CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SF HOLDINGS GROUP, INC.
Adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware
Hans H. Heinsen, being the Senior Vice President of SF Holdings
Group, Inc., a corporation existing under the laws of the State of Delaware,
does hereby certify as follows:
First: That the Certificate of Incorporation of said corporation shall
be amended as follows:
By deleting Paragraph Fourth thereof and inserting in lieu thereof a
new Paragraph Fourth, reading in its entirety as follows:
"FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two million one hundred and twenty
thousand (2,120,000) shares, consisting of:
(a) two million (2,000,000) shares of Common Stock, par value
$.001 per share (hereinafter referred to as "Common Stock");
(b) twenty thousand (20,000) shares of Exchangeable Preferred
Stock, par value $.001 per share (hereinafter referred to as
"Preferred Stock"); and
(c) one hundred thousand (100,000) shares of Class B Preferred
Stock, par value $.001 per share (hereinafter referred to as
"Class B Preferred Stock").
The designations, relative rights, preferences and limitations of
shares of each class and the authority of the Board of Directors to fix the
designations, relative rights, preferences and limitations of shares of each
class not fixed hereby shall be as follows:
A. PREFERRED STOCK
The powers, preferences and rights, and the qualifications, limitations
and restrictions, of the Preferred Stock are as follows:
1. The Preferred Stock shall, with respect to dividend distributions
and distributions upon the liquidation, winding up or dissolution of the
Corporation, rank senior to all classes of Common Stock of the Corporation and,
except as provided in the following proviso, to each other class or series of
capital stock issued by the Corporation now or hereafter created (collectively,
"Junior Stock"); provided, however, that the Board of Directors may authorize a
class or series of preferred stock on a parity in powers, preferences and rights
to the Preferred Stock (collectively, "Parity Stock") or senior in powers,
preferences and rights to the Preferred Stock (collectively, "Senior Stock") if
approved by the holders of a majority of the shares of Preferred Stock.
2. (a) The holders of shares of Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds of the
Corporation legally available therefor, cumulative dividends at an annual rate
equal to 13.75%. Until March 15, 2003, dividends on the Preferred Stock will be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year (each, a "Dividend Payment Date"), commencing June 15, 1998, (i) in
cash or, at the option of the Corporation, (ii) by issuing shares of Preferred
Stock with an aggregate Liquidation Amount (as defined in subparagraph 3 below)
equal to the amount of such dividends. From and after such time, dividends on
the Preferred Stock shall be payable quarterly in arrears in cash except to the
extent that the covenants applicable to Indebtedness (as defined in subparagraph
9 below) of the Corporation prohibit such cash payments or the covenants
applicable to securities and/or Indebtedness of the Corporation's subsidiaries
prohibit such subsidiaries from distributing the necessary cash to the
Corporation. Dividends in arrears on the Preferred Stock may be paid at any
time, without reference to any regular dividend payment date. Dividends will
accrue and be cumulative from the date of original issue of the Preferred Stock,
whether or not declared for any reason (including if such declaration is
prohibited under any outstanding indebtedness or borrowing or other contractual
provision binding on the Corporation or any of its subsidiaries) and whether or
not there will be funds of the Corporation legally available for the payment
thereof. Dividends accruing and not declared until March 15, 2003 shall, when
declared, be payable in cash or additional shares of Preferred Stock as
described above. All accrued and unpaid dividends will be compounded at the
dividend rate on a quarterly basis. All dividends that accrue in accordance with
the foregoing provisions shall be cumulative from and after March 15, 2003.
(b) No dividend or other distribution (payable other than in shares
of Junior Stock) shall be paid to the holders of Junior Stock, and no shares of
Junior Stock shall be purchased, redeemed or otherwise acquired by the
Corporation or any of its subsidiaries (except by conversion into or in exchange
for Junior Stock), nor shall any monies be paid or made available for a
purchase, redemption or sinking fund for the purchase or redemption of any
Junior Stock unless (i) all dividends on the outstanding shares of Preferred
Stock that shall have accrued through any prior Dividend Payment Date shall have
been paid or declared and funds set apart for payment thereof; (ii) the
Corporation shall not be in default on any of its obligations to purchase or
redeem the Preferred Stock pursuant to subparagraphs 4, 5 or 6 of this Paragraph
A; and (iii) the Corporation shall not be in default on any of the covenants
included in subparagraph 9 of this Paragraph A. When dividends are not paid in
full upon the shares of Preferred Stock and any Parity Stock, all dividends
declared upon shares of Preferred Stock and all Parity Stock
2
shall be declared pro rata so that the amount of dividends declared per share of
Preferred Stock and all such Parity Stock shall in all cases bear to each other
the same ratio that accrued dividends per share on the shares of Preferred Stock
and all such Parity Stock bear to each other.
3. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, no payment or distribution of
assets shall be made to or set apart for the holders of Junior Stock unless the
holders of shares of Preferred Stock shall have received, out of assets legally
available therefor, Ten Thousand Dollars ($10,000.00) per share of Preferred
Stock (the "Liquidation Amount") plus an amount of cash equal to the dividends,
whether or not earned or declared, accrued and unpaid thereon to the date of
final distribution to such holder. If upon any such distribution of assets in
liquidation or dissolution or upon the winding up of the affairs of the
Corporation the amount which would be distributed to the holders of the
outstanding shares of Preferred Stock would be less than this amount, then such
lesser amount shall be distributed pro rata to the holders of then outstanding
shares of Preferred Stock and to the holders of then outstanding shares of
Parity Stock, and no distribution shall be made to the holders of Junior Stock.
None of the consolidation or the merger of the Corporation, or the sale, lease
or transfer by the Corporation of all or any part of its assets, shall be deemed
to be a liquidation, dissolution or winding up of the Corporation for purposes
of this subparagraph 3.
4. The Corporation shall redeem the Preferred Stock on March 15, 2009,
out of funds legally available for such purpose, at a redemption price per
share, in cash, equal to the Liquidation Amount plus an amount of cash equal to
the dividends, whether or not earned or declared, accrued and unpaid thereon to
the date of redemption. Shares of Preferred Stock redeemed pursuant to this
subparagraph 4 shall be cancelled and shall not be reissued.
5. (a) Except as set forth below, the Preferred Stock shall not be
redeemable at the Corporation's option prior to March 15, 2003. From and after
March 15, 2003, the Corporation may, at its option, redeem the Preferred Stock,
in whole or in part, at the redemption prices (expressed as percentages of the
Liquidation Amount) set forth below, plus an amount of cash equal to the
dividends, whether or not earned or declared, accrued and unpaid thereon to the
date of redemption, if redeemed during the twelve-month period beginning on
March 15 of the years indicated below:
Year Percentage
---- ----------
2003..................................... 106.875%
2004..................................... 104.583%
2005..................................... 102.293%
2006 and thereafter.............. 100.000%
(b) Prior to March 15, 2001, the Corporation may, at its option,
redeem up to one-half of the aggregate Liquidation Amount of Preferred Stock at
a redemption price of 113.75% of the Liquidation Amount, plus an amount of cash
equal to the dividends, whether or not earned or declared, accrued and unpaid
thereon to the date of redemption, with the net cash
3
proceeds of an Equity Offering (as defined below); provided, however, that at
least one-half of the aggregate Liquidation Amount of Preferred Stock remains
outstanding immediately after the occurrence of such redemption (excluding
Preferred Stock held by the Corporation and its subsidiaries); and provided,
further, that any such redemption shall occur within 60 days of the date of the
closing of such Equity Offering. As used herein, "Equity Offering" means an
underwritten public offering of Common Stock (other than Disqualified Stock (as
defined below)) registered under the Securities Act (other than a public
offering registered on Form S-8 under the Securities Act).
(c) If less than all outstanding shares of Preferred Stock are to
be redeemed, the shares to be redeemed shall be selected pro rata (with any
fractional shares being rounded to the nearest whole share) according to the
number of whole shares held by each holder of Preferred Stock.
(d) In the event the Corporation shall redeem shares of Preferred
Stock pursuant to subparagraphs 4 or 5 hereof, notice of such redemption shall
be given by first class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register of the Corporation. Each such redemption notice shall state: (i) the
redemption date; (ii) the number of shares of Preferred Stock to be redeemed
and, if fewer than all the shares held by such holder are to be redeemed, the
number of shares to be redeemed from such holder; (iii) the redemption price;
(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. On or after
the date so specified, each holder of then outstanding shares of Preferred Stock
so to be redeemed shall surrender the certificate or certificates evidencing the
Preferred Stock held by such holder to the Corporation at its principal office
(or such other office or agency of the Corporation as the Corporation may
designate in such notice), in exchange for payment to its order or that of its
nominee, as such holder shall request, in an aggregate amount equal to the
aggregate redemption amount of the shares of Preferred Stock so redeemed. The
Corporation shall reissue to each such holder a certificate for any shares of
Preferred Stock surrendered but not redeemed. All shares of Preferred Stock
which are redeemed pursuant to this subparagraph 5 shall be cancelled and shall
not be reissued.
6. (a) In the event of a Change of Control (as defined below), the
Corporation shall be required to make an offer to each holder of shares of
Preferred Stock to repurchase such holder's shares of Preferred Stock (a
"Repurchase Offer") at a purchase price equal to 101% of the Liquidation Amount,
plus the cash value of any accrued and unpaid dividends payable in kind and the
amount of any accrued and unpaid cash dividends (the "Change of Control
Payment"). As used herein, "Change of Control" means the occurrence of any of
the following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Corporation and
its Restricted Subsidiaries (as defined in subparagraph 9 below) taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) or "group" (as defined in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) other than the Principals (as defined below),
4
(ii) the adoption of a plan relating to the liquidation or dissolution of the
Corporation, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" or "group" (as defined above), other than the Principals, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more of the voting power of the
Voting Stock (as defined below) of the Corporation than at that time is
beneficially owned by the Principals, or (iv) the first day on which more than a
majority of the directors on the Board of Directors of the Corporation are not
Continuing Directors (as defined below). For purposes of this definition, any
transfer of an equity interest of an entity that was formed for the purpose of
acquiring Voting Stock of the Corporation will be deemed to be a transfer of
such portion of such Voting Stock as corresponds to the portion of the equity of
such entity that has been so transferred.
(b) Within ten days following any Change of Control, the Corporation
shall mail a notice to each holder of shares of Preferred Stock describing the
transaction or transactions that constitute the Change of Control. Such notice
shall state: (i) the date of repurchase, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed ("the Change
of Control Payment Date"); (ii) the place or places where certificates for such
shares are to be surrendered (the "Paying Agent"); and (iii) that dividends on
the shares to be repurchased will cease to accrue on such Change of Control
Payment Date. The Corporation shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the shares of Preferred Stock as a result of a Change of Control.
(c) At least three days before the Change of Control Payment Date,
each holder of then outstanding shares of Preferred Stock which elects to have
some or all of its shares of Preferred Stock repurchased pursuant to the
Repurchase Offer shall surrender the certificate or certificates evidencing the
Preferred Stock held by such holder to the Paying Agent, with a request for
payment to its order or that of its nominee in an aggregate amount equal to the
aggregate Change of Control Payment. On the Change of Control Payment Date, the
Corporation shall, to the extent lawful, (i) accept for payment all shares of
Preferred Stock properly tendered pursuant to the Repurchase Offer, and (2)
deposit with the Paying Agent an amount equal to the Change of Control Payment
in respect of all shares of Preferred Stock so tendered. The Paying Agent shall
promptly mail to each holder of shares of Preferred Stock so tendered the Change
of Control Payment for such shares of Preferred Stock. All shares of Preferred
Stock which are repurchased pursuant to this subparagraph 6 shall be cancelled
and shall not be reissued. The Corporation shall publicly announce the results
of the Repurchase Offer on or as soon as practicable after the Change of Control
Payment Date, but in no case more than five days (excluding legal holidays)
after the Change of Control Payment Date.
(d) Notwithstanding the foregoing, the Corporation shall not be
required to make a Repurchase Offer upon a Change of Control if such Repurchase
Offer would cause an event of default under any of the agreements governing
Indebtedness of the Corporation, or if a third party makes the Repurchase Offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in this subparagraph 6 applicable to a Repurchase Offer made by the
5
Corporation and purchases all shares of Preferred Stock validly tendered and not
withdrawn under such Repurchase Offer.
7. (a) The Corporation may, at its option, on any Dividend Payment Date
with respect to the Preferred Stock, redeem all, but not less than all, of the
then outstanding shares of Preferred Stock in exchange for the Corporation's
13.75% Subordinated Notes due March 15, 2009 to be issued pursuant to an
indenture between the Corporation and a trustee and having substantially the
terms assigned to the Preferred Stock as set forth in this Paragraph A of
Article FOURTH (the "Subordinated Notes"), at a rate of one dollar (or fraction
thereof) principal amount of Subordinated Notes for each dollar (or fraction
thereof) in Liquidation Amount plus, subject to the following paragraph, the
cash value of any accrued and unpaid dividends payable in kind and the amount of
any accrued and unpaid cash dividends, whether or not earned or declared,
accrued and unpaid thereon to the date of exchange (provided that no event of
default under the indenture governing the Subordinated Notes shall have occurred
and be continuing).
(b) Cash dividends on any shares of Preferred Stock exchanged for
Subordinated Notes which have accrued but have not been paid as of the date of
exchange shall be paid, at the option of the Corporation, in cash or in
additional Subordinated Notes in an equivalent principal amount of such accrued
and unpaid dividends. In no event shall the Corporation issue Subordinated Notes
in denominations other than $1,000 or in an integral multiple thereof. Cash will
be paid in lieu of any such fraction of Subordinated Notes that would otherwise
have been issued (which shall be determined with respect to the aggregate
principal amount of Subordinated Notes to be issued to a holder upon any such
exchange). Interest will accrue on the Subordinated Notes from the date of
exchange.
(c) In the event the Corporation shall exchange shares of
Preferred Stock, notice of such exchange shall be given by first class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
exchange date, to each holder of record of the shares of Preferred Stock to be
exchanged at such holder's address as the same appears on the stock register of
the Corporation. Each such exchange notice shall state: (A) the exchange date;
(B) the principal amount of Subordinated Notes to be received by the exchanging
holder; (C) the place or places where the certificate or certificates for such
shares of Preferred Stock are to be exchanged for notes evidencing the
Subordinated Notes to be received by the exchanging holder; and (D) that
dividends on the shares of Preferred Stock to be exchanged will cease to accrue
on such exchange date. On the date so specified, each holder of then outstanding
shares of Preferred Stock shall surrender the certificate or certificates
evidencing the Preferred Stock held by such holder to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate in such notice), in exchange for the Subordinated
Notes to which such holder is entitled, registered in such holder's name or that
of its nominee or payable to its order or that of its nominee, as such holder
shall request, and in such denominations as such holder shall request. All
shares of Preferred Stock which are redeemed pursuant to this subparagraph 7
shall be cancelled and shall not be reissued.
(d) Prior to giving notice of intention to exchange, the
Corporation shall execute and deliver with a bank or trust company selected by
the Corporation an indenture having
6
substantially the terms assigned to the Preferred Stock as set forth in this
Paragraph A of Article FOURTH. The Corporation will cause the Subordinated Notes
to be authenticated on the Dividend Payment Date on which the exchange is
effective, and will pay interest on the Subordinated Notes at the rate and on
the dates specified in such indenture from the exchange date.
(e) The Corporation will not give notice of its intention to
exchange unless it shall file at the place or places (including a place in the
Borough of Manhattan, The City of New York) maintained for such purpose an
opinion of counsel (who may be an employee of the Corporation) to the effect
that (i) the indenture has been duly authorized, executed and delivered by the
Corporation, has been duly qualified under the Trust Indenture Act of 1939 (or
that such qualification is not necessary) and constitutes a valid and binding
instrument enforceable against the Corporation in accordance with its terms
(subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles, and subject to such other qualifications as are then
customarily contained in opinions of counsel experienced in such matters), (ii)
the Subordinated Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the indenture and delivered
in exchange for the shares of Preferred Stock, will constitute valid and binding
obligations of the Corporation entitled to the benefits of the indenture
(subject to the aforesaid), (iii) neither the execution nor delivery of the
indenture or the Subordinated Notes nor compliance with the terms, conditions or
provisions of such instruments will result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or agreement or instrument, known to such counsel, to
which the Corporation or any of its subsidiaries is a party or by which it or
any of them is bound, or any decree, judgment, order, rule or regulation, known
to such counsel, of any court or governmental agency or body having jurisdiction
over the Corporation and such subsidiaries or any of their properties, and (iv)
the Subordinated Notes have been duly registered for such exchange with the
Securities and Exchange Commission under a registration statement that has
become effective under the Securities Act of 1933 (the "Act") or that the
exchange of the Subordinated Notes for the shares of Preferred Stock is exempt
from registration under the Act.
(f) The exchange shall be deemed to have been effected immediately
prior to the close of business on the relevant Dividend Payment Date on or prior
to which the certificates for shares of Preferred Stock shall have been
surrendered, and the person in whose name or names the Subordinated Notes shall
be issuable upon such exchange shall be deemed to have become the holder of
record of the Subordinated Notes represented thereby at such time on such
Dividend Payment Date.
(g) Prior to the delivery of any securities which the Corporation
shall be obligated to deliver upon exchange of the Preferred Stock, the
Corporation shall comply with all applicable federal and state laws and
regulations that require action to be taken by the Corporation. The Corporation
will pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of notes evidencing Subordinated
Notes on exchange of the Preferred Stock pursuant hereto; provided that the
Corporation shall not be
7
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of notes evidencing Subordinated Notes in a name other
than that of the holder of the Preferred Stock to be exchanged and no such issue
or delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
8. (a) The holders of shares of Preferred Stock shall not be entitled
to any voting rights, except as described below or as otherwise required by
applicable law. In the event the Corporation fails to (i) pay dividends for six
or more quarters (whether or not consecutive), (ii) satisfy any mandatory
redemption obligation with respect to the Preferred Stock (regardless of whether
the reason for such failure is lack of legally available funds), (iii) make a
Repurchase Offer within 30 days following a Change of Control or make an Asset
Sale Offer pursuant to paragraph (f) of subparagraph 9 (regardless of whether
such offer is prohibited by the terms of any Indebtedness of the Corporation) or
(iv) comply with any of the covenants set forth in subparagraph 9 of this
Paragraph A for a period of 30 days after the receipt of notice of such failure
from the registered holders of not less than twenty-five percent (25%) of the
shares of Preferred Stock then outstanding, the Board of Directors of the
Corporation shall be increased by two members and the holders of a majority of
the outstanding shares of Preferred Stock, voting as a separate class, shall be
entitled to elect two members to the Board of Directors of the Corporation. The
foregoing voting rights shall cease, and the term of office of any directors
elected pursuant to the exercise of the foregoing voting rights shall terminate,
if and when the failure by the Corporation giving rise to such voting rights is
cured, but subject always to the vesting of such right in the case of a similar
future event. The foregoing voting rights may be exercised initially either by
written consent or at a special meeting of the holders of the Preferred Stock,
called as hereinafter provided, or at any annual meeting of stockholders held
for the purpose of electing directors, and thereafter at each subsequent annual
meeting. At any time when such voting rights shall have vested, and if such
right shall not already have been exercised by written consent, a proper officer
of the Corporation may call, and, upon the written request, addressed to the
Secretary of the Corporation, of the record holders of shares representing
twenty-five percent (25%) of the voting power of the shares then outstanding of
the Preferred Stock, shall call a special meeting of the holders of the
Preferred Stock. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of stockholders at the place for
holding annual meetings of stockholders of the Corporation, or, if none, at a
place designated by the Board of Directors. Notwithstanding the foregoing, no
such special meeting shall be called during a period within 60 days immediately
preceding the date fixed for the next annual meeting of stockholders. At any
meeting held for the purpose of electing directors at which the holders of
Preferred Stock shall have the right to elect directors as provided herein, the
presence in person or by proxy of the holders of shares representing more than
fifty percent (50%) in voting power of the then outstanding shares of the
Preferred Stock having such right shall be required and shall be sufficient to
constitute a quorum of such class for the election of directors by such class.
Any director elected by holders of Preferred Stock pursuant to such voting
rights shall hold office until the next annual meeting of stockholders (unless
such term has previously terminated as described above) and any vacancy in
respect of any such director shall be filled only by vote of the remaining
director so elected or, if there be no such remaining director, by the holders
of Preferred Stock by written consent or at a special meeting called in
8
accordance with the procedures set forth above or, if no special meeting is
called or written consent executed, at the next annual meeting of stockholders.
(b) The approval of the holders of a majority of the outstanding
shares of Preferred Stock, voting as a separate class, shall also be required
for (i) the authorization by the Corporation of any series of preferred stock
ranked senior or on a parity in powers, preferences and rights to the Preferred
Stock (including any additional shares of Preferred Stock), (ii) the amendment
or modification of any provisions of the Certificate of Incorporation of the
Corporation in any manner that would adversely affect the voting powers,
designations, preferences and rights of the Preferred Stock and (iii) any merger
or consolidation or sale of all or substantially all of the assets of the
Corporation if the terms of such transaction do not provide for the repurchase
or redemption of all of the shares of Preferred Stock upon consummation of such
merger, consolidation or sale. Notwithstanding the foregoing, upon a refinancing
of the Corporation's 12.75% Senior Secured Discount Notes due 2008 (the
"Discount Notes"), the Certificate of Incorporation of the Corporation may be
amended or modified without any approval of the holders of the Preferred Stock
to reflect covenants in the new notes which are more favorable to the
Corporation than those contained in the Discount Notes.
9. (a) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any shares of
Preferred Stock are outstanding, the Corporation shall furnish to the holders of
record of shares of Preferred Stock (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Corporation were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Corporation and its consolidated Subsidiaries (as defined
below) (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the financial
condition and results of operations of the Corporation and its Restricted
Subsidiaries (as defined below) separate from the financial condition and
results of operations of the Unrestricted Subsidiaries (as defined below) of the
Corporation) and, with respect to the annual information only, a report thereon
by the Corporation's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Corporation were required to file such reports, in each case within the time
periods specified in the Commission's rules and regulations. In addition,
following the consummation of the exchange offer contemplated by the
Registration Rights Agreement (as defined below), whether or not required by the
rules and regulations of the Commission, the Corporation shall file a copy of
all such information and reports with the Commission for public availability
within the time periods specified in the Commission's rules and regulations
(unless the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. The
Corporation shall also furnish to the holders of Preferred Stock and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A under the Act.
9
(b) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Corporation's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Corporation or any of
its Restricted Subsidiaries), other than a dividend on the Preferred Stock, or
to the direct or indirect holders of the Corporation's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Corporation or to the Corporation or any Restricted Subsidiary of the
Corporation); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Corporation) any Equity Interests of the Corporation or any direct
or indirect parent of the Corporation or other Affiliate of the Corporation
(other than any such Equity Interests owned by the Corporation or any Restricted
Subsidiary of the Corporation); (iii) make any principal payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Senior Secured Discount
Notes, except a payment of principal at Stated Maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Corporation would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of paragraph (d) of
this subparagraph 9; and
(C) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Corporation and its
Restricted Subsidiaries after March 12, 1998 (excluding
Restricted Payments permitted by clauses (ii), (iii) and (iv) of
the next succeeding paragraph), is less than the sum, without
duplication, of (i) 50% of the Consolidated Net Income of the
Corporation for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing after March
12, 1998 to the end of the Corporation's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100%
of such deficit), plus (ii) 100% of the aggregate net cash
proceeds received by the Corporation since March 12, 1998 as a
contribution to its common equity capital or from the issue or
sale of Equity Interests of the Corporation (other than
Disqualified Stock) or from the issue or sale of Disqualified
Stock or debt securities of the Corporation that have been
converted
10
into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a
Restricted Subsidiary of the Corporation), plus (iii) to the
extent that any Restricted Investment that was made after March
12, 1998 is sold for cash or otherwise liquidated or repaid for
cash, 100% of the net cash proceeds thereof (less the cost of
disposition, if any), but only to the extent not included in
subclause (i) of this clause (C).
The foregoing provisions shall not prohibit (i) the payments and
applications of the proceeds to be received by the Corporation from the issuance
of the Units as described under the caption "Use of Proceeds" of the Offering
Memorandum governing the issuance of the Units (ii) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of this
subparagraph 9; (iii) the redemption, repurchase, retirement, defeasance or
other acquisition of any Equity Interests of the Corporation in exchange for, or
out of the net cash proceeds of the substantially concurrent sale (other than to
a Restricted Subsidiary of the Corporation) of, other Equity Interests of the
Corporation (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (C) of
the preceding paragraph; (iv) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the substantially concurrent
sale (other than to a Restricted Subsidiary of the Corporation) of Equity
Interests of the Corporation (other than Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such defeasance,
redemption or repurchase shall be excluded from clause (C) of the preceding
paragraph; (v) the payment of any dividend by a Restricted Subsidiary of the
Corporation to the holders of its Equity Interests on a pro rata basis; and (vi)
so long as no Default or Event of Default shall have occurred and be continuing
immediately after such transaction, the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Corporation
or any Restricted Subsidiary of the Corporation held by any member of the
Corporation's (or any of its Restricted Subsidiaries') management; provided that
the aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any twelve-month period plus
the aggregate cash proceeds received by the Corporation (or any of its
Restricted Subsidiaries) during any such twelve-month period from any issuance
of Equity Interests by the Corporation (or any of its Restricted Subsidiaries)
to members of management of the Corporation (or any of its Restricted
Subsidiaries) (provided that such proceeds are excluded from clause (C) of the
preceding paragraph; and provided, further, that such repurchase, redemption or
other acquisition or retirement may not include any Equity Interests owned,
directly or indirectly, by the Principals.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Corporation and its Restricted Subsidiaries (except to the extent repaid in
cash) in the Subsidiary so designated shall be deemed to be Restricted Payments
at the time of such designation and shall reduce the amount available for
Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments shall be deemed to constitute Investments in an amount
equal to the greatest of (i)
11
the net book value of such Investments at the time of such designation, (ii) the
fair market value of such Investments at the time of such designation and (iii)
the original fair market value of such Investments at the time they were made.
Such designation shall only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Corporation or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $1.0 million.
(c) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (i)(a) pay dividends or make any other distributions to the
Corporation or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Corporation or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Corporation or any
of its Restricted Subsidiaries or (iii) transfer any of its properties or assets
to the Corporation or any of its Restricted Subsidiaries. However, the foregoing
restrictions shall not apply to encumbrances or restrictions existing under or
by reason of (a) Existing Indebtedness as in effect on March 12, 1998 and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, with respect to such
dividend and other payment restrictions, than those as in effect on March 12,
1998, (b) the Indenture and the Senior Secured Discount Notes, (c) applicable
law, (d) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Corporation or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of paragraph (d) of this subparagraph 9
to be incurred, (e) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices, (f)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (g) restrictions relating to a Restricted
Subsidiary formed for the sole purpose of engaging in accounts receivable
financing, (h) any agreement for the sale of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending its sale, (i)
Permitted Refinancing Indebtedness; provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced and
12
(j) secured Indebtedness otherwise permitted to be incurred pursuant to the
provisions of paragraph (d) of this subparagraph 9 that limits the right of the
debtor to dispose of the assets securing such Indebtedness.
(d) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Corporation shall not permit any of its Restricted Subsidiaries to issue any
shares of preferred stock; provided, however, that so long as no Default or
Event of Default has occurred or is continuing, the Corporation and its
Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) if the
Fixed Charge Coverage Ratio for the Corporation's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
is issued would have been at least 1.75 to 1, if such additional Indebtedness is
incurred prior to March 15, 2000, or at least 2.0 to 1, if such additional
Indebtedness is incurred on or after March 15, 2000, in each case, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred at the beginning
of such four-quarter period.
The provisions of the immediately preceding paragraph shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Corporation and its Restricted
Subsidiaries of Indebtedness from a bank or other financial
institution in an aggregate principal amount not to exceed $200.0
million at any one time outstanding, less any Net Proceeds of
Asset Sales applied to permanently reduce any such Indebtedness
pursuant to paragraph (f) of this subparagraph 9;
(ii) the incurrence by the Corporation and its Restricted
Subsidiaries of the Existing Indebtedness, other than pursuant to
the Fonda Credit Facility or the Sweetheart Credit Facilities;
(iii) the incurrence by the Corporation of Indebtedness
represented by the Senior Secured Discount Notes and the
Indenture;
(iv) the incurrence by the Corporation or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligations,
in each case incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement
of property, plant or equipment used in the business of the
Corporation or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $5.0 million at any time
outstanding;
(v) the incurrence by the Corporation or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition
of assets or a new Restricted
13
Subsidiary; provided that such Indebtedness was incurred by the
prior owner of such assets or such Restricted Subsidiary prior to
such acquisition by the Corporation or one of its Restricted
Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by the Corporation or one of
its Restricted Subsidiaries; and provided further that the
principal amount (or accreted value, as applicable) of such
Indebtedness, together with any other outstanding Indebtedness
incurred pursuant to this clause (v) and any Permitted
Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (v), does not
exceed $5.0 million;
(vi) the incurrence by the Corporation or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to refund, refinance
or replace Indebtedness (other than intercompany Indebtedness)
that was permitted to be incurred under the first paragraph
hereof or clauses (ii), (iii), (iv) or (v) of this paragraph;
(vii) the incurrence by the Corporation or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the
Corporation and any of its Restricted Subsidiaries; provided,
however, that (a) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than the Corporation or a Restricted Subsidiary
thereof and (b) any sale or other transfer of any such
Indebtedness to a Person that is not either the Corporation or a
Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Corporation
or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vii);
(viii) the incurrence by the Corporation or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the
purpose of fixing or hedging interest rate risk with respect to
any floating rate Indebtedness that is permitted by the terms of
the Indenture to be outstanding; and
(ix) the incurrence by the Corporation or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) not to exceed $25.0
million at any one time outstanding.
For purposes of determining compliance with this paragraph (d), in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (ix) above or is
entitled to be incurred pursuant to the first paragraph of this paragraph (d),
the Corporation shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this paragraph (d). Accrual of
interest, accretion or amortization of original issue discount, and the payment
of interest on any Indebtedness in the form of additional Indebtedness with the
same terms shall not be deemed to be an incurrence of Indebtedness for purposes
of this paragraph (d); provided, in each such case, that the amount thereof is
included in Fixed Charges of the Corporation as accrued.
14
(e) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is
on terms that are no less favorable to the Corporation or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Corporation or such Restricted Subsidiary with an unrelated
Person and (ii) (a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, the Board of Directors shall have passed a resolution certifying
that such Affiliate Transaction complies with clause (i) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, the Board of Directors shall have
received an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing with total assets in excess of $1.0
billion, except with respect to transactions in the ordinary course of business
and consistent with past practice between the Corporation or any of its
Restricted Subsidiaries and Four M, CEG or any of their respective subsidiaries;
provided that the following shall not be deemed to be Affiliate Transactions:
(1) the Indenture of Lease dated as of January 1, 1995, between Dennis Mehiel
and Fonda relating to the Jacksonville Facility except for any purchases of
property by Fonda that may arise thereunder; (2) any employment agreement
entered into by the Corporation or any of its Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of the
Corporation or such Restricted Subsidiary in an amount not to exceed $1.00
million per annum; (3) transactions between or among the Corporation and its
Restricted Subsidiaries; (4) Restricted Payments and Permitted Investments that
are permitted by paragraph (b) of this subparagraph 9; and (5) transactions
entered into in connection with the Transactions.
(f) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless (i) the Corporation (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the fair market value (evidenced by a resolution of the
Board of Directors) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Corporation or such Restricted Subsidiary is in the form of
cash; provided that the amount of (x) any liabilities (as shown on the
Corporation's or such Restricted Subsidiary's most recent balance sheet), of the
Corporation or any Restricted Subsidiary (other than contingent liabilities)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Corporation or such Restricted Subsidiary
from further liability and (y) any securities, notes or other obligations
received by the Corporation or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to ordinary settlement periods)
converted by the Corporation or such Restricted Subsidiary into cash (to the
extent of the cash received), shall be deemed to be cash for purposes of this
provision.
15
Within 365 days after the Corporation's or any Restricted Subsidiary's
receipt of any Net Proceeds from an Asset Sale, the Corporation or such
Restricted Subsidiary may apply such Net Proceeds (a) to permanently repay
Indebtedness of a Restricted Subsidiary of the Corporation (and, in the case of
revolving borrowings, to correspondingly reduce commitments with respect
thereto), or (b) to the acquisition of a majority of the assets of, or a
majority of the Voting Stock of, another Permitted Business, the making of a
capital expenditure or the acquisition of other long-term assets that are used
or useful in a Permitted Business. Pending the final application of any such Net
Proceeds, the Corporation may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Certificate of Incorporation. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute Excess Proceeds. When the aggregate amount of Excess
Proceeds exceeds $10.0 million (an "Excess Proceeds Offer Triggering Event"),
the Corporation shall be required to make an offer to each holders of shares of
Preferred Stock (an "Asset Sale Offer") to repurchase the maximum number of such
holder's shares of Preferred Stock that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
Liquidation Amount, plus an amount of cash equal to the amount of any accrued
and unpaid dividends, in accordance with the procedures set forth in
subparagraph 6 of this Paragraph A with respect to a Change of Control; provided
however, that such offer will not be required if the application of such Excess
Proceeds to repurchase shares of Preferred Stock would cause an Event of Default
under any of the agreements governing Indebtedness of the Corporation. If the
aggregate purchase price of the shares of Preferred Stock tendered into such
Asset Sale Offer surrendered by the holders thereof is less than the amount of
Excess Proceeds, the Corporation may use such Excess Proceeds for general
corporate purposes (subject to the provisions of this Certificate of
Incorporation). If the aggregate purchase price of the shares of Preferred Stock
tendered into such Asset Sale Offer surrendered by the holders thereof exceeds
the amount of Excess Proceeds, the Corporation shall select the Shares of
Preferred Stock to be purchased on a pro rata basis. Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
(g) So long as any shares of Preferred Stock are outstanding, the
Corporation (i) shall not, and shall not permit any Wholly Owned Restricted
Subsidiary of the Corporation to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock in any Wholly Owned Restricted Subsidiary of the
Corporation to any Person (other than the Corporation or a Wholly Owned
Restricted Subsidiary of the Corporation), unless (a) such transfer, conveyance,
sale, lease or other disposition is of all the Capital Stock in such Wholly
Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
paragraph (f) hereof, and (ii) shall not permit any Wholly Owned Restricted
Subsidiary of the Corporation to issue any of its Equity Interests (other than,
if necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Corporation or a Wholly Owned Restricted
Subsidiary of the Corporation.
(h) So long as any shares of Preferred Stock are outstanding,
neither the Corporation nor any of its Restricted Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of shares of Preferred Stock for or as
an inducement to any amendment or modification of any of the terms or
16
provisions of this Certificate of Incorporation unless such consideration is
offered to be paid or is paid to all holders of shares of Preferred Stock that
amend or modify, or agree to amend or modify, in the time frame set forth in the
solicitation documents relating to such amendment or modification.
(i) So long as any shares of Preferred Stock are outstanding, the
Corporation may not consolidate or merge with or into (whether or not the
Corporation is the surviving entity), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Corporation is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Corporation) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) immediately after such transaction no Default or Event of Default
exists; and (iii) except in the case of a merger of the Corporation with or into
a Wholly Owned Restricted Subsidiary of the Corporation, the Corporation or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Corporation), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Corporation immediately preceding the transaction
and (B) shall, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of paragraph (d) of this subparagraph 9.
(j) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
(k) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, and shall not permit any Subsidiary to, engage in any
business other than Permitted Businesses (as defined below), except to such
extent as would not be material to the Corporation and its Restricted
Subsidiaries taken as a whole.
(l) So long as any shares of Preferred Stock are outstanding, the
Corporation shall do or cause to be done all things necessary to preserve and
keep in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Restricted Subsidiaries, in
accordance with the respective organizational documents (as they may be amended
from time to time) of the Corporation or any such Restricted Subsidiary and (ii)
the rights (charter and statutory), licenses and franchises of the Corporation
and its Restricted Subsidiaries; provided, however, that the Corporation shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Restricted Subsidiaries,
if the Board of Directors of the Corporation shall determine that the
preservation thereof
17
is no longer desirable in the conduct of the business of the Corporation and its
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the holders of the shares of Preferred Stock.
(m) The restrictions set forth in the preceding paragraphs (a)
through (l) of this subparagraph 9 shall in no way limit the power and authority
of the Corporation to take any of the actions restricted thereby. Rather, a
violation of any such paragraphs shall have the consequences set forth in
paragraph (a) of subparagraph 8 of this Paragraph A, and only such consequences.
(n) As used herein, the following terms are ascribed with the
following meanings:
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person (as
described below) directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that beneficial ownership of 10% or more of the Voting Stock
(as described below) of a Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than (x) sales of inventory in the ordinary course of
business consistent with past practices, and (y) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Corporation
and its Restricted Subsidiaries taken as a whole, and (ii) the issue or sale by
the Corporation or any of its Restricted Subsidiaries of Equity Interests of any
of the Corporation's Restricted Subsidiaries, in the case of either clause (i)
or (ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $2.5 million or (b) for net proceeds
in excess of $2.5 million. Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by the
Corporation to a Restricted Subsidiary or by a Restricted Subsidiary to the
Corporation or to another Restricted Subsidiary and (ii) a Restricted Payment
that is permitted by paragraph (b) of this subparagraph 9.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP (as defined below).
18
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person, excluding stock appreciation rights issued in the
ordinary course of business.
"CEG" means Creative Expressions Group, Inc and CEG Holdings, LLC.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period plus (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (to the extent such
losses were deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash charges (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash charges were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of the referent Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent that a corresponding amount
would be permitted at the date of determination to be dividend to the
Corporation by such Restricted Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity
19
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a Wholly Owned
Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) income of any Unrestricted
Subsidiary shall be excluded whether or not distributed to the Corporation or
any of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its Restricted Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to March 12, 1998 in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Corporation who (i) was a member of such
Board of Directors on March 12, 1998 or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of the Board at the time of such
nomination or election.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible, or for which it
is exchangeable, at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to June 14, 2008; provided, however, that any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Corporation to repurchase such
Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall
not constitute Disqualified Stock if the terms of such Capital Stock
20
provide that the Corporation may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
paragraph (b) of this subparagraph 9.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Event of Default" is ascribed the meaning set forth in Section
6.01 of the Indenture.
"Existing Indebtedness" means Indebtedness of the Corporation and
its Restricted Subsidiaries in existence on March 12, 1998, including
Indebtedness represented by the demand notes issued to the stockholders of
Sweetheart, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in cash,
on any series of preferred stock of such Person, other than dividend payments on
Equity Interests payable solely in Equity Interests of the Corporation (other
than Disqualified Stock) or to the Corporation or a Restricted Subsidiary of the
Corporation, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the referent Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to
21
above, (i) acquisitions that have been made by the Corporation or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Subsidiaries following the Calculation Date.
"Fonda" means The Fonda Group, Inc.
"Fonda Credit Facility" means the credit facility between Fonda
and IBJ Schroder Bank & Trust Corporation, as agent, providing for available
borrowings of up to $50.0 million.
"Four M" means Four M Corporation.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on March 12, 1998.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness (as defined below).
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Senior Secured Discount
Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging
22
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien (as defined below) on any asset of such Person (whether
or not such Indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means the Indenture, dated as of March 12, 1998, between
the Corporation and The Bank of New York, as trustee (the "Trustee"), governing
the Corporation's 12.75% Senior Secured Discount Notes due 2008.
"Investments" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Corporation or any Restricted Subsidiary of the Corporation sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Corporation such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Corporation, the
Corporation shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of paragraph (b) of this subparagraph 9.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
23
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that were
the subject of such Asset Sale, and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Corporation nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Secured Discount Notes (as defined below)) of the Corporation or any
of its Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Corporation or any
of its Restricted Subsidiaries.
"Offering" means the Offering of the Units by the Corporation.
"Offering Memorandum" means the Offering Memorandum, dated March 5,
1998, governing the Offering of the Units by the Corporation.
"Permitted Business" means the business of producing and selling
food service, packaging, tissue and party goods products and such other
businesses as the Corporation and its Restricted Subsidiaries are engaged in on
the date of the Indenture, and reasonable expansions and extensions thereof.
"Permitted Investment" means (a) any Investment in the Corporation
or in a Restricted Subsidiary of the Corporation; (b) any Investment in Cash
Equivalents; (c) any Investment by the Corporation or any Restricted Subsidiary
of the Corporation in a Person, if as a result of such Investment (i) such
Person becomes a Restricted Subsidiary of the Corporation or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Corporation or a
Restricted Subsidiary of the Corporation; (d) any Investment made as a result of
the receipt of non-cash consideration from an Asset Sale made in accordance with
the provisions of paragraph (f) of this paragraph 9; (e) a $2.6 million loan
from Fonda to CEG, as in effect on March 12, 1998 as such loan may be amended or
refinanced in a manner not adverse to Fonda, the Corporation or the Holders of
the Senior Secured Discount Notes; and (f) other Investments in a Permitted
Business in an aggregate amount not to exceed $5.0 million.
24
"Permitted Liens" means (i) Liens on Indebtedness of the
Corporation's Restricted Subsidiaries that was permitted by the terms of this
subparagraph 9 to be incurred; (ii) Liens in favor of the Corporation or any of
its Restricted Subsidiaries; (iii) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Corporation or any
Restricted Subsidiary of the Corporation; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Corporation or any Restricted Subsidiary; (iv) Liens on property
existing at the time of acquisition thereof by the Corporation or any Restricted
Subsidiary of the Corporation; provided that such Liens were in existence prior
to the contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (iv) of the second paragraph of paragraph (d) of this subparagraph 9
covering only the assets acquired with such Indebtedness; (vii) Liens existing
on March 12, 1998; (viii) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) Liens incurred in the
ordinary course of business of the Corporation or any Restricted Subsidiary of
the Corporation with respect to obligations that do not exceed $2.5 million at
any one time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Corporation or such Restricted
Subsidiary; (x) Liens in favor of the holders of Senior Secured Discount Notes;
and (xi) renewals or refundings of any Liens referred to in clauses (iii)
through (x) above; provided that any such renewal or refunding does not extend
to any assets or secure any Indebtedness not securing or secured by the Liens
being renewed or refinanced.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Corporation or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Corporation or any such Restricted Subsidiary;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Senior Secured Discount Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Senior
Secured Discount Notes on terms at least as favorable to the Holders of Senior
Secured Discount Notes as those contained in the documentation governing the
Indebtedness
25
being extended, refinanced, renewed, replaced, defeased or refunded; and (iv)
such Indebtedness is incurred either by the Corporation or by the Subsidiary who
is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" means Dennis Mehiel, his lineal descendants and any
trust, corporation, partnership, association, limited liability company or other
entity in which Dennis Mehiel and/or his lineal descendants hold at least 80% of
the total, combined outstanding voting power or similar controlling interest.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 12, 1998, by and among the Corporation and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Senior Secured Discount Notes" means the Corporation's 12.75%
Senior Secured Discount Notes due 2008.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof); provided, however,
that Sweetheart (as defined below) shall be deemed to be a Subsidiary of the
Corporation for so long as the Corporation directly or indirectly owns at least
50% of Sweetheart's aggregate outstanding common stock.
"Sweetheart" means Sweetheart Holdings Inc. and its Subsidiaries.
"Sweetheart Credit Facilities" means Sweetheart's revolving credit
facility with BankAmerica in the amount of up to $135.0 million, and
Sweetheart's term and revolving credit facilities with The Bank of Nova Scotia,
which provides for (i) a term loan facility in the amount of up to Cdn. $14.0
million; (ii) a revolving credit facility in the amount of up to Cdn. $7.0
26
million; and (iii) a revolving overdraft credit facility with standby or
guarantee letters of credit in the amount of up to Cdn. $1.0 million.
"Transactions" is ascribed the meaning set forth in the Offering
Memorandum.
"Units" means the Units offered in the Offering consisting of
$1,000 in aggregate principal amount at maturity of the Senior Secured Discount
Notes and two (2) shares of Class C Common Stock, par value $.001 per share of
the Corporation.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than Fonda
or Sweetheart or any successor to any of them) that is designated by the Board
of Directors as an Unrestricted Subsidiary pursuant to a resolution of the Board
of Directors; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Corporation or any Restricted
Subsidiary of the Corporation unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Corporation or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Corporation; (c) is a Person with respect to which
neither the Corporation nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Corporation or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Corporation or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Corporation
or any of its Restricted Subsidiaries. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Corporation as of such date. The Board of Directors of the
Corporation may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Corporation of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under paragraph
(d) of this subparagraph 9, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date
27
and the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
B. CLASS B PREFERRED STOCK
Shares of Class B Preferred Stock may be issued from time to time in
one or more series, as may from time to time be determined by the Board of
Directors, each of said series to be distinctly designated. All shares of any
one series of Class B Preferred Stock shall be alike in every particular, except
that there may be different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting rights, if any, and the preferences
and relative, participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding; and,
subject to the provisions of Paragraph A of this Article FOURTH and subparagraph
2 of Paragraph E of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular series
of Class B Preferred Stock, the voting rights, if any, and the designations,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(a) The distinctive designation of, and the number of shares of Class
B Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by like action of the Board of Directors;
(b) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Class B Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such dividends to the
dividends payable on any other class or classes or series of the same or other
classes of stock and whether such dividends shall be cumulative or
non-cumulative;
(c) The right, if any, of the holders of Class B Preferred Stock
of such series to convert the same into, or exchange the same for, shares of any
other class or classes or of any series of the same or any other class or
classes of stock of the Corporation and the terms and conditions of such
conversion or exchange;
(d) Whether or not Class B Preferred Stock of such series shall
be subject to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Class B Preferred Stock
of such series may be redeemed;
28
(e) The rights, if any, of the holders of Class B Preferred Stock
of such series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-up of the
Corporation;
(f) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Class B Preferred Stock of such series; and
(g) The voting powers, if any, of the holders of such series of
Class B Preferred Stock which may, without limiting the generality of the
foregoing, include the right, voting as a series by itself or together with
other series of Class B Preferred Stock or all series of Class B Preferred Stock
as a class, to vote on such matters or under such circumstances and on such
conditions as the Board of Directors may determine.
C. CLASS B SERIES 1 PREFERRED STOCK
Pursuant to the authority granted to the Board of Directors in
Paragraphs B and C of this Article FOURTH, fifteen thousand (15,000) of the
authorized shares of Class B Preferred Stock are hereby designated as Class B
Series 1 Preferred Stock. The powers, preferences and rights, and the
qualifications, limitations and restrictions, of the Class B Series 1 Preferred
Stock are as follows:
1. The holder of shares of Class B Series 1 Preferred Stock shall not
be entitled to receive any dividends whatsoever.
2. The Class B Series 1 Preferred Stock shall, with respect to
distributions upon the liquidation, winding up or dissolution of the
Corporation, rank junior to the Preferred Stock and senior to all classes of
Common Stock of the Corporation and, except as provided in the following
proviso, to each other class or series of capital stock issued by the
Corporation now or hereafter created (collectively, together with the Common
Stock, "Series 1 Junior Stock"); provided, however, that the Board of Directors
may authorize a class or series of preferred stock on a parity in powers,
preferences and rights to the Class B Series 1 Preferred Stock (collectively,
"Series 1 Parity Stock") or senior in powers, preferences and rights to the
Class B Series 1 Preferred Stock (collectively, "Series 1 Senior Stock") if
approved by the holders of a majority of the shares of Class B Series 1
Preferred Stock; provided, however, that no such class or series of Series 1
Senior Stock shall be senior in powers, preferences and rights to the Preferred
Stock except as provided in subparagraph 1 of Paragraph A of this Article
FOURTH.
3. In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, no payment or distribution
of assets shall be made to or set apart for the holders of Series 1 Junior Stock
unless the holders of shares of Class B Series 1 Preferred Stock shall have
received, out of assets legally available therefor, one thousand dollars
($1,000) per share of Class B Series 1 Preferred Stock (the "Liquidation
Value"). If upon any such distribution of assets in liquidation or dissolution
or upon the winding up of the affairs of the Corporation the amount which would
be distributed to the holder of the outstanding shares of Class B Series 1
Preferred Stock would be less than this amount, then such lesser amount shall be
distributed pro rata to the holders of then outstanding shares of Class B Series
1 Preferred
29
Stock and to the holders of then outstanding shares of Series 1 Parity Stock,
and no distribution shall be made to the holders of Series 1 Junior Stock. None
of the consolidation or the merger of the Corporation, or the sale, lease or
transfer by the Corporation of all or any part of its assets, shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes of
this subparagraph 3.
4. (a) The Corporation shall redeem all, but not less than all, of the
Class B Series 1 Preferred Stock on March 13, 2010, out of funds legally
available for such purpose, at a redemption price per share, in cash, equal to
the aggregate Liquidation Value. Notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 30 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Corporation. Each such redemption notice shall state: (i) the redemption
date; (ii) the number of shares of Class B Series 1 Preferred Stock to be
redeemed; and (iii) the place or places where certificates for such shares are
to be surrendered for payment of the redemption price. On or after the date so
specified, each holder of then outstanding shares of Class B Series 1 Preferred
Stock so to be redeemed shall surrender the certificate or certificates
evidencing the Class B Series 1 Preferred Stock held by such holder to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate in such notice), in exchange for
payment to its order or that of its nominee, as such holder shall request, in an
aggregate amount equal to the aggregate redemption amount of the shares of Class
B Series 1 Preferred Stock so redeemed. All shares of Preferred Stock which are
redeemed pursuant to this subparagraph 4 shall be cancelled and shall not be
reissued.
(b) No dividend or other distribution (payable other than in shares
of Series 1 Junior Stock) shall be paid to the holders of Series 1 Junior Stock,
and no shares of Series 1 Junior Stock shall be purchased, redeemed or otherwise
acquired by the Corporation or any of its subsidiaries (except by conversion
into or in exchange for Series 1 Junior Stock), nor shall any monies be paid or
made available for a purchase, redemption or sinking fund for the purchase or
redemption of any Series 1 Junior Stock unless the Corporation shall not be in
default on any of its obligations to purchase or redeem the Class B Series 1
Preferred Stock pursuant to this subparagraph 4.
5. (a) The shares of Class B Series 1 Preferred Stock may, at the
option of the holder, at any time and from time to time, be converted into
shares of fully paid and non-assessable shares of Class A Common Stock or Class
B Common Stock, at the conversion ratio of one (1) share of Class B Series 1
Preferred Stock for 8.89963 shares of Class A Common Stock or Class B Common
Stock, subject to adjustment for any subdivision or combination of, or stock
dividend on, the Class A Common Stock or Class B Common Stock. The fifteen
thousand (15,000) shares of Class B Series 1 Preferred Stock authorized shall,
initially, be convertible into one million three hundred thirty four thousand
nine hundred and forty five (133,494.5) shares of Class A Common Stock or Class
B Common Stock.
(b) Upon receipt by the Corporation from the record holder of the
shares of Class B Series 1 Preferred Stock of a written request to convert its
shares of Class B Series 1
30
Preferred Stock, the shares of Class B Series 1 Preferred Stock shall be
converted into shares of Class A Common Stock or Class B Common Stock, as
specified in such written request, at the conversion ratio specified in
subparagraph 5(a) above. The conversion of shares hereunder shall be effective,
subject to the terms of this subparagraph 5, as of the close of business on the
date of the receipt by the Corporation of such request to convert, and the
holder entitled to receive the shares issuable upon such conversion shall be
treated for all purposes as the record holder of such shares on such date.
(c) The conversion of shares of Class B Series 1 Preferred Stock
shall be exercised by the surrender by the holder of the certificates
representing the shares being converted accompanied by a written notice of
conversion signed by such holder or its duly authorized agent, at the principal
office of the Corporation (or such other office or agency of the Corporation as
the Corporation may designate by notice in writing to the holders of Class B
Series 1 Preferred Stock) at any time during its usual business hours, and
stating the name or names in which such holder wishes the certificates for Class
A Common Stock or Class B Common Stock to be received upon conversion to be
issued and the address to which such certificates shall be delivered. In case
such notice shall specify a name or names other than that of the holder, such
notice shall be accompanied by payment of any and all transfer taxes payable
upon the issuance of the Class A Common Stock or Class B Common Stock upon
conversion and all instruments of transfer appropriately completed to permit
such issuance. Subject to the foregoing, the issuance of certificates for shares
of Class A Common Stock or Class B Common Stock upon conversion of shares of
Class B Series 1 Preferred Stock shall be made without charge to the holder of
such converted shares for any costs incurred by the Corporation in connection
with such conversion and related issuance of shares. As soon as practicable
after such surrender of such certificates, the Corporation shall issue and
deliver at such address as is specified by such holder the certificates for the
number of shares of Class A Common Stock or Class B Common Stock to which such
holder shall be entitled as aforesaid.
(d) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares, solely for the purpose of issue upon
the conversion of shares of Class B Series 1 Preferred Stock as herein provided,
such number of shares of Class A Common Stock and Class B Common Stock as shall
then be issuable upon the conversion of the shares of Class B Series 1 Preferred
Stock. All shares of Class A Common Stock and Class B Common Stock issuable upon
any conversion described herein shall, when issued, be duly and validly issued
and fully paid and non-assessable. The Corporation will take such action as may
be necessary to assure that all such shares of Class A Common Stock and Class B
Common Stock may be so issued without violation of any applicable requirements
of any national stock exchange upon which the shares of Common Stock of the
Corporation may be listed.
6. The holder of shares of Class B Series 1 Preferred Stock shall
not be entitled to any voting rights whatsoever, except as provided in
subparagraph 2 of this Paragraph C and except to the extent otherwise required
by applicable law.
7. In case at any time or from time to time the Corporation shall
take any action in respect of the Common Stock, then unless such action will not
have a materially adverse effect
31
upon the conversion rights of the holders of Class B Series 1 Preferred Stock,
the conversion rights set forth in subparagraph 5 of this Paragraph C shall, in
the good faith judgment of the Board of Directors of the Corporation, be
adjusted in such manner as shall be equitable in the circumstances.
8. In the event that the Corporation shall propose (a) to pay any stock
dividend to the holders of its Common Stock or to make any other distribution to
the holders of its Common Stock, or (b) to offer to the holders of its Common
Stock rights, warrants or options to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any class or any other securities,
rights or options, or (c) to effect any reclassification of its Common Stock
(other than a reclassification involving only the subdivision or combination of
outstanding shares of Common Stock), or (d) to effect any consolidation, merger
or sale, transfer or other disposition of all or substantially all of the assets
of the Corporation, or (e) to effect the liquidation, dissolution or winding-up
of the Corporation, or (f) to effect any transaction that would constitute or
effect a Change of Control, then, in each such case, the Corporation shall give
to the holders of the Class B Series 1 Preferred Stock a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution or offer of rights, warrants or options, or the date on
which such reclassification, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution, winding-up or Change of Control is to take place and
the date of participation therein by the holders of Common Stock, if any such
date is to be fixed. Such notice shall be so given at least 20 days prior to (i)
the record date for the purposes of any action covered by clause (a) or (b)
above or (ii) the earlier of the date of the taking of such proposed action or
the date of participation therein by the holders of Common Stock, for the
purposes of any action covered by clause (c), (d), (e) or (f) above.
D. COMMON STOCK
The Common Stock shall be divided into one million four hundred
thousand (1,400,000) shares of Class A Common Stock, two hundred thousand
(200,000) shares of Class B Common Stock, two hundred thousand (200,000) shares
of Class C Common Stock and two hundred thousand (200,000) shares of Class D
Common Stock. The powers, preferences and rights, and the qualifications,
limitations and restrictions, of the Class A Common Stock, Class B Common Stock,
Class C Common Stock and, Class D Common Stock are as follows:
1. Except to the extent expressly set forth in subparagraph 4 or
subparagraph 5 of this Paragraph D, none of the Class A Common Stock, the Class
B Common Stock, the Class C Common Stock or Class D Common Stock has any
preference over, or with respect to, any other such class of Common Stock, and
each share of Class A Common Stock, Class B Common Stock, Class C Common Stock
and, Class D Common Stock is vested with all of the same dividend and
liquidation rights.
2. After the requirements with respect to preferential dividends
on the Preferred Stock or the Class B Preferred Stock (fixed in accordance with
the provisions of Paragraphs A and B of this Article FOURTH), if any, shall have
been met and after the Corporation shall have complied with all the
requirements, if any, with respect to the setting aside of sums as sinking funds
or
32
repurchase, redemption or purchase accounts (fixed in accordance with the
provisions of Paragraphs A and B of this Article FOURTH), and subject further to
any other conditions which may be fixed in accordance with the provisions of
Paragraphs A and B of this Article FOURTH, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends as may be declared from
time to time by the Board of Directors out of funds legally available therefor.
When and as dividends are declared thereon, whether payable in cash, property or
securities of the Corporation, holders of Class A Common Stock, Class B Common
Stock, Class C Common Stock and, Class D Common Stock will be entitled to share
in such dividends ratably according to the number of shares of Class A Common
Stock, Class B Common Stock, Class C Common Stock and, Class D Common Stock held
by them. If dividends are declared which are payable in shares of Class A Common
Stock, Class B Common Stock, Class C Common Stock or, Class D Common Stock such
dividends will be declared payable at the same rate on each class of Common
Stock, and the dividends payable in shares of Class A Common Stock will be
payable to the holders of Class A Common Stock, the dividends payable in shares
of Class B Common Stock will be payable to the holders of Class B Common Stock,
the dividends payable in shares of Class C Common Stock will be payable to the
holders of Class C Common Stock and the dividends payable in shares of Class D
Common Stock will be payable in shares of Class D Common Stock. If a holder of
Class B, Class C or, Class D Common Stock, as the case may be, shall convert any
of its respective shares of Class B, Class C or, Class D Common Stock into
shares of Class A Common Stock pursuant to subparagraph 5 of this Paragraph D at
a time which falls after the record date, but before the payment date, of any
dividend declared by the Corporation, the holder shall be entitled to the
receipt of such declared dividend as though such conversion had not taken place.
3. After distribution in full of the preferential amount (fixed in
accordance with the provisions of Paragraphs A, B and C of this Article FOURTH),
if any, to be distributed to the holders of Preferred Stock and to the holders
of any series of Class B Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or
winding-up of the Corporation, the holders of Class A Common Stock, Class B
Common Stock, Class C Common Stock and, Class D Common Stock shall be entitled
to share, ratably according to the number of shares of Class A Common Stock,
Class B Common Stock, Class C Common Stock and/or, Class D Common Stock,
respectively, held by them, in all the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for distribution to
stockholders.
4. Except as may otherwise be required by law, each holder of Class
A Common Stock shall have one vote in respect of each share of Class A Common
Stock held by it on all matters voted upon by the stockholders, including the
election of directors. Except as may otherwise be required by law, each holder
of Class B Common Stock shall have one-tenth (.1) of a vote in respect of each
share of Class B Common Stock held by it on all matters voted upon by the
stockholders, including the election of directors, and shall vote together with
the Class A Common Stock as a single class; provided, however, that the approval
of the holders of a majority of the outstanding shares of Class B Common Stock,
voting as a separate class, shall be required for the amendment or modification
of any provisions of the Certificate of Incorporation of the Corporation in any
manner that would adversely affect the powers, preferences and rights of the
Class B Common Stock. The holders of Class C Common Stock and Class D Common
33
Stock shall not be entitled to any vote whatsoever, except to the extent
otherwise required by applicable law.
5. (a) Any share of Class B Common Stock may, at any time, be converted
into one fully paid and non-assessable share of Class A Common Stock (x) at the
option of any holder other than a Non-Converting Holder (as defined below) or
(y) at the option of any Non-Converting Holder concurrently with a sale or other
transfer of such shares of Class B Common Stock to any person, firm or
corporation other than a Non-Converting Holder, subject to the conditions
hereinafter set forth. For the purpose of this subparagraph 5, the term
"Non-Converting Holder" shall mean The Equitable Life Assurance Society of the
United States and any of its affiliates, or any other person, firm or
corporation that elects to be treated as a Non-Converting Holder by written
notice delivered to the Corporation on or before the date of acquisition of
shares of Class B Common Stock by such person, firm or corporation, which notice
refers to this sentence and states that such person, firm or corporation is
irrevocably electing to be treated as a Non-Converting Holder. Such written
notice shall be filed with the minutes of the proceedings of the Board of
Directors of the Corporation.
(b) Any share of Class C Common Stock may, following either(i) an
underwritten initial public offering of shares of Common Stock of the
Corporation or (ii) a refinancing of the Senior Secured Discount Notes, be
converted into one fully paid and non-assessable share of Class A Common Stock
(x) at the option of any holder or (y) at the option of the Corporation.
(c) Any share of Class D Common Stock may, following an underwritten
initial public offering of shares of Common Stock of the Corporation, be
converted into one fully paid and non-assessable share of Class A Common Stock
(i) at the option of any holder or (ii) at the option of the Corporation.
(d) Upon receipt by the Corporation from a record holder of shares
of Class B Common Stock, Class C Common Stock or Class D Common Stock, as the
case may be, of a written request to convert its shares of Class B or Class C or
Class D Common Stock, the shares of Class B or Class C or Class D Common Stock
requested to be converted shall be converted into shares of Class A Common
Stock, on the basis of one share of Class A Common Stock for each share of Class
B or Class C or Class D Common Stock, as the case may be. The conversion of
shares hereunder shall be effective, subject to the terms of this subparagraph
5, as of the close of business on the date of the receipt by the Corporation of
such request to convert, and the holder entitled to receive the shares issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares on such date. All shares of Class B or Class C or Class D Common
Stock converted into shares of Class A Common Stock as provided in this
subparagraph 5 may be reissued by the Corporation.
(e) Upon receipt by a record holder of shares of Class C or Class D
Common Stock from the Corporation of written notice of mandatory conversion of
its shares of Class C or Class D Common Stock, the shares of Class C or Class D
Common Stock, as the case may be, to be converted shall be converted into shares
of Class A Common Stock, on the basis of one share
34
of Class A Common Stock for each share of Class C or Class D Common Stock, as
the case may be. The conversion of shares hereunder shall be effective, subject
to the terms of this subparagraph 5, as of the close of business on the date of
the receipt by the record holder of Class C or Class D Common Stock, as the case
may be, of such notice from the Corporation of mandatory conversion, and the
holder entitled to receive the shares issuable upon such mandatory conversion
shall be treated for all purposes as the record holder of such shares on such
date. For purposes of this section (e) of this subparagraph 5, such notice shall
be deemed to be received by the record holder of Class C or Class D Common
Stock, as the case may be, ten (10) business days following mailing of the
notice by the Corporation. All shares of Class C or Class D Common Stock
converted into shares of Class A Common Stock as provided in this subparagraph 5
may be reissued by the Corporation.
(f) Any conversion of shares of Class B or Class C or Class D Common
Stock shall be exercised by the surrender by the holder of the certificate or
certificates representing the shares being converted accompanied, if the
conversion is at the option of the holder, by a written notice of conversion
signed by such holder or its duly authorized agent, at the principal office of
the Corporation (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holder or holders of Class
B or Class C or Class D Common Stock, as the case may be,) at any time during
its usual business hours, and stating the name or names in which such holder
wishes the certificate or certificates for Class A Common Stock to be received
upon conversion to be issued and the address to which such certificate or
certificates shall be delivered. In case such notice shall specify a name or
names other than that of the holder, such notice shall be accompanied by payment
of any and all transfer taxes payable upon the issuance of the Class A Common
Stock upon conversion and all instruments of transfer appropriately completed to
permit such issuance. Subject to the foregoing, the issuance of certificates for
shares of Class A Common Stock upon conversion of shares of Class B or Class C
or Class D Common Stock shall be made without charge to the holder of such
converted shares for any costs incurred by the Corporation in connection with
such conversion and related issuance of shares. As soon as practicable after
such surrender of such certificate or certificates, the Corporation shall issue
and deliver at such address as is specified by such holder a certificate or
certificates for the number of shares of Class A Common Stock to which such
holder shall be entitled as aforesaid.
(g) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares, solely for the purpose of issue upon
the conversion of shares of Class B Common Stock as herein provided, such number
of shares of Class A Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Class B Common Stock. The Corporation shall,
following an underwritten initial public offering of the shares of Common Stock
of the Corporation, reserve and keep available, out of its authorized and
unissued shares, solely for the purpose of issue upon the conversion of shares
of Class C and Class D Common Stock as herein provided, such number of shares of
Class A Common Stock as shall then be issuable upon conversion of all
outstanding shares of Class C and Class D Common Stock. All shares of Class A
Common Stock issuable upon any conversion described herein shall, when issued,
be duly and validly issued and fully paid and non-assessable. The Corporation
will take such action as may be necessary to assure that all such shares of
Class A Common Stock may be
35
so issued without violation of any applicable requirements of any national stock
exchange upon which the shares of Common Stock of the Corporation may be listed.
(h) If the Corporation in any manner subdivides or combines the
outstanding shares of any class of Common Stock, the outstanding shares of the
other classes will be proportionately subdivided or combined.
E. OTHER PROVISIONS
1. Except as may be otherwise provided in an agreement between the
Corporation and one or more holders of the shares of stock or of options,
warrants or other rights to purchase share of stock or other securities of the
Corporation, no holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any preemptive
right to purchase or subscribe for any unissued stock of any class or series or
any additional shares of any class or series to be issued by reason of any
increase of the authorized capital stock of the Corporation of any class or
series, or bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations or
associations, whether one or more of such holders or others, and upon such terms
as may be deemed advisable by the Board of Directors.
2. The relative powers, preferences and rights of each series of
Class B Preferred Stock in relation to the powers, preferences and rights of
each other series of Class B Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or resolutions
adopted pursuant to authority granted in Paragraph B of this Article FOURTH and
the consent, by class or series vote or otherwise, of the holders of Preferred
Stock or the holders of such of the series of Class B Preferred Stock as are
from time to time outstanding shall not be required for the issuance by the
Board of Directors of any other series of Class B Preferred Stock; provided,
however, that the approval of the holders of a majority of the shares of the
Preferred Stock, voting as a separate class, shall be required for the matters
described in the first sentence of subparagraph 8(b) of Paragraph A of this
Article FOURTH and the approval of the holders of a majority of the shares of
Class B Series 1 Preferred Stock, voting as a separate class, shall be required
for the matters described in subparagraph 2 of Paragraph C of this Article
FOURTH; and provided, however, that the Board of Directors may expressly provide
in the resolution or resolutions as to any series of Class B Preferred Stock
adopted pursuant to Paragraph B of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein fixed) of
the outstanding shares of such series voting thereon shall be required for the
issuance of any or all other series of Class B Preferred Stock.
3. Subject to the provisions of subparagraph 2 of this Paragraph E,
shares of any series of Class B Preferred Stock, in an aggregate amount not
exceeding the total number of shares of
36
Class B Preferred Stock authorized in this Amended and Restated Certificate of
Incorporation, may be issued from time to time as the Board of Directors of the
Corporation shall determine and on such terms and for such consideration as
shall be fixed by the Board of Directors, and shares of Preferred Stock, in an
aggregate amount not exceeding the total number of shares of Preferred Stock
authorized in this Amended and Restated Certificate of Incorporation, may be
issued from time to time pursuant to subparagraph 2(a) of Paragraph A of this
Article FOURTH.
4. Shares of Class A Common Stock, Class B Common Stock, Class C Common
Stock and, Class D Common Stock, in an aggregate amount not exceeding the
respective total number of shares of Class A Common Stock, Class B Common Stock,
Class C Common Stock and, Class D Common Stock, as applicable, authorized in
this Certificate of Amendment of the Certificate of Incorporation may be issued
from time to time as the Board of Directors of the Corporation shall determine
and on such terms and for such consideration as shall be fixed by the Board of
Directors.
5. The authorized amount of shares of Class B Preferred Stock and
Common Stock may, without a class or series vote, be increased or decreased (but
not below the number of such shares then outstanding) from time to time by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon."
SECOND: That such amendment has been duly adopted in
accordance with the provisions of Section 242 and 228 of the General Corporation
Law of the State of Delaware and that notice has been given in accordance with
Section 228.
37
IN WITNESS WHEREOF, we have signed this certificate as of this
12 day of January, 2001.
/s/ Hans H. Heinsen
----------------------------
Hans H. Heinsen, Senior Vice
President
Attest:
/s/ Harvey L. Friedman
- -------------------------
Harvey L. Friedman
Secretary
38
IN WITNESS WHEREOF, we have signed this certificate as of this
12 day of January, 2001.
----------------------------
Hans H. Heinsen, Senior Vice
President
Attest:
- -------------------------
Harvey L. Friedman
Secretary
39