CERTIFICATE OF DESIGNATION
OF
7% SERIES G CUMULATIVE CONVERTIBLE PAY-IN-KIND
PREFERRED STOCK
OF
Rite Aid Corporation
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
Rite Aid Corporation (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware,
certifies that pursuant to the authority contained in Article Fourth of its
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of the
Company, at a meeting duly called and held via telephone conference on January
19, 2005, and the Pricing Committee designated by the Board of Directors of the
Company by resolution adopted by unanimous written consent on January 28, 2005,
duly approved and adopted the following resolution which resolution remains in
full force and effect on the date hereof:
RESOLVED, that, pursuant to the authority vested in the
Pricing Committee by the Board of Directors, and in the Board of Directors by
the Certificate of Incorporation, the Pricing Committee designated by the Board
of Directors does hereby designate, create, authorize and provide for the
issuance of 7% Series G Cumulative Convertible Pay-in-Kind Preferred Stock (the
"Series G Preferred Stock"), par value $1.00 per share, with a liquidation
preference of $100 per share at the time of initial issuance, initially
consisting of 2,000,000 shares, which number may be increased from time to time
by the Board of Directors upon any issuance of Series G Preferred Stock in
accordance with Section 3 of this Certificate of Designation and upon compliance
with applicable law, having the following voting powers, preferences and
relative, optional and other special rights, and qualifications, limitations and
restrictions thereof as follows:
1. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this Section 1 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural).
"Board of Directors" means the Board of Directors of the
Company or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Closing Price" means, with respect to any securities on any
day, the closing sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the New York Stock Exchange, or, if such
security is not listed or admitted to trading on such exchange, on the principal
national securities exchange or quotation system on which such security is
quoted or listed or admitted to trading, or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose.
"Common Stock" means the common stock, par value $1.00 per
share, of the Company.
"Conversion Price" means $5.50, subject to adjustment as set
forth in Section 6 herein.
"DGCL" means the Delaware General Corporation Law.
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"Dividend Payment Date" has the meaning set forth in Section
3(a) below.
"Dividend Rate" means 7.00% per annum.
"Holder" means the record holder of one or more shares of
Series G Preferred Stock, as shown on the books and records of the Company.
"Issue Date" means the first date on which any shares of
Series G Preferred Stock are issued.
"Junior Securities" has the meaning set forth in Section 2
below.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.
"Liquidation Date" has the meaning set forth in Section 4
below.
"Liquidation Preference" means, as of any date and subject to
adjustment based on stock splits, subdivisions or combinations with respect to
the Series G Preferred, $100 plus accrued and unpaid dividends with respect to
any preceding Dividend Payment Date, as if the same had been paid on such date,
at the Dividend Rate.
"Optional Redemption Price" has the meaning set forth in
Section 5(a) below.
"Parity Securities" has the meaning set forth in Section 2
below.
"Partial Dividend Period Amount" means, as of any applicable
date, with respect to any Series G Preferred Stock, an amount equal to the
amount of dividends that would accrue at the Dividend Rate on the Liquidation
Preference of such Series G Preferred Stock on a daily basis from the last
Dividend Payment Date to and including such applicable date.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, other entity or government or agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business).
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"Preferred Stock Director" has the meaning set forth in
Section 7(c) below.
"Record Date" has the meaning set forth in Section 3(a) below.
"Redemption Date" has the meaning set forth in Section 5(c)
below.
"Senior Security" has the meaning set forth in Section 2
below.
"Series D Preferred Directors" means the individuals elected
by the holders of the Company's Series D Cumulative Convertible Pay-In-Kind
Preferred Stock and serving as such immediately prior to the initial issuance of
the Series G Preferred Stock.
"Series E Preferred Stock" means the Company's Series E
Mandatory Convertible Preferred Stock, par value $1.00 per share, and with a
liquidation preference of $50 per share.
"Series F Preferred Stock" means the Company's 8% Series F
Cumulative Convertible Pay-in-Kind Preferred Stock, par value $1.00 per share,
and with a liquidation preference of $100 per share.
"Series H Preferred Stock" means the Company's 6% Series H
Cumulative Convertible Pay-in-Kind Preferred Stock, par value $1.00 per share,
and with a liquidation preference of $100 per share.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Trading Day" means (x) if the applicable security is listed
or admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business or (y) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made on the Nasdaq National Market or (z) if the applicable security is not
otherwise listed, admitted for
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trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
2. Ranking. The Series G Preferred Stock shall, with respect
to dividend rights and distributions upon the liquidation, winding-up or
dissolution of the Company, rank (i) senior to all classes of Common Stock of
the Company and to each other class of Capital Stock or series of preferred
stock established after the Issue Date by the Board of Directors, the terms of
which do not expressly provide that it ranks senior to or on a parity with the
Series G Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred to
with the Common Stock of the Company as "Junior Securities"); (ii) on parity
with the Company's Series E Preferred Stock, Series F Preferred Stock, including
any additional shares of Series F Preferred Stock issued as dividends, Series H
Preferred Stock, including any additional shares of Series H Preferred Stock
issued as dividends, and any additional shares of Series G Preferred Stock
issued by the Company in the future in accordance with Section 3 hereof and any
other class of Capital Stock or series of preferred stock established after the
Issue Date by the Board of Directors, the terms of which expressly provide that
such class or series will rank on a parity with the Series G Preferred Stock as
to dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Securities") and
(iii) subject to Section 7(g) hereof, junior to any other class of Capital Stock
or series of preferred stock established after the Issue Date by the Board of
Directors, the terms of which expressly provide that such class or series will
rank senior to the Series G Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Securities").
3. Dividends.
a. Except as set forth in paragraph 3 (d) below, the Holders
of shares of the Series G Preferred Stock shall be entitled to receive, when, as
and if dividends are declared by the Board of Directors out of funds of the
Company legally available therefor, cumulative preferential dividends, accruing
from the date of issuance, unless otherwise provided for herein, at the Dividend
Rate on the Liquidation Preference and payable quarterly in arrears on each
March 31, June 30, September 30 and December 31 or, if any such date is not a
Business Day, on the next succeeding Business Day (each, a "Dividend Payment
Date"), to the Holders of record as of the next preceding March 15, June 15,
September 15 and December 15 (each, a "Record Date"). Dividends shall be
payable, at the option of the Company,
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either (i) in cash, (ii) by issuance of additional shares of Series G Preferred
Stock (including fractional shares) having an aggregate Liquidation Preference
equal to the amount of the dividend to be paid, or (iii) in any combination
thereof. All dividends paid with respect to shares of Series G Preferred Stock,
whether in cash or shares of Series G Preferred Stock, pursuant to this Section
3 shall be made pro rata among the Holders based upon the aggregate accrued but
unpaid dividends on the shares held by each such Holder. If and when any shares
are issued under this Section 3(a) for the payment of accrued dividends, such
shares shall be validly issued and outstanding and fully paid and nonassessable
and shall initially have a Conversion Price equal to that of the Series G
Preferred Stock with respect to which it is issued. Dividends payable on the
Series G Preferred Stock shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and shall be deemed to accumulate on a daily
basis.
b. To the extent not paid pursuant to Section 3(a) above,
dividends on the Series G Preferred Stock shall accumulate, whether or not there
are funds legally available for the payment of such dividends and whether or not
dividends are declared. For all purposes hereunder, dividends on the Series G
Preferred Stock shall be treated as if the same were paid on the relevant
Dividend Payment Date, whether or not the same were in fact so paid or declared.
c. Holders of the Series G Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of the full cumulative dividends as herein described; provided, however, that
the Company may pay any additional dividend on the Series G Preferred Stock out
of legally available funds, when as and if declared by the Board of Directors.
Unless full cumulative dividends on all outstanding shares of Series G Preferred
Stock for all past dividend periods shall have been declared and paid in cash or
by the issuance of additional shares of Series G Preferred Stock, or declared
and a sufficient sum for the payment thereof set apart, then: (i) no dividend
(other than a dividend payable solely in Junior Securities) shall be declared or
paid upon, or any sum set apart for the payment of dividends upon, any shares of
Junior Securities; (ii) no other distribution shall be declared or made upon, or
any sum set apart for the payment of any distribution upon, any shares of Junior
Securities, other than a distribution consisting solely of Junior Securities;
(iii) no shares of Junior Securities shall be purchased, redeemed or otherwise
acquired or retired for value (excluding an exchange or conversion for shares of
other Junior Securities) by the Company or any of its Subsidiaries; and (iv) no
monies shall be paid into or set apart or made available for a sinking or other
like fund for the purchase, redemption or other acquisition or retirement for
value of any shares of Junior Securities by the Company or any of its
Subsidiaries.
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d. In the case of shares of Series G Preferred Stock issued on
the Issue Date, dividends shall accrue and be cumulative from January 1, 2005.
In the case of shares of Series G Preferred Stock issued as a dividend on shares
of Series G Preferred Stock, dividends shall accrue and be cumulative from the
Dividend Payment Date in respect of which such shares were issued or were
scheduled to be paid pursuant to Section 3(a) hereof as a dividend.
e. Each fractional share of Series G Preferred Stock
outstanding (or treated as outstanding pursuant to Section 3(b) hereof) shall be
entitled to a ratably proportionate amount of all dividends accruing with
respect to each outstanding or due to be issued and outstanding share of Series
G Preferred Stock pursuant to paragraph (a) of this Section 3, and all such
dividends with respect to such outstanding fractional shares shall be cumulative
and shall accrue (whether or not declared); and shall be payable in the same
manner and at such times as provided for in paragraph (a) of this Section 3 with
respect to dividends on each outstanding or due to be issued and outstanding
share of Series G Preferred Stock. Each fractional share of Series G Preferred
Stock outstanding shall also be entitled to a ratably proportionate amount of
any other distributions made with respect to each outstanding or due to be
issued and outstanding share of Series G Preferred Stock, and all such
distributions shall be payable in the same manner and at the same time as
distributions on each outstanding or due to be issued and outstanding share of
Series G Preferred Stock.
f. Accrued but unpaid dividends for any past dividend periods
may be declared by the Board of Directors and paid on any date fixed by the
Board of Directors, whether or not a regular Dividend Payment Date, to Holders
of record on the books of the Corporation on such record date as may be fixed by
the Board of Directors, which record date shall be no more than 60 days prior to
the payment date thereof.
4. Distributions Upon Liquidation, Dissolution or Winding Up.
Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company or reduction or decrease in its Capital
Stock resulting in a distribution of assets to the holders of any class or
series of the Company's Capital Stock (the date of such occurrence, the
"Liquidation Date"), the Company shall, out of the assets of the Company
available for distribution, make the following payments in respect of its
Capital Stock:
a. first, payments due in connection with the Senior
Securities on the Liquidation Date, including any accumulated and unpaid
dividends, if any, on such Senior Securities, to the Liquidation Date;
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b. second, on a pro rata basis, payments (i) on shares of the
Series G Preferred Stock equal to the Liquidation Preference per share of Series
G Preferred Stock held by or due to (as of such date pursuant to Section 3
hereof) such Holder, plus all Partial Dividend Period Amounts, if any, thereon
to the Liquidation Date and (ii) due on Parity Securities; and
c. third, payments on any Junior Securities, including,
without limitation, the Common Stock.
After payment in full in cash of the Liquidation Preference
and all accrued and unpaid dividends, if any, to which Holders of Series G
Preferred Stock are entitled, such Holders shall not be entitled to any further
participation in any distribution of assets of the Company.
5. Redemption by the Company.
a. From time to time, on and after the fourth anniversary of
the Issue Date, the Company shall have the option to redeem (subject to the
legal availability of funds therefor) all, or any part of, the outstanding (and
due to be issued and outstanding as of such date pursuant to Section 3 hereof)
shares of the Series G Preferred Stock at a price equal to 105% of the
Liquidation Preference), plus the Partial Dividend Period Amount, if any, to the
applicable Redemption Date (together, the "Optional Redemption Price"). In
addition, the Company shall have the option to redeem (subject to legal
availability of funds therefor) up to 31,000 shares of Series G Preferred Stock
at at a price equal to 105% of the Liquidation Preference), plus the Partial
Dividend Period Amount, if any, to the applicable Redemption Date on or before
March 4, 2005 (the "Early Redemption"). Notwithstanding the provisions of
Section 5(c) hereof, the notice period for the Early Redemption shall be three
days.
b. In case of redemption of less than all of such shares of
Series G Preferred Stock, the shares to be redeemed shall be selected pro rata
or by other appropriate means.
c. Notice of any redemption shall be sent by or on behalf of
the Company not less than 30 nor more than 60 days prior to the date specified
for redemption in such notice (the "Redemption Date"), by first class mail,
postage prepaid, to all Holders of record of the Series G Preferred Stock at
their last addresses as they shall appear on the books of the Company; provided,
however, that no failure to give such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any shares of Series G Preferred Stock except as to the Holder to whom the
Company has failed to give
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notice or except as to the Holder to whom notice was defective. In addition to
any information required by law, such notice shall state: (i) the Redemption
Date; (ii) the Optional Redemption Price; (iii) the number of shares of Series G
Preferred Stock to be redeemed and, if less than all shares held by such Holder
are to be redeemed, the number of such shares to be redeemed; (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the Optional Redemption Price; (v) the Conversion Price then in effect; (vi)
that the Holder's right to convert such shares of into Common Stock shall
terminate on the close of business on the fifth Business Day preceding such
redemption date; and (vii) that dividends on the shares to be redeemed will
cease to accumulate on the Redemption Date. Upon the mailing of any such notice
of redemption, the Company shall become obligated to redeem at the time of
redemption specified therein all shares called for redemption.
d. If notice has been mailed in accordance with Section 5(c)
above and provided that on or before the Redemption Date specified in such
notice, all funds necessary for such redemption shall have been set aside by the
Company, separate and apart from its other funds in trust for the pro rata
benefit of the Holders of the shares so called for redemption, so as to be, and
to continue to be available therefor, then, from and after the Redemption Date,
dividends on the shares of the Series G Preferred Stock so called for redemption
shall cease to accumulate, and said shares shall no longer be deemed to be
outstanding and shall not have the status of shares of Series G Preferred Stock,
and all rights of the Holders thereof as stockholders of the Company (except the
right to receive from the Company the Optional Redemption Price) shall cease.
Upon surrender, in accordance with said notice, of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the Company
shall so require and the notice shall so state, unless such certificates have
not yet been issued by the Company but are otherwise due to such Holder pursuant
to Section 3 hereof), such shares shall be redeemed by the Company at the
Optional Redemption Price.
e. Any deposit of funds with a bank or trust company for the
purpose of redeeming Series G Preferred Stock shall be irrevocable except that
any balance of monies so deposited by the Company and unclaimed by the Holders
of the Series G Preferred Stock entitled thereto at the expiration of two years
from the applicable Redemption Date shall be repaid, together with any interest
or other earnings earned thereon, to the Company, and after any such repayment,
the Holders of the shares entitled to the funds so repaid to the Company shall
look only to the Company for payment without interest or other earnings;
provided, however, that any funds deposited for the purpose of redeeming shares
of Series G Preferred Stock which are subsequently converted in accordance with
Section 6 hereof shall be repaid to the Company upon such conversion.
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6. Conversion.
a. Any Holder of shares of Series G Preferred Stock shall have
the right to convert any of such shares which have not been previously redeemed
into fully paid, nonassessable shares of Common Stock. For the purpose of
conversion, each share of Series G Preferred Stock shall be valued at the
Liquidation Preference, which shall be divided by the Conversion Price in effect
on the conversion date to determine the number of shares issuable upon
conversion. In case any shares of Series G Preferred Stock are to be redeemed
pursuant to Section 5 hereof, such right of conversion shall cease and terminate
as to the shares of Series G Preferred Stock to be redeemed at the close of
business on the fifth Business Day preceding the date fixed for redemption,
unless the Company shall default in the payment of the applicable redemption
price.
b. Any Holder of shares of Series G Preferred Stock desiring
to convert such shares into Common Stock shall surrender the certificate or
certificates (unless such certificates have not yet been issued by the Company
but are otherwise due such Holder pursuant to Section 3 hereof) evidencing such
shares of Series G Preferred Stock at the office of the transfer agent (which
may be the Company) for the Series G Preferred Stock, which certificate or
certificates, if the Company shall so require, shall be duly endorsed to the
Company or in blank, or accompanied by proper instruments of transfer to the
Company or in blank, accompanied by (i) an irrevocable written notice to the
Company that the Holder elects so to convert such shares of Series G Preferred
Stock and specifying the name or names (with address or addresses) in which a
certificate or certificates evidencing shares of Common Stock are to be issued,
(ii) in the event that the Series G Preferred Stock is converted during the
period from the close of business on any Record Date next preceding any Dividend
Payment Date to the opening of business on such Dividend Payment Date, payment
in New York Clearing House funds or other funds acceptable to the Company of an
amount equal to the Partial Dividend Period Amount (other than with respect to
dividends to be paid-in-kind by the Company) that would accrue from the date of
conversion to such Dividend Payment Date on the Series G Preferred Stock so
converted and (iii) if required pursuant to Section 6(f), an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Company demonstrating that such taxes have been paid). In the event that a
holder fails to notify the Company of the number of shares of Series G Preferred
Stock which such Holder wishes to convert, such Holder shall be deemed to have
elected to convert all shares represented by the certificate or certificates
surrendered for conversion.
Holders of shares of Series G Preferred Stock at the close of
business on a Record Date shall be entitled to receive the dividend payable on
such shares on
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the corresponding Dividend Payment Date notwithstanding the conversion thereof
following such Record Date and prior to such Dividend Payment Date. A Holder of
shares of Series G Preferred Stock on a Record Date who (or whose transferee)
tenders any such shares for conversion into shares of Common Stock on such
Dividend Payment Date will receive the dividend payable by the Company on such
shares of Series G Preferred Stock on such date. Except as provided for above,
no payments or adjustments in respect of dividends on shares of Series G
Preferred Stock surrendered for conversion or on account of any dividend on the
Common Stock issued upon conversion shall be made upon the conversion of any
shares of Series G Preferred Stock.
The Company shall, as soon as practicable after such deposit
of certificates (to the extent required above) evidencing shares of Series G
Preferred Stock accompanied by the written notice and compliance with any other
conditions herein contained, deliver at such office of such transfer agent to
the person for whose account such shares of Series G Preferred Stock were so
surrendered, or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person shall
be entitled as aforesaid, together with a cash adjustment in respect of any
fraction of a share of Common Stock as hereinafter provided. Subject to the
following provisions of this paragraph, 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 G Preferred Stock to be converted shall
have been surrendered (to the extent required above) together with the
irrevocable written notice and payment of taxes (if applicable) as provided for
in clauses (i) and (iii) above, and the person or persons entitled to receive
the Common Stock deliverable upon conversion of such Series G Preferred Stock
shall be treated for all purposes as the record holder or holders of such Common
Stock at such time on such date, unless the stock transfer books of the Company
shall be closed on such date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of business
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice (and, if applicable, payment)
received by the Company. Immediately following such conversion, the rights of
the holders of converted Series G Preferred Stock, as such, shall cease.
c. Adjustment of Conversion Price. The Conversion Price at
which shares of Series G Preferred Stock are convertible into Common Stock shall
be subject to adjustment from time to time, as follows:
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i. In case at any time after the date hereof, the Company
shall pay or make a dividend or other distribution on all or any portion of its
Common Stock or shall make a dividend or other distribution on any other class
of Capital Stock of the Company which dividend or distribution includes Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be decreased by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such decrease to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph (i), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip Common Stock. If any dividend
or distribution of the type described in this Section 6(c)(i) is declared but
not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. Notwithstanding the foregoing, any dividend or
distribution of Common Stock to holders of Series E Preferred Stock pursuant to
the terms of the Certificate of Designation governing the Series E Preferred
Stock will not require any adjustment to the Conversion Price.
ii. In case at any time after the date hereof, the Company
shall pay or make a dividend or other distribution on all of its Common Stock
consisting of, or shall otherwise issue to all holders of its Common Stock,
rights, warrants or options (not being available on an equivalent basis to
Holders of the Series G Preferred Stock upon conversion) entitling the holders
of its Common Stock to subscribe for or purchase Common Stock at a price per
share less than the current market price per share (determined as provided in
paragraph (viii) of this Section 6(c)) of the shares of Common Stock on the date
fixed for the determination of stockholders entitled to receive such rights,
warrants or options (other than pursuant to a dividend reinvestment plan), the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be decreased by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number
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of shares of Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase would
purchase at such current market price and the denominator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so offered for
subscription or purchase, such decrease to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (ii), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but will include shares issuable in respect of scrip
certificates, if any, issued in lieu of fractions of shares of Common Stock. The
Company will not issue any rights or warrants in respect of Common Stock held in
the treasury of the Company (or, if rights or warrants are issued in respect of
all of the Common Stock of the Company, will not exercise any such rights or
warrants in respect of Common Stock held in the treasury of the Company). In the
event that such rights or warrants are not so issued, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such date fixed for the determination of stockholders entitled to receive such
rights or warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of Common Stock
at less than such current market price, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into account
any consideration received for such rights or warrants. The value of such
consideration, if other than cash, shall be determined in the reasonable good
faith judgment of the Board of Directors of the Company, whose determination
shall be conclusive.
iii. In case at any time after the date hereof, all or any
portion of the Common Stock outstanding shall be subdivided into a greater
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely in case at any time
after the date hereof, all or any portion of the shares of Common Stock
outstanding shall each be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
iv. In case at any time after the date hereof, the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (including securities, rights, warrants
or options, but excluding any rights, warrants, or options referred to in
paragraph (ii) of this Section 6(c) as entitling the holders of Common Stock to
subscribe for or purchase Common Stock at a price per share less than the
current market price, any dividend or distribution paid exclusively in cash, any
dividend or distribution
13
referred to in paragraph (i) of this Section 6(c) and any dividend or
distribution upon a merger or consolidation referred to in paragraph (v) of this
Section 6(c)), the Conversion Price shall be decreased so that the same shall
equal the rate determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per share
(determined as provided in paragraph (viii) of this Section 6(c)) of the Common
Stock on the date fixed for such determination less the then fair market value
(as determined by the Board of Directors in good faith, whose determination
shall be conclusive) of the portion of the assets or evidence of indebtedness so
distributed applicable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution. If any dividend or distribution of the type described
in this Section 6(c)(iv) is declared but not so paid or made, the Conversion
Price shall again be adjusted to the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
v. In case at any time after the date hereof, the Company
shall, by dividend or otherwise, make a distribution to all holders of its
Common Stock consisting exclusively of cash (excluding any cash that is
distributed upon a merger or consolidation or a sale or transfer of all or
substantially all of the assets of the Company to which Section 6(e) applies or
as part of a distribution referred to in paragraph (iv) of this Section 6(c)) in
an aggregate amount that, combined together with (i) the aggregate amount of any
other distributions to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to this paragraph (v) has been made and
(ii) the aggregate of any cash plus the fair market value (as determined by the
Board of Directors in good faith, whose determination shall be conclusive) of
consideration payable in respect of any tender offer by the Company or any of
its Subsidiaries for all or any portion of the Common Stock concluded within the
12 months preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to paragraph (vi) of this Section 6(c) has been
made, exceeds 12.5% of the product of the current market price per share of
Common Stock on the date for the determination of holders of Common Stock
entitled to receive such distribution times the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately after the
close of business on such date for determination, the Conversion Price shall be
decreased so that the same shall equal the rate determined by multiplying the
Conversion Price in effect immediately prior to the close of business in the
date fixed for determination
14
of the stockholders entitled to receive such distribution by a fraction (A) the
numerator of which shall be equal to the current market price per share
(determined as provided in paragraph (viii) of this Section 6(c)) of the Common
Stock on the date fixed for such determination less an amount equal to the
quotient of (x) the excess of such combined amount over such 12.5% and (y) the
number of shares of Common Stock outstanding on such date for determination and
(B) the denominator of which shall be equal to the current market price per
share (determined as provided in paragraph (viii) of this section 6(c)) of the
Common Stock on such date for determination. If any dividend or distribution of
the type described in this Section 6(c)(v) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price which would
then be in effect if such dividend or distribution had not been declared.
vi. In case a tender or exchange offer made by the Company or
any Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a fair market value (as determined
by the Board of Directors in good faith, whose determination shall be
conclusive) that combined together with (i) the aggregate of the cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive) as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any Subsidiary of the company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment, pursuant to this paragraph
(vi) has been made and (ii) the aggregate amount of any distributions to all
holders of the Company's Common Stock made exclusively in cash within 12 months
preceding the expiration of such tender or exchange offer and in respect of
which no adjustment pursuant to paragraph (v) of this Section 6(c) has been
made, exceeds 12.5% of the product of the current market price per share of the
Common Stock (determined as provided in paragraph (viii) of this Section 6(c))
as of the last time (the "Expiration Time") tenders or tenders could have been
made pursuant to such tender or exchange offer (as it may be amended) times the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day after the date of the
Expiration Time, the Conversion Price shall be decreased so that the same shall
equal the rate determined by multiplying the Conversion Price immediately prior
to the close of business on the date of the Expiration Time by a fraction (A)
the numerator of which shall be equal to (1) the product of (x) the current
market price per share of the Common Stock (determined as provided in paragraph
(viii) of this Section 6(c)) on the date of the Expiration Time and (y) the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the date of the Expiration Time less (2) the amount of cash
plus the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares, and (B) the
denominator of which shall be equal to the product of (x) the current market
price per share of the Common
15
Stock (determined as provided in paragraph (viii) of this Section 6(c), as of
the Expiration Time and (y) the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) as of the Expiration Time less the
number of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such maximum, being
referred to as the "Purchased Shares"). In the event that the Company is
obligated to purchase shares pursuant to any such tender offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such tender offer
had not been made.
vii. The reclassification of Common Stock into securities
other than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 6(e) applies) shall be deemed to involve (i) a
distribution of such securities other than Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination" within the meaning of
paragraph (ii) of this Section 6(c)) and (ii) a subdivision or combination, as
the case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective," as the case may be, and "the day upon which such subdivision
or combination becomes effective", within the meaning of the paragraph (iii) of
this Section 6(c)).
viii. For the purpose of any computation under paragraphs
(ii), (iv), (v), or (vi) of this Section 6(c), the current market price per
share of Common Stock on any date shall be deemed to be the average of the daily
Closing Prices per share for the five consecutive Trading Days immediately
preceding the earlier of the day in question and the day before the "ex date"
with respect to the issuance or distribution requiring such computation. For
purposes of this paragraph, the term "ex date", when used with respect to any
issuance or distribution, means the
16
first date on which the Common Stock trades regular way on the applicable
securities exchange or in the applicable securities market without the right to
receive such issuance or distribution.
ix. The Company may make such reductions in the Conversion
Price, in addition to those required by subparagraphs (i), (ii), (iii), (iv),
(v) and (vi), of this Section 6(c), as it considers to be advisable to avoid or
diminish any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. The Company
from time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least twenty days, the reduction is irrevocable
during the period and the Board of Directors (or, to the extent permitted by
applicable law, a duly authorized committee thereof) shall have made a good
faith determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. Whenever the Conversion Price
is reduced pursuant to the preceding sentence, the Company shall mail to Holders
of record of the Series G Preferred Stock a notice of the reduction at least
fifteen days prior to the date the reduced Conversion Price takes effect, and
such notice shall state the reduced Conversion Price and the period it will be
in effect.
x. Notwithstanding any other provision of this Section 6, no
adjustment to the Conversion Price shall reduce the Conversion Price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the Conversion Price to such par value. Without the prior
approval of the holders of a majority of the outstanding shares of Series G
Preferred Stock, the Company will not take any action (1) to increase the par
value per share of the Common Stock or (2) that would or does result in any
adjustment in the Conversion Price that would cause the Conversion Price to be
less than the then par value per share of the Common Stock.
xi. Notwithstanding any other provision of this Section 6, no
adjustment in the Conversion Price need be made until all cumulative adjustments
amount to 1% or more of the Conversion Price as last adjusted. Any adjustments
that are not made shall be carried forward and taken into account in any
subsequent adjustment.
xii. Whenever the Conversion Price is adjusted as herein
provided:
(1) the Company shall compute the adjusted conversion
price and shall prepare a certificate signed by the Treasurer of the
17
Company setting forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
forthwith be filed with the transfer agent for the Series G Preferred Stock; and
(2) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record Holders of shares of Series G
Preferred Stock at their last addresses as they shall appear upon the stock
transfer books of the Company.
xiii. In any case in which this Section 6(c) provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (x) issuing to the
Holder of any share of Series G Preferred Stock converted after such record date
and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (y) paying to such Holder any amount in cash in
lieu of any fractional share of Common Stock pursuant to Section 6(d).
d. The Company shall not issue fractional shares or scrip
representing fractional shares of Common Stock upon conversion of Series G
Preferred Stock. Instead the Company shall pay a cash adjustment based upon the
Closing Price of the Common Stock on the Business Day immediately preceding the
date of conversion. If more than one certificate evidencing shares of Series G
Preferred Stock shall be surrendered for conversion at one time by the same
Holder, the number of shares issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of Series G Preferred Stock so
surrendered.
e. In the event that the Company shall be a party to any
transaction, including without limitation any (i) recapitalization or
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock), (ii) any consolidation of the
Company with, or merger of the Company into, any other Person, any merger of
another Person into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), (iii) any sale or transfer of all or substantially
all of the assets of the Company or (iv) any compulsory share exchange, pursuant
to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made as part
of the terms of such transaction whereby the Holder of each share of Series G
Preferred Stock then outstanding shall have the right thereafter, to
18
convert such share into the kind and amount of securities, cash and other
property receivable upon such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the number of shares of
Common Stock into which such share of Series G Preferred Stock might have been
converted immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange. The Company or the
person formed by such consolidation or resulting from such merger or which
acquires such assets or which acquires the Company's shares, as the case may be,
shall make provisions in its certificate or articles of incorporation or other
constituent document to establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments which,
for events subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 6. The above
provisions shall similarly apply to successive recapitalization,
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
f. The Company shall at all times reserve and keep available,
out of its authorized and unissued stock, solely for the purpose of effecting
the conversion of the Series G Preferred Stock, such number of shares of its
Common Stock, free of preemptive rights, as shall from time to time be
sufficient to effect the conversion of all shares of Series G Preferred Stock
from time to time outstanding. The Company shall from time to time, in
accordance with the laws of the State of Delaware, use its best efforts to
increase the authorized number of shares of Common Stock if at any time the
number of shares of authorized and unissued Common Stock shall not be sufficient
to permit the conversion of all the then outstanding shares of Series G
Preferred Stock.
The Company shall pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the Series G Preferred Stock. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of Common Stock (or other securities or assets) in a
name other than that in which the shares of Series G Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount of
such tax or has established, to the satisfaction of the Company, that such tax
has been paid.
g. In case:
i. the Company shall authorize or take an action that
would, upon consummation, require a Conversion Price adjustment pursuant to
subparagraphs (ii), (iii), (iv), (v) or (vi) of Section 6(c); or
19
ii. of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company shall be required, or of the sale or
transfer of all or substantially all of the assets of the Company or of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
iii. of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be mailed to the Holders of record of the Series
G Preferred Stock, at their last addresses as they shall appear upon the stock
transfer books of the Company, at least twenty days prior to the proposed record
or effective date as the case may be, notice stating (x) the date on which a
record (if any) is to be taken for the purpose of such action, dividend or
distribution, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend or
distribution are to be determined or (y) the date on which such action,
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and 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 or other
property deliverable upon such action, reclassification, consolidation, merger,
sale, transfer, share exchange, dissolution, liquidation or winding up (but no
failure to mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the corporate action required to be specified in
such notice).
h. Notwithstanding the foregoing provisions, the issuance of
any shares of Common Stock pursuant to any plan providing for the reinvestment
of dividends or interest payable on securities of the Company and the investment
of dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the Issue Date (which securities include
the Series E Preferred Stock, Series F Preferred Stock and Series H Preferred
Stock), shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies so long as the size or
extent of the plan or plans are
20
customary corporations similar to the Company. There shall also be no adjustment
of the Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Company except as
specifically described in this Section 6. If any action would require adjustment
of the Conversion Price pursuant to more than one of the provisions described
above, only one adjustment shall be made and such adjustment shall be the amount
of adjustment which has the greatest absolute value.
i. For purposes of this Section 6, the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Company.
7. Voting Rights.
a. Holders of Series G Preferred Stock shall have no voting
rights, except as required by law and as hereinafter provided in this Section 7.
b. The Holders of Series G Preferred Stock shall be entitled
to notice of all stockholders meetings in accordance with the Company's bylaws
and the DGCL, and except as set forth in Section 7(c) and (d) below and as
otherwise required by applicable law, the Holders of Series G Preferred Stock
shall be entitled to vote on all matters submitted to the stockholders for a
vote, voting together with the holders of the Common Stock, and any other series
of preferred stock entitled to vote on such matters, as a single class, with
each share of Common Stock entitled to one vote per share and each share of
Series G Preferred Stock entitled to one vote for each share of Common Stock
issuable upon conversion of the Series G Preferred Stock as of the record date
for such vote or, if no record date is specified, as of the date of such vote.
c. The Holders of the outstanding shares of Series G Preferred
Stock, voting together with holders of the Series F Preferred Stock and the
Series H Preferred Stock as a single class (on an as if converted basis), shall
have the right to elect one director to serve on the Company's Board of
Directors (the "Preferred Stock Director"). The Preferred Stock Director shall
initially be Jonathan D. Sokoloff.
d.
i. If at any time dividends on any of the Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock are not
paid in full, all dividends declared upon such shares of Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock shall be declared
pro rata based on the
21
relative liquidation preference of such preferred stock. If at any time
dividends on any of the Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock, shall as to any such series, be in arrears in an
amount equal to at least two of the full quarterly dividends payable (either in
such or additional shares of the applicable series of Preferred Stock) on such
series of preferred stock, then the Company shall take all steps reasonably
required to increase the number of members of the Board of Directors by two and
the holders of the outstanding shares of Series G Preferred Stock, voting
together with the holders of Series F Preferred Stock and Series H Preferred
Stock (on an as if converted basis) as a single class, shall be entitled to
elect the directors to fill the newly created directorships resulting from the
increase in the number of directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders of
such shares of Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock called as hereinafter provided, or by the written consent of the
holders of Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock without a meeting.
ii. Whenever such voting right pursuant to this Section
7(d) shall have vested as aforesaid, such right may be exercised initially by
written consent of the holders of Series F Preferred Stock, Series G Preferred
Stock and Series H Preferred Stock, or either at a special meeting of the
holders of Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at such
annual meeting, or by the written consent of the holders of Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock without a meeting.
Such voting right of the Series G Preferred Stock shall continue until such time
as dividends accrued on the series of preferred stock that triggered the voting
rights of this Section 7(d) shall be in arrears in an amount less than two of
the full quarterly dividends payable on such shares of preferred stock, at which
time such voting right of the holders of Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall terminate, subject to
revesting in the event of each and every subsequent failure of the Company for
the requisite period of time fully to pay dividends as described above, and the
number of directors shall be reduced by two with the directors elected pursuant
to this Section 7(d) resigning from the Board of Directors.
iii. At any time after such voting power shall have been so
vested, pursuant to this Section 7(d), in shares of Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock and such right shall not
already have been exercised by written consent, as aforesaid, a proper officer
of the Company may, and upon the written request of holders of record of at
least 10% of the
22
outstanding shares of Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock (addressed to the Secretary of the Company at the
principal office of the Company) shall, call a special meeting of the holders of
shares of Series G Preferred Stock together with the holders of Shares of Series
F Preferred Stock and Series H Preferred Stock for the election of the directors
of the Company to be elected by them as herein provided, such call to be made by
notice given in accordance with the notice provisions provided by the by-laws of
the Company for a special meeting of the stockholders or as required by law.
Such meeting shall be held at the earliest practicable date upon the notice
required for special meetings of stockholders at the place designated by the
Secretary of the Company. If such meeting shall not be called by a proper
officer of the Company within 30 days after receipt of such written request by
the Secretary of the Company then the holders of record of at least 10% of the
outstanding shares of Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock then outstanding may call such meeting at the expense
of the Company, and such meeting may be called by such holders upon the notice
required for special meetings of stockholders and shall be held at the place
designated in such notice. Any holder of Series G Preferred Stock which would be
entitled to vote at any such meeting shall have access to the stock books of the
Company for the purpose of causing a meeting of holders of Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock to be called
pursuant to the provisions of this paragraph. Notwithstanding the provisions of
this paragraph, however, no such special meeting shall be called during a period
within 90 days immediately preceding the date fixed for the next annual meeting
of stockholders.
e. At any meeting held for the purpose of electing directors
at which the holders of Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock shall have the right to elect one or more directors as
provided herein, the presence in person or by proxy of the holders of a majority
of the then outstanding shares of Series F Preferred Stock, Series G Preferred
Stock and Series H Preferred Stock shall be required and be sufficient to
constitute a quorum for the election of directors by such class. At any such
meeting or adjournment thereof (x) the absence of a quorum of the holders of
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
shall not prevent the election of directors other than the director to be
elected by the holders of Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock voting together as a class, and the absence of a quorum
or quorums of the holders of Capital Stock entitled to elect such other
directors shall not prevent the election of the director to be elected by the
holders of Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock voting together as a class, and (y) in the absence of a quorum
of the holders of any class of stock entitled to vote for the election of
23
directors, holders of a majority of the shares of Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock present in person or by
proxy of such class shall have the power to adjourn the meeting for the election
of directors which the holders of such class are entitled to elect, from time to
time, without notice (except as required by law) other than announcement at the
meeting, until a quorum shall be present.
f. In case of a vacancy occurring in the office of any
director so elected pursuant to Section 7, the holders of a majority of the
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
then outstanding may, at a special meeting of the holders or by written consent
as provided above, elect a successor to hold office for the unexpired term of
such director.
g. The Company shall not, without the affirmative vote or
consent of the holders of a majority of the shares of Series G Preferred Stock
then outstanding:
i. amend or otherwise alter (in each case, by merger,
consolidation or otherwise) its Certificate of Incorporation in any manner that
adversely affects the rights, privileges and preferences of the Series G
Preferred Stock set forth in this Certificate of Designation;
ii. take any action requiring a vote of stockholders of the
Company that adversely affects the rights, preferences and privileges of the
Series G Preferred Stock set forth in this Certificate of Designation;
iii. authorize, create (by way of reclassification or
otherwise) or issue (in each case, by merger, consolidation or otherwise) any
Senior Securities or security convertible into or evidencing the right to
purchase any Senior Securities; or
iv. issue or obligate or otherwise commit itself to issue (in
each case, by merger, consolidation or otherwise) shares of Series G Preferred
Stock, except as dividends in accordance with Section 3(a) hereof.
h. The Company shall not, without the affirmative vote or
consent of the Preferred Stock Director, redeem or repurchase any Capital Stock
of the Company or pay any cash dividend on the Common Stock unless such cash
dividend would not require an adjustment to the Conversion Price pursuant to
Section 6(c)(i) or (v) hereof.
8. Payment.
24
a. All amounts payable in cash with respect to the Series G
Preferred Stock shall be payable in United States dollars at the principal
executive office of the Company or, at the option of the Holder, payment of
dividends (if any) may be made by check mailed to such Holder of the Series G
Preferred Stock at its address set forth in the register of holders of Series G
Preferred Stock maintained by the Company.
b. Any payment on the Series G Preferred Stock due on any day
that is not a Business Day need not be made on such day, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
due date.
c. Dividends payable on the Series G Preferred Stock on any
Redemption Date that is a Dividend Payment Date shall be paid to the Holders of
record as of the immediately preceding Record Date.
9. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of
Series G Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than those
specifically set forth or authorized in this Certificate of Designation (as such
Certificate of Designation may be amended from time to time) and in the
Certificate of Incorporation. The shares of Series G Preferred Stock shall have
no preemptive or subscription rights.
10. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
11. Severability of Provisions.
If any voting powers, preferences and relative, participating,
optional and other special rights of the Series G Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
Certificate of Designation (as it may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Series G Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
Certificate of Designation (as so amended) which can be given effect without the
invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, optional and
25
other special rights of Series G Preferred Stock and qualifications, limitations
and restrictions thereof shall, nevertheless, remain in full force and effect,
and no voting powers, preferences and relative, participating, optional or other
special rights of Series G Preferred Stock and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Series G Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
12. Reissuance of Series G Preferred Stock. Shares of Series G
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased, redeemed, exchanged or converted, shall (upon compliance with
any applicable provisions of the DGCL) have the status, without any further
action on behalf of the Company of authorized but unissued shares of preferred
stock of the Company undesignated as to series and may be designated or
redesignated and issued or reissued, as the case may be, as part of any series
of preferred stock of the Company, provided that any issue of such shares as
Series G Preferred Stock must be in compliance with the terms hereof.
[signature page follows]
26
IN WITNESS WHEREOF, the Company has caused this certificate to
be duly executed this 28th day of January, 2005.
RITE AID CORPORATION
By:_____________________________
Name: Robert B. Sari
Title: Senior Vice President, General Counsel
and Secretary
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