FILED

 

                                               SEP 30 1987 1PM

 

                                              [ILLEGIBLE]

 

                                              [ILLEGIBLE]

 

 

                      Restated Certificate of Incorporation

                                       of

                              Cambrex Corporation

 

      Cambrex Corporation, a corporation organized and existing under the laws

of the State of Delaware (the "Corporation"), hereby certifies as follows:

 

            1.    The name of the Corporation is Cambrex Corporation. The

Corporation was originally incorporated under the name "CasChem Group, Inc.".

The date of filing its original Certificate of Incorporation with the Secretary

of State is October 11, 1983.

 

            2.    This Restated Certificate of Incorporation restates and

integrates and further amends the Certificate of Incorporation of the

Corporation by amending ARTICLES SIXTH and EIGHTH thereof.

 

            3.    The text of the Certificate of Incorporation of the

Corporation, as amended, or supplemented heretofore is further amended hereby to

read as herein set forth in full:

 

            FIRST: The name of the Corporation is:

 

                               Cambrex Corporation

 

            SECOND: The address of its registered office in the State of

Delaware is No. 1209 Orange Street, in the City of Wilmington, County of New

Castle. The name of its registered agent at such address is The Corporation

Trust Company.

 

            THIRD: The purpose of the Corporation is to engage in any lawful act

or activity for which corporations

 

 

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3686C

 

may be organized under the General Corporation Law of Delaware.

 

            FOURTH: The total number of shares of all classes of stock which the

Corporation shall have authority to issue is 26,263,835 shares, consisting of

400,000 shares of Class A 8.25% Cumulative Preferred StocK, par value $.10 per

share (the "Class A Preferred"), 40,597 shares of Class B 8.25% Cumulative

Convertible Preferred Stock, par value $.10 per share (the "Class B Preferred"),

19,403 shares of Class C Convertible Preferred Stock, par value $.10 per share

(the "Class C Preferred"), 73,089 shares of Class D 8% Convertible Preferred

Stock, par value $.10 per share (the "Class D Preferred"), 5,000,000 shares of

Series Preferred Stock, par value $.10 per share (the "Series Preferred Stock"),

730,746 shares of Nonvoting Common Stock, par value $.10 per share (the

"Nonvoting Common"), and 20,000,000 shares of Common Stock, par value $.10 per

share (the "Voting Common"). The Class B Preferred and the Class C Preferred are

referred to herein collectively as the "1981 Convertible Preferred Stock"; the

1981 Convertible Preferred Stock and the Class A Preferred are referred to

herein collectively as the "1981 Preferred Stock"; the 1981 Preferred Stock and

the Class D Preferred are referred to herein collectively as the "Preferred

Stock"; and the Voting Common and the Nonvoting Common are referred to herein

collectively as the "Common Stock". A share of Preferred Stock will be referred

to herein as a "share". The Voting Common is also referred to herein as the

"Class A Common" and the Non-voting Common is also referred to herein as the

"Class B Common". Unless otherwise provided, other capitalized terms used in

Section A of this Article FOURTH are defined in subdivision VI thereof, other

capitalized terms used in Section C of this Article FOURTH are defined in

subdivision VIII thereof and definitions set forth in any Section of this

Article FOURTH apply only to capitalized terms used in such Section. All

cross-references in each Section of this Article FOURTH refer to other parts,

paragraphs and subdivisions in such Section unless otherwise indicated.

 

            The following is a statement of the designations, and the powers,

preferences and rights, and the qualifications, limitations or restrictions

thereof, in respect of each class of stock of the Corporation:

 

                                      -2-

 

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                         SECTION A. 1981 PREFERRED STOCK

 

I.    Terms Applicable Only to Class A

      Preferred and Class B Preferred.

 

            1.    Dividends.

 

            1A.   General Obligation. When and as declared by the board of

directors of the Corporation and to the extent permitted under applicable law,

the Corporation will pay preferential dividends to the holders of the Class A

Preferred and the Class B Preferred as provided in this part 1. Except as

otherwise provided herein, dividends on each Share of Class A Preferred will

accrue cumulatively on a daily basis at the rate of 8.25% per annum of the

Liquidation Value thereof from and including the first day after the end of the

calendar quarter next preceding the date of issuance of such Share to and

including the date on which the Redemption Price of such Share is paid.

Dividends on each Share of Class B Preferred will accrue cumulatively on a daily

basis at the rate of 8.25% per annum of the Purchase Price thereof from and

including the first day after the end of the calendar quarter next preceding the

date of issuance of such Share to and including the date on which the Redemption

Price of such Share is paid or the date on which such Share is converted.

Dividends on the Class A Preferred and the Class B Preferred will accrue whether

or not they have been declared and whether or not there are profits, surplus or

other funds of the Corporation legally available for the payments of dividends.

The date on which the Corporation initially issues any Share will be deemed to

be its "date of issuance" regardless of the number of times transfer of such

Share is made on the stock records maintained by or for the Corporation and

regardless of the number of certificates which may be issued to evidence such

Share. Notwithstanding the foregoing, the payment of any dividend accrued on

the Class A Preferred or the Class B Preferred shall be subject to the

provisions of Section C, subdivision VII. 2C. hereof.

 

            1B.   Dividend Reference Dates. To the extent not paid on each March

31, June 30, September 30 and December 31, beginning December 31, 1983 (the

"Dividend Reference Dates"), all dividends which have accrued on each Share of

Class A Preferred outstanding during the three-month period (or other period in

the case of the initial Dividend Reference Date) ending upon any such Dividend

Reference Date will be added to the Liquidation Value of such Share and will

remain a part thereof until such dividends are paid. All dividends which have

accrued on each Share of Class B Preferred outstanding during the three-month

period (or other period in the case of

 

                                      -3-

 

<PAGE>

 

the initial Dividend Reference Date) ending upon any Dividend Reference Date

will become payable on such Dividend Reference Date to the extent declared by

the Corporation's board of directors.

 

            1C.   Distribution of Partial Dividend Payments. If at any time the

Corporation pays less than the total amount of dividends then accrued with

respect to the Class A Preferred or the Class B Preferred, such payment will be

distributed among the holders of such class so that an equal amount will be paid

with respect to each outstanding Share.

 

            2.    Redemptions.

 

            2A.   Class A Scheduled Redemptions. The Corporation will redeem

200,000 Shares of Class A Preferred (or such lesser number then outstanding) on

December 31 of each year, commencing in 1989 and ending in 1990 (the "Class A

Scheduled Redemption Dates"), at a price per Share equal to the Redemption Price

thereof.

 

            2B.   Class A Optional Redemptions. The Corporation may at any time

redeem all or any portion of the Class A Preferred then outstanding at a price

per Share equal to the Redemption Price. No redemption of Class A Preferred

pursuant to this subdivision may be made for less than 50,000 Shares (or such

lesser number of Shares then outstanding), and redemptions made pursuant to this

subdivision will not relieve the Corporation of its obligation to redeem Shares

on the Class A Scheduled Redemption Dates.

 

            2C.   Class B Scheduled Redemptions. The Corporation will redeem

20,299 Shares of Class B Preferred (or such lesser number then outstanding) on

December 31 of each year, commencing in 1991 and ending in 1992 (the "Class B

Scheduled Redemption Dates"), at a price per Share equal to the Redemption Price

thereof; provided that the Shares of Class B Preferred to be redeemed pursuant

to this subdivision will be subject to the right of offset set forth in

subdivision 1B of subdivision IV and, to the extent the right of offset is

exercised, the Corporation's redemption obligation will be reduced.

 

            2D.   No Redemption During Certain Class D Preferred Events of

Noncompliance. Anything herein contained to the contrary notwithstanding, the

making by the Corporation of any payment in respect of redemption of any Shares

of 1981 Preferred Stock shall be subject to the provisions of Section C,

subdivision VII. 2C. hereof.

 

                                      -4-

 

<PAGE>

 

            3.    Voting Rights. Except as provided herein or as otherwise

provided by law, the Class A Preferred and the Class B Preferred will have no

voting rights.

 

II.   Terms Applicable to All Classes of 1981 Preferred Stock.

 

            1.    Liquidation. Upon any liquidation, dissolution or winding up

of the Corporation, each holder of 1981 Preferred Stock will be entitled to be

paid, before any distribution or payment is made upon any Junior Securities of

the Corporation, an amount in cash equal to the aggregate Liquidation Value of

all Shares held by such holder, and the holders of 1981 Preferred Stock will not

be entitled to any further payment; provided, however, except at provided in

Section C, subdivision V.2., no payment upon any liquidation, dissolution or

winding up of the Corporation may be made with respect to any 1981 Preferred

Stock unless each holder of Class D Preferred shall have received payment in

cash of an amount equal to the aggregate Liquidation Value of the shares of

Class D Preferred held by such holder. The Corporation will mail written notice

of such liquidation, dissolution or winding up, not less than 60 days prior to

the payment date stated therein, to each record holder of 1981 Preferred Stock.

Neither the consolidation or merger of the Corporation into or with any other

corporation or corporations, nor the sale or transfer by the Corporation of all

or any part of its assets, nor the reduction of the capital stock of the

Corporation, will be deemed to be a liquidation, dissolution or winding up of

the Corporation within the meaning of this part 1.

 

            2.    General Terms of Redemptions.

 

            2A.   Redemption Price. For each Share of 1981 Preferred Stock which

is to be redeemed, the Corporation will be obligated on the Redemption Date to

pay to the holder thereof (upon surrender by such holder at the Corporation's

principal office of the certificate representing such Share) an amount in cash

equal to the respective Liquidation Value of such Share (the "Redemption

Price"). If the funds of the Corporation legally available for redemption of

Shares of any class of 1981 Preferred Stock on any Redemption Date are

insufficient to redeem the total number of Shares of such class to be redeemed

on such date, those funds which are legally available will be used to redeem the

maximum possible number of Shares pro rata among the holders of the Shares to be

redeemed based upon the aggregate Liquidation Value of the Shares to be

redeemed. At any time thereafter when additional funds of the Corporation are

legally available for the redemption of Shares of such class, such funds will

 

                                      -5-

 

<PAGE>

 

immediately be used to redeem the balance of the Shares which the Corporation

has become obligated to redeem on any Redemption Date but which it has not

redeemed.

 

            2B.   Notice of Redemption. The Corporation will mail written notice

of each redemption of any class or classes of 1981 Preferred Stock to each

record holder of such class or classes, not more than 60 nor less than 30 days

prior to the date on which such redemption is to be made. Upon mailing any

notice of redemption which relates to a redemption at the Corporation's option,

the Corporation will become obligated to redeem the total number of Shares

specified in such notice at the time of redemption specified therein. In case

fewer than the total number of Shares represented by any certificate are

redeemed, a new certificate representing the number of unredeemed Shares will be

issued to the holder thereof without cost to such holder promptly upon

surrender of the certificate representing the redeemed Shares.

 

            2C.   Determination of the Number of Each Holder's Shares to be

Redeemed. Except as otherwise provided in subdivision IV, the number of Shares

of a particular class of 1981 Preferred Stock to be redeemed from each holder

thereof in redemptions hereunder will be the number of whole Shares determined,

as nearly as practicable to the nearest Share, by multiplying the total number

of Shares of such class to be redeemed times a fraction, the numerator of which

will be the total number of Shares of such class then held by such holder and

the denominator of which will be the total number of Shares of such class then

outstanding.

 

            2D.   Dividends After Redemption Date. No Share of 1981 Preferred

Stock is entitled to any dividends accruing after its Redemption Date. On such

Redemption Date all rights of the holder of such Share will cease, and such

Share will not be deemed to be outstanding.

 

            2E.   Redeemed or Otherwise Acquired Shares. Any Shares of 1981

Preferred Stock which are redeemed or otherwise acquired by the Corporation will

be cancelled and will not be reissued, sold or transferred.

 

            2F.   Other Redemptions or Acquisitions. Neither the Corporation nor

any Subsidiary will redeem or otherwise acquire any 1981 Preferred Stock, except

as expressly authorized herein or pursuant to a purchase offer made to all

holders of the Class A Preferred or the 1981 Convertible Preferred Stock, as the

case may be, pro rata based upon the

 

                                      -6-

 

<PAGE>

 

aggregate Liquidation Value of the Shares of such class or classes of 1981

Preferred Stock held by each such holder.

 

            2G.   Accrued Dividends Must be Paid Prior to Any Redemption. The

Corporation may not redeem any Shares of a particular class of 1981 Preferred

Stock, unless all dividends accrued on the outstanding Shares of such class of

1981 Preferred Stock through the immediately preceding Dividend Reference Date

have been paid in full.

 

            3.    Events of Noncompliance.

 

            3A.   Definition. An Event of Noncompliance will be deemed to have

occurred if:

 

            (i)   the Corporation fails to pay on any Dividend Reference Date

      the full amount of dividends then accrued on the Class A Preferred or the

      Class B Preferred, whether or not such payment is legally permissible;

 

            (ii)  the Corporation fails to make any redemption payment with

      respect to the 1981 Preferred Stock which it is obligated to make, whether

      or not such payment is legally permissible;

 

            (iii) the Corporation breaches or otherwise fails to perform or

      observe any other covenant or agreement with respect to the 1981 Preferred

      Stock set forth in this Article FOURTH or in the Exchange Agreement;

 

            (iv)  any material representation or warranty contained in the

      Exchange Agreement or required to be furnished to any transferor of 1981

      Preferred Stock pursuant to the Exchange Agreement on or before the date

      of issuance of the 1981 Preferred Stock is false or misleading in any

      material respect on the date made or furnished;

 

            (v)   any written information furnished by the Corporation or any

      Subsidiary to any holder of 1981 Preferred Stock pursuant to the Exchange

      Agreement after the date of issuance of the 1981 Preferred Stock is, to

      the Corporation's or such Subsidiary's knowledge after due inquiry, false

      or misleading in any material respect on the date made or furnished;

 

            (vi)  the Corporation or any Material Subsidiary makes an assignment

      for the benefit of credi-

 

                                      -7-

 

<PAGE>

 

      tors or admits in writing its inability to pay its debts generally as they

      become due; or an order, judgment or decree is entered adjudicating the

      Corporation or any Material Subsidiary bankrupt or insolvent under the

      Bankruptcy Code or the Corporation or any Material Subsidiary is a

      debtor-in-possession under the Bankruptcy Code; or any order for relief

      with respect to the Corporation or any Material Subsidiary is entered

      under the Bankruptcy Code; or the Corporation or any Material Subsidiary

      petitions or applies to any tribunal for the appointment of a custodian,

      trustee, receiver or liquidator of the Corporation or any Material

      Subsidiary or of any substantial part of the assets of the Corporation or

      any Material Subsidiary, or commences any proceeding (other than a

      proceeding for the voluntary liquidation and dissolution of a Material

      Subsidiary) relating to the Corporation or any Material Subsidiary under

      any bankruptcy, reorganization, arrangement, insolvency, readjustment of

      debt, dissolution or liquidation law of any jurisdiction; or any such

      petition or application is filed, or any such proceeding is commenced,

      against the Corporation or any Material Subsidiary and either (a) the

      Corporation or any such Material Subsidiary by any act indicates its

      approval thereof, consent thereto or acquiesence therein or (b) such

      petition, application or proceeding is not dismissed within 60 days;

 

            (vii) a judgment in excess of $500,000 is rendered against the

      Corporation or any Material Subsidiary and, within 60 days after entry

      thereof, such judgment is not discharged or execution thereof stayed

      pending appeal, or within 60 days after the expiration of any such stay,

      such judgment is not discharged; or

 

            (viii) the Corporation or any Material Subsidiary defaults in the

      performance of any obligation, if the effect of such default is to cause

      an amount exceeding $500,000 to become due prior to its stated maturity,

      or to permit the holder or holders of such obligation to cause an amount

      exceeding $500,000 to become due prior to its stated maturity.

 

An Event of Noncompliance will not be deemed to have occurred with respect to

the matters described in subparagraph 3A(iii) or 3A(iv) if the Corporation

establishes that (a) in the case

 

                                      -8-

 

<PAGE>

 

of subparagraph 3A(iii), the particular Event of Noncompliance has not been

caused by knowing or purposeful conduct by the Corporation or any Subsidiary and

the Corporation has exercised, and continues to exercise, best efforts

expeditiously to cure the Event of Noncompliance (if cure is possible), (b) in

the case of subparagraph 3A(iv), the particular Event of Noncompliance has not

been caused by a knowing or willful misstatement or misrepresentation on the

part of the Corporation, (c) in the case of both such subparagraphs, the Event

of Noncompliance is not material to the Corporation's financial condition,

operations, assets or business prospects, and (d) in the case of both such

subparagraphs, the Event of Noncompliance is not material to any holder's

investment in the 1981 Preferred Stock.

 

            3B.   Consequences of Certain Events of Noncompliance.

 

            (i)   If an Event of Noncompliance of the type described in

      subparagraph 3A(iii) has occurred and continued for a period of 30 days or

      any other Event of Noncompliance has occurred, the dividend rate on the

      Class A Preferred will increase immediately by an increment of 1/2

      percentage point. Thereafter, until such time as no Event of Noncompliance

      exists, the dividend rate on the Class A Preferred will increase

      automatically at the end of each succeeding 90-day period by an additional

      increment of 1/2 percentage point (but in no event will the dividend rate

      exceed 10.25%). Any increase of the dividend rate resulting from the

      operation of this subdivision will terminate as of the close of business

      on the date on which no Event of Noncompliance exists, subject to

      subsequent increases pursuant to this subdivision.

 

            (ii)  If Events of Noncompliance exist for an aggregate of 365 days

      (whether or not such days are successive), the Conversion Price of the

      1981 Convertible Preferred Stock will be reduced immediately by 10% of the

      Conversion Price in effect immediately prior to such adjustment.

      Notwithstanding the foregoing, if no Events of Noncompliance exist for a

      period of 365 successive days, previous days in which Events of

      Noncompliance existed will not be counted in determining such adjustment.

      In no event will the Conversion Price adjustment be rescinded, and in no

      event will there be more than one Conversion Price adjustment pursuant to

      this subdivision.

 

                                      -9-

 

<PAGE>

 

            (iii) If an Event of Noncompliance exists, each holder of 1981

      Preferred Stock will also have any other rights which such holder may have

      been afforded under any contract or agreement at any time and any other

      rights which such holder may have pursuant to applicable law.

 

III.  Priority of 1981 Preferred Stock.

 

            1.    Class A Preferred Priority in Liquidation. Upon any

liquidation, dissolution or winding up of the Corporation, if the assets of the

Corporation to be distributed among the holders of 1981 Preferred Stock are

insufficient to permit payment to such holders of the aggregate amount which

they are entitled to be paid, then the assets of the Corporation to be

distributed to such holders will be distributed (i) first to the holders of

Class D Preferred pursuant to Section C, subdivision V.1., (ii) second, to the

holders of Class A Preferred, until such holders are paid the aggregate amount

which they are entitled to be paid, or, if the assets to be distributed are

insufficient for such purpose, the entire assets to be distributed will be

distributed ratably among such holders based upon the aggregate Liquidation

Value of Class A Preferred held by each such holder, and (iii) third, the

balance (if any) will be distributed ratably among the holders of 1981

Convertible Preferred Stock based upon the aggregate Liquidation Value of the

1981 Convertible Preferred Stock held by each such holder; provided, however,

the priority established by clauses (i) and (ii) shall be subject to Section C,

subdivision V.2.

 

            2.    Class A Preferred Priority on Dividends, Redemptions, etc. So

long as any Class A Preferred remains outstanding, neither the Corporation nor

any Subsidiary will redeem, purchase or otherwise acquire any 1981 Convertible

Preferred Stock or any Junior Securities (except in connection with conversions

thereof), nor will the Corporation declare or pay any dividend or make any

distribution upon any 1981 Convertible Preferred Stock or any Junior Securities

of the Corporation, if immediately after such redemption, purchase, acquisition,

dividend or distribution any Event of Noncompliance of the type described in

subdivision 3A(i) or 3A(ii) of subdivision II would exist with respect to the

Class A Preferred.

 

            3.    Class B Preferred Priority on Dividends, Redemptions, etc. So

long as any Class B Preferred remains outstanding, neither the Corporation nor

any Subsidiary will redeem, purchase or otherwise acquire any Class C Preferred

or any Junior Securities (except in connection with conver-

 

                                      -10-

 

<PAGE>

 

sions thereof), nor will the Corporation declare or pay any dividend or make any

other distribution upon any Class C Preferred or any Junior Securities of the

Corporation, if immediately after such redemption, purchase, acquisition,

dividend or distribution any Event of Noncompliance of the type described in

subdivision 3A(i) or 3A(ii) of subdivision II would exist with respect to the

Class B Preferred.

 

IV.   Terms Applicable Only to 1981 Convertible Preferred Stock.

 

            1A.   Optional Redemptions. The Corporation may redeem all or any

portion of the 1981 Convertible Preferred Stock after the earlier of (i) the

date of closing with the underwriters of the first firm commitment underwriting

of Common Stock, whether for the account of the Corporation or for others,

having a gross price per share equal to at least 150% of the Conversion Price in

effect on such date and an aggregate price to the public for the Common Stock

which, when added to the aggregate price to the public of any similar prior

registered offerings with gross purchase prices per share of Common Stock equal

to at least 150% of the respective Conversion Prices in effect on the respective

dates of such sales, shall equal at least $5,000,000, or (ii) the date on which

the Corporation shall have received gross proceeds from the sale of Common Stock

for its account for a gross purchase price per share equal to at least 200% of

the Conversion Price in effect on the date of such sale, which proceeds, when

added to the proceeds of any other such sale or sales of Common Stock for gross

purchase prices per share equal to at least 200% of the respective Conversion

Prices at the respective dates of sale, shall equal at least $5,000,000;

provided that no more than one redemption pursuant to clause (i) or (ii) may be

made in any twelve-month period and no 1981 Convertible Preferred Stock may be

redeemed pursuant to clause (ii) prior to December 31, 1986. All redemptions of

1981 Convertible Preferred Stock pursuant to this subdivision will be made pro

rata among the Class B Preferred and the Class C Preferred based upon the the

aggregate Liquidation Value of the Shares then outstanding. For the purposes of

the foregoing clause (ii), the sale by the Corporation of any stock or

securities convertible into or exchangeable for Common Stock (such convertible

or exchangeable stock or securities being called "Convertible Securities" in

this subdivision) shall be deemed to be the sale of Common Stock on the date

upon which such Convertible Securities are converted into or exchanged for

Common Stock, and the gross proceeds received by the Corporation upon the sale

of such Convertible Securities plus the amount of any additional consideration

paid to the Corporation upon the

 

                                      -11-

 

<PAGE>

 

conversion or exchange thereof shall be deemed to be gross proceeds received

from such sale of Common Stock. No redemptions of 1981 Convertible Preferred

Stock pursuant to this subdivision may be made for less than 5,000 Shares (or

such lesser number of Shares then outstanding), and redemptions made pursuant to

this subdivision will not relieve the Corporation of its obligation to redeem

Shares on the Class B Scheduled Redemption Dates pursuant to subdivision 2C of

subdivision I.

 

            1B.   Right of Offset. Upon the receipt of any notice of redemption

under this part 1 or under subdivision 2C of subdivision I, any holder of 1981

Convertible Preferred Stock or Class B Preferred, as the case may be, will have

the right (exercisable by notifying the Corporation at least two days prior to

the date specified for redemption in the redemption notice) to reduce the number

of Shares of the particular class to be redeemed from such holder at such time

by a number of Shares not exceeding the sum of the number of Offset Shares of

such class of 1981 Convertible Preferred Stock held by such holder at the time

of such redemption; provided that in the case of the final Class B Scheduled

Redemption or a redemption at the Corporation's option in which all outstanding

1981 Convertible Preferred Stock will be redeemed, a holder of 1981 Convertible

Preferred Stock or Class B Preferred, as the case may be, may apply Offset

Shares to reduce the number of Shares to be redeemed from such holder in such

redemption only to the extent such holder converts or has converted the Shares

which are to be redeemed at such time. Each holder of 1981 Convertible Preferred

Stock or Class B Preferred, as the case may be, will be deemed to so apply a

number of Offset Shares equal to the excess (if any) of the number of Shares of

the particular class of 1981 Convertible Preferred Stock to be redeemed from

such holder in any redemption over the number of Shares of such class held by

such holder as of the time of such redemption.

 

            1C.   Determination of the Number of Each Holder's Shares to be

Redeemed. The number of Shares of a particular class of 1981 Convertible

Preferred Stock to be redeemed from each holder thereof in redemptions by the

Corporation under this part 1 and subdivision 2C of subdivision I will be the

number of whole Shares, as nearly as practicable to the nearest Share,

determined by multiplying the total number of Shares of the particular class of

1981 Convertible Preferred Stock to be redeemed times a fraction, the numerator

of which will be the total number of Shares and Offset Shares of such class then

held by such holder and the denominator of which will be the total number of

Shares and Offset Shares of such

 

                                      -12-

 

<PAGE>

 

class then outstanding; provided that the number of Shares so determined to be

redeemed from any holder will be reduced by the number of Offset Shares such

holder applies to such redemption.

 

            2.    Conversions.

 

            2A.   Conversion Procedure.

 

            (i)   At any time up to two days prior to the Redemption Date of any

      Share, any holder of 1981 Convertible Preferred Stock may convert all or

      any portion of such holder's Shares of 1981 Convertible Preferred Stock

      into a number of shares of the Conversion Stock computed by multiplying

      the number of Shares to be converted by $83.75 and dividing the result by

      the Conversion Price then in effect. For purposes of this subdivision,

      "Conversion Stock" means the Non-Voting Common in the case of Class B

      Preferred and the Voting Common in the case of Class C Preferred.

 

            (ii)  Each conversion of 1981 Convertible Preferred Stock will be

      deemed to have been effected as of the close of business on the date on

      which the certificate or certificates representing the 1981 Convertible

      Preferred Stock to be converted have been surrendered at the principal

      office of the Corporation. At such time as such conversion has been

      effected, the rights of the holder of such 1981 Convertible Preferred

      Stock as such holder will cease and the Person or Persons in whose name or

      names any certificate or certificates for shares of Conversion Stock are

      to be issued upon such conversion will be deemed to have become the holder

      or holders of record of the shares of Conversion Stock represented

      thereby.

 

            (iii) As soon as possible after the conversion has been effected,

      the Corporation will deliver to the converting holder:

 

                  (a)   a certificate or certificates representing the number of

            shares of Conversion Stock issuable by reason of such conversion in

            such name or names and such denomination or denominations as the

            converting holder has specified;

 

                  (b)   payment in an amount equal to all accrued dividends with

            respect to each Share of Class B Preferred converted, which have not

            been paid prior thereto, plus the amount payable under

 

                                      -13-

 

<PAGE>

 

            subparagraph (v) below with respect to such conversion; and

 

                  (c)   a certificate representing any Shares of 1981

            Convertible Preferred Stock which were represented by the

            certificate or certificates delivered to the Corporation in

            connection with such conversion but which were not converted.

 

            (iv)  If for any reason the Corporation is unable to pay any accrued

      dividends on the Class B Preferred being converted, the Corporation will

      pay such dividends to the converting holder as soon thereafter as funds of

      the Corporation are legally available for such payment. At the request of

      any such converting holder, the Corporation will provide such holder with

      written evidence of its obligation to such holder.

 

            (v)   If any fractional interest in a share of Conversion Stock

      would, except for the provisions of this subparagraph (v), be deliverable

      upon any conversion, the Corporation, in lieu of delivering the fractional

      share therefor, will pay an amount equal to the Market Price of such

      fractional interest as of the date of conversion; provided that if for any

      reason the Corporation is unable to pay the Market Price of any such

      fractional interest, the Corporation will issue such fractional share upon

      the conversion.

 

            (vi)  The issuance of certificates for shares of Conversion Stock

      upon conversion of 1981 Convertible Preferred Stock will be made without

      charge to the holders of such 1981 Convertible Preferred Stock for any

      issuance tax in respect thereof or other cost incurred by the Corporation

      in connection with such conversion and the related issuance of shares of

      Conversion Stock.

 

            (vii) The Corporation will not close its books against the transfer

      of 1981 Convertible Preferred Stock or of Conversion Stock issued or

      issuable upon conversion of 1981 Convertible Preferred Stock in any manner

      which interferes with the timely conversion of 1981 Convertible Preferred

      Stock.

 

            (viii) If the shares of Non-Voting Common issuable by reason of such

      conversion of Class B Preferred are convertible into or exchangeable for

      any other stock or securities of the Corporation (including, without

      limitation, Class A Common), the Corporation will, at the converting

      holder's option, upon surrender of the

 

                                      -14-

 

<PAGE>

 

      shares to be converted by such holder as provided above together with any

      notice or payment required to effect such conversion or exchange of

      Non-Voting Common, deliver to such holder, or as otherwise specified by

      such holder, a certificate or certificates representing the stock or

      securities into which the shares of Non-Voting Common issuable by reason

      of such conversion are so convertible or exchangeable, registered in such

      name or names and in such denomination or denominations as such holder has

      specified.

 

            2B.   Conversion Price.

 

            (i)   The initial Conversion Price for the 1981 Convertible

      Preferred Stock will be $83.75. In order to prevent dilution of the

      conversion rights granted under this subdivision, the Conversion Price

      will be subject to adjustment from time to time pursuant to this part 2.

 

            (ii)  If and whenever the Corporation issues or sells, or in

      accordance with subdivision 2C is deemed to have issued or sold, any

      shares of its Common Stock for a consideration per share less than the

      Conversion Price in effect immediately prior to the time of such issue or

      sale, then forthwith upon such issue or sale, the Conversion Price will be

      reduced to the Conversion Price determined by dividing (A) an amount equal

      to the sum of (x) the product derived by multiplying the Conversion Price

      immediately prior to such issue or sale times the number of shares of

      Common Stock Deemed Outstanding immediately prior to such issue or sale,

      plus (y) the consideration, if any, received by the Corporation upon such

      issue or sale, by (B) the number of shares of Common Stock Deemed

      Outstanding immediately after such issue or sale; provided that no such

      adjustment in the Conversion Price will be made in connection with the

      issuance of (including the issuance of rights and options to purchase) up

      to an aggregate of 8,000 shares of Class A Common to key employees of the

      Corporation and its Subsidiaries.

 

            2C.   Effect on Conversion Price of Certain Events. For purposes of

determining the adjusted Conversion Price under subdivision 2B, the following

will be applicable:

 

            (i)   Issuance of Rights or Options. If the Corporation in any

      manner grants any rights or options to subscribe for or to purchase Common

      Stock or any stock or other securities convertible into or exchangeable

      for Common Stock (such rights or

 

                                      -15-

 

<PAGE>

 

      options being herein called "Options" and such convertible or exchangeable

      stock or securities being herein called "Convertible Securities") and the

      price per share for which Common Stock is issuable upon exercise of such

      Options or upon conversion or exchange of such Convertible Securities is

      less than the Conversion Price in effect immediately prior to the time of

      the granting of such Options, then the total maximum number of shares of

      Common Stock issuable upon the exercise of such Options or upon conversion

      or exchange of the total maximum amount of such Convertible Securities

      issuable upon the exercise of such Options will be deemed to be

      outstanding and to have been issued and sold by the Corporation for such

      price per share. For purposes of this subdivision, the "price per share

      for which Common Stock is issuable" will be determined by dividing (A) 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 to the Corporation upon the

      issuance or sale of such Convertible Securities and the conversion or

      exchange thereof, by (B) the total maximum number of shares of Common

      Stock issuable upon the exercise of such Options or upon the conversion or

      exchange of all such Convertible Securities issuable upon the exercise of

      such Options. Except as otherwise provided in subdivision 2C(iii), no

      adjustment of the Conversion Price will be made when Convertible

      Securities are actually issued upon the exercise of such Options or when

      Common Stock is actually issued upon the exercise of such Options or the

      conversion or exchange of such Convertible Securities.

 

            (ii)  Issuance of Convertible Securities. If the Corporation in any

      manner issues or sells any Convertible Securities and the price per share

      for which Common Stock is issuable upon such conversion or exchange is

      less than the Conversion Price in effect immediately prior to the time of

      such issue or sale, then the maximum number of shares of Common Stock

      issuable upon conversion or exchange of all such Convertible Securities

      will be deemed

 

                                      -16-

 

<PAGE>

 

      to be outstanding and to have been, issued and sold by the Corporation for

      such price per share. For the purposes of this subdivision, the "price per

      share for which Common Stock is issuable" will be determined by dividing

      (A) 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 (B) the

      total maximum number of shares of Common Stock issuable upon the

      conversion or exchange of all such Convertible Securities. Except as

      otherwise provided in subdivision 2C(iii), no further adjustment of the

      Conversion Price will be made when Common Stock is actually issued upon

      the conversion or exchange of such Convertible Securities, and if any such

      issue or sale of such Convertible Securities is made upon exercise of any

      Options for which adjustments of the Conversion Price had been or are to

      be made pursuant to other provisions of this part 2, no further adjustment

      of the Conversion Price will be made by reason of such issue or sale.

 

            (iii) Change in Option Price or Conversion Rate. If the purchase

      price provided for in any Options, the additional consideration, if any,

      payable upon the conversion or exchange of any Convertible Securities, or

      the rate at which any Convertible Securities are convertible into or

      exchangeable for Common Stock change at any time (other than under or by

      reason of provisions designed to protect against dilution of the type set

      forth in this part 2 and which have no more favorable effect on the

      holders of such Options or Convertible Securities than this part 2 would

      have if this part 2 were included in such Options or Convertible

      Securities), the Conversion Price in effect at the time of such change

      will be readjusted to the Conversion Price which would have been in effect

      at such time had such Options or Convertible Securities still outstanding

      provided for such changed purchase price, additional consideration or

      changed conversion rate, as the case may be, at the time initially

      granted, issued or sold. If the purchase price provided for in any

      Options, the additional consideration, if any, payable upon the conversion

      or exchange of any Convertible Securities, or the rate at which any

 

                                      -17-

<PAGE>

 

Convertible Securities are convertible into or exchangeable for Common Stock, is

reduced at any time under or by reason of provisions with respect thereto

designed to protect against dilution of the type set forth herein and which have

no more favorable effect on the holders of such Options or Convertible

Securities than the provisions hereof would have if the provisions hereof were

included in such Options or Convertible Securities, then in the case of the

delivery of Common Stock upon the exercise of any such Options or other

conversion or exchange of any such Convertible Securities, the Conversion Price

then in effect hereunder will forthwith be adjusted to such respective amount as

would have been obtained had such Option or Convertible Security never been

issued as to such Common Stock and had adjustments been made upon the issuance

of the shares of Common Stock delivered, but only if as a result of such

adjustment the Conversion Price then in effect hereunder would be reduced.

 

      (iv)  Treatment of Expired Options and Unexercised Convertible

Securities. Upon the expiration of any Option or the termination of any right to

convert or exchange any Convertible Securities without the exercise of such

Option or right, the Conversion Price then in effect hereunder will be adjusted

to the Conversion Price which would have been in effect at the time of 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)   Calculation of Consideration Received. If any Common Stock,

Options or Convertible Securities are issued or sold or deemed to have been

issued or sold for cash, the consideration received therefor will be deemed to

be the net amount received by the Corporation therefor. In case any Common

Stock, Options or Convertible Securities are issued or sold for a consideration

other than cash, the amount of the consideration other than cash received by the

Corporation will be the fair value of such consideration, except where such

consideration consists of securities, in which case the amount of consideration

received by the Corporation will be the Market Price thereof as of the date of

receipt. In case any Common Stock,

 

                                      -18-

 

<PAGE>

 

Options or Convertible Securities are issued in connection with any merger in

which the Corporation is the surviving corporation, the amount of consideration

therefor will be deemed to be the fair value of such portion of the net assets

and business of the non-surviving corporation as is attributable to such Common

Stock, Options or Convertible Securities, as the case may be. The fair value of

any consideration other than cash and securities will be determined jointly by

the Corporation and the holders of a majority of the outstanding 1981

Convertible Preferred Stock (based upon the aggregate Liquidation Value

thereof). If such parties are unable to reach agreement, the fair value of such

consideration will be determined by appraisers jointly selected by the

Corporation and the holders of a majority of the outstanding 1981 Convertible

Preferred Stock (based upon the aggregate Liquidation Value thereof).

 

      (vi)  Integrated Transactions. In case any Option is issued in connection

with the issue or sale of other securities of the Corporation, together

comprising one integrated transaction in which no specific consideration is

allocated to such Option by the parties thereto, the Option will be deemed to

have been issued without consideration.

 

      (vii) Treasury Shares. The number of shares of Common Stock outstanding at

any given time does not include shares owned or held by or for the account of

the Corporation or any Subsidiary, and the disposition of any shares so owned or

held will be considered an issue or sale of Common Stock.

 

 

      (viii) Record Date. If the Corporation takes a record of the holders of

Common Stock for the purpose of entitling them (a) to receive a dividend or

other distribution payable in Common Stock, Options or in Convertible Securities

or (b) to subscribe for or purchase Common Stock, Options or Convertible

Securities, then such record date will be deemed to be the date of the issue or

sale of the shares of Common Stock deemed to have been issued or sold upon the

declaration of such dividend or upon the making of such other distribution or

the date of the granting of such right of subscription or purchase, as the case

may be.

 

                                      -19-

 

<PAGE>

 

            2D.   Subdivision or Combination of Common Stock. If the Corporation

at any time subdivides (by any stock split, stock dividend or otherwise) one or

more classes of its outstanding shares of Common Stock into a greater number of

shares, the Conversion Price in effect immediately prior to such subdivision

will be proportionately reduced, and if the Corporation at any time combines (by

reverse stock split or otherwise) one or more classes of its outstanding shares

of Common Stock into a smaller number of shares, the Conversion Price in effect

immediately prior to such combination will be proportionately increased.

 

            2E.   Reorganization, Reclassification, Consolidation, Merger or

Sale. If any capital reorganization, reclassification, consolidation, merger or

any sale of all or substantially all of the Corporation's assets to another

Person (collectively any "Organic Change") is effected in such a way that

holders of Common Stock are entitled to receive (either directly or upon

subsequent liquidation) stock, securities or assets with respect to or in

exchange for Common Stock, then, as a condition to such Organic Change, lawful

and adequate provision (in form and substance satisfactory to the holders of a

majority of the 1981 Convertible Preferred Stock then outstanding, based upon

the aggregate Liquidation Value thereof) will be made whereby each of the

holders of 1981 Convertible Preferred Stock will thereafter have the right to

acquire and receive in lieu of shares of Conversion Stock immediately

theretofore acquirable and receivable upon the conversion of such holder's 1981

Convertible Preferred Stock, such shares of stock, securities or assets as may

be issuable or payable with respect to or in exchange for the number of shares

of Conversion Stock immediately theretofore acquirable and receivable upon

conversion of the 1981 Convertible Preferred Stock had such Organic Change not

taken place. In any such case, appropriate provision will be made with respect

to such holder's rights and interests to the end that the provisions of this

part 2 and parts 3 and 4 will thereafter be applicable in relation to any shares

of stock, securities or assets thereafter deliverable upon the conversion of

1981 Convertible Preferred Stock (including, in the case of any such

consolidation, merger or sale in which the successor corporation or purchasing

corporation is other than the Corporation, an immediate adjustment of the

Conversion Price to the value for the Common Stock reflected by the terms of

such consolidation, merger or sale if the value so reflected is less than the

Conversion Price in effect immediately prior to such consolidation, merger or

sale). The Corporation will not effect any such consolidation, merger or sale,

unless prior to the consummation thereof, the successor corporation (if other

 

                                      -20-

 

<PAGE>

 

than the Corporation) resulting from consolidation or merger or the corporation

purchasing such assets assumes by written instrument (in form reasonably

satisfactory to the holders of a majority of the 1981 Convertible Preferred

Stock then outstanding, based upon the aggregate Liquidation Value thereof), the

obligation to deliver to each such holder such shares of stock, securities or

assets as, in accordance with the foregoing provisions, such holder may be

entitled to acquire.

 

            2F.   Certain Events. If any event occurs of the type contemplated

by the provisions of this part 2 but not expressly provided for by such

provisions, then the board of directors of the Corporation will make an

appropriate adjustment in the Conversion Price so as to protect the rights of

the holders of 1981 Convertible Preferred Stock; provided that no such

adjustment will increase the Conversion Price as otherwise determined pursuant

to this part 2 or decrease the number of shares of Conversion Stock issuable

upon conversion of each share of 1981 Convertible Preferred Stock.

 

            2G.   Notices.

 

            (i)   Immediately upon any adjustment of the Conversion Price, the

      Corporation will send written notice thereof to all holders of 1981

      Convertible Preferred Stock.

 

            (ii)  The Corporation will send written notice to all holders of

      1981 Convertible Preferred Stock at least 20 days prior to the date on

      which the Corporation closes its books or takes a record (a) with respect

      to any dividend or distribution upon Common Stock, (b) with respect to any

      pro rata subscription offer to holders of Common Stock or (c) for

      determining rights to vote with respect to any Organic Change, dissolution

      or liquidation.

 

            (iii) The Corporation will also give to the holders of 1981

      Convertible Preferred Stock at least 20 days prior written notice of the

      date on which any Organic Change, dissolution or liquidation will take

      place.

 

            2H.   Mandatory Conversions of Class C Preferred. Notwithstanding

anything to the contrary contained in this Article FOURTH, at such time as there

is no longer any Class B Preferred outstanding, or at such time as the

outstanding Class D Preferred shall be converted pursuant to subdivision VIII.13

of Section C hereof, all outstanding Shares of Class C Preferred (if any) will,

without any action on the part of

 

                                      -21-

 

<PAGE>

 

the Corporation or the holders thereof, be immediately converted into shares of

Voting Common in accordance with the terms of this part 2, and thereafter no

Shares of Class C Preferred will be deemed outstanding and any holder of a

certificate of Shares of Class C Preferred will be deemed to be the holder of

the number of shares of Voting Common into which the Shares of Class C Preferred

represented by such certificate were converted pursuant to this subdivision 2H.

 

            2I.   Mandatory Conversions of Class B Preferred. Notwithstanding

anything to the contrary contained in this Article FOURTH, at such time as the

outstanding Class D Preferred shall be converted pursuant to subdivision VIII.13

of Section C hereof, all outstanding Shares of Class B Preferred (if any) will,

without any action on the part of the Corporation or the holders thereof, be

immediately converted into shares of Non-Voting Common in accordance with the

terms of this part 2, and thereafter no Shares of Class B Preferred will be

deemed outstanding and any holder of a certificate of Shares of Class B

Preferred will be deemed to be the holder of the number of shares of Non-Voting

Common into which the Shares of Class B Preferred represented by such

certificate were converted pursuant to this subdivision 2I.

 

            3.    Liquidating Dividends. If the Corporation declares a dividend

upon the Common Stock payable other than in shares of Common Stock or other than

out of earnings or earned surplus (determined in accordance with generally

accepted accounting principles, consistently applied) (a "Liquidating

Dividend"), then the Corporation will pay to the holders of 1981 Convertible

Preferred Stock at the time of payment of a Liquidating Dividend an amount equal

to the aggregate value of all Liquidating Dividends which would have been paid

on the Conversion Stock had such 1981 Convertible Preferred Stock been converted

immediately prior to the date on which a record is taken for such Liquidating

Dividend, or, if no record is taken, the date as of which the record holders of

Common Stock entitled to such dividends are to be determined. For purposes of

this part 3, a dividend other than in cash will not be considered payable out of

earnings or earned surplus regardless of whether or not earnings or earned

surplus are charged an amount equal to the fair value of such dividend.

 

            4.    Purchase Rights. If at any time the Corporation grants,

issues or sells any Options, Convertible Securities or rights to purchase

stock, warrants, securities or other property pro rata to the record holders of

any class of Common Stock (the "Purchase Rights"), then each holder of

 

                                      -22-

 

<PAGE>

 

1981 Convertible Preferred Stock will be entitled to acquire, upon the terms

applicable to such Purchase Rights, the aggregate Purchase Rights which such

holder could have acquired if such holder had held the number of shares of

Conversion Stock acquirable upon conversion of such holder's 1981 Convertible

Preferred Stock immediately before the date on which a record is taken for the

grant, issuance or sale of such Purchase Rights, or, if no such record is taken,

the date as of which the record holders of Common Stock are to be determined for

the grant, issue or sale of such Purchase Rights; provided that if the Purchase

Rights involve voting securities, the Corporation will make available to each

holder of Class B Preferred, at such holder's request, Purchase Rights

involving non-voting securities which are otherwise identical to the Purchase

Rights involving voting securities and which non-voting securities are

convertible into such voting securities on the same terms as Class B Common is

convertible into Class A Common.

 

V.    Terms Applicable Only to Class C Preferred.

 

            1.    Dividends. When and as any dividend or distribution is

declared or paid by the Corporation on Cammon Stock, whether payable in cash,

property, securities or rights to acquire securities (except for dividends

payable in shares of Common Stock or securities convertible into, or rights to

acquire, shares of Common Stock and except for Purchase Rights which the holders

of Class C Preferred are entitled to acquire pursuant to part 4 of subdivision

IV), the holders of Class C Preferred will be entitled to participate with the

holders of Common Stock in such dividend or distribution as set forth in this

part 1; provided, however, that the Corporation may pay no dividend and make no

distribution on the Class C Preferred (except for the Purchase Rights which the

holders of Class C Preferred are entitled to acquire pursuant to part 4,

subdivision IV) unless it first shall have paid all dividends and made all

distributions then due on the Class D Preferred; provided further, that the

payment of any dividend on the Class C Preferred shall be subject to Section C,

subdivision VII.2C. hereof. At the time such dividend or distribution is payable

to the holders of Common Stock, the Corporation will pay to each holder of Class

C Preferred such holder's share of such dividend or distribution equal to the

amount of the dividend or distribution per share of Common Stock payable at such

time multiplied by the number of shares of Voting Common obtainable upon

conversion of such holder's Class C Preferred.

 

                                      -23-

 

<PAGE>

 

            2.    Voting Rights. Except as otherwise provided by law, the Class

C Preferred will be entitled to vote with the Class A Common and Class D

Preferred, voting together as a single class, on all matters to be voted on by

the Corporation's stockholders, with each Share of Class C Preferred entitled

to the number of votes equal to the number of shares of Voting Common obtainable

upon conversion of such Share of Class C Preferred. Under no circumstances,

however, shall holders of the Class C Preferred, in their capacity as such, have

the right to participate in the class vote of any other class of securities,

including but not limited to the vote of the holders of Class D Preferred to

elect directors pursuant to Section C, subdivision IV.

 

VI.   Miscellaneous.

 

            1.    Registration of Transfer. The Corporation will keep at its

principal office a register for the registration of 1981 Preferred Stock. Upon

the surrender of any certificate representing 1981 Preferred Stock at such

place, the Corporation will, at the request of the record holder of such

certificate, execute and deliver (at the Corporation's expense) a new

certificate or certificates in exchange therefor, representing in the aggregate

the number of shares represented by the surrendered certificate. Each such new

certificate will be registered in such name and will represent such number of

shares as is requested by the holder of the surrendered certificate and will be

substantially identical in form to the surrendered certificate, and (if

applicable) dividends will accrue on the 1981 Preferred Stock represented by

such new certificate from the date to which dividends have been fully paid on

such 1981 Preferred Stock represented by the surrendered certificate.

 

            2.    Replacement. Upon receipt of evidence reasonably satisfactory

to the Corporation (an affidavit of the registered holder will be satisfactory)

of the ownership and the loss, theft, destruction or mutilation of any

certificate evidencing one or more Shares of 1981 Preferred Stock, and in the

case of any such loss, theft or destruction, upon receipt of loss bond or other

indemnity reasonably satisfactory to the Corporation (provided that if the

holder is an institution its own agreement will be satisfactory), the

Corporation will (at its expense) execute and deliver in lieu of such

certificate a new certificate representing the number of shares represented by

such lost, stolen, destroyed or mutilated certificate, and (if applicable)

dividends will accrue on the 1981 Preferred Stock represented by such new

certificate from the date to which dividends have been fully

 

                                      -24-

 

<PAGE>

 

paid on such 1981 Preferred Stock represented by the lost, stolen, destroyed or

mutilated certificate.

 

            3.    Definitions.

 

            "Bankruptcy Code" means the federal bankruptcy code, as amended, or

any similar federal law then in force.

 

            "Common Stock" means, for purposes of subdivision IV, collectively,

the Class A Common, the Class B Common and any capital stock of any class of the

Corporation hereafter authorized which is not limited to a fixed sum or

percentage of par or stated value in respect to the rights of the holders

thereof to participate in dividends or in the distribution of assets upon any

liquidation, dissolution or winding up of the Corporation.

 

            "Common Stock Deemed Outstanding" means, at any given time, the

number of shares of Common Stock actually outstanding at such time, plus the

number of shares of Common Stock deemed to be outstanding pursuant to part 2 of

subdivision IV, plus the shares of Common Stock obtainable upon con version of

the Class B Preferred and the Class C Preferred outstanding at such time.

 

            "Junior Securities" means any equity securities of any kind (but not

including any debt securities convertible into equity securities) which the

Corporation or any Subsidiary at any time issues or is authorized to issue other

than the Preferred Stock.

 

            "Liquidation Value" of any Share of Class A Preferred as of any

particular date will be equal to the sum of $10 plus any unpaid dividends on

such Share added to the Liquidation Value of such Share on any Dividend

Reference Date and not thereafter paid; and, in the event of any liquidation,

dissolution or winding up of the Corporation or the redemption of such Share,

unpaid dividends on such Share will be added to the Liquidation Value of such

Share on the payment date in any liquidation, dissolution or winding up or on

the Redemption Date, as the case may be, accrued to the close of business on

such payment date or Redemption Date.

 

            "Liquidation Value" of any Share of Class B Preferred as of any

particular date will be equal to the sum of $83.75; provided that in the event

of any liquidation, dissolution or winding up of the Corporation or the

redemption of any such Share, unpaid dividends on such Share will be added to

the Liquidation Value of such Share on the payment date in any liquidation,

dissolution or winding up or on the

 

                                      -25-

 

<PAGE>

 

Redemption Date, as the case may be, accrued to the close of business on such

payment date or Redemption Date.

 

            "Liquidation Value" of any Share of Class C Preferred as of any

particular date will be $83.75.

 

            "Market Price" of any security means the average of the closing

prices of such security's sales on all securities exchanges on which such

security may at the time be listed, or, if there have been no sales on any such

exchange on any day, the average of the highest bid and lowest asked prices on

all such exchanges at the end of such day, or, if on any day such security is

not so listed, the average of the representative bid and asked prices quoted in

the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such

security is not quoted in the NASDAQ System, the average of the high and low bid

and asked prices on such day in the domestic over-the-counter market as

reported by the National Quotation Bureau, Incorporated, or any similar

successor organization, in each such case averaged over a period of 21 days

consisting of the day as of which "Market Price" is being determined and the 20

consecutive business days prior to such day. If at any time such security is not

listed on any securities exchange or quoted in the NASDAQ System or the

over-the-counter market, the "Market Price" will be the fair value thereof

determined jointly by the Corporation and the holders of a majority of the 1981

Convertible Preferred Stock (based upon the aggregate Liquidation Value

thereof). If such parties are unable to reach agreement, such fair value will be

determined by appraisers jointly selected by the Corporation and the holders of

a majority of the 1981 Convertible Preferred Stock (based upon the aggregate

Liquidation Value thereof).

 

            "Material Subsidiary" means any Subsidiary with respect to which the

Corporation has directly or indirectly invested, loaned, advanced or guaranteed

the obligations of, an aggregate amount exceeding $500,000.

 

            "Non-Voting Common" means shares of the Corporation's authorized but

unissued Class B Common; provided that if there is a change such that the

securities issuable upon conversion of the Class B Preferred are issued by an

entity other than the Corporation or there is a change in the class of

securities so issuable then the term "Non-Voting Common" will mean one share of

the security issuable upon conversion of the Class B Preferred if such security

is issuable in shares, or will mean the smallest unit in which such security is

issuable if such security is not issuable in shares.

 

                                      -26-

 

<PAGE>

 

            "Offset Share": a holder of 1981 Convertible Preferred Stock will be

deemed to hold one Offset Share for each Share converted by such holder pursuant

to this Article FOURTH at any time prior to such Share's Redemption Date and for

each Share otherwise acquired by the Corporation from such holder other than in

a redemption, and an Offset Share will cease to be an Offset Share when it is

applied to reduce the number of Shares to be redeemed in any Redemption. When

any holder transfers any portion of such holder's outstanding Shares to any

other Person, the transferor will be deemed to have transferred to the

transferee an equal portion of the transferor's Offset Shares, unless the

parties to such transaction otherwise agree in a writing deposited with the

secretary of the Corporation at the time of such transfer.

 

            "Person" means an individual, a partnership, a corporation, a trust,

a joint venture, an unincorporated organization and a government or any

department or agency thereof.

 

            "Exchange Agreement" means the Exchange Agreement by and among the

Corporation and certain persons, pursuant to which such persons acquired the

Class A Preferred, the Class B Preferred and the Class C Preferred, as such

agreement may from time to time be amended in accordance with its terms.

 

            "Purchase Price" of the Class B Preferred equals $83.75 per Share.

 

            "Redemption Date" as to any Share means the date specified in the

notice of any redemption at the Corporation's option or the applicable date

specified herein in the case of any other redemption; provided that no such date

will be a Redemption Date unless the applicable Redemption Price is actually

paid in full on such date, and if not so paid in full, the Redemption Date will

be the date on which such Redemption Price is fully paid. If the notice of

redemption has been duly given and if on or before the date specified in such

notice the funds necessary for such redemption have been reserved and set aside

by the Corporation so as to be and continue to be available therefor, then,

notwithstanding that any certificate for Shares so called for redemption has not

been surrendered for cancellation, after the close of business on such date of

redemption, the Shares so called for redemption will no longer be deemed

outstanding, the dividends thereon shall cease to accrue, and all rights with

respect to Shares so called for redemption, including the rights, if any, to

receive notice and to vote, will forthwith after the close of business on such

redemption date cease,

 

                                      -27-

 

<PAGE>

 

except only the right of the holders thereof to receive the amount payable upon

redemption thereof, without interest.

 

            "Subsidiary" means any corporation of which the shares of stock

having a majority of the general voting power in electing the board of directors

are, at the time as of which any determination is being made, owned by the

Corporation either directly or indirectly through Subsidiaries.

 

            "Voting Common" means shares of the Corporation's authorized but

unissued Class A Common; provided that if there is a change such that the

securities issuable upon conversion of the Class C Preferred are issued by an

entity other than the Corporation or there is a change in the class of

securities so issuable then the term "Voting Common" will mean one share of the

security issuable upon conversion of the Class C Preferred if such security is

issuable in shares, or will mean the smallest unit in which such security is

issuable if such security is not issuable in shares.

 

            4.    Amendment and Waiver. No amendment, modification or waiver

will be binding or effective with respect to any provision of (i) subdivision I

without the prior written consent of the holders of a majority of the Class A

Preferred and Class B Preferred outstanding at the time such action is taken,

(ii) parts 1 or 2 of subdivision III without the prior written consent of the

holders of a majority of the Class A Preferred outstanding at the time such

action is taken, (iii) part 3 of subdivision III without the prior written

consent of the holders of a majority of the Class B Preferred outstanding at the

time such action is taken, (iv) subdivision IV without the prior written consent

of the holders of a majority of the 1981 Convertible Preferred Stock outstanding

at the time such action is taken, (v) subdivision V without the prior written

consent of the holders of a majority of the Class C Preferred outstanding at the

time such action is taken, or (vi) subdivision II or VI without the prior

written consent of the holders of a majority of the 1981 Preferred Stock

outstanding at the time such action is taken; provided that no such action will

change (a) the rate at which or the manner in which dividends on the Class A

Preferred or the Class B Preferred accrue or the times at which such dividends

become payable without the prior written consent of the holders of at least 90%

of the Class A Preferred and the Class B Preferred then outstanding, (b) the

amount payable on redemption of the 1981 Preferred Stock or the times at which

redemption of 1981 Preferred Stock is to take place without the prior written

consent of the holders of at least 90% of the 1981 Preferred Stock then

outstanding, (c) the Conversion Price of the 1981 Convertible Preferred Stock or

the number

 

                                      -28-

 

<PAGE>

 

of shares or the class of stock into which the 1981 Convertible Preferred Stock

is convertible without the prior written consent of the holders of at least 90%

of the 1981 Convertible Preferred Stock then outstanding, or (d) the percentage

required to approve any change described in clauses (a), (b) and (c) above

without the prior written consent of the holders of at least 90% of the Class '.

Preferred and the Class B Preferred (in the case of (a)), the 1981 Preferred

Stock (in the case of (b)) or the 1981 Convertible Preferred Stock (in the case

of (c)) then outstanding. For purposes of this part 4, the consent of the

holders of the requisite percentage of 1981 Preferred Stock or any class or

classes thereof will be determined upon the basis of the aggregate Liquidation

Value of the class or classes of 1981 Preferred Stock in question.

 

            5.    Generally Accepted Accounting Principles. When any accounting

determination or calculation is required to be made hereunder, such

determination or calculation (unless otherwise provided) will be made in

accordance with generally accepted accounting principles, consistently applied,

except that if because of a change in generally accepted accounting principles

the Corporation would have to alter a previously utilized accounting method or

policy in order to remain in compliance with generally accepted accounting

principles, such determination or calculation will continue to be made in

accordance with the Corporation's previous accounting methods and policies

unless the Corporation has obtained the prior written consent of the holders of

a majority of the 1981 Preferred Stock then outstanding (based upon the

aggregate Liquidation Value thereof).

 

            6.    Notices. All notices referred to herein, except as otherwise

expressly provided, will be made by registered or certified mail, return receipt

requested, postage prepaid, and will be deemed to have been given when so

mailed.

 

                             SECTION B. COMMON STOCK

 

            Except as otherwise provided herein, all shares of Class A Common

and Class B Common will be identical and will entitle the holders thereof to the

same rights and privileges.

 

            1.    Voting Rights. Except as otherwise required by law, the Class

A Common will be entitled to one vote per share on all matters to be voted on by

the Corporation's stockholders and will vote as a single class on all such

matters together with the Class C Preferred and Class D

 

                                      -29-

 

<PAGE>

 

Preferred as provided herein and the holders of Class B Common will have no

right to vote on any matters to be voted on by the Corporation's stockholders.

Under no circumstances, however, shall holders of the Class A Common, in their

capacity as such, have the right to participate in the class vote of any other

class of securities, including but not limited to the vote of the holders of

Class D Preferred to elect, as a class, directors, as provided in Section C,

subdivision IV. Subject to any required consent of the holders of any class or

classes of the Preferred Stock then outstanding, the authorized amount of shares

of Class A Common may, without a separate class or series vote, be increased or

decreased from time to time by the affirmative vote of the holders of a majority

of the stock of the Corporation entitled to vote thereon.

 

            2.    Dividends. When and as dividends are declared thereon, whether

payable in cash, property or securities of the Corporation, the holders of Class

A Common and the holders of Class B Common will be entitled to share equally,

share for share, in such dividends; provided that if dividends are declared

which are payable in shares of Class A Common or Class B Common, dividends will

be declared which are payable at the same rate on both classes of stock, and the

dividends payable in shares of Class A Common will be payable to holders of

Class A Common and the dividends payable in shares of Class B Common will be

payable to holders of Class B Common. No dividend on any share of Common Stock

may be declared or paid, however, unless all dividends due on the 1981 Preferred

Stock shall have been paid and unless all dividends due on the Class D Preferred

shall have been provided for as set forth in Section C, subdivision II.1;

provided, however, dividends payable in shares of Common Stock or securities

convertible into or rights to acquire Common Stock may be paid.

 

            3.    Conversion.

 

            3A.   Conversion of Class B Common. Each record holder of Class B

Common is entitled at any time to convert any or all of the shares of such

holder's Class B Common into the same number of shares of Class A Common;

provided that no holder of Class B Common is entitled to convert any share or

shares of Class B Common to the extent that, as a result of such conversion,

such holder or its affiliates would directly or indirectly own, control or have

power to vote a greater quantity of securities of any kind issued by the

Corporation than such holder and its affiliates are permitted to own, control or

have power to vote under any law or under any regulation, rule or other

requirement of any governmental

 

                                      -30-

 

<PAGE>

 

authority at any time applicable to such holder and its affiliates.

 

            3B.   Conversion Procedure.

 

            (i)   Each conversion of shares of Class B Common into shares of

      Class A Common will be effected by the surrender of the certificate or

      certificates representing the shares to be converted at the principal

      office of the Corporation at any time during normal business hours,

      together with a written notice by the holder of such Class B Common

      stating that such holder desires to convert the shares, or a stated number

      of the shares, of Class B Common represented by such certificate or

      certificates into Class A Common and that upon such conversion such holder

      and its affiliates will not directly or indirectly own, control or have

      the power to vote a greater quantity of securities of any kind issued by

      the Corporation than such holder and its affiliates are permitted to own,

      control or have the power to vote under any applicable law, regulation,

      rule or other governmental requirement (and such statement will obligate

      the Corporation to issue such Class A Common). Such conversion will be

      deemed to have been effected as of the close of business on the date on

      which such certificate or certificates have been surrendered and such

      notice has been received, and at such time the rights of the holder of the

      converted Class B Common as such holder will cease and the person or

      persons in whose name or names the certificate or certificates for shares

      of Class A Common are to be issued upon such conversion will be deemed to

      have become the holder or holders of record of the shares of Class A

      Common represented thereby.

 

            (ii)  Promptly after such surrender and the receipt of such written

      notice, the Corporation will issue and deliver in accordance with the

      surrendering holder's instructions (a) the certificate or certificates for

      the Class A Common issuable upon such conversion and (b) a certificate

      representing any Class B Common which was represented by the certificate

      or certificates delivered to the Corporation in connection with such

      conversion but which was not converted.

 

            (iii) If the Corporation in any manner subdivides or combines the

      outstanding shares of one class of Common Stock, the outstanding shares of

      the other class of Common Stock will be proportionately subdivided or

      combined.

 

                                      -31-

 

<PAGE>

 

            (iv)  The issuance of certificates for Class A Common upon

      conversion of Class B Common will be made without charge to the holders of

      such shares for any issuance tax in respect thereof or other cost incurred

      by the Corporation in connection with such conversion and the related

      issuance of Class A Common.

 

            (v)   The Corporation will not close its books against the transfer

      of Class B Common or of Class A Common issued or issuable upon conversion

      of Class B Common in any manner which would interfere with the timely

      conversion of Class B Common.

 

            4.    Registration of Transfer. The Corporation will keep at its

principal office (or such other place as the Corporation reasonably designates)

a register for the registration of shares of Common Stock. Upon the surrender

of any certificate representing shares of any class of Common Stock at such

place, the Corporation will, at the request of the registered holder of such

certificate, execute and deliver a new certificate or certificates in exchange

therefor representing in the aggregate the number of shares of such class

represented by the surrendered certificate, and the Corporation forthwith will

cancel such surrendered certificate. Each such new certificate will be

registered in such name and will represent such number of shares of such class

as is requested by the holder of the surrendered certificate and will be

substantially identical in form to the surrendered certificate. The issuance of

new certificates will be made without charge to the holders of the surrendered

certificates for any issuance tax in respect thereof or other cost incurred by

the Corporation in connection with such issuance.

 

            5.    Replacement. Upon receipt of evidence reasonably satisfactory

to the Corporation (an affidavit of the registered holder will be satisfactory)

of the ownership and the loss, theft, destruction or mutilation of any

certificate evidencing one or more shares of any class of Common Stock, and in

the case of any such loss, theft or destruction, upon receipt of indemnity

reasonably satisfactory to the Corporation (provided that if the holder is a

financial institution its own agreement will be satisfactory), or, in the case

of any such mutilation upon surrender of such certificate, the Corporation will

(at its expense) execute and deliver in lieu of such certificate a new

certificate of like kind representing the number of shares of such class

represented by such lost, stolen, destroyed or mutilated certificate and dated

the date of such lost, stolen, destroyed or mutilated certificate.

 

                                      -32-

 

<PAGE>

 

                       SECTION C. CLASS D PREFERRED STOCK

 

I.    Issuance in Series and Limitations as to Variations Between Series:

 

      1.    Designation and Number of Shares. The Class D Preferred shall be

issuable in two series, designated and comprising the numbers of Shares, as

follows:

 

            (i)   Class D 8% Convertible Preferred Stock-Series 1, par value

      $.10 per share (the "Class D-1 Preferred") comprised of 45,681 Shares and

      no more; and

 

            (ii)  Class D 8% Convertible Preferred Stock-Series 2, par value

      $.10 per share (the "Class D-2 Preferred") comprised of 27,408 Shares and

      no more;

 

      2.    Issuance of Class D-2 Preferred. Shares of Class D-2 Preferred shall

be deemed to be and shall be automatically issued upon the occurrence of the

Second Closing under the Note and Stock Purchase Agreements in discharge of the

obligations under the Short-Term Promissory Notes-Series 1 at the rate of one

share of Class D-2 Preferred for each $210 principal amount of such Notes, as

provided in each such Short-Term Promissory Note-Series 1 and in the Note and

stock Purchase Agreements.

 

      3.    Limitations as to Variations. The Class D-l Preferred and the

Class D-2 Preferred (collectively referred to as the "Class D Preferred") shall

rank equally with each other and shall be identical in all respects, except as

provided in subdivision VIII.1A. below with respect to initial Conversion Price

and except with respect to date of issue.

 

II.   Dividends.

 

      1.    General Obligation. When and as the first cash dividend, if any, is

declared or paid by the board of directors of the Corporation on Common Stock in

each calendar year, the board of directors shall declare and the Corporation

shall pay a dividend at the rate of 8% per annum of the Liquidation Value of the

Class D Preferred to the holders thereof as provided in this part II; provided,

however, if dividends as declared on the Common Stock and on the Class D

Preferred are not permitted under applicable law, dividends declared on the

Common Stock shall be reduced so that dividends on the Class D Preferred may be

paid. Each such dividend on the Class D Preferred shall be due and payable no

later than the date on which the dividend on the

 

                                      -33-

 

<PAGE>

 

Common Stock giving rise to such dividend on the Class D Preferred is payable

(whether or not the board of directors of the Corporation have declared a

dividend on the Class D Preferred); provided, however, that no more than one

such 8% dividend shall be paid in any calendar year irrespective of the number

of cash dividends which may be declared in such year.

 

      2.    Distribution of Partial Dividend Payments. If at any time the

Corporation pays less than the total amount of dividends then due and payable

with respect to the Class D Preferred, such payment will be distributed among

the holders of such class so that an equal amount will be paid with respect to

each outstanding Share. No dividend due on the Class C Preferred may be paid

until all amounts then due on the Class D Preferred shall have been paid (except

for the Purchase Rights which the holders of Class C Preferred are entitled to

acquire pursuant to part 4 of subdivision IV of Section A). No dividend due on

the Common Stock may be paid until all amounts then due on the Class D

Preferred, as well as any amounts that initially would become due on the Class D

Preferred upon the payment to holders of Common Stock, shall have been paid,

provided, however, dividends payable in shares of Common Stock or securities

convertible into or rights to acquire Common Stock may be paid.

 

III.  Voting Rights.

 

            Except as otherwise provided by law, the Class D Preferred will be

entitled to vote with the Class A Common and Class C Preferred, voting together

as a single class, on all matters to be voted on by the Corporation's

stockholders, with each Share of Class D Preferred entitled to the number of

votes equal to the number of shares of Voting Common obtainable upon conversion

of such Share of Class D Preferred, calculated as of the date of the record

date,for each vote. In addition, the Class D Preferred shall be entitled to vote

as a class on matters as to which they are entitled to a class vote under

applicable law; provided further that the rights of the Class D Preferred as a

class may not be diminished in any way without the approval of 51% of the shares

of Class D Preferred.

 

IV.   Class D Directors.

 

            In addition to such voting rights as are described in subdivision

III, so long as (i) the Corporation shall not have any class of Common Stock

registered under Section 12 of the Securities Exchange Act of 1934 and (ii) the

total number of votes to which the holders of the Class D Preferred then

 

                                      -34-

 

<PAGE>

 

outstanding shall be entitled exceeds 17% of the total number of votes which may

be cast generally for the election of Directors, then the holders of the Class D

Preferred outstanding shall have the right, as a class, to nominate, elect and

maintain in office two Directors to the board of directors of the Corporation;

provided, however, that if at any time the board of directors shall be or shall

be authorized to be composed of more than 10 directors the holders of the Class

D Preferred outstanding shall have the right, as a class, to nominate and elect

a number of additional Directors no greater than necessary to bring the

percentage of authorized Directors chosen by the holders of the Class D

Preferred pursuant to this subdivision IV to at least 20%. The term of office of

any Director elected pursuant to the preceding sentence shall not extend beyond

the first to occur of the events specified in clauses (i) and (ii) of such

preceding sentence. In any election of directors pursuant to this subdivision IV

(and not in an election of directors generally), each holder of Class D

Preferred shall be entitled to as many votes as shall equal (x) the number of

votes which (except for the provision as to voting set forth in this sentence)

such holder would be entitled to cast for the election of directors generally

With respect to the shares of Class D Preferred held by such holder multiplied

by (y) the number of directors to be elected pursuant to this subdivision IV,

and such holder may cast the resulting number of votes for a single director or

distribute them among the number of directors to be voted for, or for any two or

more of such directors as the holder may see fit.

 

V.    Liquidation.

 

            1.    Upon any liquidation, dissolution or winding up of the

Corporation, each holder of Class D Preferred will be entitled to be paid,

before any distribution or payment is made upon the 1981 Preferred Stock or any

Junior Securities, an amount in cash equal to the aggregate Liquidation Value of

all Shares held by such holder, and the holders of Class D Preferred will not be

entitled to any further payment. If the net assets of the Corporation shall be

insufficient to permit the payment to holders of all outstanding shares of all

classes of Preferred Stock of the full amounts to which they are entitled, then

the assets of the Corporation shall be distributed (i) first to the holders of

the Class D Preferred, until such holders are paid the aggregate amount which

they are entitled to be paid, or, if the assets to be distributed are

insufficient for such purpose, the entire assets to be distributed will be

distributed ratably among such holders based upon the aggregate Liquidation

Value of

 

                                      -35-

 

<PAGE>

 

the Class D Preferred held by each such holder, and (ii) second, the balance (if

any) will be distributed among the holders of all outstanding shares of

Preferred Stock other than the Class D Preferred in accordance with the

provisions of Section A hereof. The Corporation will mail written notice of such

liquidation, dissolution or winding up, not less than 60 days prior to the

payment date stated therein, to each record holder of Class D Preferred. Neither

the consolidation or merger of the Corporation into or with any other

corporation or corporations, nor the sale or transfer by the Corporation of all

or any part of its assets, nor the reduction of the capital stock of the

Corporation, will be deemed to be a liquidation, dissolution or winding up of

the Corporation within the meaning of this subdivision V.

 

            2.    Notwithstanding the foregoing, if at any time any Class D

Preferred shall have been outstanding for at least three years, is registered

under Section 12 of the Securities Exchange Act of 1934, and the Class A Common

or other security into which the Class D Preferred shall be convertible has

traded on a national securities exchange or NASDAQ on each of 20 consecutive

days at a price per share of at least 170% of the then-applicable Conversion

Price, then the Class D Preferred shall from such time be pari passu with the

Class A Preferred with respect to liquidation preferences, and the rights of

holders of shares of Class D Preferred with respect to liquidation shall be the

same as if such shares were shares of Class A Preferred.

 

VI.   Redemptions

 

      1.    Scheduled Redemptions.

 

            1A.   The Corporation will redeem 25% of the original total number

of Shares of Class D Preferred issued on the First Closing Date, each of the

Delayed First Closing Dates, if any, and the Second Closing Date, if any, or

such lesser number then outstanding on June 30 of each year, commencing in 1995

and ending in 1998 (the "Class D Scheduled Redemption Dates") at a price per

share equal to the Redemption Price as defined in subdivision VI.3A.

 

            1B.   If any Shares of Class D Preferred are converted pursuant to

subdivision VIII other than in a situation described in the immediately

following sentence, the number of Shares of Class D Preferred thereafter to be

redeemed pursuant to subdivision VI.1A. on each subsequent Class D Scheduled

Redemption Date shall be reduced in the same proportion as the number of Shares

of Class D Preferred outstanding immediately prior to such conversion is reduced

 

                                      -36-

 

<PAGE>

 

by the conversion pursuant to subdivision VIII. If a notice of redemption

pursuant to subdivision VI.3B. has been given and thereafter any Share or Shares

of Class D Preferred to which such notice relates shall have been converted into

Common Stock pursuant to Section VIII prior to the Redemption Date to which such

notice relates, such Share or Shares shall, for the purposes of subdivision

VI.1A. hereof, be deemed to have been redeemed to the extent so converted.

 

      2.    Optional Redemptions. The Corporation may not redeem at its option

any Shares of Class D Preferred prior to June 30, 1990. The Corporation may, at

any time on or after June 30, 1990, at its option, upon notice as provided in

subdivision VI.3B., on the date specified in such notice, redeem as a whole, but

not in part, all of the shares of Class D Preferred then outstanding at the

following prices per Share (expressed as a percentage of the Redemption Price,

as defined in subdivision VI.3A.), together with due and payable but unpaid

dividends, if any, to the Redemption Date (as defined in subdivision VI.B.):

 

<TABLE>

<CAPTION>

 Redemption to be made

  during the 12-month

period beginning June 30  Percentage

------------------------  ----------

<S>                       <C>

      1990                    140%

      1991                    130

      1992                    120

      1993                    110

      1994                    105

      1995                    105

      1996                    105

      thereafter              100

</TABLE>

 

      3.    General Terms of Scheduled and Optional Redemptions.

 

            3A.   Redemption Price. For each Share of Class D Preferred which is

to be redeemed, the Corporation will be obligated on the Redemption Date to pay

to the holder thereof an amount in cash equal to the respective Liquidation

Value of such Share (the "Redemption Price"). If the funds of the Corporation

legally available for redemption of Shares of the Class D Preferred on any

Redemption Date are insufficient to redeem the total number of Shares to be

redeemed on such date, those funds which are legally available will be used to

redeem the maximum possible number of Shares pro rata among the holders of the

Shares to be redeemed and the amount equal to the Redemption Price of the Shares

that have not been redeemed because of such insufficiency of funds shall remain

 

                                      -37-

<PAGE>

due and payable and shall be deemed to increase at a rate of 15% per annum until

such Shares have been redeemed. At any time thereafter when additional funds of

the Corporation are legally available for the redemption of Shares of Class D

Preferred, such funds will immediately be used to redeem the balance of the

Shares which the Corporation has become obligated to redeem on any Redemption

Date but which it has not redeemed including the deemed increase in Redemption

Price set forth in the last preceding sentence. No dividends may be paid on the

Common Stock so long as there remains due and payable any amount with respect to

the Class D Preferred, provided, however, dividends payable in shares of Common

Stock or securities convertible into or rights to acquire Common Stock may be

paid.

 

            3B.   Notice of Redemption. The Corporation will mail written notice

of each redemption of Class D Preferred to each record holder of Class D

Preferred not more than 60 days nor less than 30 days prior to the date on which

such redemption is to be made (the "Redemption Date"), in each case specifying

such date, the aggregate number of Shares to be redeemed on such date, the

number of Shares held by such holder to be redeemed on such date, the Redemption

Price and the dividend due and payable, if any, applicable to such redemption.

Each such notice shall be accompanied by an Officers' Certificate certifying

that the conditions of subdivision VI.1 or VI.2 have been fulfilled in

connection with such redemption and specifying the particulars of such

fulfillment. Upon mailing any notice of redemption which relates to a

redemption at the Corporation's option, the Corporation will become obligated to

redeem all of the Shares of Class D Preferred then outstanding. In the event of

a scheduled redemption, if fewer than the total number of Shares represented by

any certificate are redeemed, a new certificate representing the number of

unredeemed Shares will be issued to the holder thereof without cost to such

holder promptly upon the surrender of the certificate representing the redeemed

Shares.

 

            3C.   Determination of the Number of Each Holder's Shares to be

Redeemed Pursuant to Scheduled Redemptions. The number of Shares of Class D

Preferred to be redeemed from each holder thereof in scheduled redemptions

hereunder will be the number of whole Shares, as nearly as practicable to the

nearest Share, determined by multiplying the total number of Shares of Class D

Preferred to be redeemed times a fraction, the numerator of which will be the

total number of Shares of Class D Preferred then held by such holder and the

denominator of which will be the total number of Shares of Class D Preferred

then outstanding, provided, however on the

 

                                   -38-

 

<PAGE>

 

last Class D Scheduled Redemption Date, all shares of Class D Preferred shall be

redeemed.

 

            3D.   Certain Consequences of Redemption. If the notice of

redemption has been duly given and if and only if on or before the date

specified in such notice the funds necessary for such redemption have been

reserved and set aside by the Corporation so as to be and continue to be

available therefor, then, notwithstanding that any certificate for Shares so

called for redemption has not been surrendered for cancellation, after the

close of business on such date of redemption, the Shares so called for

redemption will no longer be deemed outstanding, and all rights with respect to

Shares so called for redemption, including the rights, if any, to receive notice

and to vote, will forthwith after the close of business on such redemption date

cease, except only the right of the holders thereof to receive the amount

payable upon redemption thereof, without interest.

 

            3E.   Redeemed or Otherwise Acquired Shares. Any Shares of Class D

Preferred which are redeemed or otherwise acquired by the Corporation will be

cancelled and will not be reissued, sold or transferred.

 

            3F.   Other Redemptions or Acquisitions. Neither the Corporation nor

any Subsidiary will redeem or otherwise acquire any Class D Preferred, except as

expressly authorized herein or pursuant to a purchase offer made to all holders

of Class D Preferred, pro rata, based upon the number of Shares held by each

holder, but no such purchase shall modify the mandatory redemption obligations

under subdivision VI.1A.

 

VII.  Events of Noncompliance.

 

      1.    Definition.

 

            1A.   An Event of Noncompliance will be deemed to have occurred if:

 

            (i)   the Corporation fails to pay on any date the full amount of

dividends then due and payable on the Class D Preferred, whether or not such

payment is legally permissible or the Corporation fails to make any redemption

payment with respect to the Class D Preferred which it is obligated to make,

whether or not such payment is legally permissible;

 

            (ii)  the Corporation breaches or otherwise fails to perform or

otherwise observe any covenant or agreement set forth in Section 12.12 of the

Note and Stock Purchase Agreements or the Corporation fails to make any

prepayment which

 

                                   -39-

 

<PAGE>

 

it is obligated to make as set forth in Section 10 of the Note and Stock

Purchase Agreements;

 

            (iii) the Corporation breaches or otherwise fails to perform or

otherwise observe any covenant or agreement set forth in Sections 12.1, 12.2,

12.4, 12.7(a) and (b) insofar as subsections 12.7(a) and (b) relate to the

Corporation or CasChem, of the Note and Stock Purchase Agreements or the

Corporation or CasChem fails to preserve and keep in full force and effect its

corporate existence;

 

            (iv)  the Corporation breaches or otherwise fails to perform or

observe any other covenant or agreement set forth in this Section C of this

Restated Certificate of Incorporation, in the Note and Stock Purchase

Agreements, in the Notes or in the Registration Rights Agreement;

 

            (v) any material representation or warranty contained in the Note

and Stock Purchase Agreements or required to be furnished to any Purchaser of

Class 0 Preferred pursuant to the Note and Stock Purchase Agreements on or

before the date of issuance of the Class D Preferred is false or misleading in

any material respect on the date made or furnished;

 

            (vi)  any written information furnished by the Corporation or any

Subsidiary to any holder of Class D Preferred pursuant to the Note and Stock

Purchase Agreements after the date of issuance of the Class D Preferred is, to

the Corporation's or such Subsidiary's knowledge after due inquiry, false or

misleading in any material respect on the date made or furnished;

 

            (vii) the Corporation or any Subsidiary makes an assignment for the

benefit of creditors or admits in writing its inability to pay its debts

generally as they become due; or an order, judgment or decree is entered

adjudicating the Corporation or any Subsidiary bankrupt or insolvent under the

Bankruptcy Code or the Corporation or any Subsidiary is a debtor-in-possession

under the Bankruptcy Code; or any order for relief with respect to the

Corporation or any Subsidiary is entered under the Bankruptcy Code; or the

Corporation or any Subsidiary petitions or applies to any tribunal for the

appointment of a custodian, trustee, receiver or liquidator of the Corporation

or any Subsidiary or of any substantial part of the assets of the Corporation or

any Subsidiary, or commences any proceeding (other than a proceeding for the

voluntary liquidation and dissolution of a Subsidiary) relating to the

Corporation or any Subsidiary under any bankruptcy, reorganization, arrangement,

insolvency,

 

                                   -40-

 

<PAGE>

 

readjustment of debt, dissolution or liquidation law of any jurisdiction; or any

such petition or application is filed, or any such proceeding is commenced,

against the Corporation or any Subsidiary and either (a) the Corporation or any

such Subsidiary by any act indicates its approval thereof, consent thereto or

acquiescence therein or (b) such petition, application or proceeding is not

dismissed within 60 days;

 

            (viii) a judgment in excess of $500,000 is rendered against the

Corporation or any Subsidiary and, within 60 days after entry thereof, such

judgment is not discharged or execution thereof stayed pending appeal, or within

60 days after the expiration of any such stay, such judgment is not discharged;

or

 

            (ix) the Corporation or any Subsidiary defaults in the performance

of any obligation, if the effect of such default is to cause an amount exceeding

$500,000 to become due prior to its stated maturity, or to permit the holder or

holders of such obligation to cause an amount exceeding $500,000 to become due

prior to its stated maturity.

 

            1B.   An Event of Noncompliance will not be deemed to have occurred

with respect to the matters described in subdivision VII.1A.(iv) or VII.1A.(v)

if the Corporation establishes that (a) in the case of subdivision VII.1A.(iv),

the particular Event of Noncompliance has not been caused by knowing or

purposeful conduct by the Corporation or any Subsidiary and the Corporation has

exercised, and continues to exercise, best efforts expeditiously to cure the

Event of Noncompliance (if cure is possible), (b) in the case of subdivision

VII.1A.(v), the particular Event of Noncompliance has not been caused by a

knowing or willful misstatement or misrepresentation on the part of the

Corporation, (c) in the case of both such subdivisions, the Event of

Noncmpliance is not material to the Corporation's financial condition, opera-

tions, assets, or business prospects, and (d) in the case of both such

subdivisions, the Event of Noncompliance is not material to any holder's

investment in the Class D Preferred.

 

      2.    Consequence of Certain Events of Noncompliance.

 

            2A.   If an Event of Noncompliance of the type described in

subdivision VII. 1A.(ii), (iii) or (iv) has occurred and continued for a period

of 30 days or any other Event of Noncompliance has occurred, the dividend rate

on the Class D Preferred will increase immediately by an increment of 0.5X per

annum and dividends shall automatically accrue and shall cumulatively accrue.

Thereafter, until such time

 

                                    -41-

 

<PAGE>

 

as no Event of Noncompliance exists, the dividend rate on the Class D Preferred

will increase automatically at the end of each succeeding 90-day period by an

additional increment of 0.5% per annum (but in no event will the dividend rate

exceed lO% per annum). Any increase of the dividend rate resulting from the

operation of this subdivision will terminate as of the close of business on the

date on which no Event of Noncompliance exists, subject to subsequent increases

pursuant to this subdivision provided, however, dividends shall continue to

accrue automatically (at 8% per annum) and shall cumulatively accrue until 12

months after such Event of Noncompliance shall have been removed and all unpaid

dividends due and payable shall have been paid.

 

            2B.   If Events of Noncompliance exist for an aggregate of 365

days (whether or not such days are successive), the Conversion Price of the

Class D Preferred will be reduced immediately by 10% of the Conversion Price in

effect immediately prior to such adjustment. Notwithstanding the foregoing,

if no Events of Noncompliance exist for a period of 365 successive days,

previous days in which Events of Noncompliance existed will not be counted in

determining such adjustment. In no event will the Conversion Price adjustment be

rescinded, and in no event will there be more than one Conversion Price

adjustment pursuant to this subdivision.

 

            2C.   So long as an Event of Noncompliance of the type described in

subdivision VII.A1,(i), (ii) or (iii) has occurred and is continuing, no

dividends on the 1981 Preferred Stock shall be declared (except for dividends

payable in shares of Common Stock or securities convertible into or rights to

acquire Common Stock) and the Corporation shall not redeem any shares of 1981

Preferred stock. So long as an Event of Noncompliance of the type described in

subdivision VII.1A.(i) or (ii) has occurred and is continuing, no dividends on

the 1981 Preferred Stock shall be paid (except for dividends payable in shares

of Common Stock or securities convertible into rights to acquire Common Stock).

If, prior to the payment of a dividend on the 1981 Preferred Stock, an Event of

Noncompliance of the type described in subdivision VII.lA.(iii) has occurred,

and if such dividend, on the 1981 Preferred Stock had been declared pursuant to

the terms and conditions of the 1981 Preferred Stock and such dividend is

payable within 30 days of such declaration, such dividend may be paid provided

that such payment is made within 30 days of such declaration. In addition, so

long as the Corporation breaches or otherwise fails to perform or observe those

provisions of Section 3.1 or 3.2 of the Registration Rights Agreement requiring

the Corporation to file registration statements, governing the number of

registration rights

 

                                   -42-

 

<PAGE>

 

granted, or otherwise requiring the Corporation to include in a registration

statement the Common Stock issuable on conversion of Class D Preferred, the

Corporation shall not redeem any shares of 1981 Preferred Stock.

 

            2D.   If an Event of Noncompliance exists, each holder of Class D

Preferred will also have any other rights which such holder may have been

afforded under any contract or agreement at any time and any other rights which

such holder may have pursuant to applicable law.

 

VIII. Conversions.

 

      1.    Conversion Procedure.

 

            1A.   At any time up to two days prior to the Redemption Date of

any Share of Class D Preferred, the holder thereof may convert all or any

portion of such holder's Shares of Class D Preferred into a number of shares of

the Class A Common computed by multiplying the number of Shares to be converted

by $165 if no Class D-2 Preferred have been issued, or by $210 if the Class D-2

Preferred have been issued pursuant to the terms of the Note and Stock Purchase

Agreements, and dividing the result by the Conversion Price then in effect;

provided, however, that no Class D-1 Preferred may be converted until the

earlier of the date of issuance of the Class D-2 Preferred and the Cosan

Termination Date.

 

            1B.   Each conversion of Class D Preferred will be deemed to have

been effected as of the close of business on the date on which the certificate

or certificates representing the Class D Preferred to be converted have been

surrendered at the principal office of the Corporation. At such time as such

conversion has been effected, the rights of such holder of such Class D

Preferred as such holder will cease and the Person or Persons in whose name or

names any certificate or certificates for shares of Class A Common are to be

issued upon such conversion will be deemed to have become the holder or holders

of record of the shares of Class A Common represented thereby; provided,

however, a conversion of Class D Preferred within 10 days after the receipt by a

holder of notice of a declaration by the board of directors of the Corporation

of a cash dividend on Common Stock will be deemed to have been effected one day

prior to the record date for such cash dividend on Common Stock, provided,

further that the Class D Preferred so deemed to have been converted shall not be

entitled to any dividend on such Class D Preferred resulting from the

declaration or payment of such cash dividend on the Common Stock.

 

                                  -43-

 

<PAGE>

 

            1C.   As soon as possible after a conversion has been effected, the

Corporation will deliver to the converting holder:

 

            (a)   a certificate or certificates representing the number of

      shares of Class A Common issuable by reason of such conversion in such

      name or names and such denomination or denominations as the converting

      holder has specified;

 

            (b)   payment in an amount equal to all due and payable dividends

      with respect to each Share of Class D Preferred converted, which have not

      been paid prior thereto, plus the amount payable under subdivision

      VIII.1E. below with respect to such conversion; and

 

            (c)   a certificate representing any Shares of Class D Preferred

      which were represented by the certificate or certificates delivered to the

      Corporation in connection with such conversion but which were not

      converted.

 

            1D.   If for any reason the Corporation is unable to pay any due and

payable dividends on the Class D Preferred being converted, the Corporation will

pay such dividends plus an amount equal to 15% per annum of such unpaid

dividends, calculated from the date on which payment was due and payable to the

date of payment, to the converting holder as soon thereafter as funds of the

Corporation are legally available for such payment. At the request of any such

converting holder, the Corporation will provide such holder with written

evidence of its obligation to such holder. No dividends may be paid on the

Common Stock so long as there remain due and payable any dividends or interest

with respect to the Class D Preferred, provided, however, dividends payable in

shares of Common Stock or securities convertible into or rights to acquire

Common Stock may be paid.

 

            1E.   If any fractional interest in a share of Common Stock would,

except for the provisions of this subdivision VIII.1E., be deliverable upon

any conversion, the Corporation, in lieu of delivering the fractional share

therefor, will pay an amount equal to the Conversion Price of such fractional

interest as of the date of conversion; provided that if for any reason the

Corporation is unable to pay the Conversion Price of any such fractional

interest, the Corporation will issue such fractional share upon the

conversion.

 

                                 -44-

 

<PAGE>

 

            1F.   The issuance of certificates for shares of Common Stock upon

conversion of Class D Preferred will be made without charge to the holders of

such Class D Preferred for any issuance tax in respect thereof or other cost

incurred by the Corporation in connection with such conversion and the related

issuance of shares of Common Stock.

 

            1G.   The Corporation will not close its books against the transfer

of Class D Preferred or of Common Stock issued or issuable upon conversion of

Class D Preferred in any manner which interferes with the timely conversion of

Class D Preferred.

 

      2.    Conversion Price. The Conversion Price for the Class D-1 Preferred

shall initially be $165, and shall be adjusted at the date the Class D-2

Preferred shall have been issued by the Corporation, at which time the

Conversion Price for the Class D-1 Preferred shall become $210; if no Class D-2

Preferred shall have been issued by the Corporation on or before December 31,

1985 (or such later date as indicated in writing by the holders of at least 50%

in principal amount of the Short-Term Promissory Notes, as defined below), such

adjustment to the Class D-1 Preferred shall no longer be applicable. The

Conversion Price for the Class D-2 Preferred shall initially be $210. In order

to prevent dilution of the conversion rights granted under this subdivision, the

Conversion Price of Class D Preferred will be subject to adjustment from time to

time pursuant to this subdivision VIII.

 

      3.    Adjustment of Conversion Price for Diluting Issues, etc.

 

            3A.   Formula Adjustments.

 

            (i)   Issuance of Additional Shares of Common Stock. In case the

Corporation shall at any time or from time to time after the date of the

issuance of the Class D-1 Preferred issue or sell, or be deemed under any

provision of this subdivision VIII to have issued or sold, any additional shares

of Common Stock (except for issuances excluded pursuant to subdivision

VIII.3H.) whether or not subsequently reacquired or retired by the Corporation,

without consideration or for a consideration per share which shall be less

than the Conversion Price in effect immediately prior to such issue or sale,

then and in each such case, the Conversion Price in effect immediately prior to

such issue or sale shall be reduced, effective concurrently with such issue or

sale,

 

                                 -45-

 

<PAGE>

 

to a price (calculated to the nearest cent) determined by dividing,

 

            (a)   an amount equal to the sum of (1) the aggregate number of

      shares of Common Stock outstanding immediately prior to such issue and

      sale, including, without duplication, those deemed to have been issued

      under any provision of subdivision VIII, and including, without

      duplication, the shares of Common Stock into which the Class B Preferred

      and Class C Preferred may be converted, multiplied by the then existing

      Conversion Price, and (2) the consideration, if any, received by the

      Corporation upon such issue or sale, by

 

            (b)   the aggregate number of shares of Common Stock of all classes

      outstanding immediately after such issue or sale, including, without

      duplication, those deemed to have been issued under any provision of

      subdivision VIII and including, without duplication, the shares of Common

      Stock into which the Class B Preferred and Class C Preferred may be

      converted.

 

For all purposes of this clause VIII.3A.(i), the provisions of the following

subdivisions VIII.3B. through VIII.3G. shall be applicable.

 

            (ii)  Liquidating Dividends. If Group declares a dividend upon the

Common Stock payable other than in shares of Common stock or other than out of

earnings or earned surplus (determined in accordance with GAAP, consistently

applied) (a "Liquidating Dividend"), then Group will pay to the holders of Class

D Preferred at the time of payment of a Liquidating Dividend an amount equal to

the aggregate value of all Liquidating Dividends which would have been paid. On

the Common Stock issuable on conversion of Class D Preferred had such Class D

Preferred been converted immediately prior to the date on which a record is

taken for such Liquidating Dividend, or, if no record is taken, the date as of

which the record holders of Common Stock entitled to such dividends are to be

determined. For purposes of this subsection (ii), a dividend other than in cash

will not be considered payable out of earnings or earned surplus regardless of

whether or not earnings or earned surplus are charged an amount equal to the

fair value of such dividend.

 

            3B.   Options. In case at any time or from time to time the

Corporation shall (whether directly or by assumption in a merger or otherwise)

grant, issue or sell any Options,

 

                                  -46-

 

<PAGE>

 

whether or not such Options are immediately exercisable, then the maximum number

of shares of Common Stock issuable upon the exercise of such Options (or

issuable upon the conversion of any Convertible Securities issuable pursuant to

such Options), without regard to any provision for subsequent adjustment of such

number, shall be deemed to be outstanding and to have been issued immediately

after the opening of business on the date of the grant of such Options.

 

            3C.   Convertible Securities. In case at any time or from time to

time the Corporation shall (whether directly or by assumption in a merger or

otherwise) issue or sell any Convertible Securities (other than any Convertible

Security issued pursuant to an Option and the shares of Common Stock issuable

upon the conversion of which have been or are to be deemed issued pursuant to

subdivision VIII.3B.), whether or not such Convertible Securities are

immediately convertible or exchangeable into Common Stock, then the maximum

number of shares of Common Stock issuable upon the conversion or exchange of

such Convertible Securities without regard to any provision for subsequent

adjustment of such number shall be deemed to be outstanding and to have been

issued immediately after the opening of business on the date of the issuance or

sale of such Convertible Securities.

 

            3D.   Treatment of Expired Options and Unexercised Convertible

Securities. Upon the expiration of any Option or the termination of any right to

convert or exchange any Convertible Securities without the exercise of such

Option or right, the Conversion Price then in effect hereunder will be adjusted

to the Conversion Price which would have been in effect at the time of such

expiration or termination had such Option or Covertible Securities, to the

extent outstanding immediately prior to such expiration or termination, never

been issued.

 

            3E.   Stock Dividends, Subdivisions, etc. In case at any time or

from time to time after the date of the issuance of the Class D Preferred the

Corporation shall (i) declare or pay any dividend or make any other distribution

upon any capital stock of the Corporation which is payable in Common Stock or

Convertible Securities, or (ii) effect a subdivision of the outstanding shares

of Common Stock into a greater number of shares of Common Stock (by

reclassification or otherwise than by payment of a dividend in Common Stock),

then, in any such event, the total number of additional shares of Common Stock,

or (in the case of any such dividend or distribution payable in Convertible

Securities) Convertible Securities issuable in payment of such dividend or

distribution or to give effect to such sub-

 

                                   -47-

 

<PAGE>

 

division shall be deemed to have been issued immediately after the close of

business on the record date (or other date) for the determination of holders of

any class of securities in connection with such dividend, distribution, or

subdivision.

 

            3F.   Determination of Consideration.

 

            (i)   Cash Consideration. In case of the issuance of shares of

Common Stock for a consideration part or all of which shall be cash, the amount

of the cash consideration therefor shall be deemed to be the amount of cash

received by the Corporation for such shares (or, if such shares of Common Stock

are offered by the Corporation for subscription, the subscription price, or, if

such shares of Common Stock are sold to underwriters or dealers for public

offering without a subscription offering, the initial public offering price);

after deducting therefrom (in cases other than issuances involving an

underwritten public offering or a shelf registration on customary terms) any

expenses incurred in connection therewith other than any compensation or

discount in the sale, underwriting or purchase thereof by underwriters or

dealers or others performing similar services. The consideration for shares of

Common Stock deemed to have been issued under subdivision (ii) or (iii) of this

subdivision shall be deemed to have been received by the Corporation at the time

such shares of Common Stock are deemed to have been issued.

 

            (ii)  Consideration other than Cash. In case of the issuance

(otherwise than as a dividend or other distribution on any class of capital

stock of the Corporation or upon conversion or exchange of any Convertible

Securities or upon any exercise of any Options) of shares of Common Stock for a

consideration part or all of which shall be other than cash, the amount of the

consideration therefor other than cash shall be the fair value thereof as

determined by the board of directors of the Corporation, irrespective of the

accounting treatment thereof. The reclassification of securities other than

Common Stock into securities including Common Stock shall be deemed to involve

the issuance for a consideration other than cash of such Common Stock on the

date fixed for the determination of security holders entitled to receive such

Common Stock.

 

            (iii) Options and Convertible Securities. In case of the issuance of

shares of Common Stock deemed to occur under subdivisions (38) or (3C) with

respect to the conversion or exchange of any Convertible Securities (other

than Notes or Class D Preferred) or the exercise of any Options of the

Corporation, the amount of the consideration received by

 

                                   -48-

 

<PAGE>

 

the Corporation for such shares of Common Stock shall be deemed to be the total

of (a) the amount of the consideration, if any, received by the Corporation

upon the issuance of such Convertible Securities or the grant of such Options,

as the case may be, plus (b) the minimum amount of the consideration, if any,

other than the consideration received for such Convertible Securities or

Options, received or deemed to be received by the Corporation (except on

adjustment of interest or dividends) upon such conversion, exchange or exercise

without regard to any provision for adjustment of such consideration. In

determining the amount of the consideration received by the Corporation upon

the issuance of such Convertible Securities or the grant of such Options, as the

case may be, (x) except as otherwise provided in the following clauses (y) and

(z), the amount of the consideration in cash and other than cash shall be

determined pursuant to subdivisions VIII.3F(i), and VIII.3F(ii). (in each case

as if all references therein to "shares of Common Stock", "shares" or "Common

Stock" were references to such Convertible Securities or Options), (y) any

such Convertible Securities or Options issued by way of dividend or other

distribution on any class of capital stock of the Corporation shall be deemed

to have been issued without consideration, and (z) if securities of the same

class or series of a class as such Convertible Securities or Options were issued

or granted for different amounts of consideration, or if some were issued for no

consideration, then the amount of the consideration received by the Corporation

upon the issuance or grant of each of the securities of such class or series, as

the case may be, shall be deemed to be the mean average amount of the

consideration received by the Corporation upon the issuance of all the

securities of such class or series, as the case may be. Any Convertible

Securities issued or any Option granted as a dividend or other distribution on

any class of capital stock of the Corporation shall be deemed to have been

issued or granted immediately after the opening of business on the date fixed

for the determination of stockholders entitled to receive such dividend or other

distribution and without consideration.

 

            (iv)  Stock Dividends, etc. In case shares of Common Stock are

deemed to have been issued pursuant to subdivision VIII.3E., relating to stock

dividends and subdivisions, such shares shall be deemed to have been issued

without consideration.

 

            3G.   Treasury Shares 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 such shares shall

be consid-

 

                                  -49-

 

<PAGE>

 

ered an issue or sale of Common Stock for the purposes of this subdivision

VIII.3.

 

            3H.   Certain Issues Excepted. Anything in this subdivision VIII to

the contrary notwithstanding, the Corporation shall not be required to make any

adjustment of the Conversion Price in respect of any of the following (without

duplication):

 

            (i)   the issuance, exchange or transfer of the Notes or the

      issuance of Common Stock upon conversion of the Notes;

 

            (ii)  the issuance, exchange or transfer of the Class D Preferred or

      the issuance of Common Stock upon conversion of the Class D Preferred;

 

            (iii) shares of Common Stock previously deemed to have been issued

      pursuant to subdivision VIII.3B. or VIII.3C.;

 

            (iv)  the issuance of up to 8,000 shares of Common Stock in

      connection, with the employment of any Person by the Corporation or any

      Subsidiary including the issuance of options or rights with respect

      thereto; and

 

            (v)   the issuance of shares of Common Stock and other securities

      upon the conversion of the Corporation's Class B Common, Class B Preferred

      and Class C Preferred in accordance with the terms in existence and

      applicable to such conversion on the date hereof.

 

            3I.   Determination of Consideration Under Certain Circumstances.

Anything herein to the contrary notwithstanding, in case at any time after the

date hereof the Corporation shall issue any shares of Common Stock or

Convertible Securities, or any rights or options to purchase any such Common

Stock or Convertible Securities, in connection with the acquisition by the

Corporation or a Subsidiary of the stock or assets of any other corporation or

the merger of any other corporation into the Corporation or a Subsidiary (or the

merger of a Subsidiary into another corporation which thereby becomes a

Subsidiary) under circumstances where on the date of the issuance of such shares

of Common Stock or Convertible Securities or such rights or options the

consideration per share received for such Common Stock or deemed to have been

received for the Common Stock into which such Convertible Securities or such

rights or options are

 

                                      -50-

 

<PAGE>

 

convertible is less than an amount equal to the then Conversion Price, but on

the date the number of shares of Common Stock or Convertible Securities (or in

the case of Convertible Securities other than stock, the aggregate principal

amount of Convertible Securities) or the number of such rights or options (or

the terms by which such number shall be determined) was approved by the Board of

the Corporation (as evidenced by a resolution thereof) the consideration

received per share for such Common Stock or deemed to have been received for the

Common Stock into which such Convertible Securities or such rights or options

are convertible or for which they are exercisable would not have been less than

an amount equal to the Conversion Price thereof, such shares of Common Stock

shall not be deemed to have been issued for less than an amount equal to the

Conversion Price.

 

      4.    Other Securities.

 

            In case any Other Securities shall be issued or shall become subject

to issue upon the conversion or exchange of any stock (or Other Securities) of

the Corporation (or any issuer of Other Securities or any other Person referred

to in subdivision VIII.5.) or to subscription, purchase or other acquisition

pursuant to any Convertible Securities or Options issued by the Corporation (or

any other issuer or Person) for a consideration such as to dilute the conversion

rights of the holders of the Class D Preferred, the computations, adjustments

and readjustments provided for in this subdivision VIII with respect to the

Conversion Price shall be made as nearly as possible in the manner so provided

and applied to determine the amount of Other Securities from time to time

receivable upon the conversion of the Class D Preferred, so as to protect the

holders of the Class D Preferred against the effects of such dilution.

 

      5.    Adjustments for Consolidation, Merger, Sale of Assets,

            Reorganization, etc.

 

            5A.   General Provisions. In case at any time the Corporation shall

be a party to any transaction (including, without limitation, a merger,

consolidation, sale of all or substantially all of the Corporation's assets or

recapitalization of the Common Stock) in which the previously outstanding

Common Stock shall be changed into or exchanged for different securities of

the Corporation, common stock or other securities of another corporation or

interests in a noncorporate entity or other property (including cash) or any

combination of any of the foregoing (each such transaction being hereinafter

referred to as a "Transaction", the date of

 

                                  -51-

 

<PAGE>

 

the consummation of the Transaction being hereinafter referred to as the

"Consummation Date"), the Corporation (in the case of a recapitalization of the

Common Stock) or such other corporation or entity (in each other case) being

hereinafter referred to as the "Acquiring Company", and the common stock (or

equivalent equity interests) of the Acquiring Company being hereinafter

referred to as the "Acquirer's Common Stock"), then, as a condition to the

consummation of the Transaction, lawful and adequate provisions shall be made so

that, upon the basis and the terms and in the manner provided in subdivision

VIII, each holder of Shares of Class D Preferred, upon the conversion thereof at

any time after the consummation of the Transaction, shall be entitled to

receive, in lieu of the Stock or Other Securities issuable upon such conversion

prior to such consummation, the stock and other securities, cash and property to

which such holder would have been entitled upon the consummation of the

Transaction if such holder had converted such Shares of Class D Preferred

immediately prior thereto (subject to adjustments from and after the

Consummation Date as nearly equivalent as possible to the adjustments provided

for in this subdivision VIII).

 

            5B.   Marketable Stock. The Corporation will not enter into or be a

party to any Transaction following the consummation of which any holder of

Shares of Class D Preferred would be entitled in accordance with the foregoing

provisions of this subdivision VIII.5. to receive Acquirer's Common Stock or

other securities of the Acquiring Company upon conversion of such Shares of

Class D Preferred unless, immediately following the consummation thereof on the

Consummation Date, all of the following requirements are fulfilled as to the

Acquiring Company:

 

            (i)   its common stock is listed on the New York Stock Exchange or

      the American Stock Exchange and such common stock continues to meet the

      requirements for listing thereon, and

 

            (ii)  it is required to file, and in each of its three fiscal years

      immediately preceding the Consummation Date has filed, reports with the

      Commission pursuant to Section 13 or 15(d) of the Exchange Act.

 

            5C.   Assumption of Obligations. Notwithstanding anything contained

in this Certificate of Incorporation to the contrary, the Corporation will not

effect any transaction unless, prior to the consummation thereof, each

corporation or entity (other than the Corporation) which may be required to

deliver any stock, securities, cash or property upon the

 

                                   -52-

 

<PAGE>

 

conversion of any Shares of Class D Preferred as provided herein shall assume,

by written instrument delivered to the holder of such Shares of Class D

Preferred, the obligation to deliver to such holder such shares of stock,

securities, cash or property as, an accordance with the foregoing provisions,

such holder may be entitled to receive, and such corporation or entity shall

have similarly delivered to such holder an opinion of counsel for such

corporation or entity, which counsel shall be reasonably satisfactory to such

holder, stating that such Shares of Class D Preferred shall thereafter

continue in full force and effect and the terms hereof (including, without

limitation, all of the provisions of subdivision VIII shall be applicable to the

stock, securities, cash or property which such corporation or entity may be

required to deliver upon the exercise hereof.

 

      6.    Adjustments for Combinations, etc.

 

            In case the outstanding shares of Common Stock shall be combined or

consolidated, by reclassification or otherwise, into a lesser number of shares

of Common Stock, the Conversion Price in effect immediately prior to such

combination or consolidation shall, concurrently with the effectiveness of such

combination or consolidation, be proportionately increased.

 

      7.    Notice of Adjustments of Conversion Price.

 

            Whenever the Conversion Price is adjusted as provided in subdivision

VIII, the Corporation shall promptly (and, in any event, not later than the

thirtieth day following the occurrence of the event requiring such adjustment)

compute the adjusted Conversion Price in accordance with subdivision VIII and

shall prepare a report setting forth such adjustment and showing in detail the

method of calculation and the facts upon which such adjustment is based,

including a statement of (i) the consideration received or to be received by

the Corporation for any additional shares of Common Stock issued or sold or

deemed to have been issued, (ii) the number of shares of Common Stock

outstanding or deemed to be outstanding, and (iii) the Conversion Price in

effect immediately prior to such issue or sale and as adjusted on account

therefor and, upon the request of any holder of the Shares of Class D Preferred,

shall cause certified public accountants of recognized national standing (which

may be the regular auditors of the Corporation) selected by the Corporation to

verify such computation and report, if not previously verified at the request of

any holder. The Corporation will promptly (and, in any event, not later than

such thirtieth day) furnish a

 

                                  -53-

 

<PAGE>

 

copy of each such report and such verification to the holder of any Shares of

Class D Preferred, and will, upon the written request at any reasonable time of

the holder of any Shares of Class D Preferred, furnish to such holder a like

report setting forth the Conversion Price at the time in effect and showing how

it was calculated. The Corporation will also keep copies of all such reports and

such verifications at its principal office, and will cause the same to be

available for inspection at such office during normal business hours by the

holder of any Shares of Class D Preferred or any prospective purchaser of any

Note designated by the holder of such Shares of Class D Preferred.

 

      8.    Notice of Certain Corporate Action.

 

            In case:

 

            (i)   the Corporation shall declare a dividend (or any other

      distribution) on its Common Stock payable otherwise than in cash out of

      its earned surplus or at an annualized rate in excess of 120% of the

      annualized rate of the last cash dividend theretofore paid; or

 

            (ii)  the Corporation shall authorize the granting to the holders of

      its Common Stock of rights or warrants to subscribe for or purchase any

      shares of capital stock of any class or of any other rights; or

 

            (iii) of any reclassification of the Common Stock of the Corporation

      (other than a subdivision or combination of its outstanding shares of

      Common Stock), any capital reorganization of the Corporation or of any

      consolidation or merger to which the Corporation is a party, or of the

      sale or transfer, of all or substantially all of the assets of the

      Corporation; or

 

            (iv)  of the voluntary or involuntary dissolution, liquidation or

      winding up of the Corporation;

 

the Corporation shall at least 10 business days prior to the applicable record

date hereinafter specified give to each holder of any Shares of Class D

Preferred an Officers' Certificate stating (a) the date on which a record is

to be taken for the purpose of such dividend, distribution, rights or warrants,

or, if a record is not to be taken, the date as of which the holders of Common

Stock of record to be entitled to such dividend, distribution, rights or

warrants are to be

 

                                   -54-

 

<PAGE>

 

determined, or (b) the date on which such reclassification, reorganization,

consolidation, merger, sale, transfer, dissolution, liquidation or winding up

is expected to become effective, and the date as of which it is expected that

holders of Common Stock of record shall be entitled to exchange their shares of

Common Stock for securities or other property deliverable upon such

reclassification, recapitalization, consolidation, merger, sale, transfer,

dissolution, liquidation or winding up.

 

      9.    Other Dilutive Events.

 

            In case any event shall occur as to which the other provisions of

subdivision VIII are not strictly applicable but in respect of which the failure

to make any adjustment would not in the opinion of any holders of at least 20%

in the aggregate of the number of shares of Class D Preferred at the time

outstanding or in the opinion of the Corporation fairly protect the conversion

rights granted by subdivision VIII in accordance with the essential intent and

principles hereof, then, in each such case, upon the written request of such

holder or holders or on its own motion, the Corporation shall appoint a firm of

independent certified public accountants of recognized national standing

(which may be the regular auditors of the Corporation), which shall give their

opinion as to the adjustment, if any, on a basis consistent with the essential

intent and principles established in subdivision VIII, necessary to preserve,

without dilution, such conversion rights. Upon receipt of such opinion, the

Corporation will promptly mail a copy thereof to the holder of any Shares of

Class D Preferred and shall make the adjustments or increases described therein.

 

      10.   No Dilution or Impairment.

 

            The Corporation will not, by amendment of this Certificate of

Incorporation or through any consolidation, merger, reorganization, transfer of

assets, dissolution, issue or sale of securities or any other voluntary action,

avoid or seek to avoid the observance or performance of any of the terms to be

observed or performed hereunder by the Corporation, but will at all times in

good faith assist in the carrying out of all such terms and in the taking of all

such action as may be necessary or appropriate in order to protect the

conversion rights granted by subdivision VIII against dilution or other

impairment. Without limiting the generality of the foregoing, the Corporation

(i) will not permit the par value of any shares of stock at the time re-

ceivable upon the conversion of any Shares of Class D Preferred to exceed the

Conversion Price then in effect,

 

                                    -55-

 

<PAGE>

 

(ii) will take all such action as may be necessary or appropriate in order

that the Corporation may validly and legally issue fully paid and nonassessable

shares of Stock upon any conversion of the Class D Preferred, (iii) will not

take any action which results in any adjustment of the Conversion Price if the

total number of shares of Common Stock (or Other Securities) issuable after the

action upon the conversion of all of the Shares of Class D Preferred would

exceed the total number of shares of Common Stock (or Other Securities) then

authorized by the Corporation's certificate of incorporation and available for

the purpose of issue upon such exercise, and (iv) except as provided herein will

not issue any capital stock of any class which is preferred or pari passu as to

dividends or as to the distribution of assets upon voluntary or involuntary

dissolution, liquidation or winding up.

 

      11.   De Minimis Adjustments of Conversion Price; Optional Reductions.

 

            Notwithstanding any other provision of subdivision VIII to the

contrary, no single adjustment in the Conversion Price otherwise required

hereunder shall be required unless such adjustment would require an increase or

decrease of at least 1/2 of 1% in such price; provided, however, that any

adjustments which by reason of this subdivision VIII.11 are not required to be

made shall be carried forward and shall be taken into account in any subsequent

adjustment and shall be taken into account upon the conversion of any Shares of

Class D Preferred; and provided, further, that adjustments shall be required and

made in accordance with the provisions of subdivision VIII (other than this

subdivision 11) not later than such time as may be required in order to preserve

the tax-free nature of a distribution to the holders of Common Stock. Anything

in subdivision VIII to the contrary notwithstanding, the Corporation shall be

entitled to make such reductions in the Conversion Price, in addition to those

otherwise required by subdivision VIII, as it in its sole discretion shall

determine to be advisable in order that any stock dividend, subdivision of

shares, distribution of rights to purchase stock or securities, or distribution

of securities convertible into or exchangeable for stock hereafter made by the

Corporation to its stockholders shall not be taxable.

 

      12.   Continuing Obligation of the Corporation.

 

            The Corporation will, at the time of conversion of any Shares of

Class D Preferred in full or in part, upon the request of any holder thereof,

acknowledge in writing its continuing obligation to afford such holder any

rights (in-

 

                                  -56-

 

<PAGE>

 

cluding, without limitation, any right of registration of the shares of Stock or

Other Securities issued upon such conversion) to which such holder shall

continue to be entitled after such conversion in accordance with the provisions

of this Certificate of Incorporation; provided, however, that if any such holder

shall fail to make any such request, such failure shall not affect the

continuing obligation of the Corporation to afford to such holder all such

rights.

 

      13.   Mandatory Conversions of Class D Preferred.

 

            Notwithstanding anything to the contrary contained in this Section

C, at such time as (i) the Corporation shall have participated in a public

offering or offerings of the Common Stock, in which the aggregate price to the

public of the securities sold shall have been at least $10,000,000, (ii) the

Common Stock was sold to the public at the most recent such offering at a price

exceeding the Conversion Price then in effect by not less than 50%, and (iii)

the outstanding shares of Class B Preferred and Class C Preferred, if any, are

subject to mandatory conversion upon conversion of the Class D Preferred

pursuant to this subdivision VIII.13, then all outstanding Shares of Class D

Preferred, if any, will, without any action on the part of the Corporation or

the holders thereof, be immediately converted into shares of Class A Common in

accordance with the terms of this Section C, and thereafter no Shares of Class D

Preferred will be outstanding and any holder of a certificate of Shares of Class

D Preferred will be deemed to be the holder of the number of Shares of Class A

Common into which the Shares of Class D Preferred represented by such

certificate were converted pursuant to this subdivision VIII.13.

 

IX.   Transfer, Exchange and Replacement of Certificates for Class D Preferred.

 

            1.    The Corporation will keep at its principal office a register

for the registration of Class D Preferred. Upon surrender at such office of any

certificate representing Shares of Class D Preferred for conversion or for

registration of exchange or (subject to compliance with the applicable

provisions of the Registration Rights Agreement) transfer, the Corporation will

issue, at its expense, one or more new certificates, in such denomination or

denominations as may be requested, for the same aggregate number of Shares

represented by the certificate so surrendered and registered as such holder may

request; provided, however, that no such transfer shall be in violation of the

Securities Act of 1933, as amended. Any certificate representing any Shares of

Class

 

                                   -57-

<PAGE>

 

D Preferred surrendered for registration or transfer shall be duly endorsed, or

accompanied by a written instrument of transfer duly executed by the holder of

such certificate or his attorney duly authorized in writing.

 

            2.    The Corporation will pay all costs of all deliveries of

certificates representing any Shares of Class D Preferred from the office of the

holder thereof to the office of the Corporation to be surrendered pursuant to

this subdivision IX.2. (including the cost of insurance against loss or theft in

an amount satisfactory to such holder) upon any exchange provided for herein.

Upon receipt of evidence reasonably satisfactory to the Corporation of the

ownership of and the loss, theft, destruction or mutilation of any certificate

representing any shares of Class D Preferred and, in the case of such loss,

theft, destruction or mutilation of any certificate representing any Shares of

Class D Preferred, upon delivery of an indemnity bond in such reasonable amount

as the Corporation may determine (or in the case of any Shares of Class D

Preferred held by the original owner or its nominee, of an unsecured indemnity

agreement from such owner or nominee holding such Shares), or in the case of any

such mutilation, upon the surrender of such certificate for cancellation at the

principal office of the Corporation, the Corporation, at its expense, will

execute and deliver, in lieu thereof, a new certificate of like tenor and for an

equal number of Shares of Class D Preferred.

 

X.    Definitions.

 

            "Class D Scheduled Redemption Dates" has the meaning assigned in

subdivision VI.1A.

 

            "Convertible Securities" means any evidence of indebtedness, shares

of capital stock (other than Class A Common) or other securities directly or

indirectly convertible into or exchangeable for Class A Common or any stock

into which such Class A Common shall have been changed or any stock resulting

from any capital reorganization or reclassification of such Class A Common.

 

            "Conversion Price" of any Share of Class D Preferred means the sum

of $210 (or $165 if no Class D-2 Preferred shall have been issued) as adjusted

by the provisions of subdivision VIII of this Section C.

 

            "Cosan Purchase Certificate" means the Certificate substantially in

the form of Exhibit H to the Note and Stock Purchase Agreements.

 

                                      -58-

<PAGE>

 

            "Delayed First Closing Dates" means, collectively, each date upon

which shares of Class D-1 Preferred shall have been issued pursuant to the Note

and Stock Purchase Agreements subsequent to the First Closing Date.

 

            "Escrow Agreement" means the Escrow Agreement as defined in the Note

and Stock Purchase Agreements.

 

            "Event of Noncompliance" has the meaning assigned in subdivision

VII.

 

            "First Closing Date" means the initial date upon which shares of

Class D-1 Preferred shall have been issued pursuant to the Note and Stock

Purchase Agreements.

 

            "GAAP" means generally accepted accounting principles as set forth

in the opinions of the Accounting Principles Board of the American Institute of

Certified Public Accountants and in statements by the Financial Accounting

Standards Board or in such opinions and statements of such other entities as

shall be approved by a significant segment of the accounting profession.

 

            "Junior Securities" has the meaning assigned in subdivision VI.3. of

Section A hereof.

 

            "Liquidating Dividend" has the meaning assigned in subdivision

VIII,3A.(ii).

 

            "Liquidation Value" as to any Share of Class D Preferred as of any

particular date will be equal to the sum of $210 plus any due and payable but

unpaid dividends on such Share.

 

            "NASDAQ" means the NASDAQ interdealer quotation system maintained by

the National Association of Securities Dealers, Inc., or any successor composite

reporting service.

 

            "Note and Stock Purchase Agreements" means the Note and Stock

Purchase Agreements between the Corporation, and each of a group of investors

and in connection with which the Corporation adopted this Restated Certificate

of Incorporation and agreed to issue the Class D Preferred.

 

            "Notes" means the 9% Convertible Subordinated Notes due June 30,

1997, issued by the Corporation pursuant to the Note and Stock Purchase

Agreements.

 

            "Officers' Certificate" means a certificate executed on behalf of

the Corporation by the Chairman of the

 

                                        -59-

 

<PAGE>

 

Board of Directors (if an officer) or its President or one of its Vice

Presidents and its Vice President-Finance or Treasurer or one of its Assistant

Treasurers.

 

            "Options" means rights, options or warrants to subscribe for,

purchase or otherwise acquire either Class A Common or Convertible Securities.

 

            "Other Securities" means any stock (other than Common Stock) and

other securities of the Corporation or any other person (corporate or otherwise)

which the holders of the Class D Preferred at any time shall be entitled to

receive, or shall have received, upon the conversion of the Class D Preferred,

in lieu of or in addition to Common Stock, or which at any time shall be

issuable or shall have been issued in exchange for or in replacement of Common

Stock or such other securities pursuant to the Note and Stock Purchase

Agreements.

 

            "Redemption Date" has the meaning assigned in subdivision VI.3B.

 

            "Redemption Price" has the meaning assigned in subdivision VI.3A.

 

            "Registration Rights Agreement" means the Registration Rights

Agreement contemplated by the Note and Stock Purchase Agreements between the

Corporation and the initial purchasers of Class D Preferred or securities

convertible into Class D Preferred.

 

            "Second Closing" has the meaning assigned in the Note and Stock

Purchase Agreements.

 

            "Short-Term Promissory Notes" and "Short-Term Promissory

Notes-Series 1" have the meanings assigned in the Note and Stock Purchase

Agreements.

 

            "Subsidiary" has the meaning assigned in the Note and Stock Purchase

Agreements.

 

XI.   Notices.

 

            All notices referred to herein, except as otherwise provided, will

be made by registered or certified mail, return receipt requested, postage

prepaid, and will be deemed to have been given when so mailed.

 

                                      -60-

 

<PAGE>

 

                  SECTION D. SERIES PREFERRED STOCK

 

            The Series Preferred Stock may be issued from time to time by the

Board of Directors as snares of one or more series. Subject to the provisions

hereof and the limitations prescribed by law, the Board of Directors is

expressly authorized, prior to issuance, by adopting resolutions providing for

the issuance of, or providing for a change in the number of, shares of any

particular series and, if and to the extent from time to time required by law,

by filing a certificate pursuant to the General Corporation Law (or other law

hereafter in effect relating to the same or substantially similar subject

matter), to establish or change the number of shares to be included in each such

series and to fix the designation and relative powers, preferences and rights

and the qualifications and limitations or restrictions thereof relating to the

shares of each such series. The authority of the Board of Directors with respect

to each series shall include, but not be limited to, determination of the

following:

 

                  (a)   the distinctive serial designation of such series and

            the number of shares constituting such series (provided that the

            aggregate number of shares constituting all series of Series

            Preferred Stock shall not exceed Five Million (5,000,000));

 

                  (b)   the annual dividend rate on shares of such series,

            whether dividends shall be cumulative and, if so, from which date or

            dates;

 

                  (c)   whether the shares of such series shall be redeemable

            and, if so, the terms and conditions of such redemption, including

            the date or dates upon and after which such shares 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;

 

                  (d)   the obligation, if any, of the Corporation to retire

            shares of such series pursuant to a sinking fund;

 

                  (e)   whether shares of such series shall be convertible into,

            or exchangeable for, shares of stock of any other class or classes

            and, if so, the terms and conditions of such conversion or

            exchange, including the price or prices or the rate or rates of

            conversion or exchange and the terms of adjustment, if any;

 

                                      -61-

 

<PAGE>

 

 

                  (f)   whether the shares of such series shall have voting

            rights, in addition to the voting rights provided by law, and, if

            so, the terms of such voting rights;

 

                  (g)   the rights of the shares of such series in the event of

            voluntary or involuntary liquidation, dissolution or winding up of

            the Corporation; and

 

                  (h)   any other relative rights, powers, preferences,

            qualifications, limitations or restrictions thereof relating to such

            series.

 

            The shares of Series Preferred Stock of any one series shall be

identical with each other in all respects except as to the dates from and after

which dividends thereon shall cumulate, if cumulative.

 

            The number of authorized shares of Series Preferred Stock may be

increased or decreased by the affirmative vote of the holders of a majority of

the stock of the Corporation entitled to vote without the separate vote of

holders of Series Preferred Stock as a class.

 

            FIFTH: The Corporation is to have perpetual existence.

 

            SIXTH: (a) Except as otherwise fixed by or pursuant to the

provisions of Article FOURTH hereof relating to the rights of the holders of any

class or series of stock having a preference over the Common Stock as to

dividends or upon liquidation to elect additional directors under specified

circumstances, the number of the directors of the Corporation shall be fixed

from time to time by or pursuant to the By-Laws of the Corporation. The

directors, other than those who may be elected by the holders of any class or

series of stock having a preference over the Common Stock as to dividends or

upon liquidation, shall be classified, with respect to the time for which they

severally hold office, into three classes, as nearly equal in number as

possible, as shall be provided in the manner specified in the By-Laws of the

Corporation, one class to hold office initially for a term expiring at the

annual meeting of stockholders to be held in 1988, another class to hold office

initially for a term expiring at the annual meeting of stockholders in 1989,

and another class to hold office initially for a term expiring at the annual

meeting of stockholders to be held in 1990, with the members of each class to

hold office until their successors are elected and qualified. At each annual

meeting of the stockholders of the Corporation, the

 

                                      -62-

 

<PAGE>

 

successors of the class of directors whose term expires at that meeting shall be

elected to hold office for a term expiring at the annual meeting of stockholders

held in the third year following the year of their election.

 

                  (b)   Advance notice of stockholder nominations for the

            election of directors shall be given in the manner provided in the

            By-Laws of the Corporation.

 

                  (c)   Except as otherwise provided for or fixed by or pursuant

            to the provisions of Article FOURTH hereof relating to the rights of

            the holders of any class or series of stock having a preference over

            the Common Stock as to dividends or upon liquidation to elect

            directors under specified circumstances, newly created directorships

            resulting from any increase in the number of directors and any

            vacancies on the Board of Directors resulting from death,

            resignation, disqualification, removal or other cause shall be

            filled solely by the affirmative vote of a majority of the directors

            or the sole director then remaining in office, even though less than

            a quorum of the Board of Directors. Any director elected in

            accordance with the preceding sentence shall hold office for the

            remainder of the full term of the class of directors in which the

            new directorship was created or the vacancy occurred and until such

            director's successor shall have been elected and qualified. If the

            number of directors is changed, any increase or decrease shall be

            apportioned among the classes by the Board of Directors so as to

            maintain the number of directors in each class as nearly equal as

            possible. No decrease in the number of directors constituting the

            Board of Directors shall shorten the term of any incumbent director.

 

                  (d)   Subject to the rights of any class or series of stock

            having a preference over the Common Stock as to dividends or upon

            liquidation to elect directors under specified circumstances, any

            director may be removed from office, but only for cause and only by

            the affirmative vote of the holders of at least two-thirds of the

            combined voting power of the then outstanding shares of stock

            entitled to vote generally in the election of directors, voting

            together as a single class.

 

                  (e) Any action required or permitted to be taken by the

            stockholders of the Corporation must be

 

                                      -63-

 

<PAGE>

 

3686C

 

            effected at a duly called annual or special meeting of such holders

            and may not be effected by any consent in writing by such holders.

            Except as otherwise required by law and subject to the rights of the

            holders of any class or series of stock having a preference over the

            Common Stock as to dividends or upon liquidation, special meetings

            of stockholders of the Corporation may be called only by the

            Chairman of the Board or President or the Board of Directors

            pursuant to a resolution approved by a majority of the entire Board

            of Directors or as otherwise provided in the By-Laws of the

            Corporation.

 

                  (f)   In furtherance and not in the limitation of the powers

            conferred by statute, the Board of Directors is expressly authorized

            to make, alter, amend or repeal the By-Laws of the Corporation, but

            the stockholders may adopt additional By-Laws and may amend or

            repeal By-Laws whether or not adopted by them provided that the

            affirmative vote of the holders of at least two-thirds of the

            combined voting power of the then outstanding shares of stock

            entitled to vote generally in the election of directors, voting

            together as a single class, is required for any such adoption of

            additional By-Laws, amendment or repeal.

 

                  (g)   Notwithstanding any other provision of this Certificate

            of Incorporation or the By-Laws of the Corporation (and

            notwithstanding the fact that a lesser percentage may be specified

            by law, the Certificate of Incorporation or the By-Laws of the

            Corporation), the affirmative vote of the holders of at least

            two-thirds of the voting power of all the shares of the Corporation

            entitled to vote generally in the election of directors, voting

            together as a single class, shall be required to alter, amend or

            repeal this Article SIXTH or to adopt any provision inconsistent

            herewith.

 

            SEVENTH: Meetings of stockholders may be held within or without the

State of Delaware, as the By-Laws may provide. The books of the Corporation may

be kept (subject to any provisions contained in the statutes) outside the State

of Delaware at such place or places as may be designated from time to time by

the Board of Directors in the By-Laws of the Corporation. Elections of

directors need not be by written ballot unless the By-Laws of the Corporation so

provide.

 

            EIGHTH; The Corporation shall, to the fullest extent authorized

shall by Section 145 of the General Corporation Law of the

 

                                      -64-

 

<PAGE>

 

3686C

 

State of Delaware, as the same exists or may hereafter be amended (but in the

case of any such amendment, other than one mandating lesser indemnification,

only to the extent that such amendment permits the Corporation to provide

broader indemnification than said law permitted the Corporation to provide prior

to such amendment) indemnify all persons whom it may indemnify pursuant thereto.

 

            NINTH: The Corporation reserves the right to amend, alter change or

repeal any provisions contained in this Certificate of Incorporation, in the

manner now or hereafter prescribed by statute, and all rights conferred upon

stockholders herein are granted subject to this reservation.

 

            TENTH: No director of the Corporation shall be personally liable to

the Corporation or its stockholders for monetary damages for breach of fiduciary

duty as a director, except for liability (i) for any breach of such director's

duty of loyalty to the Corporation or its stockholders, (ii) for acts or

omissions not in good faith or which involve intentional misconduct or a

knowing violation of law, (iii) under Section 174 of the General Corporation Law

of the State of Delaware, or (iv) for any transaction from which such director

derived any improper personal benefit.

 

            Any repeal or modification of the foregoing paragraph by the

stockholders of the Corporation shall not adversely affect any right or

protection of a director of the Corporation existing at the time of such repeal

or modification.

 

            4.    This Restated Certificate of Incorporation was duly adopted at

a special meeting of the stockholders by the stockholders entitled to vote

thereon, in accordance with the applicable provisions of Sections 242 and 245

of the General Corporation Law of the State of Delaware.

 

            IN WITNESS WHEREOF, said Combrex Corporation has caused its

corporate seal to be hereunto affixed and this Certificate to be signed by Cyril

C. Baldwin, Jr., its President, and attested by Irving Needleman, its

Secretary, this 16th day of September, 1987.

 

                                                  Cambrex Corporation

 

                                                  By /s/ John P. Lynch

                                                     ---------------------------

                                                           VICE PRESIDENT

 

ATTEST:

 

By /s/ Irving Needleman

   -------------------------

          Secretary

 

 

TEXT OF AMENDMENTS TO THE RESTATED CERTIFICATE OF INCORPORATION OF CAMBREX CORPORATION

Article SIXTH of the Restated Certificate of Incorporation of the Company would be amended to read as follows:

SIXTH: (a) Except as otherwise fixed by or pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional directors under specified circumstances, the number of the directors of the Corporation shall be fixed from time to time by or pursuant to the By-Laws of the Corporation. Subject to the provisions of this Article SIXTH below, until the 2010 annual meeting of stockholders when the following classification shall cease, Tthe directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as shall be provided in the manner specified in the By-Laws of the Corporation, one class to hold office initially for a term expiring at the annual meeting of stockholders to be held in 1988, another class to hold office initially for a term expiring at the annual meeting of stockholders in 1989, and another class to hold office initially for a term expiring at the annual meeting of stockholders to be held in 1990, with the members of each class to hold office until the successors are elected and qualified. At each annual meeting of the stockholders of the Corporation until the 2008 annual meeting of stockholders, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Directors elected at and after the 2008 annual meeting of stockholders shall hold office until the first annual meeting of stockholders following their election and until a successor shall have been elected and qualified or until the director’s prior death, resignation or removal.

          (b) Advance notice of stockholder nominations for the election of directors shall be given in the manner provided in the By-Laws of the Corporation.

          (c) Except as otherwise provided for or fixed by or pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the directors or the sole director then remaining in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred until the next succeeding annual meeting of stockholders following such director’s election and until such director’s successor shall have been elected and qualified, including in circumstances where such director’s predecessor was elected to a

 


 

longer term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes by the Board of Directors so as to maintain the number of directors in each class as nearly equal as possible. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

          (d) Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any director may be removed from office, but only for with or without cause, and only by the affirmative vote of the holders of at least two-thirds a majority of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class.

          (e) Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, special meetings of stockholders of the Corporation may be called only by the Chairman of the Board or President or the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors or as otherwise provided in the By-Laws of the Corporation.

          (f) In furtherance and not in the limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the By-Laws of the Corporation, but the stockholders may adopt additional By-Laws and may amend or repeal By-Laws whether or not adopted by them provided that the affirmative vote of the holders of at least two-thirds a majority of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class, is required for any such adoption of additional By-Laws, amendment or repeal.

          (g) Notwithstanding any other provision of this Certificate of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, the Certificate of Incorporation or the By-Laws of the Corporation), the affirmative vote of the holders of at least two-thirds a majority of the voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal this Article SIXTH or to adopt any provision inconsistent herewith.

 

As Filed: 05/02/2007