EXHIBIT E
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK
EVEREST & JENNINGS INTERNATIONAL LTD.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
EVEREST & JENNINGS INTERNATIONAL LTD., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in Article IV-A of its Cert ificate
of Incorporation, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors has adopted the following
resolution creating a series of its Preferred Stock, $0.01 par value, designated as Series C
Convertible Preferred Stock:
RESOLVED, that a series of the class of authorized Preferred Stock, $0.01 par value, of the
Corporation hereby be created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as follows:
SECTION 1. Designation and Amount.
The shares of such series shall be designated as "Series C Convertible Preferred Stock" (the
"Series C Convertible Preferred Stock"), and the number of shares constituting such series shall
be 20,000,000.
SECTION 2. Dividends and Distribution
2.2 Payment. Dividends accrued and cumulated from and after the Dividend Accrual Date shal l
be payable on the first business day of each April commencing with the first April following the
end of the fiscal year in which the second of the Consecutive Profitable Quarters occurs (each a
"Dividend Payment Date"). Dividends shall be payable in cash or, if the Board of Directors so
elects (a "Dividend In-Kind Election"), in shares of "Common Stock" (as defined in Section 12
below) of the Corporation at a price per share equal to the "Market Price" (as defined i n Section
12 below) per share in effect as of the relevant Dividend Payment Date. If the Board of Directors
wishes to make a Dividend In-Kind Election, it shall do so by delivering written notice of such
intention to each holder of record of Series C Convertible Preferred Stock at least 10 days prior
to the applicable Dividend Payment Date, and the applicable dividend shall be paid to each
holder in Common Stock of the Corporation.
2.3 Priority; Pro-Rata Payment. Except as hereinafter provided, no dividend shall be declare d or
paid or set apart for payment for any period on (a) the Series Class B Convertible Preferred
Stock or the Common Stock of the Corporation or to any other stock of the Corporation ranking,
as to dividends junior to the Series C Convertible Preferred Stock or (b) any other series of
Preferred Stock of the corporation ranking, as to dividends, on a parity with the Series C
Convertible Preferred Stock unless full cumulative dividends have been or contemporaneously
are declared and paid on the Series C Convertible Preferred Stock and any other class or series of
stock of the Corporation on a parity with the Series C Convertible Preferred Stock as to
dividends. Dividends declared on the shares of Series C Convertible Preferred Stock and on any
other series of Preferred Stock of the Corporation on a parity as to dividends with the Series C
Convertible Preferred Stock shall be declared pro-rata so that the amount of dividends dec lared
per share on Series C Convertible Preferred Stock and such other series of Preferred Stock shall
in all cases bear to each other the same ratio that the accrued dividends per share on the shares of
Series C Convertible Preferred Stock and such other series of Preferred Stock bear to each other.
2.4 Record Date. The Board of Directors may fix a record date for the determination of holders
of Series C Convertible Preferred Stock entitled to receive payment of a dividend declared
thereon, which record date shall be no more than 60 days prior to the date fixed for the pa yment
thereof.
SECTION 3. Voting Rights.
The holders of Series C Convertible Preferred Stock shall have the following voting rights: (a) except as provided in Section 3(c) below, each share of Series C Convertible
Preferred Stock shall entitle the holder thereof to one vote on all matters submitt ed to a
vote of the Corporation's holders of Common Stock;
(b) except as otherwise provided herein or by law, the holders of Series C
Convertible Preferred Stock shall vote together with the holders of Common Stock of the
Corporation (and the holders of any Series of the Preferred Stock of the Corporation
designated as having the right to vote together with the Common Stock) as one class on
all matters submitted to a vote of the Corporation's holders of Common Stock;
(c) every holder of shares of Series C Convertible Preferred Stock complying with
the provisions of this Section 3 and entitled to vote at any election of directors ma y
cumulate such holder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which the holde r's
shares are normally entitled (except for this Section 3(c)), or distribute the holder's votes
on the same principle among as many candidates as the holder thinks fit. No such holder
shall be entitled to cumulate votes (i .e .), to cast for any candidate a number of votes
greater than the number of votes which such holder normally is entitled to cast) unle ss
such candidate's or candidates' name(s) have been placed in nomination prior to t he
voting and the holder has given notice at the meeting prior to the voting of the holder's
intention to cumulate the holder's votes. If any one holder of shares of any voting class of
stock of the Corporation has given such notice, all holders of Series C Convertible
Preferred Stock may cumulate their votes for candidates in nomination. In accordance
with Article IV, in any election of directors, the candidates receiving the highest num ber
of affirmative votes of the shares entitled to be voted for them up to the number of
directors to be elected by such shares are elected; votes against the direct ors and votes
withheld shall have no legal effect.
SECTION 4. Certain Restrictions.Whenever annual dividends payable on the Series C Convertible Preferred Stock as provided in
Section 2 cannot be paid due to legal impediments or otherwise, thereafter and until all accrued
dividends on shares of the Series C Convertible Preferred Stock outstanding shall have been pa id
in full or declared and set apart for payment, the Corporation shall not (a) pay dividends on,
make any other distributions on, or redeem or purchase or otherwise acquire for consideration
any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to
the Series C Convertible Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in exchange for, or out of the net
cash proceeds from the sale of, other shares of any such junior stock, (b) pay dividends on or
make any other distributions on any stock ranking on a parity (as to dividends and upon
liquidation, dissolution or winding up) with the Series C Convertible Preferred Stock, except
dividends paid ratably on the Series C Convertible Preferred Stock and all such parity stoc k on
which dividends are payable or in an-ears in proportion to the total amounts to which t he holders
of all such shares are then entitled, (c) redeem or purchase or otherwise acquire for consi deration
any stock ranking on a parity (as to dividends and upon liquidation, dissolution or winding up)
with the Series C Convertible Preferred Stock, provided that the Corporation may at any time
(subject to the limitations set forth in Section 5 below) redeem, purchase or otherwise acquire
shams of any such parity stock in exchange for shares of any stock of the Corporation ranking
junior to the Series C Convertible Preferred Stock, or (d) purchase or otherwise acquire for
consideration any shares of the Series C Convertible Preferred Stock or any shams of stock
ranking on a parity with the Series C Convertible Preferred Stock except (subject to t he
limitations set forth in Section 5 below) in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and classes, shall det ermine in
good faith will result in fair and equitable treatment among the respective seri es or classes. The
Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire
for consideration any shares of stock of the Corporation unless the Corporation could purchase
such shares at such nine and in such manner.
SECTION 5. Reacquired Shares.
Any shares of the Series C Convertible Preferred Stock redeemed or purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and canceled prom ptly
after the acquisition thereof. All such shares shall, upon cancellation, become authoriz ed but
unissued shares of Preferred Stock, without designation as to series, and may be reissued as part
of any series of Preferred Stock created by resolution or resolutions of the Board of Directors.
SECTION 6. Liquidation, Dissolution or Winding Up.
Upon the dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Series C Convertible Preferred Stock shall be entitled to receive
out of the assets of the Corporation available for distribution to stockholders, before any payme nt
or distribution shall be made on the Common Stock or on any other class of stock ranking junior
to the Series C Convertible Preferred Stock, upon liquidation, the amount of $ 1. 00 per share,
plus an amount equal to all dividends (whether or not earned or declared) on such shares,
accrued and unpaid thereon to the date of final distribution. If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation, or the proceeds thereof,
distributable among the holders of the shares of Series C Convertible Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid and liquidating payments on any
other stock of the Corporation ranking, as to liquidation, on a parity with the Series C
Convertible Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among
the holders of Series C Convertible Preferred Stock and any such other stock of the Corporation
ratably in accordance with the respective amounts which would be payable upon liquidati on,
dissolution or winding up on such shares of Series C Convertible Preferred Stock and any such
other stock of the Corporation if all amounts payable thereon were paid in full. Subject t o the
rights of the holders of shares of any series or class or classes of stock of the Corporation ranking
on a parity with or prior to the Series C Convertible Preferred Stock upon liquidation, dissolut ion
or winding up, upon any dissolution, liquidation or winding up of the Corporation, after payment
shall have been made in full to the Series C Convertible Preferred Stock as provided i n this
Section , any other series or class or classes of stock of, or other securities having an equity
interest in, the Corporation ranking junior to the Series C Convertible Preferred Stock upon
liquidation, dissolution or winding up, shall, subject to the respective terms and provisions, if
any, applying thereto, be entitled to receive any and all assets remaining to be paid or distributed,
and the Series C Convertible Preferred Stock shall not be entitled to share therei n. For purposes
of this Section , a consolidation or merger of the Corporation with one or more corporations shall
not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary.
Notwithstanding any other provision of this Section 6 to the contrary, the Series B
Convertible Preferred Stock and Series A Convertible Preferred Stock of the Corporation shall
be on a parity for liquidation, winding up or dissolution purposes with the Series C Convertible
Preferred Stock.
SECTION 7. Conversion.
Each share of Series C Convertible Preferred Stock may be converted at any time, a t the option
of the holder thereof, into shares of Common Stock of the Corporation, on the terms and
conditions set forth below in this Section .
7.1 Conversion Ratio. Subject to the provisions for adjustment hereinafter set forth, each share of
Series C Convertible Preferred Stock shall be convertible at the option of the holder t hereof, in
the manner hereinafter set forth, into one fully-paid and nonassessable share of Common Stock
of the Corporation.
7.2 Adjustment to Conversion Ratio. Ile number of shares of Common Stock into which each
share of Series C Convertible Preferred Stock is convertible shall be adjusted from tim e to time
as follows:
(a) If the Corporation shall at any time after the date hereof (i) issue any shares of
Common Stock, or securities convertible into or exchangeable or exercisable for shares
of Common Stock ("Common Stock Equivalents"), by way of a dividend or other
distribution on any stock of the Company and without consideration, or (ii) subdivide or
combine its outstanding shares of Common Stock or Common Stock Equivalents, the
number of shares of Common Stock into which each share of Series C Convertible
Preferred Stock is convertible shall be adjusted (to the nearest full share) by multiplying
(x) the number of shares of Common Stock or Common Stock Equivalents into which
such share was convertible immediately prior to such issuance or sale by (y) a fraction,
the numerator of which is the total number of shares of Common Stock, or Common
Stock Equivalents, as applicable, into which such share was convertible immediately
prior to such issuance or sale plus the number of shares, if any, of Common Stock, or
Common Stock Equivalents, as applicable, which the holder would not have been entitled
to receive as a holder of Series C Convertible Preferred Stock but would have been
entitled to receive in connection with such issuance or sale had the holder convert ed such
share of Series C Convertible Preferred Stock into Common Stock immediately prior
thereto, and the denominator of which is the number of shares of Common Stock into
which such share of Series C Convertible Preferred Stock was convertible immediately
prior to such issuance or sale. For the purposes of any computation to be made in
accordance with this Section 7.2(a), shares of Common Stock issuable by way of
dividend or other distribution on any stock of the Corporation shall be deemed to have
been issued immediately after the opening of business on the day following the record
date for the determination of stockholders entitled to receive such dividend or other
distribution.
(b) If the Corporation shall sell or issue Common Stock or Common Stock
Equivalents (other than pursuant to transactions described in Section 7.2(a above), or
rights, options, warrants or convertible securities (or options to purchase convertible
securities) containing the right to subscribe for or purchase shares of Common Stock or
Common Stock Equivalents without consideration or for a consideration per share less
than the Market Price (as defined in Section 12 below) per share of the Common Stock
immediately prior to the date of such sale or issuance (which date, in the event of
distribution to stockholders, shall be deemed to be the record date set by the Corporation
to determine stockholders entitled to participate in such distribution), the number of
shares of Common Stock into which each share of Series C Convertible Preferred Stock
is convertible shall be adjusted (to the nearest full share) so that such number shall equal
the product of (i) the number of shares of Common Stock into which each share of Series
C Convertible Preferred Stock was convertible immediately prior to the date of suc h sale
or issuance (which date, in the event of distribution to stockholders, shall be deemed to
be the record date set by the Corporation to determine stockholders entitled to parti cipate
in such distribution) multiplied by (ii) a fraction, the numerator of which shall be (x) the
number of shares of Common Stock and Common Stock Equivalents outstanding on the
date of such sale or issuance, plus (y) the number of additional shares of Common Stock
and Common Stock Equivalents offered for subscription or purchase (or into which the
Common Stock Equivalents so offered are convertible) and the denominator of which
shall be (x) the number of shares of Common Stock and Common Stock Equivalents
outstanding on the date of such issuance or sale, plus (y) the number of additional shares
of Common Stock and Common Stock Equivalents which the aggregate consideration
received by the Corporation upon such issuance or sale (plus the aggregate of any
additional amount to be received by the Corporation upon the exercise or conversion of
such rights, options, warrants, convertible securities or options to purchase convertible
securities) would purchase at the Market Value per share on the date immediately prior to
such sale or issuance (which date, in the event of distribution to stockholders, shall be
deemed to be the record date set by the Corporation to determine stockholders entitl ed to
participate in such distribution). For purposes of the foregoing adjustment, the
consideration per share in the case of rights, options, warrants and convertible securities
(or options to purchase convertible securities), shall be determined by dividing (i) the
total amount received or receivable by the Corporation in consideration of the sale or
issuance of the rights, options, warrants and convertible securities (or options to purchase
convertible securities) plus the total consideration payable to the Corporation upon
conversion or exercise thereof, by (ii) the total number of shares of Common Stock
covered by (or issuable on conversion of the Common Stock Equivalents covered
by) such rights, options, warrants and convertible securities). Such adjustments shall be
made successively whenever such rights, options, warrants and convertible securities (or
options to purchase convertible securities) are issued. To the extent that shares of
Common Stock or Common Stock Equivalents are not delivered after the expiration of
such rights, options, warrants or conversion features of convertible securities, the number
of shares of Common Stock into which each share of Series C Convertible Preferred
Stock is convertible shall be readjusted to the nearest whole number which would then be
in effect had the adjustments made upon the issuance of such rights, options or warrants
been made upon the basis of delivery of only the number of shares of Common Stock (or
Common Stock Equivalents) actually delivered. The provisions of this Section 7.2(b)
shall not apply, and no adjustment to the number of shares of Common Stock into which
each share of Series C Convertible Preferred Stock is convertible shall be made, in the
case of the issuance of Common Stock or Common Stock Equivalents under the
following circumstances: (i) the issuance of up to 55,000,000 shares of Common Stock to
the Holder pursuant to that certain Debt Conversion Agreement dated as of September
30, 1993, among the Corporation, Everest & Jennings Inc., The Jennings Investment Co.,
BIL (Far East Holdings) Limited and BEL Securities (Offshore) Limited, (H) the
issuance of up to 1,400,000 shares of Common Stock or Common Stock Equivalents
issuable under the 1990 Omnibus Stock Incentive Plan of the Corporation, (iii) the
issuance of up to 5,600,000 shares of Common Stock or Common Stock Equivalents to
officers, directors, employees, agents or representatives of the Corporation or its
subsidiaries as incentive or other compensation in connection with services rendered or to
be rendered, (iv) the issuance of shares of Common Stock or Common Stock Equivalents
representing reasonable directors' fees due directors of the Corporation, (v) subject to
Section 8 hereof, the issuance of Common Stock, Common Stock Equivalents or
Preferred Stock in connection with a business combination or acquisition by way of
merger, consolidation, stock or asset acquisition or otherwise, provided that such business
combination or acquisition shall be at fair value as reasonably determined by the
Corporation's Board of Directors, or (vi) as a result of the conversion of Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock -,of the Corporation
into Common Stock.
(c) In case the Corporation hereafter shall fix a record date for making a
distribution to the holders of Common Stock of assets or evidences of its indebtedness
(excluding cash dividends or distributions out of earnings and dividends or distributions
referred to in Section 7.2(a) or Common Stock subscription rights, options or warrants for
Common Stock or Common Stock Equivalents (excluding those referred to in Section
7.2(b)), then in each such case the number of shares of Common Stock into which each
share of Series C Convertible Preferred Stock is convertible in effect after such record
date shall be adjusted to a number determined by multiplying the number in effect
immediately prior thereto by a fraction, the numerator of which shall be the Market Price
per share of the Common Stock as of such date, less the fair market value (as reasonably
determined by the Corporation's Board of Directors) of said assets or evidences of
indebtedness so distributed or of such Common Stock subscription rights, options and
warrants or of such Common Stock Equivalents applicable to one share of Common
Stock, and the denominator of which shall be the Market Price per share of the Common
Stock as of such date. Such adjustment shall be made successively whenever the record
date for such distribution is fixed and shall become effective immediately after suc h
record date.
7.3 Exercise of Conversion Rights. The holder of any shares of Series C Convertible Preferred
Stock may exercise his option to convert such shares into shares of Common Stock by
surrendering for such purpose to the Corporation, at its principal office or at such other office or
agency maintained by the Corporation for that purpose, a certificate or certificates representing
the shares of Series C Convertible Preferred Stock to be converted accompanied by a writ ten
notice stating that such holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this Section and specifying the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to be issued. In c ase
such notice shall specify a name or names other than that of such holder, such notice shal l be
accompanied by payment of all transfer taxes payable upon the issuance of shares of Comm on
Stock in such name or names. As promptly as practicable, and in any event within five (5)
business days after the surrender of such certificates and the receipt of such notice re lating
thereto and, if applicable, payment of all transfer taxes, the Corporation shall deliver or cause to
be delivered (a) a certificate or certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which the holder of Series C
Convertible Preferred Stock so converted shall be entitled, (b) if less than the full number of
shares of Series C Convertible Preferred Stock evidenced by the surrendered certificate or
certificates, then less the number of shares converted, and (c) if less than the full number of
shares of Series C Convertible Preferred Stock, a certificate or certificates for the balance of
shares of Series C Convertible Preferred Stock which the holder does not convert into Common
Stock of the Corporation. Such conversions shall be deemed to have been made at the close of
business on the date of the giving of such notice and of such surrender of the certificate or
certificates representing the shares of Series C Convertible Preferred Stock to be convert ed so
that the rights of the holder thereof shall cease except for the right to receive C ommon Stock of
the Corporation in accordance herewith, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the Corporation at such
time.
7.4 Effect of Conversion. Upon conversion of any shares of the Series C Convertible Preferred
Stock, the holder thereof shall not be entitled to receive any accumulated, ac crued or unpaid
dividends in respect of the shares so converted, provided that such holder shall be entitled t o
receive any dividends on such shares of the Series C Convertible Preferred Stock declared prior
to such conversion if such holder held such shares on the record date fixed for the determinat ion
of holders of the Series C Convertible Preferred Stock entitled to receive payment of such
dividend.
7.5 No Fractional Shares. In connection with the conversion of any shares of Series C
Convertible Preferred Stock, no fractional shares of Common Stock shall be issued, but the
Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal
to the Closing Price of such shares on the last Trading Day immediately preceding the date upon
which such shares of Series C Convertible Preferred Stock are deemed to have been converted.
7.6 Reservation of Common Stock. The Corporation shall at all times reserve and keep a vailable
out of its authorized Common Stock the full number of shares of Common Stock of the
Corporation issuable upon the conversion of all outstanding shares of Series C Convertible
Preferred Stock.
SECTION 8. Adjustments For Consolidation, Merger, etc.
In case the Corporation, (a) shall consolidate with or merge into any other person and sha ll not
be the continuing or surviving corporation of such consolidation or merger, (b) shall permit any
other person to consolidate with or merge into the Corporation and the Corporation shall be the
continuing or surviving person, but, in connection with such consolidation or merger, the
Common Stock shall be changed into or exchanged for stock or other securities of any other
person or cash or any other property, (c) shall transfer all or substantially all of its prope rties or
its assets to any other person, or (d) shall effect a capital reorganization or recl assification of the
Common Stock (other than a capital reorganization or reclassification resulting in the issue of
additional shares of Common Stock for which adjustment is provided in Section 7), then, and in
each such case, proper provision shall be made so that each share of Series C ' Convertibl e
Preferred Stock then outstanding shall be converted into, or exchanged for, one share of
preferred stock (the "Substitute Preferred Stock") of the "Acquiring Corporation" (as hereinafter
defined) entitling the holder thereof to all of the rights, powers, privileges and preference s with
respect to the Acquiring Corporation to which the holder of a share of Series C Convertible
Preferred Stock is entitled with respect to the Corporation, and being subject with respec t to the
Acquiring Corporation to the qualifications, limitations and restrictions to which a sha re of
Series C Convertible Preferred Stock is subject with respect to the Corporation, except that in
lieu of and notwithstanding the provisions for conversion at the option of the holders of Series C
Convertible Preferred Stock set forth in Section 7, each share of Substitute Preferred Stock shall
be convertible at any time, at the option of the holder thereof, into the number of sha res of
"Voting Common Stock" (as hereinafter defined) of the Acquiring Corporation, subject to
adjustments (subsequent to consummation of such transaction) as nearly equivalent as possible t o
the adjustments provided for in Section 7 and this Section 8, determined by multiplying t he
number of shares of Common Stock into which each share of Series C Convertible Preferred
Stock was convertible immediately prior to consummation of such transaction by a fraction, the
numerator of which is the "Acquisition Price" (as hereinafter defined) and the denominator of
which is the lesser of (i) the Closing Price per share of the Voting Common Stock of the
Acquiring Corporation on the date of such consummation, and (ii) the Closing Price per share of
the Voting Common Stock of the Acquiring Corporation on the date of such conversion.
Notwithstanding anything contained herein to the contrary, the Corporation will not effect any of
the transactions described in clauses (a) through (d) above unless, prior to the consummation
thereof, each corporation, including this Corporation, which may be required to deliver any
stock, securities, cash or other property to the holders of shares of Series C Convertible Prefe rred
Stock shall assume, by written instrument delivered to each transfer agent of the Se ries C
Convertible Preferred Stock, or to each holder of record of Series C Convertible Preferred Stock
if no transfer agent exists therefor, the obligation to deliver to such holder such shares of st ock,
securities, cash or other property to which, in accordance with the foregoing provisions, such
holder may be entitled and each such corporation shall have furnished to each such transfer agent
or holder, as applicable, an opinion of counsel for such corporation, stating that such assumption
agreement is legal, valid and binding upon such corporation. For purposes of this Section 8, the
term "Voting Common Stock" with respect to any corporation shall mean the common stock of
such corporation; the term "Acquiring Corporation" shall mean the continuing or surviving
corporation of a consolidation or merger with the Corporation (if other than the Corporation), the
transferee of all or substantially all of the properties and assets of the Corporation, t he
corporation consolidating with or merging into the Corporation in a consolidation or merger in
which the Corporation is the continuing or surviving person, but in connection with which the
Common Stock of the Corporation is changed into or exchanged for the stock or other securities
of any other person or cash or any other property, or, in case of a capital reorganization or
reclassification, the Corporation; and the term "Acquisition Price" shall mean, as appl ied to the
Common Stock, the greatest of whichever of the following are applicable: (a) the Closi ng Price
per share of Common Stock on the date on which any transaction to which this Section applies is
consummated; and (b) if a purchase, tender or exchange offer is made by the Acquiring
Corporation (or by any of its affiliates) to the holders of Common Stock and such offer is
accepted by the holders of more than 50% of the outstanding shares of Common Stock, the
greater of (i) the price determined in accordance with the provisions of the foregoing cla use (a of
this definition and (d) the Market Price per share of Common Stock on the date of accept ance of
such offer by the holders of more than 50% of the outstanding shares of Common Stock.
SECTION 9. Reports as to Adjustments .
Whenever the number of shares of Common Stock into which the shares of Series C Convertible
Preferred Stock are convertible is adjusted as provided in Section , the Corporation shall (a )
promptly compute such adjustment and furnish to each transfer agent for the Series C
Convertible Preferred Stock, or to each holder of record of Series C Convertible Preferred Stock
if no transfer agent exists therefor, a certificate, signed by the chief financial officer of the
Corporation, setting forth the number of shares of Common Stock into which each share of
Series C Convertible Preferred Stock is convertible as a result of such adjustment, a bri ef
statement of the facts requiring such adjustment and the computation thereof and when such
adjustment will become effective and (b) promptly mail to the holders of record of t he
outstanding shares of Series C Convertible Preferred Stock a notice stating that the numbe r of
shares into which the shares of Series C Convertible Preferred Stock are convertible has bee n
adjusted and setting forth the new number of shares into which each share of Series C
Convertible Preferred Stock is convertible as a result of such adjustment and when such
adjustment will become effective.
SECTION 10. Notices of Corporate Action .In the event: (a) the Corporation shall establish a record date for the purpose of entitling the
holders of its Common Stock to receive a dividend or distribution in cash or otherwise;
(b) the Corporation shall offer to the holders of its Common Stock any additional
shares of capital stock of the Corporation or securities convertible into or exchangeable
for shares of capital stock of the Corporation, or any right to subscribe for or purchase the
same;
(c) the Corporation shall authorize the distribution to all holders of its Common
Stock of evidences of its indebtedness or assets;
(d) a dissolution, liquidation or winding up of the Corporation (other than in
connection with a consolidation or merger) or a sale of all or substantially all of t he
Corporation's property, assets and business as an entirety shall be finally approved by the
Corporation's Board of Directors; or
(e) a merger or consolidation of the Corporation with or into any other
corporation shall be finally approved by the Corporation's Board of Directors;
then, in any one or more, of such events, the Corporation shall give written notice of such e vent
to the holders of record of Series C Convertible Preferred Stock at least thirty (30) days be fore
the date fixed as a record date or the date of closing the transfer books for the det ermination of
the stockholders entitled to such dividend, distribution, additional shares, convertible or
exchangeable securities or subscription or purchase rights, or entitled to vote on such proposed
dissolution, liquidation, winding up, sale, merger of consolidation. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be. The failure t o give any
notice required by this Section I , or any defect therein, shall not affect the lega lity or validity of
any such action requiring such notice.
SECTION 11. Determinations and Decisions to be Made by Independent Directors.
All determinations and decisions made by the Corporation with respect to Series C Convertible
Preferred Stock, including without limitation determinations and decisions with respect t o
Dividend In-Kind Elections and with respect to the redemption (including the procurement of
funds to accomplish redemption) of Series C Convertible Preferred Stock, shall be made by a
majority of the independent directors of the Corporation. excluding any directors affiliated with
or serving as directors of the Corporation at the request of any holder of Series C Convertible
Preferred Stock. For purposes of the foregoing, a director shall not be deemed to be affiliated
with a holder of Series C Convertible Preferred Stock or to be serving in such capacity at the
request of a holder of Series C Convertible Preferred Stock solely because such holder has
voted such holder has voted such holder's Common Stock, Series C Convertible X' referred
Stock or other voting securities for the election of such director.
SECTION 12. Definitions.
As used herein the following terms shall have the following meanings: "Closing Price" on a given day means the last sale price regular way or, in case no
such reported sales took place on such date, the average of the last reported bid and a sk
price, regular way, in either case on the principal national securities exchange or the
NASDAQ/National Market System on which shares of Common Stock of the
Corporation are admitted to trading or listed, or if not so admitted or listed, the
representative closing bid price as reported by NASDAQ or other similar organization if
NASDAQ is no longer reporting such information or, if not so available, the fair market
price for the Common Stock as reasonably determined by the Board of Directors of the
Corporation.
"Common Stock" means, as of the applicable time, (i) the Class A Common Stock
of the Corporation if the Class A Common Stock and Class B Common Stock of the
Corporation have not been reclassified into a new single class of Common Stock of the
Corporation, and (ii) the new single class of Common Stock of the Corporation if the
Class A Common Stock and the Class B Common Stock of the Corporation have been
reclassified into such new single class of Common Stock.
"Market Price" per share means the weighted average "Closing Price" of the
"Common Stock" of the Corporation for the 30 "Trading Days" prior to the Dividend
Payment Date.
"Trading Day" means a day on which the principal national securities exchange
on which shares of Common Stock of the Corporation are listed or admitted to trading is
open for the transaction of business or, if the shares of such Common Stock are not listed
or admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the Borough of
Manhattan, City and State of New York, a-re not authorized or obligated by law or
executive order to close.
IN WITNESS WHEREOF, EVEREST& JENNINGS INTERNATIONAL LTD. has caused this
Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock to be
duly executed by its President and attested to by its Secretary and has caused it s corporate seal to
be affixed hereto, this _ day of 199
EVEREST & JENNINGS INTERNATIONAL LTD., a Delaware corporation
By:
Its: President
(Corporate Seal)
ATTEST:
