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PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATIONTO AUTHORIZE PREFERRED STOCK The Company's Restated Certificate of Incorporation presently authorizes 100,000,000 shares of common stock. For the reasons set forth below, the Board of Directors believes it advisable that the Restated Certificate of Incorporation be amended to authorize the issuance of 8,000,000 shares of preferred stock, which in most instances could be issued upon authority of the Board without further stockholder approval. The proposed amendment, however, contains limitations on the voting power of any series of preferred stock that may be issued. The text of the proposed amendment to the Restated Certificate of Incorporation (the "Proposed Amendment") is set forth in Exhibit A to this Proxy Statement. The Proposed Amendment would authorize the Board of Directors, without the necessity of further action or authorization by the stockholders (unless required in a specific case by applicable law or regulations or stock exchange rules), to authorize the issuance of preferred stock from time to time in one or more series and to determine all relevant terms of each such series, including but not limited to the following: (a) the number of shares constituting such series; (b) the dividend rates and priority, if any, and whether the dividends would be cumulative and, if so, from what date or dates; (c) whether the holders of the shares of such series would have full, limited or no voting powers; (d) whether, and upon what terms, the shares of such series would be convertible into, or exchangeable for, other securities; (e) whether, and upon what terms, the shares of such series would be redeemable; (f) whether a sinking fund would be provided for the redemption of the shares of such series and, if so, the terms thereof, and (g) the preference, if any, to which shares of such series would be entitled in the event of voluntary or involuntary liquidation of the Company. The Proposed Amendment, however, would limit the voting rights of holders of a series of preferred stock so that the holders of such series (i) would not be entitled to more than the lesser of (x) one vote per $100 of liquidation value or (y) one vote per share and (ii) will not be ent itled to a class vote (other than as required by law and other than the limited right to elect two additional directors in the event of the failure to pay in full dividends on any series of preferred stock for any six quarterly dividend periods). The Board of Directors believes that it is highly desirable for the Company to have the flexibility to issue preferred stock as one of the means of providing financing for the Company. In light of the Company's recent results and financial condition, the Company is engaged in analyzing a full range of financing, strategic and other contingency plans, including possible issuances of preferred stock. Although the Company would also be able to issue preferred stock in connection with acquisitions, stock dividends, employee benefit plans or other corporate purposes, no issuances for any such purposes are currently contemplated. Even though the voting rights of any preferred stock that is issued will be limited, the issuance of preferred stock could be used to discourage attempts to acquire control of the Company which the Board of Directors oppose. Ile Board of Directors represents that it will not authorize the Company to issue, without prior stockholder approval, any series of preferred stock to any individual or group (i) for any defensive or anti-takeover purpose, (ii) with features intended to make any attempted acquisition of the Company more difficult or costly or (iii) for the purpose of creating a block of voting power which his agreed to support the Board and management on a controversial issue. This representation does not preclude the Board from authorizing the issuance of a series of prefmed stock in a public offering. The Board of Directors and management believe that the Proposed Amendment is in the best interests of stockholders and the Company since it could not disproportionately affect the voting power of existing stockholders, is consistent with sound corporate governance principles and enhances the Company's ability to take advantage of financing alternatives. The Board of Directors is not aware of any present efFort to accumulate shares of common stock or take any other action for the purpose of gaining control of the Company.Certain existing provisions of the Company's by-laws may also have an anti-takeover effect. The by-laws provide that special meetings of stockholders may be called only by the chairman or president or a majority of the Board of Directors. In addition, in 1986 the Company adopted a Stockholder Rights Plan, which is described in the Notes to Consolidated Financial Statements included in the Company's 1992 Annual Report to Stockholders. Exercise of the rights issued pursuant to such Stockholder Rights Plan could cause substantial dilution to a person that acquires the Company without the approval of the Board of Directors. The Company has also entered into termination and change of control agreements with the Named Executive Officers and four other executive officers. The agreements, which provide for severance pay and benefits in the event of termination of employment within a specified period after a change in control of the Company, are described on pages 7 and 8 of this Proxy Statement. If the Proposed Amendment is adopted, it is the present intention of the Board of Directors not to seek stockholder approval prior to any issuance of preferred stock, unless otherwise required by applicable law or regulations or stock exchange rules or by the representation of the Board of Directors stated above, Opportunities may arise that require prompt action, such as the sale of securities under favorable market conditions. It is the belief of the Board of Directors that the delay necessary for stockholder approval of a specific issuance could be to the detriment of the Company and its stockholders. However, under the laws of Delaware, stockholder approval prior to the issuance of common stock or preferred stock is required in connection with certain mergers. It is not possible to state the actual effect of the authorization of the preferred stock upon the rights of holders of common stock until the Board of Directors determines the respective rights of the holders of one or more series of the preferred stock. However, such effects might include: (a) restrictions on dividends on common stock if dividends on the preferred stock are in arrears; (b) dilution of the voting power of the common stock to the extent that a series of the preferred stock would have voting rights; (c) the holders of common stock not being entitled to share in the Company's assets upon liquidation until satisfaction of any liquidation preference granted to the preferred stock, and (d) potential dilution of the equity of holders of common stock to the extent that a series of the preferred stock might be convertible into common stock. If approved, the Proposed Amendment would become effective upon filing with the Secretary of State of Delaware a Certificate of Amendment to the Company's Restated Certificate of Incorporation, which filing is expected to take place shortly after such approval. Under the provisions of the General Corporation Law of Delaware, a favorable vote of a majority of the outstanding shares of common stock of the Company entitled to vote on the Proposed Amendment is required for adoption of the amendment authorizing the preferred stock.The Board of Directors recommends a vote "FOR" the approval of the proposed amendment to the Restated Certificate of Incorporation authorizing the Board of Directors to issue preferred stock. EXHIBIT A RESOLVED that Article Four of the Restated Certificate of Incorporation of Zenith Electronics Corporation be and the same is hereby amended to read as follows: ARTICLE FOUR The total number of shares of all classes of stock which the Corporation shall have the authority to issue shall be one hundred eight million (108,000,000) shares which shall be dividend into two classes as follows: Eight million (8,000,000) shares of preferred stock having a par value of One Dollar ($ 1) per share, and One hundred million (100,000,000) shares of common stock having a par value of One Dollar (Sl) per share. The designations, voting powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of the above classes of stock shall be as follows: 1. PREFERRED STOCK 1. Shares of preferred stock may be issued in one or more series at such time or times, and for such consideration or considerations, as the Board of Directors may determine. 2. The Board of Directors is expressly authorized at any time, and from time to time, to provide for the issue of all or any shares of preferred stock, in one or more series and to fix for each such series, such voting powers (subject to the limitations provided below), full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board of Directors providing for the issue of such series (a "Preferred Stock Designation") and as may be permitted by the General Corporation Law of the State of Delaware including, but not limited to, determination of any of the following: (a) The distinctive designation of, and the number of shares constituting, a series of preferred stock; (b) The dividend rate or rates on the shares of such series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of such series; (c) The voting powers, full or limited, if any, of the shares of such series; provided that the holders of shares of such series (i) will not be entitled to more than the lesser of (X) one vote per $100 of liquidation value or (Y) one vote per share and (ii) will not be entitled to vote on any matter separately as a class, except (A) to the extent provided by the General Corporation Law of the State of Delaware and (B) to the extent specified in the Preferred Stock Designation with respect to such series, in the event the Corporation fails to pay dividends on any series of preferred stock in full for any six quarterly dividend payment periods, whether or not consecutive, in which event the number of directors may be increased by two and the holders of outstanding shares of preferred stock similarly entitled shall be entitled to elect the two additional directors until full accumulated dividends on all such shares of preferred stock shall have been paid; (d) Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation or any other corporation, and if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (e) Whether or not the shares of such series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon which or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (f) Whether or not the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of shares of such series, and, if so entitled, the amount of such fund and the manner of its application, including the price or prices at which the shares of such series may be redeemed or purchased through the application of such fund; (g) The amount or amounts payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation prior to any payment or distribution of the assets of the Corporation to any class or classes of stock of the Corporation ranking Junior to the shares of such series; and (h) Any other preferences, privileges and powers, and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of this Certificate of Incorporation. 3. Shares of preferred stock which have been issued and reacquired in any manner by the Corporation (excluding, until the Corporation elects to retire them, shares which are held as treasury shares but including shares redeemed, shares purchased and retired and shares which have been converted into shares of common stock) shall have the status of authorized but unissued shares of preferred stock and may be reissued. II. COMMON STOCK 1. Subject to the preferential rights of the preferred stock, the holders of the common stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors. 2. Except as may be otherwise required by law or this Certificate of Incorporation, each holder of common stock shall have one vote in respect of each share of common stock held by such holder of record on the books of the Corporation on all matters voted upon by the stockholders. 3. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, after distribution in full of the preferential amount to be distributed to the holders of shares of the preferred stock, holders of the common stock shall be entitled to receive all the remaining assets of the Corporation of whatever kind available for distribution to stockholders, ratably in proportion to the number of shares of common stock held by them respectively. III. OTHER PROVISIONS 1. The number of authorized shares of stock of any class may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of the stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the stock, or any class or series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation or by the General Corporation Law of the State of Delaware. Zenith Electronics Corporation 3/30/93