| Item 3.03 | Material Modification to Rights of Security Holders. |
In connection with the public offering by ViacomCBS Inc. (the “Company”) of 10,000,000 shares of its 5.75% Series A Mandatory Convertible Preferred Stock, par value $0.001 per share (the “Mandatory Convertible Preferred Stock”), and up to 1,500,000 additional shares of Mandatory Convertible Preferred Stock if the underwriters exercise their over-allotment option, the Company filed a Certificate of Designations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware on March 25, 2021, to establish the designations, powers, preferences and rights of the Mandatory Convertible Preferred Stock and the qualifications, limitations, restrictions, conditions and other characteristics thereof, including the dividend rate, the amount payable with respect thereto in the event of the Company’s voluntary or involuntary liquidation, winding up or dissolution, restrictions on the issuance of senior securities, the terms and conditions of conversion of the Mandatory Convertible Preferred Stock and the voting rights of the Mandatory Convertible Preferred Stock. Each share of the Mandatory Convertible Preferred Stock has a liquidation preference of $100.00. The Certificate of Designations became effective upon its acceptance by the Secretary of State of the State of Delaware.
Subject to certain exceptions, so long as any share of Mandatory Convertible Preferred Stock remains outstanding, no dividends or distributions will be declared or paid on shares of Class B Common Stock, par value $0.001 per share, of the Company (the “Class B Common Stock”), or any other class or series of stock ranking junior to the Mandatory Convertible Preferred Stock, and no common stock or any other class or series of stock ranking on parity with or junior to the Mandatory Convertible Preferred Stock will be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Company or any of its subsidiaries unless, all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid in full in cash, shares of Class B Common Stock or a combination thereof upon, or a sufficient amount of cash or number of shares of Class B Common Stock has been set aside for the payment of such dividends, on all outstanding shares of Mandatory Convertible Preferred Stock. In addition, when dividends on shares of the Mandatory Convertible Preferred Stock (i) have not been declared and paid in full on any dividend payment date, or (ii) have been declared but a sum of cash or number of shares of Class B Common Stock sufficient for payment thereof has not been set aside for the benefit of the holders, no dividends may be declared or paid on any shares of parity stock unless dividends are declared on the shares of Mandatory Convertible Preferred Stock on a pro rata basis.
Unless converted earlier in accordance with the terms of the Certificate of Designations, each share of Mandatory Convertible Preferred Stock will automatically convert for settlement on the mandatory conversion date, which is April 1, 2024, into between 1.0013 and 1.1765 shares of Class B Common Stock, subject to customary anti-dilution adjustments. The number of shares of Class B Common Stock issuable upon conversion will be determined based on the volume-weighted average price per share of Class B Common Stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately preceding April 1, 2024.
Subject to the rights of holders of any class or series of the Company’s capital stock ranking senior to the Mandatory Convertible Preferred Stock with respect to dividends, holders of Mandatory Convertible Preferred Stock will be entitled to receive, when, as and if declared by the Company’s Board of Directors (or a duly authorized committee thereof) out of funds legally available for payment, cumulative dividends at the annual rate of 5.75% of the liquidation preference of $100.00 per share (equivalent to $1.4535 per share for the first dividend and $1.4375 per share for each subsequent dividend per quarter), payable in cash or, subject to certain limitations, by delivery of shares of Class B Common Stock or through any combination of cash and shares of Class B Common Stock, at the Company’s election. If declared, dividends on the Mandatory Convertible Preferred Stock will be payable quarterly on January 1, April 1, July 1 and October 1 of each year, commencing on July 1, 2021 and continuing to, and including, April 1, 2024 to the holders of record of the Mandatory Convertible Preferred Stock as they appear on the Company’s stock register at the close of business on the immediately preceding March 15, June 15, September 15 and December 15, respectively.
If accumulated dividends on the outstanding Mandatory Convertible Preferred Stock have not been declared and paid in an aggregate amount corresponding to six or more dividend periods, whether or not consecutive, then, subject to the other provisions of the Mandatory Convertible Preferred Stock, the authorized number of the Company’s directors will automatically increase by two and the holders of the Mandatory Convertible Preferred Stock, voting together as a single class with the holders of each class or series of voting parity stock, if any, will have the right to elect two directors to fill such two new directorships at the Company’s next annual meeting of stockholders (or, if earlier, at a special meeting of the Company’s stockholders called for such purpose).
