SEC Info - Warburg Pincus Private Equity VIII, L.P., et al. - ‘SC 13D’ on 7/1/03 re: Wellman Inc

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Warburg Pincus Private Equity VIII, L.P., et al. – ‘SC 13D’ on 7/1/03 re: Wellman Inc – EX-3

On: Tuesday, 7/1/03, at 4:23pm ET · Accession #: 899140-3-529 · File #: 5-38617

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/01/03  Warburg Pincus Private E… VIII LP SC 13D                 4:171K Wellman Inc                       Willkie Fa… Gallagher/FA
          Warburg Pincus &Co.
          Warburg Pincus LLC

General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D      Initial Filing on Schedule SC 13D                     25     81K 
 2: EX-1        Joint Filing Agreement                                 2      9K 
 3: EX-3        Certificate of Amendment                              23     91K 
 4: EX-5        Common Stock Purchase Warrant                         15     51K

EX-3 — Certificate of Amendment
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Certificate of Incorporation
1	1st Page - Filing Submission
"	Certificate of Incorporation

EX-3 1st Page of 23 TOC ↑Top Previous Next ↓Bottom Just 1st
 
                                                                       Exhibit 3
                                                                       ---------

 STATE OF DELAWARE

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

 WELLMAN, INC.

Pursuant to Section 242 of the General Corporation Law of the State of
Delaware                                                                        

THE UNDERSIGNED, being a duly appointed officer of Wellman, Inc. (the 
"Corporation"), a corporation organized and existing under and by virtue of the 
Delaware General Corporation Law of the State of Delaware (the "DGCL"), for the 
purpose of amending the Corporation's Restated Certificate of Incorporation, as 
amended to the date hereof (the "Certificate of Incorporation") filed pursuant  
to Section 102 of the DGCL, hereby certifies, pursuant to Sections 242 and 103  
of the DGCL, as follows:                                                        

    FIRST: The amendments effected hereby have been duly adopted in accordance
with the provisions of Section 242 of the DGCL.                                 

 SECOND: That the first paragraph of Article Fourth of the Corporation's
Certificate of Incorporation is hereby amended in its entirety to read as       
follows:                                                                        

     Capital Stock. The total number of shares of stock which the Corporation is
authorized to issue is 117,200,000 as follows: 100,000,000 shares of Common     
Stock with a par value of $.001 per share, 5,500,000 shares of Class B Common   
Stock with a par value of $.001 per share, 5,000,000 shares of Series A         
Convertible Preferred Stock with a par value of $.001 per share and 6,700,000   
shares of Series B Convertible Preferred Stock with a par value of $.001 per    
share.                                                                          

     THIRD: That paragraph 1 of Section A of Article Fourth of the Corporation's
Certificate of Incorporation is hereby amended by adding the following to the   
end thereof:                                                                    

(c) Limitation. Except as otherwise required by law, holders of Common
Stock and Class B Common Stock, as such, shall not be entitled to vote on any   
amendment to this Certificate of Incorporation that relates solely to the terms 
of one or more outstanding series of Preferred Stock if (i) the holders of such 
affected series are entitled, either separately or together with the holders of 
one or more other such series, to vote thereon pursuant to this Certificate of  
Incorporation or pursuant to the DGCL and (ii) such amendment would not increase
the dividend rate of any series of Preferred Stock, increase the amounts        
otherwise payable to the holders of any series of Preferred Stock upon          
liquidation, dissolution, winding up,                                           

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redemption or any Change in Control (as defined in Section C of Article Fourth  
below), reduce the conversion price of any series of Preferred Stock, or        
increase the votes per share of any series of Preferred Stock.                  

FOURTH: That Article Fourth of the Corporation's Certificate of       
Incorporation is hereby amended by adding the following to the end thereof:     

    C. Series A Convertible Preferred Stock and Series B Convertible Preferred
Stock.                                                                          

 1. DESIGNATION AND AMOUNT. 5,000,000 shares of Preferred Stock shall be
designated "Series A Convertible Preferred Stock" (the "Series A Preferred      
Stock"), which shall constitute the entire number of shares of such series and  
6,700,000 shares of Preferred Stock shall be designated "Series B Convertible   
Preferred Stock" (the "Series B Preferred Stock"), which shall constitute the   
entire number of shares of such series.                                         

2. DIVIDENDS.                                                         

  (a) Participating Dividends. The holders of Series A Preferred Stock and
Series B Preferred Stock (collectively, the "Preferred Stock") shall be entitled
to receive, on a pari passu basis, out of funds legally available therefor,     
when, as and if dividends are declared on shares of Common Stock by the Board of
Directors of the Corporation (the "Board of Directors"), Participating Dividends
(as defined below) per share of Preferred Stock in such amount as the holders of
the Preferred Stock would have received had such holders converted the Preferred
Stock into Common Stock immediately prior to the record date for such dividends,
provided, however, that no such dividend shall be payable on the Preferred Stock
if the Consolidated Net Earnings (as defined below) for the period of           
twenty-four (24) consecutive quarters ending on the last day of the most recent 
quarter that ends at least forty-five (45) days prior to the payment date for   
such dividend is less than $160,000,000 (the "Participation Condition"). All    
dividends declared upon Preferred Stock shall be declared pro rata per share.   
For the purposes hereof, "Consolidated Net Earnings" shall mean, for any period,
the aggregate net earnings (or loss) of the Corporation for such period on a    
consolidated basis determined in accordance with U.S. generally accepted        
accounting principles (excluding (A) the cumulative effect of any changes in    
accounting principles implemented after September 30, 2002, (B) any beneficial  
conversion charges and (C) any dividends paid on preferred stock);              
"Extraordinary Dividends" shall mean all dividends paid to the holders of Common
Stock (other than Ordinary Dividends and dividends payable solely in shares of  
Common Stock), whether paid in cash or otherwise (including without limitation  
in connection with a spin-off or distribution), but excluding any dividends     
which result in an adjustment to the Conversion Price (as defined below)        
pursuant to Section 7; "Ordinary Dividend" shall mean, with respect to any      
quarter, ordinary cash dividends in an amount per share of Common Stock not     
exceeding the sum of (x) $0.09 and (y) the Dividend Increase Amount in respect  
of such quarter, or such greater amount as has been consented to in writing by  
the Majority Holders (as defined below); "Dividend Increase Amount" shall mean, 
with respect to any quarter, an amount equal to the product of (A) $0.01 and (B)
the number of complete years elapsed from January 1, 2003 to the date on which  
the dividend is paid; and "Participating Dividends" shall mean Extraordinary    
Dividends and Ordinary Dividends. In determining the amount of any Participating
Dividend to which the                                                           

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holders of Preferred Stock are entitled pursuant to this Section 2(a), the      
holders of Preferred Stock will be deemed entitled to convert the Preferred     
Stock into Common Stock in accordance with Section 5 hereof (determined without 
giving effect to the provisions of Sections 7(h) and (i) hereof unless the      
Conversion Price has been adjusted pursuant to such Sections) as if a Conversion
Event (as defined in Section 5(a)) had occurred.                                

(b) Preferred Dividends.                                              

    (i) After the fifth anniversary of the Initial Issuance Date (as
defined below), the holders of the respective Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors   
(subject to Section 2(b)(iii) below), out of funds legally available  
     therefor, on a pari passu basis, dividends per share at a rate of 8.75% per
 annum of the Liquidation Preference as of the Dividend Payment Date (as
 defined below), compounded quarterly to the extent not previously paid,
before any dividends shall be declared, set apart for or paid upon the
 Common Stock or any other stock ranking with respect to dividends or on
 Liquidation junior to the Preferred Stock (such stock being referred to
     hereinafter collectively as "Junior Stock") in any year, provided, however,
that if (A) the Ordinary Dividend for any quarter after such fifth    
anniversary is less than $0.045 per share of Common Stock or (B) the  
holders of the Preferred Stock are not entitled to receive Ordinary   
 Dividends because the Participation Condition has not been met (each, a
   "Shortfall Event"), such dividend rate shall increase to 10% per annum of
the Liquidation Preference as of the Dividend Payment Date, compounded
    quarterly to the extent not previously paid, beginning on the first day of
 the next succeeding quarter after the quarter with respect to which the
  Shortfall Event relates and continuing each quarter thereafter until the
 first day of the quarter succeeding the quarter as of which there is no
Shortfall Event. Dividends pursuant to this Section 2(b)(i) shall be  
payable quarterly, in arrears on each April 5, July 5, October 5 and  
 January 5 (each, a "Dividend Payment Date") or, if any Dividend Payment
 Date is not a Business Day, then the Dividend Payment Date shall be the
next succeeding Business Day. The amount of dividends payable on the  
Preferred Stock for any period shorter than a full quarter shall be   
  computed on the basis of a 360-day year of twelve 30-day months. As used
   herein, the term "Business Day" shall mean any day other than a Saturday,
 Sunday or other day on which banks in the State of New York are legally
authorized to close.                                                  

      (ii) Dividends on the Preferred Stock provided for in this Section
2(b) shall be cumulative and shall continue to accrue on a daily basis
   whether or not declared and whether or not in any fiscal year there shall
be funds legally available therefor, so that if in any fiscal year or 
     years, dividends in whole or in part are not paid upon the Preferred Stock,
unpaid dividends shall accumulate as against the holders of the Junior
Stock.                                                                

       (iii) Dividends on the Preferred Stock provided for in this Section
     2(b) shall be payable in cash or continue to accrue, at the election of the
   holders of a majority of the outstanding shares of Preferred Stock voting
  together as a single class (the "Majority Holders"), such election to be
     made in writing to the Corporation at least ten (10) Business Days prior to
such Dividend Payment Date. If no such election is made, the dividends
provided for in this Section 2(b) will be payable in cash.            

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    (iv) For so long as the Preferred Stock remains outstanding, the
   Corporation shall not, without the prior consent of the Majority Holders,
   pay any dividend upon the Junior Stock, whether in cash or other property
(other than solely in shares of Junior Stock) unless all dividends    
     theretofore required to have been paid to the holders of Preferred Stock in
respect of all prior dividend periods shall have been paid.           

(c) In the event (each a "Default") that the Corporation fails for any
reason to pay any Participating Dividend required to be paid to the holders of  
the Preferred Stock pursuant to Section 2(a) (other than because the            
Participation Condition has not been met), or any dividend payable pursuant to  
Section 2(b) for two consecutive quarters, then, in any such case, upon written 
notice from any holder of Preferred Stock to the Corporation (a "Default        
Notice") given at any time following the Default and the failure of the         
Corporation to cure such Default in full within thirty (30) days of the receipt 
of such Default Notice from any holder of Preferred Stock, any holder of        
Preferred Stock may request the Remarketing (as defined below) of all of the    
shares of Preferred Stock held by such holder in accordance with Section 8      
hereof. Failure by any holder of Preferred Stock to issue a Default Notice      
promptly upon the occurrence of a given Default shall not be deemed to be a     
waiver of such rights, such rights being exercisable at any time that a Default 
shall have occurred and be continuing.                                          

     (d) For the purposes hereof "Initial Issuance Date" shall mean the date the
first share of Series A Preferred Stock or Series B Preferred Stock is issued by
the Corporation.                                                                

(e) The dividend rates referred to in this Section 2 are subject to   
adjustment as provided in Section 8 hereof.                                     

3. LIQUIDATION, BANKRUPTCY, DISSOLUTION OR WINDING UP.                

    (a) In the event of any Liquidation (as defined below) of the Corporation,
the holders of shares of Preferred Stock then outstanding shall be entitled to  
be paid out of the assets of the Corporation available for distribution to its  
stockholders, on a pari passu basis, after and subject to the payment in full of
all amounts required to be distributed to the holders of any other preferred    
stock of the Corporation ranking on Liquidation prior and in preference to the  
Preferred Stock (such preferred stock being referred to hereinafter as "Senior  
Preferred Stock") upon such Liquidation, but before any payment shall be made to
the holders of any Junior Stock, an amount per share in cash equal to the       
greater of (x) the Liquidation Preference (as defined below) and (y) the amount 
such holder would receive if the Preferred Stock were converted into Common     
Stock on the date of, or the record date for, such Liquidation; provided,       
however, that in the event of a Liquidation resulting from the liquidation,     
dissolution or winding up of the Corporation occurring after the earlier of (i) 
the tenth anniversary of the Initial Issuance Date and (ii) the completion of   
any Remarketing, holders of Preferred Stock shall only be entitled to receive an
amount per share in cash equal to the Liquidation Preference.                   

    (b) If upon any Liquidation of the Corporation the remaining assets of the
Corporation available for the distribution to its stockholders after payment in 
full of amounts required to be paid or distributed to holders of Senior         
Preferred Stock shall be insufficient to pay the holders of shares of Preferred 
Stock the full amount to which they shall be entitled, the                      

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holders of shares of Preferred Stock, and any class or series of stock ranking  
on Liquidation on a parity with the Preferred Stock, shall share ratably in any 
distribution of the remaining assets and funds of the Corporation in proportion 
to the respective amounts which would otherwise be payable in respect of the    
shares held by them upon such distribution if all amounts payable on or with    
respect to said shares were paid in full. After the payment of all preferential 
amounts required to be paid to the holders of Senior Preferred Stock, the       
holders of Preferred Stock and any other class or series of preferred stock upon
Liquidation of the Corporation, the holders of shares of Junior Stock then      
outstanding shall be entitled to receive the remaining assets and funds of the  
Corporation available for distribution to its stockholders.                     

(c) Definitions.                                                      

    (i) "Liquidation Preference" shall mean (x) the Stated Value (as
   defined below) per share at the Initial Issuance Date, which amount shall
   thereafter accrete at the annual rate of 7.25%, compounded quarterly from
the Initial Issuance Date through the fifth anniversary of the Initial
   Issuance Date, provided, however, that if a Shortfall Event occurs during
   such period, such annual accretion rate shall increase to 8.5% per annum,
 compounded quarterly, beginning on the first day of the next succeeding
     quarter after the quarter with respect to which the Shortfall Event relates
   and continuing each quarter thereafter until the first day of the quarter
     succeeding the quarter as of which there is no Shortfall Event plus (y) any
     accrued but unpaid dividends thereon (excluding any Participating Dividends
declared but not previously paid to the holders of the Common Stock). 
     Liquidation Preference shall be determined, (i) in the case of any dividend
     payment, as of the record date for holders of Common Stock for any dividend
pursuant to Section 2(a) and as of the Dividend Payment Date for any  
  dividend pursuant to Section 2(b), (ii) in the case of a Liquidation, on
    the date of such Liquidation, (iii) in the case of a Change in Control (as
     defined below), on the date of such Change in Control, (iv) upon conversion
  of the Preferred Stock, on the date of such conversion, and (v) upon any
redemption of the Preferred Stock in accordance with Section 9, on the
applicable Redemption Date (as herein defined). Notwithstanding the   
 foregoing, upon any Liquidation or Change in Control consummated within
    five (5) years after the Initial Issuance Date, the Liquidation Preference
     shall be calculated for all purposes hereof assuming (x) that any Preferred
     Stock outstanding at the date of such consummation has been outstanding for
     five (5) years after the date of the Initial Issuance Date and (y) assuming
  that, from such date and continuing thereafter for the remainder of such
five year period, the annual accretion rate is 8.5%.                  

         (ii) "Stated Value" shall mean with respect to the Series A Preferred
    Stock, $11.25 per share, and with respect to the Series B Preferred Stock,
$11.25 per share.                                                     

      (iii) "Liquidation" shall mean (x) any liquidation, dissolution or
 winding up of the Corporation, (y) the filing by the Corporation of any
  bankruptcy or insolvency petition under federal or state law, or (z) the
commencement of any involuntary bankruptcy proceeding against the     
Corporation which remains unstayed for a period of sixty (60) days.   

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The merger or consolidation of the Corporation with or into another person or   
entity, the merger or consolidation of any other person or entity with or into  
the Corporation, or the sale, conveyance, mortgage, pledge or lease of all or   
substantially all of the assets of the Corporation to a person or entity shall  
not be deemed to be a Liquidation for purposes of this Section 3.               

4. VOTING.                                                            

    (a) Each issued and outstanding share of Preferred Stock shall be entitled
to the number of votes equal to the number of shares of Common Stock into which 
each such share of Preferred Stock is then convertible (assuming for the        
purposes of this Section 4(a) that a Conversion Event has occurred), at each    
meeting of stockholders of the Corporation (or pursuant to any action by written
consent) with respect to any and all matters presented to the stockholders of   
the Corporation for their action or consideration, other than, prior to the     
fifth anniversary of the Initial Issuance Date, the election of directors by the
holders of Common Stock, provided, however, that at any time the voting power of
all shares of Common Stock and Preferred Stock beneficially owned (within the   
meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934) by  
the Warburg Parties (as defined below) (the "Warburg Voting Power") would       
otherwise exceed 49.9% of the total voting power of the Common Stock and the    
Preferred Stock (determined without giving effect to the provisions of Section  
7(h) and (i) unless the Conversion Price has been actually adjusted pursuant to 
such sections) as of the record date for any action to be taken by stockholders 
of the Corporation, then, during any such period, the voting power of each      
issued and outstanding share of Preferred Stock held by the Warburg Parties     
shall be reduced proportionately to the extent necessary to result in the       
Warburg Voting Power equaling 49.9% of the total voting power of the Common     
Stock and Preferred Stock(determined without giving effect to the provisions of 
Section 7(h) and (i) unless the Conversion Price has been adjusted pursuant to  
such sections). Except as provided by law, by the provisions of this Section 4  
or by the provisions establishing any other class or series of preferred stock, 
holders of Preferred Stock shall vote together with the holders of Common Stock 
as a single class. For the purposes hereof, the "Warburg Parties" shall mean,   
collectively, Warburg Pincus Private Equity VIII, L.P ("Warburg Pincus"),       
Warburg Pincus & Co. ("WPC") and any other investment funds for which WPC acts  
as general partner and Warburg Pincus LLC ("WPLLC").                            

(b)                                                                   

     (i) For so long as Warburg Pincus or its Qualified Transferee (as
 defined below) owns at least one third of the shares of Preferred Stock
 issued to Warburg Pincus pursuant to the Securities Purchase Agreement,
    dated as of February 12, 2003 (as the same may be modified or amended, the
"Purchase Agreement"), between Warburg Pincus and the Corporation, the
Majority Holders shall have the exclusive right to appoint two (2)    
directors to the Board of Directors.                                  

          (ii) In the event that Warburg Pincus or its Qualified Transferee owns
less than one third of the shares of Preferred Stock issued to Warburg
     Pincus pursuant to the Purchase Agreement but the shares of Preferred Stock
   held by Warburg Pincus or its Qualified Transferee represent greater than
     5% of the outstanding Common Stock (calculated on a fully diluted basis and
 assuming the occurrence of a Conversion Event and the conversion of the
Preferred Stock, determined without regard to the provisions of       

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  Sections 7(h) and (i) unless the Conversion Price (as defined below) has
 been actually adjusted pursuant to such sections), the Majority Holders
    shall have the exclusive right to appoint one (1) director to the Board of
Directors.                                                            

        (iii) Each Preferred Stock Director (as defined below) shall be duly
appointed in accordance with the Corporation's by-laws, Certificate of
   Incorporation and the General Corporation Law of Delaware. Each Preferred
   Stock Director so elected shall serve for a term of one year or until his
 successor is duly elected and qualified. For so long as such membership
does not conflict with any applicable law or regulation or listing    
     requirement of the New York Stock Exchange, Inc. (the "NYSE"), at least one
such Preferred Stock Director shall serve as a member of each of the  
  principal committees of the Board of Directors, except for any committee
     formed to consider a transaction between the Corporation and Warburg Pincus
    or, if applicable, its Qualified Transferee, or any affiliate thereof. Any
     vacancy in the position of a Preferred Stock Director may be filled only by
   the Majority Holders. Each Preferred Stock Director may be removed at any
   time, with or without cause, by the Majority Holders. Any vacancy created
by such removal may be filled by the Majority Holders.                

        (iv) "Qualified Transferee" shall mean one Person (or group (as such
   term is used in Section 13(d) of the Securities Exchange Act of 1934)) to
    which Warburg Pincus transfers, sells or assigns (A) at least one third of
the shares of Preferred Stock issued to Warburg Pincus pursuant to the
Purchase Agreement with respect to Section 4(b)(i) or (B) shares of   
     Preferred Stock issued to Warburg Pincus pursuant to the Purchase Agreement
     representing greater than 5% of the outstanding Common Stock (calculated on
     a fully diluted basis and assuming the occurrence of a Conversion Event (as
defined below) and the conversion of the Preferred Stock, determined  
without regard to the provisions of Sections 7(h) and (i) unless the  
     Conversion Price has been actually adjusted pursuant to such sections) with
    respect to Section 4(b)(ii). Notwithstanding the foregoing, such Person or
group shall only be deemed a Qualified Transferee after the fifth     
anniversary of the Initial Issuance Date.                             

    (v) "Preferred Stock Director" shall mean any director appointed
pursuant to Section 4(b)(i) or (ii) above.                            

         (vi) Prior to the fifth anniversary of the Initial Issuance Date, the
    holders of the Common Stock, voting separately as a class, shall elect all
   of the directors of the Corporation other than those the Majority Holders
are entitled to designate pursuant to Sections 4(b)(i) and (ii) above.

    (c) In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the     
Majority Holders:                                                               

         (i) change or amend the Corporation's Certificate of Incorporation or
Bylaws in a manner which adversely affect the rights, preferences or  
privileges of the holders of the Preferred Stock, including any such  
changes to the terms of the Preferred Stock made in connection with a 
merger or consolidation of the Corporation;                           

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       (ii) offer, sell or issue any equity or equity-linked securities of
the Corporation (including, without limitation, warrants issued in    
  connection with debt or stock appreciation or similar rights) which have
   preference or priority over, or which are on a parity with, the Preferred
     Stock (including the issuance of additional shares of Preferred Stock after
    the Initial Issuance Date) with respect to dividend or Liquidation rights;

   (iii) repurchase or redeem or permit any of its subsidiaries to
    repurchase or redeem, directly or indirectly, any equity securities of the
    Corporation (including, without limitation, securities convertible into or
     exchangeable for equity securities or stock appreciation or similar rights)
 for an aggregate consideration in excess of $10 million in any 12-month
   period, other than in connection with (A) repurchases of restricted stock
   from an employee or consultant following such person's termination, in an
   aggregate amount not to exceed $2 million in any 12-month period, (B) the
   repurchase of Junior Stock to the extent that after giving effect to such
     repurchase the ratio of the Corporation's Indebtedness to Annualized EBITDA
     (in each case as defined in Exhibit A to the Purchase Agreement and in each
   case as of the date of such repurchase) is not greater than 2.5 to 1, and
   (C) repurchases made with the proceeds from a contemporaneous exercise of
     the warrants issued pursuant to the Purchase Agreement (the "Warrants"), or
     a contemporaneous issuance of Junior Stock after the Initial Issuance Date;
or                                                                    

       (iv) declare or pay any Extraordinary Dividend on the Common Stock.

5. OPTIONAL CONVERSION.                                               

(a) Each share of Preferred Stock may be converted at any time, at the
option of the holder thereof, into the number of fully-paid and nonassessable   
shares of Common Stock obtained by dividing the Liquidation Preference then in  
effect by the Conversion Price of such series then in effect, provided, however,
that the Preferred Stock may not be converted to Common Stock unless (i) a      
Conversion Event has occurred, (ii) the Average Price on the conversion date is 
at least $23.00 or (iii) the Board of Directors shall have consented to the     
conversion of such shares of Preferred Stock (whether limited to a conversion   
during a specified period or at any time), and provided further that on any     
redemption of any Preferred Stock, the right of conversion shall terminate at   
the close of business on the full Business Day next preceding the date fixed for
such redemption. The number of shares of Common Stock into which a share of each
series of the Preferred Stock is convertible is referred to herein as the       
"Conversion Rate" for such series. Each of the applicable Conversion Prices and 
Conversion Rates, from time to time in effect, is subject to adjustment as      
hereinafter provided. The initial conversion price of the Series A Preferred    
Stock is equal to $11.25 (the "Series A Conversion Price") and the initial      
conversion price of the Series B Preferred Stock is equal to $11.25 (the "Series
B Conversion Price" and each such price applicable to each such series as the   
same may be adjusted in accordance with Section 7 below, the "Conversion Price" 
for such series). When used herein the following terms shall have the meaning   
indicated:                                                                      

(i) "Average Price" shall mean, with respect to any day, the
     volume-weighted average price of the Common Stock on the NYSE for the sixty
(60) consecutive trading days prior to such day (or, if not listed or 
admitted to trading on any national securities                        

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   exchange, the average of the reported bid and asked prices during such 60
trading day period in the over-the-counter market as furnished by the 
  National Quotation Bureau, Inc., or, if such firm is not then engaged in
  the business of reporting such prices, as furnished by any member of the
   National Association of Securities Dealers, Inc. (the "NASD") selected by
    the Corporation or, if the shares of Common Stock are not publicly traded,
the Private Value).                                                   

    (ii) "Base Date" shall mean (a) a date, selected by the Majority
     Holders in their sole discretion, that is a trading day and is no more than
   twenty (20) trading days prior to the Adjustment Date (as defined below),
     provided that the Majority Holders shall have given the Corporation written
notice of the date they selected as the Base Date at least one (1) day
prior to the date so selected or (b) if no date is so selected by the 
Majority Holders prior to the Adjustment Date, the Adjustment Date.   

   (iii) "Cash Earnings per Share" shall mean, for any period, the
 quotient of (x) the sum of (A) the net earnings of the Corporation from
    continuing operations and (B) sixty-five percent (65%) of any depreciation
and amortization of the Corporation, each as publicly reported on the 
   Corporation's consolidated statement of cash flows prepared in accordance
  with U.S. generally accepted accounting principles ("GAAP"), and (y) the
     diluted weighted average common shares outstanding, as such share amount is
publicly reported on the Corporation's consolidated statements of     
operations prepared in accordance with GAAP.                          

(iv) "Conversion Event" shall mean the first to occur of the
    following: (i) following the Adjustment Date (as defined in Section 7(h)),
     the first date upon which the highest price of the Common Stock on the NYSE
(or, if not listed or admitted to trading on any national securities  
exchange, the average of the reported bid and asked prices during such
  trading day in the over-the-counter market, as furnished by the National
Quotation Bureau, Inc., or, if such firm is not then engaged in the   
   business of reporting such prices, as furnished by any member of the NASD
selected by the Corporation or, if the shares of Common Stock are not 
     publicly traded, the Private Value) is at least 110% of the lowest price on
    the NYSE on the Base Date (or, if not listed or admitted to trading on any
  national securities exchange, the average of the lowest reported bid and
    asked prices on the Base Date in the over-the-counter market, as furnished
by the National Quotation Bureau, Inc., or, if such firm is not then  
engaged in the business of reporting such prices, as furnished by any 
    member of the NASD selected by the Corporation or, if the shares of Common
Stock are not publicly traded, the Private Value); or (ii) the date on
    which the Corporation publicly reports or announces that its Cash Earnings
 per Share for the four calendar quarters ending prior to such report or
     announcement are or will be less than $1.50; or (iii) the date on which the
     Corporation publicly reports or announces that it has taken or will take an
extraordinary charge or charges in any calendar year that have or are 
   expected to result in cash payments of more than $50 million; or (iv) the
 date on which a majority of the directors then in office (excluding the
     Preferred Stock Directors) shall have adopted a resolution declaring that a
Conversion Event shall have occurred; or (v) the date on which the    
   Corporation enters into an agreement providing for a Change in Control or
   the date on which a Change in Control occurs; or (vi) the date on which a
Redemption Notice (as defined below) has been given.                  

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      (v) "Private Value" shall mean the fair market value of a share of
Common Stock determined jointly by the Corporation and the Majority   
Holders; provided, however, that if such parties are unable to reach  
  agreement within a reasonable period of time, the Private Value shall be
     determined in good faith by an independent investment banking firm selected
    jointly by the Corporation and such Majority Holders or, if that selection
  cannot be made within 20 days, by an independent investment banking firm
 selected by the American Arbitration Association in accordance with its
rules.                                                                

 (b) The Corporation shall not issue fractions of shares of Common Stock
upon any conversion of Preferred Stock or scrip in lieu thereof. If any fraction
of a share of Common Stock would, except for the provisions of this Section     
5(b), be issuable upon conversion of any Preferred Stock, the Corporation shall 
in lieu thereof pay to the person entitled thereto an amount in cash equal to   
such fraction, calculated to the nearest one-hundredth (1/100) of a share,      
multiplied by the Market Price (as defined below) for the Common Stock. Whenever
the Conversion Rate and Conversion Price of either series of Preferred Stock    
shall be adjusted as provided in Section 7 hereof, the Corporation shall        
forthwith file at each office designated for the conversion of Preferred Stock, 
a statement, signed by the Chairman of the Board, the President, any Vice       
President or Treasurer of the Corporation, showing in reasonable detail the     
facts requiring such adjustment and the Conversion Rate for such series that    
will be effective after such adjustment. The Corporation shall also cause a     
notice setting forth any such adjustments to be sent by mail, first class,      
postage prepaid, to each record holder of Preferred Stock at his or its address 
appearing on the stock register.                                                

     (c) In order to exercise the conversion privilege, the holder of any shares
of Preferred Stock to be converted shall surrender his or its certificate or    
certificates therefor to the principal office of the transfer agent for the     
Preferred Stock (or if no transfer agent be at the time appointed, then the     
Corporation at its principal office), and shall give written notice to the      
Corporation at such office that the holder elects to convert the Preferred Stock
represented by such certificates, or any number thereof. Such notice shall also 
state the name or names (with address) in which the certificate or certificates 
for shares of Common Stock which shall be issuable on such conversion shall be  
issued, subject to any restrictions on transfer relating to shares of the       
Preferred Stock or shares of Common Stock upon conversion thereof. If so        
required by the Corporation, certificates surrendered for conversion shall be   
endorsed or accompanied by a written instrument or instruments of transfer, in  
form satisfactory to the Corporation, duly authorized in writing. The date of   
receipt by the transfer agent (or by the Corporation if the Corporation serves  
as its own transfer agent) of the certificates and notice shall be the          
conversion date. As soon as practicable after receipt of such notice and the    
surrender of the certificate or certificates for Preferred Stock as aforesaid,  
the Corporation shall cause to be issued and delivered at such office to such   
holder, or on his or its written order, a certificate or certificates for the   
number of full shares of Common Stock issuable on such conversion in accordance 
with the provisions hereof, cash as provided in Section 5(b) hereof in respect  
of any fraction of a share of Common Stock otherwise issuable upon such         
conversion and, if less than all shares of Preferred Stock represented by the   
certificate or certificates so surrendered are being converted, a residual      
certificate or certificates representing the shares of Preferred Stock not      
converted.                                                                      

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  (d) The Corporation shall at all times when the Preferred Stock shall be
outstanding reserve and keep available out of its authorized but unissued stock,
for the purposes of effecting the conversion of the Preferred Stock, such number
of its duly authorized shares of Common Stock as shall from time to time be     
sufficient to effect the conversion of all outstanding Preferred Stock. Before  
taking any action that would cause an adjustment reducing the Conversion Price  
of either series of Preferred Stock below the then par value of the shares of   
Common Stock issuable upon conversion of such Preferred Stock, the Corporation  
will take any corporate action that may, in the opinion of its counsel, be      
necessary in order that the Corporation may validly and legally issue fully-paid
and nonassessable shares of such Common Stock at such adjusted conversion price.

 (e) All shares of Preferred Stock which shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding and   
all rights with respect to the Preferred Stock so converted will terminate,     
except only the rights of the holders thereof, upon surrender of their          
certificate or certificates therefor, to receive certificates for the number of 
shares of Common Stock into which such share of Preferred Stock has been        
converted. Any shares of Preferred Stock so converted shall, automatically and  
without further action, be retired and canceled and shall not be reissued, and  
the Corporation may from time to time take such appropriate action as may be    
necessary to reduce the authorized shares of each series of Preferred Stock     
accordingly.                                                                    

6. MANDATORY CONVERSION.                                              

  (a) If the closing price of the Common Stock on the NYSE exceeds 125% of
the applicable Conversion Price of a series of Preferred Stock for any thirty   
(30) consecutive trading days (any such period, a "Measurement Period") at any  
time after the fifth anniversary of the Initial Issuance Date (or, if not listed
or admitted to trading on any national securities exchange, the average of the  
reported bid and asked prices during such Measurement Period in the             
over-the-counter market as furnished by the National Quotation Bureau, Inc., or,
if such firm is not then engaged in the business of reporting such prices, as   
furnished by any member of the NASD selected by the Corporation or, if the      
shares of Common Stock are not publicly traded, the Private Value), the         
Corporation shall have the right to require the holders of such series of       
Preferred Stock to convert such shares into the number of shares of Common Stock
obtained by dividing the Liquidation Preference then in effect by the Conversion
Price of such series then in effect.                                            

    (b) All holders of record of shares of the series of Preferred Stock to be
converted will be given at least ten (10) Business Days' prior written notice by
the Corporation of the date fixed and the place designated for such mandatory   
conversion of all of such shares of Preferred Stock pursuant to this Section 6; 
provided that such written notice must be provided to such holders not later    
than ten (10) Business Days after the end of the Measurement Period selected by 
the Corporation that is the basis for requiring the conversion of such series of
Preferred Stock to Common Stock. Such written notice will be sent by mail, first
class, postage prepaid, to each record holder of shares of such series of       
Preferred Stock at such holder's address appearing on the stock register. On or 
before the date fixed for conversion each holder of shares of such series of    
Preferred Stock shall surrender his or its certificate or certificates for all  
such shares to the Corporation at the place designated in such notice, and shall
thereafter receive                                                              

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certificates for the number of shares of Common Stock to which such holder is   
entitled pursuant to this Section 6.                                            

(c) If so required by the Corporation, certificates surrendered for   
conversion shall be endorsed or accompanied by written instrument or instruments
of transfer, in form satisfactory to the Corporation, duly executed by the      
registered holder or by his attorneys duly authorized in writing. All shares of 
Preferred Stock the certificates for which are required to be surrendered for   
conversion in accordance with the provisions hereof shall, from and after the   
date such certificates are so required to be surrendered, be deemed to have been
converted into the number of shares of Common Stock into which such shares of   
Preferred Stock are so convertible, notwithstanding the failure of the holder or
holders thereof to surrender such certificates on or prior to such date, and    
such certificates shall thereafter represent for all purposes the shares of     
Common Stock into which such shares of Preferred Stock have been converted.     

    (d) As soon as practicable after the date of such mandatory conversion and
the surrender of the certificate or certificates for such series of Preferred   
Stock as aforesaid, the Corporation shall cause to be issued and delivered to   
such holder, or on his or its written order, a certificate or certificates for  
the number of full shares of Common Stock issuable on such conversion in        
accordance with the provisions hereof and cash as provided in Section 5(b)      
hereof in respect of any fraction of a share of Common Stock otherwise issuable 
upon such conversion.                                                           

7. CONVERSION PRICE ADJUSTMENTS.                                      

(a) In order to protect against dilution of the rights granted to the 
Preferred Stock hereunder, the applicable Conversion Price of the Preferred     
Stock shall be subject to adjustment from time to time in accordance with this  
Section 7. Except as provided in Sections 7(c), 7(e) and 7(f) hereof, if and    
whenever on or after the Initial Issuance Date, the Corporation shall issue or  
sell, or shall in accordance with paragraphs (i) to (ix) of Section 7(b),       
inclusive, be deemed to have issued or sold, any shares of its Common Stock for 
a consideration per share less than the Market Price immediately prior to such  
issuance or sale or if such issue or sale is pursuant to any contract or        
agreement (excluding Options (as defined below)), the Market Price as of the    
date the Corporation became legally bound to issue or sell, then, forthwith upon
such issue or sale (the "Triggering Transaction"), the Conversion Price of such 
series in effect immediately prior to the time of such Triggering Transaction   
shall (subject to paragraphs (i) to (ix) of Section 7(b)), be reduced to the    
Conversion Price (calculated to the nearest tenth of a cent) determined by      
multiplying the Conversion Price in effect immediately prior to the time of such
issue or sale by a fraction, the numerator of which shall be the sum of (x) the 
Number of Shares Outstanding immediately prior to such Triggering Transaction   
multiplied by the Market Price immediately prior to such Triggering Transaction 
plus (y) the consideration received by the Corporation upon such Triggering     
Transaction, and the denominator of which shall be the product of (x) the Number
of Shares Outstanding immediately prior to such Triggering Transaction plus the 
number of shares issued or deemed to be issued pursuant to Section 7(b) in such 
Triggering Transaction, multiplied by (y) the Market Price immediately prior to 
such Triggering Transaction.                                                    

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For purposes of Section 5(b) and this Section 7, (A) the term "Market 
Price" shall mean, with respect to any day, the volume weighted average price of
a share of Common Stock on the trading day preceding such day on the principal  
national securities exchange on which the shares of Common Stock or securities  
are listed or admitted to trading or, if not listed or admitted to trading on   
any national securities exchange, the average of the reported bid and asked     
prices on such trading day in the over-the-counter market as furnished by the   
National Quotation Bureau, Inc., or, if such firm is not then engaged in the    
business of reporting such prices, as furnished by any member of the NASD       
selected by the Corporation or, if the shares of Common Stock or securities are 
not publicly traded, the Private Value and (B) the term "Number of Shares       
Outstanding" means, at any given time, the number of shares of Common Stock     
actually outstanding at such time, plus, after the occurrence of a Conversion   
Event, the number of shares of Common Stock issuable upon conversion of the     
Preferred Stock (without regard to the provisions of Sections 7(h) and (i)      
unless the Conversion Price has been actually adjusted pursuant to such         
sections, but assuming a Conversion Event had occurred), plus the number of     
shares of Common Stock issuable upon the conversion or exercise in full of all  
Convertible Securities and Options (including Convertible Securities and Options
outstanding on the date hereof) whether or not the Convertible Securities or    
Options are convertible into or exercisable for Common Stock at such time, but  
shall not include (a) any shares of Common Stock or Convertible Securities in   
the treasury of the Corporation or held for the account of the Corporation or   
any of its subsidiaries, and (b) any shares of Common Stock issued or reserved  
for issuance under stock option, restricted stock, retirement or executive      
ownership plans to the extent that such shares or Options to purchase such      
shares are issued or granted after the Initial Issuance Date.                   

(b) For purposes of determining the adjusted Conversion Price for the 
Series A Preferred Stock and/or the Series B Preferred Stock under Section 7(a),
the following paragraphs (i) to (ix), inclusive, shall be applicable:           

       (i) In case the Corporation, at any time after the Initial Issuance
 Date, shall in any manner grant (whether directly or by assumption in a
 merger or otherwise) any rights to subscribe for or to purchase, or any
    options for the purchase of, Common Stock or any stock or other securities
   convertible into or exchangeable for Common Stock (such rights or options
     being herein called "Options" and such convertible or exchangeable stock or
  securities being herein called "Convertible Securities"), whether or not
such Options or the right to convert or exchange any such Convertible 
   Securities are immediately exercisable, and the price per share for which
the Common Stock is issuable upon exercise, conversion or exchange    
(determined by dividing (x) the total amount, if any, received or     
 receivable by the Corporation as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
    payable to the Corporation upon the exercise of all such Options, plus, in
the case of such Options which relate to Convertible Securities, the  
    minimum aggregate amount of additional consideration, if any, payable upon
     the issue or sale of such Convertible Securities and upon the conversion or
     exchange thereof, by (y) the total maximum number of shares of Common Stock
    issuable upon the exercise of such Options (including, without limitation,
by means of accretion or accrual of interest or dividends) or the     
   conversion or exchange of such Convertible Securities) shall be less than
the Market Price immediately prior to the time of the granting of such
Option, then the total maximum amount of Common                       

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    Stock issuable upon the exercise of such Options or in the case of Options
for Convertible Securities, upon the conversion or exchange of such   
   Convertible Securities shall (as of the date of granting of such Options)
be deemed to be outstanding and to have been issued and sold by the   
     Corporation for such price per share. No adjustment of the Conversion Price
   for such series of Preferred Stock shall be made upon the actual issue of
such shares of Common Stock or such Convertible Securities upon the   
   exercise of such Options, except as otherwise provided in paragraph (iii)
below.                                                                

        (ii) In case the Corporation, at any time after the Initial Issuance
 Date, shall in any manner issue (whether directly or by assumption in a
     merger or otherwise) or sell any Convertible Securities, whether or not the
   rights to exchange or convert thereunder are immediately exercisable, and
     the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (x) the total amount received or  
 receivable by the Corporation as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of     
additional consideration, if any, payable to the Corporation upon the 
   conversion or exchange thereof, by (y) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such  
 Convertible Securities) shall be less than the Market Price immediately
   prior to the time of such issue or sale, then the total maximum number of
 shares of Common Stock issuable upon conversion or exchange of all such
   Convertible Securities shall (as of the date of the issue or sale of such
     Convertible Securities) be deemed to be outstanding and to have been issued
    and sold by the Corporation for such price per share. No adjustment of the
    Conversion Price for such series of Preferred Stock shall be made upon the
   actual issue of such Common Stock upon exercise of the rights to exchange
    or convert under such Convertible Securities, except as otherwise provided
in paragraph (iii) below.                                             

          (iii) If the additional consideration payable upon the exercise of any
     Options referred to in paragraph (i), the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities 
     referred to in paragraphs (i) or (ii), or the rate at which any Convertible
  Securities referred to in paragraphs (i) or (ii) are convertible into or
     exchangeable for Common Stock shall change at any time (other than under or
by reason of provisions providing for a weighted average anti-dilution
   adjustment, whether based on issuances at below the applicable conversion
 or exercise price or below market value), the Conversion Price for such
series of Preferred Stock in effect at the time of such change shall  
  forthwith be readjusted to the Conversion Price which would have been in
    effect for such series of Preferred Stock at such time had such Options or
Convertible Securities still outstanding provided for such changed    
 additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold.                               

        (iv) On the expiration of any Option or the termination of any right
     to convert or exchange any Convertible Securities as to which an adjustment
    to the Conversion Price was made pursuant to clause (i) or (ii) above, the
Conversion Price for such series of Preferred Stock then in effect    
 hereunder shall forthwith be increased to the Conversion Price for such
  series of Preferred Stock which would have been in effect at the time of

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   such expiration or termination had such Option or Convertible Securities,
to the extent outstanding immediately prior to such expiration or     
termination, never been issued.                                       

        (v) In case any Options shall be issued in connection with the issue
 or sale of other securities of the Corporation, together comprising one
 integral transaction in which no specific consideration is allocated to
   such Options by the parties thereto, such Options shall be deemed to have
    been issued for the consideration determined in good faith by the Board of
Directors to be attributable to such Options.                         

   (vi) In case any shares of Common Stock, Options or Convertible
  Securities shall be issued or sold or deemed to have been issued or sold
 for cash, the consideration received therefor shall be deemed to be the
   amount received by the Corporation therefor. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a
   consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be the fair value of such      
 consideration as determined in good faith by the Board of Directors. In
     case any shares of Common Stock, Options or Convertible Securities shall be
issued in connection with any merger in which the Corporation is the  
    surviving corporation (including the assumption or exchange of Options and
 Convertible Securities of the non-surviving corporation), the amount of
  consideration received by the Corporation therefor shall be deemed to be
the fair value of such portion of the net assets and business of the  
    non-surviving corporation as shall be attributed by the Board of Directors
   in good faith to such Common Stock, Options or Convertible Securities, as
the case may be. The consideration received by the Corporation in     
  connection with the issuance and sale or deemed issuance and sale of any
 Common Stock, Options or Convertible Securities shall be computed based
   upon the total consideration received or determined to be received by the
     Corporation in accordance with the terms hereof before giving effect to any
   customary underwriting discounts or commissions, placement agency fees or
     other customary transaction expenses typically borne by an issuer but after
giving effect to any other discounts or fees.                         

       (vii) The number of shares of Common Stock outstanding at any given
  time shall not include shares owned or held by or for the account of the
  Corporation, and the disposition of any shares so owned or held shall be
     considered an issue or sale of Common Stock for the purpose of this Section
7(b).                                                                 

       (viii) In case the Corporation shall declare a dividend or make any
    other distribution upon the stock of the Corporation payable in Options or
     Convertible Securities, then, unless the holders of Preferred Stock receive
their pro rata share of such dividend or distribution, any Options or 
 Convertible Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or sold  
without consideration.                                                

         (ix) For purposes of this Section 7(b), in case the Corporation shall
take a record of the holders of its Common Stock for the purpose of   
   entitling them (x) to receive a dividend or other distribution payable in
     Common Stock, Options or in Convertible Securities, or (y) to subscribe for
or purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the

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shares of Common Stock deemed to have been issued or sold upon the    
  declaration of such dividend or the making of such other distribution or
    the date of the granting of such right or subscription or purchase, as the
case may be.                                                          

     (c) In case the Corporation shall at any time (A) subdivide the outstanding
Common Stock or (B) issue a dividend on its outstanding Common Stock payable in 
shares of Common Stock, the applicable Conversion Rate of the Preferred Stock in
effect immediately prior to such dividend or subdivision shall be               
proportionately increased by the same ratio as the subdivision or dividend (with
appropriate adjustments to the Conversion Price for such series of Preferred    
Stock in effect immediately prior to such subdivision or dividend). In case the 
Corporation shall at any time combine its outstanding Common Stock, the         
applicable Conversion Rate of the Preferred Stock in effect immediately prior to
such combination shall be proportionately decreased by the same ratio as the    
combination (with appropriate adjustments to the Conversion Price for such      
series of Preferred Stock in effect immediately prior to such combination).     

(d)                                                                   

        (i) If any Change in Control (as defined below) shall be effected in
     such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or other property with respect to or in exchange for 
  Common Stock, then, as a condition of the consummation of such Change in
     Control, lawful and adequate provision shall be made whereby the holders of
   the shares of Preferred Stock that thereafter remain outstanding, if any,
shall have the right to acquire and receive upon conversion of the    
     Preferred Stock, which right shall be prior to the rights of the holders of
Junior Stock (but after and subject to the rights of holders of Senior
   Preferred Stock, if any), such shares of stock, securities, cash or other
property issuable or payable (as part of any reorganization,          
reclassification, consolidation, merger or sale in connection with the
Change in Control) with respect to or in exchange for such number of  
outstanding shares of Common Stock as would have been received upon   
   conversion of the Preferred Stock at the Conversion Price for such series
    of Preferred Stock then in effect (the "Change in Control Consideration").

          (ii) The Corporation will not effect any such Change in Control unless
   prior to the consummation thereof the successor entity (if other than the
 Corporation) resulting from such Change in Control or, in the case of a
     sale of the Corporation's assets which constitutes a Change in Control, the
    entity purchasing such assets shall assume by written instrument mailed or
     delivered to the holders of the Preferred Stock at the last address of each
  such holder appearing on the books of the Corporation, the obligation to
deliver to each such holder such Change in Control Consideration such 
holder may be entitled to purchase in accordance with the foregoing   
  provisions, unless such holder has elected to continue to hold Preferred
Stock in the surviving entity pursuant to Section 10(b) hereof.       

For purposes hereof, the term "Change in Control" shall mean (i) a    
consolidation, merger, reorganization or other form of acquisition of or by the 
Corporation in which the Corporation's stockholders immediately prior to the    
transaction retain less than 50% of the voting power of or economic interest in 
the surviving or resulting entity (or its parent), (ii) a sale of the           

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Corporation's assets in excess of a majority of the Corporation's assets (valued
at fair market value as determined in good faith by the Board of Directors), or 
(iii) the individuals who were directors of the Corporation as of the Initial   
Issuance Date (together with any Preferred Stock Director and any new directors 
whose election or appointment was approved by the directors then in office who  
were either directors as of the Initial Issuance Date or whose election or      
appointment was previously so approved) ceasing to constitute a majority of the 
Board of Directors or the board of directors of any surviving or resulting      
entity (or its parent).                                                         

(e) The provisions of this Section 7 shall not apply to the following 
shares of Common Stock issued, issuable or deemed outstanding under paragraphs  
(i) to (ix) of Section 7(b) inclusive: (A) shares of Common Stock issuable upon 
conversion of the shares of Preferred Stock, (B) the Warrants (as defined in the
Purchase Agreement) and shares of Common Stock issued or issuable upon exercise 
thereof, (C) warrants issued to lenders of non-convertible debt and the Common  
Stock issuable upon exercise thereof; provided such warrants do not exceed, in  
the aggregate, 5% of the issued and outstanding shares of Common Stock and the  
terms thereof have been approved by the Board of Directors, (D) shares of Common
Stock issued in consideration for bona fide acquisitions, mergers, joint        
ventures or similar transactions provided that the terms thereof are approved by
the Board of Directors, (E) shares of Common Stock issued or issuable pursuant  
to any stock option, restricted stock, retirement, stock purchase or similar    
plan or arrangement for the benefit of the employees, directors or consultants  
of the Corporation or its subsidiaries, duly adopted by the Board of Directors  
and (F) shares of Common Stock issued in a bona fide underwritten public        
offering underwritten by a nationally recognized investment bank pursuant to an 
effective registration under the Securities Act of 1933, as amended, or any     
similar federal statute then in force.                                          

  (f) If at any time or from time to time on or after the Initial Issuance
Date, the Corporation shall grant, issue or sell any Options, Convertible       
Securities or rights to purchase property (the "Purchase Rights") pro rata to   
the record holders of any class of Common Stock and such grants, issuances or   
sales do not result in an adjustment of the Conversion Price of the Preferred   
Stock under Section 7(a) hereof, then each holder of such series of Preferred   
Stock that did not have an adjustment made to its Conversion Price shall be     
entitled to acquire (within thirty (30) days after the later to occur of the    
initial exercise date of such Purchase Rights or receipt by such holder of the  
notice concerning Purchase Rights to which such holder shall be entitled under  
Section 7(b)) upon the terms applicable to such Purchase Rights either:         

  (i) the aggregate Purchase Rights which such holder could have
 acquired if it had held the number of shares of Common Stock acquirable
   (assuming a Conversion Event had occurred) upon conversion of such series
   of Preferred Stock immediately before the grant, issuance or sale of such
   Purchase Rights; provided that if any Purchase Rights were distributed to
    holders of Common Stock without the payment of additional consideration by
 such holders, corresponding Purchase Rights shall be distributed to the
  exercising holders of such series of Preferred Stock as soon as possible
     after such exercise and it shall not be necessary for the exercising holder
    of such series of Preferred Stock specifically to request delivery of such
rights; or                                                            

         (ii) in the event that any such Purchase Rights shall have expired or
     shall expire prior to the end of said thirty (30) day period, the number of
shares of Common                                                      

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    Stock or the amount of property which such holder could have acquired upon
     such exercise at the time or times at which the Corporation granted, issued
or sold such expired Purchase Rights.                                 

(g) If any event occurs as to which, in the opinion of the Board of   
Directors, the provisions of this Section 7 are not strictly applicable or if   
strictly applicable would not fairly protect the rights of the holders of the   
Series A Preferred Stock and/or the holders of Series B Preferred Stock in      
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make an adjustment in the application of such          
provisions, in accordance with such essential intent and principles, so as to   
protect such rights as aforesaid, but in no event shall any such adjustment have
the effect of increasing the Conversion Price of such series of Preferred Stock 
as otherwise determined pursuant to any of the provisions of this Section 7,    
except in the case of a combination of shares of a type contemplated in Section 
7(d) hereof and then in no event to an amount larger than the Conversion Price  
as adjusted pursuant to Section 7(d) hereof.                                    

   (h) The Conversion Price will be reduced on the fourth anniversary of the
Initial Issuance Date (the "Adjustment Date"), as set forth in this paragraph   
(h), if the Average Price on the Adjustment Date is less than $23.00 per share  
(subject to appropriate adjustments for stock splits, subdivisions, stock       
dividends, combinations, reclassifications or similar events) (the "Target      
Price"). In the event an adjustment to the Conversion Price is required to be   
made pursuant to this Section 7(h), it shall be made as follows:                

        (i) the Series A Conversion Price will be reduced by an amount equal
    to the excess of the Target Price over the Average Price on the Adjustment
 Date; provided, however, that in no event shall the Series A Conversion
Price be reduced by more than a total of $4.50 per share pursuant to  
   Sections 7(h)(i) and Section 7(i) (subject to appropriate adjustments for
stock splits, subdivisions, stock dividends, combinations,            
reclassifications or similar events); and                             

         (ii) the Series B Conversion Price will be reduced by an amount equal
    to the excess of the Target Price over the Average Price on the Adjustment
 Date; provided, however, that in no event shall the Series B Conversion
Price be reduced by more than a total of $4.50 per share pursuant to  
    Sections 7(h)(ii) and Section 7(i) (subject to appropriate adjustments for
stock splits, subdivisions, stock dividends, combinations,            
reclassifications or similar events).                                 

(i) The Conversion Price will be reduced on the first (but not any    
subsequent) occurrence of a Change in Control consummated prior to the          
Adjustment Date (the date of such consummation, the "Change in Control Date"),  
as set forth in this paragraph (i), if the Average Price (calculated for all    
purposes of this Section 7(i) on the basis of thirty (30) trading days rather   
than sixty (60) trading days) on the Change in Control Date is less than (i)    
$14.00 per share in the case of a Change in Control consummated on or prior to  
the first anniversary of the Initial Issuance Date, (ii) $17.00 per share in the
case of a Change in Control consummated after the first anniversary of the      
Initial Issuance Date but on or prior to the second anniversary thereof, (iii)  
$20.00 per share in the case of a Change of Control consummated after the second
anniversary of the Initial Issuance Date but on or prior to the third           
anniversary thereof, or (iv)                                                    

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$23.00 per share in the case of a Change in Control consummated after the third 
anniversary of the Initial Issuance Date but on or prior to the fourth          
anniversary thereof (each such price, a "Change in Control Target Price"). In   
the event a reduction in the Conversion Price is required pursuant to this      
Section 7(i), it shall be made as follows:                                      

        (i) The Series A Conversion Price will be reduced by an amount equal
 to the excess of the applicable Change in Control Target Price over the
    Average Price on the Change in Control Date; provided, however, that in no
   event shall the Series A Conversion Price be reduced by more than a total
of $4.50 per share pursuant to Sections 7(h) and (i)(i) (subject to   
  appropriate adjustments for stock splits, subdivisions, stock dividends,
combinations, reclassifications or similar events); and               

         (ii) The Series B Conversion Price will be reduced by an amount equal
 to the excess of the applicable Change in Control Target Price over the
    Average Price on the Change in Control Date; provided, however, that in no
   event shall the Series B Conversion Price be reduced by more than a total
of $4.50 per share pursuant to Sections 7(h) and (i)(ii) (subject to  
  appropriate adjustments for stock splits, subdivisions, stock dividends,
combinations, reclassifications or similar events).                   

(j) For the ninety (90) day period prior to the Adjustment Date or the
Change in Control Date, as the case may be, the Corporation shall not, directly 
or indirectly, repurchase or acquire more than 200,000 shares of Common Stock or
such greater number of shares as agreed to in writing by the Majority Holders,  
whether by means of open market repurchases, tender offer or otherwise, nor     
shall it announce any intention to do so.                                       

(k) In the event that:                                                

         (i) the Corporation shall declare any Extraordinary Dividend upon its
Common Stock, or                                                      

     (ii) the Corporation shall offer for subscription pro rata to the
    holders of its Common Stock any additional shares of stock of any class or
other rights, or                                                      

(iii) there shall be a Change in Control;                   

then, in connection with such event, the Corporation shall give to the
holders of Preferred Stock:                                                     

      (A) at least twenty (20) days' prior written notice of the date on
       which the books of the Corporation shall close or a record shall be
       taken for such dividend, distribution or subscription rights or for
        determining rights to vote in respect of any such Change in Control;
and                                                         

       (B) in the case of any Change in Control to the extent possible, at
          least twenty (20) days' prior written notice of the date when the same
shall take place.                                           

     Such notice in accordance with the foregoing clause (A) shall also specify,
in the case of any such dividend, distribution or subscription rights, the date 
on which the holders of                                                         

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Common Stock shall be entitled thereto, and such notice in accordance with the  
foregoing clause (B) shall also specify the date, if any, on which the holders  
of Common Stock shall be entitled to exchange their Common Stock for securities 
or other property deliverable upon Change in Control. Each such written notice  
shall be given by first class mail, postage prepaid, addressed to the holder at 
the address of the holder as shown on the books of the Corporation.             

8. REMARKETING.                                                       

    (a) Upon the delivery of a Default Notice or upon the written request (the
"Reset Notice") of the Majority Holders given not earlier than thirty (30) days 
prior to the seventh anniversary of the Initial Issuance Date, the Corporation  
shall, subject to its redemption rights set forth in Section 9 hereof, adjust   
the dividend rate on the Preferred Stock to the rate necessary in the opinion of
a nationally recognized investment banking firm (selected by the Corporation)   
(the "Remarketing Agent") to allow the Remarketing Agent to resell all of the   
Preferred Stock on behalf of the holders thereof (such resale, the              
"Remarketing") at a price of not less than 100% (after deduction of fees for the
Remarketing Agent) of the then applicable Liquidation Preference (such adjusted 
dividend rate, the "Adjusted Rate"). Notwithstanding the foregoing, within five 
(5) Business Days after the Remarketing Agent has established the Adjusted Rate,
the Corporation may elect to redeem all of the Preferred Stock in accordance    
with Section 9(a)(ii) hereof. In the event the Corporation does not elect to    
redeem the Preferred Stock in accordance with Section 9, the Corporation shall  
give written notice to the holders of Preferred Stock of the Adjusted Rate.     

 (b) In the event the Corporation does not elect to redeem the Preferred
Stock in accordance with Section 9:                                             

          (i) notwithstanding any provision in this Certificate of Incorporation
     to the contrary, the Adjusted Rate shall be effective as of the date of the
Default Notice or Reset Notice, as applicable;                        

        (ii) the Corporation shall cause the Remarketing Agent to effect the
  Remarketing within ninety (90) days of the date of the Default Notice or
Reset Notice, as applicable; and                                      

         (iii) the Corporation shall use its reasonable best efforts (together
    with the Remarketing Agent) to facilitate a Remarketing in accordance with
the terms hereof.                                                     

(c) Any Remarketing shall be on such terms that (i) provide for the   
immediate disbursement of proceeds from the Remarketing in an amount of not less
than 100% (after deduction of fees for the Remarketing Agent) of the then       
applicable Liquidation Preference to the holders of the relevant series of      
Preferred Stock in cash, without any escrows, holdbacks or similar arrangements 
and (ii) do not contain any representations (other than with respect to         
ownership of the shares of Preferred Stock), indemnities, liabilities or other  
provisions imposing any obligation on the holders of the relevant series of     
Preferred Stock, other than the obligation to tender the certificates           
representing the relevant shares of Preferred Stock to the Remarketing Agent.   
Each such certificate shall bear a legend to the effect that each share of      
Preferred Stock shall be subject to the remarketing provisions contained in this
Section 8.                                                                      

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9. REDEMPTION.                                                        

    (a) As promptly as possible after, but in no event later than (i) five (5)
Business Days after the Corporation gives a Change in Control Redemption Notice 
(as defined below) stating that it will effect the redemption, (ii) one hundred 
(100) days after the Reset Notice if the Corporation elects to redeem the       
Preferred Stock in lieu of a Remarketing pursuant to Section 8 or (iii) thirty  
(30) days after the receipt of a Default Notice (if the Corporation elects to   
redeem in lieu of a Remarketing pursuant to Section 8), the Corporation shall   
redeem the relevant Preferred Stock (to the extent that such redemption shall   
not violate any applicable provisions of the laws of the State of Delaware) at a
price in cash equal to the Liquidation Preference as of the date of such        
redemption (such applicable amount is hereinafter referred to as a "Redemption  
Price" and any such date of redemption is hereafter referred to as a "Redemption
Date"). If the Corporation is unable at any Redemption Date to redeem any shares
of Preferred Stock then to be redeemed because such redemption would violate the
applicable laws of the State of Delaware, dividends shall continue to accrue at 
the applicable rate and the Corporation shall redeem such shares as soon        
thereafter as redemption would not violate such laws.                           

    (b) Prior to each Redemption Date, written notice shall be mailed, postage
prepaid, to each holder of record of Preferred Stock to be redeemed, at his or  
its post office address last shown on the records of the Corporation, notifying 
such holder of the number of shares so to be redeemed, specifying the Redemption
Date and the date on which such holder's conversion rights (pursuant to Section 
5 hereof) as to such shares terminate and calling upon such holder to surrender 
to the Corporation, in the manner and at the place designated, his or its       
certificate or certificates representing the shares to be redeemed (such notice 
is hereinafter referred to as the "Redemption Notice").                         

    (c) On or prior to each Redemption Date, each holder of Preferred Stock to
be redeemed shall surrender his or its certificate or certificates representing 
such shares to the Corporation, in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the Redemption Price of such      
shares shall be payable to the order of the person whose name appears on such   
certificate or certificates as the owner thereof and each surrendered           
certificate shall be canceled. In the event less than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued         
representing the unredeemed shares. From and after the Redemption Date, unless  
there shall have been a default in payment of the Redemption Price, all rights  
of the holders of the Preferred Stock designated for redemption in the          
Redemption Notice as holders of Preferred Stock (except the right to receive the
Redemption Price without interest upon surrender of their certificate or        
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be    
outstanding for any purpose whatsoever.                                         

   (d) Except as provided in Section 9(a) hereof, the Corporation shall have
no right to redeem the shares of Preferred Stock. Any shares of Preferred Stock 
so redeemed shall, automatically and without any further action, be permanently 
retired, shall no longer be deemed outstanding and shall not under any          
circumstances be reissued, and the Corporation may from time to time take such  
appropriate corporate action as may be necessary to reduce the authorized       
Preferred Stock accordingly. Nothing herein contained shall prevent or restrict 
the purchase by the Corporation, from time to time either at public or private  
sale, of the whole or any part of the                                           

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Preferred Stock at such price or prices as the Corporation may determine,       
subject to the provisions of applicable law.                                    

  (e) Each holder of Preferred Stock acknowledges that the Corporation may
from time to time be a party to credit, loan and similar agreements with        
institutional lenders that restrict the Corporation's ability to redeem or      
repurchase shares of Preferred Stock (each a "Credit Agreement"). Prior to      
taking any action that could require the Corporation to redeem or repurchase any
shares of Preferred Stock in circumstances where such repurchase or redemption  
would violate any Credit Agreement, the Corporation will either obtain any      
waivers necessary to redeem or repurchase such shares or pay or arrange to pay  
in full all amounts due under any Credit Agreement that would otherwise restrict
or prohibit such redemption or repurchase.                                      

10. CHANGE IN CONTROL; PROCEDURES UPON A CHANGE IN CONTROL.           

  Upon a Change in Control, holders of the outstanding shares of Preferred
Stock may, at their election:                                                   

  (a) convert the Preferred Stock into Common Stock in accordance with the
provisions of Sections 5 and 7 hereof and receive the Change in Control         
Consideration upon conversion;                                                  

(b) in lieu of receiving any liquidation preference in respect of such
Preferred Stock upon such Change in Control, continue to hold the Preferred     
Stock in any surviving entity resulting from such Change in Control or, in the  
case of a sale of the Corporation's assets which results in a Change in Control,
the entity purchasing such assets, provided, however, that the provisions hereof
(including but not limited to the provisions of Section 7, but excluding        
Sections 7(h) and (i) following the date of such Change in Control) shall       
continue to remain in effect with respect to such Preferred Stock; or           

  (c) within sixty (60) days after the Change in Control Date, request, in
lieu of receiving the Change in Control Consideration, that the Corporation     
redeem, out of funds lawfully available for the redemption of shares, the       
Preferred Stock (the "Redemption Request") for an amount in cash equal to the   
applicable Liquidation Preference, plus any declared and unpaid Participating   
Dividends as of the Redemption Date; provided, that the Corporation may, in lieu
of making the redemption so requested, effect a Remarketing pursuant to Section 
8. Promptly but in any event within five (5) days after receipt of the          
Redemption Request, the Corporation shall provide a written notice to all       
holders of the Preferred Stock setting forth whether it will redeem the         
Preferred Stock or effect a Remarketing (the "Change in Control Redemption      
Notice"). In the event the Corporation elects to redeem the Preferred Stock, the
Preferred Stock shall be redeemed in accordance with Section 9. In the event the
Corporation elects to effect a Remarketing, the Remarketing shall be effected in
accordance with Section 8 (as long as such Remarketing is effected within ninety
(90) days after making a Redemption Request), and all references to Reset Notice
shall be deemed to be changed to Redemption Request.                            

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11. ADJUSTMENTS. In the event of any stock splits, subdivisions, stock
dividends, combinations, reclassifications or similar events with respect to the
Preferred Stock or the Common Stock, there shall be an appropriate adjustment to
any dollar amount referred to herein other than the Conversion Price, which     
shall be subject to adjustment as provided in Section 7.                        

     IN WITNESS WHEREOF, the undersigned has made and signed this Certificate of
Amendment this 26th day of June, 2003 and affirms the statements contained      
herein as true under penalties of perjury.                                      

             WELLMAN, INC.

                      By: /s/ Thomas M. Duff
                                      ------------------------------
                     Name:  Thomas M. Duff
                                   Title: Chairman and Chief Executive
                     Officer

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘SC 13D’ Filing	Date	First	Last	Other Filings

Filed on:	7/1/03
	2/12/03	6		SC 13G/A
	1/1/03	2
	9/30/02	2		10-Q, SC 13D/A
				List all Filings

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Filing Submission 0000899140-03-000529 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Warburg Pincus Private Equity VIII, L.P., et al. – ‘SC 13D’ on 7/1/03 re: Wellman Inc – EX-3

On: Tuesday, 7/1/03, at 4:23pm ET · Accession #: 899140-3-529 · File #: 5-38617

Previous ‘SC 13D’: ‘SC 13D/A’ on 3/7/03 · Next: ‘SC 13D/A’ on 7/24/03 · Latest: ‘SC 13D/A’ on 9/6/19

General Statement of Beneficial Ownership — Schedule 13DFiling Table of Contents

EX-3 — Certificate of AmendmentExhibit Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents

EX-3 — Certificate of Amendment
Exhibit Table of Contents