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EXHIBIT 99.02
Designation of Rights Agreement dated February 19, 1997
Page 53 of 72 Pages
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State of Delaware
PAGE 1
Office of the Secretary of State
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I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "CHECKERS DRIVE-IN RESTAURANTS, INC.", FILED IN THIS OFFICE ON
THE EIGHTEENTH DAY OF FEBRUARY, A.D. 1997, AT 1 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ XXXXXX X. XXXXX
-----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
2272161 8100 AUTHENTICATION: 8334651
971052144 DATE: 02-18-97
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XXXXX XX XXXXXXXX
XXXXXXXXX XX XXXXX
DIVISION OF CORPORATIONS
FILED 01:00 PM 02/18/1997
971052144 - 2272161
CERTIFICATE OF DESIGNATION
of
SERIES A PREFERRED STOCK
of
CHECKERS DRIVE-IN RESTAURANTS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
CHECKERS DRIVE-IN RESTAURANTS, INC., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Corporation's Restated Certificate of
Incorporation, as amended (the "Restated Certificate of Incorporation"), the
said Board of Directors on February 12, 1997, adopted the following resolution
creating a series of 87,719 shares of Preferred Stock designated as "Series A
Preferred Stock":
RESOLVED, that pursuant to the authority vested in the
Board of Directors of this Corporation in accordance with the
provisions of the Certificate of Incorporation, Series A of
Preferred Stock, par value $.001 per share, of the Corporation
be and hereby is created, and that the designation and number
of shares thereof and the voting and other powers, preferences
and relative, participating, optional or other rights of the
shares of such series and the qualifications, limitations and
restrictions thereof are as follows:
SERIES A PREFERRED STOCK
1. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series A Preferred Stock" (hereinafter
referred to as the "Series A Preferred"), and the number of shares constituting
such series shall be 87,719. Such number of shares may be decreased by
resolution of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series A Preferred to less than the number of
shares then issued and outstanding.
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2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Preferred with respect to dividends and distributions
(other than payments on liquidation, dissolution or winding up to which Section
6 hereof is applicable) (hereinafter "Dividends"), each share of Series A
Preferred at that time issued and outstanding, in preference to shares of any
class or series of stock of the Corporation ranking junior to the Series A
Preferred with respect to Dividends, shall be entitled to receive, out of funds
or property legally available for the purpose, a Dividend accruing from the
date hereof and equal, on a per share basis, to $16.53 per annum; provided, that
such Dividends shall accrue from the closing date for the sale of the Series A
Preferred only if either (i) the conversion of the Series A Preferred pursuant
to Section 9 hereof and any change in the number of authorized or outstanding
shares of Common Stock needed to enable the Corporation to fulfill its
obligations hereunder are not approved at the first action by the Corporation's
stockholders occurring after the date hereof (the "Stockholder Approval") or
(ii) the Series A Preferred is not converted into Common Stock prior to June
30, 1997. Such Dividends shall be payable in arrears in cash commencing on
August 19, 1997 and quarterly thereafter, on the 19th day of November, February,
May and August, to holders of record of the Series A Preferred on such dates as
the Board of Directors (or any authorized Committee thereof) may from time to
time determine, but only when and as declared by the Board of Directors (or
such Committee). Such Dividends shall be payable before any Dividends shall be
declared or paid upon, or set apart for, the issued and outstanding Common
Stock or such other stock of the Corporation into which the Common Stock may be
converted (the "Common Stock"), and shall be cumulative, so that if at any time
any Dividends upon the outstanding shares of Series A Preferred shall not have
been paid thereon, or declared and set apart therefor, with respect to all
preceding dividend periods, the amount of the deficiency shall be fully paid,
or declared and funds or property set apart for payment, but without interest,
before any Dividend shall be paid upon, or declared and funds or property set
apart for, the Common Stock.
(B) If at any time any cash Dividend on any other class or
series of Preferred Stock of the Corporation having cumulative Dividend rights
shall be in default, in whole or in part, no cash Dividend shall be paid, or
declared and set apart for payment, on the Series A Preferred unless
concurrently therewith, there shall be paid, or declared and set apart for
payment, without interest, all Dividends for all prior dividend periods on any
other class or series of cumulative Preferred Stock of the Corporation which
may hereafter be created having with respect to Dividend rights priority over
or parity with the Series A Preferred; provided, however, in the event such
default in Dividend payments is with respect only to the Series A Preferred and
any other class or any series of cumulative Preferred Stock of the Corporation
which may hereafter be created having with respect to Dividend rights parity
with the Series A Preferred. Dividends may be paid or declared and set apart
for payment, without interest, on the Series A Preferred and such other class
or series of cumulative Preferred Stock in amount proportional to the amounts
by which such Dividends are in default for the Series A Preferred and such
other class or series of cumulative Preferred Stock.
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(C) Dividends paid on the Series A Preferred in an amount
less than the total amount of Dividends at the time accrued and payable shall
be allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred entitled to receive
payment of a Dividend declared thereon, which record date shall be no more than
60 days prior to the date fixed for the payment thereof.
(D) Any reference to "Dividends" contained herein shall not
be deemed to include any Dividend payable in capital stock of the Corporation,
or in rights or warrants to acquire capital stock of the Corporation, nor shall
any such reference to "Dividends" in relation to issued and outstanding shares
be deemed to limit, curtail, or divest the authority of the Board of Directors
to make any proper distributions of authorized but unissued Common Stock, if
any.
3. Voting Rights. The holders of shares of Series A Preferred
shall have only the following voting rights:
(A) If the Corporation fails to declare and pay two
Dividends, which holders of Series A Preferred are entitled to receive pursuant
to Section 2 hereof, whether or not such failure is for consecutive periods,
then and in such event, the number of directors constituting the Corporation's
Board of Directors shall be increased by two, and the holders of the Series A
Preferred (voting as a separate class) shall be entitled at any annual meeting
of the stockholders to elect two directors of the Corporation; provided,
however, that the holders of Series A Preferred may, through the written
consent of holders of Series A Preferred representing a majority of the issued
and outstanding shares thereof, elect two directors to serve as directors of
the Corporation until their successors are elected at the next annual meeting
of stockholders. The presence in person or by proxy of the person entitled to
vote a majority of the shares of the Series A Preferred at any such meeting
shall constitute a quorum for the purpose of electing directors as hereinabove
provided. Such right of the holders of the Series A Preferred to elect
directors may be exercised until the stockholders of the Corporation approve
the conversion of the Series A Preferred into Common Stock pursuant to Section
9 hereof, and when such conversion is so approved, the right of the holders of
Series A Preferred to elect any directors shall cease. The directors so
elected shall serve until their respective successors shall be elected and
qualified; provided, however, that whenever the holders of the Series A
Preferred shall cease to have the special rights to elect directors as above
provided, the terms of office of all persons elected as directors by the
holders of the Series A Preferred, or elected to fill any vacancies or
directors so elected by the holders of the Series A Preferred, shall thereupon
automatically terminate.
If, during any interval between annual meetings of stockholders for the
election of directors, and while the holders of the Series A Preferred shall be
entitled to elect directors pursuant to this Paragraph (A) of Section 3, the
number of directors who have been elected by the holders of the Series A
Preferred shall, by reason of death, resignation or removal, be less than two,
the vacancy or vacancies in the directors elected by the holders of the Series
A
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Preferred may be filled by the written consent of holders of Series A Preferred
representing a majority of the issued and outstanding shares thereof.
(B) The approval of the holders of two-thirds (2/3) of the
outstanding shares of Series A Preferred (voting as a separate class) shall be
required for an amendment of the Restated Certificate of Incorporation which
would materially alter or change the powers, preferences or special rights of
the Series A Preferred so as to affect them adversely.
(C) Except as required by law, holders of the Series A
Preferred shall have no other voting rights and their consent shall not be
required for taking any corporate action.
4. Certain Restrictions.
(A) Whenever Dividends payable on the Series A Preferred as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid Dividends, whether or not declared, on shares of Series A Preferred
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay Dividends on, or redeem or
purchase or otherwise acquire for consideration any shares of stock ranking
with respect to Dividends junior (either as to Dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred;
(ii) declare or pay any Dividends on any shares of
stock ranking with respect to Dividends on a parity (either as to Dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred and
all such parity stock on which Dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled; or
(iii) purchase or otherwise acquire for consideration
any shares of Series A Preferred, or any shares ranking with respect to
Dividends on a parity with the Series A Preferred, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of Series A Preferred, or to such holders and
holders of any such shares ranking on a parity therewith, upon such terms as
the Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired promptly after the
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acquisition thereof. All such shares shall upon their retirement become
authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors, subject to any conditions and restrictions on
issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (upon liquidation, dissolution or
winding up) to the Series A Preferred unless, prior thereto, the holders of
shares of Series A Preferred shall have received an amount per share equal to
$114.00 plus accrued unpaid Dividends, based upon the number of days elapsed
and a 360-day year (the "Liquidation Preference").
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, ranking
(upon liquidation, dissolution or winding up) on a parity with the Series A
Preferred, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences.
(C) Neither the merger or consolidation of the Corporation
into or with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6.
7. Consolidation, Merger, Etc. In case (i) the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the Common Stock is to be exchanged for or changed into other stock or
securities, cash and/or any other property, (ii) a tender or exchange offer for
25% of the outstanding shares of Common Stock is successfully completed, (iii)
the Corporation shall sell all or substantially all of the Corporation's
assets, or (iv) any other event, occurring after a failure by the Company to
obtain the Stockholder Approval at the first action by the Corporation's
stockholders occurring after the date hereof, which results in a change of
control of the Corporation, then in any such case each share of Series A
Preferred shall at the same time be automatically redeemed for the then current
Liquidation Preference.
8. Redemption. The Series A Preferred shall be redeemed for the
then current Liquidation Preference on or prior to the second anniversary of
the date hereof. If the Corporation does not redeem the Series A Preferred as
required by this Section 8, then: (i) the Dividend which holders of the Series
A Preferred are entitled to receive hereunder shall increase to $20.52 per
share per annum; and (ii) if the holders of the Series A Preferred are not
otherwise entitled to elect two directors, the number of directors constituting
the Board of Directors shall be increased by two, and the holders of the Series
A Preferred (voting as a
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separate class) shall be entitled to elect two directors of the Corporation in
accordance with the terms and procedures set forth in Section 3 hereof.
9. Conversion
(A) The provisions of this Section 9 are subject to, and shall
not take effect until, approval by the Corporation's stockholders.
(B) Upon the date of the Stockholder Approval (the "Conversion
Date"), the Series A Preferred shall be automatically converted into the Common
Stock and such other capital stock of the corporation as hereinafter provided.
The corporation shall cause a notice of such stockholder approval to be mailed,
as soon as practicable thereafter, to the holders of record of the outstanding
Series A Preferred on the date of such approval, and to the transfer agent, if
any, for the Series A Preferred. Upon the Conversion Date, the holders of the
Series A Preferred shall be deemed to be holders of the number of shares of the
Common Stock into which their shares of Series A Preferred have been converted,
and shall have no rights with respect to the Series A Preferred except to
exchange the certificate(s) representing the holder's shares of Series A
Preferred for certificates representing Common Stock.
(C) Each share of Series A Preferred shall be convertible at
the office of the transfer agent for the Series A Preferred, if any, or at such
other office or offices, as the Board of Directors of the Corporation may
designate, into the number of fully paid and nonassessable shares of Common
Stock of the Corporation (calculated as to each conversion to the nearest
1/100th of a share) obtained by dividing the then current Liquidation
Preference attributable to a share of Series A Preferred by $1.14, subject to
adjustment as provided in Paragraph (F) of this Section 9 (the "Conversion
Rate"). Notwithstanding any other provisions of this Section 9, no change in
the Conversion Rate shall actually be made until the cumulative effect of the
adjustments called for by this Section 9 since the date of the last change in
the Conversion Rate would change the Conversion Rate by more than two percent
(2%). However, once the cumulative effect would result in a two percent (2%)
change, then the conversion rate shall be changed to reflect all adjustments
called for by this paragraph and not previously made.
(D) No fractional shares of Common Stock shall be issued upon
conversion of Series A Preferred but, in lieu of any fraction of a share of
Common Stock which would otherwise be issuable in respect of the aggregate
number of shares surrendered for conversion at one time by the same holder, the
Corporation shall pay in cash an amount equal to the sum of the current market
price of the Corporation's Common Stock multiplied by a number equal to the
fraction of a share.
(E) For the purposes of any computation pursuant to this
Section 9, the current market price of the Corporation's Common Stock shall be
deemed to be the average of the daily closing prices of the Corporation's
Common Stock for the thirty (30) consecutive business days commencing
forty-five (45) business days before the date on which such shares are duly
converted. For purposes of this Section 9, the closing price for each day
shall be the last sale
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price of the Corporation's Common Stock on the NASDAQ National Market, or if
the Corporation's Common Stock is not traded on the NASDAQ National Market, the
average of the bid and asked prices as furnished by any New York Stock Exchange
member firm selected from time to time by the Corporation for such purpose, or
if no such bid and asked prices can be obtained from any such firm, the fair
market value of one share of the Common Stock on such day as determined in good
faith by the Board of Directors of the Corporation.
(F) The Conversion Rate shall be subject to adjustment from time to
time in certain cases as follows:
(i) In case the Corporation shall (a) pay a dividend on its
Common Stock in shares of its capital stock, (b) subdivide its outstanding
Common Stock into a greater number of shares, (c) combine the shares of its
outstanding Common Stock into a smaller number of shares, or (d) issue by
reclassification of its Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing corporation) any shares of its capital stock, the Conversion Rate in
effect immediately prior thereto shall be proportionately adjusted so that the
holder of any Series A Preferred thereafter surrendered for conversion shall be
entitled to receive, to the extent permitted by applicable law, the number and
kind of shares of capital stock of the Corporation which he would have owned or
have been entitled to receive after the happening of such event had such Series
A Preferred been converted immediately prior to the happening of such event.
Such adjustment shall be made whenever any of such events shall occur. An
adjustment made pursuant to this Paragraph (F)(i) of Section 9 shall become
effective, retroactively, immediately after the record date in the case of a
stock dividend and shall become effective immediately after the effective date
in the case of subdivision, combination or reclassification.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period expiring within
forty-five (45) days after the record date mentioned below) to subscribe for or
purchase Common Stock at a price per share less than the current market price
per share of the Common Stock (as defined above) at the record date mentioned
below, the Conversion Rate then in effect shall be adjusted by multiplying it by
the ratio which (a) the number of shares of Common Stock outstanding on the date
of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such current market price bears to (b) the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional Common Shares offered for subscription or purchase. Such
adjustment shall be made whenever such rights or warrants are issued, and shall
become effective, retroactively, immediately after the record date for the
determination of shareholders entitled to receive such rights or warrants.
(iii) In case the Corporation shall distribute to all holders
of its Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the continuing corporation)
evidences of its indebtedness or assets, then in such case the Conversion Rate
then in effect shall be adjusted by multiplying it by the ratio
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which (a) the current market price per share of the Common Stock (as defined
above) less the fair market value (as determined in good faith by the Board of
Directors of the Corporation, (based upon the opinion of an independent
investment banking firm), whose determination shall be conclusive) of the
portion of such evidences of indebtedness so distributed applicable to one
share of Common Stock bears to (b) such current market price per share of the
Common Stock at the date of such distribution. Such adjustment shall be made
whenever any such distribution is made, and shall become effective,
retroactively, immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(iv) All calculations hereunder shall be made to the nearest
cent or to the nearest one-hundredth (1/100) of a share, as the case may be.
(v) In the event that at any time, as a result of an
adjustment made pursuant to Paragraph (F)(i) above, the holder of any Series A
Preferred thereafter converted shall become entitled to receive any shares of
capital stock of the Corporation other than its Common Stock, thereafter the
number of such other shares so receivable upon conversion shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Paragraphs (F)(i) to (iv), inclusive, above.
Except as otherwise provided for in this Paragraph (F) of Section 9, no
adjustment shall be made on any conversion for share distributions, dividends,
including, without limitation, dividends in property distributions, theretofore
declared and paid or payable on the Common Stock.
Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall send to the transfer agent, if any, for the Series A
Preferred and to the record holders of the Series A Preferred a statement
executed by the President as to the new Conversion Rate.
(G) Upon obtaining the Stockholder Approval, the Corporation shall at
all times reserve and keep available, out of its authorized and unissued stock,
solely for the purpose of effecting the conversion of the Series A Preferred,
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all shares of Series A Preferred from time to time
outstanding.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
14th day of February, 1997.
CHECKERS DRIVE-IN RESTAURANTS, INC.
By: /s/ XXXXX X. XXXXXX
---------------------------------
Xxxxx X. Xxxxxx
Senior Vice President and
General Counsel
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