EXHIBIT 3.3
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS
OF SERIES A CONVERTIBLE REDEEMABLE
PIK PREFERRED STOCK
OF PRICELINE.COM INCORPORATED
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Pursuant to Section 151 of the General Corporation Law of the State of Delaware
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The undersigned, Daniel Schulman, Chief Executive
Officer, President and Chief Operating Officer of priceline.com
Incorporated (the "Company"), a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "GCL"), pursuant
to Section 151(g) of the GCL and in accordance with the provisions of
Section 103 thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board
of Directors of the Company (the "Board of Directors") by the Amended and
Restated Certificate of Incorporation of the Company, the Board of
Directors on February 9, 2000 adopted the following resolution creating a
series of six million (6,000,000) shares of preferred stock, par value $.01
per share, of the Company, designated as Series A Convertible Redeemable
PIK Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the
Board of Directors in accordance with the provisions of the Amended and
Restated Certificate of Incorporation of the Company, a series of preferred
stock of the Company be, and it hereby is, created, and that the
designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof,
are as set forth herein.
1. Designation and Number of Shares. There is hereby
created and established, out of the authorized and unissued Preferred Stock
(as hereinafter defined) of the Company, a series of Preferred Stock
designated as "Series A Convertible Redeemable PIK Preferred Stock" (the
"Series A Preferred Stock"). The authorized number of shares of Series A
Preferred Stock shall be six million (6,000,000). The Series A Preferred
Stock shall have a liquidation preference of $59.93 per share (the "Series
A Stated Amount"), plus an amount equal to any dividends accrued or
cumulated but not paid on the Series A Preferred Stock pursuant to Section
4 hereof, whether or not declared, to the date fixed for Liquidation (as
hereinafter defined) of the Company (the "Series A Liquidation
Preference").
2. Rank. The Series A Preferred Stock shall, with respect
to the right to receive dividends and distributions of assets and rights
upon the Liquidation of the Company, rank (x) senior to the common stock,
par value $0.008 per share, of the Company ("Common Stock"), and each other
class or series of capital stock of the Company hereafter created which
expressly ranks junior to the Series A Preferred Stock (together with the
Common Stock, the "Junior Securities"), and (y) pari passu with all other
series of Preferred Stock of the Company, whether now in existence or
created after the date hereof, which do not expressly rank junior to the
Series A Preferred Stock ("Parity Securities"). The respective definitions
of Junior Securities and Parity Securities shall also include any rights or
options exercisable for or convertible into any of the Junior Securities
and Parity Securities, as the case may be.
3. Liquidation Preference.
A. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company (a
"Liquidation"), each of the holders of shares of Series A Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the
Company available for distribution to its stockholders an amount in cash
equal to the Series A Liquidation Preference with respect to each share of
Series A Preferred Stock held by such holder on the date fixed for
Liquidation, before any payment or distribution of the assets of the
Company (whether capital or surplus) shall be made to or set apart for the
holders of Junior Securities. If the assets of the Company available for
distribution to the holders of Series A Preferred Stock and Parity
Securities shall be insufficient to permit payment in full to such holders
of the sums which such holders are entitled to receive in a Liquidation,
then all of the assets available for distribution to the holders of Series
A Preferred Stock and Parity Securities shall be distributed among and paid
to such holders ratably in proportion to the amounts that would be payable
to such holders if such assets were sufficient to permit payment in full.
Immediately prior to a Liquidation of the Company, to the extent funds of
the Company are legally available for the payment of dividends, the Company
shall declare for payment all accrued and unpaid dividends with respect to
the Series A Preferred Stock and any Parity Securities ratably in
accordance with the respective amounts that would be payable on such shares
of Series A Preferred Stock and any such other Parity Securities if all
amounts payable thereon were paid in full. After payment in full of the
Series A Liquidation Preference, the holders of the Series A Preferred
Stock will not be entitled to any further participation in any distribution
of assets by the Company.
B. Upon any such Liquidation, after the holders of
Series A Preferred Stock shall have been paid in full the Series A
Liquidation Preference, the remaining assets of the Company shall be
distributed to the holders of the Junior Securities.
C. For the purposes of this Section 3, neither (i) the
voluntary sale, lease, conveyance, exchange or transfer (for cash, shares,
securities or other consideration) of all or substantially all of the
property or assets of the Company nor (ii) the merger or other business
combination of the Company with one or more Persons shall be deemed to be a
Liquidation.
4. Dividends.
A. Each holder of Series A Preferred Stock shall be
entitled to receive, out of the funds of the Company legally available
therefor, cumulative dividends, payable in accordance with this Section 4.
B. Dividends on each outstanding share of Series A
Preferred Stock (the "Series A Dividend") shall be payable semi-annually in
arrears on October 1st and April 1st of each year commencing October 1,
2000 or, if any such date is not a Business Day (as hereinafter defined),
on the next succeeding Business Day (each, a "Dividend Payment Date" and
each such semi-annual period being a "Dividend Period"), at a rate of 8% of
the Series A Stated Amount per annum. The amount of Series A Dividends
payable on the Series A Preferred Stock for each full Dividend Period shall
be computed by dividing the annual dividend rate by two. Series A Dividends
payable on the Series A Preferred Stock for any period less than a full
Dividend Period shall be computed on the basis of twelve 30-day months and
a 360-day year.
C. Subject to subsection D below, Series A Preferred
Dividends shall be paid by the issuance of shares of Common Stock having an
aggregate Fair Market Value (as hereinafter defined) on the record date
relating to the Dividend Period in which such Series A Dividend accrued
equal to the amount of the Series A Dividend that otherwise would have been
payable if the Series A Dividend were payable in cash and had been declared
and paid on such record date. In the event that, between the record date
relating to the Dividend Period in which any Series A Preferred Dividend
accrued and the payment date of such Series A Preferred Dividend, any of
the events set forth in Section 9 requiring an adjustment to the Conversion
Rate shall occur, the number of shares of Common Stock to be issued as
payment of any Series A Preferred Dividends shall be adjusted in a manner
equivalent to that provided for in Section 9 with respect to the Conversion
Rate, such that on the date of payment the holder of Series A Preferred
Stock will receive the number of shares of Common Stock such holder would
then own if the Series A Preferred Dividend had been paid on the record
date occurring in the Dividend Period in which such Series A Preferred
Dividend accrued.
D. In the event that during a Dividend Period the
Company pays one or more dividends to holders of Common Stock in cash, then
each holder of shares of Series A Preferred Stock shall have the right to
demand that the Company pay in cash, on the date such cash dividend is paid
to the holders of Common Stock, a dividend per share of Series A Preferred
Stock equal to the lesser of the (i) amount of such cash dividends payable
per share of Common Stock, adjusted to reflect any modifications to the
Conversion Rate pursuant to Section 9 hereof, and (ii) the amount of the
Series A Dividend. Such cash dividend shall be in lieu of that portion of
the shares of Common Stock payable pursuant to Section C above on the
Dividend Payment Date next following the date of payment of such cash
dividend, equal to the amount of such cash dividend, but not any such
shares of Common Stock in excess of the amount of such cash dividend or any
accrued or cumulated dividends relating to a prior Dividend Period.
E. Series A Dividends shall accrue and be cumulative
from April 1, 2000, whether or not the Company has earnings or profits,
whether or not there are funds legally available for the payment of such
Series A Dividends on any Dividend Payment Date or at any time during any
Dividend Period and whether or not Series A Dividends are declared or paid.
Notwithstanding any other provision hereof, in the event Series A Dividends
are not paid on the applicable Dividend Payment Date, the Company shall
nonetheless determine the number of shares of Common Stock to be issued,
pursuant to Section C above, to holders of Series A Preferred Stock on the
date such Series A Dividend is actually paid, by measuring the Fair Market
Value of the Common Stock as of the record date relating to the Dividend
Period in which such Series A Dividend accrued as set forth in Section F
below.
F. Series A Dividends shall be paid to the holders of
record of shares of Series A Preferred Stock as each appears in the stock
register of the Company at the close of business on the record date
therefor. As used herein, the term "record date" means, with respect to
Series A Dividends payable on October 1st or April 1st , respectively, of
each year, the immediately preceding September 15th or March 15th,
respectively.
G. So long as any shares of the Series A Preferred
Stock are outstanding, no dividend, except as described in the next
succeeding sentence, shall be declared or paid or set apart for payment on
any Parity Securities, nor shall any Parity Securities be redeemed,
purchased or otherwise acquired for any consideration (or moneys be paid to
or made available for a sinking fund for the redemption of any shares of
any such stock) by the Company, directly or indirectly, unless in each case
full cumulative dividends have been or contemporaneously are declared and
paid or declared and consideration sufficient for the payment thereof set
apart for such payment on the Series A Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of the dividend on
such class or series of Parity Securities or the redemption, purchase or
other acquisition thereof. When dividends are not paid in full or
consideration sufficient for such payment is not set apart, as aforesaid,
all dividends declared upon shares of the Series A Preferred Stock and all
dividends declared upon any other class or series of Parity Securities
shall be declared ratably in proportion to the respective amounts of
dividends accumulated and unpaid on the Series A Preferred Stock and
accumulated and unpaid on such Parity Securities.
H. So long as any shares of the Series A Preferred
Stock are outstanding, no dividends (other than dividends or distributions
paid in shares of, or to effectuate a stock split on, or options, warrants
or rights to subscribe for or purchase shares of, Junior Securities) shall
be declared or paid or set apart for payment or other distribution declared
or made upon Junior Securities, nor shall any Junior Securities be
redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of shares of Common Stock made for purposes
of any employee incentive or benefit plan of the Company or any subsidiary,
upon exercise of options issued pursuant thereto or upon the withholding of
shares upon exercise of warrants by the holders thereof) (any such
dividend, distribution, redemption or purchase being hereinafter referred
to as a "Junior Securities Distribution") for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock) by the Company, directly or indirectly
(except by conversion into or exchange for Junior Securities), unless, in
each case, the full cumulative dividends on all outstanding shares of the
Series A Preferred Stock and accrued and unpaid dividends on any other
Parity Securities shall have been paid or set apart for payment for all
past Dividend Periods with respect to the Series A Preferred Stock and all
past dividend periods with respect to such Parity Securities.
5. Voting Rights.
A. The holders of Series A Preferred Stock shall be
entitled to vote on all matters submitted to a vote of stockholders of the
Company at all stockholders meetings and in all actions by written consent
of stockholders of the Company. Each holder of Series A Preferred Stock
shall be entitled to (i) such number of votes as such holder would be
entitled to cast if such holder had converted all of its shares of Series A
Preferred Stock into Common Stock pursuant to Section 7 hereof immediately
prior to the record date for such stockholders meeting or action by written
consent and (ii) notice of any stockholders meeting in accordance with the
Certificate of Incorporation and By-laws of the Company. Except as
otherwise required herein or by law, shares of Series A Preferred Stock
shall vote together with shares of Common Stock, as a single class.
B. So long as any shares of Series A Preferred Stock
are outstanding, the written consent or affirmative vote at a meeting
called for that purpose of the holders of a majority of the shares of
Series A Preferred Stock then outstanding, voting together as a single
class, shall be necessary to amend, alter or repeal the Certificate of
Incorporation of the Company or of any provision thereof (including the
adoption of a new provision thereof), whether by merger or otherwise, which
amendment, alteration or repeal would (A) increase or decrease the
aggregate number of authorized shares, or the par value, of the Series A
Preferred Stock or (B) alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely;
provided, however, that the holders of Series A Preferred Stock shall not
be entitled to vote pursuant to this Section 5(B) in connection with (i)
any Business Combination wherein the holders of Series A Preferred Stock
receive the consideration to which they are entitled pursuant to Section
8(A)(i) or (ii) hereof, as the case may be, as such Section is in effect as
of immediately prior to such Business Combination or (ii) any other
transaction in which the provisions of Section 9(B) or (D) hereof are
applicable and the adjustments referred to in Section 9(B) or (D) are made,
as such Section is in effect as of immediately prior to such transaction.
6. Redemption.
A. Optional Redemption. The outstanding shares of
Series A Preferred Stock, subject to Section E below, may be redeemed at
the option of the Company (the "Optional Redemption"), in whole or in part,
at any time and from time to time after April 1, 2003, out of funds legally
available therefor. The Company may redeem the Series A Preferred Stock by
payment in cash, for each share of Series A Preferred Stock to be redeemed,
in an amount (the "Series A Redemption Amount") equal to the Series A
Stated Amount, plus an amount equal to any Series A Dividends that have
accrued or cumulated through the Series A Redemption Date (as hereinafter
defined), but have not been paid as of such date. The date on which the
Series A Redemption Amount is payable is referred to herein as the "Series
A Redemption Date". If less than all of the outstanding shares of Series A
Preferred Stock are to be redeemed, the Company shall either (i) redeem a
pro rata portion of the shares of Series A Preferred Stock held by each
holder, based on the number of shares held by each holder, or (ii) select
the shares to be redeemed by lot. Any redemption pursuant to this Section
6(A) shall be made upon prior written notice (which notice shall comply
with the provisions of Section 6(C) hereof).
B. Mandatory Redemption. Except as may be, and solely
to the extent, prohibited by any instrument relating to indebtedness of the
Company then outstanding (a "Loan Agreement"), on April 1, 2010, or as soon
thereafter as not prohibited by any such Loan Agreement (the "Mandatory
Redemption Date"), the Company shall redeem, out of funds legally available
therefor, all of the then outstanding shares of Series A Preferred Stock.
Notice of the redemption pursuant to this Section 6(B) shall comply with
the provisions of Section 6(C) hereof mailed to each holder of Series A
Preferred Stock at such holder's address as shown in the stock register of
the Company. The redemption price for each share of Series A Preferred
Stock redeemed pursuant to this Section 6(B) shall be equal to the Series A
Stated Amount per share plus an amount equal to any accrued or cumulated
Series A Dividends thereon through the Mandatory Redemption Date, but have
not been paid as of such date (the "Mandatory Redemption Payment").
C. Notice of redemption shall be given not less than
30 days nor more than 60 days prior to the Series A Redemption Date or the
Mandatory Redemption Date, as the case may be, to each holder of record of
the Series A Preferred Stock on the record dated fixed for such redemption,
mailed by first-class mail, postage prepaid, to such holder's address as
shown in the stock register of the Company; provided, however, that no
failure to give such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any Series A Preferred
Stock to be redeemed, except as to the holder to whom the Company has
failed to give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) the Series A Redemption Date
or the Mandatory Redemption Date, as the case may be; (ii) the Series A
Redemption Amount or the Mandatory Redemption Payment, as the case may be;
(iii) the number of shares of Series A Preferred Stock to be redeemed and,
if fewer than all the shares held by such holder are to be redeemed, the
number of shares to be redeemed from such holder; and (iv) the place or
method for payment of the Series A Redemption Amount or the Mandatory
Redemption Payment, as the case may be.
D. Notice having been given as aforesaid, from and
after the Series A Redemption Date or the Mandatory Redemption Date, as the
case may be (unless default shall be made by the Company in providing funds
for the payment of the Series A Redemption Amount or the Mandatory
Redemption Payment, as the case may be), all rights of the holders of
Series A Preferred Stock (in such capacity) as stockholders of the Company
(except the right to receive the Series A Redemption Amount or the
Mandatory Redemption Payment, as the case may be) shall cease. Series A
Dividends shall cease to accrue as of the Series A Redemption Date or the
Mandatory Redemption Date, as the case may be, with respect to the shares
of Series A Preferred Stock to be redeemed. Upon surrender in accordance
with said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the Company
shall so require and the notice shall so state), such Series A Preferred
Stock shall be redeemed by the Company at the Series A Redemption Amount or
the Mandatory Redemption Payment, as the case may be. In case fewer than
all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
E. Each holder of Series A Preferred Stock shall have
the right, but not the obligation, within 30 days following the date of
delivery of a Redemption notice, to convert, pursuant to Section 7 hereof,
some or all of the shares of Series A Preferred Stock to be redeemed, by
delivering written notice thereof in accordance with Section 7(A) hereof.
If such conversion right is timely exercised, the Company shall not have
the right to redeem such shares of Series A Preferred Stock to be
converted.
F. Notwithstanding the foregoing provisions of this
Section 6, the Company shall not have the right to redeem or call for
redemption any shares of the Series A Preferred Stock unless full
cumulative dividends (whether or not declared) on all outstanding shares of
Series A Preferred Stock shall have been paid or contemporaneously are
declared and set apart for payment for all Dividend Periods terminating on
or prior to the applicable redemption date.
G. Prior to any Redemption Date, the Company shall
deposit with a paying agent (or, if the Company is acting as its own paying
agent, segregate and hold in trust) an amount of consideration sufficient
to pay the Series A Redemption Amount of all the shares of Series A
Preferred Stock that are to be redeemed on that date. If any share of
Series A Preferred Stock called for redemption is converted, any
consideration deposited with the paying agent or so segregated and held in
trust for the redemption of such share of Series A Preferred Stock shall be
paid or delivered to the Company upon its order or, if then held by the
Company, shall be discharged from such trust.
7. Conversion at the Option of the Holder.
A. Each holder of Series A Preferred Stock shall have
the right, at its option, at any time and from time to time following the
date of issuance of the Series A Preferred Stock but prior to the
redemption of such shares of Series A Preferred Stock, to convert (the
"Conversion") any or all of such holder's Series A Preferred Stock into
duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock at a rate of one (1) share of Common Stock for each share of
Series A Preferred Stock (the "Conversion Rate"), subject to adjustment
pursuant to Section 9 hereof. Such conversion right shall be exercised by
the surrender of certificate(s) representing the Series A Preferred Stock
to be converted to the Company at any time during usual business hours at
its principal place of business (or such other office or agency of the
Company as the Company may designate by notice in writing to the holders of
Series A Preferred Stock), accompanied by written notice that the holder
elects to convert such Series A Preferred Stock and specifying the name or
names (with address) in which a certificate or certificates for Common
Stock are to be issued and (if the shares issuable upon conversion are to
be issued in a different name as the name in which such shares of Series A
Preferred Stock are registered) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company duly executed by
the holder or its duly authorized legal representative and transfer tax
stamps or funds therefor, if required pursuant to Section 7(D) hereof. All
certificates representing Series A Preferred Stock surrendered for
conversion shall be delivered to the Company for cancellation and canceled
by it.
B. Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which
the certificates for shares of Series A Preferred Stock shall have been
surrendered and such notice received by the Company as aforesaid, and the
person in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder of record of the shares of Common Stock represented
thereby at such time on such date and such conversion shall be into a
number of shares of Common Stock equal to the product of the number of
shares of Series A Preferred Stock surrendered times the Conversion Rate in
effect at such time on such date. All shares of Common Stock delivered upon
conversion of the Series A Preferred Stock will upon delivery be validly
issued and fully paid and nonassessable, free of all liens and charges
created by the Company and not subject to any preemptive rights.
(i) Upon delivery to the Company by a holder of
shares of Series A Preferred Stock of a notice of election to convert, the
right of the Company to redeem such shares of Series A Preferred Stock
shall terminate as provided in Section 6(E).
(ii) Upon the surrender of certificates
representing shares of Series A Preferred Stock, such shares shall no
longer be deemed to be outstanding and all rights of a holder with respect
to such shares surrendered for conversion shall immediately terminate
except the right to receive the Common Stock and other amounts payable
pursuant to this Section 7(B).
(iii) From the date of delivery by a holder of
shares of Series A Preferred Stock of such notice of election to convert,
in lieu of dividends on such Series A Preferred Stock pursuant to Section
4, such Series A Preferred Stock shall participate ratably with the holders
of shares of Common Stock in all dividends on the Common Stock for which
the record date is on or before the date of such delivery as if such shares
of Series A Preferred Stock had been converted to shares of Common Stock at
the time of such delivery.
(iv) If a notice of election to convert is
delivered by a holder of shares of Series A Preferred Stock to the Company
before the receipt of any notice of redemption thereof or any Business
Combination Notice, such holder shall be entitled to receive the number of
shares of Common Stock issuable upon such conversion, as set forth in
Section 7(A), plus a number of shares of Common Stock equal to the amount
of accrued or cumulated Series A Dividends through the last Dividend
Payment Date preceding the date on which such notice of election to convert
is delivered (but excluding any dividends for the period from the last
Dividend Payment Date to the date of delivery of the notice of election to
convert) (collectively, the "Conversion Amount").
(v) If, after receipt by a holder of shares of
Series A Preferred Stock of a notice of redemption pursuant to Section 6(A)
or a Business Combination Notice pursuant to Section 8(B), such holder
delivers to the Company a notice of election to convert as provided in
Section 6(E) or Section 8(E), respectively, such Series A Preferred Stock
shall be entitled to receive the number of shares of Common Stock issuable
upon such conversion as set forth in Section 7(A), plus a number of shares
of Common Stock equal to the amount of accrued or cumulated dividends
through the last preceding Dividend Payment Date (together with any Series
A Dividends for the period from the last Dividend Payment Date to the date
of delivery of the notice of election to convert) (collectively, the
"Post-Redemption Conversion Amount").
C. The Company shall at all times reserve and keep
available out of its authorized and unissued shares of Common Stock, solely
for issuance upon the Conversion as herein provided, free from any
preemptive rights, such number of shares of Common Stock as shall be
issuable upon the Conversion.
D. The issuance or delivery of certificates for Common
Stock upon the conversion of Series A Preferred Stock shall be made without
charge to the converting holder of Series A Preferred Stock for such
certificates or for any tax in respect of the issuance or delivery of such
certificates or the securities represented thereby, and such certificates
shall be issued or delivered in the respective names of, or (subject to
compliance with the applicable provisions of federal and state securities
laws) in such names as may be directed by, the holders of Series A
Preferred Stock converted; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name
other than that of the holder of Series A Preferred Stock converted, and
the Company shall not be required to issue or deliver such certificate
unless or until the Person or Persons requesting the issuance or delivery
thereof shall have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such tax has
been paid.
8. Business Combinations.
A. (i) In the event the Company consummates a Business
Combination (as hereinafter defined) wherein the holders of the Company's
Common Stock receive consideration and some or all of such consideration is
other than Capital Stock of the acquiring entity or the surviving
corporation in a merger (or, as applicable, its ultimate parent), in
connection with such Business Combination, each holder of shares of Series
A Preferred Stock shall have the right to receive, prior to or at the
closing of such Business Combination in accordance with the procedures set
forth in Section 8(B) hereof, at the option of such holder, either (x) an
amount in cash equal to the Series A Stated Amount per share, plus the
amount of any accrued or cumulated dividends thereon (including pro rata
dividends for the period from the last Dividend Payment Date to the
Business Combination Date), and, if the Business Combination Date is prior
to April 1, 2003, the amount of all Series A Dividends to be accrued on or
before the April 1, 2003 Dividend Payment Date that have not already been
paid as of the Business Combination Date, or (y) an amount of cash equal to
the product of (1) the number of shares of Common Stock into which such
Series A Preferred Stock is then convertible, plus the number of shares of
Common Stock issuable in respect of accrued or cumulated but unpaid
dividends on the Series A Preferred Stock as of the Business Combination
Date, including, if the Business Combination Date is prior to April 1,
2003, the number of shares of Common Stock that would be issuable to the
holder on or before the Business Combination Date if all Series A Dividends
to be accrued on or before the April 1, 2003 Dividend Payment Date that
have not already been paid as of the Business Combination Date, were paid,
times (2) the Fair Market Value of the per share consideration to be
received by the holders of Common Stock in the Business Combination.
(ii) In the event of a Business Combination wherein
the holders of the Company's Common Stock receive consideration that
consists solely of Capital Stock of the acquiring entity or the surviving
corporation in a merger (or, as applicable, its ultimate parent), the
Series A Preferred Stock shall, in connection with such Business
Combination, be assumed by and shall become preferred stock of such
acquiring entity (or, as applicable, its ultimate parent), having in
respect of such entity substantially the same (and not less favorable)
powers, preferences and special rights that the Series A Preferred Stock
had immediately prior to such Business Combination, except that after such
Business Combination each share of Series A Preferred Stock shall be
convertible, on the terms and conditions provided in Section 7 hereof, into
the number of shares of the acquiring entity's (or, as applicable, its
ultimate parent's) common stock receivable in such Business Combination by
a holder of the number of shares of Common Stock into which such share of
Series A Preferred Stock is convertible immediately prior to such Business
Combination (such number of shares of Common Stock to include an amount
equal to all accrued or cumulated but unpaid dividends on the Series A
Preferred Stock). The rights of the Series A Preferred Stock as preferred
stock of such acquiring entity (or, as applicable, its ultimate parent)
shall successively be subject to adjustments pursuant to Section 9 after
such Business Combination as nearly equivalent as practicable to the
adjustment provided for by such section prior to such Business Combination.
B. At least ten (10) days and not more than sixty (60)
days prior to the date fixed for the consummation of a Business Combination
(the "Business Combination Date"), a written notice (the "Business
Combination Notice") of such Business Combination shall be mailed by
first-class mail, postage prepaid, to each holder of record of shares of
Series A Preferred Stock addressed to such holder at such holder's mailing
address as it appears in the stock register of the Company. Each such
Business Combination Notice shall contain all instructions and materials
necessary to enable such holder of Series A Preferred Stock to submit such
holder's shares pursuant to the Business Combination and shall state:
(i) the parties to the Business Combination and the
terms and timing of the Business Combination;
(ii) the aggregate and per share amount of all
cash, securities or other property to be paid pursuant to such Business
Combination to holders of the outstanding shares of Series A Preferred
Stock assuming that none of such holders elect to receive payment of the
Series A Stated Amount in connection with such Business Combination;
(iii) that holders of Series A Preferred Stock
shall be required, within thirty days following the date of such Business
Combination Notice, to elect the form of consideration they wish to receive
in such Business Combination, pursuant to Section 8(A) hereof;
(iv) that holders of Series A Preferred Stock will
be required to surrender the certificate or certificates representing such
shares, together with an appropriate form letter of transmittal to be
mailed to the holders with such Business Combination Notice, to the Company
at the address specified in the Business Combination Notice prior to the
close of business on the day specified in the Business Combination Notice;
and
(v) such other information as the Company, in its
sole discretion, deems appropriate.
C. In the event of a change in the parties to, or any
material change in the terms or the timing of, any Business Combination,
the Company shall give the holders of the Series A Preferred Stock written
notice in accordance with Section 8(B) hereof describing such change at
least ten (10) Business Days prior to the consummation of the Business
Combination.
D. Each holder of Series A Preferred Stock shall have
the right, but not the obligation, within 30 days following the date of
delivery of a Business Combination Notice, to convert, pursuant to Section
7 hereof, some or all of the shares of Series A Preferred Stock held by
such holder, by delivering written notice thereof in accordance with
Section 7(A) hereof. If such conversion right is timely exercised, the
shares specified in such conversion notice shall not be treated in
accordance with this Section 8.
9. Antidilution Adjustments.
A. Distribution, Subdivision, Combination or
Reclassification of Common Stock. In the event that the Company shall at
any time or from time to time, prior to Conversion of the Series A
Preferred Stock, (i) make a distribution (other than a distribution made to
holders of Series A Preferred Stock) on the outstanding Common Stock
payable in any Capital Stock or other securities of the Company, (ii)
subdivide the outstanding Common Stock into a larger number of shares,
(iii) combine the outstanding Common Stock into a smaller number of shares
or (iv) issue any shares of Capital Stock in a reclassification of the
Common Stock (other than any such event (x) for which an adjustment is made
pursuant to another clause of this Section 9 or (y) that is a Business
Combination subject to Section 8 hereof), then, and in each such case, the
number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock into which the Series A Preferred Stock shall be
Converted shall be adjusted (and any other appropriate actions shall be
taken by the Company) so that the holder of any Series A Preferred Stock
thereafter surrendered for Conversion shall be entitled to receive upon
Conversion the number of shares of Common Stock or other securities of the
Company that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such
shares of Series A Preferred Stock been Converted immediately prior to, as
applicable, the date of, or the record date for, such event. An adjustment
made pursuant to this Section 9 shall become effective retroactively to the
close of business on the day upon which such action becomes effective.
B. Certain Distributions. In case the Company shall at
any time or from time to time, prior to Conversion of the Series A
Preferred Stock, distribute to all holders of Common Stock (including any
such distribution made in connection with a merger or consolidation in
which the Company is the resulting or surviving Person and the Common Stock
is not changed or exchanged) cash, evidences of indebtedness of the Company
or another issuer, securities of the Company or another issuer or other
assets (excluding (i) distributions paid or made to holders of Series A
Preferred Stock, or in which holders of such shares participate equally
with holders of Common Stock, (ii) distributions payable in Common Stock
for which adjustment is made under another Section of this Section 9, (iii)
distributions in connection with an Excluded Transaction, (iv)
distributions in connection with a Business Combination in respect of which
the provisions of Section 8(A) are applicable, and (v) distributions of
rights or warrants to subscribe for or purchase securities of the Company
(provided such rights or warrants are issued with a subscription or
exercise price equal to the fair market value of such securities as of the
date such rights or warrants are issued)), then, and in each such case, (x)
the Conversion Rate then in effect shall be adjusted (and any other
appropriate actions shall be taken by the Company) so that the holder of
any Series A Preferred Stock thereafter surrendered for Conversion shall,
in addition to the consideration provided for in Section 7 hereof, be
entitled to receive upon Conversion cash, evidences of indebtedness,
securities or other assets that such holder would have owned or would have
been entitled to receive upon or by reason of any of the events described
above, had such Series A Preferred Stock been Converted immediately prior
to, as applicable, the date of, or the record date for, such event and (y)
other than pursuant to (x) above, the powers, preferences and special
rights of the Series A Preferred Stock shall not be amended or altered
(whether by merger or otherwise) as a result of any of the events described
above. An adjustment made pursuant to this Section shall become effective
retroactively to the close of business on the day upon which such action
becomes effective.
C. Other Changes. In case the Company at any time or
from time to time, prior to the Conversion of the Series A Preferred Stock,
shall take any action affecting its Common Stock similar to or having an
effect similar to any of the actions described in Section 9(A), (B) or (D)
hereof (but not including any action described in any such Section) and the
Board of Directors in good faith determines that it would be equitable in
the circumstances to adjust the Conversion Rate as a result of such action,
then, and in each such case, the Conversion Rate shall be adjusted in such
manner and at such time as the Board of Directors in good faith determines
would be equitable in the circumstances (such determination to be evidenced
in a resolution, a certified copy of which shall be mailed to the holders
of the Series A Preferred Stock).
D. Reorganization, Reclassification. In case of any
merger of the Company or any capital reorganization, reclassification or
other change of outstanding Common Stock (each, a "Transaction"), other
than a Business Combination in respect of which the provisions of Section
8(A) are applicable, the Company shall execute and deliver to each holder
of Series A Preferred Stock, at least ten (10) Business Days prior to
effecting such Transaction, a certificate stating that either (i) the
Series A Preferred Stock shall remain outstanding following such
Transaction without any amendment or alteration (whether by merger or
otherwise) that would adversely affect the powers, preferences and special
rights of the Series A Preferred Stock, or (ii) the holder of each share of
Series A Preferred Stock shall have the right to receive in such
Transaction, in exchange for each share of Series A Preferred Stock, a
security with powers, preferences and special rights substantially similar
to (and not less favorable than) the Series A Preferred Stock (provided,
that, in the case of (i) and (ii) above, the conversion rate of such
security shall be equal to the Conversion Rate in effect immediately prior
to such Transaction, adjusted, if applicable, such that the holder of any
shares of Series A Preferred Stock or such substantially similar security
thereafter surrendered for Conversion shall be entitled to receive upon
Conversion the number of shares of Common Stock or other securities that
such holder would have owned or would have been entitled to receive upon or
by reason of such Transaction, had such holder's shares of Series A
Preferred Stock been converted immediately prior to, as applicable, the
date of, or the record date for, such Transaction, assuming such holder of
Common Stock of the Company (x) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the
Company or to which such recapitalization, sale or transfer was made, as
the case may be (a "constituent person"), or an affiliate of a constituent
person and (y) failed to exercise any rights of election as to the kind or
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, recapitalization, sale or
transfer (provided, that if the kind or amount of securities, cash and
other property receivable upon such reclassification, change,
consolidation, merger, recapitalization, sale or transfer is not the same
for each share of Common Stock of the Company held immediately prior to
such reclassification, change, consolidation, merger, recapitalization,
sale or transfer by other than a constituent person or an affiliate thereof
and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this Section 9(D)
the kind and amount of securities, cash and other property receivable upon
such reclassification, change, consolidation, merger, recapitalization,
sale or transfer by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing
shares)). Provision shall be made therefor in the agreement, if any,
relating to such Transaction. Each such certificate shall provide for
adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 9. The provisions of this
Section and any equivalent thereof in any such certificate similarly shall
apply to successive transactions.
E. Notwithstanding any other provisions of this
Section 9, until the effective date of the Conversion, the Company shall
not be required to make any adjustment to the number of shares of Common
Stock issuable upon Conversion unless such adjustment (plus any adjustments
not previously made by reason of this Section (E)) would require an
increase or decrease of at least one percent (1%) in the number of shares
of Common Stock into which each share of Series A Preferred Stock is then
convertible. Any lesser adjustment shall be carried forward and shall be
made (i) no later than the time of, and together with, the next subsequent
adjustment which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least one percent
(1%) or (ii) at the effective date of the Conversion, whichever is earlier.
All adjustments shall be carried out to five decimal places.
F. Whenever one or more adjustments to the Conversion
Rate are required by the provisions of this Section 9, the Company shall
forthwith place on file with the Secretary of the Company, a statement
stating the adjustment. Such statement shall set forth in reasonable detail
such facts as shall be necessary to show the reason and the manner of
computing each such adjustment. Promptly after each adjustment, the Company
shall mail, by first-class mail, postage prepaid, a notice thereof to each
holder of Series A Preferred Stock containing a brief description of the
transaction causing such adjustment and the resulting number of shares of
Common Stock issuable upon Conversion.
10. Reports. So long as any shares of the Series A
Preferred Stock are outstanding, the Company will furnish the holders
thereof with the quarterly and annual financial reports, and current
reports on Form 8-K, that the Company is required to file with the
Securities and Exchange Commission pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended, or, in the event the
Company is not required to file such reports, reports containing the same
information as would be required in such reports.
11. Certain Definitions. For purposes of this
Certificate, the following terms shall have the meanings set forth below:
"Affiliate" means, when used with reference to any
Person, any Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with that Person. For the purposes
of this definition, "control," when used with respect to any specified
Person, means the power to direct or cause the direction of the management
or policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Business Combination" means the occurrence of any of the
following events: (a) any Person or Group is or becomes the beneficial
owner (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act,
except, notwithstanding the provisions of such Rules, that a Person shall
be deemed to have "beneficial ownership" of all securities that such Person
has the right to acquire only upon exercise of such right), directly or
indirectly, of more than 50% of the total Voting Stock of the Company; or
(b) the Company sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person or Group
(other than by way of merger or consolidation); or (c) any transaction or
series of related transactions if, immediately following such transaction
or series of related transactions the holders of the Common Stock
outstanding immediately prior to such transaction or series of related
transactions own 50% or less of the outstanding Voting Stock of the
surviving or transferee corporation (and its ultimate parent corporation).
"Business Day" means any day other than a Saturday, a
Sunday, any day on which the New York Stock Exchange is closed or any other
day on which banking institutions in New York, New York are authorized or
required by law to be closed.
"Capital Stock" means, with respect to any Person, any
and all shares, interests, participations, rights in, or other equivalents
(however designated and whether voting and/or non-voting) of such Person's
Capital Stock, and any and all rights, warrants or options exchangeable for
or convertible into such Capital Stock.
"Common Stock Equivalent" means any security or
obligation which is by its terms convertible into shares of Common Stock or
another Common Stock Equivalent, and any option, warrant or other
subscription or purchase right with respect to Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any successor statute, and the rules and regulations
promulgated thereunder.
"Excluded Transaction" means (a) any issuance by the
Company to employees, consultants or directors of the Company of Common
Stock or Common Stock Equivalents pursuant to a stock option plan or other
employee benefit arrangement approved by the Board of Directors (and the
issuance of Common Stock upon the exercise of such Common Stock
Equivalents); and (b) any issuance of Common Stock (i) upon the conversion
or exercise of Common Stock Equivalents, and (ii) as a dividend on shares
of Series A Preferred Stock.
"Fair Market Value" shall mean, (a) with respect to any
securities, the average of the closing sales price of such securities as
reported on the principal exchange on which such securities are then
listed, which for these purposes includes the NASDAQ Stock Market, during
each of the twenty (20) consecutive trading days ending on the trading day
that is five (5) trading days immediately prior to the applicable
measurement date, or, if such securities are not than reported on a
securities exchange, such value as determined by the Company's Board of
Directors in good faith, and (b) with respect to property other than
securities, such value as determined by the Company's Board of Directors in
good faith, provided that with respect to any determination of Fair Market
Value by the Company's Board of Directors pursuant to clause (a) or (b)
above, if the holders of 25% of the Series A Preferred Stock shall object
to any such determination, the Board of Directors shall retain an
independent appraiser reasonably satisfactory to such holders to determine
such Fair Market Value.
"Group" means a group within the meaning of Section
13(d)(3) of the Exchange Act.
"Person" means any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means the preferred stock, par value
$.01 per share, of the Company.
"Subsidiary" means, with respect to any Person, any
corporation, limited or general partnership, limited liability company,
trust, association or other business entity of which an aggregate of 50% or
more of the outstanding capital stock or other interests entitled to vote
in the election of the board of directors of such corporation (irrespective
of whether, at the time, Capital Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency), managers, trustees or other controlling
Persons, or an equivalent controlling interest therein, of such Person is,
at the time, directly or indirectly, owned by such Person and/or one or
more Affiliates of such Person.
"Voting Stock" means, with respect to any Person, the
Capital Stock of any class or kind ordinarily having the power to vote for
the election of directors or other members of the governing body of such
Person.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned has executed and
subscribed this Certificate and does affirm the foregoing as true this 29th
day of June, 2000.
By: /s/ Daniel Shulman
-----------------------------
Daniel Shulman
Chief Executive Officer,
President and Chief Operating Officer
