-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UZJbrQ8vS81OrjdLFx8rPSjaGEF68qw++3wa+puKoRzsHi/ierqB9yTVLa8dh0rB rFpm9z/zfnq/W1UopWYriw== 0000950144-02-003764.txt : 20020416 0000950144-02-003764.hdr.sgml : 20020416 ACCESSION NUMBER: 0000950144-02-003764 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020327 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEAFNER TIRE GROUP INC CENTRAL INDEX KEY: 0001068152 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLE SUPPLIES & NEW PARTS [5013] IRS NUMBER: 560754594 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-61713 FILM NUMBER: 02608523 BUSINESS ADDRESS: STREET 1: 2105 WATER RIDGE PARKWAY STREET 2: SUITE 500 CITY: CHARLOTTE STATE: NC ZIP: 28217 BUSINESS PHONE: 7044238989 MAIL ADDRESS: STREET 1: 2105 WATER RIDGE PARKWAY STREET 2: SUITE 500 CITY: CHARLOTTE STATE: NC ZIP: 28217 FORMER COMPANY: FORMER CONFORMED NAME: J H HEAFNER CO INC DATE OF NAME CHANGE: 19980817 8-K 1 g75510e8-k.txt HEAFNER TIRE GROUP, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (date of earliest event reported): MARCH 27, 2002 HEAFNER TIRE GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 333-61713 56-0754584 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification Number) 12200 HERBERT WAYNE COURT, SUITE 150 (28078), P.O. BOX 1345 HUNTERSVILLE, NORTH CAROLINA 28070-3145 (Address of Principal Executive Offices) (Zip Code) (704) 992-2000 (Registrant's Telephone Number, Including Area Code) N/A (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. On March 27, 2002, the Registrant announced the consummation of several debt restructuring transactions (the "Restructuring Transactions"). The Restructuring Transactions comprised (i) a tender offer for up to $126 million aggregate principal amount of the Registrant's 10% Senior Notes Due 2008, Series D (the "Senior Notes"), and the related solicitation of consents to modifications to the Indenture governing the Senior Notes, dated as of December 1, 1998 (as amended and supplemented from time to time, the "Indenture"), among the Registrant, the Subsidiary Guarantors from time to time party thereto (the "Subsidiary Guarantors"), and First Union National Bank, as trustee (the "Trustee"), (ii) an amendment to the Registrant's senior secured credit facility to permit and make funds available for the Restructuring Transactions, (iii) a sale and leaseback of three of the Registrant's tire distribution warehouses generating net proceeds of approximately $13 million, and (iv) an equity investment of approximately $29 million from the Registrant's existing shareholders, in the Registrant's new Series D Preferred Stock. Upon the consummation of the Restructuring Transactions on March 27, 2002, the Registrant repurchased $121.4 million in outstanding principal amount of the Senior Notes at a purchase price of $535 per $1,000 in face amount of Senior Notes, plus accrued and unpaid interest thereon, and the Registrant, the Subsidiary Guarantors and the Trustee executed the Fourth Supplemental Indenture to the Indenture. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Not applicable. (b) Not applicable. (c) Exhibits. 3.1 Second Restated Certificate of Incorporation of Heafner Tire Group, Inc. 4.1 Fourth Supplemental Indenture, dated as of March 27, 2002, among Heafner Tire Group, Inc., the Subsidiary Guarantors named therein, and First Union National Bank, as Trustee. 10.1 Share Purchase Agreement, dated as of March 27, 2002, among Heafner Tire Group, Inc. and the Investors named therein. 99.1 Press Release, dated March 27, 2002. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: April 11, 2002 HEAFNER TIRE GROUP, INC. /s/ Richard P. Johnson ------------------------------------- Richard P. Johnson President and Chief Executive Officer 3 EX-3.1 3 g75510ex3-1.txt SECOND RESTATED CERTIFICATE OF INCORPORATION Exhibit 3.1 SECOND RESTATED CERTIFICATE OF INCORPORATION OF HEAFNER TIRE GROUP, INC. Heafner Tire Group, Inc. (the "Corporation"), a corporation formed under the General Corporation Law of the State of Delaware (as the same may be amended, supplemented or repealed from time to time, the "Act"), hereby certifies as follows: 1. The original Certificate of Incorporation of the Corporation was filed on December 29, 1998. A Restated Certificate of Incorporation of the Corporation was filed on April 3, 2001. 2. This Second Restated Certificate of Incorporation (hereinafter referred to as the "Articles") was duly adopted in accordance with provisions of Sections 242 and 245 of the Act by a resolution duly adopted at a meeting of the Board of Directors and by written consent of the Stockholders of the Corporation. 3. The Corporation's Restated Certificate of Incorporation is amended and restated in its entirety as follows: ARTICLE 1 CORPORATE NAME. The name of the Corporation is Heafner Tire Group, Inc. ARTICLE 2 REGISTERED AGENT. The address, including street, number, city, and county, of the registered office of the Corporation in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, in the County of New Castle, and the name of the registered agent of the Corporation in the State of Wilmington at such address is Corporation Service Company. ARTICLE 3 PURPOSE. The purpose of the Corporation is to conduct any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which a corporation may be organized under the Act. ARTICLE 4 CAPITAL STOCK. Section 4.1. Shares Authorized. The total number of shares of capital stock which the Corporation shall have authority to issue is (i) 50,000,000 shares of Common Stock, par value of $.01 per share (the "Common Stock"), and (ii) 10,982,426 shares of Preferred Stock with a par value of $.01 per share (the "Preferred Stock"). Section 4.2. Common Stock. The Common Stock shall have such rights, powers and privileges as provided in these Articles, in any amendment to these Articles and under applicable law. Section 4.3. Preferred Stock. The Preferred Stock shall have such voting powers, designations, preferences, such other relative, participating, optional and other special rights, and such qualifications, limitations and restrictions as provided in these Articles and in any amendment to these Articles. Of the 10,982,426 shares of Preferred Stock authorized for issuance by the Corporation, 7,000 shares shall initially be designated Series A Cumulative Redeemable Preferred Stock (the "Series A Preferred Stock"), 4,500 shares shall initially be designated Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred Stock" and, together with the Series A Preferred Stock, the "Kelly Preferred Stock"), 1,333,334 shares shall initially be designated Series C Preferred Stock (the "Series C Preferred Stock") and 6,637,592 shares shall initially be designated Series D Preferred Stock (the "Series D Preferred Stock"). The stated value of the Series A Preferred Stock (the "Series A Liquidation Preference") shall be $1,000.00 per share. The stated value of the Series B Preferred Stock (the "Series B Liquidation Preference") shall initially be $1,000.00 per share and shall be adjusted from time to time as provided in Section 6.3. Section 4.4. Rank of Capital Stock. With respect to dividend rights and other rights upon liquidation, dissolution or winding up of the Corporation, (i) the Series A Preferred Stock and the Series B Preferred Stock shall rank on a parity with each other and senior to the Series C Preferred Stock, Series D Preferred Stock and Common Stock, (ii) the Series C Preferred Stock and Series D Preferred Stock shall rank junior to the Series A Preferred Stock and Series B Preferred Stock and senior to the Common Stock and (iii) the Series C Preferred Stock and Series D Preferred Stock shall rank on a parity with each other. Other classes or series of capital stock may, subject to the provisions of these Articles and applicable law, be authorized by the Board of Directors that rank (as to payment of dividends or distribution of assets upon liquidation, dissolution or winding up) senior to ("Senior Stock"), on a parity with ("Parity Stock") or junior to ("Junior Stock") other classes or series of capital stock. Section 4.5. No Preemptive Rights. No holder of shares of capital stock of the Corporation shall have preemptive rights to acquire unissued shares of capital stock of the Corporation under these Articles. 2 ARTICLE 5 COMMON STOCK. Section 5.1. Voting Rights. Each outstanding share of Common Stock shall be entitled to vote on each matter on which the stockholders of the Corporation shall be entitled to vote and each holder of Common Stock shall be entitled to one vote for each share of Common Stock held by such holder. Section 5.2. Dividends and Distributions. The holders of shares of Common Stock shall be entitled to receive dividends or other distributions out of the assets of the Corporation legally available therefor when, as and if declared by the Board of Directors. Section 5.3. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Common Stock shall be entitled to share ratably in the net assets of the Corporation remaining after payment or provision for payment of the debts and liabilities of the Corporation and all amounts payable to holders of Senior Stock. ARTICLE 6 KELLY PREFERRED STOCK. The Kelly Preferred Stock shall have the following voting powers, preferences and other rights, qualifications, limitations and restrictions: Section 6.1. Series A Dividends and Distributions. (a) Holders of shares of Series A Preferred Stock, in preference to the holders of shares of Common Stock and any shares of other capital stock of the Corporation other than shares of Parity Stock or Senior Stock with respect to the Series A Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation legally available therefor, cumulative cash dividends (the "4% Series A Dividends") on the Series A Liquidation Preference of such shares at an annual rate of 4.0%; provided that, if as of December 31, 1997 (i) the Corporation and its subsidiaries are not ordering all of their respective requirements of "Winston" brand tires from The Kelly-Springfield Tire Company, a division of The Goodyear Tire and Rubber Company (together with its affiliates, "Kelly-Springfield"), and (ii) Kelly-Springfield is otherwise ready, willing and able to supply the Corporation and its subsidiaries with such "Winston" brand tires in accordance with the terms set forth in the Supply Agreement (as defined below in Section 6.5(c)), then, beginning immediately thereafter and continuing until such time as the earlier of (1) the Corporation and its affiliates are ordering all of such "Winston" brand tires from Kelly-Springfield and (2) the Kelly Preferred Stock has been redeemed in full, the annual rate of the 4% Series A Dividends shall be at the greater of (x) 4% and (y) 120% of the Prime Rate (as defined below in Section 6.1(b)) (the "Adjusted Series A Dividend Rate"). The 4% Series A Dividends shall be calculated on the basis of a 360-day year consisting of twelve 30-day months, and shall accrue and be payable, in immediately available funds, due on the last Business Day of each calendar month (each a "4% Dividend Monthly Payment Date"). Payment of 4% Series A Dividends on shares of Series A Preferred Stock shall commence on the first 4% Dividend Monthly Payment Date following the date of original 3 issue of such shares (the "Series A Issue Date"). The first payment of 4% Series A Dividends on such shares shall be in an amount equal to the product of (i) the quotient obtained by dividing (1) the product of the Series A Liquidation Preference of such shares and 4.0% by (2) 12 and (ii) the quotient obtained by dividing (x) the number of days from and including the Series A Issue Date up to and excluding the initial 4% Dividend Monthly Payment Date by (y) 30. If holders of shares of Series A Preferred Stock are entitled to receive 4% Series A Dividends on a date other than a 4% Dividend Monthly Payment Date (a "4% Dividend Special Payment Date"), such payment shall be in an amount equal to the product of (i) the quotient obtained by dividing (1) the product of the Series A Liquidation Preference of such shares and 4.0% or the Adjusted Series A Dividend Rate, as applicable, by (2) 12 and (ii) the quotient obtained by dividing (x) the number of days from and including the date of such immediately preceding 4% Dividend Monthly Payment Date up to and excluding the 4% Dividend Special Payment Date by (y) 30. All other payments of 4% Series A Dividends shall accrue from and including the immediately preceding 4% Dividend Monthly Payment Date or 4% Dividend Special Payment Date, as applicable, to but excluding the following 4% Dividend Monthly Payment Date or 4% Dividend Special Payment Date, as applicable. "Business Day" means any day other than a Saturday, Sunday or other day on which banks in Atlanta, Georgia are authorized to close. (b) In addition to the 4% Series A Dividends, holders of Series A Preferred Stock, in preference to the holders of shares of Common Stock and any shares of other capital stock of the Corporation other than shares of Parity Stock or Senior Stock with respect to the Series A Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation legally available therefor, cumulative cash dividends (the "Series A Additional Dividends" and, together with the 4% Series A Dividends, the "Series A Dividends") in an amount equal to the product of the Series A Liquidation Preference of such shares and the Applicable Rate (as defined below). The Series A Additional Dividends shall accrue and be payable in immediately available funds on the last Business Day of January of each year (each an "Additional Dividend Payment Date"), with the first such Series A Additional Dividend to accrue and be payable on the last Business Day of January 1999; provided that, if in any calendar year immediately preceding an Additional Dividend Payment Date a 4% Series A Dividend accrues and becomes payable at the Adjusted Series A Dividend Rate, the amount of the Series A Additional Dividend that accrues and becomes payable on such Additional Dividend Payment Date shall be reduced by an amount equal to the excess, if any, of (x) the aggregate amount of the 4% Series A Dividends that accrued and became payable in such calendar year over (y) the aggregate amount of such Series A Dividends that would have accrued and become payable in such calendar year if the Adjusted Series A Dividend Rate had not applied in such calendar year. The "Applicable Rate" for determining the amount of the Series A Additional Dividend for each Additional Dividend Payment Date shall be the percentage rate set forth opposite such date (and corresponding to the applicable number of Units Purchased (as defined below)) set forth below: 4 Additional Dividend Payment Date Units Purchased Applicable Rate - ------------------- ------------------- --------------- January 1999 Less than 1,000,000 Standard Rate 1,000,000-1,099,999 4.0 1,100,000-1,199,999 3.0 1,200,000-1,299,999 2.0 1,300,000-1,399,999 1.0 1,400,000 or more 0.0 - ------------------------------------------------------------------------ January 2000 Less than 1,100,000 Standard Rate 1,100,000-1,199,999 4.0 1,200,000-1,299,999 3.0 1,300,000-1,399,999 2.0 1,400,000-1,499,999 1.0 1,500,000 or more 0.0 - ------------------------------------------------------------------------ January 2001 Less than 1,144,000 Standard Rate 1,144,001-1,247,999 4.0 1,248,000-1,351,999 3.0 1,352,000-1,455,999 2.0 1,456,000-1,559,999 1.0 1,560,000 or more 0.0 - ------------------------------------------------------------------------ January 2002 Less than 1,189,760 Standard Rate 1,189,761-1,297,919 4.0 1,297,920-1,406,079 3.0 1,406,080-1,514,239 2.0 1,514,240-1,622,399 1.0 1,622,400 or more 0.0 5 Additional Dividend Payment Date Units Purchased Applicable Rate - ------------------- ------------------- --------------- January 2003 Less than 1,237,350 Standard Rate 1,237,351-1,349,836 4.0 1,349,837-1,462,322 3.0 1,462,323-1,574,809 2.0 1,574,810-1,687,295 1.0 1,687,296 or more 0.0 - ------------------------------------------------------------------------ January 2004 Less than 1,286,844 Standard Rate 1,286,845-1,403,829 4.0 1,403,830-1,520,815 3.0 1,520,816-1,637,801 2.0 1,637,802-1,754,787 1.0 1,754,788 or more 0.0 - ------------------------------------------------------------------------ January 2005 Less than 1,338,318 Standard Rate 1,338,319-1,459,982 4.0 1,459,983-1,581,648 3.0 1,581,649-1,703,313 2.0 1,703,314-1,824,978 1.0 1,824,979 or more 0.0 - ------------------------------------------------------------------------ January 2006 Less than 1,391,851 Standard Rate 1,391,852-1,518,381 4.0 1,518,382-1,644,914 3.0 1,644,915-1,771,446 2.0 1,771,447-1,897,977 1.0 1,897,978 or more 0.0 - ------------------------------------------------------------------------ January 2007 Less than 1,447,525 Standard Rate 1,447,526-1,579,116 4.0 1,579,117-1,710,711 3.0 1,710,712-1,842,304 2.0 1,842,305-1,973,896 1.0 1,973,897 or more 0.0 - ------------------------------------------------------------------------ 6 Additional Dividend Payment Date Units Purchased Applicable Rate - ------------------- ------------------- --------------- January 2008 Less than 1,505,426 Standard Rate 1,505,427-1,642,281 4.0 1,642,282-1,779,139 3.0 1,779,140-1,915,996 2.0 1,915,997-2,052,852 1.0 2,052,853 or more 0.0 provided that, in no event shall the Applicable Rate be higher than the Standard Rate. "Standard Rate" means the excess, if any, of (x) the Prime Rate over (y) 4%. "Prime Rate" means the rate of interest publicly announced from time to time by Fleet National Bank at its office at 100 Federal Street, Boston, Massachusetts as its "base" rate as in effect on the Business Day immediately preceding the applicable dividend payment date. "Units Purchased" means, for any Additional Dividend Payment Date, the net number of tires (other than "Monarch" brand tires) purchased by the Corporation and its subsidiaries from Kelly-Springfield during the calendar year immediately preceding such Additional Dividend Payment Date, which number of tires shall not include an amount equal to the sum of (x) 250,000 and (y) an amount equal to the number of premium tires purchased by the Corporation and its affiliates from Kelly-Springfield in 1996. (c) If, as of the close of business on any 4% Dividend Monthly Payment Date, there is a 4% Series A Dividend Arrearage (as hereinafter defined), an additional dividend (the "4% Series A Makewhole Dividend") shall accrue on each share of the Series A Preferred Stock for the period from and including such 4% Dividend Monthly Payment Date to the earlier of (x) the date on which such 4% Series A Dividend Arrearage is paid in full and (y) the next succeeding 4% Dividend Monthly Payment Date, in an amount equal to the product of (i) the Prime Rate (calculated for such period in accordance with Section 6.1(a)) and (ii) the amount of such 4% Series A Dividend Arrearage as of such 4% Dividend Monthly Payment Date. "4% Series A Dividend Arrearage" means, with respect to each share of Series A Preferred Stock, as of any 4% Dividend Monthly Payment Date, the excess, if any, of (i) all 4% Series A Dividends accrued to (but excluding) such 4% Dividend Monthly Payment Date on such share over (ii) all 4% Series A Dividends actually paid with respect to such share on or before the close of business on such 4% Dividend Monthly Payment Date. (d) If, as of the close of business on any Additional Dividend Payment Date, there is a Series A Additional Dividend Arrearage (as hereinafter defined), an additional dividend (the "Additional Series A Makewhole Dividend") shall accrue on each share of the Series A Preferred Stock for the period from and including such Additional Dividend Payment Date to the earlier of (x) the date on which such Additional Series A Dividend Arrearage is paid in full and (y) the next succeeding Additional Dividend Payment Date, in an amount equal to the product of (i) the Prime Rate and (ii) the amount of such Additional Series A Dividend Arrearage as of such Additional Dividend Payment Date. "Additional Series A Dividend Arrearage" means, with 7 respect to each share of Series A Preferred Stock, as of any Additional Dividend Payment Date, the excess, if any, of (i) all Series A Additional Dividends accrued to (but excluding) such Additional Dividend Payment Date on such share over (ii) all Series A Additional Dividends actually paid with respect to such share on or before the close of business on such Additional Dividend Payment Date. (e) The 4% Series A Dividends shall accrue, and shall be cumulative from the Series A Issue Date of the underlying shares, whether or not declared by the Board of Directors. The Series A Additional Dividends shall accrue, and shall be cumulative from the first day on which such dividends are due, whether or not declared by the Board of Directors. The 4% Series A Makewhole Dividend and the Additional Series A Makewhole Dividend, if any, shall accrue, and shall be cumulative from the date on which a 4% Series A Dividend Arrearage or Series A Additional Dividend Arrearage arises, whether or not declared by the Board of Directors. If the Corporation makes a dividend payment on shares of Series A Preferred Stock in an amount less than the total amount of accrued and payable dividends on the underlying shares at such time, then the dividends paid shall be allocated ratably on a share-by-share basis among all shares of Series A Preferred Stock then outstanding. The Board of Directors may fix a record date that is no more than sixty days and no less than ten days prior to any date fixed for payment of a dividend declared on shares of Series A Preferred Stock to determine the holders of shares of Series A Preferred Stock entitled to receive such payment. Accumulated but unpaid dividends for any past dividend periods or payment dates may be declared and paid at any time (without reference to any regular payment date) to holders of record on a record date fixed by the Board of Directors that is no more than sixty days and no less than ten days preceding the date fixed for payment of such dividends. (f) The holders of shares of Series A Preferred Stock shall not be entitled to receive, and the Corporation shall not declare or pay thereon, any dividends or other distributions except as provided herein. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payment or payments on the shares of Series A Preferred Stock which may be in arrears. Section 6.2. Series B Dividends and Distributions. (a) If during any calendar year beginning with 1998 the Corporation and its affiliates do not purchase from Kelly-Springfield tires with an aggregate purchase price in an amount equal to or greater than (i) for 1998, $60,000,000, (ii) for 1999, $80,000,000, and (iii) for each calendar year thereafter, an amount averaging at least 104% of the aggregate purchase price for tires purchased from Kelly-Springfield in the prior calendar year, holders of shares of Series B Preferred Stock, in preference to the holders of shares of Common Stock and any shares of other capital stock of the Corporation other than shares of Parity Stock or Senior Stock with respect to the Series B Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of Directors, out the assets of the Corporation legally available therefor, cumulative cash dividends (the "Series B Dividends") on the Series B Liquidation Preference of such shares at the Prime Rate. The Series B Dividends shall accrue and be payable in immediately available funds on the last Business Day of the month of January following each such calendar year during which the applicable aggregate purchase price threshold is not equaled or exceeded (each a "Series B Dividend Payment Date"). 8 (b) If, as of the close of business on any Series B Dividend Payment Date, there is a Series B Dividend Arrearage (as hereinafter defined), an additional dividend (the "Series B Makewhole Dividend") shall accrue on each share of the Series B Preferred Stock for the period from and including such Series B Dividend Payment Date to the earlier of (x) the date on which such Series B Dividend Arrearage is paid in full and (y) the next succeeding Series B Dividend Payment Date, in an amount equal to the product of (i) the Prime Rate and (ii) the amount of such Series B Dividend Arrearage as of such Series B Dividend Payment Date. "Series B Dividend Arrearage" means, with respect to each share of Series B Preferred Stock, as of any Series B Dividend Payment Date, the excess, if any, of (i) all Series B Dividends accrued to (but excluding) such Series B Dividend Payment Date on such share over (ii) all Series B Dividends actually paid with respect to such share on or before the close of business on such Series B Dividend Payment Date. (c) Series B Dividends shall accrue, and shall be cumulative from the first day on which such dividends are due, whether or not declared by the Board of Directors. Series B Makewhole Dividends, if any, shall accrue, and shall be cumulative from the date on which a Series B Dividend Arrearage arises. If the Corporation makes a dividend payment on the shares of Series B Preferred Stock in an amount less than the total amount of accrued and payable dividends on the underlying shares at such time, then the dividends paid shall be allocated ratably on a share-by-share basis among all shares of Series B Preferred Stock then outstanding. The Board of Directors may fix a record date that is no more than sixty days and no less than ten days prior to any date fixed for payment of a dividend declared on shares of Series B Preferred Stock to determine the holders of shares of Series B Preferred Stock entitled to receive such payment. Accumulated but unpaid dividends for any past dividend periods or payment dates may be declared and paid at any time (without reference to any regular payment date) to holders of record on a record date fixed by the Board of Directors that is no more than sixty days and no less than ten days preceding the date fixed for payment of such dividends. (d) The holders of shares of Series B Preferred Stock shall not be entitled to receive, and the Corporation shall not declare or pay, any dividends or other distributions except as provided herein. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payment or payments on the shares of Series B Preferred Stock which may be in arrears. Section 6.3. Adjustment of Series B Liquidation Preference. After the date of original issue of the shares of Series B Preferred Stock (the "Series B Issue Date"), the Series B Liquidation Preference for the outstanding shares of Series B Preferred Stock on any date (a "Series B Valuation Date") shall be an amount per share equal to the excess, if any, of (i) $1,000 over (ii) the quotient obtained by dividing (x) the aggregate Tire Purchase Credit (as defined below) as of such Series B Valuation Date by (y) the total number of shares of Series B Preferred Stock outstanding as of such Series B Valuation Date. The "Tire Purchase Credit" as of any Series B Valuation Date shall be an amount equal to (x) $1.00 per unit of "Broad Line" tires and (y) $2.00 per unit of "HV&Z Performance" tires, in each case purchased by the Corporation and its affiliates from and including the Series B Issue Date through such Series B Valuation Date; provided that, for purposes of calculating the amount of the Tire Purchase Credit, purchases of "Value Line" and "OPP" tires shall not be counted. 9 Section 6.4. Voting Rights. (a) Ownership of shares of Kelly Preferred Stock shall entitle the holders to no voting rights except as provided in this Section 6.4 and under applicable law. (b) So long as any shares of either Series A Preferred Stock or Series B Preferred Stock shall be outstanding, the Corporation shall not, without the affirmative vote or written consent of the holders of a majority of the aggregate number of shares of Series A Preferred Stock or Series B Preferred Stock then outstanding, as applicable, each considered as a separate series, (i) alter or change the powers, preferences or rights given to the Series A Preferred Stock or Series B Preferred Stock, as applicable, by these Articles or (ii) amend these Articles to increase the authorized amount of Series A Preferred Stock or Series B Preferred Stock or to authorize or create any Senior Stock or Parity Stock with respect to the Series A Preferred Stock or Series B Preferred Stock. The amendment of these Articles to authorize or create, or to increase the authorized amount of, any Junior Stock shall not be deemed to alter or change the powers, preferences or rights given to the Series A Preferred Stock or the Series B Preferred Stock by these Articles. Notwithstanding the foregoing provisions, the affirmative vote or consent of the holders of the Series A Preferred Stock or the Series B Preferred Stock, as applicable, shall not be required for any alteration or change on which the holders would otherwise be entitled to vote if, at or prior to the time that any such alteration or change takes effect, due provision is made for the redemption of all such shares of Series A Preferred Stock or Series B Preferred Stock at the time outstanding. (c) So long as Kelly-Springfield holds (of record and beneficially) all of the outstanding shares of Kelly Preferred Stock, if on any date (1) any condition or event shall occur which results in the acceleration of the maturity of the indebtedness evidenced by the Debt Documents or (2) without the requisite vote or consent of the holders of Series A Preferred Stock or Series B Preferred Stock, as applicable, the Corporation adversely alters or changes the powers, preferences or rights given to such series by these Articles, then the number of directors constituting the Board of Directors shall, without further action, be increased by the Specified Number (as defined below) and the holders of shares of Kelly Preferred Stock shall have, in addition to the other voting rights set forth in these Articles, the exclusive right, voting separately as a single class, to elect such Specified Number of directors of the Corporation to fill such newly created directorships, by written consent as provided herein, or at a special meeting of such holders called as provided herein. Any such additional directors shall continue as directors (subject to reelection or removal as provided in Section 6.4(d)(ii)) and the holders of Kelly Preferred Stock shall have such additional voting rights until such time as (A) Kelly-Springfield no longer holds (of record and beneficially) all of the outstanding shares of Kelly Preferred Stock, (B) in the case of any event described in clause (1) above, such acceleration of the indebtedness evidenced by the Debt Documents shall have been rescinded or such indebtedness shall have been repaid in full, (C) in the case of clause (2) above, such adverse alteration or change of the powers, preferences or rights given to the Series A Preferred Stock or the Series B Preferred Stock, as applicable, shall have been rescinded or (D) all of the outstanding shares of Kelly Preferred Stock shall have been redeemed pursuant to Section 6.5, whichever is earlier, at which time such additional directors shall cease to be directors and such additional voting rights 10 of the holders of Kelly Preferred Stock shall terminate subject to revesting in the event of each and every subsequent event of the character indicated above. "Specified Number" means a number of directors equal to the number required so that the holders of Kelly Preferred Stock will have the right to elect, voting separately as a single class, a majority of the Board of Directors at any time. (d) (i) The right of holders of shares of Kelly Preferred Stock to take any action as provided in Section 6.4(c) may be exercised at any annual meeting of stockholders or at a special meeting of holders of shares of Kelly Preferred Stock held for such purpose as hereinafter provided or at any adjournment thereof, or by the written consent, delivered to the Secretary of the Corporation, of the holders of the minimum number of shares required to take such action, which shall be a majority of the outstanding shares of Kelly Preferred Stock unless otherwise required by law. So long as such right to vote continues (and unless such right has been exercised by written consent of the minimum number of shares required to take such action), the President of the Corporation may call, and upon the written request of holders of record of at least 10% of the outstanding shares of Kelly Preferred Stock, addressed to the Secretary of the Corporation at the principal office of the Corporation, shall call, a special meeting of the holders of shares entitled to vote as provided herein. Such meeting shall be held within 30 days after delivery of such request to the Secretary, at the place and upon the notice provided by law and in the by-laws of the Corporation for the holding of meetings of stockholders. (ii) At each meeting of stockholders at which the holders of shares of Kelly Preferred Stock shall have the right, voting separately as a single class, to elect the directors of the Corporation as provided in Section 6.4(c), the presence in person or by proxy of the holders of record of a majority of the total number of shares of Kelly Preferred Stock then outstanding and entitled to vote on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereof: (A) the absence of a quorum of the holders of shares of Kelly Preferred Stock shall not prevent the election of directors other than those to be elected by the holders of shares of Kelly Preferred Stock, and the absence of a quorum of the holders of shares of any other class or series of capital stock shall not prevent the election of directors to be elected by the holders of shares of Kelly Preferred Stock; and (B) in the absence of a quorum of the holders of shares of Kelly Preferred Stock, a majority of the holders of such shares present in person or by proxy shall have the power to adjourn the meeting as to the actions to be taken by the holders of shares of Kelly Preferred Stock from time to time and place to place without notice other than announcement at the meeting until a quorum shall be present. For taking of any action as provided in Section 6.4(c) by the holders of shares of Kelly Preferred Stock, each such holder shall have one vote for each share of such stock standing in his name on the transfer books of the Corporation as of any record date fixed for such purpose or, if 11 no such date be fixed, at the close of business on the Business Day next preceding the day on which notice is given, or if notice is waived, at the close of business on the Business Day next preceding the day on which the meeting is held or, if action is taken by written consent, at the close of business on the Business Day next preceding the day on which such consent is entered into; provided that shares of Kelly Preferred Stock owned by the Corporation or any Affiliate of the Corporation shall not be deemed to be outstanding for purposes of taking any action as provided in Section 6.4(c). Each director elected by the holders of shares of Kelly Preferred Stock as provided in Section 6.4(c) shall, unless his or her term shall expire earlier in accordance with the provisions hereof, hold office until the annual meeting of stockholders next succeeding his or her election or until his or her successor, if any, is elected and qualified. If any director so elected by the holders of Kelly Preferred Stock shall cease to serve as a director before his or her term shall expire (except by reason of the termination of the voting rights accorded to the holders of Kelly Preferred Stock with respect to the Specified Number of directors in accordance with Section 6.4(c)), the holders of the Kelly Preferred Stock then outstanding and entitled to vote for such director may, by written consent as provided herein, or at a special meeting of such holders called as provided herein, elect a successor to hold office for the unexpired term of the director whose place shall be vacant. Any director elected by the holders of shares of Kelly Preferred Stock voting separately as a single class may be removed from office with or without cause by the vote or written consent of the holders of at least a majority of the then outstanding shares of Kelly Preferred Stock, at the time of removal. Section 6.5. Redemption. (a) Subject to the restrictions contained in Section 6.6, beginning on the last Business Day of December 2002, and on the last Business Day of each June and December thereafter ending on the last Business Day of June 2007 (each a "Series A Fixed Redemption Date"), the Corporation shall redeem, out of the assets of the Corporation legally available therefor, a number of outstanding shares of Series A Preferred Stock equal to the lesser of (x) 700 and (y) the total number of shares of Series A Preferred Stock outstanding on such Series A Fixed Redemption Date at a price per share equal to the sum of (1) 100% of the Series A Liquidation Preference and (2) an amount per share equal to all accrued and unpaid Series A Dividends, 4% Series A Makewhole Dividends and Additional Series A Makewhole Dividends on such shares, whether or not declared or payable, to such Series A Fixed Redemption Date, in immediately available funds. If less than all of the outstanding shares of Series A Preferred Stock are to be redeemed pursuant to this Section 6.5(a), shares shall be redeemed from all holders of outstanding Series A Preferred Stock on the date the redemption notice specified in Section 6.5(g) is mailed, pro rata in proportion (to the extent practicable) to the number of shares of Series A Preferred Stock held by each such holder. No fractions of shares shall be redeemed pursuant to this Section 6.5(a). 12 (b) Subject to the restrictions contained in Section 6.6, on the last business day of June 2007 (the "Series B Fixed Redemption Date"), the Corporation shall redeem, out of the assets of the Corporation legally available therefor, all of the outstanding shares of Series B Preferred Stock at a price per share equal to the sum of (1) 100% of the Series B Liquidation Preference and (2) an amount per share equal to all accrued and unpaid Series B Dividends and Series B Makewhole Dividends on such shares, whether or not declared or payable, to the Series B Fixed Redemption Date, in immediately available funds. (c) Subject to the restrictions contained in Section 6.6, no later than 30 Business Days after the termination of the Supply Agreement (the "Supply Agreement") to be entered into by and between the Corporation and Kelly-Springfield in connection with Kelly-Springfield's purchase of the Kelly Preferred Stock (the "Kelly Mandatory Redemption Date"), the Corporation shall redeem, out of the assets of the Corporation legally available therefor, all of the shares of Kelly Preferred Stock outstanding on the Kelly Mandatory Redemption Date at a price per share equal to the sum of (1) the product of (x) 100% of the Series A Liquidation Preference or the Series B Liquidation Preference, as applicable, and (y) the Applicable Premium then in effect as provided in paragraph (f) below and (2) an amount per share equal to all accrued and unpaid Series A Dividends, 4% Series A Makewhole Dividends and Additional Series A Makewhole Dividends or Series B Dividends and Series B Makewhole Dividends, as applicable, whether or not declared or payable, to the Kelly Mandatory Redemption Date, in immediately available funds. (d) Reserved. (e) Subject to the restrictions contained in Section 6.6, at any time after the Series A Issue Date, the Corporation may, in its sole discretion, redeem all (but not less than all) of the outstanding shares of Kelly Preferred Stock, out of the assets of the Corporation legally available therefor, at a price per share equal to the sum of (1) the product of (x) 100% of the Series A Liquidation Preference or the Series B Liquidation Preference, as applicable, and (y) the Applicable Premium then in effect as provided in paragraph (f) below and (2) an amount per share equal to all accrued and unpaid Series A Dividends, 4% Series A Makewhole Dividends and Additional Series A Makewhole Dividends or Series B Dividends and Series B Makewhole Dividends, as applicable, whether or not declared or payable, to the Optional Redemption Date (as defined below), in immediately available funds. "Optional Redemption Date" means, with respect to a redemption pursuant to this Section 6.5(e), the date specified for such redemption in the notice to the holders of the Kelly Preferred Stock required under Section 6.5(g). (f) The "Applicable Premium" for each of the following periods shall be the number set forth opposite such period below: Period Applicable Premium ------ ------------------ Series A Issue Date through first anniversary 1.22 After first anniversary through second anniversary 1.20 13 After second anniversary through third anniversary 1.18 After third anniversary through fourth anniversary 1.15 After fourth anniversary through fifth anniversary 1.10 After fifth anniversary 1.00 (g) Notice of any redemption of shares of Kelly Preferred Stock pursuant to this Section 6.5 shall be mailed at least 10, but not more than 30, days prior to the date fixed for redemption to each holder of shares of Kelly Preferred Stock to be redeemed, at such holder's address as it appears on the transfer books of the Corporation. Such notice shall include instructions for the surrender of the Kelly Preferred Stock to be redeemed and the receipt of payment therefor. In order to facilitate the redemption of shares of Kelly Preferred Stock pursuant to this Section 6.5, the Board of Directors may fix a record date for the determination of shares of Kelly Preferred Stock to be redeemed, or may cause the transfer books of the Corporation for the Kelly Preferred Stock to be closed, not more than 30 days or less than 10 days prior to the date fixed for such redemption. (h) Notice of redemption having been given as aforesaid, upon the date fixed for redemption in respect of shares of Kelly Preferred Stock to be redeemed pursuant to this Section 6.5, notwithstanding that any certificates for such shares shall not have been surrendered for cancellation, from and after the date of redemption designated in the notice of redemption, (i) the shares of Kelly Preferred Stock represented thereby shall no longer be deemed outstanding, (ii) the rights to receive dividends thereon shall cease to accrue, and (iii) all rights of the holders of shares of Kelly Preferred Stock to be redeemed shall cease and terminate, excepting only the right to receive the applicable redemption price. Section 6.6. Limitations on Mandatory Redemption and Dividends. Notwithstanding anything to the contrary in these Articles, so long as any amounts are outstanding under any Debt Documents (as defined below) or any commitments to lend under the Debt Documents have not been terminated, the Corporation shall not make payment in respect of any redemption permitted or otherwise required by Section 6.5, or declare, make or pay any dividend or distribution in respect of any shares of Kelly Preferred Stock if any Event of Default (as defined in the Debt Documents) or default under any of the Debt Documents or any event which, upon notice or lapse of time, or both, would constitute an Event of Default has occurred and is continuing or would result therefrom and has not been cured or waived in writing by the requisite vote of the holders of the indebtedness represented by the Debt Documents. "Debt Documents" means the Loan and Security Agreement, dated as of the Series A Issue Date between the Corporation, Oliver & Winston, Inc., the financial institutions party thereto and BankBoston, N.A., as agent, and the Senior Subordinated Note and Warrant Purchase Agreement, dated the Series A Issue Date, by and among the Corporation and The 1818 Mezzanine Fund, L.P., and the notes, mortgages, security documents, guaranties and other agreements entered into in connection therewith (each as amended, modified, supplemented and/or restated from time to time in 14 accordance with its terms, including any replacement agreement therefor and any refinancing of the debt incurred thereunder, which refinancing may result in a greater principal amount outstanding in connection therewith). Section 6.7. Reacquired Shares. Any shares of Kelly Preferred Stock exchanged, redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares of Kelly Preferred Stock shall upon their cancellation become authorized but unissued shares of preferred stock, par value $.01 per share, of the Corporation and, upon the filing of an appropriate charter amendment with the Secretary of State of the State of Delaware, may be reissued as part of another series of preferred stock, par value $.01 per share, of the Corporation subject to the conditions or restrictions on issuance set forth herein, but in any event may not be reissued as shares of Kelly Preferred Stock or other Parity Stock unless all of the shares of Kelly Preferred Stock shall have already been redeemed. Section 6.8. Liquidation, Dissolution or Winding Up. (a) If the Corporation shall commence a voluntary case under the United States bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any other country, or consent to the entry of an order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the United States bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any other country, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and on account of any such event the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, no distribution shall be made (i) to the holders of shares of Junior Stock with respect to the Kelly Preferred Stock unless, prior thereto, the holders of shares of Kelly Preferred Stock shall have received an amount equal to the Series A Liquidation Preference or the Series B Liquidation Preference, as applicable, plus all accrued and unpaid dividends, whether or not declared or currently payable, to the date of distribution, with respect to each outstanding share, or (ii) to the holders of shares of Parity Stock with respect to the Kelly Preferred Stock, except distributions made ratably on the Kelly Preferred Stock and all other Parity Stock in proportion to the total amounts to which the holders of all shares of Kelly Preferred Stock and other Parity Stock are entitled upon such liquidation, dissolution or winding up. (b) Neither the consolidation or merger of the Corporation with or into any other person or entity nor the sale, lease, exchange (for cash, shares of stock, securities or other consideration) or other distribution to another person or entity of all or substantially all the assets, property or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 6.8. 15 Section 6.9. Exercise of Rights. (a) The rights of holders of shares of Kelly Preferred Stock to take any action as provided in Article 6 hereof may be exercised at any annual meeting of stockholders or by the written consent, delivered to the Secretary of the Corporation, of the holders of the minimum number of shares required to take such action, which shall be a majority of the outstanding shares of Series A Preferred Stock or Series B Preferred Stock, as applicable, unless otherwise required by law. (b) For taking of any action as provided in this Article 6 by the holders of shares of Kelly Preferred Stock, each such holder shall have one vote for each share of such stock standing in its name on the transfer books of the Corporation as of any record date fixed for such purpose or, if no such date be fixed, at the close of business on the Business Day next preceding the day on which notice is given, or if notice is waived, at the close of business on the Business Day next preceding the day on which the meeting is held. ARTICLE 6A SERIES C PREFERRED STOCK. The Series C Preferred Stock shall have the following voting powers, preferences and other rights, qualifications, limitations and restrictions: Section 6A.1. Dividends and Distributions. (a) Cumulative 12% Dividends. Holders of shares of Series C Preferred Stock, in preference to the holders of shares of Common Stock and any shares of other capital stock of the Corporation other than shares of Parity Stock or Senior Stock with respect to the Series C Preferred Stock, shall be entitled to receive, out of the assets of the Corporation legally available therefor, cumulative cash dividends (the "Series C Dividends") on the Series C Liquidation Preference of such shares at an annual rate of 12.0% (compounded quarterly and calculated on the basis of a 365/366 day year and the actual number of days elapsed), accruing in equal quarterly installments on the last Business Day of each fiscal quarter of the Corporation, commencing on the last Business Day of the second fiscal quarter of the Corporation's 2001 fiscal year. Series C Dividends shall begin to accrue and shall be cumulative from April 3, 2001 (the "Series C Issue Date") whether or not declared by the Board of Directors. Subject in each case to Sections 4.4 and 6A.7, (i) accumulated but unpaid dividends for any past quarterly dividend periods may be declared and paid at any time, without reference to any regular quarterly dividend payment date, to holders of record on any date fixed by the Board of Directors in accordance with these Articles and applicable law and (ii) accumulated but unpaid dividends for any current quarterly dividend period may be declared and paid in cash by the Board of Directors (in which case such dividend payment shall not accrue and be cumulative), to holders of record on any date fixed by the Board of Directors in accordance with these Articles and applicable law. The "Series C Liquidation Preference" is $9.00 per share of Series C Preferred Stock as of March ___, 2002, and shall be adjusted appropriately from time to time after the Series C Issue Date to reflect stock splits, combinations and reclassifications with respect to the Series C Preferred Stock. (b) Participating Dividends. Subject to Sections 4.4 and 6A.7, in addition to the Series C Dividends, in the event that the Corporation shall declare a dividend or make any other 16 distribution (including, without limitation, in cash, in capital stock (which shall include, without limitation, any options, warrants, convertible securities or other rights to acquire capital stock) of the Corporation, whether or not pursuant to a shareholder rights plan, "poison pill" or similar arrangement, or other property or assets) on or with respect to shares of Common Stock other than a dividend paid solely in Common Stock, then the Board of Directors shall declare, and the holder of each share of Series C Preferred Stock shall be entitled to receive in respect of each share of Series C Preferred Stock, a dividend or distribution in an amount equal to the amount of such dividend or distribution received by a holder of the number of shares of Common Stock for which such share of Series C Preferred Stock is convertible on the record date for such dividend or distribution. Any such amount shall be paid to the holders of shares of Series C Preferred Stock at the same time such dividend or distribution is made to holders of Common Stock. (c) Other Provisions. The holders of shares of Series C Preferred Stock shall not be entitled to receive any dividends or other distributions with respect to the Series C Preferred Stock except as provided in this Article 6A. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payment or payments on the shares of Series C Preferred Stock which may be in arrears. Section 6A.2. Conversion of Series C Preferred Stock. (a) Conversion Right. Any holder of Series C Preferred Stock shall have the right, at its option, at any time and from time to time, to convert, subject to the terms and provisions of this Section 6A.2, any or all of such holder's shares of Series C Preferred Stock into such number of fully paid and non-assessable shares of Common Stock as is equal, subject to Section 6A.2(g), to the product of the number of shares of Series C Preferred Stock being so converted multiplied by the quotient of (i) the Series C Liquidation Preference then in effect divided by (ii) the Series C Conversion Price (as defined below) then in effect. The "Series C Conversion Price" is $3.00 as of March ___, 2002, and is subject to adjustment as set forth in Section 6A.2(d). Such conversion right shall be exercised by the surrender of the shares to be converted to the Corporation at any time during usual business hours at its principal place of business, accompanied by a written notice in which the holder elects to convert such shares and specifies the name or names (with address) in which a certificate or certificates for shares of Common Stock are to be issued and (if so required by the Corporation) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized legal representative and transfer tax stamps or funds therefor, if required pursuant to Section 6A.2(j). All shares surrendered for conversion shall be delivered to the Corporation for cancellation and canceled by it and no shares of Series C Preferred Stock shall be issued in lieu thereof. (b) As promptly as practicable after the surrender of any shares of Series C Preferred Stock for conversion pursuant to Section 6A.2(a), the Corporation shall deliver to or upon the written order of the holder of the shares of Series C Preferred Stock so surrendered a certificate or certificates representing the number of fully paid and non-assessable shares of Common Stock into which such shares of Series C Preferred Stock may be or have been converted in accordance with the provisions of this Section 6A.2. Subject to the following provisions of this paragraph and of Section 6A.2(d), such conversion shall be deemed to have been made immediately prior 17 to the close of business on the date that such shares of Series C Preferred Stock shall have been surrendered in satisfactory form for conversion, and the person or persons entitled to receive the Common Stock deliverable upon conversion of such shares of Series C Preferred Stock shall be treated for all purposes as having become the record holder or holders of such Common Stock at such appropriate time, and such conversion shall be at the Series C Conversion Price in effect at such time; PROVIDED, HOWEVER, that no surrender shall be effective to constitute the person or persons entitled to receive the Common Stock deliverable upon such conversion as the record holder or holders of such Common Stock while the share transfer books of the Corporation shall be closed (but not for any period in excess of five days), but such surrender shall be effective to constitute the person or persons entitled to receive such Common Stock as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which such share transfer books are open, and such conversion shall be deemed to have been made at, and shall be made at the Series C Conversion Price in effect at, such time on such next succeeding day. In case of the redemption of any shares of Series C Preferred Stock pursuant to Section 6A.4, the right of the holders of such shares to convert such shares into Common Stock pursuant to this Section 6A.2 shall cease and terminate, as to the shares to be redeemed, at the close of business on the date fixed for redemption, unless the Corporation shall default in the payment of the applicable redemption price for the shares to be redeemed. If the last day for the exercise of the conversion right with respect to the Series C Preferred Stock shall not be a Business Day, then such conversion right may be exercised on the next succeeding Business Day. (c) To the extent permitted by law, when shares of Series C Preferred Stock are converted, all dividends accrued and unpaid (whether or not declared or currently payable) on the Series C Preferred Stock so converted to the date of conversion shall be immediately due and payable, at the option of the holder of shares of Series C Preferred Stock being converted, in cash (subject to Section 6A.7 and to the last sentence of this Section 6A.2(c)) or shares of Common Stock. If the holder of shares of Series C Preferred Stock elects to receive shares of Common Stock in lieu of the cash payment of the accrued and unpaid dividends, the holder of shares of Series C Preferred Stock shall be entitled to receive that number of shares of Common Stock which the amount of accrued and unpaid dividends would purchase at the Series C Liquidation Preference, and such shares of Common Stock must accompany the shares of Common Stock issued upon such conversion. If the holder of shares of Series C Preferred Stock elects to receive payment in cash of such accrued and unpaid dividends, such cash payment must accompany the shares of Common Stock issued upon such conversion unless the Board of Directors determines that such cash payment may not be made under the Other Documents (as defined in Section 6A.7), in which case such cash payment shall be made promptly after such time as the circumstances giving rise to such inability to make such cash payment shall, in the sole judgment of the Board of Directors, no longer exist; PROVIDED, HOWEVER, that, at any time prior to such payment, such holder may elect to receive shares of Common Stock in lieu of such cash payment, and, upon such election, shall be entitled to receive that number of shares of Common Stock that the amount of such cash payment would purchase at the Series C Conversion Price on the date of such election. (d) The Series C Conversion Price and the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock shall be subject to adjustment as provided in this Section 6A.2(d): 18 (i) In case the Corporation shall at any time or from time to time (A) subdivide the outstanding shares of Common Stock into a larger number of shares, (B) combine the outstanding shares of Common Stock into a smaller number of shares or (C) issue any shares of its capital stock in a reclassification of the Common Stock, then, and in each such case, the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock in effect immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series C Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of any of the events described above, had such share of Series C Preferred Stock been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 6A.2(d)(i) shall become effective retroactively to the close of business on the day upon which the corporate action giving rise to such adjustment becomes effective. (ii) In case the Corporation shall at any time or from time to time issue or sell (other than in a Series C Exempt Issuance (as defined in Section 6A.2(d)(iii) below)) shares of Common Stock (or securities convertible into or exchangeable for Common Stock, or any options, warrants or other rights to acquire shares of Common Stock), at a price per share less than the Series C Conversion Price then in effect at the record date referred to in the immediately following sentence (treating the price per share of any security convertible or exchangeable or exercisable into Common Stock as equal to (A) the sum of the price for such security convertible, exchangeable or exercisable into Common Stock plus any additional consideration payable (without regard to any anti-dilution adjustments) upon the conversion, exchange or exercise of such security into Common Stock divided by (B) the number of shares of Common Stock initially underlying such convertible, exchangeable or exercisable security), then, and in each such case, the Series C Conversion Price then in effect shall be adjusted by dividing the Series C Conversion Price in effect on the day immediately prior to such record date by a fraction (x) the numerator of which shall be the sum of the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock issued or to be issued (or the maximum number into which such convertible or exchangeable securities initially may convert or exchange or for which such options, warrants or other rights initially may be exercised) and (y) the denominator of which shall be the sum of the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate consideration for the total number of such additional shares of Common Stock so issued (or into which such convertible or exchangeable securities may convert or exchange or for which such options, warrants or other rights may be exercised plus the aggregate amount of any additional consideration initially payable upon conversion, exchange or exercise of such security) would purchase at the Series C Conversion Price in effect on such record date. Such adjustment shall be made whenever such shares, securities, options, warrants or other rights are issued, and shall become effective retroactively to a date immediately following the close of business on the record date for the determination of shareholders entitled to receive such shares, securities, options, warrants or other rights; PROVIDED, HOWEVER, that the determination as to whether an adjustment is required to be made pursuant to this Section 6A.2(d)(ii) shall only be made upon the issuance of such shares or such convertible or exchangeable securities, options, warrants or other rights and not upon the issuance of the security into which such convertible or exchangeable security converts or exchanges, or the security underlying such options, warrants 19 or other rights; PROVIDED, FURTHER, that if any convertible or exchangeable securities, options, warrants or other rights (or any portions thereof) which shall have given rise to an adjustment pursuant to this Section 6A.2(d)(ii) shall have expired or terminated without the exercise thereof and/or if by reason of the terms of such convertible or exchangeable securities, options, warrants or other rights there shall have been an increase or increases, with the passage of time or otherwise, in the price payable upon the exercise or conversion thereof, then the Series C Conversion Price hereunder shall be readjusted (but to no greater extent than originally adjusted with respect to the related event) on the basis of (x) eliminating from the computation any additional shares of Common Stock corresponding to such convertible or exchangeable securities, options, warrants or other rights as shall have expired or terminated, (y) treating the additional shares of Common Stock, if any, actually issued or issuable pursuant to the previous exercise of such convertible or exchangeable securities, options, warrants or other rights as having been issued for the consideration actually received and receivable therefor and (z) treating any of such convertible or exchangeable securities, options, warrants or other rights which remain outstanding as being subject to exercise or conversion on the basis of such exercise or conversion price as shall be in effect at this time. (iii) Notwithstanding Section 6A.2(d)(ii), no adjustment to the Series C Conversion Price pursuant to Section 6A.2(d)(ii) or otherwise shall be made in respect of any sale or issuance by the Corporation of (A) shares of Common Stock (or options, warrants or other Common Stock purchase rights, and the Common Stock issued pursuant to such options, warrants or other equity incentive rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like)) issued or to be issued pursuant to the conversion, exchange or exercise of the Series C Preferred Stock, the Series D Preferred Stock or any other security, option, warrant, right or other convertible security outstanding or in effect on the Series C Issue Date, (B) shares of Common Stock (or options, warrants or other Common Stock purchase rights, and the Common Stock issued pursuant to such options, warrants or other equity incentive rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like)) issued or to be issued to employees, officers or directors of, or consultants or advisors to the Corporation or any subsidiary pursuant to any stock incentive or equity-based compensation, plan, program, arrangement or agreement of the Corporation or any of its subsidiaries in effect on the Series C Issue Date (as amended from time to time in accordance with its terms) or any other stock incentive or equity-based compensation plan, program, arrangement or agreement approved by the Board of Directors; (C) securities issued pursuant to a registration statement filed under the Securities Act of 1933; (D) securities issued pursuant to the acquisition of another entity by the Corporation by merger, purchase of assets or other form of reorganization; or (E) securities issued to landlords, equipment lessors, banks, financial institutions, manufacturers, vendors, suppliers or similar entities in transactions approved by the Board of Directors (each, a "Series C Exempt Issuance"). (iv) In case the Corporation at any time or from time to time shall take any action affecting its Common Stock, other than an action described in any of Section 6A.2(d)(i) through Section 6A.2(d)(iii), inclusive, then, and in each such case, the Series C Conversion Price shall be adjusted in such manner and at such time as the Board of Directors of the Corporation in its sole business judgment determines to be equitable in the circumstances. 20 (v) Notwithstanding anything herein to the contrary, no adjustment under this Section 6A.2(d) need be made to the Series C Conversion Price unless such adjustment would require an increase or decrease of at least 1% of the Series C Conversion Price then in effect. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least 1% of such Series C Conversion Price. Any adjustment to the Series C Conversion Price carried forward and not theretofore made shall be made immediately prior to the conversion of any shares of Series C Preferred Stock pursuant hereto. (e) If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to shareholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the Series C Conversion Price then in effect shall be required by reason of the taking of such record. (f) Upon any increase or decrease in the Series C Conversion Price, then, and in each such case, the Corporation shall deliver to each registered holder of Series C Preferred Stock a certificate, signed by a responsible officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Series C Conversion Price then in effect following such adjustment. (g) No fractional shares or scrip representing fractional shares shall be issued upon the conversion of any shares of Series C Preferred Stock. If more than one share of Series C Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Series C Liquidation Preference of the shares of Preferred Stock so surrendered. If the conversion of any share or shares of Series C Preferred Stock results in a fraction, an amount equal to such fraction multiplied by the Current Market Price of the Common Stock on the Business Day preceding the day of conversion shall be paid to such holder in cash by the Corporation. (h) In case at any time or from time to time: (A) the Corporation shall declare a dividend (or any other distribution) on or with respect to its Common Stock; (B) 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 stock of any class or of any other rights or warrants; (C) there shall be any reclassification of the Common Stock, or any consolidation or merger to which the Corporation is a party and for which approval of any shareholders of the Corporation is required, or any sale or other disposition of all or substantially all of the assets of the Corporation; or 21 (D) there shall occur any voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then the Corporation shall mail to each holder of shares of Series C Preferred Stock at such holder's address as it appears on the transfer books of the Corporation a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or 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 or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up is expected to become effective. Such notice also shall specify the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for shares of stock or other securities or property or cash deliverable upon such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up. (i) The Corporation shall at all times reserve and keep available for issuance upon the conversion of the Series C Preferred Stock, such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series C Preferred Stock, and shall take all action required to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series C Preferred Stock. (j) The issuance or delivery of certificates for Common Stock upon the conversion of shares of Series C Preferred Stock shall be made without charge to the converting holder of shares of Series C Preferred Stock for such certificates or for any stamp or transfer tax in respect of the issuance or delivery of such certificates or the securities represented thereby, and such certificates shall be issued or delivered in the respective names of, or in such names as may be directed by, the holders of the shares of Series C Preferred Stock converted; PROVIDED, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of Series C Preferred Stock converted, and the Corporation shall not be required to issue or deliver such certificate unless or until the person or persons requesting the issuance or delivery thereof shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. Section 6A.3. Voting Rights. Ownership of shares of Series C Preferred Stock shall entitle the holders to no voting rights except as provided in this Section 6A.3 and under applicable law. So long as any shares of the Series C Preferred Stock are outstanding, each outstanding share of Series C Preferred Stock shall entitle the holder thereof to vote, in person or by proxy, at a special or annual meeting of shareholders, on all matters voted on by holders of Common Stock voting together as a single class with other shares entitled to vote thereon (other than matters on which the holders of Series C Preferred Stock are entitled by law or these Articles to vote as a separate class). With respect to any such vote, each share of Series C Preferred Stock shall entitle the holder thereof to cast that number of votes per share of Series C Preferred Stock as is equal to the number of votes that such holder would be entitled to cast had such holder converted his shares of Series C Preferred Stock into Common Stock on the record 22 date for determining the shareholders of the Corporation eligible to vote on any such matters. So long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote or written consent of the holders of a majority of the aggregate number of shares of Series C Preferred Stock then outstanding, (i) alter or change the powers, preferences or rights given to the Series C Preferred Stock by these Articles or (ii) amend these Articles to increase the authorized amount of Series C Preferred Stock. The amendment of these Articles to authorize or create, or to increase the authorized amount of, any Junior Stock shall not be deemed to alter or change the powers, preferences or rights given to the Series C Preferred Stock by these Articles. Notwithstanding the foregoing provisions, the affirmative vote or consent of the holders of the Series C Preferred Stock, as applicable, shall not be required for any alteration or change on which the holders would otherwise be entitled to vote if, at or prior to the time that any such alteration or change takes effect, due provision is made for the redemption of all such shares of Series C Preferred Stock at the time outstanding. Section 6A.4. Redemption. (a) Requested Redemption. At any time on or after May 16, 2009, each holder of Series C Preferred Stock shall have the right, exercisable by written notice to the Corporation (the "Series C Requested Redemption Notice"), to request that the Corporation purchase all or any portion of the shares of Series C Preferred Stock held by such holder, and upon the exercise of such right, the Corporation shall be obligated to repurchase and redeem, out of assets of the Corporation legally available therefor, the shares designated for repurchase and redemption in the Series C Requested Redemption Notice by the requesting holders, at a price per share equal to (x) the Series C Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series C Dividends on such share through and including the date of redemption, on the date set forth in the Series C Requested Redemption Notice (which date shall be no less than 10 Business Days after the date of such Series C Requested Redemption Notice). (b) Optional Redemption. Subject to the rights and preferences of any Senior Stock and subject to Sections 4.4 and 6A.7, at any time on or after the Series C Issue Date, the Corporation shall have the right, exercisable by written notice to all holders of Series C Preferred Stock (the "Series C Optional Redemption Notice"), to redeem all (but not less than all) of the outstanding shares of Series C Preferred Stock, out of the assets of the Corporation legally available therefor, at a price per share equal to (x) the Series C Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series C Dividends on such share through and including the date of redemption, on the date set forth in the Series C Optional Redemption Notice (which date shall be no less than 10 Business Days after the date of such Series C Optional Redemption Notice). (c) Redemption Procedures. Each repurchase of shares of Series C Preferred Stock under this Section 6A.4 shall be deemed to have been effected on the date of redemption and repurchase by the Corporation pursuant to this Section 6A.4(c). On the date specified in each Series C Requested Redemption Notice or in a Series C Optional Redemption Notice, as applicable, each holder of shares of Series C Preferred Stock to be redeemed shall deliver to the Corporation a certificate or certificates representing the shares of Series C Preferred Stock to be redeemed, duly endorsed and in proper form for transfer, against payment in full by wire transfer 23 of immediately available funds in U.S. dollars to an account designated in writing by such holder of an amount per share equal to (x) the Series C Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series C Dividends on such share through and including the date of redemption. (d) Funds Insufficient to Effect Redemptions. If, at any time, the Corporation shall be required to redeem any shares of the Series C Preferred Stock, and the Corporation shall not have assets or funds legally available for the redemption of all of the shares required to be redeemed, the Corporation shall redeem ratably from the holders of the Series C Preferred Stock such number of shares as it shall have funds legally available therefor and shall redeem the remainder of such shares on the earliest practicable date(s) as assets or funds become legally available therefor. Any shares of Series C Preferred Stock not so redeemed shall remain issued and outstanding for all purposes under this Article 6A until the date of actual redemption by the Corporation. Section 6A.5. Reacquired Shares. Any shares of Series C Preferred Stock exchanged, redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. Section 6A.6. Liquidation, Dissolution or Winding Up. If the Corporation shall commence a voluntary case under the United States bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any other country, or consent to the entry of an order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the United States bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any other country, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and on account of any such event the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, no distribution shall be made (i) to the holders of shares of Series C Preferred Stock unless, prior thereto, the holders of shares of all Senior Stock shall have received the total amounts to which such holders are entitled upon such Liquidation Event, (ii) to the holders of shares of Junior Stock with respect to the Series C Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock shall have received an amount per share equal to the greater of (A) the amount and type of proceeds that a holder of Series C Preferred Stock would have been entitled to receive if such holder had converted its shares of Series C Preferred Stock into Common Stock in accordance with Section 6A.2 immediately prior to such liquidation, dissolution or winding up or (B) the sum of (x) the Series C Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series C Dividends on such share through and including the date of redemption or (iii) to the holders of shares of Parity Stock with respect to the Series C Preferred Stock, except distributions made ratably on the Series C Preferred Stock and all other Parity Stock in 24 proportion to the total amounts to which the holders of all shares of Series C Preferred Stock and other Parity Stock are entitled upon such liquidation, dissolution or winding up. (b) Neither the consolidation or merger of the Corporation with or into any other person or entity nor the sale, lease, exchange (for cash, shares of stock, securities or other consideration) or other distribution to another person or entity of all or substantially all the assets, property or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Article 6A. Section 6A.7. Limitations on Redemption and Dividends. Notwithstanding anything to the contrary in these Articles, for so long as any shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, no dividend or redemption payments (it being understood that the accrual of Series C Dividends shall not constitute the declaration or making of dividend payments for purposes of this sentence) shall be declared or made by the Corporation in respect of the Series C Preferred Stock under this Article 6A or otherwise. Notwithstanding anything to the contrary in these Articles, from and after the date on which no shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, no dividend or redemption payments (it being understood that the accrual of Series C Dividends shall not constitute the declaration or making of dividend payments for purposes of this sentence) shall be declared or made by the Corporation in respect of the Series C Preferred Stock under this Article 6A or otherwise unless due provision can be made for the full amount of any dividend or liquidation preference or redemption payment (if any) payable to which holders of any Senior Stock may be entitled under these Articles. In addition, notwithstanding anything to the contrary in these Articles, so long as any amounts are outstanding under any Other Documents (as defined below) or any commitments to lend under the Other Documents have not been terminated, the Corporation shall not make payment in respect of any redemption permitted or otherwise required by this Article 6A, or declare, make or pay any dividend or distribution in respect of any shares of Series C Preferred Stock, to the extent that the making or declaration of such payment would breach, conflict with, or result in any violation of or default or event of default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the properties or assets of the Corporation or any of its subsidiaries under, or result in the Series C Preferred Stock constituting "Disqualified Stock" as defined under, any provision of the Other Documents. "Other Documents" means (i) the Amended and Restated Loan and Security Agreement, dated as of March 6, 2000, between and among the Corporation, Winston Tire Company, The Speed Merchant, Inc., and California Tire Company, as borrowers, the financial institutions party thereto and Fleet Capital Corporation, as Administrative Agent, (ii) the Indenture, dated as of May 15, 1998, between and among the Corporation, the Subsidiary Guarantors party thereto and First Union National Bank, as Trustee, (iii) the Indenture, dated as of December 1, 1998, between and among the Corporation, the Subsidiary Guarantors party thereto and First Union National Bank, as Trustee, (iv) all notes, mortgages, security documents, guaranties and other agreements, documents and instruments entered into in connection therewith, in each case, as extended, amended, modified, supplemented and/or restated from time to time in accordance with its terms, including any replacement agreement for any thereof and any refinancing of the debt incurred under any thereof, which refinancing may result in a greater principal amount outstanding in connection 25 therewith. Any determination made by the Board of Directors, in its sole judgment, that the making or declaration of any payment pursuant to this Article 6A would breach, conflict with, or result in any violation of or default or event of default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the properties or assets of the Corporation or any of its subsidiaries under, or result in the Series C Preferred Stock constituting "Disqualified Stock" as defined under, any of the Other Documents, shall be conclusive and binding on the Corporation and all holders of Series C Preferred Stock. ARTICLE 6B SERIES D PREFERRED STOCK. The Series D Preferred Stock shall have the following voting powers, preferences and other rights, qualifications, limitations and restrictions: Section 6B.1. Dividends and Distributions. (a) Cumulative 12% Dividends. Holders of shares of Series D Preferred Stock, in preference to the holders of shares of Common Stock and any shares of other capital stock of the Corporation other than shares of Parity Stock or Senior Stock with respect to the Series D Preferred Stock, shall be entitled to receive, out of the assets of the Corporation legally available therefor, cumulative cash dividends (the "Series D Dividends") on the Series D Liquidation Preference of such shares at an annual rate of 12.0% (compounded quarterly and calculated on the basis of a 365/366 day year and the actual number of days elapsed), accruing in equal quarterly installments on the last Business Day of each fiscal quarter of the Corporation, commencing on the last Business Day of the second fiscal quarter of the Corporation's 2002 fiscal year. Series D Dividends shall accrue and shall be cumulative from the first date Series D Preferred Stock shall have been issued by the Corporation (the "Series D Issue Date") whether or not declared by the Board of Directors. Subject in each case to Sections 4.4 and 6B.7, (i) accumulated but unpaid dividends for any past quarterly dividend periods may be declared and paid at any time, without reference to any regular quarterly dividend payment date, to holders of record on any date fixed by the Board of Directors in accordance with these Articles and applicable law and (ii) accumulated but unpaid dividends for any current quarterly dividend period may be declared and paid in cash by the Board of Directors (in which case such dividend payment shall not accrue and be cumulative), to holders of record on any date fixed by the Board of Directors in accordance with these Articles and applicable law. The "Series D Liquidation Preference" shall initially be $3.00 per share of Series D Preferred Stock, and shall be adjusted appropriately from time to time after the Series D Issue Date to reflect stock splits, combinations and reclassifications with respect to the Series D Preferred Stock. (b) Participating Dividends. Subject to Sections 4.4 and 6B.7, in addition to the Series D Dividends, in the event that the Corporation shall declare a dividend or make any other distribution (including, without limitation, in cash, in capital stock (which shall include, without limitation, any options, warrants, convertible securities or other rights to acquire capital stock) of the Corporation, whether or not pursuant to a shareholder rights plan, "poison pill" or similar 26 arrangement, or other property or assets) on or with respect to shares of Common Stock other than a dividend paid solely in Common Stock, then the Board of Directors shall declare, and the holder of each share of Series D Preferred Stock shall be entitled to receive in respect of each share of Series D Preferred Stock, a dividend or distribution in an amount equal to the amount of such dividend or distribution received by a holder of the number of shares of Common Stock for which such share of Series D Preferred Stock is convertible on the record date for such dividend or distribution. Any such amount shall be paid to the holders of shares of Series D Preferred Stock at the same time such dividend or distribution is made to holders of Common Stock. (c) Other Provisions. The holders of shares of Series D Preferred Stock shall not be entitled to receive any dividends or other distributions with respect to the Series D Preferred Stock except as provided in this Article 6B. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payment or payments on the shares of Series D Preferred Stock which may be in arrears. Section 6B.2. Conversion of Series D Preferred Stock. (a) Conversion Right. Any holder of Series D Preferred Stock shall have the right, at its option, at any time and from time to time, to convert, subject to the terms and provisions of this Section 6B.2, any or all of such holder's shares of Series D Preferred Stock into such number of fully paid and non-assessable shares of Common Stock as is equal, subject to Section 6B.2(g), to the product of the number of shares of Series D Preferred Stock being so converted multiplied by the quotient of (i) the Series D Liquidation Preference then in effect divided by (ii) the Series D Conversion Price (as defined below) then in effect. The "Series D Conversion Price" shall initially be $3.00, and is subject to adjustment as set forth in Section 6B.2(d). Such conversion right shall be exercised by the surrender of the shares to be converted to the Corporation at any time during usual business hours at its principal place of business, accompanied by a written notice in which the holder elects to convert such shares and specifies the name or names (with address) in which a certificate or certificates for shares of Common Stock are to be issued and (if so required by the Corporation) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized legal representative and transfer tax stamps or funds therefor, if required pursuant to Section 6B.2(j). All shares surrendered for conversion shall be delivered to the Corporation for cancellation and canceled by it and no shares of Series D Preferred Stock shall be issued in lieu thereof. (b) As promptly as practicable after the surrender of any shares of Series D Preferred Stock for conversion pursuant to Section 6B.2(a), the Corporation shall deliver to or upon the written order of the holder of the shares of Series D Preferred Stock so surrendered a certificate or certificates representing the number of fully paid and non-assessable shares of Common Stock into which such shares of Series D Preferred Stock may be or have been converted in accordance with the provisions of this Section 6B.2. Subject to the following provisions of this paragraph and of Section 6B.2(d), such conversion shall be deemed to have been made immediately prior to the close of business on the date that such shares of Series D Preferred Stock shall have been surrendered in satisfactory form for conversion, and the person or persons entitled to receive the Common Stock deliverable upon conversion of such shares of Series D Preferred Stock shall be 27 treated for all purposes as having become the record holder or holders of such Common Stock at such appropriate time, and such conversion shall be at the Series D Conversion Price in effect at such time; PROVIDED, HOWEVER, that no surrender shall be effective to constitute the person or persons entitled to receive the Common Stock deliverable upon such conversion as the record holder or holders of such Common Stock while the share transfer books of the Corporation shall be closed (but not for any period in excess of five days), but such surrender shall be effective to constitute the person or persons entitled to receive such Common Stock as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which such share transfer books are open, and such conversion shall be deemed to have been made at, and shall be made at the Series D Conversion Price in effect at, such time on such next succeeding day. In case of the redemption of any shares of Series D Preferred Stock pursuant to Section 6B.4, the right of the holders of such shares to convert such shares into Common Stock pursuant to this Section 6B.2 shall cease and terminate, as to the shares to be redeemed, at the close of business on the date fixed for redemption, unless the Corporation shall default in the payment of the applicable redemption price for the shares to be redeemed. If the last day for the exercise of the conversion right with respect to the Series D Preferred Stock shall not be a Business Day, then such conversion right may be exercised on the next succeeding Business Day. (c) To the extent permitted by law, when shares of Series D Preferred Stock are converted, all dividends accrued and unpaid (whether or not declared or currently payable) on the Series D Preferred Stock so converted to the date of conversion shall be immediately due and payable, at the option of the holder of shares of Series D Preferred Stock being converted, in cash (subject to Section 6B.7 and to the last sentence of this Section 6B.2(c)) or shares of Common Stock. If the holder of shares of Series D Preferred Stock elects to receive shares of Common Stock in lieu of the cash payment of the accrued and unpaid dividends, the holder of shares of Series D Preferred Stock shall be entitled to receive that number of shares of Common Stock which the amount of accrued and unpaid dividends would purchase at the Series D Liquidation Preference, and such shares of Common Stock must accompany the shares of Common Stock issued upon such conversion. If the holder of shares of Series D Preferred Stock elects to receive payment in cash of such accrued and unpaid dividends, such cash payment must accompany the shares of Common Stock issued upon such conversion unless the Board of Directors determines that such cash payment may not be made under the Other Documents (as defined in Section 6B.7), in which case such cash payment shall be made promptly after such time as the circumstances giving rise to such inability to make such cash payment shall, in the sole judgment of the Board of Directors, no longer exist; PROVIDED, HOWEVER, that, at any time prior to such payment, such holder may elect to receive shares of Common Stock in lieu of such cash payment, and, upon such election, shall be entitled to receive that number of shares of Common Stock that the amount of such cash payment would purchase at the Series D Conversion Price on the date of such election. (d) The Series D Conversion Price and the number of shares of Common Stock issuable upon conversion of the Series D Preferred Stock shall be subject to adjustment as provided in this Section 6B.2(d): (i) In case the Corporation shall at any time or from time to time (A) subdivide the outstanding shares of Common Stock into a larger number of shares, (B) combine 28 the outstanding shares of Common Stock into a smaller number of shares or (C) issue any shares of its capital stock in a reclassification of the Common Stock, then, and in each such case, the number of shares of Common Stock issuable upon conversion of the Series D Preferred Stock in effect immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series D Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of any of the events described above, had such share of Series D Preferred Stock been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 6B.2(d)(i) shall become effective retroactively to the close of business on the day upon which the corporate action giving rise to such adjustment becomes effective. (ii) In case the Corporation shall at any time or from time to time issue or sell (other than in a Series D Exempt Issuance (as defined in Section 6B.2(d)(iii) below)) shares of Common Stock (or securities convertible into or exchangeable for Common Stock, or any options, warrants or other rights to acquire shares of Common Stock), at a price per share less than the Series D Conversion Price then in effect at the record date referred to in the immediately following sentence (treating the price per share of any security convertible or exchangeable or exercisable into Common Stock as equal to (A) the sum of the price for such security convertible, exchangeable or exercisable into Common Stock plus any additional consideration payable (without regard to any anti-dilution adjustments) upon the conversion, exchange or exercise of such security into Common Stock divided by (B) the number of shares of Common Stock initially underlying such convertible, exchangeable or exercisable security), then, and in each such case, the Series D Conversion Price then in effect shall be adjusted by dividing the Series D Conversion Price in effect on the day immediately prior to such record date by a fraction (x) the numerator of which shall be the sum of the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock issued or to be issued (or the maximum number into which such convertible or exchangeable securities initially may convert or exchange or for which such options, warrants or other rights initially may be exercised) and (y) the denominator of which shall be the sum of the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate consideration for the total number of such additional shares of Common Stock so issued (or into which such convertible or exchangeable securities may convert or exchange or for which such options, warrants or other rights may be exercised plus the aggregate amount of any additional consideration initially payable upon conversion, exchange or exercise of such security) would purchase at the Series D Conversion Price in effect on such record date. Such adjustment shall be made whenever such shares, securities, options, warrants or other rights are issued, and shall become effective retroactively to a date immediately following the close of business on the record date for the determination of shareholders entitled to receive such shares, securities, options, warrants or other rights; PROVIDED, HOWEVER, that the determination as to whether an adjustment is required to be made pursuant to this Section 6B.2(d)(ii) shall only be made upon the issuance of such shares or such convertible or exchangeable securities, options, warrants or other rights and not upon the issuance of the security into which such convertible or exchangeable security converts or exchanges, or the security underlying such options, warrants or other rights; PROVIDED, FURTHER, that if any convertible or exchangeable securities, options, warrants or other rights (or any portions thereof) which shall have given rise to an adjustment 29 pursuant to this Section 6B.2(d)(ii) shall have expired or terminated without the exercise thereof and/or if by reason of the terms of such convertible or exchangeable securities, options, warrants or other rights there shall have been an increase or increases, with the passage of time or otherwise, in the price payable upon the exercise or conversion thereof, then the Series D Conversion Price hereunder shall be readjusted (but to no greater extent than originally adjusted with respect to the related event) on the basis of (x) eliminating from the computation any additional shares of Common Stock corresponding to such convertible or exchangeable securities, options, warrants or other rights as shall have expired or terminated, (y) treating the additional shares of Common Stock, if any, actually issued or issuable pursuant to the previous exercise of such convertible or exchangeable securities, options, warrants or other rights as having been issued for the consideration actually received and receivable therefor and (z) treating any of such convertible or exchangeable securities, options, warrants or other rights which remain outstanding as being subject to exercise or conversion on the basis of such exercise or conversion price as shall be in effect at this time. (iii) Notwithstanding Section 6B.2(d)(ii), no adjustment to the Series D Conversion Price pursuant to Section 6B.2(d)(ii) or otherwise shall be made in respect of any sale or issuance by the Corporation of (A) shares of Common Stock (or options, warrants or other Common Stock purchase rights, and the Common Stock issued pursuant to such options, warrants or other equity incentive rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like)) issued or to be issued pursuant to the conversion, exchange or exercise of the Series C Preferred Stock, the Series D Preferred Stock or any other security, option, warrant, right or other convertible security outstanding or in effect on the Series D Issue Date, (B) shares of Common Stock (or options, warrants or other Common Stock purchase rights, and the Common Stock issued pursuant to such options, warrants or other equity incentive rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like)) issued or to be issued to employees, officers or directors of, or consultants or advisors to the Corporation or any subsidiary pursuant to any stock incentive or equity-based compensation, plan, program, arrangement or agreement of the Corporation or any of its subsidiaries in effect on the Series D Issue Date (as amended from time to time in accordance with its terms) or any other stock incentive or equity-based compensation plan, program, arrangement or agreement approved by the Board of Directors; (C) securities issued pursuant to a registration statement filed under the Securities Act of 1933; (D) securities issued pursuant to the acquisition of another entity by the Corporation by merger, purchase of assets or other form of reorganization; or (E) securities issued to landlords, equipment lessors, banks, financial institutions, manufacturers, vendors, suppliers or similar entities in transactions approved by the Board of Directors (each, a "Series D Exempt Issuance"). (iv) In case the Corporation at any time or from time to time shall take any action affecting its Common Stock, other than an action described in any of Section 6B.2(d)(i) through Section 6B.2(d)(iii), inclusive, then, and in each such case, the Series D Conversion Price shall be adjusted in such manner and at such time as the Board of Directors of the Corporation in its sole business judgment determines to be equitable in the circumstances. (v) Notwithstanding anything herein to the contrary, no adjustment under this Section 6B.2(d) need be made to the Series D Conversion Price unless such adjustment would require an increase or decrease of at least 1% of the Series D Conversion Price then in effect. 30 Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least 1% of such Series D Conversion Price. Any adjustment to the Series D Conversion Price carried forward and not theretofore made shall be made immediately prior to the conversion of any shares of Series D Preferred Stock pursuant hereto. (e) If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to shareholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the Series D Conversion Price then in effect shall be required by reason of the taking of such record. (f) Upon any increase or decrease in the Series D Conversion Price, then, and in each such case, the Corporation shall deliver to each registered holder of Series D Preferred Stock a certificate, signed by a responsible officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Series D Conversion Price then in effect following such adjustment. (g) No fractional shares or scrip representing fractional shares shall be issued upon the conversion of any shares of Series D Preferred Stock. If more than one share of Series D Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Series D Liquidation Preference of the shares of Preferred Stock so surrendered. If the conversion of any share or shares of Series D Preferred Stock results in a fraction, an amount equal to such fraction multiplied by the Current Market Price of the Common Stock on the Business Day preceding the day of conversion shall be paid to such holder in cash by the Corporation. (h) In case at any time or from time to time: (A) the Corporation shall declare a dividend (or any other distribution) on or with respect to its Common Stock; (B) 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 stock of any class or of any other rights or warrants; (C) there shall be any reclassification of the Common Stock, or any consolidation or merger to which the Corporation is a party and for which approval of any shareholders of the Corporation is required, or any sale or other disposition of all or substantially all of the assets of the Corporation; or (D) there shall occur any voluntary or involuntary dissolution, liquidation or winding up of the Corporation; 31 then the Corporation shall mail to each holder of shares of Series D Preferred Stock at such holder's address as it appears on the transfer books of the Corporation a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or 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 or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up is expected to become effective. Such notice also shall specify the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for shares of stock or other securities or property or cash deliverable upon such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up. (i) The Corporation shall at all times reserve and keep available for issuance upon the conversion of the Series D Preferred Stock, such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series D Preferred Stock, and shall take all action required to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series D Preferred Stock. (j) The issuance or delivery of certificates for Common Stock upon the conversion of shares of Series D Preferred Stock shall be made without charge to the converting holder of shares of Series D Preferred Stock for such certificates or for any stamp or transfer tax in respect of the issuance or delivery of such certificates or the securities represented thereby, and such certificates shall be issued or delivered in the respective names of, or in such names as may be directed by, the holders of the shares of Series D Preferred Stock converted; PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of Series D Preferred Stock converted, and the Corporation shall not be required to issue or deliver such certificate unless or until the person or persons requesting the issuance or delivery thereof shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. Section 6B.3. Voting Rights. Ownership of shares of Series D Preferred Stock shall entitle the holders to no voting rights except as provided in this Section 6B.3 and under applicable law. So long as any shares of the Series D Preferred Stock are outstanding, each outstanding share of Series D Preferred Stock shall entitle the holder thereof to vote, in person or by proxy, at a special or annual meeting of shareholders, on all matters voted on by holders of Common Stock voting together as a single class with other shares entitled to vote thereon (other than matters on which the holders of Series D Preferred Stock are entitled by law or these Articles to vote as a separate class). With respect to any such vote, each share of Series D Preferred Stock shall entitle the holder thereof to cast that number of votes per share of Series D Preferred Stock as is equal to the number of votes that such holder would be entitled to cast had such holder converted his shares of Series D Preferred Stock into Common Stock on the record date for determining the shareholders of the Corporation eligible to vote on any such matters. So long as any shares of Series D Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote or written consent of the holders of a majority of the aggregate number of 32 shares of Series D Preferred Stock then outstanding, (i) alter or change the powers, preferences or rights given to the Series D Preferred Stock by these Articles or (ii) amend these Articles to increase the authorized amount of Series D Preferred Stock. The amendment of these Articles to authorize or create, or to increase the authorized amount of, any Junior Stock shall not be deemed to alter or change the powers, preferences or rights given to the Series D Preferred Stock by these Articles. Notwithstanding the foregoing provisions, the affirmative vote or consent of the holders of the Series D Preferred Stock, as applicable, shall not be required for any alteration or change on which the holders would otherwise be entitled to vote if, at or prior to the time that any such alteration or change takes effect, due provision is made for the redemption of all such shares of Series D Preferred Stock at the time outstanding. Section 6B.4. Redemption. (a) Requested Redemption. At any time on or after May 16, 2009, each holder of Series D Preferred Stock shall have the right, exercisable by written notice to the Corporation (the "Series D Requested Redemption Notice"), to request that the Corporation purchase all or any portion of the shares of Series D Preferred Stock held by such holder, and upon the exercise of such right, the Corporation shall be obligated to repurchase and redeem, out of assets of the Corporation legally available therefor, the shares designated for repurchase and redemption in the Series D Requested Redemption Notice by the requesting holders, at a price per share equal to (x) the Series D Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series D Dividends on such share through and including the date of redemption, on the date set forth in the Series D Requested Redemption Notice (which date shall be no less than 10 Business Days after the date of such Series D Requested Redemption Notice). (b) Optional Redemption. Subject to the rights and preferences of any Senior Stock and subject to Sections 4.4 and 6B.7, at any time on or after the Series D Issue Date, the Corporation shall have the right, exercisable by written notice to all holders of Series D Preferred Stock (the "Series D Optional Redemption Notice"), to redeem all (but not less than all) of the outstanding shares of Series D Preferred Stock, out of the assets of the Corporation legally available therefor, at a price per share equal to (x) the Series D Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series D Dividends on such share through and including the date of redemption, on the date set forth in the Series D Optional Redemption Notice (which date shall be no less than 10 Business Days after the date of such Series D Optional Redemption Notice). (c) Redemption Procedures. Each repurchase of shares of Series D Preferred Stock under this Section 6B.4 shall be deemed to have been effected on the date of redemption and repurchase by the Corporation pursuant to this Section 6B.4(c). On the date specified in each Series D Requested Redemption Notice or in a Series D Optional Redemption Notice, as applicable, each holder of shares of Series D Preferred Stock to be redeemed shall deliver to the Corporation a certificate or certificates representing the shares of Series D Preferred Stock to be redeemed, duly endorsed and in proper form for transfer, against payment in full by wire transfer of immediately available funds in U.S. dollars to an account designated in writing by such holder of an amount per share equal to (x) the Series D Liquidation Preference then in effect PLUS (y) the 33 amount of all accrued and unpaid Series D Dividends on such share through and including the date of redemption. (d) Funds Insufficient to Effect Redemptions. If, at any time, the Corporation shall be required to redeem any shares of the Series D Preferred Stock, and the Corporation shall not have assets or funds legally available for the redemption of all of the shares required to be redeemed, the Corporation shall redeem ratably from the holders of the Series D Preferred Stock such number of shares as it shall have funds legally available therefor and shall redeem the remainder of such shares on the earliest practicable date(s) as assets or funds become legally available therefor. Any shares of Series D Preferred Stock not so redeemed shall remain issued and outstanding for all purposes under this Article 6B until the date of actual redemption by the Corporation. Section 6B.5. Reacquired Shares. Any shares of Series D Preferred Stock exchanged, redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. Section 6B.6. Liquidation, Dissolution or Winding Up. If the Corporation shall commence a voluntary case under the United States bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any other country, or consent to the entry of an order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the United States bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any other country, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and on account of any such event the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, no distribution shall be made (i) to the holders of shares of Series D Preferred Stock unless, prior thereto, the holders of shares of all Senior Stock shall have received the total amounts to which such holders are entitled upon such Liquidation Event, (ii) to the holders of shares of Junior Stock with respect to the Series D Preferred Stock unless, prior thereto, the holders of shares of Series D Preferred Stock shall have received an amount per share equal to the greater of (A) the amount and type of proceeds that a holder of Series D Preferred Stock would have been entitled to receive if such holder had converted its shares of Series D Preferred Stock into Common Stock in accordance with Section 6B.2 immediately prior to such liquidation, dissolution or winding up or (B) the sum of (x) the Series D Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series D Dividends on such share through and including the date of redemption or (iii) to the holders of shares of Parity Stock with respect to the Series D Preferred Stock, except distributions made ratably on the Series D Preferred Stock and all other Parity Stock in proportion to the total amounts to which the holders of all shares of Series D Preferred Stock and other Parity Stock are entitled upon such liquidation, dissolution or winding up. 34 (b) Neither the consolidation or merger of the Corporation with or into any other person or entity nor the sale, lease, exchange (for cash, shares of stock, securities or other consideration) or other distribution to another person or entity of all or substantially all the assets, property or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Article 6B. Section 6B.7. Limitations on Redemption and Dividends. Notwithstanding anything to the contrary in these Articles, for so long as any shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, no dividend or redemption payments (it being understood that the accrual of Series D Dividends shall not constitute the declaration or making of dividend payments for purposes of this sentence) shall be declared or made by the Corporation in respect of the Series D Preferred Stock under this Article 6B or otherwise. Notwithstanding anything to the contrary in these Articles, from and after the date on which no shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, no dividend or redemption payments (it being understood that the accrual of Series D Dividends shall not constitute the declaration or making of dividend payments for purposes of this sentence) shall be declared or made by the Corporation in respect of the Series D Preferred Stock under this Article 6B or otherwise unless due provision can be made for the full amount of any dividend or liquidation preference or redemption payment (if any) payable to which holders of any Senior Stock may be entitled under these Articles. In addition, notwithstanding anything to the contrary in these Articles, so long as any amounts are outstanding under any Other Documents (as defined below) or any commitments to lend under the Other Documents have not been terminated, the Corporation shall not make payment in respect of any redemption permitted or otherwise required by this Article 6B, or declare, make or pay any dividend or distribution in respect of any shares of Series D Preferred Stock, to the extent that the making or declaration of such payment would breach, conflict with, or result in any violation of or default or event of default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the properties or assets of the Corporation or any of its subsidiaries under, or result in the Series D Preferred Stock constituting "Disqualified Stock" as defined under, any provision of the Other Documents (as defined in Section 6A.7). Any determination made by the Board of Directors, in its sole judgment, that the making or declaration of any payment pursuant to this Article 6B would breach, conflict with, or result in any violation of or default or event of default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the properties or assets of the Corporation or any of its subsidiaries under, or result in the Series D Preferred Stock constituting "Disqualified Stock" as defined under, any of the Other Documents, shall be conclusive and binding on the Corporation and all holders of Series D Preferred Stock. ARTICLE 7 CORPORATE EXISTENCE. The Corporation is to have perpetual existence. 35 ARTICLE 8 CORPORATE GOVERNANCE. For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation, and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: Section 8.1. Management. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the By-laws. The election of directors need not be by written ballot except and to the extent provided in the By-laws of the Corporation. Section 8.2. Amendment of Articles. From time to time any of the provisions of these Articles may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by these Articles are granted subject to the provisions of this Section 8.2. Section 8.3. Amendment of By-laws. The Board of Directors shall, subject to Section 109 of the Act, have the power to adopt, amend, or repeal the By-laws of the Corporation. Section 8.4. Indemnification of Directors. To the fullest extent permitted by the Act, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment, modification or repeal of this Section 8.4 shall adversely affect any right or protection of a director that exists at the time of such amendment, modification or repeal. Section 8.5. Indemnification of Authorized Persons. The Corporation shall, to the fullest extent permitted by the Act, indemnify any and all persons whom it shall have power to indemnify thereunder from and against any and all of the expenses, liabilities, or other matters referred to in or covered by the Act and may advance funds to such persons in respect of such expenses, liabilities or other matters. The indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors, and administrators of such a person. 36 IN WITNESS WHEREOF, Heafner Tire Group, Inc. has caused this Second Restated Certificate of Incorporation to be executed by its duly authorized officer on March ___, 2002. HEAFNER TIRE GROUP, INC. By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: President and CEO 37 EX-4.1 4 g75510ex4-1.txt FOURTH SUPPLEMENTAL INDENTURE Exhibit 4.1 FOURTH SUPPLEMENTAL INDENTURE, dated as of March 27, 2002 (the "FOURTH SUPPLEMENTAL INDENTURE"), among HEAFNER TIRE GROUP, INC., a Delaware corporation (successor to The J.H. Heafner Company, Inc.) (the "COMPANY"), the Subsidiary Guarantors party hereto (the "SUBSIDIARY GUARANTORS"), and FIRST UNION NATIONAL BANK, as Trustee (the "TRUSTEE"), under the Indenture referred to below. ---------------------------------------------------------------------- The Company, the Subsidiary Guarantors and the Trustee are parties to an Indenture, dated as of December 1, 1998, as supplemented by the First Supplemental Indenture dated as of February 22, 1999, the Second Supplemental Indenture dated as of May 14, 1999, and the Third Supplemental Indenture, dated as of May 25, 2000 (as so supplemented, the "INDENTURE"), providing, among other things, for the authentication, delivery and administration of the Company's 10% Senior Notes Due 2008, Series D (the "SECURITIES"). Pursuant to an Offer to Purchase and Consent Solicitation Statement dated February 5, 2002, as amended by an Amended Offer to Purchase and Consent Solicitation Statement dated March 11, 2002 (as further amended or supplemented, the "TENDER OFFER AND CONSENT SOLICITATION"), the Company has proposed certain amendments (the "PROPOSED AMENDMENTS") to the Indenture. Pursuant to Section 9.02 of the Indenture, the Holders (as defined in the Indenture) of at least a majority in principal amount of the outstanding Securities have approved such Proposed Amendments as described in this Fourth Supplemental Indenture. The Company has directed the Trustee to execute and deliver this Fourth Supplemental Indenture in accordance with the terms of the Indenture. In consideration of the foregoing premises, the parties mutually agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Securities: ARTICLE I DEFINITIONS SECTION 1.1 DEFINED TERMS. As used in this Fourth Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that, unless otherwise stated, the term "Holders" in this Fourth Supplemental Indenture shall refer to the term "Holders" as defined in the Indenture and the Trustee acting on behalf or for the benefit of such Holders. The words "herein," "hereof" and "hereby" and other words of similar import used in this Fourth Supplemental Indenture refer to this Fourth Supplemental Indenture as a whole and not to any particular section hereof. ARTICLE II AMENDMENTS TO INDENTURE SECTION 2.1 AMENDMENTS TO INDENTURE. The Indenture is hereby amended as follows: a) The following definition is added to Section 1.01 of the Indenture: "Limited Vendor Financing" means Vendor Financing which constitutes Indebtedness, or is secured by a Lien (to the extent of the fair value of the property subject to the Lien), or both." b) The definition of "Vendor Financing" in Section 1.01 of the Indenture is deleted in its entirety and replaced with the following: "Vendor Financing" means Indebtedness and other obligations (including trade accounts payable) Incurred to finance the cost to acquire inventory to the extent such Indebtedness and other obligations are Incurred to and held by the supplier of such inventory. c) Clause (f) of the definition of "Permitted Liens" in Section 1.01 of the Indenture is deleted in its entirety and replaced with the following: "(f) Liens securing Indebtedness Incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property of such Person, and Liens securing Vendor Financing; PROVIDED, HOWEVER, that the Lien may not extend to any other property (other than improvements thereon) owned by such Person or any of its Subsidiaries at the time the Lien is Incurred, and the Indebtedness or Vendor Financing (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien; and PROVIDED, FURTHER, that the aggregate amount of Vendor Financing at any time outstanding secured by Liens pursuant to this clause (f) (to the extent of the fair value of the inventory securing any such Vendor Financing) shall not exceed the sum of (x) the amount of Limited Vendor Financing, and Refinancing Indebtedness in respect thereof, outstanding immediately after giving effect to the Fourth Supplemental Indenture hereto, dated as of March __, 2002, and the consummation at or about that time of the transactions entered into by the Company in connection therewith, PLUS (y) $30 million; ". d) Section 4.03(b)(4) of the Indenture is deleted in its entirety and replaced with the following: "(4) Vendor Financing, and Refinancing Indebtedness in respect thereof, in an aggregate amount which does not exceed, when taken together with all other 2 Indebtedness Incurred pursuant to this clause (4) and then outstanding, the sum of (x) the amount of Limited Vendor Financing, and Refinancing Indebtedness in respect thereof, outstanding immediately after giving effect to the Fourth Supplemental Indenture hereto, dated as of March __, 2002, and the consummation at or about that time of the transactions entered into by the Company in connection therewith, PLUS (y) $30 million;". e) Section 4.03(b)(5) of the Indenture is deleted in its entirety and replaced with the following: "(5) Attributable Debt in respect of Sale/Leaseback Transactions, and Refinancing Indebtedness in respect thereof, in an aggregate amount which does not exceed, when taken together with all other Indebtedness Incurred pursuant to this clause (5) and then outstanding, the sum of (x) the amount of Attributable Debt in respect of Sale/Leaseback Transactions, and Refinancing Indebtedness in respect thereof, outstanding immediately after giving effect to the Fourth Supplemental Indenture hereto, dated as of March __, 2002, and the consummation at or about that time of the transactions entered into by the Company in connection therewith, PLUS (y) $5 million; PROVIDED that such Sale/Leaseback Transactions comply with Section 4.11;". f) Section 4.03(b)(11) of the Indenture is deleted in its entirety and replaced with the following: "(11) Indebtedness of the Company in an aggregate principal amount which, together with all other Indebtedness of the Company outstanding on the date of such Incurrence (other than Indebtedness permitted by Section 4.03(b)(1) through (10) or Section 4.03(a)), does not exceed $25 million.". SECTION 2.2 NOTIFICATION TO HOLDERS. The Company shall notify the Holders in accordance with Section 9.02 of the Indenture of the execution of this Fourth Supplemental Indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of this Fourth Supplemental Indenture. SECTION 2.3 RECEIPT BY TRUSTEE. In accordance with Sections 9.06 and 11.04 of the Indenture, the parties acknowledge that the Trustee has received an Officers' Certificate and Opinion of Counsel as conclusive evidence that this Fourth Supplemental Indenture complies with the applicable requirements of the Indenture. ARTICLE III MISCELLANEOUS SECTION 3.1 PARTIES. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Fourth Supplemental Indenture or the Indenture or any provision herein or therein contained. 3 SECTION 3.2 GOVERNING LAW. This Fourth Supplemental Indenture shall be governed by the laws of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 3.3 SEVERABILITY CLAUSE. In case any provision in this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability. SECTION 3.4 RATIFICATION OF INDENTURE; FOURTH SUPPLEMENTAL INDENTURE PART OF INDENTURE. Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Fourth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Fourth Supplemental Indenture. SECTION 3.5 CONDITION TO OPERATIVE EFFECT. For purposes of Sections 9.02 and 9.04 of the Indenture only, this Fourth Supplemental Indenture shall have operative effect upon execution hereof by the Trustee, the Company and the Subsidiary Guarantors. For all other purposes, including Section 2.1 hereof, the operative effect of this Fourth Supplemental Indenture is conditioned upon the occurrence of the consummation of the Amended Offer and Solicitation (each as defined in the Tender Offer and Consent Solicitation). SECTION 3.6 COUNTERPARTS. The parties hereto may sign one or more copies of this Fourth Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. SECTION 3.7 HEADINGS. The headings of the Articles and the sections in this Fourth Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 4 IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed as of the date first above written. HEAFNER TIRE GROUP, INC. By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: President & CEO THE SPEED MERCHANT, INC., as a Subsidiary Guarantor By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: Chairman By: /s/ W.E. Berry ------------------------------------- Name: William E. Berry Title: Vice-President T.O. HAAS HOLDING CO., INC., as a Subsidiary Guarantor By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: Chairman T.O. HAAS TIRE COMPANY, INC. , as a Subsidiary Guarantor By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: Chairman 5 CALIFORNIA TIRE COMPANY, as a Subsidiary Guarantor By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: Chairman By: /s/ W.E. Berry ------------------------------------- Name: William E. Berry Title: Vice-President FIRST UNION NATIONAL BANK, as Trustee By: /s/ Shawn K. Bednasek ------------------------------------- Name: Shawn K. Bednasek Title: Vice President 6 EX-10.1 5 g75510ex10-1.txt SHARE PURCHASE AGREEMENT Exhibit 10.1 SHARE PURCHASE AGREEMENT, dated as of March 27, 2002, among Heafner Tire Group, Inc., a Delaware corporation (the "COMPANY"), the parties listed on SCHEDULE I attached hereto (the "INVESTORS"). ------------------------------------------------------------ INTRODUCTION The Investors desire to purchase from the Company, and the Company desires to issue and sell to the Investors, 9,637,592 shares of Series D Preferred Stock, par value $.01 per share (the "SERIES D PREFERRED STOCK"), of the Company upon the terms and subject to the conditions set forth in this Agreement. Accordingly, the parties agree as follows: ARTICLE I AUTHORIZATION AND SALE OF THE SHARES Section 1.1. AUTHORIZATION. The Company has authorized the issuance and sale of 9,637,592 shares (the "SHARES") of its Series D Preferred Stock at a price of $3.00 per share on the terms and conditions set forth in this Agreement. The Series D Preferred Stock shall have the rights, preferences and privileges provided for in the Second Restated Certificate of Incorporation of the Company, which shall be in the form attached as EXHIBIT A hereto (the "ARTICLES"). Section 1.2. PURCHASE AND SALE OF THE SHARES. Upon the terms and subject to the conditions of this Agreement, at the Closing (as defined below) the Company shall issue and sell to the Investors, and the Investors shall purchase from the Company, the Shares for an aggregate purchase price of $28,912,776 in cash (the "PURCHASE Price"). The amount to be paid by and the number of such Shares to be issued to each Investor are as set forth in SCHEDULE I. Each Investor's obligations under this Agreement (including without limitation to purchase the Shares to be purchased by such Investor) shall be several and not joint. Section 1.3. CLOSING. The closing (the "CLOSING") of each purchase and sale to the Investors of the Shares shall be held at the offices of Covington & Burling, 1330 Avenue of the Americas, New York, New York 10019, at 10:00 a.m. on or prior to March 27, 2002, or at such other time or on such other date as may be agreed to by the Investors and the Company. The date on which the first such issuance and purchase of Shares occurs is referred to in this Agreement as the "CLOSING DATE." Section 1.4. CLOSING DELIVERIES. At the Closing of each Investor's purchase of Shares, (a) such Investor shall deliver to the Company, by wire transfer of immediately available funds to an account designated in writing by the Company no less than two business days prior to such Closing, the applicable Purchase Price and an executed copy of this Agreement and (b) the Company shall issue and deliver to such Investor certificates representing the Shares being purchased, registered in the name of each Investor as applicable. The obligation of each Investor to purchase such Investor's Shares is contingent on the fulfillment of each of the conditions set forth in Article IV and the obligation of the Company to issue and sell the Shares is contingent on the fulfillment of each of the conditions set forth in Article V. ARTICLE II COMPANY REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Investors as follows: Section 2.1. ORGANIZATION AND STANDING. Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each of the Company and its Subsidiaries has all requisite power and authority necessary to enable it to own and operate its properties and assets and to conduct its business as presently conducted and proposed to be conducted. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in any jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any change in or effect on the Company or its business that is or could reasonably be expected to be materially adverse to the business, operations, properties, condition (financial or otherwise), results of operations, assets or liabilities of the Company and its Subsidiaries, taken as a whole. Section 2.2. AUTHORITY; VALID AND BINDING AGREEMENTS. The Company has all requisite corporate power and authority to execute and deliver this Agreement and the Articles and, upon the filing of the Articles with the Secretary of State of Delaware, to issue and sell the Shares hereunder and to consummate the other transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement and the Articles and all documents, certificates and instruments to be executed by the Company in connection therewith and, upon the filing of the Articles with the Secretary of State of Delaware, the authorization, issuance, sale and delivery of the Shares, have been duly authorized by all requisite corporate action on the part of the Company and its stockholders. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally and general principles of equity. Section 2.3. CONFLICTS; CONSENTS. The execution, delivery and performance by the Company of this Agreement and the Articles and the consummation of the transactions contemplated hereby and thereby and compliance with the terms hereof and thereof does not and will not breach, conflict with, or result in any violation of or default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any Lien of any nature whatsoever upon any of the properties or assets of the Company or any of its Subsidiaries under, (i) any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective properties or assets may be bound or affected, (ii) any provision of the constitutive or -2- governing documents of the Company or any of its Subsidiaries or (iii) assuming that the representations of the Investors set forth in Article III are correct, any Legal Requirement applicable to the Company or any of its Subsidiaries or any of their respective properties or assets. Assuming that the representations of the Investors set forth in Article III are correct and except for the filing of the Articles, no consent, approval, order, license, permit or authorization of, or notification, registration, declaration or filing with, any Governmental Authority or any other Person is required to be obtained or made by or with respect to the Company or any of its Subsidiaries in connection with the execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares, or the consummation of the transactions contemplated thereby except for consents, approvals, orders, licenses, permits, authorizations, notifications, registrations, declarations or filings which have been obtained or made or the failure to obtain or make which could not reasonably be expected to have a Material Adverse Effect. Section 2.4. CAPITAL STOCK. (a) After giving effect to the filing of the Articles with the Secretary of State of Delaware, the authorized capital stock of the Company will consist of 50,000,000 shares of Common Stock (as defined below) and 10,982,426 shares of Preferred Stock, $.01 par value (the "PREFERRED STOCK"). On the date hereof, 5,136,917 shares of Common Stock, $.01 par value (the "COMMON STOCK"), and 10,982,426 shares of Preferred Stock were issued and outstanding, of which 7,000 shares have been designated Series A Cumulative Redeemable Preferred Stock, 4,500 have been designated Series B Cumulative Redeemable Preferred Stock, 1,333,334 shares have been designated Series C Preferred Stock and 9,637,592 have been designated Series D Preferred Stock. Upon the filing of the Articles with the Secretary of State of Delaware, the Shares will have been duly authorized and, when issued in accordance with this Agreement, the Shares (i) will be validly issued, fully paid and non-assessable, (ii) will have the rights, preferences and privileges described in the Articles and (iii) will not have been issued in violation of, and will not be subject to, any preemptive or subscription rights and will not result in the antidilution provisions of any security of the Company becoming applicable. (b) The Shares, when issued and delivered in accordance with this Agreement, will be free and clear of any Liens and the Investors will have good title thereto. (c) Except as set forth on SCHEDULE 2.4(C), there are no outstanding warrants, options, rights, other securities, agreements, subscriptions or other commitments, arrangements or undertakings pursuant to which the Company is or may become obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any additional capital stock or other securities of the Company or to issue, grant, extend or enter into any such warrant, option, right, security, agreement, subscription or other commitment, arrangement or undertaking. Except as set forth on SCHEDULE 2.4(C), there are no outstanding options, rights, other securities, agreements or other commitments, arrangements or undertakings pursuant to which the Company is or may become obligated to redeem, repurchase or otherwise acquire or retire any capital stock or other securities of the Company, or any securities of the type described in this Section 2.4(c), which are presently outstanding or may be issued in the future. Except as set forth on SCHEDULE 2.4(C), there are no bonds, debentures, notes or other indebtedness or securities of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. -3- (d) All issued and outstanding shares of capital stock or membership interests of the Company's Subsidiaries have been duly authorized, were validly issued, are fully paid and non-assessable and subject to no preemptive rights and are directly or indirectly owned beneficially and of record by the Company, free and clear of all Liens, and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock). (e) Assuming that the representations and warranties of the Investors set forth in Section 3.2 and 3.3 are true and correct, the offering, issuance and delivery of the Shares are exempt from the registration requirements of the Securities Act, and it is not necessary to make or obtain any filings, registrations, qualifications, notifications or consents or approvals of or with any Governmental Authority (including without limitation under the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended, or any state securities or "blue sky" laws) in connection therewith. Section 2.5. SEC REPORTS. The Company has previously furnished or made available to the Investors true and complete copies of all reports (the "SEC REPORTS") filed by the Company and its Subsidiaries with the Securities and Exchange Commission (the "SEC") through and including the date of this Agreement. Each of the balance sheets (including the related notes) included in the Company SEC Reports presents fairly, in all material respects, the consolidated financial position of the Person (consolidated with its Subsidiaries, as applicable) to which it relates as of the date thereof, and each of the other related statements (including the related notes) included in the Company SEC Reports presents fairly, in all material respects, the results of operations and changes in financial position of the Person (consolidated with its Subsidiaries, as applicable) to which it relates for the period or as of the date set forth therein, all in conformity with generally accepted accounting principles consistently applied during the periods involved, except as otherwise noted therein and subject, in the case of the unaudited interim financial statements, to normal year-end adjustments and any other adjustments described therein. Each Company SEC Report, as of its date (as amended through the date of this Agreement), complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the applicable rules and regulations thereunder. Section 2.6 LITIGATION. There are no suits, actions, claims, arbitrations or other legal, administrative or regulatory proceedings or investigations, whether at law or in equity, or before or by any Governmental Authority pending or, to the knowledge of the Company, threatened by or against or affecting the Company or any of its Subsidiaries or any of their respective properties or assets, in each case, which could reasonably be expected to have a Material Adverse Effect. Section 2.7. COMPLIANCE WITH APPLICABLE LAWS. The Company and its Subsidiaries and their respective properties, assets, operations and business are in compliance in all material respects with all applicable Legal Requirements, including without limitation laws and regulations relating to the environment, hazardous materials and occupational safety and health, except for such instances of noncompliance as could not individually or in the aggregate be reasonably expected to have a Material Adverse Effect. Each of the Company and its -4- Subsidiaries has obtained and has in effect all material permits, licenses and other authorizations which are required with respect to the operation of its business and the ownership of its assets. Each of the Company and its Subsidiaries is in full compliance in all material respects with all terms and conditions of such permits, licenses and authorizations, no proceeding is pending or, to the knowledge of the Company, threatened, to revoke or limit any thereof. Section 2.8. BROKERS. No agent, broker, investment banker, Person or firm acting on behalf of the Company or under the authority of the Company is or will be entitled to any broker's or finder's fee or any other commission or similar fee directly or indirectly from any of the parties hereto in connection with any of the transactions contemplated hereby. ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR Each of the Investors hereby represents and warrants to the Company, severally and not jointly, as follows: Section 3.1. ORGANIZATION AND AUTHORITY. Such Investor is a corporation or limited liability company or limited partnership duly organized, validly existing and in good standing, if applicable, under the laws of its jurisdiction of organization. Such Investor has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by such Investor of this Agreement and the consummation by such Investor of the transactions contemplated hereby has been duly authorized by all requisite corporate action on the part of such Investor. This Agreement constitutes the valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of credits' rights generally and general principles of equity. Section 3.2. SECURITIES ACT. Such Investor is acquiring the Shares for investment only for its own account, not as a nominee or agent, and not with a view to any public distribution of all or any portion thereof. Section 3.3. ACCREDITED INVESTOR. Such Investor is an "accredited investor" as such term is defined in Rule 501(a) promulgated under the Securities Act. Section 3.4. BROKERS. No agent, broker, investment banker, Person or firm acting on behalf of such Investor or under the authority of such Investor is or will be entitled to any broker's or finder's fee or any other commission or similar fee directly or indirectly from any of the parties hereto in connection with any of the transactions contemplated hereby. Section 3.5. EXPERIENCE. Such Investor is experienced in evaluating and investing in companies such as the Company. Such Investor has substantial experience in investing in and evaluating private placement transactions of securities in companies similar to -5- the Company and is capable of evaluating the risks and merits of its investment in the Company and has the capacity to protect its own interests. Section 3.6. RESTRICTED SECURITIES. Such Investor acknowledges that, because they have not been registered under the Securities Act or any state securities laws, the Shares it is purchasing must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Such Investor is familiar with the provisions of Rule 144 promulgated under the Securities Act and the resale limitation imposed thereby and by the Securities Act. Such Investor understands that no public market now exists for the Shares and that it is uncertain whether a public market will ever exist for the Shares. Section 3.7. NO CONFLICTS. The execution and delivery of this Agreement by such Investor does not and will not violate any Legal Requirement or provision of any indenture, agreement or other instrument applicable to such Investor, except in each case for violations which could not reasonably be expected to have a material adverse effect on such Investor's ability to execute, deliver and perform this Agreement and consummate the transactions contemplated hereby. ARTICLE IV CONDITIONS OF THE INVESTORS' OBLIGATIONS The obligation of each Investor to purchase its portion of the Shares is subject to the satisfaction (or waiver by such Investor) as of the Closing Date of the following conditions: Section 4.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and warranties of the Company made in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date with the same effect as if made at and as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier time. The Company shall have performed each of the covenants and agreements of the Company contained in this Agreement required to be performed at or prior to the Closing Date. Section 4.2. CONSENTS AND APPROVALS. The Company shall have obtained or made all consents, approvals, orders, licenses, permits and authorizations of, and registrations, declarations and filings with, any Governmental Authority or any other Person (if any) required to be obtained or made by or with respect to the Company in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated thereby. Section 4.3. NO LEGAL BAR. No action or proceeding by or before any Governmental Authority shall be pending or threatened challenging or seeking to restrain or prohibit the transactions contemplated by this Agreement. No Legal Requirement preventing the transactions contemplated by this Agreement shall be in effect. Section 4.4. SECOND RESTATED CERTIFICATE OF INCORPORATION. The Articles shall have been approved by all requisite Board and stockholder action on the part of the Company, -6- filed with and accepted by the Secretary of State of the State of Delaware and not further amended in any respect except as consented to by the Investors in writing. Section 4.5. TENDER OFFER AND CONSENT SOLICITATION. The "Amended Offer" and the "Solicitation," each as defined in the Amended Offer to Purchase and Consent Solicitation Statement of the Company, dated March 11, 2002 shall have been consummated in accordance with the terms thereof. Section 4.6. CLOSING DOCUMENTS. The Company shall have delivered to the Investors the following: (a) a certificate of an authorized officer of the Company, dated the Closing Date, to the effect that the conditions specified in Section 4.1 and 4.2 have been satisfied or waived; (b) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the Closing Date, certifying as to attached copies of the Articles, the By-laws of the Company and resolutions adopted by the Board of Directors of the Company and its stockholders authorizing the Articles, the execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated thereby, including the issuance and sale of the Shares; (c) a copy of the Articles, as filed with the Secretary of State of the State of Delaware; (d) a certificate of the Secretary of State of the State of Delaware, dated a recent date, certifying that the Company is in good standing in the State of Delaware; (e) such other certificates or documents as the Investors or their counsel may reasonably request relating to the transactions contemplated hereby. Section 4.7. PURCHASE BY EACH INVESTOR. Each Investor shall have purchased the applicable number of Shares to be purchased by such Investor in accordance with the terms of this Agreement. ARTICLE V CONDITIONS OF COMPANY'S OBLIGATIONS The obligation of the Company to issue and sell the Shares to the Investors is subject to the satisfaction (or waiver by the Company) as of the Closing Date of the following conditions: Section 5.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Investors made in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date with the same effect as if made at and as of the Closing Date. -7- Section 5.2. NO LEGAL BAR. The Company shall have obtained all necessary authorizations, approvals, blue sky law permits and qualifications, or secured exemptions therefrom, required by, and made all necessary filings and registrations with, any Governmental Authority in connection with the offer and sale of the Shares and the consummation of the transactions contemplated by this Agreement. No action or proceeding by or before any Governmental Authority shall be pending or threatened challenging or seeking to restrain or prohibit the transactions contemplated by this Agreement. No Legal Requirement preventing the transactions contemplated by this Agreement shall be in effect. Section 5.3. PURCHASE BY EACH INVESTOR. Each Investor shall have purchased the applicable number of Shares to be purchased by such Investor in accordance with the terms of this Agreement. ARTICLE VI COVENANTS The Company covenants and agrees that: Section 6.1. USE OF PROCEEDS. The proceeds of the sale of the Shares shall be used to repurchase the Company's outstanding 10% Senior Notes Due 2008, Series D and pay related transaction fees and expenses, including accrued interest on the Senior Notes. Section 6.2. PRESERVATION OF CORPORATE EXISTENCE. The Company shall preserve and maintain, and cause its Subsidiaries to preserve and maintain, in full force and effect its corporate existence and good standing under the laws of its jurisdiction of incorporation and shall use its best efforts to preserve and maintain in full force and effect all material rights, privileges, qualifications, licenses and franchises necessary in the normal conduct of its business. Section 6.3. PUBLIC ANNOUNCEMENTS. The Company and the Investors shall consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated hereby, and shall not issue any such press release or make any such public statement that uses the name of any Investor or any affiliate thereof without the prior written consent of each such Investor and affiliate whose name is proposed to be used. Section 6.4. REDEMPTION OF SERIES D PREFERRED STOCK. (a) REDEMPTION RIGHT. Subject to the restrictions contained in Section 6.4(e), if, at any time after the Closing Date a Change of Control (as defined below) occurs, the Company shall, within 10 Business Days after such occurrence, send notice of such occurrence to the holders of the Series D Preferred Stock. If, within 10 Business Days of such notice, a holder of outstanding shares of Series D Preferred Stock sends notice to the Company specifying that such holder thereby requests that the Company redeem all of the outstanding shares of Series D Preferred Stock held by such holder, the Company shall redeem, out of the assets of the Company legally available therefor, all such shares within 30 Business Days of the Company's -8- receipt of all such requests (the "CHANGE OF CONTROL REDEMPTION DATE") at a price per share equal to (x) the Series D Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series D Dividends on such share through and including the date of redemption. (b) CHANGE OF CONTROL DEFINED. "CHANGE OF CONTROL" means such time as (i) any person or "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the "EXCHANGE ACT")) other than the Principal Shareholders (as defined below) or Kelly-Springfield (as defined in the Articles) is or becomes the beneficial owner, directly or indirectly, of outstanding shares of capital stock of the Company, entitling such person or persons to exercise 50% or more of the total votes entitled to be cast at a regular or special meeting, or by action by written consent, of stockholders of the Company (the term "beneficial owner" shall be determined in accordance with Rule 13d-3, promulgated by the Securities and Exchange Commission under the Exchange Act), PROVIDED, HOWEVER, that a person or group shall not be deemed to be the "beneficial owner" of capital stock of the Company solely by reason of such person or group having entered into a stockholders or similar agreement with a Principal Shareholder, (ii) a majority of the Board of Directors shall consist of persons other than Continuing Directors (the term "CONTINUING DIRECTOR" shall mean any member of the Board of Directors immediately following the Closing Date, any member of the Board of Directors elected by Kelly-Springfield pursuant to Section 6.4(c) of the Articles and any other member of the Board of Directors who shall be recommended or elected to succeed or become a Continuing Director by a majority of Continuing Directors who are then members of the Board of Directors), (iii) the stockholders of the Company shall have approved a recapitalization, reorganization, merger, consolidation or similar transaction, in each case, with respect to which all or substantially all the persons who were the respective beneficial owners of the outstanding shares of capital stock of the Company immediately prior to such recapitalization, reorganization, merger, consolidation or similar transaction will beneficially own, directly or indirectly, less than 50% of the combined voting power of the then outstanding shares of capital stock of the Company resulting from such recapitalization, reorganization, merger consolidation or similar transaction; or (iv) the stockholders of the Company shall have approved the sale or other disposition of all or substantially all the assets of the Company in one transaction or in a series of related transactions to a person not owning or controlling, or any entity not owned or controlled by the holders of, directly or indirectly, 50% or more of the combined voting power of the outstanding shares of capital stock of the Company immediately prior to such disposition. "PRINCIPAL SHAREHOLDERS" means Charlesbank Equity Fund IV, Limited Partnership, Charlesbank Equity Fund IV GP, Limited Partnership, Charlesbank Capital Partners, LLC, any other funds managed by Charlesbank Capital Partners, LLC, any person that, as of the Closing Date, is a limited partner of Charlesbank Equity Fund IV, Limited Partnership, members of senior management of the Company that were employees of the Company as of the Closing Date, and any corporation, partnership, limited liability company or other entity a majority of the voting capital stock or partnership, membership or equity interests of which is owned by any of the foregoing. (c) REDEMPTION PROCEDURES. Each redemption of shares of Series D Preferred Stock under this Section 6.4 shall be deemed to have been effected on the applicable Change of Control Redemption Date. On the applicable Change of Control Redemption Date, each holder of shares of Series D Preferred Stock to be redeemed shall deliver to the Company a certificate or -9- certificates representing the shares of Series D Preferred Stock to be redeemed, duly endorsed and in proper form for transfer, against payment in full by wire transfer of immediately available funds in U.S. dollars to an account designated in writing by such holder of an amount per share equal to (x) the Series D Liquidation Preference then in effect PLUS (y) the amount of all accrued and unpaid Series D Dividends on such share through and including the date of redemption. (d) FUNDS INSUFFICIENT TO EFFECT REDEMPTIONS. If the Company shall not have assets or funds legally available for the redemption of all of the shares of Series D Preferred Stock required to be redeemed under this Section 6.4, the Company shall redeem ratably from the holders of the Series D Preferred Stock such number of shares as it shall have funds legally available therefor and shall redeem the remainder of such shares on the earliest practicable date(s) as assets or funds become legally available therefor. Any shares of Series D Preferred Stock not so redeemed shall remain issued and outstanding for all purposes until the date of actual redemption by the Company. (e) LIMITATIONS ON REDEMPTION. Notwithstanding any contrary provision of this Agreement, for so long as any shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, the Company shall not be obligated to make any redemption payments under this Section 6.4 or otherwise in respect of the Series D Preferred Stock. Notwithstanding any contrary provision of this Agreement, from and after the date on which no shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, the Company shall not be obligated to make any redemption payments under this Section 6.4 or otherwise in respect of the Series D Preferred Stock unless due provision can be made for the full amount of any dividend or liquidation preference or redemption payment (if any) payable to which holders of any Senior Stock may be entitled under the Articles. In addition, notwithstanding anything to the contrary in this Agreement, (i) so long as any amounts are outstanding under any Other Documents (as defined below) or any commitments to lend under the Other Documents have not been terminated, the Company shall not make payment in respect of any redemption permitted or otherwise required by this Section 6.4 to the extent that the making of such payment would breach, conflict with, or result in any violation of or default or event of default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the properties or assets of the Company or any of its Subsidiaries under, or result in the Series D Preferred Stock constituting "Disqualified Stock" as defined under, any provision of the Other Documents; and (ii) so long as any amount is outstanding under the Indenture, the Company shall not make payment in respect of any redemption permitted or otherwise required by this Section 6.4 until after the Company has complied with the provisions of Sections 4.06 and 4.09 of the Indenture, it being understood and agreed that if any event or series of events constituting a Change of Control hereunder shall not also constitute a "Change of Control" under the Indenture, such event or series of events shall be deemed not to constitute a Change of Control hereunder and the Company shall not be obligated to make any redemption payments under this Section 6.4 or otherwise in respect of the Series D Preferred Stock in connection therewith. "OTHER DOCUMENTS" means (i) the Amended and Restated Loan and Security Agreement, dated as of March 6, 2000, between and among the Company and the subsidiaries of the Company party thereto, as borrowers, the financial institutions party thereto (the "LENDERS") and Fleet Capital -10- Corporation, as Administrative Agent (the "ADMINISTRATIVE AGENT"), (ii) the Indenture, dated as of December 1, 1998, between and among the Company, the Subsidiary Guarantors party thereto and First Union National Bank, as Trustee (the "INDENTURE"), (iii) all notes, mortgages, security documents, guaranties and other agreements, documents and instruments entered into in connection therewith, in each case, as extended, amended, modified, supplemented and/or restated from time to time in accordance with its terms, including any replacement agreement for any thereof and any refinancing of the debt incurred under any thereof, which refinancing may result in a greater principal amount outstanding in connection therewith. Any determination made by the Board of Directors, in its sole judgment, that the making of any payment pursuant to this Section 6.4 would breach, conflict with, or result in any violation of or default or event of default (with or without notice or lapse of time or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the properties or assets of the Company or any of its subsidiaries under, or result in the Series D Preferred Stock constituting "Disqualified Stock" as defined under, any of the Other Documents, shall be conclusive and binding on the Company and all holders of Series D Preferred Stock. ARTICLE VII MISCELLANEOUS Section 7.1. NOTICES. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service or sent by facsimile (a) if to an Investor, to the address or facsimile number set forth opposite such Investor's name on SCHEDULE I and (b) if to the Company, to: Heafner Tire Group, Inc. 12200 Herbert Wayne Court Suite 150 Huntersville, North Carolina 28078 Facsimile: (704) 947-1919 Attention: General Counsel or to such other address as any party hereto shall have communicated to the other parties hereto by notice in accordance with this provision. All notices and other communications given to any party in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by facsimile in each case delivered or sent (properly addressed) to such party as provided in this Section 7.1 or in accordance with the latest unrevised direction from such party given in accordance with this Section 7.1. Section 7.2. TERMINATION; SURVIVAL OF AGREEMENT. This Agreement shall terminate automatically and be of no further force or effect with respect to an Investor upon written notice from such Investor to the Company if the Closing shall not have occurred prior to the close of business on April 30, 2002. All representations and warranties made by the Company in this Agreement and in the certificates or other documents prepared or delivered in connection -11- with the Closing shall be considered to have been relied upon by the Investors and shall survive the execution and delivery of this Agreement or such certificate or other document, the Closing, the sale and purchase of the Shares and any disposition thereof, regardless of any investigation made by any Investor or on its behalf, for a period of two years from and after the Closing Date. Section 7.3. ASSIGNMENT. This Agreement and the rights, interests and obligations hereunder shall not be assignable or transferable by either party without the prior written consent of the other party hereto; PROVIDED that any Investor may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement to any of its Affiliates. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. Section 7.4. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing expressed or implied in this Agreement shall give or be construed to give to any Person, other than the parties hereto and such successors and assigns, any legal or equitable rights hereunder, except that the Administrative Agent (for the benefit of the Lenders) is intended to be a third party beneficiary of this Agreement. Section 7.5. EXPENSES. The Company shall pay or reimburse the Investors for all reasonable costs and expenses incurred in connection with the negotiation, execution and delivery of this Agreement, including the reasonable fees and expenses of attorneys, financial advisors and accountants. Section 7.6. WAIVERS; AMENDMENT. No failure or delay of the Investors or the Company in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Investors and the Company hereunder are cumulative and are not exclusive of any rights or remedies which the Investors or the Company would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Company therefrom shall in any event be effective unless the same shall be effected in a written agreement signed by the Company and the Investors. Any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. Section 7.7. ENTIRE AGREEMENT. This Agreement (including the Exhibits and Schedules hereto) constitutes the entire agreement between the parties relative to the subject matter hereof and thereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Section 7.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, -12- UNDER OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, THE SHARES OR THE CONVERSION SHARES. Section 7.9. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. Section 7.10. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party. Section 7.11. HEADINGS. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. Except as otherwise expressly provided in this Agreement, the following rules of interpretation apply to this Agreement: (i) the singular includes the plural and the plural includes the singular; (ii) "or" and "any" are not exclusive and "include" and "including" are not limiting; (iii) a reference to any agreement or other contract includes permitted supplements and amendments; (iv) a reference to a law includes any amendment or modification to such law and any rules or regulations issued thereunder; (v) a reference to a person includes its permitted successors and assigns; and (vi) a reference in this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the Article, Section, Annex, Exhibit or Schedule of this Agreement. Section 7.12. DEFINITIONS. As used in this Agreement, the following terms shall have the meanings specified below: "AFFILIATE" means, when used with respect to a specified Person, a limited or general partner of such Person or another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. "BUSINESS DAY" shall have the meaning given in the Articles. "CONTROL" (including, with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. "GOVERNMENTAL AUTHORITY" means any government, court, administrative agency or commission or other governmental agency, authority or instrumentality, domestic or foreign, of competent jurisdiction. -13- "LEGAL REQUIREMENT" means any constitution, act, statute, law, ordinance, treaty, rule, regulation or official interpretation of, or judgment, injunction, order, decision, decree, license, permit or authorization issued by, any Governmental Authority. "LIEN" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, charge, security interest, easement, covenant, right of way, restriction, equity or encumbrance of any nature whatsoever in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "PERSON" means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Authority or other entity, and shall include any successor (by merger or otherwise) of such entity. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations thereunder. "SENIOR STOCK" shall have the meaning given in the Articles. "SERIES A PREFERRED STOCK" shall have the meaning given in the Articles. "SERIES B PREFERRED STOCK" shall have the meaning given in the Articles. "SERIES D DIVIDENDS" shall have the meaning given in the Articles. "SERIES D LIQUIDATION PREFERENCE" shall have the meaning given in the Articles. "SUBSIDIARY" of any Person means any firm, corporation, partnership, limited liability company, trust, joint venture or other entity more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are (or in the case of a Person which does not have outstanding shares or securities, but more than 50% of whose ownership interest representing the right to make decisions for such other entity is) now or hereafter owned or controlled, directly or indirectly, by such Person, but such firm, corporation, partnership, limited liability company, trust, joint venture or other entity shall be deemed to be a Subsidiary only so long as such ownership or control exists. Section 7.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. -14- Section 7.14. CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF NEW YORK STATE SITTING IN THE COUNTY OF NEW YORK OR ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE SHARES OR THE TRANSACTIONS CONTEMPLATED HEREBY. NONE OF THE PARTIES HERETO MAY MOVE TO (I) TRANSFER ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH NEW YORK COURT OR FEDERAL COURT TO ANOTHER JURISDICTION, (II) CONSOLIDATE ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH NEW YORK COURT OR FEDERAL COURT WITH A SUIT, ACTION OR PROCEEDING IN ANOTHER JURISDICTION OR (III) DISMISS ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH NEW YORK COURT OR FEDERAL COURT FOR THE PURPOSE OF BRINGING THE SAME IN ANOTHER JURISDICTION. THE COMPANY AGREES THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SHARES OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY NEW YORK COURT SITTING IN THE COUNTY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY NOTICE IN THE MANNER SPECIFIED IN SECTION 7.1. Section 7.15. RESTRICTIVE LEGENDS. The certificates evidencing the Shares to the extent applicable will bear legends reading substantially as follows (unless and until such legend is no longer required) in addition to any other legends required by any other agreement or applicable Legal Requirement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR IN A TRANSACTION WHICH QUALIFIES AS AN EXEMPT TRANSACTION UNDER SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER. THE COMPANY WILL FURNISH THE HOLDER OF THIS CERTIFICATE INFORMATION CONCERNING THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE TO EACH CLASS OR SERIES OF SHARES, INCLUDING THE LIQUIDATION PREFERENCES AND THE VOTING AND CONVERSION RIGHTS OF THE SERIES D PREFERRED STOCK EVIDENCED HEREBY, UPON WRITTEN REQUEST AND WITHOUT CHARGE." Section 7.16. CERTAIN ACKNOWLEDGMENTS BY THE 1818 MEZZANINE FUND. The 1818 Mezzanine Fund, L. P. (the "FUND") hereby acknowledges and agrees that (i) the execution and delivery of this Agreement by the Fund and the Fund's purchase of the Shares to be purchased by it hereunder constitute the exercise in full of any and all subscription rights, -15- preemptive rights or similar rights of the Fund to acquire shares of Series D Preferred Stock, including without limitation pursuant to Section 4.1(a) of the Warrantholder Agreement, dated as of May 21, 1999 (the "WARRANTHOLDER AGREEMENT"), between and among the Company, the Fund and Charlesbank Equity Fund IV, Limited Partnership, and (ii) the Fund has received sufficient notice of the transactions contemplated by this Agreement and waives any rights under the Warrantholder Agreement or otherwise to receive any other notice with respect thereto. The Fund acknowledges and agrees that the Shares purchased by it under this Agreement shall constitute "Capital Stock" (as defined in the Warrantholder Agreement) for all purposes under the Warrantholder Agreement. The Company and the Investors (other than the Fund) acknowledge and agree that the shares of Common Stock of the Company issuable upon conversion of the Shares purchased by the Fund under this Agreement and the shares of Common Stock of the Company issuable upon conversion of the shares of Series C Preferred Stock, par value $.01 per share, purchased by the Fund under the Share Purchase Agreement, dated as of March 30, 2001, among the Company and the Investors shall constitute "Registrable Securities" for al purposes under the Amended and Restated Registration Rights Agreement, dated as of May 21, 1999, between and among the Company, the Fund and Charlesbank Equity Fund IV, Limited Partnership. -16- IN WITNESS WHEREOF, the parties have duly executed this Share Purchase Agreement as of the day and year first above written. HEAFNER TIRE GROUP, INC. By: /s/ Richard P. Johnson ------------------------------------- Name: Richard P. Johnson Title: President & CEO CHARLESBANK EQUITY FUND IV, LIMITED PARTNERSHIP By: CHARLESBANK EQUITY FUND IV GP, LIMITED PARTNERSHIP, ITS GENERAL PARTNER By: CHARLESBANK CAPITAL PARTNERS, LLC, ITS GENERAL PARTNER By: /s/ Tim R. Palmer ------------------------------------- Tim R. Palmer Managing Director By: /s/ Michael R. Eisenson ------------------------------------- Michael R. Eisenson Managing Director THE 1818 MEZZANINE FUND, L. P. By: BROWN BROTHERS HARRIMAN & CO., ITS GENERAL PARTNER By: /s/ Joseph P. Donlan ------------------------------------- Name: Joseph P. Donlan Title Managing Director -17- SCHEDULE I
Number of Shares of Amount of Investor Series D Preferred Stock Investment - -------- ------------------------ ---------- Charlesbank Equity Fund IV, Limited 8,100,215 $24,300,645 Address for notices: c/o Charlesbank Capital Partners, LLC 600 Atlantic Avenue Boston, Mass. 02210-2203 Attention: Mark A. Rosen and Tami E. Nason Fax (617) 619-5402 Charlesbank Coinvestment 5,000 $ 15,000 Partners Fund Address for notices: c/o Charlesbank Capital Partners, LLC 600 Atlantic Avenue Boston, Mass. 02210-2203 Attention: Mark A. Rosen and Tami E. Nason Fax (617) 619-5402 The 1818 Mezzanine Fund, L. P. Address for 1,532,377 $ 4,597,131 notices: c/o Brown Brothers Harriman & Co. 59 Wall Street New York, N.Y. 10005 Attention: Joseph P. Donlan Fax (212) 493-8429 --------- ----------- Total 9,637,592 $28,912,776
EXHIBIT A FORM OF RESTATED CERTIFICATE OF INCORPORATION SCHEDULE 2.4(C) CAPITAL STOCK Delaware The First State I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF "HEAFNER TIRE GROUP, INC.", FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF MARCH, A.D. 2002, AT 4 O'CLOCK P.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. /s/ Harriet Smith Windsor ----------------------------------------- Harriet Smith Windsor, Secretary of State AUTHENTICATION: 1691869 DATE: 03-27-02 EX-99.1 6 g75510ex99-1.txt PRESS RELEASE, DATED MARCH 27, 2002 Exhibit 99.1 FOR IMMEDIATE RELEASE HEAFNER TIRE GROUP ANNOUNCES COMPLETION OF TENDER OFFER AND CONSENT SOLICITATION Huntersville, N.C. - March 27, 2002 - Heafner Tire Group, Inc. ("Heafner") announced today the completion of its tender offer and consent solicitation, pursuant to the Amended Offer to Purchase and Consent Solicitation Statement dated March 11, 2002 (the "Offer"), to purchase up to $126 million of its 10% Senior Notes Due 2008, Series D (the "Notes") at a price, determined pursuant to a modified Dutch auction procedure, of not less than $450 nor greater than $535 per $1,000 principal amount, plus accrued but unpaid interest. As of the expiration date of the Offer, approximately $121.4 million in aggregate principal amount of the Notes were tendered, and related consents given, pursuant to the terms set forth in the Offer. The purchase price for Notes to be purchased pursuant to the Offer, as determined pursuant to the modified Dutch auction procedure, is $535 per $1,000 principal amount, plus accrued but unpaid interest. In connection with the consent solicitation, consents to the proposed amendments to the Indenture governing the Notes were obtained from holders representing approximately 79% of the aggregate principal amount of the Notes outstanding at the time of the expiration of the Offer. The amendments were included in a supplemental indenture signed by Heafner and the Indenture Trustee, effective March 27, 2002. After having determined that the conditions to the consummation of the Offer and Consent Solicitation were met, Heafner accepted for purchase all Notes tendered pursuant to the Offer as contemplated by the Offer. ABOUT HEAFNER TIRE GROUP Heafner Tire Group, Inc. (formerly The J.H. Heafner Company, Inc.) is one of largest independent suppliers of tires to the replacement tire market in the United States. Heafner operates 65 distribution centers servicing all or parts of 35 states. Heafner sells a broad selection of tires, custom wheels, automotive service equipment and related products manufactured by the leading manufacturers of those products. Reports and other information filed by Heafner with the Securities and Exchange Commission may be obtained from the website that the Commission maintains at HTTP://WWW.SEC.GOV or by request to Heafner at 12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078 (tel: (704) 632-7127), Attention: Legal Department. CONTACTS: Media inquires: Deborah Gardner Heafner Tire Group (704) 632-7127 deborahg@heafnet.com Investor inquiries: Mike Gaither Heafner Tire Group (704) 632-7110 mikeg@heafnet.com -----END PRIVACY-ENHANCED MESSAGE-----