Document:

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                                                                    EXHIBIT 10.3

                                    AGREEMENT

     AGREEMENT, dated as of September 7, 2000, between Salton, Inc., a
Delaware corporation (the "Company"), and Michael Srednick, an individual
("Srednick").

                                   WITNESSETH

     WHEREAS, the Company and Michael Srednick are parties to an agreement (the
"Srednick Agreement") dated July 1, 1999 pursuant to which the Company purchased
from Srednick stock and other property; and

     WHEREAS, under the Agreement, Srednick has the right to receive four annual
cash installments of $1,375,000 each on the first, second, third and fourth
anniversary of the closing of the transactions contemplated by the Srednick
Agreement (the "Future Consideration"); and

     WHEREAS, the parties desire to, among other things, amend the terms of the
Future Consideration to provide for the payment to Srednick on the date hereof
of shares of common stock, $.01 par value per share, of the Company (the "Common
Stock") valued at $1,375,000 in lieu of the first annual $1,375,000 cash
installment of the balance of the Purchase Price payable pursuant to Section
4(a)(ii) of the Srednick Agreement;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

     1.   Amendment.

               (a) Notwithstanding Section 4(a)(ii) of the Srednick Agreement,
     the parties hereto agree that, in lieu of the second installment of the
     balance of the Purchase Price payable pursuant to Section 4(a)(ii) of the
     Srednick Agreement, the Company shall issue to Srednick on the date hereof
     37,543 shares of Common Stock:

               (b) Except as specifically set forth in this Agreement, the terms
     and provisions of the Srednick Agreement and the agreements contemplated
     thereby (including, without limitation, the Trademark Security Agreement)
     shall continue in full force and effect.

     2.   Representations and Warranties of the Company. The Company hereby
represents and warrants to Srednick as follows:

               (a) Organization and Standing of the Company. The Company is a
     corporation duly incorporated, validly existing and in good standing under
     the laws of the State of Delaware.

               (b) Authority. The Company has the requisite corporate power and
     authority to enter into this Agreement and to carry out its obligations
     hereunder. The execution, delivery and performance of this Agreement by the
     Company have been duly and validly authorized by all requisite corporate
     proceedings on the part of the Company and do not require the approval or
     consent of any stockholders of the

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     Company. This Agreement has been duly executed and delivered by the Company
     and is (assuming the due authorization, execution and delivery by Srednick)
     a valid and binding agreement of the Company, enforceable against it in
     accordance with its terms, except as such enforceability may be limited by
     bankruptcy and insolvency laws and by other laws affecting the rights of
     creditors generally or by the availability of equitable remedies and except
     as rights of indemnity or contribution may be limited by federal or state
     securities or other laws or the public policy underlying such laws.

               (c) Status of Shares. The Shares (as defined below) have been (or
     will be) duly authorized by all necessary corporate action on the part of
     the Company (no consent or approval of stockholders being required by law,
     the Certificate of Incorporation of the Company, as amended and restated,
     or its By-laws). The Shares, when delivered pursuant to this Agreement,
     will be validly issued and outstanding, fully paid and nonassessable and
     free and clear of any liens (other than those imposed by the securities
     laws), and the issuance of such Shares is not and will not be subject to
     preemptive or similar rights of any other stockholder of the Company. For
     purposes of this Agreement, "Shares" shall mean the shares of Common Stock
     issued to Srednick pursuant to this Agreement, and any additional shares of
     Common Stock issued to Srednick in accordance with Section 4(e) of this
     Agreement.

     3.   Representations and Warranties of Srednick. Srednick hereby represents
and warrants to the Company as follows:

               (a) Authority and Authorization of Srednick. Srednick has the
     requisite power to enter into this Agreement. This Agreement has been duly
     executed and delivered by Srednick and is (assuming the due authorization,
     execution and delivery by the Company) a valid and binding agreement of
     Srednick, enforceable against Srednick in accordance with its terms except
     as may be limited by bankruptcy and insolvency laws and by other laws
     affecting the rights of creditors generally and except as may be limited by
     the availability of equitable remedies and except as rights of indemnity or
     contribution may be limited by federal or state securities or other laws or
     the public policy underlying such laws.

               (b) Experience of Srednick; Acquisition for Investment. Srednick
     is an accredited investor as defined in Regulation D under the Securities
     Act of 1933. Srednick has extensive knowledge and experience in financial
     and business matters and has the capability to evaluate the merits and
     risks of an investment in the Shares and has had the opportunity to ask any
     and all questions of the Company's management. Srednick represents that he
     is not acquiring the Shares with a view to or for sale in connection with
     any distribution thereof, except as permitted by and pursuant to Section 4
     of this Agreement, and that he has no present intention or plan to effect
     any distribution of the Shares, except as permitted by and pursuant to
     Section 4 of this Agreement; provided, however that the disposition of
     Srednick's property shall at all times be and remain within his control,
     subject to the provisions of this Agreement. Srednick understands that the
     Shares have not yet been registered under the Securities Act of 1933 (the
     "Securities Act") by reason of specific exemptions therefrom which depend
     upon, among other things,

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     the accuracy of his representations as expressed herein. The Shares shall
     bear the following legend:

               THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
          ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
          THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE
          SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
          IN THE ABSENCE OF SUCH REGISTRATIONS OR EXEMPTIONS THEREFROM
          UNDER SAID ACT OR LAWS.

               (c) Rule 144. Srednick acknowledges that the Shares must be held
     indefinitely unless subsequently registered under the Securities Act or any
     applicable state securities laws or unless exemptions from such
     registrations are available. Srednick is aware of the provisions of Rule
     144 promulgated under the Securities Act which permit limited resale of
     securities purchased in a private placement subject to the satisfaction of
     certain conditions.

               (d) Shares. Srednick acknowledges and agrees that he will not,
     except in connection with a merger, tender offer or similar transaction
     involving the Company, sell, transfer or otherwise dispose of the Shares
     except to the public pursuant to the registration statement contemplated by
     Section 4 hereof or in brokerage transactions in accordance with Rule 144
     under the Securities Act.

     4.   Registration.

               (a) The Company agrees, at its sole expense, to prepare and file
     with the Securities and Exchange Commission (the "Commission") as soon as
     reasonably practicable after the issuance of any Shares to Srednick
     pursuant to this Agreement a registration statement (including a prospectus
     therein) (or amend and continue the effectiveness of any registration
     statement) with respect to the sale of such Shares to the public in
     brokerage transactions and to use its reasonable best efforts to cause such
     registration statement to become and remain effective for such period as
     may be necessary to permit the successful marketing of such Shares, but not
     exceeding the earlier of (i) September 30, 2001 and (ii) the date on which
     Srednick could dispose of any remaining Shares to the public pursuant to
     Rule 144(k) under the Securities Act. The date on which Srednick is
     entitled to use such prospectus for the sale of the Shares is sometimes
     referred to herein as the "Effective Date". Notwithstanding the foregoing,
     the Company shall be entitled to prohibit any offers or sales of the Shares
     pursuant to the prospectus for a reasonable period of time (but not
     exceeding an aggregate of 90 days during any 12 month period) if the
     Company determines, in its reasonable judgment, that (i) the Company is in
     possession of material information that has not been disclosed to the
     public and the Company reasonably determines that it would be significantly
     detrimental to the Company and its stockholders to disclose such
     information at such time in a registration statement or (ii) such
     registration and offering would interfere with any

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     financing, acquisition, corporate reorganization or other material
     transaction involving the Company or any of its affiliates and, in any such
     case, the Company promptly gives Srednick written notice of such
     determination, containing a general statement of the reasons for such
     postponement and an approximation of the anticipated delay. Srednick agrees
     that, upon receipt of any such written notice, he will forthwith
     discontinue disposition of any Shares until he receives notice in writing
     from the Company that the use of the prospectus may be resumed. The Company
     shall furnish to Srednick promptly after the date when the registration
     statement becomes effective such number of prospectuses as may be needed in
     order to facilitate the public sale of the Shares. Srednick shall furnish
     to the Company such information regarding Srednick and the distribution of
     the Shares as the Company may from time to time reasonably request in order
     to comply with the Securities Act.

               (b) In the event that the aggregate proceeds (after reasonable
     and customary brokerage commissions) from the sale of Shares by Srednick to
     the public prior to the one year anniversary of the Effective Date plus the
     market value (based on the average closing price of the Common Stock (as
     reported on the NYSE Composite Transactions Reporting system as published
     in The Wall Street Journal or, if not published therein, in another
     alternative source) during the ninety (90) trading days ending on the third
     trading day preceding the one year anniversary of the Effective Date) of
     Shares which Srednick continues to hold on the one year anniversary of the
     Effective Date are less than the product of (x) the number of Shares
     multiplied by (y) $36.625, then the Company shall pay to Srednick an amount
     in cash (or, at the election of the Company in accordance with Section 4(e)
     hereof, in additional shares of Common Stock) equal to the difference
     between (a) the product of (x) the number of Shares sold during the
     specified one year period multiplied by (y) $36.625 and (b) the aggregate
     proceeds (after reasonable and customary brokerage commissions) from the
     sale of such Shares.

               (c) In the event the aggregate proceeds (after reasonable and
     customary brokerage commissions) from the sale of Shares by Srednick to the
     public prior to the one year anniversary of the Effective Date plus the
     market value (based on the average closing price of the Common Stock (as
     reported on the NYSE Composite Transactions Reporting system as published
     in The Wall Street Journal or, if not published therein, in another
     alternative source) during the ninety (90) trading days ending on the third
     trading day preceding the one year anniversary of the Effective Date) are
     more than the product of (x) the number of Shares multiplied by (y)
     $36.625, then Srednick shall pay to the Company an amount in cash equal to
     fifty percent (50%) of the excess.

               (d) Srednick agrees that he will not sell in the aggregate more
     than 50,000 Shares during any trading day and that he will use his
     reasonable best efforts to obtain the best available sales price for any
     Shares sold on or prior to the one year anniversary of the Effective Date.

               (e) Payments required to be made by any party to any other party
     pursuant to Section 4(b) or 4(c) shall be made promptly after the one year
     anniversary of the Effective Date (and in any event not later than fifteen
     (15) days after the

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     one year anniversary of the Effective Date). In the event that the Company
     elects to make any payment required by Section 4(b) hereof with respect to
     any fiscal year by issuing shares of Common Stock to Srednick, then the
     Company shall issue to Srednick that number of shares of Common Stock that
     is equal to (1) the dollar amount of the payment required, divided by (2)
     the average closing price of the Common Stock (as reported on the NYSE
     Corporate Reporting System as published in The Wall Street Journal or, if
     not published therein, in another alternative source) during the ninety
     (90) trading days ending on the third trading day preceding the one year
     anniversary of the Effective Date. Each of the parties will cooperate with
     each other and furnish each other information (including, without
     limitation, documented information concerning any sales of the Shares) to
     determine the amount of payments due pursuant to Sections 4(b) through (d)
     above. For purposes of Sections 4(b), in the event that Srednick sells any
     of the Shares pursuant to a merger, tender offer or similar transaction
     involving the Company, he shall be deemed to have sold such Shares to the
     public for an amount equal to the aggregate consideration he receives for
     the sale of such Shares in such transaction.

               (f) The Company shall indemnify and hold harmless Srednick any
     expenses, losses, claims, damages or liabilities, joint or several, to
     which Srednick may become subject under the Securities Act or the
     Securities Exchange Act of 1934, as amended, including any of the foregoing
     incurred in settlement of any litigation, commenced or threatened, insofar
     as such expenses, losses, claims, damages or liabilities (or actions in
     respect thereof) arise out of or are based upon (i) any untrue statement or
     alleged untrue statement of any material fact contained in the registration
     statement or final prospectus contained therein, or any amendment or
     supplement thereto; or (ii) any omission or alleged omission to state
     therein a material fact required to be stated therein or necessary to make
     the statements therein, in light of the circumstances under which they were
     made, not misleading; and shall reimburse each Srednick for any legal or
     any other expenses reasonably incurred by him in connection with
     investigating or defending any such loss, claim, damage, liability or
     action; provided, however, that the Company shall not be liable in any such
     case to the extent that any such expense, loss, claim, damage or liability
     arises out of or is based upon an untrue statement or alleged untrue
     statement or omission or alleged omission made in the registration
     statement or said prospectus or said amendment or supplement in reliance
     upon and in conformity with written information furnished to the Company by
     Srednick specifically for use in the preparation thereof.

               (g) Srednick shall indemnify and hold harmless the Company and
     each person, if any, who controls the Company within the meaning of the
     Securities Act, each officer of the Company who signs the registration
     statement and each director of the Company, against any and all such
     expenses, losses, claims, damages or liabilities referred to in Section
     4(f) above if the statement, alleged statement, omission or alleged
     omission in respect of which such expense, loss, claim, damage or liability
     was made in reliance upon and in conformity with information furnished in
     writing to the Company by Srednick specifically for use in connection with
     the preparation of the registration statement, prospectus, amendment or
     supplement.

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               (h) Promptly after receipt by an indemnified party of notice of
     the commencement of any action, such indemnified party shall, if a claim in
     respect thereof is to be made against the indemnifying party, notify the
     indemnifying party in writing of the commencement thereof; but the omission
     so to notify the indemnifying party shall not relieve it from any liability
     which it may have to any indemnified party otherwise than under this
     Section 4 or to the extent that it has not been prejudiced as a proximate
     result of such failure. In case any such action shall be brought against
     any indemnified party, and it shall notify the indemnifying party of the
     commencement thereof, the indemnifying party shall be entitled to
     participate therein and, to the extent that it shall wish, to assume the
     defense thereof, with counsel reasonably satisfactory to such indemnified
     party; provided, however, that if the defendants in any such action include
     both the indemnified party and the indemnifying party and the indemnified
     party shall have reasonably concluded that there may be legal defenses
     available to it and/or other indemnified parties which are different from
     or additional to those available to the indemnifying party, the indemnified
     party or parties shall have the right to select one separate counsel to
     assert such legal defenses (in which case the indemnifying party shall not
     have the right to direct the defense of such action on behalf of the
     indemnified party or parties). Upon the permitted assumption by the
     indemnifying party of the defense of such action, and approval by the
     indemnified party of counsel, the indemnifying party shall not be liable to
     such indemnified party under this Section 4 for any legal or other expenses
     subsequently incurred by such indemnified party in connection with the
     defense thereof (other than reasonable costs or investigation) unless (i)
     the indemnified party shall have employed one separate counsel in
     connection with the assertion of legal defenses in accordance with the
     proviso to the next preceding sentence, (ii) the indemnifying party shall
     not have employed counsel reasonably satisfactory to the indemnified party
     to represent the indemnified party within a reasonable time, (iii) the
     indemnifying party and its counsel do not actively and vigorously pursue
     the defense of such action or (iv) the indemnifying party has authorized
     the employment of counsel for the indemnified party at the expense of the
     indemnifying party.

               (i) From the date hereof until September 30, 2001, the Company
     agrees to use its reasonable best efforts to file with the Commission such
     information as is required under the Securities Exchange Act of 1934, as
     amended, and to take all actions as may be required as a condition to the
     availability of Rule 144 under the Securities Act.

     5.   Miscellaneous.

               (a) Specific Performance. The parties hereto agree that
     irreparable damage would occur in the event that any of the provisions of
     this Agreement were not performed by the applicable party hereto in
     accordance with the specific terms of this Agreement or were otherwise
     breached. Each of the parties hereto shall be entitled to an injunction or
     injunctions to prevent breaches of this Agreement by the other and to
     enforce specifically the terms and provisions hereof in addition to any
     other remedy to which such party is entitled at law or in equity, and each
     party waives the posting of any bond or security in connection with any
     proceeding related thereto.

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               (b) Expenses. Except for the Company's payment of the costs and
     expenses of filing a registration statement (including a prospectus
     therein) with respect to the sale of the Shares, no party hereto shall be
     responsible for the payment of any other party's expenses incurred in
     connection with this Agreement.

               (c) Third Party Beneficiaries. The terms and provisions of this
     Agreement are intended solely for the benefit of each party hereto and his
     or its respective successors and permitted assigns, and it is not the
     intention of the parties to confer third party beneficiary rights upon any
     other person or entity.

               (d) Amendments. This Agreement may not be modified, amended,
     altered or supplemented except upon the execution and delivery of a written
     agreement executed by each of Srednick and the Company.

               (e) Assignment. Neither this Agreement nor any of the rights,
     interests or obligations hereunder shall be assigned, in whole or in part,
     by Srednick without the prior written consent of the Company. Subject to
     the preceding sentence, this Agreement will be binding upon, inure to the
     benefit of, and be enforceable by, the parties and their respective
     successors and assigns.

               (f) Notices. All notices, requests, claims, demands and other
     communications hereunder shall be in writing and shall be deemed given if
     delivered personally or sent by overnight courier (providing proof of
     delivery) to the parties at the following addresses (or at such other
     address for a party as shall be specified by like notice).

                         (i)      if to Srednick, to

                   Michael Srednick

                         (ii)     if to the Company, to

                   Salton, Inc.
                   550 Business Center Drive
                   Mount Prospect, Illinois  60056

                   Attention: William B. Rue, President

                   with a copy to:

                   Sonnenschein Nath & Rosenthal
                   8000 Sears Tower
                   Chicago, Illinois  60606

                   Attention: Neal Aizenstein, Esq.

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               (g) Governing Law. This Agreement shall be governed by, and
     interpreted in accordance with, the laws of the State of Delaware, without
     regard to the conflict of law principles thereof. All actions and
     proceedings arising out of or relating to this Agreement shall be heard and
     determined in any state or Federal court sitting in Delaware. Each of the
     parties hereto (i) consents to submit such party to the personal
     jurisdiction of any Federal court located in the State of Delaware or any
     Delaware state court in the event any dispute arises out of this Agreement
     or any of the transactions contemplated hereby, (ii) agrees that such party
     will not attempt to deny or defeat such personal jurisdiction by motion or
     other request for leave from any such court, (iii) agrees that such party
     will not bring any action relating to this Agreement or the transactions
     contemplated hereby in any court other than a Federal court sitting in the
     State of Delaware or a Delaware state court and (iv) waives any right to
     trial by jury with respect to any claim or proceeding related to or arising
     out of this Agreement or any of the transactions contemplated hereby.

               (h) Counterparts. This Agreement may be executed in one or more
     counterparts, each of which shall be deemed to constitute an original. This
     Agreement shall become effective when one counterpart signature page has
     been signed by each party hereto and delivered to each of the other
     parties.

               (i) Effect of Headings. The descriptive headings contained herein
     are for convenience of reference only and shall not affect in any way the
     meaning or interpretation of this Agreement.

               (j) Further Assurances. Each of the parties hereto agrees to
     execute and deliver all such further documents, certificates and
     instruments, and take all such further reasonable action as may be
     necessary or reasonably appropriate, in order to consummate the
     transactions contemplated hereby.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.

                                       SALTON, INC.

                                       By:
                                       Its:

                                       MICHAEL SREDNICK

                                       By:

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                                                                    EXHIBIT 4.11

                          Certificate of Designation of
                            Series A Preferred Stock

                                       of

                             Southern Energy, Inc.

         It is hereby certified that:

         1.       The name of the corporation is Southern Energy, Inc.
(hereinafter called the "Corporation");

         2.       The Restated Certificate of Incorporation of the Corporation
(the "Certificate of Incorporation"), is hereby amended so that the designation
and number of shares of the class and series acted upon in the following
resolution, and the relative rights, preferences and limitations of such class
and series, are as stated in such resolution; and

         3.       The following resolution was duly adopted by the Board of
Directors of the Corporation as required by the General Corporation Law of the
State of Delaware at a meeting duly called and held on August 22, 2000;

         RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a series of
Series A Preferred Stock, with a par value of $0.10 per share, of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences and limitations thereof (in addition to the
provisions set forth in the Certificate of Incorporation which are applicable to
the Preferred Stock of all classes and series) as follows:

         Series A Preferred Stock

         Section 1.        Designation, Par Value and Amount. The shares of such
series shall be designated as "Series A Preferred Stock" (hereinafter referred
to as "Series A Preferred Stock"), the shares of such series shall be with par
value of $0.10 per share, and the number of shares constituting such series
shall be one million (1,000,000) shares; provided, however, that, if more than a
total of 1,000,000 shares of Series A Preferred Stock shall be issuable upon the
exercise of Rights (the "Rights") issued pursuant to the Rights Agreement
between the Corporation and ChaseMellon Shareholder Services, LLC, as Rights
Agent (as amended from time to time, the "Rights Agreement"), the Board of
Directors of the Corporation, pursuant to the General Corporation Law of the
State of Delaware, shall direct by resolution or resolutions that a certificate
be properly executed, acknowledged and filed providing for the total number of
shares of Series A Preferred Stock authorized to be issued to be increased (to
the extent that the

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Certificate of Incorporation then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of the Rights.

         Section 2.        Dividends and Distributions.

         (A)      Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of assets legally available for the purpose,
quarterly dividends payable in cash on the first business day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock, par value $0.01 per share, of the Corporation
(the "Common Stock") or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock.

         (B)      The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

         (C)      Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution

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declared thereon, which record date shall be not more than 30 days prior to the
date fixed for the payment thereof.

         Section 3.        Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:

         (A)      Except as provided in paragraph C of this Section 3 and
subject to the provision for adjustment hereinafter set forth, each share of
Series A Preferred Stock shall entitle the holder thereof to one thousand votes
on all matters submitted to a vote of the stockholders of the Corporation.

         (B)      Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.

         (C)(i)   If, on the date used to determine stockholders of record
for any meeting of stockholders for the election of directors, a default in
preference dividends (as defined in subparagraph (v) below) on the Series A
Preferred Stock shall exist, the holders of the Series A Preferred Stock shall
have the right, voting as a class as described in subparagraph (ii) below, to
elect two directors (in addition to the directors elected by holders of Common
Stock of the Corporation). Such right may be exercised (a) at any meeting of
stockholders for the election of directors or (b) at a meeting of the holders of
shares of Voting Preferred Stock (as hereinafter defined), called for the
purpose in accordance with the By-laws of the Corporation, until all such
cumulative dividends (referred to above) shall have been paid in full or until
non-cumulative dividends have been paid regularly for at least one year.

         (ii)     The right of the holders of Series A Preferred Stock to elect
two directors, as described above, shall be exercised as a class concurrently
with the rights of holders of any other series of Preferred Stock upon which
voting rights to elect such directors have been conferred and are then
exercisable. The Series A Preferred Stock and any additional series of Preferred
Stock which the Corporation may issue and which may provide for the right to
vote with the foregoing series of Preferred Stock are collectively referred to
herein as "Voting Preferred Stock".

         (iii)    Each director elected by the holders of shares of Voting
Preferred Stock shall be referred to herein as a "Preferred Director." A
Preferred Director so elected shall continue to serve as such director for a
term of one year, except that upon any termination of the right of all of such
holders to vote as a class for Preferred Directors, the term of office of such
directors shall terminate. Any Preferred Director may be removed by, and shall
not be removed except by, the vote of the holders of record of a majority of the
outstanding shares of Voting Preferred Stock then entitled to vote for the
election of directors, present (in person or by proxy) and voting together as a
single class (a) at a meeting of the stockholders, or (b) at a meeting of the
holders of shares of such Voting Preferred Stock, called for the purpose in
accordance with the By-laws of the Corporation, or (c) by written consent signed
by the holders of a majority of the then

                                       3
<PAGE>   4

outstanding shares of Voting Preferred Stock then entitled to vote for the
election of directors, taken together as a single class.

         (iv)     So long as a default in any preference dividends on the Series
A Preferred Stock shall exist or the holders of any other series of Voting
Preferred Stock shall be entitled to elect Preferred Directors, (a) any vacancy
in the office of a Preferred Director may be filled (except as provided in the
following clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote or
written consent of the holders of a majority of the outstanding shares of Voting
Preferred Stock then entitled to vote for the election of directors, present (in
person or by proxy) and voting together as a single class, at such time as the
removal shall be effected. Each director appointed as aforesaid by the remaining
Preferred Director shall be deemed, for all purposes hereof, to be a Preferred
Director. Whenever (x) no default in preference dividends on the Series A
Preferred Stock shall exist and (y) the holders of other series of Voting
Preferred Stock shall no longer be entitled to elect such Preferred Directors,
then the number of directors constituting the Board of Directors of the
Corporation shall be reduced by two.

         (v)      For purposes hereof, a "default in preference dividends" on
the Series A Preferred Stock shall be deemed to have occurred whenever the
amount of cumulative and unpaid dividends on the Series A Preferred Stock shall
be equivalent to six full quarterly dividends or more (whether or not
consecutive), and, having so occurred, such default shall be deemed to exist
thereafter until, but only until, all cumulative dividends on all shares of the
Series A Preferred Stock then outstanding shall have been paid through the last
Quarterly Dividend Payment Date or until, but only until, non-cumulative
dividends have been paid regularly for at least one year.

         (E)      Except as set forth herein, holders of Series A Preferred
Stock shall have no general or special voting rights and their consent shall not
be required for taking any corporate action.

         Section 4.        Certain Restrictions.

         (A)      Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not (i) declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;

         (ii)     declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;

                                       4
<PAGE>   5

         (iii)    redeem or purchase or otherwise acquire for consideration
(except as provided in (iv) below) shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock;

         (iv)     redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.

         (B)      The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.

         Section 5.        Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, in any other Certificate of
Amendment creating a series of Preferred Stock or as otherwise required by law.

         Section 6.        Liquidation. Dissolution or Winding Up.

         (A)      Subject to the prior and superior rights of holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Preferred Stock with respect to rights upon liquidation, dissolution
or winding up (voluntary or otherwise), no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $10.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series Liquidation Preference"). Following the payment of the full amount
of the Series A Liquidation Preference, no additional distributions shall be
made to the holders of shares of Series A Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share
(the "Capital Adjustment") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Capital Adjustment in respect of all outstanding
shares of Series

                                       5
<PAGE>   6

A Preferred Stock and Common Stock, respectively, holders of Series A Preferred
Stock and holders of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.

         (B)      In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of Series A Preferred Stock
and the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Capital Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.

         Section 7.        Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to two times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.

         Section 8.        No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.

         Section 9.        Ranking. The Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.

         Section 10.       Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.

                                       6
<PAGE>   7

         IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President and attested by its Secretary this
22nd day of August, 2000.

                                             /s/ S. Marce Fuller
                                             -------------------------------
                                             S. Marce Fuller
                                             President

Attest:

/s/ Elizabeth B. Chandler
---------------------------------
Elizabeth B. Chandler
Vice President and Secretary

                                       7

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