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EXHIBIT 2
ON COMMAND CORPORATION
CERTIFICATE OF DESIGNATIONS
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SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"CONVERTIBLE PARTICIPATING PREFERRED STOCK,
SERIES A" ADOPTED BY THE BOARD OF DIRECTORS
OF ON COMMAND CORPORATION
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The undersigned, a Vice President of ON COMMAND CORPORATION, a
Delaware corporation (this "Corporation"), HEREBY CERTIFIES that the Board of
Directors of this Corporation on July 25, 2000, duly adopted the following
resolutions creating a new series of this Corporation's Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV of the Certificate of Incorporation of this
Corporation, the Board of Directors hereby creates and authorizes the issuance
of a new series of this Corporation's preferred stock, par value $.01 per share
("Preferred Stock"), and hereby fixes the powers, designations, dividend rights,
voting powers, rights on liquidation, conversion rights, redemption rights and
other preferences and relative, participating, optional or other special rights
and the qualifications, limitations or restrictions of the shares of such series
(in addition to the powers, designations, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof set forth in the Certificate of
Incorporation that are applicable to each class and series of Preferred Stock),
as follows:
1. Designation and Number. The designation of the series of
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Preferred Stock, par value $.01 per share, of this Corporation authorized hereby
is "Convertible Participating Preferred Stock, Series A" (the "Series A
Preferred Stock"). The number of shares constituting the Series A Preferred
Stock shall be 13,500.
2. Certain Definitions. Unless the context otherwise requires,
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the terms defined in this paragraph 2 shall, for all purposes of this
Certificate of Designations, have the meanings herein specified:
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"Note": The promissory note made by Jerome H. Kern to this Corporation
dated August 10, 2000 in the principal amount of $21,080,250, or any substitute
therefor or amendment thereof.
"Board of Directors": The Board of Directors of this Corporation and,
to the extent permitted by law, unless the context indicates otherwise, any
committee thereof authorized with respect to any particular matter to exercise
the power of the Board of Directors of this Corporation with respect to such
matter.
"Business Day": Any day other than a Saturday, Sunday or a day on
which banking institutions in Denver, Colorado are not required to be open.
"Capital Stock": Any and all shares, interests, participations or
other equivalents (however designated) of corporate stock of this Corporation.
"Common Stock": The Common Stock, $.01 par value per share, of this
Corporation, and all series thereof hereafter created.
"Control": The direct or indirect power to direct, or cause the
directions of, the management and policies of any person, whether, through the
ownership of voting securities, by contract, by membership or involvement on the
board of directors, management committee or other management structure or
otherwise.
"Conversion Date": Of a share of Series A Preferred Stock, (i) in the
case of a conversion at the option of the holder pursuant to paragraph 5(a)(i),
the date on which the requirements for conversion of such Share set forth in
paragraph 5(j) have been satisfied by the holder thereof and (ii) in the case of
an automatic conversion pursuant to paragraph 5(a)(ii), the close of business on
the day of the occurrence of the event requiring such automatic conversion.
"Conversion Price": As defined in paragraph 5(b).
"Conversion Rate": The kind and amount of securities, cash or other
assets that as of any date are issuable or deliverable upon conversion of a
share of Series A Preferred Stock. The Conversion Rate of a Share of Series A
Preferred Stock shall initially be as set forth in paragraph 5(b), subject to
adjustment as set forth in paragraph 5 of this Certificate of Designations. In
the event that pursuant to paragraph 5 the Series A Preferred Stock becomes
convertible into more than one class or series of Capital Stock of this
Corporation, the term Conversion Rate, when used with respect to any such class
or series, shall mean the number or fraction of shares or other units of such
Capital Stock that as of any date would be issued upon conversion of a share of
Series A Preferred Stock.
"Convertible Securities": Securities that are convertible into or
exercisable or exchangeable for Common Stock at the option of the holder
thereof, or which otherwise entitle the holder thereof to subscribe for,
purchase or otherwise acquire Common Stock.
"Corporation": On Command Corporation.
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"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Offer": An issuer tender offer (within the meaning of Rule
13e-4(a)(2) of the rules and regulations promulgated by the Securities and
Exchange Commission under the Exchange Act, as such Rule is in effect on the
date hereof), including, without limitation, one that is effected through the
distribution of rights or warrants, made to holders of Common Stock (or to
holders of other stock of this Corporation receivable by a holder of Shares upon
conversion thereof ( or upon conversion of securities receivable by a holder of
Shares upon conversion of such Shares)), to issue stock of this Corporation or
of a Subsidiary of this Corporation and/or other property to a tendering
stockholder in exchange for shares of Common Stock (or such other stock) validly
tendered pursuant to such issuer tender offer.
"Exchange Preferred Stock": A series of convertible preferred stock of
this Corporation, having terms, conditions, designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that are identical, or as nearly so as is practicable in
the judgment of the Board of Directors, to those of the Series A Preferred Stock
for which such Exchange Preferred Stock is exchanged, except that (i) the
liquidation preference will be determined as provided in paragraph 5(e) or 5(f),
as applicable, (ii) the running of any time periods pursuant to the terms of the
Series A Preferred Stock shall be tacked to the corresponding time periods in
the Exchange Preferred Stock and (iii) the Exchange Preferred Stock will not be
convertible into, and the holders will have no conversion rights thereunder with
respect to, (x) in the case of a redemption of Redeemable Capital Stock, the
Redeemable Capital Stock redeemed, or the Redemption Securities issued, in the
Redemption Event, and (y) in the case of a Spin Off, the Spin Off Securities.
"Exchange Securities": Stock of this Corporation or of a Subsidiary of
this Corporation that is issued in exchange for shares of Common Stock (or other
stock of this Corporation receivable by a holder of Shares upon conversion
thereof (or upon conversion of securities receivable by a holder of Shares upon
conversion of such Shares)) pursuant to an Exchange Offer.
"HSR Act": As defined in paragraph 5(a).
"Issue Date": The first date on which any shares of the Series A
Preferred Stock are issued.
"Junior Securities": All shares of Common Stock, and any class or
series of Capital Stock of this Corporation, whether now existing or hereafter
created, to the extent that it ranks junior to the Series A Preferred Stock as
to dividend rights or rights on liquidation. A class or series of Junior Stock
shall rank junior to the Series A Preferred Stock as to dividend rights or
rights on liquidation if the holders of shares of Series A Preferred Stock shall
be entitled to dividend payments or payments of amounts distributable upon
liquidation, dissolution or winding up of the affairs of this Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or series.
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"Liquidation Preference": $.01 per share of Series A Preferred Stock.
"Mirror Preferred Stock": Convertible preferred stock issued by (a) in
the case of a redemption of Redeemable Capital Stock, the issuer of the
applicable Redemption Securities, (b) in the case of a Spin Off, the issuer of
the applicable Spin Off Securities, and (c) in the case of an Exchange Offer,
the issuer of the applicable Exchange Securities, and having terms, conditions,
designations, dividend rights, voting powers, rights on liquidation and other
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof that are identical, or as
nearly so as practicable in the judgment of the Board of Directors, to those of
the Series A Preferred Stock for which such Mirror Preferred Stock is exchanged,
except that (i) the liquidation preference will be determined as provided in
paragraph 5(e), 5(f) or 6, as applicable, (ii) the running of any time periods
pursuant to the terms of the Series A Preferred Stock shall be tacked to the
corresponding time periods in the Mirror Preferred Stock, and (iii) the Mirror
Preferred Stock shall be convertible into the kind and amount of Redemption
Securities, Spin Off Securities or Exchange Securities, as applicable, and other
securities and property that the holder of a share of Series A Preferred Stock
in respect of which such Mirror Preferred Stock is issued pursuant to the terms
hereof would have received (x) in the case of the redemption of Redeemable
Capital Stock, upon such redemption had such shares of Series A Preferred Stock
been converted immediately prior to the effective date of the Redemption Event,
(y) in the case of a Spin Off, in such Spin Off had such share of Series A
Preferred Stock been converted immediately prior to the record date for such
Spin Off and (z) in the case of an Exchange Offer, upon consummation thereof had
such share of Series A Preferred Stock that such holder elects to tender
pursuant to Section 6 been converted and the shares of Common Stock received
upon such conversion been tendered in full pursuant to such Exchange Offer prior
to the expiration thereof and the same percentage of such tendered shares had
been accepted for exchange as the percentage of validly tendered shares of
Common Stock were accepted for exchange pursuant to such Exchange Offer, as the
case may be.
"Offeror": As defined in paragraph 6(a).
"Parity Securities": Any class or series of stock of this Corporation,
whether now existing or hereafter created, ranking on a parity basis with the
Series A Preferred Stock as to dividend rights or rights on liquidation. Stock
of any class or series shall rank on a parity basis as to dividend rights or
rights on liquidation with the Series A Preferred Stock, whether or not the
dividend rates, dividend payment dates or liquidation prices per share are
different from those of the Series A Preferred Stock, if the holders of shares
of such class or series shall be entitled to dividend payments or payments of
amounts distributable upon liquidation, dissolution or winding up of the affairs
of this Corporation, as the case may be, in proportion to their respective
accumulated and accrued and unpaid dividends or liquidation prices,
respectively, without preference or priority, one over the other, as between the
holders of shares of such class or series and the holders of Series A Preferred
Stock. No class or series of Capital Stock that ranks junior to the Series A
Preferred Stock as to rights on liquidation shall rank or be deemed to rank on a
parity basis with the Series A Preferred Stock as to dividend rights unless the
instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
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"Participating Dividends": As defined in paragraph 3(a).
"Permitted Holder": Jerome H. Kern, the executor or personal
representative of the estate of Jerome H. Kern and any corporation, partnership
or limited liability company (x) of which at least 50% of the outstanding equity
interests are owned of record and beneficially by Jerome H. Kern and (y) which
is Controlled by Jerome H. Kern.
"person": A natural person, corporation, limited liability company,
partnership or other legal entity.
"Preferred Stock": The preferred stock, par value $.01 per share, of
the Corporation.
"Redeemable Capital Stock": A class or series of Capital Stock of this
Corporation that provides by its terms a right in favor of this Corporation to
call, redeem, exchange or otherwise acquire all of the outstanding shares or
units of such class or series.
"Redemption Securities": With respect to the redemption of any
Redeemable Capital Stock, stock of a Subsidiary of this Corporation that is
distributed by this Corporation in payment, in whole or in part, of the
redemption price of such Redeemable Capital Stock.
"Senior Securities": Any class or series of stock of this Corporation,
whether now existing or hereafter created, ranking senior to the Series A
Preferred Stock as to dividend rights or rights on liquidation. Stock of any
class or series shall rank senior to the Series A Preferred Stock as to dividend
rights or rights on liquidation if the holders of shares of such class or series
shall be entitled to dividend payments or payments of amounts distributable upon
dissolution, liquidation or winding up of the affairs of this Corporation, as
the case may be, in preference or priority to the holders of shares of Series A
Preferred Stock. No class or series of Capital Stock that ranks on a parity
basis with or junior to the Series A Preferred Stock as to rights on liquidation
shall rank or be deemed to rank prior to the Series A Preferred Stock as to
dividend rights, notwithstanding that the dividend rate or dividend payment
dates thereof are different from those of the Series A Preferred Stock, unless
the instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
"Series A Preferred Stock": As defined in paragraph 1.
"Share": A share of Series A Preferred Stock.
"Spin Off": The distribution of stock of a Subsidiary of this
Corporation as a dividend to all holders of Common Stock (or to holders of other
stock of this Corporation receivable by a holder of Shares upon conversion
thereof (or upon conversion of securities receivable by a holder of Shares upon
conversion of such Shares)).
"Spin Off Securities": Stock of a Subsidiary of this Corporation that
is distributed to holders of Common Stock (or to holders of other stock of this
Corporation receivable by a holder of Shares upon conversion thereof (or upon
conversion of securities receivable by a holder of Shares upon conversion of
such Shares)) in a Spin Off.
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"Stated Value": Of a Share of the Series A Preferred Stock, $1,562.50.
"Subsidiary": With respect to any person, any corporation, limited
liability company, partnership or other legal entity more than 50% of whose
outstanding voting securities or membership, partnership or other ownership
interests, as the case may be, are directly or indirectly owned by such person.
3. Dividends.
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(a) Subject to the prior preferences and other rights of any
Senior Stock and the provisions of paragraphs 5 and 6 hereof, the holders of
Series A Preferred Stock shall be entitled to receive dividends per Share in
cash, securities, property or other assets of the Corporation (other than a
dividend or distribution for which an adjustment is required pursuant to
paragraph 5(c)) only when, as and if a dividend or distribution is declared and
paid upon the outstanding shares of Common Stock. The type and amount of the
dividends or distributions to which the holder of a Share is entitled (the
"Participating Dividend") shall be determined as follows:
(i) Cash Dividends. In case this Corporation, on or after
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the Issue Date, declares and pays a dividend in cash on the Common Stock
(or other securities into which the Series A Preferred Stock is then
convertible), a Participating Dividend will be declared and paid to the
holders of the Series A Preferred Stock in an amount equal to the product
of (x) the amount of the cash dividend declared and to be paid on a single
share of Common Stock (or any other security into which the Series A
Preferred Stock is then convertible) and (y) the number of shares of Common
Stock (or other security) into which a share of Series A Preferred Stock
may be converted as of the date such dividend is paid.
(ii) Other Distributions. In case this Corporation, on or
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after the Issue Date, shall distribute to all holders of shares of Common
Stock (or other securities into which the Series A Preferred Stock is then
convertible) any evidences of its indebtedness or assets or rights or
warrants to purchase shares of Common Stock (or Convertible Securities)
(excluding dividends or distributions referred to in paragraph 5(c),
distributions of Spin Off Securities referred to in paragraph 5(f) and
distributions of rights or warrants exercisable for Exchange Securities
(which shall be governed by paragraph 6)), a Participating Dividend will be
declared and paid to the holders of the Series A Preferred Stock in an
amount equal to the product of (x) the type and amount of such security,
property or other asset which is to be distributed in respect of a single
share of Common Stock (or other security) into which a share of Series A
Preferred Stock is then convertible) and (y) the number of shares of Common
Stock (or other security) into which a share of Series A Preferred Stock is
convertible immediately prior to the opening of business on (A) the record
date for the determination of stockholders entitled to receive the
distribution or (B) in the case of a reclassification, the effective date
of such reclassification.
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(b) The Participating Dividends shall be the only dividends or
distribution payable to holders of Series A Preferred Stock. Participating
Dividends shall be payable in preference to, but simultaneously with, any
dividend payments to the holders of any Junior Stock. Participating Dividends
shall be payable to holders of record of shares of Series A Preferred Stock as
of the record date for the determination of holders of Common Stock entitled to
receive such dividend or the payment date established by the Corporation for the
payment of such dividend or the making of such distribution to holders of Common
Stock, if no such record date is established.
(c) All dividends paid with respect to the shares of Series A
Preferred Stock pursuant to this paragraph 3 shall be paid pro rata to all the
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holders of shares of Series A Preferred Stock outstanding on the applicable
record date.
4. Distributions Upon Liquidation, Dissolution or Winding Up.
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Subject to the prior payment in full of the preferential amounts to
which any Senior Stock is entitled, in the event of any liquidation, dissolution
or winding up of this Corporation, whether voluntary or involuntary, the holders
of Series A Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Series A Preferred Stock as of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Securities
ranking on a parity basis with the Series A Preferred Stock with respect to
distributions upon liquidation, dissolution or winding up of the Corporation.
Following the payment of all amounts owing to holders of each class or series of
Capital Stock of this Corporation having a preference or priority over the
Common Stock (or other stock into which the Series A Preferred Stock is then
convertible) as to distributions upon the liquidation, dissolution or winding up
of this Corporation, then the holders of the Series A Preferred Stock shall be
entitled to participate, with the holders of the Common Stock (or other stock
into which the Series A Preferred Stock is then convertible), pro rata, based
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upon the number of shares of Common Stock (or other securities) into which the
shares of Series A Preferred Stock are then convertible, as to any amounts
remaining for distribution to the holders of Common Stock (or other securities)
upon the liquidation, dissolution or winding up of this Corporation. If, upon
distribution of this Corporation's assets in liquidation, dissolution or winding
up, the assets of this Corporation to be distributed among the holders of the
Series A Preferred Stock and to all holders of any Parity Stock ranking on a
parity basis with the Series A Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up shall be insufficient to permit
payment in full to such holders of the respective preferential amounts to which
they are entitled, then the entire assets of this Corporation to be distributed
to holders of the Series A Preferred Stock and such Parity Securities shall be
distributed pro rata to such holders based upon the aggregate of the full
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preferential amounts to which the shares of Series A Preferred Stock and such
Parity Securities would otherwise respectively be entitled. Neither the
consolidation or merger of this Corporation with or into any other corporation
or corporations nor the sale, transfer or lease of all or substantially all of
the assets of this Corporation shall itself be deemed
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to be a liquidation, dissolution or winding up of this Corporation within the
meaning of this paragraph 4. Notice of the liquidation, dissolution or winding
up of this Corporation shall be given, not less than 20 days prior to the date
on which such liquidation, dissolution or winding up is expected to take place
or become effective, to the holders of record of the shares of Series A
Preferred Stock.
5. Conversion.
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(a) (i) The Series A Preferred Stock may be converted at any
time or from time to time, at the option of the holder thereof, in such
manner and upon such terms and conditions as hereinafter provided in this
paragraph 5 into fully paid and non-assessable full shares of Common Stock.
(ii) Each share of Series A Preferred Stock that is
outstanding at the date upon which all obligations under the Note have been
satisfied will, subject to the receipt of any required governmental
consents or approvals and the expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), automatically be converted without the taking of
any action by the holder thereof into shares of Common Stock (or other
securities) at the then applicable Conversion Rate. From and after the date
of the occurrence of the event requiring conversion pursuant to this clause
(ii), all shares of Series A Preferred Stock will be deemed to represent
only the right to receive the number of shares of Common Stock (or other
securities) issuable upon such conversion.
(b) Subject to the provisions for adjustment hereinafter set
forth in this paragraph 5, the Series A Preferred Stock may be converted into
Common Stock at the initial conversion rate of 100 fully paid and non-assessable
shares of Common Stock for one share of the Series A Preferred Stock, which rate
was determined by dividing the Stated Value of a Share of Series A Preferred
Stock by $15.625 (the "Conversion Price").
(c) In case this Corporation shall, on or after the Issue Date,
(i) pay a dividend or make a distribution on its then outstanding shares of
Common Stock in shares of Common Stock, (ii) subdivide the then outstanding
shares of Common Stock into a greater number of shares of Common Stock, (iii)
combine the then outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue by reclassification of its then
outstanding shares of Common Stock (other than a reclassification by way of
merger or binding share exchange that is subject to paragraph 5(d)) any shares
of any other class or series of Capital Stock of this Corporation (other than
rights, warrants or options for its Capital Stock), then, subject to the
following sentence and to paragraph 5(h), the conversion privilege and the
Conversion Rate in effect immediately prior to the opening of business on the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
holder of each share of the Series A Preferred Stock thereafter surrendered for
conversion or deemed automatically converted shall be entitled to receive the
number and kind of shares of Capital Stock of this Corporation that such holder
would have owned or been entitled to receive immediately following such action
had such shares
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of Series A Preferred Stock been converted immediately prior to the record date
for, or effective date of, as the case may be, such event.
An adjustment made pursuant to this paragraph 5(c) for a dividend or
distribution shall become effective immediately after the record date for the
dividend or distribution and an adjustment made pursuant to this paragraph 5(c)
for a subdivision, combination or reclassification shall become effective
immediately after the effective date of the subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any action
listed above shall be taken.
Any shares of Common Stock issuable in payment of a dividend shall be
deemed to have been issued immediately prior to the time of the record date for
such dividend for purposes of calculating the number of outstanding shares of
Common Stock under paragraph 5(d) below.
(d) If this Corporation consolidates with any other entity or
merges into another entity, or in case of any sale or transfer to another entity
(other than by mortgage or pledge) of all or substantially all of the properties
and assets of this Corporation, or if the Corporation is a party to a merger or
binding share exchange which reclassifies or changes its outstanding Common
Stock, this Corporation (or its successor in such transaction) or the purchaser
of such properties and assets shall make appropriate provision so that the
holder of a Share shall have the right thereafter to convert such Share into the
kind and amount of securities, cash or other assets that such holder would have
owned immediately after such consolidation, merger, sale or transfer if such
holder had converted such Share into Common Stock immediately prior to the
effective date of such consolidation, merger, sale or transfer (taking into
account for this purpose (to the extent applicable) the valid exercise by such
holder of any rights of election made available to holders of Common Stock,
which rights of election shall simultaneously be made available to holders of
Shares on the same basis as if such Shares had theretofore been converted into
shares of Common Stock), and the holders of the Series A Preferred Stock shall
have no other conversion rights under these provisions; provided that effective
provision shall be made, in the Articles or Certificate of Incorporation of the
resulting or surviving corporation or otherwise or in any contracts of sale or
transfer, so that the provisions set forth herein for the protection of the
conversion rights of the Series A Preferred Stock shall thereafter be made
applicable, as nearly as reasonably may be, to any such other securities and
other assets deliverable upon conversion of the Series A Preferred Stock
remaining outstanding or other convertible preferred stock or other convertible
securities received by the holders of Series A Preferred Stock in place thereof;
and provided, further, that any such resulting or surviving corporation or
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purchaser shall expressly assume the obligation to deliver, upon the exercise of
the conversion privilege, such securities, cash or other assets as the holders
of the Series A Preferred Stock remaining outstanding, or other convertible
preferred stock or other convertible securities received by the holders in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to
make provision for the protection of the conversion rights as above provided.
(e) Subject to paragraph 5(h) and to the remaining provisions of
this paragraph 5(e), in the event that a holder of Series A Preferred Stock
would be entitled to receive
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upon conversion thereof pursuant to this paragraph 5 any Redeemable Capital
Stock and this Corporation redeems, exchanges or otherwise acquires all of the
outstanding shares or other units of such Redeemable Capital Stock (such event
being a "Redemption Event"), then, from and after the effective date of such
Redemption Event, the holders of Shares of Series A Preferred Stock then
outstanding shall be entitled to receive upon conversion of such Shares, in lieu
of shares or units of such Redeemable Capital Stock, the kind and amount of
securities, cash and other assets receivable upon the Redemption Event by a
holder of the number of shares or units of such Redeemable Capital Stock into
which such Shares of Series A Preferred Stock could have been converted
immediately prior to the effective date of such Redemption Event (assuming, to
the extent applicable, that such holder failed to exercise any rights of
election with respect thereto and received per share or unit of such Redeemable
Capital Stock the kind and amount of securities, cash and other assets received
per share or unit by a plurality of the non-electing shares or units of such
Redeemable Capital Stock), and (from and after the effective date of such
Redemption Event) the holders of the Series A Preferred Stock shall have no
other conversion rights under these provisions with respect to such Redeemable
Capital Stock.
Notwithstanding the foregoing, if the redemption price for the shares
of such Redeemable Capital Stock is paid in whole or in part in Redemption
Securities, and the Mirror Preferred Stock Condition is met, the Series A
Preferred Stock shall not be convertible into such Redemption Securities and,
from and after the applicable redemption date, the holders of any shares of
Series A Preferred Stock that have not been exchanged for Mirror Preferred Stock
and Exchange Preferred Stock shall have no conversion rights under these
provisions except for any conversion right that may have existed immediately
prior to the effective date of the Redemption Event with respect to any
securities (including the Common Stock), cash or other assets other than the
Redeemable Capital Stock so redeemed. This Corporation shall use all
commercially reasonable efforts to ensure that the Mirror Preferred Stock
Condition is satisfied. The Mirror Preferred Stock Condition will be satisfied
in connection with a redemption of any Redeemable Capital Stock into which the
Series A Preferred Stock is then convertible if appropriate provision is made so
that the holders of the Series A Preferred Stock have the right to exchange
their shares of Series A Preferred Stock on the effective date of the Redemption
Event for Exchange Preferred Stock of this Corporation and Mirror Preferred
Stock of the issuer of the Redemption Securities. The sum of the initial
liquidation preferences of the shares of Exchange Preferred Stock and Mirror
Preferred Stock delivered in exchange for a Share of Series A Preferred Stock
will equal the Liquidation Preference of a share of Series A Preferred Stock on
the effective date of the Redemption Event. The Mirror Preferred Stock will have
an aggregate initial liquidation preference equal to the product of the
aggregate Liquidation Preference of the Shares of Series A Preferred Stock
exchanged therefor and the quotient of (x) the product of the Conversion Rate
for the Redeemable Capital Stock to be redeemed (determined immediately prior to
the effective date of the Redemption Event) and the average of the daily Closing
Prices of the Redeemable Capital Stock for the period of ten consecutive trading
days ending on the third trading day prior to the effective date of the
Redemption Event, divided by (y) the sum of the amount determined pursuant to
clause (x), plus the fair value of the securities (other than the Redeemable
Capital Stock being redeemed), cash or other assets that would have been
receivable by a holder of Series A Preferred Stock upon conversion thereof
immediately prior to the effective date of the Redemption Event (such fair value
to be determined in the case of stock or other securities with a Closing Price
in the same manner as provided in clause (x) and otherwise by the Board of
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Directors in the exercise of its good faith judgment). The shares of Exchange
Preferred Stock will have an aggregate initial liquidation preference equal to
the difference between the aggregate Liquidation Preference of the Shares of
Series A Preferred Stock exchanged therefor and the aggregate initial
liquidation preference of the Mirror Preferred Stock.
(f) If this Corporation effects a Spin Off, this Corporation
shall make appropriate provision so that the holders of the Series A Preferred
Stock have the right to exchange their Shares of Series A Preferred Stock on the
effective date of the Spin Off for Exchange Preferred Stock of this Corporation
and Mirror Preferred Stock of the issuer of the Spin Off Securities. The sum of
the initial liquidation preferences of the shares of Exchange Preferred Stock
and Mirror Preferred Stock delivered in exchange for a Share of Series A
Preferred Stock will equal the Liquidation Preference of a Share of Series A
Preferred Stock on the effective date of the Spin Off. The Mirror Preferred
Stock will have an aggregate liquidation preference equal to the product of the
aggregate Liquidation Preference of the Shares of Series A Preferred Stock
exchanged therefor and the quotient of (x) the product of the number (or
fraction) of Spin Off Securities that would have been receivable upon such Spin
Off by a holder of the number of shares of Common Stock issuable upon conversion
of a Share of Series A Preferred Stock immediately prior to the effective date
of the Spin Off and the average of the daily Closing Prices of the Spin Off
Securities for the period of ten consecutive trading days commencing on the
tenth trading day following the effective date of the Spin Off, divided by (y)
the sum of the amount determined pursuant to clause (x), plus the fair value of
the shares of Common Stock and other securities (other than Spin Off
Securities), cash or other assets that would have been receivable by a holder of
a Share of Series A Preferred Stock upon conversion thereof immediately prior to
the effective date of the Spin Off (such fair value to be determined in the case
of Common Stock or other securities with a Closing Price in the same manner as
provided in clause (x) and otherwise by the Board of Directors in the exercise
of its good faith judgment). The shares of Exchange Preferred Stock will have an
aggregate initial liquidation preference equal to the difference between the
aggregate Liquidation Preference of the Shares of Series A Preferred Stock
exchanged therefor and the aggregate initial liquidation preference of the
Mirror Preferred Stock. From and after the effective date of such Spin Off, the
holders of any Shares of Series A Preferred Stock that have not been exchanged
for Mirror Preferred Stock and Exchange Preferred Stock as provided above shall
have no conversion rights under these provisions with respect to such Spin Off
Securities.
(g) Whenever the Conversion Rate or the conversion privilege
shall be adjusted as provided in this paragraph 5, this Corporation shall
promptly cause a notice to be mailed to the holders of record of the Series A
Preferred Stock describing the nature of the event requiring such adjustment,
the Conversion Rate in effect immediately thereafter and the kind and amount of
Capital Stock or other securities or cash or other assets into which the Series
A Preferred Stock shall be convertible after such event. Where appropriate, such
notice may be given in advance and included as a part of a notice required to be
mailed under the provisions of paragraph 5(i).
(h) This Corporation may, but shall not be required to, make any
adjustment of the Conversion Rate if such adjustment would require an increase
or decrease of less than 1% in such Conversion Rate; provided, however, that any
adjustments which by reason
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of this paragraph 5(h) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
paragraph 5 shall be made to the nearest cent or the nearest 1/1000th of a
share, as the case may be. In any case in which this paragraph 5(h) shall
require that an adjustment shall become effective immediately after a record
date for such event, the Corporation may defer until the occurrence of such
event (x) issuing to the holder of any Shares of Series A Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of Common Stock or other Capital Stock issuable upon such
conversion by reason of the adjustment required by such event over and above the
shares of Common Stock or other Capital Stock issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder cash in
lieu of any fractional interest to which such holder is entitled pursuant to
paragraph 5(m); provided, however, that, if requested by such holder, this
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares of
Common Stock or other Capital Stock, and such cash, upon the occurrence of the
event requiring such adjustment.
To the extent the shares of Series A Preferred Stock become
convertible into cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
(i) In case at any time:
(i) this Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to this paragraph;
(ii) there shall be any capital reorganization or
reclassification of the Common Stock (other than a change in par value), or
any consolidation, merger or binding share exchange to which the
Corporation is a party and for which approval of any stockholders of this
Corporation is required, or any sale, transfer or lease of all or
substantially all of the assets of the Corporation, or a tender offer for
shares of Common Stock of any series representing at least a majority of
the total voting power represented by the outstanding shares of Common
Stock of such series which has been recommended by the Board of Directors
as being in the best interests of the holders of Common Stock; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice to
the holders of the Series A Preferred Stock at their respective addresses as the
same appear on the books of the Corporation, at least twenty days (or ten days
in the case of a recommended tender offer as specified in clause (ii) above)
prior to any record date for such action, dividend or distribution or the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
assets, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, binding share exchange, sale, transfer, lease, tender
offer, dissolution, liquidation or winding up; provided, however, that any
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notice required by any event described in clause (ii) of this paragraph 5(i)
shall be given in the
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manner and at the time that such notice is given to the holders of Common Stock.
Without limiting the obligations of this Corporation to provide notice of
corporate actions hereunder, the failure to give the notice required by this
paragraph 5(i) or any defect therein shall not affect the legality or validity
of any such corporate action of the Corporation or the vote upon such action.
(j) Upon conversion of Series A Preferred Stock pursuant to
paragraph 5(a), the holder shall surrender the certificate or certificates for
such Series A Preferred Stock at the office of this Corporation or at the office
of the transfer agent for the Series A Preferred Stock, which certificate or
certificates, if this Corporation shall so request, shall be duly endorsed to
this Corporation or in blank or accompanied by proper instruments of transfer to
this Corporation or in blank (such endorsements or instruments of transfer to be
in form satisfactory to this Corporation), and shall give written notice to this
Corporation at said office that it elects to convert all or a part of the Shares
represented by said certificate or certificates in accordance with the terms of
this paragraph 5, and shall state in writing therein the name or names in which
such holder wishes the certificates for Common Stock to be issued. Every such
notice of election to convert shall constitute a contract between the holder of
such Series A Preferred Stock and the Corporation, whereby the holder of such
Series A Preferred Stock shall be deemed to subscribe for the amount of Common
Stock which such holder shall be entitled to receive upon conversion of the
number of shares of Series A Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Series A Preferred
Stock to be converted, and thereby this Corporation shall be deemed to agree
that the surrender of the shares of Series A Preferred Stock to be converted
shall constitute full payment of such subscription for Common Stock to be issued
upon such conversion. This Corporation will as soon as practicable after such
deposit of a certificate or certificates for Series A Preferred Stock,
accompanied by the written notice and the statement above prescribed, issue and
deliver at the office of this Corporation or of said transfer agent to the
person for whose account such Series A Preferred Stock was so surrendered, or to
his nominee(s) or, subject to compliance with applicable law, transferee(s), a
certificate or certificates for the number of full shares of Common Stock to
which such holder shall be entitled, together with cash or its check in lieu of
any fraction of a share as hereinafter provided. If surrendered certificates for
Series A Preferred Stock are converted only in part, this Corporation will issue
and deliver to the holder, or to his nominee(s), without charge therefor, a new
certificate or certificates representing the aggregate of the unconverted
Shares.
The person or persons entitled to receive the Common Stock issuable
upon conversion of such Series A Preferred Stock shall be treated for all
purposes as the record holder or holders of such Common Stock on the Conversion
Date. Notwithstanding the foregoing, this Corporation shall not be required to
convert any Shares of Series A Preferred Stock, and no surrender of Series A
Preferred Stock shall be effective for that purpose, while the stock transfer
books of this Corporation are closed for any purpose; but such surrender shall
be effective (assuming all other requirements of this paragraph 5(j) have been
satisfied) for conversion, and to constitute the person or persons entitled to
receive the Common Stock issuable upon such conversion as the record holder(s)
of such shares of Common Stock, for all purposes immediately upon the reopening
of such books. Upon conversion of Shares, the rights of the holder of the
Shares so converted, as a holder thereof, will cease; provided, however, that if
-------- -------
the Board of Directors declares any dividend or makes any distribution on the
Series A Preferred
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Stock pursuant to paragraph 3(a) of this Certificate of Designations and the
Conversion Date for any Shares of Series A Preferred Stock occurs after the
record date for such dividend or distribution and before the payment date for
such dividend or distribution, then the holder of such Shares on such record
date shall be entitled to receive such dividend on such payment date as if such
Conversion Date had not occurred.
The issuance of certificates for shares of Common Stock upon
conversion of Shares of Series A Preferred Stock shall be made without charge
for any issue, stamp or other similar tax in respect of such issuance; provided,
--------
however, if any such certificate is to be issued in a name other than that of
-------
the registered holder of the Share or Shares of Series A Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
this Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
this Corporation that such tax has been paid.
(k) This Corporation shall at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the outstanding
shares of Series A Preferred Stock, such number of shares of Common Stock (or
other Capital Stock) as shall be issuable upon the conversion of all outstanding
Shares, provided that nothing contained herein shall be construed to preclude
this Corporation from satisfying its obligations in respect of the conversion of
the outstanding shares of Series A Preferred Stock by delivery of shares of
Common Stock (or such other Capital Stock) which are held in the treasury of
this Corporation. This Corporation shall take all such corporate and other
actions as from time to time may be necessary to insure that all shares of
Common Stock (or other Capital Stock) issuable upon conversion of shares of
Series A Preferred Stock from time to time will, upon issue, be duly and validly
authorized and issued, fully paid and nonassessable and free of any preemptive
or similar rights.
(l) All shares of Series A Preferred Stock received by this
Corporation upon conversion thereof into Common Stock shall be retired and shall
be restored to the status of authorized and unissued shares of preferred stock
(and may be reissued as part of another series of the preferred stock of this
Corporation, but such shares shall not be reissued as Series A Preferred Stock).
(m) This Corporation shall not be required to issue fractional
shares of Common Stock or scrip upon conversion of the Series A Preferred Stock.
As to any final fraction of a share of Common Stock which a holder of one or
more Shares would otherwise be entitled to receive upon conversion of such
Shares in the same transaction, this Corporation shall pay a cash adjustment in
respect of such final fraction in an amount equal to the same fraction of the
market value of a full share of Common Stock.
(n) This Corporation shall not, by amendment of this Certificate
of Designations or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, other than as expressly permitted by this Certificate of
Designations or approved by the requisite vote or written consent of the holders
of Series A Preferred Stock taken or given in accordance with this Certificate,
avoid or seek to avoid the observance or performance of any of the terms to be
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observed or performed hereunder by this Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this paragraph 5
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of Series A Preferred Stock
against impairment.
6. Exchange Option.
---------------
(a) In the event an Exchange Offer is made by this Corporation
or a Subsidiary thereof (the applicable of the foregoing being the "Offeror"),
the Offeror shall concurrently therewith make an equivalent offer to the holders
of Series A Preferred Stock pursuant to which such holders may tender Shares,
based upon the number of shares of Common Stock into which such tendered Shares
are then convertible (or other stock of this Corporation receivable by a holder
of tendered Shares upon conversion thereof (or upon conversion of securities
receivable by a holder of Shares upon conversion of such tendered Shares)) (and
in lieu of tendering outstanding shares of Common Stock (or such other stock)),
together with such other consideration as may be required to be tendered
pursuant to such Exchange Offer, and receive in exchange therefor, in lieu of
Exchange Securities (and other property, if applicable), Mirror Preferred Stock
with an aggregate liquidation preference equal to the aggregate Liquidation
Preference of the shares of Series A Preferred Stock exchanged therefor. Whether
or not a holder of Shares elects to accept such offer and tender Shares, no
adjustment to the Conversion Rate of the Shares will be made pursuant to
paragraph 5 in connection with the Exchange Offer.
(b) If an Exchange Offer is made as discussed above, the Offeror
shall, concurrently with the distribution of the offering circular or prospectus
and related documents to holders of Common Stock, provide each holder of Series
A Preferred Stock with a notice setting forth the offer described in paragraph
6(a) above and describing the Exchange Offer, the Exchange Securities and the
Mirror Preferred Stock. Such notice shall be accompanied by the offering
circular, prospectus or similar document provided to holders of Common Stock in
respect of the Exchange Offer and a copy of the certificate of designations (or
similar document) proposed to be filed by the Offeror in order to establish the
Mirror Preferred Stock. No failure to mail the notice contemplated by this
paragraph 6(b) or any defect therein or in the mailing thereof shall affect the
validity of the applicable Exchange Offer.
7. Limitations on Dividends and Redemptions.
----------------------------------------
If at any time this Corporation shall have declared a dividend on the
Series A Preferred Stock and failed to pay or set aside consideration sufficient
to pay such dividend, or if the Corporation declares a cash dividend on the
shares of Common Stock and fails to pay or set aside the Participating Dividend
required to be paid to the holders of the Series A Preferred Stock, then (a)
this Corporation shall not declare or pay any dividend on or make any
distribution with respect to any Parity Stock or Junior Stock or set aside any
money or assets for any such purpose until such dividend payable to the holders
of Series A Preferred Stock has been paid or consideration sufficient to pay
such dividend has been set aside for such purpose, and (b) neither this
Corporation nor any Subsidiary thereof shall redeem, exchange, purchase or
otherwise acquire any shares of Series A Preferred Stock, Parity Stock or Junior
Stock, or set aside any
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money or assets for any such purpose, pursuant to paragraph 5 hereof, a sinking
fund or otherwise, unless all then outstanding shares of any class or series of
Parity Stock that by the terms of the instrument creating or evidencing such
Parity Stock is required to be redeemed under such circumstances are redeemed or
exchanged pursuant to the terms hereof and thereof.
Neither this Corporation nor any Subsidiary thereof shall redeem,
exchange, purchase or otherwise acquire any Parity Stock or Junior Stock, or set
aside any money or assets for any such purpose, if after giving effect to such
redemption, exchange, purchase or other acquisition, the amount (as determined
by the Board of Directors in good faith) that would be available for
distribution to the holders of the Series A Preferred Stock upon liquidation,
dissolution or winding up of the Corporation if such liquidation, dissolution or
winding up were to occur on the date fixed for such redemption, exchange,
purchase or other acquisition of such Parity Stock or Junior Stock would be less
than the aggregate Liquidation Preference as of such date of all shares of
Series A Preferred Stock then outstanding.
Nothing contained in this paragraph 7 shall prevent (i) the payment of
dividends on any Junior Stock solely in shares of Junior Stock or the
redemption, purchase or other acquisition of Junior Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any) shares of Junior
Stock, or (ii) the payment of dividends on any Parity Stock solely in shares of
Parity Stock and/or Junior Stock or the redemption, exchange, purchase or other
acquisition of Parity Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Parity Stock and/or Junior Stock.
All provisions of this paragraph 7 are for the sole benefit of the
holders of Series A Preferred Stock and accordingly, if the holders of shares of
Series A Preferred Stock shall have waived (as provided in paragraph 9) in whole
or in part the benefit of the applicable provisions, either generally or in the
specific instance, such provision shall not (to the extent of such waiver, in
the case of a partial waiver) restrict the redemption, exchange, purchase or
other acquisition of, or declaration, payment or making of any dividends or
distributions on the Series A Preferred Stock, any Parity Stock or any Junior
Stock.
8. Voting Rights. Prior to the expiration or termination of the
------------
waiting period under the HSR Act with respect to the acquisition by the initial
record holder of the Series A Preferred Stock of in excess of $15 million in
voting securities of this Corporation, the holders of Series A Preferred Stock
shall have no voting rights whatsoever, except as required by law and except for
the voting rights described in paragraph 9. Following such expiration or
termination of the waiting period under the HSR Act, in connection with any
matter as to which the holders of Common Stock are entitled to vote including,
but not limited to, the election of directors, each share of Series A Preferred
Stock issued and outstanding as of the record date for such meeting shall have
(and the holder of record thereof shall be entitled to cast) one vote for each
share of Series A Preferred Stock. Except as provided in paragraph 9 and except
as otherwise may be required by law, the holders of Common Stock, the holders of
Series A Preferred Stock and the holders of any other class or series of
Preferred Stock entitled to vote thereon shall be entitled to notice of and to
attend any meeting of stockholders and to vote together as a single class.
Except as otherwise required by law, the holders of Series A Preferred Stock
shall have no other voting
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rights. Without limiting the generality of the foregoing, no vote or consent of
the holders of Series A Preferred Stock shall be required for (a) the creation
of any indebtedness of any kind of the Corporation, (b) the creation or
designation of any class or series of Senior Stock, Parity Stock or Junior
Stock, or (c) any amendment to the Certificate that would increase the number of
authorized shares of Preferred Stock or the number of authorized shares of
Series A Preferred Stock or that would decrease the number of authorized shares
of Preferred Stock or the number of authorized shares of Series A Preferred
Stock (but not below the number of shares of Preferred Stock or Series A
Preferred Stock, as the case may be, then outstanding).
9. Waiver. Any provision of this Certificate of Designations which,
------
for the benefit of the holders of Series A Preferred Stock, prohibits, limits or
restricts actions by the Corporation, or imposes obligations on the Corporation,
including but not limited to provisions relating to the obligation of the
Corporation to redeem or convert such Shares, may be waived in whole or in part,
or the application of all or any part of such provision in any particular
circumstance or generally may be waived, in each case by the affirmative vote or
with the consent of the holders of record of at least 66-2/3% of the number of
Shares then outstanding (or such greater percentage thereof as may be required
by this Certificate of Designations, applicable law or any applicable rules of
any national securities exchange or national interdealer quotation system),
either in writing or by vote at an annual meeting or a special meeting called
for such purpose at which the holders of Series A Preferred Stock shall vote as
a separate class.
10. Preemptive Rights. The holders of the Series A Preferred Stock
-----------------
will not have any preemptive right to subscribe for or purchase any shares of
stock or any other securities which may be issued by this Corporation.
11. Exclusion of Other Rights. Except as may otherwise be required by
-------------------------
law and for the equitable rights and remedies that may otherwise be available to
holders of Series A Preferred Stock, the shares of Series A Preferred Stock
shall not have any designations, preferences, limitations or relative rights,
other than those specifically set forth in these resolutions (as such
resolutions may, subject to paragraph 9, be amended from time to time) and in
the Certificate of Incorporation of this Corporation.
12. Headings. The headings of the various paragraphs and
--------
subparagraphs hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of this Corporation
are hereby authorized to execute and acknowledge a certificate setting forth
these resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware."
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The undersigned has signed this Certificate of Designations on this
10th day of August, 2000.
/s/ Paul J. Milley
----------------------------------
Name: Paul J. Milley
Title: Senior V.P.-Finance
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