARTICLE SIXTH
A director or officer of the Corporation shall not be personally
liable to the Corporation or its shareholders for damages for breach of any duty
owed to the Corporation or its shareholders, except that a director or officer
shall not be relieved of any liability under this provision for any breach of
duty based upon an act or omission (a) in breach of such person's duty of
loyalty to the Corporation or its shareholders, (b) not in good faith or
involving a knowing violation of law or (c) resulting in receipt by such person
of an improper personal benefit. Neither the amendment or repeal of this Article
SIXTH, nor the adoption of any provision of this Restated Certificate of
Incorporation inconsistent with this Article SIXTH shall eliminate or reduce the
protection afforded by this Article SIXTH to a director or officer of the
Corporation in respect to any matter which occurred, or any cause of action,
suit or claim which but for this Article SIXTH would have arisen, prior to such
amendment, repeal or adoption.
ARTICLE SEVENTH
A. The Corporation shall indemnify, to the fullest extent from time
to time permitted by law, any person made, or threatened to be made, a party to,
or a witness or other participant in, any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative,
arbitrative, legislative, investigative, or of any other kind, by reason of the
fact that such person is or was a corporate agent of the Corporation or any
subsidiary of the Corporation or serves or served any other enterprise at the
request of the Corporation (including specifically, but not limited to, service
as a fiduciary with respect to any employee benefit plan) against expenses
(including attorneys' fees), judgments, fines, penalties, excise taxes, and
amounts paid in settlement (including amounts paid pursuant to judgments or
settlements in derivative actions), actually and reasonably incurred by such
person in connection with such action, suit, or proceeding, or any appeal
therein. The rights provided by this Article SEVENTH to any person shall inure
to the benefit of such person's legal representative. Neither amendment or
repeal of this Article SEVENTH, nor the adoption of any provision of this
Restated Certificate of Incorporation inconsistent with this Article SEVENTH,
shall deprive any person of rights hereunder arising out of any matter which
occurred prior to such amendment, repeal or adoption. No indemnification
pursuant to
- 4 -
<Page>
this Article shall be required with respect to any settlement or other
nonadjudicated disposition of any threatened or pending action or proceeding
unless the Corporation has given its prior consent to such settlement or other
disposition.
B. As used in this Article "corporate agent" means any person who is
or was a director, officer, employee or agent of the Corporation or of any
constituent corporation absorbed by the Corporation in a consolidation or merger
and any person who is or was a director, officer, trustee, employee or agent of
any other enterprise, serving as such at the request of the Corporation, or of
any such constituent corporation, or the legal representative of any such
director, officer, trustee, employee or agent.
C. The Corporation shall have the authority to purchase and maintain
insurance covering its corporate agents against expenses and liabilities
incurred in connection with any action or proceeding in which such persons are a
participant because of their service to the Corporation, any subsidiary of the
Corporation or any other enterprise at the request of the Corporation.
D. To the full extent from time to time permitted by law, expenses
incurred by a person in defending a civil or criminal action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action upon receipt of an undertaking by or on behalf of such person to repay
such amount to the extent the expenses so advanced exceed the indemnification to
which it is ultimately determined that he is entitled.
ARTICLE EIGHTH
A. The merger or consolidation of the Corporation with any
other corporation or the sale, lease, exchange or other disposition of all or
substantially all the assets of the Corporation may be effected only if, in
addition to any affirmative vote required by law or otherwise, such transaction
shall have been approved by the affirmative vote of not less than eighty percent
(80%) of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock, voting together as a single class; provided, however,
that such additional voting requirement shall not be applicable in the event
that the transaction shall have been approved by not less than the greater of
(a) three-fourths of the Disinterested Directors or (b) two Disinterested
Directors; and provided, further, that this Article EIGHTH shall not be
- 5 -
<Page>
applicable to a Business Combination, as defined in Article NINTH hereof.
B. For purposes of this Article EIGHTH:
1. The term "Disinterested Director" means any member of the
Board of Directors of the Corporation, while such person is a member of the
Board of Directors, who is not an Affiliate, Associate or representative of any
party to the transaction (other than the Corporation or a corporation all of the
capital stock of which, except for directors' qualifying shares, is beneficially
owned directly or indirectly by the Corporation) and either was a member of the
Board of Directors on the date of approval of this Article EIGHTH by the Board
or was recommended for election to the Board of Directors, or elected to fill a
vacancy on the Board, by a majority of Disinterested Directors.
2. The terms "Voting Stock", "Affiliate" and "Associate" have
the meanings set forth in Article NINTH hereof.
C. A majority of the Disinterested Directors shall have the
power and duty to determine for the purposes of this Article EIGHTH, on the
basis of information known to them after reasonable inquiry, all facts necessary
to determine compliance with this Article EIGHTH.
D. The affirmative vote of not less than eighty percent (80%)
of the votes entitled to be cast by the holders of all then outstanding shares
of Voting Stock, voting together as a single class, shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article EIGHTH.
ARTICLE NINTH
A. HIGHER VOTE FOR BUSINESS COMBINATIONS. In addition to any
affirmative vote required by law or otherwise, and except as otherwise expressly
provided in Section B of this Article NINTH, a Business Combination (as
hereinafter defined) shall require the affirmative vote of not less than eighty
percent (80%) of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock (as hereinafter defined), voting together as
a single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage or separate class vote
may be specified, by law or otherwise.
- 6 -
<Page>
B. WHEN HIGHER VOTE NOT REQUIRED. The provisions of Section A
of this Article NINTH shall not be applicable to a particular Business
Combination if the conditions specified in either of the following paragraphs 1
or 2 are met!
1. APPROVAL BY CONTINUING DIRECTORS. The Business Combination
shall have been approved by not less than three-fourths of the Continuing
Directors (as hereinafter defined).
2. PRICE. FORM OF CONSIDERATION AND PROCEDURAL REQUIREMENTS.
All of the following conditions shall have been met:
(a) The transaction constituting the Business Combination
shall provide for a consideration to be received by all holders of
Common Stock in exchange for all of their shares of Common Stock and
the aggregate amount of cash and the Fair Market Value (as hereinafter
defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share
in such Business Combination by holders of Common Stock shall be at
least equal to the highest amount determined under clauses (i), (ii)
and (iii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealer's fees) paid by or on behalf of the Interested
Shareholder for any share of Common Stock in connection with the
acquisition by the Interested Shareholder of beneficial ownership
of Common Stock (x) within the two-year period immediately prior
to the date of the first public announcement of the proposed
Business Combination (the "Announcement Date") or (y) in the
transaction in which it became an interested Shareholder,
whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to Common Stock;
(ii) the Fair Market Value per share of Common Stock
on the second business day after the Announcement Date or on the
date on which an Interested Shareholder became an Interested
Shareholder (the "Determination Date"), whichever is higher, as
adjusted for any subsequent stock
- 7 -
<Page>
split, stock dividend, subdivision or reclassification with
respect to Common Stock; or
(iii) the highest Fair Market value per share of Common
Stock on any date during the period from (x) a date 30 days after
the later of the Announcement Date and the Determination Date to
(y) the date on which the proxy or information statement referred
to in Paragraph 2(f) is mailed to the shareholders of the
Corporation, as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to Common
Stock.
(b) If the transaction constituting the Business Combination
shall provide for a consideration to be received by holders of any
class or series of outstanding Capital Stock (as hereinafter defined)
other than Common Stock, the aggregate amount of cash and the Fair
Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share
in such Business Combination by holders of such class or series of
Capital Stock shall be at least equal to the highest amount determined
under clauses (i), (ii), (iii) and (iv) below.
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the Interested
Shareholder for any share of such class or series of Capital
Stock in connection with the acquisition by the Interested
Shareholder of beneficial ownership of such class or series of
Capital Stock (x) within the two-year period immediately prior to
the Announcement Date or (y) in the transaction in which it
became an Interested Shareholder, whichever is higher, in either
case as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to such class or
series of Capital Stock;
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the second business day after the
Announcement Date or on the Determination Date, whichever is
higher, as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassiflcation with respect to such
class or series of Capital Stock;
- 8 -
<Page>
(iii) the highest Fair Market Value per share of such
class or series of Capital Stock on any date during the period
from (x) a date 30 days after the later of the Announcement Date
and the Determination Date to (y) the date on which the proxy or
information statement referred to in Paragraph 2{f) is mailed to
the shareholders of the Corporation, as adjusted for any
subsequent stock split, stock dividend or reclassification with
respect to such class or series of Capital Stock; or
(iv) (if applicable) the highest preferential amount
per share to which the holders of shares of such class or series
of Capital Stock would be entitled in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, regardless of whether the Business
Combination, to be consummated constitutes each an event.
The provisions of this Paragraph 2(b) shall be required to be met with
respect to every class or series of outstanding Capital Stock other
than Common Stock whether or not the Interested Shareholder has
previously acquired beneficial ownership of any shares of a particular
class or series of Capital Stock.
(c) The consideration to be received by holders of a
particular class or series of outstanding Capital Stock shall be in
cash or in the same form as previously has been paid by or on behalf
of the Interested Shareholder in connection with its direct or
indirect acquisition of beneficial ownership of shares of such class
or series of Capital Stock. If the consideration so paid for shares of
any class or series of Capital Stock varied as to form, the form of
consideration for such class or series of Capital Stock shall be
either cash or the form used to acquire beneficial ownership of the
largest number of shares of such class or series of Capital Stock
previously acquired by the Interested Shareholder.
(d) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such Business
Combination: (i) except as approved by a majority of the Continuing
Directors,
- 9 -
<Page>
there shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not cumulative)
payable in accordance with the terms of any outstanding Capital Stock;
(ii) there shall have been (x) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
stock dividend or subdivision of the Common Stock) other than as
approved by a majority of the Continuing Directors and (y) an increase
in such annual rate of dividends as necessary to prevent any such
reduction in the event of any reclassification (including any reverse
stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to increase such annual
rate is approved by a majority of the Continuing Directors; (iii) such
Interested Shareholder shall not have become the beneficial owner of
any additional shares of Capital Stock except as part of the
transaction that results in such Interested Shareholder becoming an
Interested Shareholder and except in a transaction that, after giving
effect thereto, would not result in any increase in the Interested
Shareholder's percentage beneficial ownership of any class or series
of Capital Stock.
(e) After such Interested Shareholder has become an
Interested Shareholder, such Interested Shareholder shall not have
received the benefit, directly or indirectly (except proportionately
as a shareholder of the Corporation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation or any Subsidiary
(as hereinafter defined), whether in anticipation of or in connection
with such Business Combination or otherwise.
(f) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereafter (the "Act") (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to all
shareholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy
or information statement is required to be mailed pursuant to such Act
or subsequent provisions). The
- 10 -
<Page>
proxy or information statement shall contain on the first page
thereof, in a prominent place, any statement as to the advisability
(or inadvisability) of the Business Combination that the Continuing
Directors, or any of them, may choose to make and, if deemed advisable
by a majority of the Continuing Directors, the opinion of an
investment banking firm selected by a majority of the Continuing
Directors as to the fairness (or not) of the terms of the Business
Combination from a financial point of view to the holders of the
outstanding shares of Capital Stock of the Corporation other than the
Interested Shareholder and its Affiliates or Associates (as
hereinafter defined), such investment banking firm to be paid a
reasonable fee for its services by the Corporation.
(g) Such Interested Shareholder shall not have made any
major change in the business or equity capital structure of the
Corporation or any Subsidiary without the approval of a majority of
the Continuing Directors.
(h) The Business Combination shall have been approved by
not less than a majority of the entire Board of Directors.
(i) The Board of Directors of the Corporation shall at all
times include not less than two Continuing Directors.
C. CERTAIN DEFINITIONS. Four the purposes of this Article
NINTH:
1. "BUSINESS COMBINATION" The term "Business Combination" shall
mean:
(a) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Shareholder or (ii) any other corporation (whether or not itself an
Interested Shareholder) which is or after such merger or consolidation
would be an Affiliate or Associate of an Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of transactions)
to, with or by any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder involving any
- 11 -
<Page>
assets (including cash) or securities of the Corporation, any
Subsidiary or any Interested Shareholder or any Affiliate or Associate
of any Interested Shareholder having an aggregate Fair Market Value of
$20,000,000 or more; or
(c) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf
of an Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder; or
(d) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Shareholder) that has the effect,
directly or indirectly, of increasing the proportionate share of any
class or series of Capital Stock, or any securities convertible into
Capital Stock or into equity securities of any Subsidiary, that is
beneficially owned by any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder, or
(e) any agreement, contract or other arrangement providing
for any one or more of the actions specified in the foregoing clauses
(a) to (d).
2. "CAPITAL STOCK"; "VOTING STOCK". The term "Capital Stock"
shall mean all capital stock of the Corporation authorized to be issued from
time to time under Article THIRD of this Restated Certificate of Incorporation,
and the term "Voting Stock" shall mean all Capital Stock which by its terms may
be voted on all matters submitted to shareholders of the Corporation generally,
3. "PERSON". The term "person" shall mean any individual, firm,
corporation or other entity and shall include any group comprised of any person
and any other person with whom such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding, directly or indirectly,
for the purposes of acquiring, holding, voting or disposing of Capital Stock.
4. "INTERESTED SHAREHOLDER". The term "Interested Shareholder"
shall mean any person (other than the Corporation, any Subsidiary, any
profit-sharing, employee stock
- 12 -
<Page>
ownership or other employee benefit plan of the Corporation or any Subsidiary or
any trustee of or fiduciary with respect to any such plan when acting in such
capacity, or any person who, on the date of approval by the Board of Directors
of this Article, is a director of the Corporation) who (a) is the beneficial
owner of Voting Stock representing ten percent (10%) or more of the votes
entitled to be cast by the holders of all then outstanding shares of Voting
Stock, or (b) is an Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date in question was the
beneficial owner of Voting Stock representing ten percent (10%) or more of the
votes entitled to be cast by the holders of all then outstanding shares of
Voting Stock or (c) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock which were at any time within
the two-year period immediately prior to the date in question beneficially owned
by an Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not involving
a public offering within the meaning of the Securities Act of 1933, as amended.
5. "BENEFICIAL OWNER". A person shall be a "beneficial owner"
of any Capital Stock (a) which such person or any of its Affiliates or
Associates owns, directly or indirectly; (b) which such person or any of its
Affiliates or Associates has, directly or indirectly, (i) the right to acquire
(whether such right is exercisable immediately or, subject only to the passage
of time), pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which are owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of Capital Stock. For the purposes of
determining whether a person is an Interested Shareholder pursuant to Paragraph
4 of this Section C, the number of shares of Capital Stock deemed to be
outstanding shall include shares deemed beneficially owned by such person
through application of this Paragraph 5, but shall not include any other shares
of Capital Stock that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
6. "AFFILIATE"; "ASSOCIATE". The terms "Affiliate" and
"Associate" shall have the respective meanings
- 13 -
<Page>
ascribed to such terms in Rule 12b-2 under the Act as in effect on December 31,
1993 (the term "registrant" in said Rule 12b-2 meaning in this case the
Corporation).
7. "SUBSIDIARY". The term "Subsidiary" means any corporation of
which a majority of any class of equity security is beneficially owned by the
Corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in Paragraph 4 of this Section C, the term
"Subsidiary" shall mean only a corporation of which a majority of each class of
equity security is beneficially owned by the Corporation.
8. "CONTINUING DIRECTOR". The term "Continuing Director" means
any member of the Board of Directors of the Corporation, while such person is a
member of the Board of Directors, who is not an Affiliate or Associate or
representative of the Interested Shareholder and either was a member of the
Board of Directors on the date of approval of this Article NINTH by the Board of
Directors or was recommended for election to the Board of Directors, or elected
to fill a vacancy on the Board by a majority of Continuing Directors.
9. "FAIR MARKET VALUE". The term "Fair Market value" means (a)
in the case of cash, the amount of such cash; (b) in the case of stock, the
highest closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Act on which such stock is listed, or, if such stock is not listed on any
such exchange, the highest sale price, or if not available the highest closing
bid quotation, with respect to a share of such stock during the 30-day period
preceding the date in question, in each case on the National Association of
Securities Dealers, Inc. Automated Quotations System or any similar system then
in use, or if no such prices or quotations are available, the fair market value
on the date in question of a share of such stock as determined by a majority of
the Continuing Directors in good faith; and (c) in the case of property other
than cash or stock, the fair market value of such property on the date in
question as determined in good faith by a majority of the Continuing Directors.
10. "CONSIDERATION OTHER THAN CASH TO BE RECEIVED". In the event
of any Business Combination described in Paragraph (a) of Section C of this
Article NINTH in which
- 14 -
<Page>
the Corporation survives, the phrase "consideration other than cash to be
received" as used in Paragraphs 2(a) and 2(b) of Section B of this Article NINTH
shall include the shares of Common Stock and/or the shares of any other class or
series of Capital Stock retained by the holders of such shares.
D. POWERS AND DUTIES OF CONTINUING DIRECTORS. A majority of the
Continuing Directors shall have the power and duty to determine for the purposes
of this Article NINTH, on the basis of information known to them after
reasonable inquiry, all facts necessary to determine compliance with this
Article NINTH, including: (a) whether a person is an Interested Shareholder, (b)
the number of shares of Capital Stock or other securities beneficially owned by
any person, (c) whether a person is an Affiliate, Associate or representative of
another, (d) whether the assets that are the subject of any Business Combination
have, or the consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business Combination, has
an aggregate Fair Market Value of $20,000,000 or more, (e) whether the
requirements of Section B of this Article NINTH have been met and (f) such other
matters with respect to which a determination is required under this Article
NINTH. Any such determination made in good faith shall be, binding and
conclusive on all parties.
E. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED
SHAREHOLDERS. Nothing contained in this Article NINTH shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law.
F. EFFECT ON OBLIGATIONS OF BOARD OF DIRECTORS. The fact that
any Business Combination complies with the provisions of Section B of this
Article NINTH shall not be construed to impose any fiduciary duty, obligation or
responsibility on the Board of Directors, or any member thereof, to approve such
Business Combination or recommend its adoption or approval to the shareholders
of the Corporation, nor shall such compliance limit, prohibit or otherwise
restrict in any manner the Board of Directors, or any member thereof, with
respect to evaluations of or actions and responses taken with respect to such
Business Combination.
G. AMENDMENT, REPEAL, ETC. The affirmative vote of not less
than eighty percent (80%) of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions inconsistent with,
this Article NINTH, provided, however, that, this Section G
- 15 -
<Page>
shall not apply to, and such eighty percent (80%) vote shall not be required
for, any amendment, repeal or adoption unanimously recommended by the Board of
Directors if all of such directors are persons who would be eligible to serve as
Continuing Directors within the meaning of Section C, Paragraph 8 of this
Article NINTH.
IN WITNESS WHEREOF, the undersigned has executed this Restated
Certificate of Incorporation as of this 7th day of July, 1994.
KTI ENVIRONMENTAL GROUP, INC.
By: /s/ Nicholas Menonna, Jr.
--------------------------
Nicholas Menonna, Jr.
President
- 16 -
<Page>
CERTIFICATE REQUIRED TO BE FILED WITH THE
RESTATED CERTIFICATE OF INCORPORATION
OF
KTI ENVIRONMENTAL GROUP, INC.
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of N.J.S.A. 14A:9-5(5), the undersigned
corporation hereby executes the following certificate:
FIRST: Upon the filing of this Restated Certificate of Incorporation,
the name of the corporation is KTI, Inc.
SECOND: The Restated Certificate of Incorporation was adopted on July
6, 1994.
THIRD: At the time of the adoption of this Restated Certificate of
Incorporation, the number of shares outstanding was 1,036,714.66 shares of Class
A Common Stock and 622,460 shares of Class C Common Stock. Such shares were
entitled to vote as a single class and the vote of such shares was:
<Table>
<Caption>
Number of Shares Voted
Total Number of Shares --------------------------------
Entitled to Vote For Against Abstain
- ---------------------- ----------- ------- -------
1,659,174.66 1,658,474.66 0 700
</Table>
FOURTH: This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation, as amended, in
the following respects:
A. Article First is amended to change the name of the Corporation.
B. Article Third is amended to provide for a reclassification of the
capital stock of the Corporation in its entirety. Each share of each class of
the Corporation's common stock outstanding on the date of filing of this
Restated Certificate of Incorporation with the Secretary of State shall be
automatically changed and reclassified without further action to one share of
the reclassified common stock. Each share of each class of the Corporation's
common stock which is held as a treasury share on the date of filing of this
Restated Certificate of Incorporation with the Secretary of State shall be
cancelled.
<Page>
C. Article Fifth is amended and restated in its entirety.
D. Article Seventh is redesignated as Article Sixth and amended to
include officers as well as directors. The previous Article Sixth which set
forth a statement of the incorporator of the Corporation is omitted as no longer
necessary pursuant to N.J.S.A. 14A:9-5(4)(b).
E. Article Eighth is deleted in its entirety.
F. Articles Seventh, Eighth and Ninth are new.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of this 7th day of July, 1994.
KTI ENVIRONMENTAL GROUP, INC.
By: /s/ Nicholas Menonna, Jr.
---------------------------
Nicholas Menonna, Jr.
President
- 2 -
<Page>
ADB
FILED
FEB 8 1995
LONNA R. HOOKS
Secretary of State
0991656
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
KTI, INC.
Pursuant to the provisions of Sections 14A:9-2(4) and l4A:9-4(3),
Corporations, General, of the New Jersey Statutes, the undersigned corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
WHEREAS, a Restated Certificate of Incorporation of KTI, Inc. (the
"Corporation") was filed with the Secretary of State of the State of New Jersey
on July 12, 1994 under which the Corporation was authorized to issue 40,000,000
shares of Common Stock; and
WHEREAS, the Corporation subsequently effected, by board of directors
action alone on September 16, 1994, a share combination with each outstanding
share of the Corporation's capital stock becoming .8994 of a share, with the
aggregate number of shares then held by each stockholder rounded up to the next
full share (the "Reverse Split"); and
WHEREAS, under the terms of Section 14A:7-l5.l(5), Corporations,
General, of the New Jersey Statutes, the number of authorized shares of the
Corporation of Common Stock was automatically reduced to 35,976,000; and
WHEREAS, the Corporation desires to amend its Restated Certificate of
Incorporation to increase the authorized shares of capital stock of the
Corporation to 40,000,000 shares of common stock after giving effect to the
reduction of authorized shares as a result of the Reverse Split.
It is hereby certified as follows:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The following amendment to the Corporation's Certificate of
Incorporation was approved by unanimous written consent of the directors of the
Corporation on September 16, 1994 and thereafter duly adopted by the
shareholders of the Corporation at a special meeting of shareholders of the
Corporation held on February 7, 1995:
<Page>
RESOLVED, that the Corporation be authorized to issue FORTY MILLION
(40,000,000) shares of Common Stock without par value, after giving
effect to the .8994 for one share combination which was authorized by
the board of directors; and it is further
RESOLVED, that the text of ARTICLE THIRD remain as set forth in the
Restated Certificate of Incorporation as filed with the New Jersey
Secretary of State on July 12, 1994.
3. The total number of shares entitled to vote on the amendment was
9,647,479.
4. The number of shares that voted for the amendment was 9,643,408
and the number of shares that voted against the amendment was -0-.
The effective date of this Amendment to the Corporation's Restated
Certificate of Incorporation shall be upon filing.
Dated this 8th day of February, 1995.
KTI, INC.
By: /s/ Nicholas Menonna, Jr.
---------------------------
Nicholas Menonna, Jr.
President
- 2 -
<Page>
MGB
FILED
FEB 8 1995
LONNA R. HOOKS
Secretary of State
0991660
CERTIFICATE OF MERGER
OF
CONVERGENT SOLUTIONS, INC.,
A DELAWARE CORPORATION
INTO
KTI, INC.
A NEW JERSEY CORPORATION
Under Section 14A:10-7 of the
New Jersey Business Corporation Act
TO: THE SECRETARY OF STATE
STATE OF NEW JERSEY
Pursuant to the provisions of Sections l4A:10-4.1 and 14A:lO-7 of the
New Jersey Business Corporation Act, the undersigned does hereby certify:
FIRST: The name of each of the constituent corporations is,
respectively, Convergent Solutions, Inc., a Delaware corporation ("Convergent"),
and, KTI, Inc., a New Jersey corporation ("KTI"). KTI is the corporation
surviving the merger.
SECOND: The plan of merger was originally set forth in an Agreement
and Plan of Merger dated as of July 18, 1994 between Convergent and KTI.
Subsequently, the parties agreed to modify the transaction in certain respects.
Therefore, KTI and Convergent entered into an Amended and Restated Agreement
0100279875
<Page>
and Plan of Merger dated as of September 16, 1994 (the "Merger Agreement"). The
Merger Agreement was amended by Amendment No. 1 dated as of December 1, 1994 in
order to extend a deadline for the closing of the merger from January 31, 1995
to March 31, 1995. The plan of merger as set forth in the Merger Agreement
provides for the following:
(A) Convergent shall be merged into KTI and the name of the surviving
corporation shall be KTI.
(B) The Certificate of Incorporation of KTI shall be the certificate
of incorporation of the surviving corporation.
(C) KTI shall assume all liabilities of Convergent.
(D) Each share of Convergent common stock shall be automatically
converted into the right to receive one share of KTI common stock.
THIRD: On February 7, 1995, the shareholders of KTI duly approved the
Merger Agreement in accordance with N.J.S.A, 14A:10-7 and N.J.S.A. 14A:10-3,
and on February 7, 1995 the shareholders of Convergent duly approved the Merger
Agreement in accordance with the Delaware General Corporation Law.
FOURTH: As to each corporation whose shareholders are entitled to
vote, the number of shares entitled to vote is as follows:
<Table>
<Caption>
Total Number of Shares
Name of Corporation Entitled to Vote
- ------------------- ----------------------
KTI 9,647,479
Convergent 5,145,839
</Table>
-2-
<Page>
At to each corporation, the number of shares voted for and voted
against the merger are as follows:
<Table>
<Caption>
Number of Number of Shares
Name of Shares Voted Voted AGAINST
Corporation FOR the Merger the Merger Abstentions
- ----------- -------------- ---------------- -----------
KTI 9,643,408 0 0
Convergent 3,111,872 133,916 7,800
</Table>
FIFTH: The merger shall be effective as of February 8, 1995 at 5:00
P.M.
SIXTH: The applicable laws of the State of Delaware, the jurisdiction
of organization of Convergent, permit the merger contemplated by the Merger
Agreement and such laws will, upon compliance with filing and recording
requirements, have been complied with in respect to the merger.
IN WITNESS WHEREOF, each of the corporations hereto, has caused this
Certificate of Merger to be executed on its behalf this 8th of February, 1995.
KTI, INC.
a New Jersey Corporation
By: /s/ Nicholas Menonna, Jr.
------------------------------
Nicholas Menonna, Jr.
President
CONVERGENT SOLUTIONS, INC.
a Delaware corporation
By: /s/ Thomas A. Bosanko
------------------------------
Thomas A. Bosanko, President
-3-
<Page>
ADB
FILED
MAR 15 1995
LONNA R. HOOKS
Secretary of State
1000869
CERTIFICATE 0F AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
KTI, INC.
Pursuant to the provisions of Sections 14A:17-15.l(3), 14A:9-2(2) and
14A:9-4(2). Corporations, General, of the New Jersey Statutes, the undersigned
corporation executes the following Certificate of Amendment to its Restated
Certificate of Incorporation:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The Board of Directors of the Corporation adopted a resolution
approving a combination of the issued shares of the Corporation's common stock
on March 10, 1995.
3. The amendment to the Corporation's Restated Certificate of
Incorporation, as amended made hereby will not adversely affect the rights or
preferences of the holders of outstanding shares of any class or series and will
not result in the percentage of authorized shares that remains unissued after
the share combination exceeding the percentage of authorized shares that was
unissued before the share combination.
4. The class of the Corporation's stock subject to the combination
is its Common Stock, no par value. The shares are to be combined on a one share
for each three shares basis. No fractional shares will be issued as a result of
the combination. Stockholders will receive cash in lieu of fractional shares to
which they would otherwise be entitled.
5. In connection with the Share combination ARTICLE THIRD of the
Restated Certificate of Incorporation, as previously amended, is amended to
read as follows:
"ARTICLE THIRD
"The total number of shares of Common Stock which the Corporation
shall have authority to issue is Thirteen Million Three Hundred Thirty
Three Thousand Three Hundred and Thirty Three (13,333,333) shares
without par value. The Corporation shall also have authority to issue
ten million (10,000,000) shares of Preferred Stock."
0100279875
<Page>
6. The share combination sha11 become effective as to stockholders
of record at the close of business on March 24, 1995 with a payment date of
March 27, 1995. The foregoing amendment to the Restated Certificate of
Incorporation, as amended, shall become effective at the close of business on
March 24, 1995.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 13th day of March, 1995.
KTI, INC.
By: /s/ Nicholas Menonna, Jr.
---------------------------------
Name: Nicholas Menonna, Jr.
Title: President
- 2 -
<Page>
AMC
FILED
MAR 16 1997
LONNA R. HOOKS
Secretary of State
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to the provisions of Sections 14A:9-2(4) and 14A:9-4(3),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the Corporation is KTI, Inc.
2. The following amendment to the Certificate of Incorporation was
approved by the Board of Directors and thereafter duly adopted by the
Shareholders of the Corporation on May 14, 1997:
Resolved that ARTICLE THIRD of the Certificate of Incorporation be amended
to read in its entirety as follows:
"ARTICLE THIRD
The total number of shares of Common Stock which the Corporation shall have
authority to issue is Twenty Million (20,000,000) shares without par value. The
Corporation shall also have authority to issue ten million (10,000,000) shares
of Preferred Stock."
3. The number of shares entitled to vote upon the amendment was 6,521,225
shares.
4. The number of shares voting for, against and abstaining from voting
for such amendment are as follows:
<Table>
Number of Shares Voting For Amendment: 5,252,736
Number of Shares Voting Against Amendment: 66,005
Number of Shares Abstaining From Voting: 6,446
</Table>
5. The foregoing amendment to the Restated Certificate of Incorporation
shall become effective at the close of business on the date of filing.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 14th day of May, 1997.
KTI, Inc.
By: /s/ Robert E. Wetzel
----------------------------
Name: Robert E. Wetzel
Title: Senior Vice President
247497
461855
010O279875
<Page>
AMC
Check Appropriate Statute:
/X/ Title 14A:l-6 (5) New Jersey Business Corporation Act (File in
DUPLICATE)
/ / Title 15A:1-7 (e) New Jersey Business Corporation Act (File in
TRIPLICATE)
FILED
JUN 2 1997
LONNA R. HOOKS
Secretary of State
CERTIFICATE OF CORRECTION OF:
CORPORATION NAME: KTI, INC.
CORPORATION NUMBER: 0100-2798-75
The undersigned hereby submits for filing a Certificate of Correction
executed on behalf of the above named Corporation, pursuant to the provisions of
the appropriate Statute, checked above, of the New Jersey Statutes.
1. The Certificate to be corrected is: Certificate of Amendment to the
Restated Certificate of Incorporation of KTI, Inc., filed March 15, 1995 (the
"Certificate").
2. The inaccuracy in the Certificate is (indicate inaccuracy or defect): The
first paragraph of Paragraph 5 of the Certificate failed to specify that only
the first paragraph of Article Third was amended.
3. The Certificate of Correction hereby reads as follows: Paragraph 5 of the
Certificate is amended and restated in its entirety as follows:
"2. In connection with the share combination, the first paragraph of
ARTICLE THIRD of the Restated Certificate of Incorporation is amended to
read as follows:
"ARTICLE THIRD
The total number of shares of Common Stock which the Corporation shall
have authority to issue is Thirteen Million Three Hundred Thirty Three
Thousand Three Hundred and Thirty-Three (13,333,333) shares without par
value. The Corporation shall also have authority to issue ten million
(10,000,000) shares of Preferred Stock."
S-253465
J-472838
0100279875
<Page>
Signature: /s/ Robert E. Wetzel
----------------------
Name: Robert E. Wetzel
----------------------
Title: Senior Vice President
----------------------
Date: May 30, 1997
----------------------
<Page>
COR
FILED
JUN 2 1997
LONNA R. HOOKS
Secretary of State
Check Appropriate Statute:
/X/ Title 14A:l-6 (5) New Jersey Business Corporation Act (File in
DUPLICATE)
/ / Title 15A:l-7 (e) New Jersey Business Corporation Act (File in
TRIPLICATE)
CERTIFICATE OF CORRECTION OF:
CORPORATION NAME: KTI, INC.
CORPORATION NUMBER: 0100-2798-75
The undersigned hereby submits for filing a Certificate of Correction
executed on behalf of the above named Corporation, pursuant to the provisions of
the appropriate Statute, checked above, of the New Jersey Statutes.
l. The Certificate to be corrected is: Certificate of Amendment to the
Restated Certificate of Incorporation of KTI, Inc., filed May 16, 1997 (the
"Certificate").
2. The inaccuracy in the Certificate is (indicate inaccuracy or defect): The
second paragraph of Paragraph 2 of the Certificate incorrectly stated that
Article Third was amended in its entirety. In fact, only the first paragraph of
Article Third was amended.
3. The Certificate of Correction hereby reads as follows: Paragraph 2 of the
Certificate is attended and restated in its entirety as follows:
"2. The following amendment to the Restated Certificate of Incorporation
was approved by the Board of Directors and thereafter duly adopted by the
Shareholders of the Corporation on May 14, 1997:
Resolved that the first paragraph of ARTICLE THIRD of the Restated
Certificate of Incorporation be amended to read as follows:
"ARTICLE THIRD
The total number of shares of Common Stock which the Corporation shall
have authority to issue is Twenty Million (20,000,000) shares without par
value. The Corporation shall also have authority to issue ten million
(10,000,000) shares of Preferred Stock."
S253306
J472613
0100279875
<Page>
Signature: /s/ Robert E. Wetzel
--------------------
Name: Robert E. Wetzel
--------------------
Title: Senior Vice President
--------------------
Date: May 30, 1997
--------------------
<Page>
AMC
FILED
JUN 2 1997
LONNA R. HOOKS
Secretary of State
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to the provisions of Sections 14A:7-2(4) and 14A:9-2(2),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The following resolution was adopted by the Board of Directors of the
Corporation:
Resolved that a new ARTICLE TENTH relating to the designation, number
rights, preferences and limitations of a series of preferred stock shall be
added to the Restated Certificate of Incorporation, as amended, and shall read
in its entirety as follows:
"ARTICLE TENTH
Section 1. DESIGNATION AND AMOUNT. The series of Preferred Stock
designated and known as the "Series A Preferred" shall have no par value and the
number of shares constituting the Series A Preferred shall be 487,500.
Section 2. RANK. The Series A Preferred shall rank: (i) prior to all of
the Company's Common Stock, no par value ("Common"); (ii) PARI PASSU with any
class or series of convertible Preferred Stock or other capital stock of the
Company hereafter created, which is convertible into Common or which, when
originally issued, was issued simultaneously with Common purchase warrants; and
(iii) junior to any class of preferred stock which is not convertible into any
other class of securities of the Company ("Senior Securities"), in each case as
to distributions of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").
Section 3. DIVIDENDS. If any dividend or other distribution payable in
cash, securities or other property (other than securities of the Company the
issuance of which gives rise to adjustment of the Conversion Price as set forth
below) is declared on the Common, each holder of shares of Series A Preferred on
the record date for such dividend or distribution shall be entitled to receive
on the date of payment or distribution of such dividend or other distribution
the same cash, securities or other property which such holder would have
received on such record date if such holder was the holder of record of the
number (including any fraction) of shares of Common into which the shares of
Series A Preferred then held by such holder are then convertible.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, the holders of Series A Preferred (the
"Holders"), shall be entitled to receive, prior to any payment with respect to
any shares of Common but after any
S253306
J472614
0100279875
<Page>
payment with respect to any outstanding shares of Senior Securities, an amount
per share (the "Liquidation Preference") equal to the sum of (i) $8.00 for each
outstanding share of Series A Preferred, plus (ii) interest of 8.19 percent per
annum calculated based on the number of actual days elapsed in a 365 day year or
a 366 day year, as appropriate, plus (iii) any dividends which have been
declared and which the Holders are entitled to receive with respect to each
share of Series A Preferred. If upon the occurrence of such event, the assets
and funds available to be distributed among the Holders shall be insufficient to
permit the payment to such Holders of the full preferential amounts due to such
Holders, then the entire assets and funds of the Company legally available for
distribution to such Holders and the holders of securities PARI PASSU with the
Series A Preferred shall be distributed among the Holders and holders of such
PARI PASSU securities on a pro rata basis.
Section 5. CONVERSION. The record Holders of Series A Preferred shall
have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT.
(i) Each record Holder of Series A Preferred shall be entitled to
convert shares of Series A Preferred at any time into that number of fully-paid
and non-assessable shares of Common of the Company calculated in accordance with
the following formula (the "Conversion Rate"):
Number of shares issued upon conversion of one (1) share of Series A
Preferred =
Liquidation Preference
---------------------------
Conversion Price
where "Conversion Price" means $8.00, as adjusted herein.
(b) ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price shall be subject
to adjustment from time to time upon the occurrence of certain events described
in this SECTION 5(b).
(i) SUBDIVISION OR COMBINATION OF COMMON AND COMMON DIVIDEND. In
case the Company shall at any time subdivide its outstanding Common into a
greater number of shares or declare a dividend upon the Common payable solely in
shares of Common, the Conversion Price in effect immediately prior to such
subdivision or declaration shall be proportionately reduced. Conversely, in case
the outstanding Common shall be combined into a smaller number of shares of
Common, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
(ii) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, prior to
the conversion of all Series A Preferred, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, and as a result of which shares of Common of the Company shall be
changed into the same or a different number of shares of the same or another
class or classes of stock or securities of the Company or another entity, or
other property, the Holders shall, be given at least 30 days advance written
notice of such transaction. The Holders shall then have the right to purchase
and receive
<Page>
upon conversion of Series A Preferred, upon the basis and subject to the terms
and conditions specified herein and in lieu of the shares of Common immediately
theretofore issuable upon conversion, such shares of stock and/or securities or
other property as may be issued or payable with respect to or in exchange for
the number of shares of Common immediately theretofore purchasable and
receivable upon the conversion of Series A Preferred held by such Holders had
such merger, consolidation, exchange of shares, recapitalization or
reorganization not taken place. In any such case appropriate provisions shall be
made with respect to the rights and interests of the Holders to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Rate and of the number of shares issuable upon conversion of the
Series A Preferred) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the conversion thereof. The Company shall not effect any
transaction described in this SUBSECTION 5(b)(ii) unless (1) each Holder has
been given at least 20 days advance written notice of such transaction, and (2)
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligation to deliver to the Holders such shares of stock
and/or securities or other property as, in accordance with the foregoing
provisions, the Holders of may be entitled to receive upon conversion of the
Series A Preferred. Notwithstanding the foregoing, if any of the events
described herein constitutes a Change in Control Transaction, the Holders shall
have the option, exercisable by written notice to the Company, to receive the
Liquidation Preference for their shares of Series A Preferred pursuant to
SECTION 4(b) above in lieu of their rights under this SECTION 5(b)(ii).
(iii) DILUTIVE ISSUANCES. If the Company shall sell or issue at any
time shares of Common (other than Excluded Securities, as defined in SECTION
5(b)(viii) below) at a consideration per share less than the Conversion Price
then in effect, the Conversion Price shall be adjusted to a new Conversion Price
(calculated to the nearest cent) determined by dividing:
(A) an amount equal to (i) the total number of "Shares
Outstanding" (as defined below) immediately prior to such issuance, multiplied
by the Conversion Price in effect immediately prior to such issuance plus (ii)
the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance; by
(B) the total number of Shares Outstanding immediately after
such issuance or sale.
In no event shall any such adjustment be made pursuant to this SECTION 5(b)(iii)
if it would increase the Conversion Price in effect immediately prior to such
adjustment, except as provided in SECTIONS 5(b)(vi) AND 5(b)(vii).
(iv) DEFINITIONS. For purposes of this SECTION 5(b), the following
definitions shall apply:
(A) "CONVERTIBLE SECURITIES" means any indebtedness or
securities convertible into or exchangeable for Common.
<Page>
(B) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase Common or Convertible Securities other than rights,
warrants or options to purchase Excluded Securities (as defined in SECTION
5(b)(viii)).
(C) "SHARES OUTSTANDING" means the aggregate of all shares
of Common outstanding and all Common issuable upon exercise of all outstanding
Options and conversion of all outstanding Convertible Securities.
(v) ADJUSTMENTS. For the purposes of this SECTION 5(b), the
following provisions shall also be applicable:
(A) CASH CONSIDERATION. In case of the issuance or sale of
additional shares of Common for cash, the consideration received by the Company
therefor shall be deemed to be the amount of cash received by the Company from
the recipients or purchasers of the additional shares of Common for such shares
of Common.
(B) NON-CASH CONSIDERATION. In case of the issuance
(otherwise than upon conversion or exchange of Convertible Securities) or sale
of additional shares of Common, Options or Convertible Securities for a
consideration other than cash or a consideration a part of which shall be other
than cash, the fair value of such consideration as determined by the Board of
Directors of the Company in the good faith exercise of its business judgment,
irrespective of the accounting treatment thereof, shall be deemed to be the
value of the consideration other than cash received by the Company for such
securities.
(C) OPTIONS AND CONVERTIBLE SECURITIES. In case the Company
shall in any manner issue or grant any Options or any Convertible Securities,
the total maximum number of shares of Common issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities (in each case, without giving effect to any future
operation of any anti-dilution clauses in any such Option or Convertible
Securities at the time of such issuance or grant) at the time such Convertible
Securities first become convertible or exchangeable shall (as of the date of
issue or grant of such Options or, in the case of the issue or sale of
Convertible Securities other than where the same are issuable upon the exercise
of Options, as of the date of such issue or sale) be deemed to be issued and to
be outstanding for the purpose of this SECTION 5(b) and to have been issued for
the sum of the amount (if any) paid for such Options or Convertible Securities
and the amount (if any) payable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or exchangeable; PROVIDED that,
subject to the provisions of SECTION 5(b)(vi), no further adjustment of the
Conversion Price shall be made upon the actual issuance of any such shares of
Common or Convertible Securities or upon the conversion or exchange of any such
Convertible Securities.
(vi) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Option referred to in SUBSECTION 5(b)(v)(C), or the
rate at which any Convertible Securities referred to in SUBSECTION 5(b)(v)(C)
are convertible into or exchangeable for shares of Common shall change at any
time (other than under or by reason of provisions designed to protect against
dilution), then, for purposes of any adjustment required by SECTION 5(b), the
Conversion Price in effect at the time of such event shall
<Page>
forthwith be readjusted to the Conversion Price that would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold,
provided that if such readjustment is an increase in the Conversion Price, such
readjustment shall not exceed the amount (as adjusted by SECTIONS 5(b)(i) AND
5(b)(v)) by which the Conversion Price was decreased pursuant to
SECTION 5(b)(ii) upon the issuance of the Option or Convertible Security. If the
purchase price provided for in any such Option referred to in SUBSECTION
5(b)(v)(C), or the additional consideration (if any) payable upon the conversion
or exchange of any Convertible Securities referred to in SUBSECTION 5(b)(v)(C),
or the rate at which any Convertible Securities referred to in
SUBSECTION 5(b)(v)(C) are convertible into or exchangeable for shares of Common,
shall be reduced at any time under or by reason of provisions with respect
thereto designed to protect against dilution, then in case of the delivery of
shares of Common upon the exercise of any such Option or upon conversion or
exchange of any such Convertible Security; the Conversion Price then in effect
hereunder shall, upon issuance of such shares of Common be adjusted to such
amount as would have obtained had such Option or Convertible Security never been
issued and had adjustments been made only upon the issuance of the shares of
Common delivered as aforesaid and for the consideration actually received for
such Option or Convertible Security and the shares of Common, provided that if
such readjustment is an increase in the Conversion Price, such readjustment
shall not exceed the amount (as adjusted by SECTIONS 5(b)(i) and 5(b)(iii) by
which the Conversion Price was decreased pursuant to SECTION 5(b)(iii) upon the
issuance of the Option or Convertible Security.
(vii) TERMINATION OF OPTION OR CONVERSION RIGHTS. In the event of
the termination or expiration of any right to purchase shares of Common under
any Option granted after the date hereof or of any right to convert or exchange
Convertible Securities issued after the date hereof, the Conversion Price shall,
upon such termination, be readjusted to the Conversion Price that would have
been in effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the shares of Common issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Conversion Price, such readjustment
shall not exceed the amount (as adjusted by SECTIONS 5(b)(i) AND 5(b)(iii)) by
which the Conversion Price was decreased pursuant to SECTION 5(b)(iii) upon the
issuance of the Option or Convertible Security. The termination of expiration of
any right to purchase shares of Common under any Option granted prior to the
date hereof or of any right to convert or exchange Convertible Securities issued
prior to the date hereof shall not trigger any adjustment to the Conversion
Price, but the shares of Common issuable under such Options or Convertible
Securities shall no longer be counted in determining the number of Shares
Outstanding on the date hereof for purposes of subsequent calculations under
this SECTION 5(b).
(viii) EXCLUDED SECURITIES. Notwithstanding anything herein to the
contrary, the Conversion Price shall not be adjusted pursuant to this SECTION
5(b) by virtue of the issuance and/or sale of "Excluded Securities", which means
the following: (a) up to 682,185 shares of Common, Options or Convertible
Securities to be issued and/or sold to employees, advisors (including, without
limitation, financial, technical and legal advisers), directors or officers of,
or consultants to, the Company or any of its subsidiaries pursuant to a stock
grant, stock option plan, stock purchase plan, pension or profit sharing plan or
other stock
<Page>
agreement or arrangement existing as of the date hereof and which has been
approved by the stockholders of the Company; (b) the reissuance of any expired
and unexercised, cancelled or forfeited Options under any plan referred to in
SUBSECTION (a) above; (c) the issuance of shares of Common, Options and/or
Convertible Securities pursuant to Options and Convertible Securities
outstanding as of the date hereof; (d) the issuance of shares of Common, Options
or Convertible Securities as a stock dividend or upon any subdivision or
combination of shares of Common or Convertible Securities; (e) the issuance of
shares of Common pursuant to the exercise of certain warrants to be issued in
connection with the issuance of the shares of Series A Preferred; or (f) shares
of Common or Convertible Securities issued and sold by and for the account of
the Company pursuant to an effective registration statement filed by the Company
pursuant to the Securities and Exchange Act of 1934, as amended. For all
purposes of this SECTION 5(b), all shares of Common which are Excluded
Securities shall be deemed to have been issued for an amount of consideration
per share equal to the Conversion Price in effect at the time of issuance.
(ix) All calculations under this SECTION 5(b) shall be made to
the nearest one half of one cent ($.005) or to the nearest one-tenth of a share,
as the case may be.
(x) NOTICE OF ADJUSTMENT. Promptly after adjustment of the
Conversion Price, the Company shall give written notice thereof, by first class
mail, postage prepaid, addressed to the registered Holders at the address of
such Holders as shown on the books of the Company. The notice shall be signed by
an officer of the Company and shall state the effective date of the adjustment
and the Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(c) MECHANICS OF CONVERSION. Conversion of the Series A Preferred to Common
may be exercised in whole or in part by a Holder telecopying an executed and
completed notice of conversion ("Notice of Conversion") to the transfer agent of
the Company (the "Transfer Agent"), with a copy to the Company, and delivering
the original Notice of Conversion and the certificate representing the shares of
Series A Preferred to the Transfer Agent by hand or by express courier within
three (3) business days of exercise. Each date on which a Notice of Conversion
is telecopied to the Transfer Agent in accordance with the provisions hereof
shall be deemed a "Conversion Date." The Transfer Agent will transmit the
certificates representing the Common issuable upon conversion of all or any part
of the shares of Series A Preferred (together with any certificates for
replacement shares of Series A Preferred not previously converted but included
in the original certificate presented for conversion) to the Holder via express
courier within three (3) business days after the Transfer Agent has received the
original Notice of Conversion and certificate for the shares of Series A
Preferred being so converted. The Notice of Conversion and certificate
representing the portion of the shares of Series A Preferred converted shall be
delivered as follows:
To the Transfer Agent:
First City Transfer Company
111 Wood Avenue South, Suite 206
Iselin, NJ 08830
Attn.: Ms. Kathy Zaleski
<Page>
(Tel) (908)205-4517
(Fax) (908)205-4544
To the Company:
KTI, Inc.
7000 Boulevard East
Guttenberg, NJ 07093
Attn.: President
(Tel) 201-854-7777
(Fax) 201-854-1771
or to such other person at such other place as the Company shall designate to
the Holder in writing. The Company shall immediately notify each Holder of any
change of Transfer Agent for the Company or termination of the existing Transfer
Agent. If there is no Transfer Agent at any time, all references in this SECTION
5(c) to "Transfer Agent" shall be deemed to refer to the Company.
(i) NO FRACTIONAL SHARES. No fractional shares shall be issued
upon the conversion of the Series A Preferred. The Company shall pay to any
Holder who has converted all or any portion of the shares of Series A Preferred
cash in an amount equal to any fractional shares, such amount of cash to be
determined by multiplying the closing trading price on the last trading day
prior to the date of the conversion by the amount of the fractional share.
(d) LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of evidence
of the loss, theft, destruction or mutilation of any certificates representing
shares of Series A Preferred, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of the certificate(s), if mutilated, the Company shall execute
and deliver new certificate(s) of like tenor and date. However, Company shall
not be obligated to re-issue such lost or stolen certificates if Holder
contemporaneously requests Company to convert such Series A Preferred into
Common.
(e) MANDATORY CONVERSION. The Series A Preferred is subject to mandatory
conversion, at which time all shares of Series A Preferred will automatically be
converted at the Conversion Price, (i) upon the completion of a firm
underwritten public offering of Common by the Company (a "Public Offering") in
which (a) gross proceeds to the Company, before expenses and underwriters'
discounts and commissions, of at least $20,000,000 are received, (b) the Common
so offered is sold at an offering price per share to the public of at least 200%
of the Conversion Price then in effect, and (c) the Holders receive, as a
consequence of participation in such Public Offering, net proceeds equal to or
greater than $3,900,000 (a Public Offering which meets the conditions set forth
in (a), (b) and (c) above being referred to as a "Qualified Public Offering"),
or (ii) immediately following the completion of a Public Offering that is not a
Qualified Public Offering, but, (a) in which the Company receives gross
proceeds, before expenses and underwriters' discounts and commissions, of at
least $20,000,000, and (b) upon the "Market Price" (as defined below) for each
share of Common exceeding 200% of the Conversion Price then in effect for twenty
(20) consecutive trading days, and the average daily trading volume of the
Common
<Page>
for such twenty (20) consecutive day period exceeding 10,000 shares. "Market
Price" shall mean the closing bid price for the Common, as reported by the
Nasdaq National Market System ("Nasdaq"), or if the Common is not traded on
Nasdaq, the closing price or, if not available, the low price of the Common in
the over-the-counter market or the principal national securities exchange on
which the Common is traded.
(f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common such number of its shares of Common as shall from time to time be
sufficient to effect the conversion of all then outstanding shares of Series A
Preferred. The Company covenants and agrees that if at any time it would be
unable to fully convert all shares of Series A Preferred then outstanding, it
will promptly use its best efforts to obtain stockholder approval, within 135
days thereafter, to amend its Certificate of Incorporation to increase the
number of authorized shares of Common by an amount sufficient to permit the
conversion of all shares of Series A Preferred then outstanding.
(g) REDEMPTION BY COMPANY.
(i) REDEMPTION DATE. The Company shall redeem all outstanding
shares of the Series A Preferred on the fifth anniversary of the date of the
issuance of the shares of Series A Preferred (the "Redemption Date").
(ii) REDEMPTION PRICE. The redemption price per share of Series A
Preferred shall equal $12.00 per share of Series A Preferred (to be adjusted
proportionately if the shares of Series A Preferred to which such amount is
applicable are subdivided into a greater number or combined into a lesser
number).
(iii) MECHANICS OF REDEMPTION. The Company shall effect each such
redemption by giving notice thereof ("Redemption Notice"), by facsimile, by
5 P.M. New York City time no later than the tenth (10th) business day prior to
the Redemption Date and shall provide a copy of such redemption notice by
overnight or 2-day courier, to each Holder and the Company's transfer agent for
the Series A Preferred ("Series A Transfer Agent"). Such redemption notice shall
indicate the applicable redemption price and whether the Company has elected, at
its option, to redeem the shares of Series A Preferred for cash (a "Cash
Redemption") or for Common (a "Redemption for Stock"). In the event of a
Redemption for Stock, the Company shall also specify in the Redemption Notice
the number of shares of Common to be issued to the Holder, which shall be based
on the following formula:
Number of shares issued upon redemption of one (1) share of Series A
Preferred =
Redemption Price
-----------------------------
Adjusted Conversion Price
where, the "Adjusted Conversion Price" shall equal ninety five percent (95%) of
the average closing bid price of the Common as reported by Nasdaq for the
previous ten (10) business days ending on the day before the Redemption Date.
<Page>
(iv) HOLDER'S CONVERSION RIGHTS. Notwithstanding the foregoing,
Holder shall have five business days following receipt of the Redemption Notice
from the Company to elect, in its sole discretion, to convert all or part of the
Series A Preferred otherwise being redeemed. Such conversion shall be effected
in accordance with the provisions of SECTION 5 hereof, and if an appropriate
Notice of Conversion is delivered to the Company in a timely manner, such shares
of Series A Preferred shall be deemed to be converted and not redeemed.
(v) OPTIONAL REDEMPTION. Upon a "Change of Control Transaction"
(as defined herein), the Company shall redeem, at the option of the Holder, upon
receipt of a written redemption request from such Holder, the Series A Preferred
for the accreted value of the shares of Series A Preferred, which shall be the
initial purchase price of $8 per share plus interest of 8.19 percent per annum
calculated based on the number of actual days elapsed in a 365 day year or 366
day year, as appropriate, plus any dividends which have been declared and which
the Holders are entitled to receive with respect to each share of Series A
Preferred. A "Change of Control Transaction," is defined as any merger,
consolidation or reorganization of the Company pursuant to which shares of
capital stock of the Company are converted into cash, securities or other
property in which the holders of a majority of the voting capital stock of the
Company (on an as-converted and exercised basis) immediately prior thereto
beneficially own, directly or indirectly, less than 50% of the combined voting
power of the capital stock of the company surviving or resulting from such
merger, consolidation or reorganization.
(vi) PAYMENT OF REDEMPTION PRICE OR ISSUANCE OF SHARE
CERTIFICATES. Upon receipt of a Redemption Notice, Holder shall send its shares
of Series A Preferred being redeemed to the Company or its Series A Transfer
Agent, and the Company shall pay the applicable redemption price within three
(3) business days of receipt of the shares of Series A Preferred, if a Cash
Redemption, or issue certificates representing shares of Common, if a Redemption
for Stock. The Company shall not be obligated to deliver the redemption price or
shares of Common, as the case may be, unless the shares of Series A Preferred so
redeemed are delivered to the Company or its Series A Transfer Agent, or, in the
event one or more certificates have been lost, stolen, mutilated or destroyed,
Holder delivers to the Company a lost certificate affidavit and indemnification
agreement reasonably satisfactory to the Company and the Series A Transfer
Agent. Any redemption payment owed to any Holder under this SECTION 5(g) which
is not paid when due shall bear interest at a rate of 4% in excess of the prime
rate of interest in effect as announced by KeyBank of New York.
Section 6. VOTING RIGHTS. The Holder of each outstanding share of Series
A Preferred shall have the right to one vote for each share of Common into which
each such share of Series A Preferred could then be converted (assuming, for
this purpose only, that shares of Series A Preferred are convertible into
fractional shares) at the record date for the determination of stockholders
entitled to vote on such matters or, if no such record date is established, at
the date of such vote is taken or any written consent of stockholders is
solicited. With respect to such vote, such Holder shall have fall voting rights
and powers equal to the voting rights and powers of the holders of shares of
Common, shall be entitled to notice of any stockholders' meeting in accordance
with the By-Laws of the Company, and shall be entitled to vote, together with
holders of shares of Common, with respect to any question upon which
stockholders of the Company have the right to vote. With respect to all
<Page>
matters upon which stockholders of the Company are entitled to vote, the holders
of outstanding shares of Common and the Holders of all outstanding shares of
Series A Preferred shall vote together without regard to class, except as
expressly required herein, by the Certificate of Incorporation and the By-Laws
of the Company or the Business Corporation Law of the State of New Jersey.
Section 7. STATUS OF CONVERTED STOCK. If any shares of Series A
Preferred shall be converted pursuant to SECTION 5 above, the shares so
converted shall be canceled, shall return to the status of authorized but
unissued Preferred Stock of no designated series, and shall not be issuable by
the Company as Series A Preferred.
Section 8. PROTECTIVE PROVISION. So long as shares of Series A Preferred
are outstanding, the Company shall not without first obtaining the approval (by
vote or written consent, as provided by the applicable laws of the State of New
Jersey) of the Holders of at least a majority of the then outstanding shares of
Series A Preferred:
(a) alter or change the rights, preferences or privileges of the Series A
Preferred so as to affect adversely the Series A Preferred;
(b) increase the size of the authorized number of Series A Preferred; or
(c) do any act or thing not authorized or contemplated by this Certificate
of Designation which would result in taxation of the Holders of shares of the
Series A Preferred under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as hereafter
from time to time amended).
If Holders of at least a majority of the then outstanding shares of Series
A Preferred agree to allow the Company to alter or change the rights,
preferences or privileges of the shares of Series A Preferred, pursuant to
SUBSECTION 8(a) above, so as to affect the Series A Preferred, then the Company
will promptly deliver notice of such approved change to the Holders that did not
agree to such alteration or change."
3. Such resolution was duly adopted by the Board of Directors of the
Corporation on May 28, 1997.
4. The Restated Certificate of Incorporation, as amended, is amended so
that the designation and number of shares of each class and series acted upon in
the resolution, and the relative rights, preferences and limitations of each
such class and series, are as stated in the resolution.
<Page>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 30th day of May, 1997.
KTI, Inc.
By: /s/ Robert E. Wetzel
-------------------------------
Name: Robert E. Wetzel
Title: Senior Vice President
<Page>
AMC
FILED
AUG 8 1997
LONNA R. HOOKS
Secretary of State
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to the provisions of Sections 14A:7-2(4) and l4A:9-2(2),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The following resolution was adopted by the Board of Directors of
the Corporation:
Resolved that a new ARTICLE ELEVENTH relating to the designation,
number rights, preferences and limitation of a series of preferred stock shall
be added to the Restated Certificate of Incorporation, as amended, and shall
read in its entirety as follows:
"ARTICLE ELEVENTH"
Section 1. DESIGNATION AND AMOUNT. There is hereby created out of
the authorized and unissued shares of preferred stock of the Corporation a
series of preferred stock, no par value, designated as the "8 3/4% Series B
Convertible Exchangeable Preferred Stock" (the "Series B Preferred"). The number
of shares constituting such series shall be 880,000. The liquidation preference
of the Series B Preferred (the "Liquidation Preference") shall be $25.00 per
share.
Section 2. RANK. The Series B Preferred shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank (i) senior to all classes of Common Stock
of the Corporation and to each other class of capital stock or series of
preferred stock established after the Series B Preferred Issue Date by the Board
of Directors, the terms of which do not expressly provide that it ranks senior
to or on a parity with the Series B Preferred as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Corporation (collectively referred to with the Common Stock of the Corporation
as "Junior Securities"); (ii) on a parity with the Corporation's Series A
Preferred Stock and, subject to certain conditions, with any class of capital
stock or series of preferred stock issued by the Corporation which was
established after the Series B Preferred Issue Date by the Board of Directors,
the terms of which expressly provide that such class or series will rank on a
parity with Series B Preferred as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Parity Securities"); and (iii) subject to certain
conditions, junior to
287281 0100279875
534830
<Page>
each class of capital stock or series of preferred stock issued by the
Corporation which was established after the Series B Preferred Issue Date by the
Board of Directors, the terms of which expressly provide that such class or
series will rank senior to the Series B Preferred as to dividend distributions
and distributions upon liquidation, winding-up and dissolution of the
Corporation (collectively referred to as "Senior Securities"). The Series B
Preferred shall be subject to the issuance of series of Junior Securities,
Parity Securities and Senior Securities, provided that the Corporation may not
issue any new class of Parity Securities or Senior Securities without the
approval of the Holders of at lease a majority of the shares of Series B
Preferred then outstanding, voting or consenting, as the case may be, together
as one class unless the PRO FORMA ratios for the latest twelve months of (i) net
income available for preferred dividends to preferred dividends is not less than
1:1 and (ii) EBITDA less capital expenditures, securities amortization and
redemption, cash taxes and changes in working capital to preferred dividends is
not less than 1:2:1. The Series B Preferred shall rank junior in right of
payment to all indebtedness and other debt obligations of the Corporation.
Section 3. DIVIDENDS.
(a) Beginning on the Series B Preferred Issue Date, the Holders
of the outstanding shares of Series B Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors, from any
source of funds legally available therefor, distribution in the form of
cash dividends on each share of Series B Preferred, at a rate PER ANNUM
equal to 8 3/4% of the Liquidation Preference per share of the Series B
Preferred plus accumulated and unpaid dividends thereon as of the last
Dividend Payment Date, payable quarterly; provided that if the Corporation
fails to register the Series B Preferred pursuant to the terms of, and
within the time periods set forth in, the Registration Rights Agreement
dated August 7, 1997 between the Corporation and credit Research & Trading
LLC, then the dividend rate shall increase 0.5% per annum for each period
during which such registration is not effective. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the
Series B Preferred Issue Date and shall be payable quarterly in arrears on
each Dividend Payment Date, commencing on November 1, 1997. Each
distribution in the form of a dividend shall be payable to the Holders of
record as they appear on the stock register of the Corporation on the
record date for such purpose fixed by the Board of Directors, which shall
not be less than 10 nor more than 60 days preceding the related Dividend
Payment Date. Dividends shall cease to accumulate in respect of shares of
the Series B Preferred on the Exchange Date or on the date of their earlier
redemption unless the Company shall have failed to issue the appropriate
aggregate principal amount of Exchange Notes in respect of the Series
-2-
<Page>
B Preferred on the Exchange Date or shall have failed to pay the relevant
redemption price on the date fixed for redemption.
(b) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any cash
dividends on shares of the Series B Preferred at any time.
(c) Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption pursuant to
Section 6(a) may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to Holders of record on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(d) Except as set forth in the following sentence, no dividends
shall be declared by the Board of Directors or paid or funds set apart for
the payment of dividends by the Corporation on any Parity Securities for
any period unless full cumulative dividends shall have been or
contemporaneously are declared and paid in cash or declared and a sum in
cash set apart sufficient for such payment of the Series B Preferred for
all Dividend Periods terminating on or prior to the date of payment of such
dividends on such Parity Securities. If full dividends in cash are not so
paid upon the shares of the Series B Preferred and any other Parity
Securities, all dividends declared upon the Series B Preferred and other
Parity Securities shall be declared PRO RATA so that the amount of
dividends declared on each class or series of the Series B Preferred and
such Parity Securities shall in all cases bear to each other the same ratio
that the aggregate accumulated dividends on the Series B Preferred and such
Parity Securities bear to each other.
(e) (i) Holders of shares of the Series B Preferred shall
be entitled to receive the dividends provided for in Section 3(a) hereof
in preference to and in priority over any dividends upon any of the Junior
Securities.
(ii) So long as any shares of Series B preferred are
outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any Junior Securities or make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any
Junior Securities or any warrants, rights, calls or options
exercisable for or convertible into any Junior Securities, or make any
distribution in respect thereof, either directly or
-3-
<Page>
indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than distributions or dividends
in Junior Securities to the holders of Junior Securities), and shall
not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any Junior
Securities or any such warrants, rights, calls or options unless full
cumulative dividends determined in accordance herewith have been paid
or deemed paid in full on the Series B Preferred for all past Dividend
Periods.
(iii) So long as any shares of the Series B Preferred are
outstanding, the Corporation shall not make any payment on account of,
or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any Parity
Securities or any warrants, rights, calls or options exercisable for
or convertible into any Parity Securities, and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any Parity Securities or any such
warrants, rights, calls or options unless the dividends determined in
accordance herewith on the Series B Preferred have been paid or
deemed paid in full for all past Dividend Periods.
(f) Dividends payable on shares of the Series B Preferred for
any period of less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed in any
period of less than one month. If any Dividend Payment Date occurs on a day
that is not a Business Day, any accumulated dividends otherwise payable on
such Dividend Payment Date shall be paid on the next succeeding Business
Day.
Section 4. LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary dissolution or winding-up
of the Corporation, the Holders of shares of Series B Preferred then
outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution, the Liquidation Preference, plus an
amount in cash equal to accumulated and unpaid dividends thereon as of the
last Dividend Payment Date prior to the date fixed for dissolution or
winding-up (including an amount in cash equal to a prorated dividend for
the period from the last Dividend Payment Date to the date fixed for
liquidation, dissolution or winding-up), before any payment shall be made
or any assets distributed to the holders of any Junior Securities,
including, without limitation, Common Stock of the Corporation. If, upon
any voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, the amount payable with respect to the Series B Preferred
-4-
<Page>
and all other Parity Securities is not paid in full, then the Holders of
the Series B Preferred and the Parity Securities shall share equally and
ratably in any distribution of assets of the Corporation in proportion to
the full Liquidation Preference and accumulated and unpaid dividends
thereon as of the last Dividend Payment Date prior to the date of such
voluntary or involuntary dissolution or winding-up, to which each is
entitled. After payment of the full amount of the Liquidation Preferences
and accumulated and unpaid dividends thereon as of the last Dividend
Payment Date to which they are entitled, the Holders of shares of Series B
Preferred shall not be entitled to any further participation in any
distribution of assets of the Corporation.
(b) For the purposes of this Section 4 only, neither the sale,
lease, conveyance, exchange or transfer (for cash, shares of stock;
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with or into one or more entities shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
Section 5. CONVERSION.
(a) A Holder of shares of Series B Preferred may convert such
shares into Common Stock at any time. For the purposes of conversion, each
share of Series B Preferred shall be valued at the Liquidation Preference
plus accumulated and unpaid dividends thereon as of the last Dividend
Payment Date, which shall be divided by the Conversion Price in effect on
the Conversion Date to determine the number of shares issuable upon
conversion, except that the right to convert shares of Series B Preferred
called for redemption shall terminate at the close of business on the
Business Day preceding the Redemption Date and shall cease if not exercised
prior to that time (unless the Corporation shall default in making the
payment due upon redemption). Immediately following such conversion, the
rights of the Holders of converted Series B Preferred shall cease and the
persons entitled to receive the Common Stock upon the conversion of Series
B Preferred shall be treated for all purposes as having become the owners
of such Common Stock.
(b) To convert Series B Preferred, a Holder must (i) surrender
the certificate or certificates evidencing the shares of Series B Preferred
to be converted, duly endorsed in a form satisfactory to the Corporation,
at the office of the Corporation or the Corporation's transfer agent for
the Series B Preferred, (ii) notify the Corporation at such office that he
elects to convert Series B Preferred and the number of shares he wishes to
convert, (iii) state in
-5-
<Page>
writing the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued, and (iv) pay any
transfer or similar tax if required. In the event that a Holder fails to
notify the Corporation of the number of shares of Series B Preferred which
he wishes to convert, he shall be deemed to have elected to convert all
shares represented by the certificate or certificates surrendered for
conversion. The date on which the Holder satisfies all those requirements
is the "Conversion Date." As soon as practical, the Corporation shall
deliver a certificate for the number of full shares of Common Stock
issuable upon the conversion, a payment in cash for any factional share and
a new certificate representing the unconverted portion, if any, of the
shares of Series B Preferred represented by the certificate or certificates
surrendered for conversion. The person in whose name the Common Stock
certificate is registered shall be treated as the shareholder of record on
and after the Conversion Date. No payment or adjustment will be made for
accumulated and unpaid dividends on converted shares of Series B Preferred
or for dividends on any Common stock issued upon such conversion. A share
of Series B Preferred surrendered for conversion during the period from the
close of business on any record date for the payment of dividends to the
opening of business of the corresponding Dividend Payment Date must be
accompanied by a payment in cash in an amount equal to the dividend payable
on such Dividend Payment Date, unless such share of Series B Preferred has
been called for redemption on a Redemption Date occurring during the period
from the close of business on any record date for the payment of dividends
to the close of business on the Business Day immediately following the
corresponding Dividend Payment Date. The dividend payment with respect to a
share of Series B Preferred called for redemption on a date during the
period from the close of business on any record date for the payment of
dividends to the close of business on the Business Day immediately
following the corresponding Dividend Payment Date will be payable on such
Dividend Payment Date to the record Holder of such share on such record
date, notwithstanding the conversion of such share after such record date
and prior to such Dividend Payment Date, and the Holder converting such
share of Series B Preferred need not include a payment of such dividend
amount upon surrender of such share of Series B Preferred for conversion.
If a Holder of Series B Preferred converts more than one share at a time,
the number of full shares of Common Stock issuable upon conversion shall be
based on the total value of all shares of Series B Preferred converted. If
the last day on which Series B Preferred may be converted is not a Business
Day, Series B Preferred may be surrendered for conversion on the next
succeeding Business Day.
(c) The Corporation shall not issue a fractional share of Common
Stock upon conversion of Series B Preferred.
-6-
<Page>
Instead the Corporation shall pay a cash adjustment for the current market
value of the fractional share. The current market value of a fraction of a
share shall be determined as follows: Multiply the current market price of
a full share by the fraction. Round the result to the nearest cent. The
current market price of a share of Common Stock is the Closing Price of the
Common Stock on the last Trading Day prior to the Conversion Date.
(d) If a Holder converts shares of Series B Preferred, the
Corporation shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the conversion.
However, the Holder shall pay any such tax that is due because the shares
are issued in a name other than the Holder's name.
(e) The Corporation has reserved and shall continue to reserve
out of its authorized but unissued Common Stock or its Common Stock held in
treasury enough shares of Common Stock to permit the conversion of the
Series B Preferred in full. All shares of Common Stock that may be issued
upon conversion of Series B Preferred shall be fully paid and
nonassessable. The Corporation shall endeavor to comply with all securities
laws regulating the offer and delivery of shares of Common Stock upon
conversion of Series B Preferred and shall endeavor to list such shares on
each national securities exchange on which the Common Stock is listed.
(f) In case the Corporation shall pay or make a dividend or
other distribution on any class of capital stock of the Corporation in
Common Stock, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator of
which shall be the sum of such number of shares and the total number shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination of the holders entitled to such
dividends and distributions. For the purposes of this section 5(f), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation. The Corporation will not
pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Corporation.
(g) In case the Corporation shall issue rights, options or
warrants to all holders of its Common stock entitling them to subscribe
for, purchase or acquire shares
-7-
<Page>
of Common Stock at a price per share less than the current market price per
share (determined as provided in Section 5(k) below) of Common Stock on
the date fixed for the determination of shareholders entitled to receive
such rights, options or warrants, the Conversion Price in effect at the
opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by a
fraction the numerator of which shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so
offered for subscription, purchase or acquisition would purchase at such
current market price and the denominator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common stock so
offered for subscription, purchase or acquisition, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination of the holders entitled to such
rights, options or warrants. However, upon the expiration of any right,
option or warrant to purchase Common Stock, the issuance of which resulted
in an adjustment in the Conversion Price pursuant to this Section 5(g), if
any such right, option or warrant shall expire and shall not have been
exercised, the Conversion Price shall be recomputed immediately upon such
expiration and effectively immediately upon such expiration shall be
increased to the price it would have been (but reflecting any other
adjustments to the Conversion Price made pursuant to the provisions of this
Section 5 after the issuance of such rights, options or warrants) had the
adjustment of the Conversion Price made upon the issuance of such rights,
options or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually purchased upon
the exercise of such rights, options or warrants. No further adjustment
shall be made upon exercise of any right, option or warrant if any
adjustment shall have been made upon the issuance of such security. For the
purposes of this Section 5(g), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Corporation. The Corporation will not issue any rights, options or warrants
in respect of shares of Common Stock held in the treasury of the
Corporation.
(h) In case the outstanding shares of Common stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be reduced, and,
conversely, in case the outstanding shares of Common Stock shall each be
combined into a smaller number of shares of
-8-
<Page>
Common Stock, the Conversion Price in effect at the opening of business on
the day following the day upon which such combination becomes effective
shall be increased to equal the product of the Conversion Price in effect
on such date and a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such
subdivision or combination, as the case may be. Such reduction or increase,
as the case may be, shall become effective immediately after the opening of
business on the day following the date upon which such subdivision or
combination becomes effective.
(i) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock (i) evidences of its
indebtedness or (ii) shares of any class of capital stock, cash or other
assets (including securities, but excluding (A) any rights, options or
warrants referred to in Section 5(g) above, (B) any dividend or
distribution referred to in Section 5(f) above and (C) cash dividends paid
from the Corporation's retained earnings, unless the sum of (1) all such
cash dividends and distributions made within the preceding 12 months in
respect of which no adjustment has been made and (2) any cash and the fair
market value of other consideration paid in respect of any repurchases of
Common Stock by the Corporation or any of its subsidiaries within the
preceding 12 months in respect of which no adjustment has been made,
exceeds 20% of the Corporation's market capitalization (being the product
of the then current market price per share (determined as provided in 5(k)
below) of the Common Stock times the aggregate number of shares of Common
Stock then outstanding) on the record date for such distribution, then in
each case, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
shall be the current market price per share (determined as provided Section
5(k) below) of the Common Stock on such date of determination (or, if
earlier, on the date on which the Common Stock goes "ex-dividend" in
respect of such distribution) less the then fair market value as determined
by the Board of Directors (whose determination shall be conclusive and
shall be described in a statement which shall be available upon request) of
the portion of the capital stock, cash or other assets or evidences of
indebtedness so distributed (and for which an adjustment to the Conversion
Price has not previously been made pursuant to the terms of this Section 5)
applicable to one share of Common Stock, and the denominator shall be such
current market price per share of the Common Stock, such adjustment to
become effective
-9-
<Page>
immediately after the opening of business on the day following such date of
determination of the holders entitled to such distribution. The following
transactions shall be excluded from the foregoing clauses (1) and (2): (I)
repurchases of Common Stock issued under the Corporation's stock incentive
programs and (II) dividends or distributions payable-in-kind in additional
shares of, or warrants, rights, calls or options exercisable for or
convertible into additional shares of Junior Securities.
(j) The reclassification or change of Common Stock into
securities, including securities other than Common Stock, (other than any
reclassification upon a consolidation or merger to which Section 5(r) below
shall apply) shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date
fixed for the determination of holders of Common Stock entitled to receive
such distribution" within the meaning of Section 5(i) above), and (ii) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into
the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the
day upon which such subdivision becomes effective" or "the day upon which
such combination becomes effective," as the case may be, and "the day upon
which such subdivision or combination becomes effective" within the meaning
of Section 5(h) above).
(k) For the purpose of any computation under Section (g) or (i)
above, the current market price per share of Common Stock on any day shall
be deemed to be the average of the Closing Prices of the Common Stock for
the 10 consecutive Trading Days preceding such day.
(l) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made to the nearest cent or to the nearest l/100th
of a share, as the case may be.
(m) For purposes of this Section 5, "Common Stock" includes any
stock of any class of the Corporation which has no preference in respect of
dividends or of amounts payable the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation and which is not
subject to redemption by the Corporation. However, subject to the
provisions of Section 5(r) below, shares issuable on conversion of shares
of Series B Preferred shall include only shares of the class designated
-10-
<Page>
as Common Stock of the Corporation on the Series B Preferred Issue Date or
shares of any class or classes resulting from any reclassification thereof
and which have no preferences in respect of dividends or amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and which are not subject to redemption by
the Corporation; PROVIDED that, if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(n) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No
adjustment in the Conversion Price need be made under Sections 5(f), (g)
and (i) above if the Corporation issues or distributes to each Holder of
Series B preferred the shares of Common Stock, evidences of indebtedness,
assets, rights, options or warrants referred to in those Sections which
each Holder would have been entitled to receive had Series B Preferred been
converted into Common Stock prior to the happening of such event or the
record date with respect thereto.
(o) Whenever the Conversion Price is adjusted, the Corporation
shall promptly mail to Holders of Series B Preferred, first class, postage
prepaid, a notice of the adjustment. The Corporation shall file with the
transfer agent for the Series B Preferred, if any, a certificate from the
Corporation's independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. Subject to Section
5(p) below, the certificate shall be conclusive evidence that the
adjustment is correct.
(p) The Corporation from time to time may reduce the Conversion
Price if it considers such reductions to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the holders of Common stock by any
amount, but in no event may the Conversion Price be less than the par value
of a share of Common Stock. Whenever the Conversion Price is reduced, the
Corporation shall mail to Holders of Series B Preferred a notice of the
reduction. The Corporation shall mail, first class, postage prepaid, the
notice at least 15 days before the date the reduced Conversion Price takes
effect. The notice shall state the reduced Conversion Price and the period
it will be in effect. A reduction of the Conversion Price does not change
or adjust the Conversion Price otherwise in effect for purposes of Sections
5(f), (g), (h) and (i) above.
-11-
<Page>
(q) If:
(i) the Corporation takes any action which would
require an adjustment in the Conversion Price pursuant to Section 5
(g), (i) or (j) above;
(ii) the Corporation consolidates or merges with, or
transfers all or substantially all of its assets to, another
corporation, and shareholders of the Corporation must approve the
transaction; or
(iii) there is a dissolution or liquidation of the
Corporation;
the Corporation shall mail to Holders of the Series B Preferred, first
class, postage prepaid, a notice stating the proposed record or effective
date, as the case may be. The Corporation shall mail the notice at least 10
days before such date. However, failure to mail the notice or any defect in
it shall not affect the validity of any transaction referred to in clause
(i), (ii) or (iii) of this Section 5 (q).
(r) In the case of any consolidation of the Corporation or the
merger of the Corporation with or into any other entity or the sale or
transfer of all or substantially all of the assets of the Corporation
pursuant to which the Corporation's Common Stock is converted into other
securities, cash or assets, upon consummation of such transaction, each
share of Series B Preferred shall automatically become convertible into the
kind and amount of securities, cash or other assets receivable upon the
consolidation, merger, sale or transfer by a holder of the of shares of
Common Stock into which such share of Series B Preferred might have been
converted immediately prior to such consolidation, merger, transfer or sale
(assuming such holder of Common Stock failed to exercise any rights of
election and received per share the kind and amount receivable per share by
a plurality of non-electing shares). Appropriate adjustment (as determined
by the Board of Directors of the Corporation) shall be made in the
application of the provisions herein set forth with respect to the rights
and interests thereafter of the Holders of Series B Preferred, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustment of the Conversion Price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other securities or property thereafter deliverable upon the
conversion of Series B Preferred. If this Section 5(r) applies, Sections
5(f), (g), (h), (i) and (j) do not apply.
(s) In any case in which this Section 5 shall require that an
adjustment as a result of any event become
-12-
<Page>
effective from and after a record date, the Corporation may elect to defer
until after the occurrence of such event (A) the issuance to the Holder of
any shares of Series B preferred converted after such record date and
before the occurrence of such event of the additional shares of Common
Stock issuable upon such conversion over and above the shares issuable on
the basis of the Conversion Price in effect immediately prior to adjustment
and (B) a cash payment for any remaining fractional shares of Common Stock
as provided in Section 3 (c) above; PROVIDED, HOWEVER, that if such event
shall not have occurred and authorization of such event shall be rescinded
by the Corporation, the Conversion Price shall be recomputed immediately
upon such recision to the price that would have been in effect had such
event not been authorized, PROVIDED that such recision is permitted by and
effective under applicable laws.
(t) All shares of Series B Preferred converted pursuant to this
Section 5 shall be restored to the status of authorized and unissued shares
of preferred stock, without designation as to series and may thereafter be
reissued as shares of any series of preferred stock.
Section 6. REDEMPTION.
(a) OPTIONAL REDEMPTION. (i) The Corporation may, at the option
of the Board of Directors, redeem at any time on or after August 15, 2000,
from any source of funds legally available therefor, from time to time, in
whole or in part, in the manner PROVIDED in Section 6(c) hereof, any or
all of the shares of the Series B Preferred, at the redemption prices set
forth below if redeemed during the 12 month period beginning on, August 15
of each of the years indicated below:
<Table>
<Caption>
YEAR REDEMPTION PRICES
2000 ...................................... $26.10 per share
2001 ...................................... $25.73 per share
2002 ...................................... $25.37 per share
2003 ...................................... $25.00 per share
</Table>
plus, in each case, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Redemption Date) (the "Optional Redemption Price"), PROVIDED, that no
optional redemption pursuant to this Section 6(a)(i) shall be authorized or
made unless prior to giving the applicable Redemption Notice all
accumulated and unpaid dividends for Dividend Periods ended prior to the
date of such Redemption Notice shall have been paid in cash.
-13-
<Page>
(ii) Notwithstanding subsection (i) above, on or after
August 15, 1999, the Corporation may, at its option, redeem the Series
B Preferred at $26.47 per share plus accumulated and unpaid dividends
thereon as of the last Dividend Payment Date if the Common Stock bid
price has averaged not less than 1.5 times the Conversion Price during
the preceding 20 consecutive Trading Days.
(iii) In the event of a redemption pursuant to Section
6(a) (i) or Section(a) (ii) hereof of only a portion of the then
outstanding shares of the Series B Preferred, the Corporation shall
effect such redemption PRO RATA according to the number of shares held
by each Holder of the Series B Preferred or by lot, as may be
determined by the Corporation in its sole discretion; PROVIDED that
the Corporation may redeem all shares held by Holders of fewer than
100 shares of Series B Preferred (or by Holders that would hold fewer
than 100 shares of Series B Preferred following such redemption) prior
to its redemption of other shares of Series B Preferred.
(b) MANDATORY REDEMPTION. (i) On August 15, 2004, the
Corporation shall redeem from any source of funds legally available
therefor, in the manner provided in Section 6 (c), all of the then
outstanding shares of Series B Preferred at a redemption price equal to
100% of the then effective Liquidation Preference per share, plus an amount
equal to all accumulated and unpaid dividends thereon as of the last
Dividend Payment Date (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Redemption Date) (the "Mandatory Redemption Price"). The Mandatory
Redemption Price shall be made at the option of the Corporation either in
(a) cash or (b) Common Stock valued at 95% of the average Closing Price of
the Common Stock during the 20 Trading Days prior to such redemption price.
(ii) If the Corporation is unable or shall fail to
discharge its obligation to redeem all outstanding shares of Series B
Preferred pursuant to this Section 6(b) (the "Mandatory Redemption
Obligation"), the Mandatory Redemption Obligation shall be discharged
as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as the Mandatory Redemption
Obligation with respect to the Series B Preferred shall not be fully
discharged, the Corporation shall not, directly or indirectly, redeem,
purchase or otherwise acquire any Parity Security or discharge any
mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Parity Securities.
-14-
<Page>
(c) PROCEDURES FOR REDEMPTION. (i) At least 30 days and not
more than 60 days prior to the Redemption Date of the Series B Preferred,
the Corporation shall make a public announcement of the redemption, and
shall mail written notice (the "Redemption Notice") by first class mail,
postage prepaid, to each Holder of record on the record date fixed for such
redemption of the Series B Preferred at such Holder's address as the same
appears on the stock register of the Corporation, PROVIDED that no failure
to give such notice nor any deficiency therein shall affect the validity of
the procedure for the redemption of any shares of Series B Preferred to be
redeemed except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
(A) that the redemption is pursuant to Section 6(a)(i)
or 6(b)(i), as applicable hereof;
(B) the redemption price;
(C) whether all or less than all the outstanding
shares of the Series B Preferred are to be redeemed and the total
number of shares of the Series B Preferred being redeemed;
(D) the number of shares of Series B Preferred, held
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(E) the Redemption Date;
(F) that the Holder is to surrender to the
Corporation, at the place or places where certificates for shares
of Series B Preferred are to be surrendered for redemption, in
the manner and at the price designated, his certificate or
certificates representing the shares of Series B Preferred to be
redeemed;
(G) the name of any bank or trust company performing
the duties referred to in Section 6(c) (iv) hereof; and
(H) that dividends on the shares of the Series B
Preferred to be redeemed shall cease to accumulate on such
Redemption Date unless the Corporation defaults in the payment of
the redemption price,
(ii) Each Holder of Series B Preferred shall surrender
the certificate or certificates representing such shares of Series B
Preferred to the Corporation,
-15-
<Page>
duly endorsed, in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full redemption
price for such shares shall be payable in cash to the Person whose
name appears on such certificate or certificates as the owner thereof,
and each surrendered certificate shall be canceled and retired. In the
event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(iii) Unless the Corporation defaults in the payment in
full of the applicable redemption price, dividends on the Series B
Preferred called for redemption shall cease to accumulate on the
Redemption Date, and the Holders of such redemption shares shall cease
to have any further rights with respect thereto on the Redemption
Date, other than the right to receive the redemption price without
interest.
(iv) If a Redemption Notice shall have been duly given
or if the Corporation shall have given to the bank or trust company
hereinafter referred to irrevocable authorization promptly to give
such notice, and if on or before the Redemption Date specified therein
an amount in cash equal to the full redemption price shall have been
segregated and irrevocably deposited by the Corporation with such bank
or trust company in trust for the pro rata benefit of the Holders of
the Series B Preferred called for redemption, then, notwithstanding
that any certificate for shares so called for redemption shall not
have been surrendered for cancellation, from and after the close of
business on the day on which such funds are so deposited, all shares
so called, or to be so called pursuant to such irrevocable
authorization, for redemption shall no longer be deemed to be
outstanding and all rights with respect of such shares shall forthwith
cease and terminate and, for the purposes of Section 6(c)(i) (H) and
6(c)(iii) above, the Corporation will be deemed to have paid the
redemption price on the Redemption Date, except only the right of
Holders thereof to receive from such bank or trust company at any time
after the time of such deposit the funds so deposited, without
interest, and the right of the Holders thereof to convert such shares
as provided in Section 5 hereof to the Business Day preceding the
Redemption Date. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the Unites States of
America or any state thereof, shall have capital, surplus and
undivided profits aggregating at least $100,000,000 according to its
last published statement of condition, and shall be identified in the
Redemption Notice. Any interest
-16-
<Page>
accrued on such funds shall be paid to the Corporation from time to
time. Any funds so set aside or deposited, as the case may be, in
respect of shares of the Series B Preferred that are subsequently
converted shall be promptly returned to the Corporation. Any funds so
set aside or deposited, as the case may be, and unclaimed at the end
of three years from such redemption shall, to the extent permitted by
law, be released or repaid to the Corporation, after which repayment
the Holders of the shares so called for redemption shall look only to
the Corporation for payment thereof.
Section 7. VOTING RIGHTS.
(a) The Holders of shares of Series B Preferred, except as
otherwise required under New Jersey law, the Restated Certificate of
Incorporation of the Corporation, as amended (the "Restated Certificate of
Incorporation"), or as set forth in Sections 7(b), (c) or (d) below, shall
not be entitled or permitted to vote on any matter required or permitted to
be voted upon by the shareholders of the Corporation.
(b) (i) So long as any shares of the Series B Preferred are
outstanding, the Corporation shall not authorize or issue any new class of
Parity Securities or Senior Securities, or increase the authorized number
of shares of any such class or series, or reclassify any authorized stock
of the Corporation into any such class or series, or authorize any
obligation or security convertible into or evidencing the right to purchase
any such Parity Securities or Senior Securities unless the pro forma ratios
for the latest twelve months of (A) net income available for preferred
dividends to preferred dividends is not less than 1:1 and (B) EBITDA less
capital expenditures, securities amortization and redemption, cash, taxes
and changes in working capital to preferred dividends is not less than
1.2:1 without the affirmative vote or consent of Holders of at least a
majority of the outstanding shares of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting.
(ii) So long as any shares of the Series B Preferred are
outstanding and without the affirmative vote or convent of Holders of
at least a majority of the issued and outstanding shares of Series B
Preferred, voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting, the Corporation shall not
amend the Restated Certificate of Incorporation so as to affect
adversely the voting rights, preferences, privileges or
-17-
<Page>
relative, participating, optional or other specified rights of Holders
of shares of Series B Preferred or to authorize the issuance of any
additional shares of Series B Preferred; PROVIDED that any such
amendment that adversely changes the dividend payable on, or the
Liquidation Preference of, the Series B Preferred shall require the
affirmative vote or consent of all Holders of Series B Preferred,
voting or consenting, as the case may be, as one class, given in
person or by proxy, either in writing or by resolution adopted at an
annual or special meeting.
(iii) and so long as any shares of the Series B Preferred
are outstanding, the Corporation shall not, amend or modify the
Exchange Note Indenture from the form as existing on the date of issue
of the Series B Preferred (except as expressly provided therein),
until the exchange of Series B Preferred for Exchange Notes) without
the affirmative vote or consent of Holders of at least a majority of
the issued and outstanding shares of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(c) (i) If the Corporation fails to (A) declare and pay in
full dividends accumulated and owing on any Dividend Payment Date for more
than four consecutive Dividend Payment Dates (a "Dividend Default"); or (B)
satisfy any Mandatory Redemption Obligation with respect to the Series B
Preferred or to make a series B Preferred Change of Control Offer or to
repurchase all of the Series B Preferred validly tendered in a Series B
Preferred Change of Control Offer pursuant to the provisions of Section 9
hereof (a "Change of Control Default") (in each case, a "Voting Rights
Triggering Event"), then the number of directors consisting the Board of
Directors shall thereupon automatically be increased by one, in the case of
clause (A) above and two, in the case of clause (B) above, and the Holders
of a majority of the outstanding shares of Series B Preferred, voting
separately as one class (or as a class together with the holders of shares
of Parity Securities, if such holders are entitled to elect additional
directors pursuant to any provisions of the Restated Certificate of
Incorporation that are similar to those of the Holders of the Series B
Preferred), shall be entitled to elect such members to the Board of
Directors at a special meeting therefor called upon the occurrence of such
Voting Rights Triggering Event and at every subsequent meeting at which the
terms of office of the directors so elected expire. In no event shall the
holders of the Series B Preferred and the holders of Parity Securities
voting together as a class be entitled to elect a total of more than two
additional directors to the Board of Directors of the Corporation.
-18-
<Page>
(ii) The right of the Holders of Series B Preferred
voting separately as one class to elect members of the Board of
Directors as set forth in Section 7(c)(i) above shall continue until
such time as (A) in the event such right arises due to a Dividend
Default, all accumulated dividends that are in arrears on the Series B
Preferred are paid in full; and (B) in the event such right arises
because a Change of Control Default, the Corporation remedies any such
failure, breach or default, at which time (Y) the special right of
such Holders so to vote for the election of directors and (Z) the term
of office of any directors elected pursuant to Section 7(c)(i) shall
terminate, and the directors elected by the holders of Common Stock
shall constitute the entire Board of Directors and the authorized
number of directors of the Corporation shall thereupon return to the
number of authorized directors otherwise in effect, but subject always
to the same provisions for the renewal and divestment of such special
voting rights in the case of any future Voting Rights Triggering
Event. At any time after voting power to elect directors shall have
become vested and be continuing in the Holders of shares of the Series
B Preferred pursuant to Section 7(c)(i) hereof or if vacancies shall
exist in the offices of directors elected by the Holders of shares of
the Series B Preferred, a proper officer of the Corporation may, and
upon the written request any Holder of record of shares of Series B
Preferred then outstanding addressed to the Secretary of the
Corporation shall, call a special meeting of the Holders of Series B
Preferred, for the purpose of electing the directors that such Holders
are entitled to elect. If such meeting shall not be called by the
proper officer of the Corporation within 30 days after personal
service of such written request upon the Secretary of the Corporation,
or within 30 days after mailing the same within the United States by
certified mail, addressed to the Secretary of the Corporation at its
principal executive offices, then any Holder of record of outstanding
shares of the Series B Preferred may designate in writing one of their
number to call such meeting at the expense of the Corporation, and
such meeting may be called by the Person so designated upon the notice
required for special meetings of shareholders of the Corporation and
shall he held at the place for holding the annual meetings of
shareholders or such other place in the United States as shall be
designated in such notice. Notwithstanding the provisions of this
Section 7(c)(ii), no such special meeting shall be called if any much
request is received less than 30 days before the date fixed for the
next ensuing annual or special meeting of shareholders of the
Corporation. Any Holder of shares
-19-
<Page>
of the Series B Preferred so designated shall have, and the
Corporation shall provide, access to the lists of Holders of shares of
the Series B Preferred for purposes of calling a meeting pursuant to
the provisions of this Section 7(c)(ii).
(iii) At any meeting held for the purpose of electing
directors at which the Holders of Series B Preferred shall have the
right, voting separately as one class, to elect directors as
aforesaid, the presence in person or by proxy of the Holders of at
least a majority of the outstanding Series B Preferred shall be
required to constitute a quorum of such Series B Preferred.
(iv) Directors elected pursuant to this Section 7 shall
serve until the earlier of (A) the next annual meeting of the
shareholders and until their successors are qualified or (B) the time
specified in Section 7(c) (ii) above. Any vacancy occurring in the
office of a director elected by the Holders of shares of the Series B
Preferred may be filled by the Board of Directors with a Person
nominated by the remaining director elected by the Holders of shares
of Series B Preferred (or such Holders and holders of such Parity
Securities) unless and until such vacancy shall be filled by the
Holders of shares of the Series B Preferred (or such Holders and
holders of such Parity Securities) by calling a special meeting of
such Holders as provided in Section 7(c) (ii).
(d) In any case in which the Holders of shares of the Series B
Preferred shall be entitled to vote pursuant to this Section 7 or pursuant
to New Jersey law, each Holder of shares of the Series B Preferred shall be
entitled to one vote for each share of Series B Preferred held.
Section 8. EXCHANGE.
(a) (i) The Corporation at its option may exchange all, but
not less than all, of the then outstanding shares of Series B Preferred
into the Corporation's 8 3/4% Convertible Subordinated Notes due 2004 (the
"Exchange Notes") on any Dividend Payment Date, PROVIDED that within 60
days of the Exchange Date, the Corporation shall send a written notice (the
"Exchange Notice") of exchange by mail to each Holder, which notice shall
state: (A) that the Corporation is exercising its option to exchange the
Series B Preferred into Exchange Notes pursuant to the Restated Certificate
of Incorporation; (B) the date of the exchange (the "Exchange Date"), which
date shall not be less than 30 days nor more than 6O days following the
date on which the Exchange Notice is mailed; (C) that the Holder is to
surrender to the Corporation, at the place or places where
-20-
<Page>
certificates for shares of Series B Preferred are to be surrendered for
exchange, in the manner designated in the Exchange Notice, his certificate
or certificates representing the shares of Series B Preferred to be
exchanged; (D) that dividends on the shares of Series B Preferred to be
exchanged shall cease to accumulate on the Exchange Date whether or not
certificates for shares of Series B Preferred are surrendered for exchange
on the Exchange Date unless the Corporation shall default in the delivery
of Exchange Notes; and (E) that interest on the Exchange Notes shall accrue
from the Exchange Date whether or not certificates for shares of Series B
Preferred are surrendered for exchange on the Exchange Date, on the
Exchange Date, if the conditions set forth in clauses (U) through (Y) below
are satisfied, the Corporation shall issue Exchange Notes in exchange for
the Series B Preferred as provided in Section 8(a)(ii), provided that on
the Exchange Date: (U) there are no accumulated and unpaid dividends on the
Series B Preferred (including the dividends payable on such date) or other
contractual impediment to such exchange; (V) there shall be legally
available funds sufficient therefor; (W) the Exchange Note Indenture and
the trustee thereunder shall have been qualified under the Trust
Indenture Act; (X) immediately after giving effect to such exchange, no
Default or Event of Default (each as defined in the Exchange Note
Indenture) would exist under the Exchange Note indenture; and (y) the
Corporation shall have delivered to the trustee under the Exchange Date
Indenture a written opinion of counsel, dated the Exchange Date, regarding
the satisfaction of the conditions set forth in clauses (U), (V), and (W).
In the event that the issuance of the Exchange Notes is not permitted on
the Exchange Date or any of the conditions set forth in clauses (U) through
(X) of the preceding sentence are not satisfied on the Exchange Date, the
Corporation shall use its best efforts to satisfy such conditions and
effect such exchange as soon as practicable.
(ii) Upon any exchange pursuant to Section 8 (a)(i),
Holders of outstanding shares of Series B Preferred shall be entitled
to receive $1,000 principal amount of Exchange Notes for each 40
shares of Series B Preferred, plus an amount in cash equal to
accumulated and unpaid dividends (including an amount in cash equal to
a prorated dividend for the period from the last Dividend Payment Date
to the Exchange Date); PROVIDED, that the Corporation shall pay cash
in lieu of issuing an Exchange Note in a principal amount of less than
$1,000. on and after the Exchange Date, unless the Corporation
defaults in the issuance of Exchange Notes in exchange for the Series
B Preferred, dividends will cease to accumulate on the outstanding
shares of Series B Preferred, and all rights of the Holders of Series
B Preferred (except the right to receive the Exchange Notes, an amount
in cash equal to the accumulated and
-21-
<Page>
AMC
FILED
OCT 31 1997
LONNA R. HOOKS
Secretary of State
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to the provisions of Sections l4A:7-2(4) and 14A:9-2(2),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The following resolution was adopted by the Board of Directors of the
Corporation:
Resolved that a new ARTICLE TWELFTH relating to the designation, number
rights, preferences and limitations of a series of preferred stock shall be
added to the Restated Certificate of Incorporation, as amended, and shall read
in its entirety as follows:
"ARTICLE TWELFTH"
Section 1. DESIGNATION AND AMOUNT. The series of Preferred Stock
designated and known as the "Series C Preferred" shall have no par value and the
number of shares constituting the Series C Preferred shall be 447,500. The
Series C Preferred Stock is issued pursuant to the blank check preferred stock
authorized by the Company's Restated Certificate of Incorporation. The Series C
Preferred can only be issued in exchange for Series A Preferred on a one for one
basis. The Series C Preferred Stock shall be redesignated as Series A Preferred
upon all outstanding Series A Preferred being exchanged for Series C Preferred
or converted into Common Stock.
Section 2. RANK. The Series C Preferred shall rank: (i) prior to all of
the Company's Common Stock, no par value ("Common"); (ii) PARI PASSU with any
class or series of convertible Preferred Stock, Series A Preferred, Series B
Preferred, or other capital stock of the Company hereafter created, which is
convertible into Common or which, when originally issued, was issued
simultaneously with Common purchase warrants; and (iii) junior to any class of
preferred stock which is not convertible into any other class of securities of
the Company ("Senior Securities"), in each case as to distributions of assets
upon liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary (all such distributions being referred to collectively as
"Distributions").
Section 3. DIVIDENDS. If any dividend or other distribution payable in
cash, securities or other property (other than securities of the Company the
issuance of which gives rise to adjustment of the Conversion Price as set forth
below) is declared on the Common, each holder of shares of Series C Preferred on
the record date for such dividend or distribution shall be entitled to receive
on the date of payment or distribution of such dividend or other distribution
the same cash, securities or other property which such holder would have
received on such record date if such holder was the holder of record of the
number (including any fraction) of shares of Common into which the shares of
Series C Preferred then held by such holder are then convertible.
0100279875
<Page>
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, the holders of Series C Preferred (the
"Holders"), shall be entitled to receive, prior to any payment with respect to
any shares of Common but after any payment with respect to any outstanding
shares of Senior Securities, an amount per share (the "Liquidation Preference")
equal to the sum of (i) $8.00 for each outstanding share of Series C Preferred,
plus (ii) interest of 8.19 percent per annum calculated based on the number of
actual days elapsed in a 365 day year or a 366 day year, as appropriate, from
June 4, 1997, plus (iii) any dividends which have been declared and which the
Holders are entitled to receive with respect to each share of Series C
Preferred. If upon the occurrence of such event, the assets and funds available
to be distributed among the Holders shall be insufficient to permit the payment
to such Holders of the full preferential amounts due to such Holders, then the
entire assets and funds of the Company legally available for distribution to
such Holders and the holders of securities PARI PASSU with the Series C
Preferred shall be distributed among the Holders and holders of such PARI PASSU
securities on a pro rata basis.
Seciion 5. CONVERSION. The record Holders of Series C Preferred shall
have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT.
(i) Each record Holder of Series C Preferred shall be entitled
to convert shares of Series C Preferred at any time into that number of
fully-paid and non-assessable shares of Common of the Company calculated in
accordance with the following formula (the "Conversion Rate"):
Number of shares issued upon conversion of one (1) share of Series C
Preferred =
Liquidation Preference
----------------------------
Conversion Price
where "Conversion Price" means $8.00, as adjusted herein.
(b) ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price shall be subject
to adjustment from time to time upon the occurrence of certain events described
in this SECTION 5(b).
(i) SUBDIVISION OR COMBINATION OF COMMON AND COMMON DIVIDEND. In
case the Company shall at any time subdivide its outstanding Common into a
greater number of shares or declare a dividend upon the Common payable solely in
shares of Common, the Conversion Price in effect immediately prior to such
subdivision or declaration shall be proportionately reduced. Conversely, in case
the outstanding Common shall be combined into a smaller number of shares of
Common, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
2
<Page>
(ii) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, prior to the
conversion of all Series C Preferred, there shall be any merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event,
and as a result of which shares of Common of the Company shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities of the Company or another entity, or other property, the
Holders shall be given at least 30 days advance written notice of such
transaction. The Holders shall then have the right to purchase and receive upon
conversion of Series C Preferred, upon the basis and subject to the terms and
conditions specified herein and in lieu of the shares of Common immediately
theretofore issuable upon conversion, such shares of stock and/or securities or
other property as may be issued or payable with respect to or in exchange for
the number of shares of Common immediately theretofore purchasable and
receivable upon the conversion of Series C Preferred held by such Holders had
such merger, consolidation, exchange of shares, recapitalization or
reorganization not taken place. In any such case appropriate provisions shall be
made with respect to the rights and interests of the Holders to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Rate and of the number of shares issuable upon conversion of the
Series C Preferred) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the conversion thereof. The Company shall not effect any
transaction described in this SUBSECTION 5(b)(ii) unless (1) each Holder has
been given at least 20 days advance written notice of such transaction, and (2)
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligation to deliver to the Holders such shares of stock
and/or securities or other property as, in accordance with the foregoing
provisions, the Holders of may be entitled to receive upon conversion of the
Series C Preferred. Notwithstanding the foregoing, if any of the events
described herein constitutes a Change in Control Transaction, the Holders shall
have the option, exercisable by written notice to the Company, to receive the
Liquidation Preference for their shares of Series C Preferred pursuant to
SECTION 4(b) above in lieu of their rights under this SECTION 5(b)(ii).
(iii) DILUTIVE ISSUANCES. If the Company shall sell or issue at any
time shares of Common (other than Excluded Securities, as defined in SECTION
5(b)(viii) below) at a consideration per share less than the Conversion Price
then in effect, the Conversion Price shall be adjusted to a new Conversion Price
(calculated to the nearest cent) determined by dividing:
(A) an amount equal to (i) the total number of "Shares
Outstanding" (as defined below) immediately prior to such issuance, multiplied
by the Conversion Price in effect immediately prior to such issuance plus (ii)
the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance; by
(B) the total number of Shares Outstanding immediately after
such issuance or sale.
3
<Page>
In no event shall any such adjustment be made pursuant to this SECTION 5(b)(iii)
if it would increase the Conversion Price in effect immediately prior to such
adjustment, except as provided in SECTIONS 5(b)(vi) AND 5(b)(vii).
(iv) DEFINITIONS. For purposes of this SECTION 5(b), the following
definitions shall apply:
(A) "CONVERTIBLE SECURITIES" means any indebtedness or
securities convertible into or exchangeable for Common.
(B) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase Common or Convertible Securities other than rights,
warrants or options to purchase Excluded Securities (as defined in
SECTION 5(b)(viii)).
(C) "SHARES OUTSTANDING" means the aggregate of all shares of
Common outstanding and all Common issuable upon exercise of all outstanding
Options and conversion of all outstanding Convertible Securities.
(v) ADJUSTMENTS. For the purposes of this SECTION 5(b), the
following provisions shall also be applicable:
(A) CASH CONSIDERATION. In case of the issuance or sale of
additional shares of Common for cash, the consideration received by the Company
therefor shall be deemed to be the amount of cash received by the Company from
the recipients or purchasers of the additional shares of Common for such shares
of Common.
(B) NON-CASH CONSIDERATION. In case of the issuance
(otherwise than upon conversion or exchange of Convertible Securities) or sale
of additional shares of Common, Options or Convertible Securities for a
consideration other than cash or a consideration a part of which shall be other
than cash, the fair value of such consideration as determined by the Board of
Directors of the Company in the good faith exercise of its business judgment,
irrespective of the accounting treatment thereof, shall be deemed to be the
value of the consideration other than cash received by the Company for such
securities.
(C) OPTIONS AND CONVERTIBLE SECURITIES. In case the Company
shall in any manner issue or grant any Options or any Convertible Securities,
the total maximum number of shares of Common issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities (in each case, without giving effect to any future
operation of any anti-dilution clauses in any such Option or Convertible
Securities at the time of such issuance or grant) at the time such Convertible
Securities first become convertible or exchangeable shall (as of the date of
issue or grant of such Options or, in the case of the issue or sale of
Convertible Securities other than where the same are issuable upon the exercise
of Options, as of the date of such issue or sale) be deemed to be issued and to
be outstanding for the purpose of this SECTION 5(b) and to have been issued for
the sum of the amount (if any) paid for such Options or Convertible Securities
and the amount (if any) payable upon the exercise of such Options or upon
4
<Page>
conversion or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or exchangeable; PROVIDED that,
subject to the provisions of SECTION 5(b)(vi), no further adjustment of the
Conversion Price shall be made upon the actual issuance of any such shares of
Common or Convertible Securities or upon the conversion or exchange of any such
Convertible Securities.
(vi) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Option referred to in SUBSECTION 5(b)(v)(C), or the
rate at which any Convertible Securities referred to in SUBSECTION 5(b)(v)(C)
are convertible into or exchangeable for shares of Common shall change at any
time (other than under or by reason of provisions designed to protect against
dilution), then, for purposes of any adjustment required by SECTION 5(b), the
Conversion Price in effect at the time of such event shall forthwith be
readjusted to the Conversion Price that would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold, provided that if such
readjustment is an increase in the Conversion Price, such readjustment shall not
exceed the amount (as adjusted by SECTIONS 5(b)(i) and 5(b)(v)) by which the
Conversion Price was decreased pursuant to SECTION 5(b)(ii) upon the issuance of
the Option or Convertible Security. If the purchase price provided for in any
such Option referred to in SUBSECTION 5(b)(v)(C), or the additional
consideration (if any) payable upon the conversion or exchange of any
Convertible Securities referred to in SUBSECTION 5(b)(v)(C), or the rate at
which any Convertible Securities referred to in SUBSECTION 5(b)(v)(C) are
convertible into or exchangeable for shares of Common, shall be reduced at any
time under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of shares of Common upon the
exercise of any such Option or upon conversion or exchange of any such
Convertible Security; the Conversion Price then in effect hereunder shall, upon
issuance of such shares of Common be adjusted to such amount as would have
obtained had such Option or Convertible Security never been issued and had
adjustments been made only upon the issuance of the shares of Common delivered
as aforesaid and for the consideration actually received for such Option or
Convertible Security and the shares of Common, provided that if such
readjustment is an increase in the Conversion Price, such readjustment shall not
exceed the amount (as adjusted by SECTIONS 5(b)(i) AND 5(b)(iii) by which the
Conversion Price was decreased pursuant to SECTION 5(b)(iii) upon the issuance
of the Option or Convertible Security.
(vii) TERMINATION OF OPTION OR CONVERSION RIGHTS. In the event of
the termination or expiration of any right to purchase shares of Common under
any Option granted after the date hereof or of any right to convert or exchange
Convertible Securities issued after the date hereof, the Conversion Price shall,
upon such termination, be readjusted to the Conversion Price that would have
been in effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the shares of Common issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Conversion Price, such readjustment
shall not exceed the amount (as adjusted by SECTIONS 5(b)(i) AND 5(b)(iii)) by
which the Conversion Price was decreased pursuant to SECTION 5(b)(iii) upon the
issuance of the Option or Convertible
5
<Page>
Security, The termination or expiration of any right to purchase shares of
Common under any Option granted prior to the date hereof or of any right to
convert or exchange Convertible Securities issued prior to the date hereof shall
not trigger any adjustment to the Conversion Price, but the shares of Common
issuable under such Options or Convertible Securities shall no longer be counted
in determining the number of Shares Outstanding on the date hereof for purposes
of subsequent calculations under this SECTION 5(b).
(viii) EXCLUDED SECURITIES. Notwithstanding anything herein to the
contrary, the Conversion Price shall not be adjusted pursuant to this SECTION
5(b) by virtue of the issuance and/or sale of "Excluded Securities", which means
the following: (a) up to 682,185 shares of Common, Options or Convertible
Securities to be issued and/or sold to employees, advisors (including, without
limitation, financial, technical and legal advisers), directors or officers of,
or consultants to, the Company or any of its subsidiaries pursuant to a stock
grant, stock option plan, stock purchase plan, pension or profit sharing plan or
other stock agreement or arrangement existing as of the date hereof and which
has been approved by the stockholders of the Company; (b) the reissuance of any
expired and unexercised, cancelled or forfeited Options under any plan referred
to in SUBSECTION (a) above; (c) the issuance of shares of Common, Options and/or
Convertible Securities pursuant to Options and Convertible Securities
outstanding as of the date hereof; (d) the issuance of shares of Common, Options
or Convertible Securities as a stock dividend or upon any subdivision or
combination of shares of Common or Convertible Securities; (e) the issuance of
shares of Common pursuant to the exercise of certain warrants to be issued in
connection with the issuance of the shares of Series C Preferred; or (f) shares
of Common or Convertible Securities issued and sold by and for the account of
the Company pursuant to an effective registration statement filed by the Company
pursuant to the Securities and Exchange Act of 1934, as amended. For all
purposes of this SECTION 5(b), all shares of Common which are Excluded
Securities shall be deemed to have been issued for an amount of consideration
per share equal to the Conversion Price in effect at the time of issuance.
(ix) All calculations under this SECTION 5(b) shall be made to the
nearest one half of one cent ($.005) or to the nearest one-tenth of a share, as
the case may be.
(x) NOTICE OF ADJUSTMENT. Promptly after adjustment of the
Conversion Price, the Company shall give written notice thereof, by first class
mail, postage prepaid, addressed to the registered Holders at the address of
such Holders as shown on the books of the Company. The notice shall be signed by
an officer of the Company and shall state the effective date of the adjustment
and the Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(c) MECHANICS OF CONVERSION. Conversion of the Series C Preferred to
Common may be exercised in whole or in part by a Holder telecopying an executed
and completed notice of conversion ("Notice of Conversion") to the transfer
agent of the Company (the "Transfer Agent"), with a copy to the Company, and
delivering the original Notice of Conversion and the certificate representing
the shares of Series C Preferred to the Transfer Agent by hand or by express
courier within three (3) business days of exercise. Each date on which a Notice
6
<Page>
of Conversion is telecopied to the Transfer Agent in accordance with the
provisions hereof shall be deemed a "Conversion Date." The Transfer Agent will
transmit the certificates representing the Common issuable upon conversion of
all or any part of the shares of Series C Preferred (together with any
certificates for replacement shares of Series C Preferred not previously
converted but included in the original certificate presented for conversion) to
the Holder via express courier within three (3) business days after the Transfer
Agent has received the original Notice of Conversion and certificate for the
shares of Series C Preferred being so converted. The Notice of Conversion and
certificate representing the portion of the shares of Series C Preferred
converted shall be delivered as follows:
To the Transfer Agent:
American Stock Transfer & Co.
40 Wall Street
New York, NY 10005
Attn.: Mr. Isaac Kagan
(Tel)(718) 921-8293
(Fax)(718) 921-8334
To the Company:
KTI, Inc.
7000 Boulevard East
Guttenberg, NJ 07093
Attn.: President
(Tel) 201-854-7777
(Fax) 201-854-1771
or to such other person at such other place as the Company shall designate to
the Holder in writing. The Company shall immediately notify each Holder of any
change of Transfer Agent for the Company or termination of the existing Transfer
Agent. If there is no Transfer Agent at any time, all references in this SECTION
5(c) to "Transfer Agent" shall be deemed to refer to the Company.
(i) NO FRACTIONAL SHARES. No fractional shares shall be issued
upon the conversion of the Series C Preferred. The Company shall pay to any
Holder who has converted all or any portion of the shares of Series C Preferred
cash in an amount equal to any fractional shares, such amount of cash to be
determined by multiplying the closing trading price on the last trading day
prior to the date of the conversion by the amount of the fractional share.
(d) LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of evidence
of the loss, theft, destruction or mutilation of any certificates representing
shares of Series C Preferred, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of the certificate(s), if mutilated, the Company shall execute
and deliver new certificate(s) of like tenor and date.
7
<Page>
However, Company shall not be obligated to re-issue such lost or stolen
certificates if Holder contemporaneously requests Company to convert such Series
C Preferred into Common.
(e) MANDATORY CONVERSION. The Series C Preferred is subject to mandatory
conversion, at which time all shares of Series C Preferred will automatically be
converted at the Conversion Price, (i) upon the completion of a firm
underwritten public offering of Common by the Company (a "Public Offering") in
which (a) gross proceeds to the Company, before expenses and underwriters'
discounts and commissions, of at least $20,000,000 are received, (b) the Common
so offered is sold at an offering price per share to the public of at least 200%
of the Conversion Price then in effect, and (c) the Holders receive, as a
consequence of participation in such Public Offering, net proceeds equal to or
greater than $3,900,000 (a Public Offering which meets the conditions set forth
in (a), (b) and (c) above being referred to as a "Qualified Public Offering"),
or (ii) immediately following the completion of a Public Offering that is not a
Qualified Public Offering, but, (a) in which the Company receives gross
proceeds, before expenses and underwriters' discounts and commissions, of at
least $20,000,000, and (b) upon the "Market Price" (as defined below) for each
share of Common exceeding 200% of the Conversion Price then in effect for twenty
(20) consecutive trading days, and the average daily trading volume of the
Common for such twenty (20) consecutive day period exceeding 10,000 shares.
"Market Price" shall mean the closing bid price for the Common, as reported by
the Nasdaq National Market System ("Nasdaq"), or if the Common is not traded on
Nasdaq, the closing price or, if not available, the low price of the Common in
the over-the-counter market or the principal national securities exchange on
which the Common is traded.
(f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common such number of its shares of Common as shall from time to time be
sufficient to effect the conversion of all then outstanding shares of Series C
Preferred. The Company covenants and agrees that if at any time it would be
unable to fully convert all shares of Series C Preferred then outstanding, it
will promptly use its best efforts to obtain stockholder approval, within 135
days thereafter, to amend its Certificate of Incorporation to increase the
number of authorized shares of Common by an amount sufficient to permit the
conversion of all shares of Series C Preferred then outstanding.
(g) REDEMPTION BY COMPANY.
(i) REDEMPTION DATE. The Company shall redeem all outstanding
shares of the Series C Preferred on the fifth anniversary of the date of the
original issuance of the shares of Series A Preferred (the "Redemption Date").
(ii) REDEMPTION PRICE. The redemption price per share of Series C
Preferred shall equal $12.00 per share of Series C Preferred (to be adjusted
proportionately if the shares of Series C Preferred to which such amount is
applicable are subdivided into a greater number or combined into a lesser
number).
8
<Page>
(iii) MECHANICS OF REDEMPTION. The Company shall effect each such
redemption by giving notice thereof ("Redemption Notice"), by facsimile, by
5 P.M. New York City time no later than the tenth (10th) business day prior to
the Redemption Date and shall provide a copy of such redemption notice by
overnight or 2-day courier, to each Holder and the Company's transfer agent for
the Series C Preferred ("Series C Transfer Agent"). Such redemption notice shall
indicate the applicable redemption price and whether the Company has elected, at
its option, to redeem the shares of Series C Preferred for cash (a "Cash
Redemption") or for Common (a "Redemption for Stock"). In the event of a
Redemption for Stock, the Company shall also specify in the Redemption Notice
the number of shares of Common to be issued to the Holder, which shall be based
on the following formula:
Number of shares issued upon redemption of one (1) share of Series C
Preferred =
Redemption Price
-----------------------------
Adjusted Conversion Price
where, the "Adjusted Conversion Price" shall equal ninety five percent (95%) of
the average closing sale price of the Common as reported by Nasdaq for the
previous twenty (20) trading days ending on the day before the Redemption Date.
(iv) HOLDER'S CONVERSION RIGHTS. Notwithstanding the foregoing.
Holder shall have five business days following receipt of the Redemption Notice
from the Company to elect, in its sole discretion, to convert all or part of the
Series C Preferred otherwise being redeemed. Such conversion shall be effected
in accordance with the provisions of SECTION 5 hereof, and if an appropriate
Notice of Conversion is delivered to the Company in a timely manner, such shares
of Series C Preferred shall be deemed to be converted and not redeemed.
(v) OPTIONAL REDEMPTION. Upon a "Change of Control Transaction"
(as defined herein), the Company shall redeem, at the option of the Holder, upon
receipt of a written redemption request from such Holder, the Series C Preferred
either through Cash Redemption or a Redemption for Stock, at the option of the
Company. In the event of a Cash Redemption, the Company shall issue cash for the
accreted value of the shares of Series C Preferred, which shall be the initial
purchase price of $8 per share plus interest of 8.19 percent per annum
calculated based on the number of actual days elapsed in a 365 day year or 366
day year, as appropriate, from June 4, 1997 plus any dividends which have been
declared and which the Holders are entitled to receive with respect to each
share of Series C Preferred (the "Accreted Value"). In the event of a Redemption
for Stock, the number of shares of Common to be issued to the Holder shall be
based on the following formula:
Number of shares issued upon redemption of one (1) share of Series C
Preferred =
Accreted Value
-------------------------------
Adjusted Conversion Price
9
<Page>
where, the "Adjusted Conversion Price" shall equal ninety five percent (95%) of
the average closing bid price of the Common as reported by Nasdaq for the
previous ten (10) business days ending on the day before the Redemption Date.
A "Change of Control Transaction," is defined as any merger, consolidation or
reorganization of the Company pursuant to which shares of capital stock of the
Company are converted into cash, securities or other property in which the
holders of a majority of the voting capital stock of the Company (on an
as-converted and exercised basis) immediately prior thereto beneficially own,
directly or indirectly, less than 50% Of the combined voting power of the
capital stock of the company surviving or resulting from such merger,
consolidation or reorganization.
(vi) PAYMENT OF REDEMPTION PRICE OR ISSUANCE OF SHARE CERTIFICATES.
Upon receipt of a Redemption Notice, Holder shall send its shares of Series C
Preferred being redeemed to the Company or its Series C Transfer Agent, and the
Company shall pay the applicable redemption price within three (3) business days
of receipt of the shares of Series C Preferred, if a Cash Redemption, or issue
certificates representing shares of Common, if a Redemption for Stock. The
Company shall not be obligated to deliver the redemption price or shares of
Common, as the case may be, unless the shares of Series C Preferred so redeemed
are delivered to the Company or its Series C Transfer Agent, or, in the event
one or more certificates have been lost, stolen, mutilated or destroyed, Holder
delivers to the Company a lost certificate affidavit and indemnification
agreement reasonably satisfactory to the Company and the Series C Transfer
Agent. Any redemption payment owed to any Holder under this SECTION 5(g) which
is not paid when due shall bear interest at a rate of 4% in excess of the prime
rate of interest in effect as announced by KeyBank of New York.
Section 6. VOTING RIGHTS. The Holder of each outstanding share of
Series C Preferred shall have the right to one vote for each share of Common
into which each such share of Series C Preferred could then be converted
(assuming, for this purpose only, that shares of Series C Preferred are
convertible into fractional shares) at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is
established, at the date of such vote is taken or any written consent of
stockholders is solicited. With respect to such vote, such Holder shall have
full voting rights and powers equal to the voting rights and powers of the
holders of shares of Common, shall be entitled to notice of any stockholders'
meeting in accordance with the By-Laws of the Company, and shall be entitled to
vote, together with holders of shares of Common, with respect to any question
upon which stockholders of the Company have the right to vote. With respect to
all matters upon which stockholders of the Company are entitled to vote, the
holders of outstanding shares of Common and the Holders of all outstanding
shares of Series C Preferred shall vote together without regard to class, except
as expressly required herein, by the Certificate of Incorporation and the
By-Laws of the Company or the Business Corporation Law of the State of New
Jersey.
Section 7. STATUS OF CONVERTED STOCK. If any shares of Series C Preferred
shall be converted pursuant to SECTION 5 above, the shares so converted shall be
canceled, shall return
10
<Page>
to the status of authorized but unissued Preferred Stock of no designated
series, and shall not be issuable by the Company as Series C Preferred.
Section 8. PROTECTIVE PROVISION. So long as shares of Series C Preferred
are outstanding, the Company shall not without first obtaining the approval (by
vote or written consent, as provided by the applicable laws of the State of New
Jersey) of the Holders of at least a majority of the then outstanding shares of
Series C Preferred;
(a) alter or change the rights, preferences or privileges of the Series C
Preferred so as to affect adversely the Series C Preferred;
(b) increase the size of the authorized number of Series C Preferred; or
(c) do any act or thing not authorized or contemplated by this Certificate
of Designation which would result in taxation of the Holders of shares of the
Series C Preferred under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as hereafter
from time to time amended).
If Holders of at least a majority of the then outstanding shares of Series
C Preferred agree to allow the Company to alter or change the rights,
preferences or privileges of the shares of Series C Preferred, pursuant to
SUBSECTION 8(a) above, so as to affect the Series C Preferred, then the Company
will promptly deliver notice of such approved change to the Holders that did not
agree to such alteration or change."
3. Such resolution was duly adopted by the Board of Directors of the
Corporation on May 28, 1997.
4. The Restated Certificate of Incorporation, as amended, is amended so
that the designation and number of shares of each class and series acted upon in
the resolution, and the relative rights, preferences and limitations of each
such class and series, are as stated in the resolution.
11
<Page>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 28th day of October, 1997.
KTI, INC.
By: /s/ Robert E. Wetzel
------------------------------
Name: Robert E. Wetzel
Title: Senior Vice President
12
<Page>
Check Appropriate Statute:
/X/ Title 14A:1-6 (5) New Jersey Business Corporation Act (File in
DUPLICATE)
/ / Title 15A:1-7 (e) New Jersey Business Corporation Act (File in
TRIPLICATE)
COR
CERTIFICATE OF CORRECTION OF: FILED
CORPORATION NAME: KTI, INC. NOV 3 1997
CORPORATION NUMBER: LONNA R. HOOKS
SECRETARY OF STATE
The undersigned hereby submits for filing a Certificate of Correction
executed on behalf of the above named Corporation, pursuant to the provisions of
the appropriate Statute, checked above, of the New Jersey Statutes.
1. The Certificate to be corrected is: Certificate of Amendment to the Restated
Certificate of Incorporation of KTI, Inc. (the "Corporation"), filed August 8,
1997 (the "Certificate").
2. The inaccuracies in the Certificate are (indicate inaccuracies or defects):
(a) The word "fractional" on the thirteenth line on page 6 of the
Certificate was incorrectly spelled "factional".
(b) The last line of Section 6(b)(i) on page 14 of the Certificate
refers to the redemption price, as opposed to the Redemption Date.
(c) Section 8(a)(i) on page 20 of the Certificate failed to state the
rate at which the Corporation may convert the Series B Convertible
Exchangeable Preferred Stock into the Corporation's 8 3/4% Convertible
Subordinated Notes due 2004.
(d) Section 9(a) on page 23 of the Certificate failed to specify that
a Change of Control Payment may be made at the Option of the
Corporation either in cash or, in certain circumstances, shares of
common stock of the Corporation.
3. The Certificate of Correction hereby reads as follows:
(a) The word "factional" on the thirteenth line on page 6 of the
Certificate is hereby deleted and replaced with the word "fractional".
(b) The last line of Section 6(b)(i) on page 14 of the Certificate is
hereby amended by deleting "redemption price" and replacing it with
"Redemption Date".
0100279875
<Page>
(c) Section 8(a)(i) of the Certificate is amended by adding the
following after "8 3/4% Convertible Subordinated Notes due 2004 (the
"Exchange Notes") on any Dividend Payment Date":
"at a rate of $25.00 principal amount of Exchange
Notes for each share of Series B Preferred and
which Exchange Notes will be convertible into
Common Stock of the Corporation at the Conversion
Price which would have been applicable to the
Series B Preferred if the Series B Preferred had
remained outstanding."
(d) The following shall be added to the end of Section 9(a) of the
Certificate:
"The Change of Control Payment shall be made at
the option of the Corporation either in (a) cash
or (b) fully registered shares of Common Stock of
the Corporation valued at 95% of the average
closing price of the Common Stock during the 20
trading days prior to such Change of Control
Payment if the Board of Directors has determined
that the payment in the form of fully registered
shares of Common Stock of the Corporation will not
adversely affect the voting rights, preferences,
privileges or relative, participating, optional or
other specified rights of the holders of the
Series B Preferred or the holders of the Common
Stock."
<Page>
Signature: /s/ Robert E. Wetzel
------------------------
Name: Robert E. Wetzel
------------------------
Title: Senior Vice President
------------------------
Date: October 31, 1997
------------------------
<Page>
AMC
FILED
MAY 20 1998
LONNA R. HOOKS
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to provisions of Section 14A:9-2(4) and 14A:9-4(3),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the Corporation is KTI, Inc.
2. The following amendment to the Certificate of Incorporation was
approved by the Board of Directors and thereafter duly adopted by the
shareholders of the Corporation on May 13, 1998.
Resolved that ARTICLE THIRD of the Restated Certificate of
Incorporation be amended to read in its entirety as follows:
"ARTICLE THIRD
The total number of shares of Common Stock which the Corporation shall
have authority to issue is Forty Million (40,000,000) shares without par value.
The Corporation shall also have authority to issue Ten Million (10,000,000)
shares of Preferred Stock."
3. The number of shares entitled to vote upon the amendment was
9,477,953 shares.
4. The number of shares voting for, against and abstaining from
voting for such amendment are as follows:
<Table>
Number of shares voting for amendment: 4,915,334
Number of shares voting against amendment: 236,617
Number of shares abstaining from voting: 1,174
</Table>
5. The foregoing amendment to the Restated Certificate of
Incorporation shall become effective at the close of business on the date of
filing.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 18th day of May, 1998.
KTI, INC.
By: /s/ Martin J. Sergi
------------------------
Martin J. Sergi,
President
0100279875
<Page>
COR
FILED
NOV 20 1998
James A. DiEleutorto, Jr
State Treasurer
Check Appropriate Statute:
/X/ Title 14A:1-6 (5) New Jersey Business Corporation Act (File in
DUPLICATE)
/ / Title 15A:1-7 (e) New Jersey Business Corporation Act (File in
TRIPLICATE)
CERTIFICATE OF CORRECTION OF:
CORPORATION NAME: KTI, INC.
CORPORATION NUMBER:
The undersigned hereby submits for filing a Certificate of Correction
executed on behalf of the above named Corporation, pursuant to the provisions of
the appropriate Statute, checked above, of the New Jersey Statutes.
1. The Certificate to be corrected is: Certificate of Amendment to the
Restated Certificate of Incorporation of KTI, Inc., filed May 20, 1998 (the
"Certificate").
2. The inaccuracy in the Certificate is (indicate inaccuracy or defect); The
second paragraph of Paragraph 2 of the Certificate incorrectly stated that
Article Third was amended in its entirety. In fact, only the first paragraph of
Article Third was amended.
3. The Certificate of Correction hereby reads as follows: Paragraph 2 of the
Certificate is amended and restated in its entirety as follows:
"2. The following amendment to the Restated Certificate of Incorporation
was approved by the Board of Directors and thereafter duly adopted by the
shareholders of the Corporation on May 13, 1998:
Resolved that the first paragraph of ARTICLE THIRD of the Restated
Certificate of Incorporation be amended to read as follows:
"ARTICLE THIRD
The total number of shares of Common Stock which the Corporation
shall have authority to issue is Forty Million (40,000,000) shares
without par value. The Corporation shall also have authority to issue ten
million (10,000,000) shares of Preferred Stock."
S509229
J972485
0100279875
<Page>
Signature: /s/ Robert E. Wetzel
----------------------
Name: Robert E. Wetzel
----------------------
Title: Senior Vice President
----------------------
Date: November 20, 1998
----------------------
<Page>
MRG
FILED
DEC 14 1999
State Treasurer
CERTIFICATE OF MERGER
OF
KTI, INC.
AND
RUTLAND ACQUISITION SUB, INC.
To the Department of the Treasury
State of New Jersey
Pursuant to the provisions of Section 14A:10-4.1 of the New Jersey Business
Corporation Act, it is hereby certified that:
1. The names of the merging corporations are KTI, Inc., which is a business
corporation of the State of New Jersey and Rutland Acquisition Sub, Inc., which
is a business corporation of the State of New Jersey.
2. Annexed hereto and made a part hereof is the Agreement and Plan of
Merger for merging Rutland Acquisition Sub, Inc. with and into KTI, Inc. as
approved by the directors and the shareholders entitled to vote of each of said
merging corporations.
3. The number of shares of KTI, Inc. which were entitled to vote at the
time of the approval of the Agreement and Plan of Merger by its shareholders is
14,023,838, all of which are of one class.
The number of the aforesaid shares which were voted for the Agreement and
Plan of Merger is 8,605,365, and the number of said shares which were voted
against the same is 50,827. The date of said vote and approval was
December 8, 1999.
4. The number of shares of Rutland Acquisition Sub, Inc. which were
entitled to vote at the time of the approval of the Agreement and Plan of Merger
by its sole shareholder is 100, all of which are of one class.
The sole shareholder entitled to vote of the aforesaid corporation approved
the Agreement and Plan of Merger pursuant to its written consent without a
meeting of shareholders; and the number of shares represented by such consent is
100. The date of said consent and approval was December 8, 1999.
5. KTI, Inc. will continue its existence as the surviving corporation under
its present name pursuant to the provisions of the New Jersey Business
Corporation Act.
6. The merger herein provided for shall become effective as of the date of
filing.
S-724879
J-1353409
J-1353410
0100279875
<Page>
Executed on December 13, 1999.
KTI, INC.
By:
---------------------------
Signer's Name: Ross Pirasteh
Signer's Capacity: Chairman of the Board
RUTLAND ACQUISITION SUB, INC.
By: /s/ John W. Casella
---------------------------
Signer's Name: John W. Casella
Signer's Capacity: President
<Page>
Executed on December 13, 1999.
KTI, INC.
By: /s/ Ross Pirasteh
---------------------------
Signer's Name: Ross Pirasteh
Signer's Capacity: Chairman of the Board
RUTLAND ACQUISITION SUB, INC.
By:
---------------------------
Signer's Name: John W. Casella
Signer's Capacity: President