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Exhibit 2
CERTIFICATE OF DESIGNATION
OF SERIES B PARTICIPATING
CUMULATIVE PREFERRED STOCK SETTING
FORTH THE POWERS, PREFERENCES,
RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS
OF SUCH SERIES OF
PREFERRED STOCK
of
POLAROID CORPORATION
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Polaroid Corporation (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, 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 Corporation by paragraph (b) of Article FOURTH of the Restated Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation"), the
Board of Directors of the Corporation on May 16, 2000, adopted the following
resolution creating a series of Preferred Stock designated as Series B
Participating Cumulative Preferred Stock:
RESOLVED that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Certificate of Incorporation of the Corporation, a series of Preferred Stock of
the Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
Section 1. DESIGNATION, NUMBER OF SHARES AND PAR VALUE. The shares of
such series shall be designated as "Series B Participating Cumulative Preferred
Stock" (the "Series B Preferred Stock"). The par value of each share of the
Series B Preferred Stock shall be $1. The number of shares initially
constituting the Series B Preferred Stock shall be 1,000,000; PROVIDED, HOWEVER,
that if more than a total of 1,000,000 shares of Series B Preferred Stock shall
be issuable upon the exercise of Rights issued pursuant to the Rights Agreement
dated as of July 1, 2000, between the Corporation and Fleet National Bank, as
Rights Agent (the "Rights Agreement"), the total number of shares of Series B
Preferred Stock authorized to be issued shall be increased (to the extent that
the Certificate of Incorporation then permits) to the largest number of whole
shares (rounded up to the nearest whole number) issuable upon exercise of such
Rights.
Section 2. DIVIDENDS OR DISTRIBUTIONS. (a) Subject to the prior and
superior rights of the holders of shares of any other series of Preferred Stock
or other class of capital stock not
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by its terms ranking on a parity with, or junior to, the shares of Series B
Preferred Stock with respect to dividends, the holders of shares of the Series B
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of the assets of the Corporation legally available therefor,
(1) quarterly dividends payable in cash on the date declared by the Board of
Directors for the payment of quarterly dividends on the outstanding Common
Stock, par value $1 per share, of the Corporation (the "Common Stock") but in no
event later than the fifteenth day of March, June, September and December in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or a fraction of a share of Series B Preferred
Stock, of $20 per whole share (rounded to the nearest cent) less the amount of
all cash dividends declared on the Series B Preferred Stock pursuant to the
following clause (2) since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series B Preferred Stock,
and (2) dividends payable in cash on the payment date for each cash dividend
declared on the Common Stock in an amount per whole share (rounded to the
nearest cent) equal to the Formula Number then in effect times the cash
dividends then to be paid on each share of Common Stock. In addition, if the
Company shall pay any dividend or make any distribution on the Common Stock
payable in assets, securities or other forms of noncash consideration (other
than dividends or distributions solely in shares of Common Stock), then, in each
such case, the Company shall simultaneously pay or make on each outstanding
share of Series B Preferred Stock a dividend or distribution in like kind, of
the Formula Number then in effect times such dividend or distribution on each
share of the Common Stock. As used herein, the "Formula Number" shall be 100;
PROVIDED, HOWEVER, that if at any time after July 1, 2000, the Corporation shall
(i) declare or pay any dividend on the Common Stock payable in shares of Common
Stock or make any distribution on the Common Stock in shares of Common Stock,
(ii) subdivide (by a stock split or otherwise) the outstanding shares of Common
Stock into a larger number of shares of Common Stock or (iii) combine (by a
reverse stock split or otherwise) the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying the Formula
Number in effect immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which is the number of shares that are
outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and PROVIDED FURTHER that if at any time after July 1,
2000, the Corporation shall issue any shares of its capital stock in a
reclassification or change of the outstanding shares of Common Stock (including
any such reclassification or change in connection with a merger in which the
Corporation is the surviving corporation), then in such event the Formula Number
shall be appropriately adjusted to reflect such reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in Section 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common Stock); PROVIDED,
HOWEVER, that, in the event no dividend or distribution (other than a dividend
or distribution in shares of Common Stock) shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $20 per share
on the Series B
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Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date. The Board of Directors may fix a record date for the
determination of holders of shares of Series B Preferred Stock entitled to
receive a dividend or distribution declared thereon, which record date shall be
the same as the record date for any corresponding dividend or distribution on
the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series B
Preferred Stock; PROVIDED, HOWEVER, that dividends on such shares, which are
originally issued after the record date for the determination of holders of
shares of Series B Preferred Stock entitled to receive a quarterly dividend and
on or prior to the next succeeding Quarterly Dividend Payment Date shall begin
to accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series B Preferred Stock
which are originally issued prior to the record date for the first Quarterly
Dividend Payment, shall be calculated as if cumulative from and after the date
declared by the Board of Directors for the payment of the quarterly dividend on
the outstanding Common Stock but in no event later than March 15, June 15,
September 15 or December 15, as the case may be, next preceding the date of
original issuance of such shares. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series B Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
(d) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series B Preferred Stock shall have been declared.
(e) The holders of the shares of Series B Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
Section 3. VOTING RIGHTS. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(a) Each holder of Series B Preferred Stock shall be entitled
to a number of votes equal to the Formula Number then in effect for
each share of Series B Preferred Stock held of record on all matters on
which holders of the Common Stock or stockholders generally are
entitled to vote.
(b) Except as otherwise provided herein or by applicable law,
the holders of shares of Series B Preferred Stock and the holders of
shares of Common Stock shall vote together as one class for the
election of directors of the Corporation and on all other matters
submitted to a vote of stockholders of the Corporation.
(c) If at the time of any annual meeting of stockholders for
the election of directors, the equivalent of six quarterly dividends
(whether or not consecutive) payable
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on any share or shares of Series B Preferred Stock are in default, the
number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together
with the holders of Common Stock for the election of other directors of
the Corporation, the holders of record of the Series B Preferred Stock,
voting separately as a class to the exclusion of the holders of Common
Stock, shall be entitled at said meeting of stockholders (and at each
subsequent annual meeting of stockholders), unless all dividends in
arrears have been paid or declared and set apart for payment prior
thereto, to vote for the election of two directors of the Corporation,
the holders of any Series B Preferred Stock being entitled to cast a
number of votes per share of Series B Preferred Stock equal to the
Formula Number. Until the default in payments of all dividends which
permitted the election of said directors shall cease to exist any
director who shall have been so elected pursuant to the next preceding
sentence may be removed at any time, either with or without cause, only
by the affirmative vote of the holders of the shares at the time
entitled to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such holders
called for that purpose, and any vacancy thereby created may be filled
by the vote of such holders. If and when such default shall cease to
exist, the holders of the Series B Preferred Stock shall be divested of
the foregoing special voting rights, subject to revesting in the event
of each and every subsequent like default in payments of dividends.
Upon the termination of the foregoing special voting rights, the terms
of office of all persons who may have been elected directors pursuant
to said special voting rights shall forthwith terminate, and the number
of directors constituting the Board of Directors shall be reduced by
two. The voting rights granted by this Section 3(c) shall be in
addition to any other voting rights granted to the holders of the
Series B Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable
law, holders of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for authorizing or taking any corporate action.
Section 4. CERTAIN RESTRICTIONS. (a) Whenever quarterly dividends or
other dividends or distributions payable on the Series B Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
B Preferred Stock outstanding shall have been paid in full, the Corporation
shall not
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except dividends paid ratably on the Series B
Preferred Stock and all such parity stock on which dividends are
payable or in
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arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock ranking on a
parity with the Series B Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(v) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (a) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution, or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $100 per share or (y)
an aggregate amount per share equal to the Formula Number then in effect times
the aggregate amount to be distributed per share to holders of Common Stock, or
(2) to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except distributions made ratably on the Series B Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
Section 6. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the then
outstanding shares of Series B Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed.
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Section 7. NO REDEMPTION; NO SINKING FUND. (a) The shares of Series B
Preferred Stock shall not be subject to redemption by the Corporation or at the
option of any holder of Series B Preferred Stock; PROVIDED, HOWEVER, that the
Corporation may purchase or otherwise acquire outstanding shares of Series B
Preferred Stock in the open market or by offer to any holder or holders of
shares of Series B Preferred Stock.
(b) The shares of Series B Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
Section 8. RANKING. The Series B Preferred Stock shall rank junior to
all other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such Series Bnd the qualifications, limitations and restrictions
thereof.
Section 9. FRACTIONAL SHARES. The Series B Preferred Stock shall be
issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one one-hundredth (1/100th)
of a share or any integral multiple of such fraction. At the election of the
Corporation prior to the first issuance of a share or a fraction of a share of
Series B Preferred Stock, either (1) certificates may be issued to evidence any
such authorized fraction of a share of Series B Preferred Stock, or (2) any such
authorized fraction of a share of Series B Preferred Stock may be evidenced by
depositary receipts pursuant to an appropriate agreement between the Corporation
and a depositary selected by the Corporation provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Series B Preferred Stock.
Section 10. REACQUIRED SHARES. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors
pursuant to the provisions of paragraph (b) of Article FOURTH of the Certificate
of Incorporation.
Section 11. AMENDMENT. None of the powers, preferences and relative,
participating, optional and other special rights of the Series B Preferred Stock
as provided herein or in the Certificate of Incorporation shall be amended in
any manner which would alter or change the powers, preferences, rights or
privileges of the holders of Series B Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series B Preferred Stock, voting as a separate class.
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IN WITNESS WHEREOF, Polaroid Corporation has caused this Certificate to
be duly executed in its corporate name on this 28th day of June, 2000.
POLAROID CORPORATION,
by /s/ NEAL D. GOLDMAN
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Neal D. Goldman
Vice President, General Counsel
and Secretary
