CERTIFICATE OF DETERMINATION OF PREFERENCES
OF
SERIES C 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
BURKE INDUSTRIES, INC.
The undersigned, Rocco C. Genovese and Keith Oster, do hereby certify that:
1. They are the President and the Secretary, respectively, of Burke
Industries, Inc., a California corporation (the "Corporation").
2. Pursuant to authority given by the Corporation's Amended and Restated
Articles of Incorporation and by Section 202(e) of the California Corporations
Code, the Board of Directors of the Corporation, by unanimous written consent,
adopted the following resolution:
WHEREAS, the rights and privileges applicable to the Series C 6% Cumulative
Convertible Preferred Stock (the "Series C Preferred Stock"), including the
provisions relating to the convertibility of Series C Preferred Stock into
shares of the Corporation's Common Stock, no par value (the "Common Stock"), are
specified in the following Certificate of Determination of Series C 6%
Cumulative Convertible Preferred Stock of Burke Industries, Inc. (the
"Certificate of Determination");
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority presently
granted to and vested in the Board of Directors of this Corporation under the
provisions of the Amended and Restated Articles of Incorporation of the
Corporation and pursuant to the provisions of Section 401 of the General
Corporation Law of the State of California, this Board of Directors hereby
creates a series of Preferred Stock to consist of 3,000 shares, and hereby fixes
the powers, preferences, relative participating, voting, optional and other
special rights, and the qualifications, limitations and restrictions thereof, of
Series C Preferred Stock which have not heretofore been set forth in the Amended
and Restated Articles of Incorporation in accordance with the terms of the
Certificate of Determination attached hereto as EXHIBIT A.
3. The authorized number of shares of Preferred Stock, no par value, of
the Corporation is 50,000. The number of shares constituting this Series C
Preferred Stock is 3,000, none of which shares has been issued.
IN WITNESS WHEREOF, the undersigned officers hereby execute this
Certificate and declare, under penalty of perjury under the laws of the State of
California, that the statements set forth in this Certificate are true and
correct of their own knowledge. Executed at San Jose, California on April 21,
1998.
/s/ Rocco C. Genovese
-----------------------------------------
Rocco C. Genovese,
President
/s/ Keith Oster
-----------------------------------------
Keith Oster,
Secretary
EXHIBIT A
CERTIFICATE OF DETERMINATION
OF
SERIES C 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
BURKE INDUSTRIES, INC.
_____________________________
Pursuant to Section 401 of the General
Corporation Law of the State of California
_____________________________
FIRST: The Amended and Restated Articles of Incorporation of the
Corporation authorizes the issuance of up to 50,000 shares of Preferred Stock,
no par value per share (the "Preferred Stock"), and further authorizes the Board
of Directors of the Corporation to fix by resolution or resolutions the
designations and the powers, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, and to fix the number of shares constituting any such series, and to
increase or decrease the number of shares of any such series (but not below the
number of shares thereof then outstanding).
SECOND: On April 2, 1998, the Board of Directors of the Corporation
adopted the following resolution authorizing the creation and issuance of a
series of said Preferred Stock to be known as Series C 6% Cumulative Convertible
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of its Amended and Restated
Articles of Incorporation, a series of Preferred Stock of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
and restrictions thereof are as set forth in this Certificate of Determination
as follows:
1. DESIGNATION AND AMOUNT. The shares of such series of Preferred Stock
shall be designated as "Series C 6% Cumulative Convertible Preferred Stock" (the
"Series C Preferred Stock"), and the number of shares constituting such series
shall be 3,000. The initial liquidation preference of the Series C Preferred
Stock shall be $1,000 per share (the "Stated Liquidation Value").
2. RANK. The Series C Preferred Stock shall, with respect to rights on
bankruptcy, liquidation, winding up, dissolution and dividends, rank (i) junior
to the Series A 11.5% Redeemable Preferred Stock of the Corporation, (ii) junior
to the Series B 11.5% Redeemable
EXHIBIT A
Preferred Stock of the Corporation (together with the Series A 11.5% Redeemable
Preferred Stock, the "Redeemable Preferred Stock") and (iii) senior to the
Corporation's Common Stock, no par value per share (the "Common Stock"), and to
all other classes and series of stock of the Corporation now or hereafter
authorized, issued or outstanding, other than any class or series of stock of
the Company expressly designated as being on a parity with ("Parity Securities")
or senior to the Series C Preferred Stock. Such other classes or series of
stock of the Corporation not expressly designated as being on a parity with or
senior to the Series C Preferred Stock are referred to hereafter as "Junior
Securities." The rights of holders of shares of the Series C Preferred Stock
are subordinate to the rights of the Corporation's general creditors, including
the holders of the Corporation's (x) 10% Senior Notes due 2007 and (y) the
Floating Interest Rate Senior Notes due 2007.
3. DIVIDENDS.
(a) The holders of shares of the Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, dividends payable semi-annually in arrears on
April 15 and October 15 of each year (each such date, a "Dividend Payment
Date"), except that if any Dividend Payment Date is not a Business Day (as
defined below), then such semi-annual dividend shall be payable on the next
succeeding Business Day and such next succeeding Business Day will be the
Dividend Payment Date. Dividends shall be payable to holders of the Series C
Preferred Stock at the annual rate of 6% times the sum of (i) the Stated
Liquidation Value and (ii) accrued but unpaid dividends as of the immediately
preceding Dividend Payment Date. Dividends shall be payable in cash only to
holders of record at the close of business on the date specified by the Board of
Directors at the time such dividend is declared (the "Record Date"). Any such
Record Date shall be not less than 10 days and not more than 60 days prior to
the relevant Dividend Payment Date. All dividends paid with respect to shares
of the Series C Preferred Stock shall be paid PRO RATA to the holders entitled
thereto.
(b) Dividends on the Series C Preferred Stock shall accrue and be
cumulative on a semi-annual basis (whether or not declared and whether or not
funds are legally available for the payment thereof) from the Issue Date (as
defined below). The semi-annual dividend period shall be computed on the basis
of a 360-day year of twelve 30-day months.
(c) So long as any shares of the Series C Preferred Stock are outstanding,
the Corporation shall not, without the prior consent of the holders of at least
fifty-one percent (51%) of the shares of outstanding Series C Preferred Stock,
(i) make any payment on account of, or set apart for payment money for a sinking
or other similar fund for, the purchase, redemption or retirement of, any Junior
Securities (other than dividends or distributions payable in additional shares
of Junior Securities to holders of Junior Securities); (ii) permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase or redeem any Junior Securities; (iii) declare, pay or set apart for
payment, or permit any corporation or other entity directly or indirectly
controlled by the Corporation to declare, pay or set apart for payment, any
dividend or make any distribution or payment on any Junior Securities or Parity
Securities, whether directly or indirectly and whether in cash, obligations or
shares of the Corporation or
2
EXHIBIT A
other property (other than dividends or distributions payable in additional
shares of Junior Securities to holders of Junior Securities); or (iv) make any
payment on account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or retirement of, any Parity
Securities, whether directly or indirectly, and whether in cash, obligations,
shares of the Corporation or other property (other than payments solely of
Junior Securities), and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase or redeem any
Parity Securities, unless prior to or at the time of such payment or setting
apart for payment, the Corporation shall have repurchased, redeemed or retired
shares of the Series C Preferred Stock on a PRO RATA basis, in proportion to the
respective Liquidation Preferences (as defined in the Amended and Restated
Articles of Incorporation or applicable Certificate of Determination) of the
Series C Preferred Stock and the Parity Securities as to which such sinking fund
or similar fund payment, or such purchase, redemption or retirement, is being
effected.
(d) Notwithstanding anything contained herein to the contrary, no
dividends on shares of Series C Preferred Stock shall be authorized or declared
by the Board of Directors of the Corporation or paid or set apart for payment by
the Corporation at such time as the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, prohibits
such authorization, declaration, payment or setting apart for payment or
provides that such authorization, declaration, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent such declaration or payment shall be restricted or prohibited by law.
4. LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation, the holders of shares of Series
C Preferred Stock then outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to its shareholders an
amount in cash equal to 100% of the Stated Liquidation Value for each share
outstanding, plus an amount in cash equal to all accrued but unpaid dividends
thereon (whether or not declared) as provided in Section 3(b) above, without
interest, to the date of liquidation, dissolution or winding up (such amount the
"Liquidation Preference"), before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities. If the assets of
the Corporation are not sufficient to pay in full the Liquidation Preference
payable to the holders of outstanding shares of the Series C Preferred Stock and
any Parity Securities, then the holders of all such shares shall share ratably
in such distribution of assets in accordance with the amount which would be
payable on such distribution if the amounts to which the holders of outstanding
shares of Series C Preferred Stock and the holders of outstanding shares of such
Parity Securities are entitled were paid in full.
(b) For the purposes of this Section 4, neither the voluntary sale,
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 any one or
more other corporations shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, unless such voluntary
sale,
3
EXHIBIT A
conveyance, exchange or transfer shall be in connection with a plan of
liquidation, dissolution or winding up of the Corporation.
5. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Corporation may, at its option, redeem at
any time, out of funds legally available therefor, in the manner provided in
Section 6 hereof, all or any portion of the shares of the Series C Preferred
Stock, at a redemption price per share equal to 100% of the Liquidation
Preference thereof on the date of redemption, including dividends accrued
through the Dividend Payment Date immediately preceding the redemption date,
though not including any dividends for any period after such Dividend Payment
Date; PROVIDED, HOWEVER, that any such optional redemption by the Corporation
shall be on a PRO RATA basis and for whole shares of the Series C Preferred
Stock; PROVIDED, FURTHER, HOWEVER, that the Corporation may redeem fractional
shares of Series C Preferred Stock pursuant to this Section 5(a) in the event
that after such redemption a holder of Series C Preferred Stock would be left
with less than one full share of Series C Preferred Stock.
(b) REDEMPTION UPON CHANGE OF CONTROL. Upon the occurrence of a Change of
Control (as defined below), the Series C Preferred Stock shall be redeemable at
the option of the holders thereof, in whole or in part, at a redemption price
per share equal to 100% of the Liquidation Preference on the date of redemption,
including dividends accrued through the Dividend Payment Date immediately
preceding the redemption date, though not including any dividends for any period
after such Dividend Payment Date; PROVIDED, HOWEVER, that the Corporation will
not be obligated to redeem, and will not redeem or call for redemption, any
Series C Preferred Stock upon a Change of Control until it has repurchased or
redeemed such of the Corporation's (x) $110,000,000 original principal amount of
10% Senior Notes Due 2007, (y) the $30,000,000 original principal amount of
Floating Interest Rate Senior Notes due 2007 (collectively, the "Notes") and (z)
the Redeemable Preferred Stock then outstanding, in each case as it is required
to repurchase or has called for redemption in connection with such Change of
Control pursuant to the terms of the indentures among the Corporation, certain
of its subsidiaries and U.S. Trust Company of New York, N.A. governing the terms
of the Notes, and the Corporation's Amended and Restated Articles of
Incorporation. Subject to the foregoing proviso, the Corporation shall redeem,
out of funds legally available therefor, the number of shares specified in the
holders' notices of election to redeem pursuant to Section 6(b) hereof on the
date fixed for redemption.
6. PROCEDURE FOR REDEMPTION.
(a) In the event that the Corporation shall redeem shares of Series C
Preferred Stock pursuant to Section 5(a) hereof, notice of such redemption shall
be mailed by first-class mail, postage prepaid, and mailed not less than 30 days
nor more than 60 days prior to the redemption date to the holders of record of
the shares to be redeemed at their respective addresses as they shall appear in
the records of the Corporation; PROVIDED, HOWEVER, that failure to give such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the proceeding for the redemption of any shares so to be redeemed
except as to the holder to whom the Corporation
4
EXHIBIT A
has failed to give such notice or except as to the holder to whom notice was
defective. Each such notice shall state: (i) the redemption date; (ii) the
number of shares of Series C Preferred Stock to be redeemed and, if less than
all the shares held by such holders are to be redeemed, the number of such
shares to be redeemed from such holders; (iii) the redemption price and form of
consideration; (iv) the place or places where certificates for such shares are
to be surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date. Any
redemption of less than all the shares of Series C Preferred Stock pursuant to
Section 5(a) shall be made on a PRO RATA basis to all holders of Series C
Preferred Stock.
(b) If a Change of Control should occur, then, subject to Section 5(b)
above, within 30 days of the occurrence of such Change of Control, the
Corporation shall give written notice by first-class mail, postage prepaid, to
each holder of Series C Preferred Stock at its address as it appears in the
records of the Corporation, which notice shall set forth (in addition to the
information required by the next succeeding paragraph): (i) each holder's right
to require the Corporation to redeem shares of Series C Preferred Stock held by
such holder as a result of such Change of Control; (ii) the redemption price;
(iii) the redemption date (which date shall be no earlier than 30 days and no
later than 60 days from the date the notice in respect of such Change of Control
is mailed); (iv) the procedures to be followed by such holder in exercising its
right of redemption, including the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the redemption
date. In the event a holder of shares of Series C Preferred Stock shall elect
to require the Corporation to redeem any or all of such shares of Series C
Preferred Stock, such holder shall deliver, within 20 days of the mailing to it
of the Corporation's notice described in this Section 6(b), a written notice
stating such holder's election and specifying the number of shares to be
redeemed pursuant to Section 5(b) hereof.
(c) Notice by the Corporation having been mailed as provided in
Section 6(a) hereof, or notice of election having been mailed by the holders as
provided in Section 6(b) hereof, and provided that on or before the applicable
redemption date funds necessary for such redemption shall have been set aside by
the Corporation, separate and apart from its other funds, in trust for the PRO
RATA benefit of the holders of the shares of Series C Preferred Stock so called
for or entitled to redemption, so as to be and to continue to be available
therefor, then, from and after the redemption date, dividends on the shares of
Series C Preferred Stock so called for or entitled to redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding and shall
not have the status of shares of Series C Preferred Stock, and all rights of the
holders thereof as shareholders of the Corporation (except the right to receive
the applicable redemption price and any accrued and unpaid dividends from the
Corporation to the date of redemption) shall cease, unless the Corporation
defaults in the payment of the redemption price, in which case all rights of the
holders of Series C Preferred Stock shall continue until the redemption price is
paid. Upon surrender of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the Corporation
shall so require and a notice by the Corporation shall so state), such shares
shall be redeemed by the Corporation at the applicable redemption price as
aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate or certificates shall be issued
representing the
5
EXHIBIT A
unredeemed shares without cost to the holder thereof. Any funds set aside in
trust for the holders of Series C Preferred Stock pursuant to this Section 6(c)
which remain unclaimed on the second anniversary of the applicable redemption
date shall be released or repaid to the Company, after which the holders of
shares called for redemption shall be entitled to receive payment of the
redemption price only from the Corporation.
7. REACQUIRED SHARES. Shares of Series C Preferred Stock that have been
issued and reacquired in any manner, including shares reacquired by redemption
or shares converted into Common Stock pursuant to Section 9 below, shall (upon
compliance with any applicable provisions of the laws of the State of
California) have the status of authorized and unissued shares of the class of
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of Preferred Stock other than the Series C Preferred
Stock.
8. VOTING RIGHTS. Except as specifically provided in this Section 8 and
except for any additional voting rights provided by law, the holders of Series C
Preferred Stock shall have no voting rights. The Amended and Restated Articles
of Incorporation of the Corporation shall not be amended in any manner that
would adversely alter or change the powers, preferences or special rights of the
Series C Preferred Stock as set forth herein without the affirmative vote of the
holders of at least fifty-one percent (51%) of the outstanding shares of Series
C Preferred Stock.
9. CONVERSION RIGHTS. The rights of the holders of shares of Series C
Preferred Stock to convert such shares into shares of Common Stock (the
"Conversion Rights"), and the terms and conditions of such conversion, shall be
as follows:
(a) RIGHT TO CONVERT.
(i) At any time following a Triggering Event (as defined below), each
holder of shares of the Series C Preferred Stock shall have the right and option
to convert all, but not less than all, of such shares into that number of fully
paid and nonassessable shares of Common Stock determined in accordance with the
provisions of this Section 9. In order to convert shares of the Series C
Preferred Stock into shares of Common Stock, the holder thereof shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
Corporation or to the transfer agent for the Series C Preferred Stock or the
Common Stock, together with written notice to the Corporation stating that he,
she or it elects to convert the same and setting forth the name or names in
which he, she or it wishes the certificate or certificates for Common Stock to
be issued (the "Conversion Notice"). Any holder that does not timely deliver
such Conversion Notice and timely surrender such certificate or certificates
shall be deemed to have waived his, her or its right to conversion, and such
shares shall be subject to the Corporation's right of redemption pursuant to
Section 5(a) above.
(ii) The Corporation shall, as soon as practicable after the
surrender of the certificate or certificates evidencing shares of Series C
Preferred Stock for conversion at the office of the Corporation or the transfer
agent for the Series C Preferred Stock or the Common Stock, issue to each holder
of such shares, or such holder's nominee or nominees, a certificate or
certificates evidencing the number of shares of Common Stock to which such
holder shall be
6
EXHIBIT A
entitled. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of Series C
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the recordholder or holders of such shares of Common Stock at
such date and shall, with respect to such shares, have only those rights of a
holder of Common Stock of the Corporation.
(b) CONVERSION OF PREFERRED STOCK. Each share of Series C Preferred Stock
shall be convertible into the number of shares of Common Stock which results
from dividing the Stated Liquidation Value (without any adjustment for the
accrued but unpaid dividends thereon) by the Conversion Price per share in
effect at the time of conversion PROVIDED, HOWEVER, that any fractional number
of shares of Common Stock shall be rounded up to the next whole share. Upon
conversion of the Series C Preferred Stock, holders of shares of Series C
Preferred Stock shall not be entitled to receive any accrued but unpaid
dividends as of the conversion date.
(c) CONVERSION PRICE. The conversion price of each share of Series C
Preferred Stock shall initially be $10.00 (the "Conversion Price"), and shall be
subject to adjustment from time to time as provided herein.
(d) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If outstanding shares
of the Common Stock of the Corporation shall be subdivided into a greater number
of shares, or a dividend in Common Stock or other securities of the Corporation
convertible into or exchangeable for Common Stock (in which latter event the
number of shares of Common Stock issuable upon the conversion or exchange of
such securities shall be deemed to have been distributed), shall be paid in
respect of the Common Stock of the Corporation, the Conversion Price for each
share of Series C Preferred Stock in effect immediately prior to such
subdivision or at the record date of such dividend shall, simultaneously with
the effectiveness of such subdivision or immediately after the record date of
such dividend, be proportionately reduced, and conversely, if outstanding shares
of the Common Stock of the Corporation shall be combined into a smaller number
of shares, the Conversion Price for each share of Series C Preferred Stock in
effect immediately prior to such combination shall simultaneously with the
effectiveness of such combination, be proportionately increased.
Notwithstanding the foregoing, no adjustment of the Conversion Price for the
Series C Preferred Stock shall be required unless such adjustment would require
an increase or decrease of at least 1% in such price; PROVIDED, HOWEVER, that
any adjustments which by reason of this subparagraph (d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this subparagraph (9)(d) shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
Any adjustment to the Conversion Price under this Section 9(d) shall become
effective at the close of business on the date the subdivision, dividend, or
combination referred to herein becomes effective.
(e) REORGANIZATIONS, MERGERS AND CONSOLIDATIONS. In the event of any
capital reorganization, or the consolidation or merger of the Corporation with
or into another entity (collectively referred to hereinafter as
"Reorganizations"), unless the Corporation exercises its right to redeem the
Series C Preferred Stock pursuant to Section 5(a) above, the holders of the
7
EXHIBIT A
Series C Preferred Stock shall thereafter be entitled to receive upon conversion
of the Series C Preferred Stock the kind and number of shares of Common Stock or
other securities or property (including cash) of the Corporation (or other
corporation resulting from such consolidation or surviving such merger or to
which such properties and assets shall have been sold or otherwise disposed to),
that the holders would have been entitled to receive had such holders converted
their Series C Preferred Stock immediately prior to such Reorganization. In
case of conervsion any such case appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series C Preferred Stock, to the end
that the provisions set forth herein (including the specified changes and other
adjustments to the Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares, other securities or property
thereafter receivable upon conversion of the Series C Preferred Stock. The
provisions of this Section 9(e) shall similarly apply to successive
Reorganizations. Any agreement entered into by the Corporation relating to any
Reorganization shall make appropriate provision for the conversions described
herein.
(f) CONVERSION PRICE ADJUSTMENT CERTIFICATE. Whenever the Conversion
Price is adjusted as herein provided, the Corporation shall promptly file with
the Secretary or transfer agent an officer's certificate setting forth the
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment, which certificate shall be conclusive
evidence of the correctness of such adjustment absent manifest error. Promptly
after delivery of such certificate, the Corporation shall prepare a notice of
such adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the effective date of such adjustment and shall mail such notice of
such adjustment of the Conversion Price to the holder of each share of Series C
Preferred Stock at such holder's last address as shown on the stock records of
the Corporation.
(g) TRIGGERING EVENTS. A Triggering Event shall mean (i) a Change of
Control, (ii) an initial public offering of any class of equity securities of
the Corporation pursuant to the Securities Act of 1933, as amended, (iii) the
delivery of a notice of redemption pursuant to Section 6(a) above and (iv) the
fifth anniversary of the Issue Date.
10. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series C Preferred Stock, such numbers of its shares of Common
Stock as shall from time to time be sufficient to effect a conversion of all
outstanding shares of the Series C Preferred Stock, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all the outstanding shares of the Series C Preferred
Stock, the Corporation shall promptly seek such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose. In the event of the consolidation or merger of the Corporation with
another corporation where the Corporation is not the surviving corporation,
effective provisions shall be made in the articles or certificate of
incorporation, merger or consolidation, or otherwise of the surviving
corporation so that such corporation will at all times reserve and keep
available a sufficient number of shares of Common Stock or other securities or
property to
8
EXHIBIT A
provide for the conversion of the Series C Preferred Stock in accordance with
the provisions of this Section 10.
11. NOTICES. All notices referred to herein, except as otherwise
expressly provided, shall be made by registered or certified mail, return
receipt requested, postage prepaid and shall be deemed to have been given when
so mailed to the holder at the address for such holder maintained by the
Corporation.
12. REMEDIES. Any holder of Series C Preferred Stock may proceed to
protect and enforce his, her or its rights and the rights of other holders by
any available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision in this
Certificate of Determination or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
13. DEFINITIONS. For the purposes of this Certificate of Determination,
the following terms shall have the meanings indicated:
"Affiliate" shall mean, with respect to any specified person, (a) any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person or (b) any other person that
owns, directly or indirectly, 10% or more of such specified person's capital
stock or any executive officer or director of any such specified person or other
person or, with respect to any natural person, any person having a relationship
with such person by blood, marriage or adoption not more remote than first
cousin. For the purposes of this definition, "control," when used with respect
to any specified person, means the power to direct the management and policies
of such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Beneficial Owner" shall have the meaning ascribed to such term or the term
"beneficial ownership" in Rule 13d-3 and Rule 13d-5 under the Securities
Exchange Act of 1934, as amended, except that a person shall be deemed have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in New York, New York are authorized or obligated by
law or executive order to close.
"Change of Control" shall mean such time after the Issue Date as either:
(i) prior to the initial public offering by the Corporation of any
class of its Common Stock, the consummation of any transaction the result of
which is that the Principals and their Related Parties become the Beneficial
Owners, in the aggregate, of less than 50% of the Common Stock of the
Corporation;
9
EXHIBIT A
(ii) after the initial public offering by the Corporation of any class
of its Common Stock, any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), other than the Principals and their Related Parties, becomes,
directly or indirectly, the Beneficial Owner, by way of merger, consolidation or
otherwise, of 35% or more of the Common Stock of the Corporation and such person
is or becomes, directly or indirectly, the Beneficial Owner of a greater
percentage of the voting power of the Common Stock of the Corporation,
calculated on a fully diluted basis, than the percentage Beneficially Owned by
the Principals and their Related Parties; or
(iii) the Corporation effects the sale, lease or transfer of all or
substantially all of the assets of the Corporation to any person or group.
"Issue Date" shall mean the date on which the Corporation issues
$30 million principal amount of its Floating Interest Rate Senior Notes due 2007
as described in the Company's Preliminary Offering Memorandum, dated March 30,
1998.
"Junior Securities" shall have the meaning set forth in Section 2 hereof.
"Liquidation Preference" shall have the meaning set forth in Section 4
hereof.
"Parity Securities" shall have the meaning set forth in Section 2 hereof.
"Person" shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Principals" shall mean (i) J.F. Lehman & Company ("Lehman"), (ii) each
Affiliate of Lehman as of the Issue Date, (iii) J.F. Lehman Equity Investors I,
L.P. and (iv) each officer or employee (including their respective immediate
family members) of Lehman as of the Issue Date.
"Related Party" shall mean with respect to any Principal (A) any
controlling shareholder or 80% (or more) owned subsidiary of such Principal or
(B) any trust, corporation, partnership or other entity, the beneficiaries,
shareholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
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