EXHIBIT 4.1
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION OF
SCHERING-PLOUGH CORPORATION
Pursuant to Section 14A:7-2(4) of the New Jersey Business
Corporation Act (the "NJBCA"), the undersigned certifies as follows:
1. The name of the corporation is Schering-Plough Corporation
(the "CORPORATION").
2. The Certificate of Incorporation of the Corporation, as
amended (the "CERTIFICATE OF INCORPORATION"), is hereby amended so that the
designation and number of shares of the class and series acted upon in the
following resolution, and the relative rights, preferences and limitations of
such class and series, are as stated in such resolution.
3. The following resolution was duly adopted in accordance
with the August 2, 2004 unanimous written consent of a duly authorized committee
of the Board of Directors of the Corporation , as required by Subsection
14A:-7-2(3) of the NJBCA:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Corporation (the "BOARD") in accordance with
the provisions of Article Fourth of its Certificate of Incorporation, the Board
has directed the Corporation to and the Corporation hereby amends the Article
Fourth of the Certificate of Incorporation to add a new subsection (d) and Annex
A to the Certificate of Incorporation in order to create a new series of
Preferred Shares of the Corporation (the "PREFERRED STOCK") and hereby
authorizes and designates such new series of Preferred Stock and fixes the
designations, voting powers, preferences, rights, qualifications, limitations
and restrictions thereof as herein set forth:
"(d) Pursuant to the authority conferred by this Article
Fourth, the following series of Preferred Shares has been designated with such
series consisting of the number of shares, with such designations, voting
powers, preferences, rights, qualifications, limitations and restrictions as are
stated in Annex A attached hereto and incorporated herein by reference:
Annex A 6.00% Mandatory Convertible Preferred Stock"
ANNEX A
(1) Designation and Amount. This series of Preferred Shares shall be
designated as "6.00% Mandatory Convertible Preferred Stock" (the "CONVERTIBLE
PREFERRED STOCK") and the number of shares constituting such series shall be
28,750,000, with a par value of $1.00 per share.
(2) Ranking. The Convertible Preferred Stock shall rank, as to payment of
dividends and distribution of assets upon dissolution, liquidation or winding up
of the Corporation, (a) senior to (i) the Common Stock, (ii) the Series A
Preferred Stock and (iii) any
class or series of capital stock issued by the Corporation which by its terms
ranks junior to the Convertible Preferred Stock (collectively, the "JUNIOR
SECURITIES"), (b) junior to any class or series of capital stock issued by the
Corporation which by its terms ranks senior to the Convertible Preferred Stock
(the "SENIOR SECURITIES"), and (c) PARI PASSU with any other class or series of
capital stock issued by the Corporation (the "PARITY SECURITIES"), in each case,
whether now outstanding or to be issued in the future.
(3) Dividends. (a) Dividends on the Convertible Preferred Stock will be
payable quarterly when, as and if declared by the Board, or a duly authorized
committee thereof, when the Corporation is legally permitted to do so, on each
Dividend Payment Date, at the annual rate of $3.00 per share, subject to
adjustment as provided for in Section 18(c). The initial dividend on the
Convertible Preferred Stock for the first Dividend Period, commencing on the
date of first issuance of the Convertible Preferred Stock (assuming a date of
first issuance of August 10, 2004), to but excluding December 15, 2004, will be
$1.0417 per share, and when, as and if declared, will be payable on December 15,
2004, PROVIDED that the Corporation is legally permitted to pay such dividends
at such time. Each subsequent quarterly dividend on the Convertible Preferred
Stock, when, as and if declared, will be $0.75 per share, subject to adjustment
as provided for in Section 18(c). Dividends payable, when, as and if declared,
on a Dividend Payment Date will be payable to Record Holders for the applicable
Dividend Payment Date, except as otherwise provided in Section 6(a).
(b) The amount of dividends payable on each share of Convertible Preferred
Stock for each full quarterly period will be computed by dividing the annual
dividend rate by four. The amount of dividends payable for any other period that
is shorter or longer than a full quarterly dividend period will be computed on
the basis of a 360-day year consisting of twelve 30-day months. Dividends on the
Convertible Preferred Stock shall accrue and cumulate if the Corporation fails
to declare one or more dividends on the Convertible Preferred Stock in any
amount, whether or not the Corporation is then legally permitted to pay such
dividends.
(c) No interest or sum of money in lieu of interest shall be payable in
respect of any dividend not paid on a Dividend Payment Date or any other late
payment. The Corporation will also not pay Holders of the Convertible Preferred
Stock any dividend in excess of the full dividends on the Convertible Preferred
Stock that are payable as described above.
(d) Dividends in arrears on the Convertible Preferred Stock not declared
for payment or not paid on any Dividend Payment Date may later be declared by
the Board, or a duly authorized committee thereof, and paid on any date fixed by
the Board, or a duly authorized committee thereof, whether or not a Dividend
Payment Date, to the Holders of record as they appear on the stock register of
the Corporation on a record date selected by the Board, or a duly authorized
committee thereof, which shall (i) not precede the date the Board, or an
authorized committee thereof, declares the dividend payable and (ii) not be more
than 60 days prior to the date the dividend is paid.
(4) Payment Restrictions. (a) Unless all accrued, cumulated and unpaid
dividends on the Convertible Preferred Stock for all prior Dividend Periods have
been paid, the Corporation may not:
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(i) declare or pay any dividend or make any distribution of assets on
any Junior Securities, other than dividends or distributions in the form of
Junior Securities and cash solely in lieu of fractional shares in
connection with any such dividend or distribution;
(ii) redeem, purchase or otherwise acquire any Junior Securities or
pay or make any monies available for a sinking fund for such Junior
Securities, other than (A) upon conversion or exchange for other Junior
Securities, (B) redemptions or purchases of any Series A Preferred Stock
purchase rights or (C) the purchase of fractional interests in shares of
any Junior Securities pursuant to the conversion or exchange provisions of
such Junior Securities; or
(iii) redeem, purchase or otherwise acquire any Parity Securities,
except upon conversion into or exchange for other Parity Securities or
Junior Securities and cash solely in lieu of fractional shares in
connection with any such conversion or exchange, PROVIDED, HOWEVER, that in
the case of a redemption, purchase or other acquisition of Parity
Securities upon conversion into or exchange for other Parity Securities (A)
the aggregate amount of the liquidation preference of such other Parity
Securities does not exceed the aggregate amount of the liquidation
preference, plus accrued, cumulated and unpaid dividends, of the Parity
Securities that are converted into or exchanged for such other Parity
Securities, (B) the aggregate number of shares of Common Stock issuable
upon conversion, redemption or exchange of such other Parity Securities
does not exceed the aggregate number of shares of Common Stock issuable
upon conversion, redemption or exchange of the Parity Securities that are
converted into or exchanged for such other Parity Securities and (C) such
other Parity Securities contain terms and conditions (including, without
limitation, with respect to the payment of dividends, dividend rates,
liquidation preferences, voting and representation rights, payment
restrictions, anti-dilution rights, change of control rights, covenants,
remedies and conversion and redemption rights) that are not materially less
favorable, taken as a whole, to the Corporation or the Holders of the
Convertible Preferred Stock than those contained in the Parity Securities
that are converted or exchanged for such other Parity Securities.
(5) Voting Rights. (a) Except as otherwise required by law, the Certificate
of Incorporation or set forth in this Section 5, Holders of the Convertible
Preferred Stock are not entitled to any voting rights and their consent shall
not be required for the taking of any corporate action.
(b) So long as any shares of Convertible Preferred Stock are outstanding,
the Corporation will not, without the approval of the Holders of at least
two-thirds of the shares of Convertible Preferred Stock then outstanding, given
in person or by proxy either at an annual meeting or at a special meeting called
for that purpose, at which the Holders of the Convertible Preferred Stock shall
vote separately as a single class, amend, alter or repeal (by merger,
consolidation, combination, reclassification or otherwise) any of the provisions
of the Corporation's Certificate of Incorporation so as to affect adversely the
rights, preferences or voting powers of the Holders of the Convertible Preferred
Stock; PROVIDED that any amendment of the provisions of the Certificate of
Incorporation so as to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or
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evidencing a right to purchase, any Parity Securities or Junior Securities shall
be deemed not to affect adversely the rights, preferences or voting powers of
the Holders of the Convertible Preferred Stock. Notwithstanding anything in this
Section 5 to the contrary, any amendment, alteration or repeal of any of the
provisions of the Corporation's Certificate of Incorporation occurring in
connection with any merger or consolidation of the Corporation of the type
described in Section 14(e)(i) or any statutory exchange of securities of the
Corporation with another Person (other than in connection with a merger or
acquisition) of the type described in Section 14(e)(iv) shall be deemed not to
adversely affect the rights, preferences or voting power of the Holders of the
Convertible Preferred Stock, PROVIDED that, subject to Section 10, in the event
the Corporation does not survive the transaction, the shares of the Convertible
Preferred Stock will become shares of the successor Person, having in respect of
such successor Person the same rights, preferences or voting powers of the
Holders of the Convertible Preferred Stock immediately prior to the consummation
of such merger, consolidation, or statutory exchange and shall be convertible
into the kind and amount of net cash, securities and other property as
determined in accordance with Section 14(e) hereof, PROVIDED FURTHER that
following any such merger, consolidation or statutory exchange, such successor
Person shall succeed to and be substituted for, and may exercise all of the
rights and powers of the Corporation under the Convertible Preferred Stock.
(c) If at any time dividends on the then-outstanding shares of Convertible
Preferred Stock or any other class or series of Preferred Shares in an amount
equivalent to six quarterly dividends, whether or not consecutive, shall not
have been (i) paid or (ii)(A) declared and (B) a sum sufficient for the payment
thereof set aside, the holders of Preferred Shares (including the Convertible
Preferred Stock), voting separately as a single class, shall be entitled to
increase the authorized number of directors on the Board by two and elect such
two directors (the "PREFERRED STOCK DIRECTORS") at the next annual or special
meeting of the shareholders called in the manner described below. At any such
annual or special meeting of the shareholders, or any adjournment thereof, if
the holders of at least a majority of the Preferred Shares then outstanding
shall be present or represented by proxy, then, (1) by vote of the holders of at
least a majority of the Preferred Shares, voting as a class, then present or so
represented, the authorized number of directors of the Corporation shall be
increased by two, and (2) at such meeting the holders of the Preferred Shares,
voting as a class, shall be entitled to elect the Preferred Stock Directors by
vote of the holders of at least a majority of the Preferred Shares then present
or so represented. Such right of the holders of the Preferred Shares to elect
the Preferred Stock Directors may be exercised until all dividends in default on
such Preferred Shares shall have been (i) paid in full or (ii)(A) declared and
(B) a sum sufficient for the payment thereof set aside. When so paid or provided
for, (i) the right of the holders of Preferred Shares to elect the Preferred
Stock Directors shall cease, (ii) the terms of all of the Preferred Stock
Directors shall terminate at the next annual meeting, and (iii) the authorized
number of directors of the Corporation shall be reduced accordingly. Not later
than 40 days after such entitlement arises, the Board will convene a special
meeting of the holders of Preferred Shares for the above purpose. If the Board
fails to convene such meeting within such 40-day period, the holders of 10% of
the outstanding Preferred Shares, considered as a single class, will be entitled
to convene such meeting to elect the initial Preferred Stock Directors. Any
director who shall have been elected by the holders of Preferred Shares as a
class pursuant to this Section 5(c) may be removed at any time, either for or
without cause by, and only by, the affirmative vote of the holders of record of
a majority of the outstanding Preferred Shares given at a special meeting of
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such shareholders called for such purpose by the Corporation or at the annual
meeting of shareholders, and any vacancy created by such removal may also be
filled at such meeting. Any vacancy caused by the death or resignation of a
director who shall have been elected by the holders of Preferred Shares as a
class pursuant to this Section 5(c) may be filled only by the holders of
outstanding Preferred Shares at a meeting called for such purpose by the
Corporation. The provisions of the Certificate of Incorporation and By-laws of
the Corporation relating to the convening and conduct of special meetings of
shareholders and the nomination of directors will apply with respect to any
special meeting of the holders of Preferred Shares; PROVIDED that the notice of
the nomination need only be delivered to the Secretary of the Corporation not
more than 10 days after the Corporation (or the holders of 10% of the
outstanding Preferred Shares, if applicable) has notified the holders of
Preferred Shares of the date of the special meeting to elect the initial
Preferred Stock Directors.
(d) So long as any of the Convertible Preferred Stock is outstanding, the
Corporation will not, without the approval of the Holders of at least two-thirds
of the shares of Convertible Preferred Stock then outstanding and any class or
series of Parity Securities then outstanding, voting together as a single class,
given in person or by proxy either at an annual meeting or at a special meeting
called for that purpose:
(i) reclassify any of the Corporation's authorized shares into any
shares of any class, or any obligation or security convertible into or
evidencing a right to purchase such shares, ranking senior to the
Convertible Preferred Stock as to payment of dividends or distribution of
assets upon the dissolution, liquidation or winding up of the Corporation;
or
(ii) issue, authorize or increase the authorized amount of, or issue
or authorize any obligation or security convertible into or evidencing a
right to purchase, any stock of any class or series ranking senior to the
Convertible Preferred Stock as to payment of dividends or distribution of
assets upon the dissolution, liquidation or winding up of the Corporation;
PROVIDED that the Corporation may issue, authorize or increase the
authorized amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any shares of capital
stock ranking on a parity with or junior to the Convertible Preferred Stock
as to payment of dividends or distribution of assets upon the dissolution,
liquidation or winding up of the Corporation without the vote of the
Holders of the Convertible Preferred Stock.
(e) In exercising the voting rights set forth in this Section 5, each share
of Convertible Preferred Stock shall have one vote per share. In any case where
the Holders of the Convertible Preferred Stock are entitled to vote as a class
with holders of Parity Securities or other classes or series of Preferred
Shares, each class or series shall have a number of votes proportionate to the
aggregate liquidation preference of its outstanding shares.
(6) Liquidation, Dissolution or Winding Up. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, subject to the rights of holders of any shares of capital stock of
the Corporation then outstanding ranking senior to or pari passu with the
Convertible Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Corporation and before any amount shall be paid
or distributed
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with respect to holders of any shares of capital stock of the Corporation then
outstanding ranking junior to the Convertible Preferred Stock in respect of
distributions upon liquidation, dissolution or winding up of the Corporation,
the Holders of the Convertible Preferred Stock at the time outstanding will be
entitled to receive, out of the net assets of the Corporation legally available
for distribution to shareholders, a liquidating distribution in the amount of
$50.00 per share, subject to adjustment as provided for in Section 18(c), plus
an amount equal to the sum of all accrued, cumulated and unpaid dividends,
whether or not declared, for the portion of the then-current Dividend Period
until the payment date and all prior Dividend Periods and such Holders shall be
deemed to be the Holders of record for such Dividend Periods or portions
thereof. After the payment to the Holders of the Convertible Preferred Stock of
the full amounts provided for in this Section 6(a), the Holders of the
Convertible Preferred Stock will have no right or claim to any of the
Corporation's remaining assets.
(b) For the purpose of this Section 6, none of the following shall
constitute or be deemed to constitute a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation:
(i) the sale, transfer, lease or conveyance of all or substantially
all of the Corporation's property or business;
(ii) the consolidation or merger of the Corporation with or into any
other Person; or
(iii) the consolidation or merger of any other Person with or into the
Corporation.
(c) If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the amounts payable with respect to the
Convertible Preferred Stock then outstanding are not paid in full as provided in
Section 6(a) hereof, no distribution shall be made on account of any securities
ranking pari passu with the Convertible Preferred Stock as to the distribution
of assets upon such liquidation, dissolution or winding up, unless a pro rata
distribution is made on the Convertible Preferred Stock. The Holders of the
Convertible Preferred Stock then outstanding and the holders of any such
securities then outstanding shall share ratably in any distribution of assets
upon such liquidation, dissolution or winding up. The amount allocable to each
series of such securities then outstanding will be based on the proportion of
their full respective liquidation preference to the aggregate liquidation
preference of the outstanding shares of each such series.
(d) Written notice of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, stating the payment date or dates when, and
the place or places where, the amounts distributable to holders of Convertible
Preferred Stock in such circumstances shall be payable, shall be given by
first-class mail, postage prepaid, mailed not less than twenty calendar days
prior to any payment date stated therein, to the Holders of Convertible
Preferred Stock, at the address shown on the books of the Corporation or the
Transfer Agent; PROVIDED, HOWEVER, that a failure to give notice as provided
above or any defect therein shall not affect the Corporation's ability to
consummate a voluntary or involuntary liquidation, dissolution or winding up of
the Corporation.
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(7) Mandatory Conversion on the Mandatory Conversion Date. (a) Each share
of Convertible Preferred Stock will automatically convert (unless previously
converted at the option of the Holder in accordance with Section 8 hereof,
converted at the option of the Corporation pursuant to Section 9 hereof or
pursuant to an exercise of a Merger Early Conversion right pursuant to Section
10 hereof) on the Mandatory Conversion Date, into a number of shares of Common
Stock equal to the Conversion Rate.
(b) The "CONVERSION RATE" shall be as follows:
(i) if the Applicable Market Value of the Common Stock is equal to or
greater than $22.27 (the "THRESHOLD APPRECIATION PRICE"), then the
Conversion Rate shall be equal to 2.2451 shares of Common Stock per share
of Convertible Preferred Stock (the "MINIMUM CONVERSION RATE"), which is
equal to $50.00 divided by the Threshold Appreciation Price);
(ii) if the Applicable Market Value of the Common Stock is less than
the Threshold Appreciation Price but greater than $17.96 (the "INITIAL
PRICE"), then the Conversion Rate shall be equal to $50.00 divided by the
Applicable Market Value of the Common Stock;
(iii) if the Applicable Market Value of the Common Stock is less than
or equal to the Initial Price, then the Conversion Rate shall be equal to
2.7840 shares of Common Stock per share of Convertible Preferred Stock (the
"MAXIMUM CONVERSION RATE"), which is equal to $50.00 divided by the Initial
Price; and
(iv) the Minimum Conversion Rate, the Maximum Conversion Rate, the
Threshold Appreciation Price and the Initial Price are each subject to
adjustment in accordance with the provisions of Section 14 hereof.
(c) The Holders of Convertible Preferred Stock on the Mandatory Conversion
Date shall have the right to receive an amount in cash equal to all accrued,
cumulated and unpaid dividends on the Convertible Preferred Stock, whether or
not declared prior to that date, for the then current Dividend Period until the
Mandatory Conversion Date and all prior Dividend Periods (other than previously
declared dividends on the Convertible Preferred Stock payable to Holders of
record as of a prior date), PROVIDED that the Corporation is legally permitted
to pay such dividends at such time.
(8) Early Conversion at the Option of the Holder. (a) Shares of the
Convertible Preferred Stock are convertible, in whole or in part at the option
of the Holder thereof ("EARLY CONVERSION") at any time prior to the Mandatory
Conversion Date, into shares of Common Stock at the Minimum Conversion Rate,
subject to adjustment as set forth in Section 14 hereof.
(b) Any written notice of conversion pursuant to Section 8 hereof shall be
duly executed by the Holder, and specify:
(i) the number of shares of Convertible Preferred Stock to be
converted;
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(ii) the name(s) in which such Holder desires the shares of Common
Stock issuable upon conversion to be registered and whether such shares of
Common Stock are to be issued in book-entry or certificated form (subject
to compliance with applicable legal requirements if any of such
certificates are to be issued in a name other than the name of the Holder);
(iii) if certificates are to be issued, the address to which such
Holder wishes delivery to be made of such new certificates to be issued
upon such conversion; and
(iv) any other transfer forms, tax forms or other relevant
documentation required and specified by the Transfer Agent, if necessary,
to effect the conversion.
(c) If specified by the Holder in the notice of conversion that shares of
Common Stock issuable upon conversion of the Convertible Preferred Stock shall
be issued to a person other than the Holder surrendering the shares of
Convertible Preferred Stock being converted, the Holder shall pay or cause to be
paid any transfer or similar taxes payable in connection with the shares of
Common Stock so issued.
(d) Upon receipt by the Transfer Agent of a completed and duly executed
notice of conversion as set forth in Section 8(b), compliance with Section 8(c),
if applicable, and upon surrender of a certificate representing share(s) of
Convertible Preferred Stock to be converted (if held in certificated form), the
Corporation shall, within three Business Days or as soon as possible thereafter,
issue and shall instruct the Transfer Agent to register the number of shares of
Common Stock to which such Holder shall be entitled upon conversion in the
name(s) specified by such Holder in the notice of conversion. If a Holder elects
to hold its shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock in certificated form, the Corporation shall promptly send or
cause to be sent, by hand delivery (with receipt to be acknowledged) or by
first-class mail, postage prepaid, to the Holder thereof, at the address
designated by such Holder in the written notice of conversion, a certificate or
certificates representing the number of shares of Common Stock to which such
Holder shall be entitled upon conversion. In the event that there shall have
been surrendered a certificate or certificates representing shares of
Convertible Preferred Stock, only part of which are to be converted, the
Corporation shall issue and deliver to such Holder or such Holder's designee in
the manner provided in the immediately preceding sentence a new certificate or
certificates representing the number of shares of Convertible Preferred Stock
that shall not have been converted.
(e) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of Convertible Preferred Stock in accordance with the terms
hereof shall be deemed effective immediately prior to the close of business on
the day of receipt by the Transfer Agent of the notice of conversion and other
documents, if any, set forth in Section 8(b) hereof, compliance with Section
8(c), if applicable, and the surrender by such Holder or such Holder's designee
of the certificate or certificates representing the shares of Convertible
Preferred Stock to be converted (if held in certificated form), duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto).
(f) A Holder of a share of Convertible Preferred Stock on the Early
Conversion Date with respect to such share shall have the right to receive all
accrued, cumulated
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and unpaid dividends, whether or not declared, for the
portion of the then-current Dividend Period until the Early Conversion Date and
all prior Dividend Periods (other than previously declared dividends on the
Convertible Preferred Stock payable to Holders of record as of a prior date),
PROVIDED that the Corporation is then legally permitted to pay such dividends.
Except as described above, upon any optional conversion of the Convertible
Preferred Stock, the Corporation will make no payment or allowance for unpaid
dividends on the Convertible Preferred Stock.
(9) Provisional Conversion. (a) Prior to the Mandatory Conversion Date, if
the Closing Price of the Common Stock has exceeded 150% of the Threshold
Appreciation Price for at least 20 Trading Days within a period of 30
consecutive Trading Days ending on the Trading Day prior to the date (the
"PROVISIONAL CONVERSION NOTICE DATE") on which the Corporation notifies the
Holders (pursuant to clause (b) below) that it is exercising its option to cause
the conversion of the Convertible Preferred Stock pursuant to this Section 9,
the Corporation may, at its option, cause the conversion of all, but not less
than all, the shares of Convertible Preferred Stock then outstanding into shares
of Common Stock at the Minimum Conversion Rate for each share of Convertible
Preferred Stock, subject to adjustment as set forth in Section 14. The
Corporation shall be able to cause this conversion only if, in addition to
issuing the Holders shares of Common Stock, the Corporation is then legally
permitted to, and does, pay the Holders in cash (i) an amount equal to any
accrued, cumulated and unpaid dividends on the shares of Convertible Preferred
Stock then outstanding, whether or not declared (other than previously declared
dividends on the Convertible Preferred Stock payable to Holders of record as of
a prior date), plus (ii) the present value of all remaining future dividend
payments on the shares of Convertible Preferred Stock then outstanding through
and including the Mandatory Conversion Date. The present value of the remaining
future dividend payments will be computed using a discount rate equal to the
Treasury Yield.
(b) A written notice (the "PROVISIONAL CONVERSION NOTICE") shall be sent by
or on behalf of the Corporation, by first class mail, postage prepaid, to the
Holders of record as they appear on the stock register of the Corporation on the
Provisional Conversion Notice Date (i) notifying such Holders of the election of
the Corporation to convert and of the Provisional Conversion Date (as defined
below), which date shall not be less than 30 days nor be more than 60 days after
the Provisional Conversion Notice Date, and (ii) stating the Corporate Trust
Office of the Transfer Agent at which the shares of Convertible Preferred Stock
called for conversion shall, upon presentation and surrender of the
certificate(s) (if such shares are held in certificated form) evidencing such
shares, be converted, and the Minimum Conversion Rate to be applied thereto. The
Corporation shall also issue a press release containing such information and
publish such information on its website on the World Wide Web, PROVIDED that
failure to issue such press release or publish such information on the
Corporation's website shall not act to prevent or delay conversion pursuant to
this Section 9.
(c) The Corporation shall deliver to the Transfer Agent irrevocable written
instructions authorizing the Transfer Agent, on behalf and at the expense of the
Corporation, to cause the Provisional Conversion Notice to be duly mailed as
soon as practicable after receipt of such irrevocable instructions from the
Corporation and in accordance with the above provisions. The shares of Common
Stock to be issued upon conversion of the Convertible Preferred Stock pursuant
to this Section 9 and all funds necessary for the payment in cash of (i) an
amount equal
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to any accrued, cumulated and unpaid dividends on the shares of Convertible
Preferred Stock then outstanding, whether or not declared (other than previously
declared dividends on the Convertible Preferred Stock payable to Holders of
record as of a prior date), plus (ii) the present value of all remaining future
dividend payments on the shares of Convertible Preferred Stock then outstanding
through and including the Mandatory Conversion Date, shall be deposited with the
Transfer Agent in trust at least one Business Day prior to the Provisional
Conversion Date, for the pro rata benefit of the Holders of record as they
appear on the stock register of the Corporation, so as to be and continue to be
available therefor. Neither failure to mail such Provisional Conversion Notice
to one or more such Holders nor any defect in such Provisional Conversion Notice
shall affect the sufficiency of the proceedings for conversion as to other
Holders.
(d) If a Provisional Conversion Notice shall have been given as
hereinbefore provided, then each Holder shall be entitled to all preferences and
relative, participating, optional and other special rights accorded by this
Certificate of Amendment until and including the Provisional Conversion Date.
From and after the Provisional Conversion Date, upon delivery by the Corporation
of the Common Stock and payment of the funds to the Transfer Agent as described
in paragraph (c) above, the Convertible Preferred Stock shall no longer be
deemed to be outstanding, and all rights of such Holders shall cease and
terminate, except the right of the Holders, upon surrender of certificates
therefor, to receive Common Stock and any amounts to be paid hereunder.
(e) The deposit of monies in trust with the Transfer Agent up to the amount
necessary for the Provisional Conversion shall be irrevocable except that the
Corporation shall be entitled to receive from the Transfer Agent the interest or
other earnings, if any, earned on any monies so deposited in trust, and the
Holders of the shares converted shall have no claim to such interest or other
earnings, and any balance of monies so deposited by the Corporation and
unclaimed by the Holders entitled thereto at the expiration of two years from
the Provisional Conversion Date shall be repaid, together with any interest or
other earnings thereon, to the Corporation, and after any such repayment, the
Holders of the shares entitled to the funds so repaid to the Corporation shall
look only to the Corporation for such payment without interest.
(10) Early Conversion Upon Cash Merger. (a) In the event of a merger or
consolidation of the Corporation of the type described in Section 14(e)(i) in
which the Common Stock outstanding immediately prior to such merger or
consolidation is exchanged for consideration consisting of at least 30% cash or
cash equivalents (any such event, a "CASH MERGER"), then the Holders of the
Convertible Preferred Stock shall have the right to convert their shares of
Convertible Preferred Stock prior to the earlier of the Mandatory Conversion
Date and the Provisional Conversion Notice Date, PROVIDED that the Provisional
Conversion Date occurs within the period contemplated by Section 9(b) hereof,
(such right of the Holders to convert their shares pursuant to this Section
10(a) being the "MERGER EARLY CONVERSION") as provided herein.
(b) On or before the fifth Business Day after the consummation of a Cash
Merger, the Corporation or the corporation surviving the Cash Merger (the
"SURVIVING CORPORATION") or, at the request and expense of the Surviving
Corporation, the Transfer Agent, shall give all Holders notice of the occurrence
of the Cash Merger and of the Merger Early
10
Conversion right arising as a result thereof. The Surviving Corporation shall
also deliver a copy of such notice to the Transfer Agent. Each such notice shall
contain:
(i) the date, which shall be not less than 20 nor more than 35
calendar days after the date of such notice, on which the Merger Early
Conversion will be effected (such date being the "MERGER EARLY CONVERSION
DATE");
(ii) the date, which shall be on, or one Business day prior to, the
Merger Early Conversion Date, by which the Merger Early Conversion right
must be exercised;
(iii) the Conversion Rate in effect on the Trading Day immediately
preceding such Cash Merger (calculated as if the Trading Day immediately
preceding such Cash Merger were the Mandatory Conversion Date) and the kind
and amount of securities, cash and other property receivable per share of
Convertible Preferred Stock by the Holder upon conversion of shares of
Convertible Preferred Stock pursuant to Section 10(d); and
(iv) the instructions a Holder must follow to exercise the Merger
Early Conversion right.
(c) To exercise a Merger Early Conversion right, a Holder shall deliver to
the Transfer Agent at its Corporate Trust Office by 5:00 p.m., New York City
time on or before the date by which the Merger Early Conversion right must be
exercised as specified in the notice, the certificate(s) (if such shares are
held in certificated form) evidencing the shares of Convertible Preferred Stock
with respect to which the Merger Early Conversion right is being exercised, duly
assigned or endorsed for transfer to the Surviving Corporation, or accompanied
by duly executed stock powers relating thereto, or in blank, with a written
notice to the Surviving Corporation stating the Holder's intention to convert
early in connection with the Cash Merger containing the information set forth in
Section 8(b) and providing the Surviving Corporation with payment instructions.
(d) If the Holder exercises its Merger Early Conversion right pursuant to
the terms hereof, on the Merger Early Conversion Date the Surviving Corporation
shall deliver or cause to be delivered the net cash, securities and other
property entitled to be received by such exercising Holder, determined by
assuming the Holder had converted its shares of Convertible Preferred Stock
immediately before the Cash Merger at the Conversion Rate in effect on the
Trading Day immediately preceding such Cash Merger calculated in accordance with
Section 7(b) hereof and that such Holder was not the counterparty to the Cash
Merger or an affiliate of such other party and did not exercise any rights of
election with respect to the kind or amount of consideration to be received. In
the event a Merger Early Conversion right is exercised by a Holder in accordance
with the terms hereof, (i) all references herein to Mandatory Conversion Date
shall be deemed to refer to such Merger Early Conversion Date and (ii) if a
Reorganization Event (other than the Cash Merger) has previously occurred,
"Applicable Market Value" shall be deemed to refer to the Applicable Market
Value of the Exchange Property as determined in accordance with Section 14(e).
If a Holder does not elect to exercise the Merger Early Conversion right
pursuant to this Section 10, in lieu of shares of Common Stock, the Surviving
Corporation shall deliver to such Holder on the Mandatory Conversion Date, the
Provisional
11
Conversion Date or an Early Conversion Date, such net cash, securities and other
property as determined in accordance with Section 14(e) hereof.
(e) Upon a Merger Early Conversion, the Transfer Agent shall, in accordance
with the instructions provided by the Holder thereof in the written notice
provided to the Surviving Corporation as set forth above, deliver to the Holder
such net cash, securities or other property issuable upon such Merger Early
Conversion, together with payment in lieu of any fraction of a share, as
provided herein.
(f) In the event that a Merger Early Conversion is effected with respect to
shares of Convertible Preferred Stock representing less than all the shares of
Convertible Preferred Stock held by a Holder, upon such Merger Early Conversion
the Surviving Corporation shall execute and the Transfer Agent shall, unless
otherwise instructed in writing, countersign and deliver to the Holder thereof,
at the expense of the Surviving Corporation, a certificate evidencing the shares
of Convertible Preferred Stock as to which Merger Early Conversion was not
effected.
(g) In the event that a Merger Early Conversion is effected with respect to
shares of Convertible Preferred Stock, the Holder of such shares on the Merger
Early Conversion Date with respect to such share shall have the right to receive
an amount in cash equal to all accrued, cumulated and unpaid dividends, whether
or not declared prior to the Merger Early Conversion Date, for the portion of
the then-current Dividend Period until the Merger Early Conversion Date and all
prior Dividend Periods (other than previously declared dividends on the
Convertible Preferred Stock payable to Holders of record as of a prior date),
provided that at such time the Corporation is then legally permitted to pay such
dividends.
(11) Conversion Procedures. (a) Upon issuance and delivery to the Transfer
Agent of certificates representing shares of the Common Stock to be delivered
upon conversion of the shares of Convertible Preferred Stock on the Mandatory
Conversion Date, the Provisional Conversion Date, the Merger Early Conversion
Date or any Early Conversion Date (collectively, a "CONVERSION DATE"), dividends
on any shares of Convertible Preferred Stock converted to Common Stock shall
cease to accrue and cumulate, and such shares of Convertible Preferred Stock
shall cease to be outstanding, in each case, subject to the right of Holders of
such shares to receive any accrued, cumulated and unpaid dividends on such
shares to which they are otherwise entitled pursuant to Section (7), (8) or (10)
hereof, as applicable.
(b) The person or persons entitled to receive the Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder(s)
of such shares of Common Stock as of the close of business on the Mandatory
Conversion Date, the Merger Early Conversion Date, the Provisional Conversion
Date or any Early Conversion Date, as the case may be. No allowance or
adjustment, except as set forth in Section 14, shall be made in respect of
dividends payable to holders of Common Stock of record as of any date prior to
such effective date. Prior to such effective date, shares of Common Stock
issuable upon conversion of any shares of Convertible Preferred Stock shall not
be deemed outstanding for any purpose, and Holders of shares of Convertible
Preferred Stock shall have no rights with respect to the Common Stock (including
voting rights, rights to respond to tender offers for the Common Stock
12
and rights to receive any dividends or other distributions on the Common Stock)
by virtue of holding shares of Convertible Preferred Stock.
(c) Shares of Convertible Preferred Stock duly converted in accordance with
this Certificate of Amendment, or otherwise reacquired by the Corporation, will
resume the status of authorized and unissued Preferred Stock, undesignated as to
series and available for future issuance.
(d) In the event that a Holder of shares of Convertible Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or the address
to which the certificate or certificates representing such shares should be
sent, the Corporation shall be entitled to register such shares, and make such
payment, in the name of the Holder of such Convertible Preferred Stock as shown
on the records of the Corporation and to send the certificate or certificates
representing such shares to the address of such Holder shown on the records of
the Corporation.
(12) Reservation of Common Stock. (a) The Corporation shall at all times
reserve and keep available out of its authorized and unissued Common Stock or
shares held in the treasury of the Corporation, solely for issuance upon the
conversion of shares of Convertible Preferred Stock as herein provided, free
from any preemptive or other similar rights, such number of shares of Common
Stock as shall from time to time be issuable upon the conversion of all the
shares of Convertible Preferred Stock then outstanding. For purposes of this
Section 12(a), the number of shares of Common Stock that shall be deliverable
upon the conversion of all outstanding shares of Convertible Preferred Stock
shall be computed as if at the time of computation all such outstanding shares
were held by a single Holder.
(b) Notwithstanding the foregoing, the Corporation shall be entitled to
deliver upon conversion of shares of Convertible Preferred Stock, as herein
provided, shares of Common Stock reacquired and held in the treasury of the
Corporation (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances (other than liens, charges, security
interests and other encumbrances created by the Holders).
(c) All shares of Common Stock delivered upon conversion of the Convertible
Preferred Stock shall be duly authorized, validly issued, fully paid and
non-assessable, free and clear of all liens, claims, security interests and
other encumbrances (other than liens, charges, security interests and other
encumbrances created by the Holders).
(d) Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Convertible Preferred Stock, the
Corporation shall use its reasonable best efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority.
(e) The Corporation hereby covenants and agrees that, if at any time the
Common Stock shall be listed on the New York Stock Exchange or any other
national securities exchange or automated quotation system, the Corporation
will, if permitted by the rules of such
13
exchange or automated quotation system, list and keep listed, so long as the
Common Stock shall be so listed on such exchange or automated quotation system,
all Common Stock issuable upon conversion of the Convertible Preferred Stock;
PROVIDED, HOWEVER, that if the rules of such exchange or automated quotation
system permit the Corporation to defer the listing of such Common Stock until
the first conversion of Convertible Preferred Stock into Common Stock in
accordance with the provisions hereof, the Corporation covenants to list such
Common Stock issuable upon conversion of the Convertible Preferred Stock in
accordance with the requirements of such exchange or automated quotation system
at such time.
(13) Fractional Shares. (a) No fractional shares of Common Stock will be
issued as a result of any conversion of shares of Convertible Preferred Stock.
(b) In lieu of any fractional share of Common Stock otherwise issuable in
respect of any mandatory conversion pursuant to Section 7 hereof, any conversion
at the option of the Corporation pursuant to Section 9 hereof or a conversion at
the option of the holder pursuant to Section 8 or Section 10 hereof, the
Corporation shall pay an amount in cash (computed to the nearest cent) equal to
the same fraction of:
(i) in the case of a conversion pursuant to Section 7 or Section 9
hereof or a Merger Early Conversion pursuant to Section 10, the Current
Market Price; or
(ii) in the case of an Early Conversion pursuant to Section 8 hereof,
the Closing Price of the Common Stock determined as of the second Trading
Day immediately preceding the effective date of conversion.
(c) If more than one share of the Convertible Preferred Stock is
surrendered for conversion at one time by or for the same Holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of the Convertible Preferred
Stock so surrendered.
(14) Anti-Dilution Adjustments to the Fixed Conversion Rates. (a) Each
Fixed Conversion Rate and the number of shares of Common Stock to be delivered
upon conversion shall be subject to the following adjustments.
(i) Stock Dividends and Distributions. In case the Corporation shall
pay or make a dividend or other distribution on the Common Stock in shares
of Common Stock, each Fixed Conversion Rate, as in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution, shall
be increased by dividing such Fixed Conversion Rate 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 of Common Stock
outstanding and the total number of shares of Common Stock constituting
such dividend or other distribution, such increase to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For the purposes of this sub-section (i), the
number of shares of Common Stock at the time outstanding shall not include
shares held in the treasury of the Corporation but shall include any shares
14
issuable in respect of any scrip certificates issued in lieu of fractions
of shares of Common Stock. The Corporation will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Corporation.
(ii) Subdivisions, Splits and Combinations of the Common Stock. In
case outstanding shares of Common Stock shall be subdivided or split into a
greater number of shares of Common Stock, each Fixed Conversion Rate in
effect at the opening of business on the day following the day upon which
such subdivision or split becomes effective shall be proportionately
increased, and, conversely, in case outstanding shares of Common Stock
shall each be combined into a smaller number of shares of Common Stock,
such Fixed Conversion Rate in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day
following the day upon which such subdivision, split or combination becomes
effective.
(iii) Issuance of Stock Purchase Rights. In case the Corporation shall
issue rights or warrants to all holders of its Common Stock (other than
rights or warrants issued pursuant to a dividend reinvestment plan or share
purchase plan or other similar plans), entitling such holders, for a period
of up to 45 days from the date of issuance of such rights or warrants, to
subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price on the date fixed for the determination of
shareholders entitled to receive such rights or warrants, each Fixed
Conversion Rate in effect at the opening of business on the day following
the date fixed for such determination shall be increased by multiplying
such Fixed Conversion Rate by a fraction, the numerator of which 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 and the denominator of
which 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 which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or purchase
would purchase at such Current Market Price, such increase to become
effective immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this clause
(iii), the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Corporation but shall
include any shares issuable in respect of any scrip certificates issued in
lieu of fractions of shares of Common Stock. The Corporation shall not
issue any such rights or warrants in respect of shares of Common Stock held
in the treasury of the Corporation.
(iv) Debt or Asset Distribution. (A) In case the Corporation shall, by
dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, shares of capital stock, securities, cash or
other assets (excluding any dividend or distribution referred to in Section
14(a)(i) or Section 14(a)(ii) hereof, any rights or warrants referred to in
Section 14(a)(iii) hereof, any dividend or distribution paid exclusively in
cash, any consideration payable in connection with a tender or exchange
offer made by the Corporation or any subsidiary of the Corporation, and any
dividend of
15
shares of capital stock of any class or series, or similar equity
interests, of or relating to a subsidiary or other business unit in the
case of a Spin-Off referred to in Section 14(a)(iv)(B) below), each Fixed
Conversion Rate shall be adjusted so that it shall equal the rate
determined by multiplying such Fixed Conversion Rate in effect immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution by a fraction, the
numerator of which shall be the Current Market Price per share of the
Common Stock on the date fixed for such determination and the denominator
of which shall be such Current Market Price per share of the Common Stock
less the then Fair Market Value of the portion of the evidences of
indebtedness, shares of capital stock, securities, cash or other assets so
distributed applicable to one share of 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 shareholders entitled to
receive such distribution. In any case in which this clause (iv)(A) is
applicable, clause (iv)(B) of this Section 14(a) shall not be applicable.
(B) In the case of a Spin-Off, each Fixed Conversion Rate in effect
immediately before the close of business on the record date fixed for
determination of shareholders entitled to receive that distribution will be
increased by multiplying each Fixed Conversion Rate by a fraction, the
numerator of which is the Current Market Price per share of the Common
Stock plus the Fair Market Value of the portion of those shares of capital
stock or similar equity interests so distributed applicable to one share of
Common Stock and the denominator of which is the Current Market Price per
share of the Common Stock. Any adjustment to the Conversion Rate under this
clause (iv)(B) of this Section 14(a) will occur on the 15th Trading Day
from, but excluding, the "ex-date" with respect to the Spin-Off.
(v) Cash Distributions. In case the Corporation shall distribute cash
to all holders of the Common Stock immediately after the close of business
on such date for determination, each Fixed Conversion Rate will be adjusted
by multiplying such Fixed Conversion Rate in effect immediately prior to
the close of business on the date fixed for determination of the
shareholders of the Corporation entitled to receive such distribution by a
fraction, the numerator of which will be the Current Market Price of the
Common Stock on the date fixed for such determination and the denominator
of which will be the Current Market Price of the Common Stock on the date
fixed for such determination minus the amount per share of such dividend or
distribution; PROVIDED, that no adjustment will be made to either Fixed
Conversion Rate for (i) any cash that is distributed in a Reorganization
Event to which Section 14(e) applies or as part of a distribution referred
to in paragraph (iv) of this Section 14(a), (ii) any dividend or
distribution in connection with the liquidation, dissolution or winding up
of the Corporation (iii) any consideration payable in connection with a
tender or exchange offer made by the Corporation or any subsidiary of the
Corporation or (iv) any cash dividends on the Common Stock to the extent
that the aggregate cash dividend per share of Common Stock does not exceed
(x) $0.055 in any fiscal quarter in the case of a quarterly dividend or (y)
$0.22 in the prior twelve months in the case of an annual dividend (each
such number, the "DIVIDEND THRESHOLD AMOUNT"). The Dividend Threshold
Amount is subject to an inversely proportional adjustment whenever the
Fixed Conversion Rates are adjusted, PROVIDED that
16
no adjustment will be made to the Dividend Threshold Amount for any
adjustment made to the Fixed Conversion Rates pursuant to this clause (v)
or clause (iii), (iv), (vi), (vii) or (viii) of this Section 14(a).
If an adjustment is required to be made under this clause (v) as a
result of a distribution that is a quarterly or annual dividend, the
adjustment shall be based upon the amount by which the distribution exceeds
the applicable Dividend Threshold Amount. If an adjustment is required to
be made under this clause as a result of a distribution that is not a
quarterly or annual dividend, the adjustment shall be based upon the full
amount of such distribution.
(vi) Self Tender Offers and Exchange Offers. In case a tender or
exchange offer made by the Corporation or any subsidiary of the Corporation
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 shareholders (based on the acceptance, up to any maximum
specified in the terms of the tender or exchange offer, of Purchased Shares
(as defined below in this Section)) of an aggregate consideration per share
of Common Stock having a Fair Market Value that exceeds the Current Market
Price per share of the Common Stock on the seventh Trading Day next
succeeding the last date on which (the "EXPIRATION TIME") tenders or
exchanges could have been made pursuant to such tender or exchange offer
(as it may be amended), then, and in each such case, immediately prior to
the opening of business on the eighth Trading Day after the date of the
Expiration Time, each Fixed Conversion Rate shall be adjusted so that the
same shall equal the rate determined by dividing such Fixed Conversion Rate
in effect immediately prior to the opening of business on the eighth
Trading Day after the Expiration Time by a fraction (A) the numerator of
which shall be equal to (x) the product of (I) the Current Market Price per
share of the Common Stock on the seventh Trading Day after the Expiration
Time and (II) the number of shares of Common Stock outstanding (including
any shares validly tendered and not withdrawn) at the Expiration Time less
(y) the amount of cash plus the Fair Market Value of the aggregate
consideration payable to shareholders in the tender or exchange offer
(assuming the acceptance, up to any maximum specified in the terms of the
tender or exchange 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 Stock on the seventh Trading Day after the Expiration
Time and (y) the number of shares of Common Stock outstanding (including
any shares validly tendered and not withdrawn) as of the Expiration Time
less the number of all shares validly tendered 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").
(vii) Third Party Tender Offers and Exchange Offers. In case any
Person other than the Corporation or any subsidiary of the Corporation
makes a payment in respect of a tender offer or exchange offer in which, as
of the last time (the "OFFER EXPIRATION TIME") that tenders or exchanges
may be made pursuant to such tender or exchange offer (as it shall have
been amended), the Board of Directors is not recommending rejection of the
offer, then each Fixed Conversion Rate will be adjusted by multiplying the
Fixed Conversion Rate in effect immediately prior to the close of business
on the date of the
17
Offer Expiration Time by a fraction (A) the numerator of which will be the
sum of (x) the Fair Market Value of the aggregate consideration payable to
all holders of Common Stock based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Offer Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred
to as the "ACCEPTED PURCHASED SHARES") and (y) the product of the number of
shares of Common Stock outstanding less any such Accepted Purchased Shares
and the Current Market Price of the Common Stock on the seventh Trading Day
next succeeding the Offer Expiration Time and (B) the denominator of which
will be the product of the number of shares of Common Stock outstanding,
including any such Accepted Purchased Shares, and the Current Market Price
of the Common Stock on the seventh Trading Day next succeeding the Offer
Expiration Time. Such adjustment shall become effective as of the opening
of business on the eighth Trading Day following the Offer Expiration Time.
The adjustment referred to in this clause (vii) will only be made if
(1) the tender offer or exchange offer is for an amount that increases the
offeror's ownership of common stock to more than 30% of the total shares of
Common Stock outstanding; and (2) the cash and Fair Market Value of any
other consideration included in the payment per share of Common Stock
exceeds the Current Market Price of the Common Stock on the seventh Trading
Day next succeeding the Offer Expiration Time.
However, the adjustment referred to in this clause will not be made if
as of the Offer Expiration Time, the offering documents disclose a plan or
an intention to cause the Corporation to engage in a consolidation or
merger or a sale of all or substantially all of the Corporation's assets.
In the event the offeror is obligated to purchase shares pursuant to any
such tender or exchange offer, but such Person is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, each Fixed Conversion Rate shall be readjusted to what would
have been in effect if such tender or exchange offer had not been made.
(viii) Rights Plans. To the extent that the Corporation has a rights
plan in effect on any Conversion Date, upon conversion of any Convertible
Preferred Stock, Holders shall receive, in addition to the Common Stock,
the rights under such rights plan, unless, prior to such Conversion Date,
the rights have separated from the Common Stock, in which case each Fixed
Conversion Rate will be adjusted at the time of separation of such rights
as if the Corporation made a distribution to all holders of the Common
Stock as described in clause (iv) above, subject to readjustment in the
event of the expiration, termination or redemption of such rights.
(b) Adjustment for Tax Reasons. The Corporation may make such increases in
each Fixed Conversion Rate, in addition to any other increases required by this
Section 14, if the Board deems it advisable to avoid or diminish any income tax
to holders of the Common Stock resulting from any dividend or distribution of
shares (or issuance of rights or warrants to acquire shares) or from any event
treated as such for income tax purposes or for any other reasons; PROVIDED that
the same proportionate adjustment must be made to each Fixed Conversion Rate.
18
(c) Calculation of Adjustments. (i) All adjustments to the Conversion Rate
shall be calculated to the nearest 1/10,000th of a share (or, if there is not a
nearest 1/10,000th of a share, to the next lower 1/10,000th of a share) of
Common Stock. Prior to the Mandatory Conversion Date, no adjustment in the
Conversion Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; PROVIDED, that any
adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment;
PROVIDED FURTHER that on the Mandatory Conversion Date, adjustments to the
Conversion Rate will be made with respect to any such adjustment carried forward
and which has not been taken into account before such date. If an adjustment is
made to the Conversion Rate pursuant to Sections 14(a)(i), 14(a)(ii),
14(a)(iii), 14(a)(iv), 14(a)(v), 14(a)(vi), 14(a)(vii) or 14(b), an inversely
proportional adjustment shall also be made to the Threshold Appreciation Price
and the Initial Price solely for purposes of determining which of clauses (i),
(ii) and (iii) of Section 7(b) will apply on the Conversion Date. Such
adjustment shall be made by dividing each of the Threshold Appreciation Price
and the Initial Price by a fraction, the numerator of which shall be the
Conversion Rate immediately after such adjustment pursuant to Sections 14(a)(i),
14(a)(ii), 14(a)(iii), 14(a)(iv), 14(a)(v), 14(a)(vi) or 14(a)(vii) or 14(b) and
the denominator of which shall be the Conversion Rate immediately before such
adjustment; PROVIDED, that if such adjustment to the Conversion Rate is required
to be made pursuant to the occurrence of any of the events contemplated by
Sections 14(a)(i), 14(a)(ii), 14(a)(iii), 14(a)(iv), 14(a)(v), 14(a)(vi) or
14(a)(vii) or 14(b) during the period taken into consideration for determining
the Applicable Market Value, appropriate and customary adjustments shall be made
to the Conversion Rate.
(ii) No adjustment to the Conversion Rate need be made if Holders may
participate in the transaction that would otherwise give rise to an adjustment,
so long as the distributed assets or securities the Holders would receive upon
conversion of the Convertible Preferred Stock, if convertible, exchangeable, or
exercisable, are convertible, exchangeable or exercisable, as applicable,
without any loss of rights or privileges for a period of at least 45 days
following conversion of the Convertible Preferred Stock. The applicable
Conversion Rate shall not be adjusted:
(A) upon the issuance of any shares of the Common Stock pursuant to
any present or future plan providing for the reinvestment of dividends or
interest payable on the Corporation's securities and the investment of
additional optional amounts in shares of Common Stock under any plan;
(B) upon the issuance of any shares of the Common Stock or rights or
warrants to purchase those shares pursuant to any present or future
employee, director or consultant benefit plan or program of or assumed by
the Corporation or any of its subsidiaries;
(C) upon the issuance of any shares of the Common Stock pursuant to
any option, warrant, right or exercisable, exchangeable or convertible
security outstanding as of the date shares of the Convertible Preferred
Stock were first issued;
(D) for a change in the par value or no par value of the Common Stock;
or
(E) for accrued, cumulated and unpaid dividends.
19
(iii) The Corporation shall have the power to resolve any ambiguity or
correct any error in this Section 14 and its action in so doing, as
evidenced by a resolution of the Board, or a duly authorized committee
thereof, shall be final and conclusive.
(d) Notice of Adjustment. Whenever each Fixed Conversion Rate is to be
adjusted in accordance with Section 14(a) or (b), the Corporation shall: (i)
compute each Fixed Conversion Rate in accordance with Section 14(a) or (b) and
prepare and transmit to the Transfer Agent an Officer's Certificate setting
forth each Fixed Conversion Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon which such
adjustment is based; (ii) as soon as practicable following the occurrence of an
event that requires an adjustment to each Fixed Conversion Rate pursuant to
Section 14(a) or (b) hereof (or if the Corporation is not aware of such
occurrence, as soon as practicable after becoming so aware), provide, or cause
to be provided, a written notice to the Holders of the Convertible Preferred
Stock of the occurrence of such event; and (iii) as soon as practicable
following the determination of each revised Fixed Conversion Rate in accordance
with Section 14(a) or (b) hereof, a statement setting forth in reasonable detail
the method by which the adjustment to each Fixed Conversion Rate was determined
and setting forth each revised Fixed Conversion Rate.
(e) Reorganization Events. In the event of:
(i) any consolidation or merger of the Corporation with or into
another Person (other than a merger or consolidation in which the
Corporation is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation is not
exchanged for cash, securities or other property of the Corporation or
another Person);
(ii) any sale, transfer, lease or conveyance to another Person of all
or substantially all of the property and assets of the Corporation;
(iii) any reclassification of Common Stock into securities including
securities other than Common Stock; or
(iv) any statutory exchange of securities of the Corporation with
another Person (other than in connection with a merger or acquisition) (any
such event specified in this Section 14(e), a "REORGANIZATION EVENT");
each share of Convertible Preferred Stock outstanding immediately prior to such
Reorganization Event shall, after such Reorganization Event, be convertible into
the kind of securities, cash and other property receivable in such
Reorganization Event (without any interest thereon and without any right to
dividends or distribution thereon which have a record date that is prior to the
Conversion Date) per share of Common Stock (the "EXCHANGE PROPERTY") by a holder
of Common Stock that (1) is not a person with which the Corporation consolidated
or into which the Corporation merged or which merged into the Corporation or to
which such sale or transfer was made, as the case may be (any such person, a
"CONSTITUENT PERSON"), or an Affiliate of a Constituent Person to the extent
such Reorganization Event provides for different treatment of Common Stock held
by Affiliates of the Corporation and non-Affiliates, and (2) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other
20
property receivable upon such Reorganization Event (PROVIDED that if the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("NON-ELECTING SHARE"), then, for the purpose of
this Section 14(e) the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each Non-electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
Non-electing Shares). The amount of Exchange Property receivable upon conversion
of any Convertible Preferred Stock in accordance with Section 7, 8 or 9 hereof
shall be determined based upon the Conversion Rate in effect on such Conversion
Date. The applicable Conversion Rate shall be (x) the Minimum Conversion Rate,
in the case of an Early Conversion Date or a Provisional Conversion Date, and
(y) determined based upon the definition of Conversion Rate set forth in Section
7, in the case of the Mandatory Conversion Date.
For purposes of this Section 14(e), "APPLICABLE MARKET VALUE" shall be
deemed to refer to the Applicable Market Value of the Exchange Property and such
value shall be determined (A) with respect to any publicly traded securities
that compose all or part of the Exchange Property, based on the Closing Price of
such securities, (B) in the case of any cash that composes all or part of the
Exchange Property, based on the amount of such cash and (C) in the case of any
other property that composes all or part of the Exchange Property, based on the
value of such property, as determined by a nationally recognized independent
investment banking firm retained by the Corporation for this purpose. For
purposes of this Section 14(e), the term "CLOSING PRICE" shall be deemed to
refer to the closing sale price, last quoted bid price or mid-point of the last
bid and ask prices, as the case may be, of any publicly traded securities that
comprise all or part of the Exchange Property. For purposes of this Section
14(e), references to Common Stock in the definition of "TRADING DAY" shall be
replaced by references to any publicly traded securities that comprise all or
part of the Exchange Property.
The above provisions of this Section 14(e) shall similarly apply to
successive Reorganization Events and the provisions of Section 14 shall apply to
any shares of capital stock of the Corporation (or any successor) received by
the holders of Common Stock in any such Reorganization Event.
The Corporation (or any successor) shall, within 20 days of the occurrence
of any Reorganization Event, provide written notice to the Holders of such
occurrence of such event and of the kind and amount of the cash, securities or
other property that constitutes the Exchange Property. Failure to deliver such
notice shall not affect the operation of this Section 14(e).
(15) Replacement Stock Certificates. (a) If physical certificates are
issued, and any of the Convertible Preferred Stock certificates shall be
mutilated, lost, stolen or destroyed, the Corporation shall, at the expense of
the Holder, issue, in exchange and in substitution for and upon cancellation of
the mutilated Convertible Preferred Stock certificate, or in lieu of and
substitution for the Convertible Preferred Stock certificate lost, stolen or
destroyed, a new Convertible Preferred Stock certificate of like tenor and
representing an equivalent amount of shares of Convertible Preferred Stock, but
only upon receipt of evidence of such loss, theft or destruction of such
Convertible Preferred Stock certificate and indemnity, if requested,
satisfactory to the Corporation and the Transfer Agent.
21
(b) The Corporation is not required to issue any certificates representing
the Convertible Preferred Stock on or after the Mandatory Conversion Date or any
Provisional Conversion Date. In lieu of the delivery of a replacement
certificate following the Mandatory Conversion Date or any Provisional
Conversion Date, the Transfer Agent, upon delivery of the evidence and indemnity
described above, will deliver the shares of Common Stock issuable pursuant to
the terms of the Convertible Preferred Stock formerly evidenced by the
certificate.
(16) Transfer Agent, Registrar and Paying Agent. The duly appointed
Transfer Agent, Registrar and Paying Agent for the Convertible Preferred Stock
shall be The Bank of New York. The Corporation may, in its sole discretion,
remove the Transfer Agent in accordance with the agreement between the
Corporation and the Transfer Agent; PROVIDED that the Corporation shall appoint
a successor transfer agent who shall accept such appointment prior to the
effectiveness of such removal. Upon any such removal or appointment, the
Corporation shall send notice thereof by first-class mail, postage prepaid, to
the Holders of the Convertible Preferred Stock.
(17) Form. (a) Convertible Preferred Stock shall be issued in the form of
one or more permanent global shares of Convertible Preferred Stock in
definitive, fully registered form with the global legend (the "GLOBAL SHARES
LEGEND"), as set forth on the form of Convertible Preferred Stock certificate
attached hereto as Exhibit A (each, a "GLOBAL PREFERRED SHARE"), which is hereby
incorporated in and expressly made a part of this Certificate of Amendment. The
Global Preferred Share may have notations, legends or endorsements required by
law, stock exchange rules, agreements to which the Corporation is subject, if
any, or usage (PROVIDED that any such notation, legend or endorsement is in a
form acceptable to the Corporation). The Global Preferred Share shall be
deposited on behalf of the holders of the Convertible Preferred Stock
represented thereby with the Registrar, at its New York office, as custodian for
DTC or a Depositary, and registered in the name of the Depositary or a nominee
of the Depositary, duly executed by the Corporation and countersigned and
registered by the Registrar as hereinafter provided. The aggregate number of
shares represented by each Global Preferred Share may from time to time be
increased or decreased by adjustments made on the records of the Registrar and
the Depositary or its nominee as hereinafter provided. This Section 17(a) shall
apply only to a Global Preferred Share deposited with or on behalf of the
Depositary. The Corporation shall execute and the Registrar shall, in accordance
with this Section, countersign and deliver initially one or more Global
Preferred Shares that (i) shall be registered in the name of Cede & Co. or other
nominee of the Depositary and (ii) shall be delivered by the Registrar to Cede &
Co. or pursuant to instructions received from Cede & Co. or held by the
Registrar as custodian for the Depositary pursuant to an agreement between the
Depositary and the Registrar. Members of, or participants in, the Depositary
("AGENT MEMBERS") shall have no rights under this Certificate with respect to
any Global Preferred Share held on their behalf by the Depositary or by the
Registrar as the custodian of the Depositary or under such Global Preferred
Share, and the Depositary may be treated by the Corporation, the Registrar and
any agent of the Corporation or the Registrar as the absolute owner of such
Global Preferred Share for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Corporation, the Registrar or any
agent of the Corporation or the Registrar from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices of the Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global
22
Preferred Share. The Holder of the Convertible Preferred Shares may grant
proxies or otherwise authorize any Person to take any action that a Holder is
entitled to take pursuant to the Convertible Preferred Shares, this Certificate
of Amendment or the Certificate of Incorporation. Owners of beneficial interests
in Global Preferred Shares shall not be entitled to receive physical delivery of
certificated shares of Convertible Preferred Stock, unless (x) the Depositary is
unwilling or unable to continue as Depositary for the Global Preferred Share and
the Corporation does not appoint a qualified replacement for the Depositary
within 90 days, (y) the Depositary ceases to be a "clearing agency" registered
under the Exchange Act and the Corporation does not appoint a qualified
replacement for the Depositary within 90 days or (z) the Corporation decides to
discontinue the use of book-entry transfer through the Depositary. In any such
case, the Global Preferred Share shall be exchanged in whole for definitive
shares of Convertible Preferred Stock in registered form, with the same terms
and of an equal aggregate Liquidation Preference. Definitive shares of
Convertible Preferred Stock shall be registered in the name or names of the
Person or Person specified by the Depositary in a written instrument to the
Registrar.
(b) (i) An Officer shall sign the Global Preferred Share for the
Corporation, in accordance with the Corporation's bylaws and applicable law, by
manual or facsimile signature.
(ii) If an Officer whose signature is on a Global Preferred Share no longer
holds that office at the time the Transfer Agent countersigned the Global
Preferred Share, the Global Preferred Share shall be valid nevertheless.
(iii) A Global Preferred Share shall not be valid until an authorized
signatory of the Transfer Agent manually countersigns Global Preferred Share.
Each Global Preferred Share shall be dated the date of its countersignature.
(18) Miscellaneous. (a) All notices referred to herein shall be in writing,
and, unless otherwise specified herein, all notices hereunder shall be deemed to
have been given upon the earlier of receipt thereof or three Business Days after
the mailing thereof if sent by registered or certified mail (unless first-class
mail shall be specifically permitted for such notice under the terms of this
Certificate of Amendment) with postage prepaid, addressed: (i) if to the
Corporation, to its office at 2000 Galloping Hill Road, Kenilworth, NJ 07033
(Attention: the Secretary) or to the Transfer Agent at its Corporate Trust
Office, or other agent of the Corporation designated as permitted by this
Certificate of Amendment, or (ii) if to any Holder of the Convertible Preferred
Stock or holder of shares of Common Stock, as the case may be, to such Holder at
the address of such Holder as listed in the stock record books of the
Corporation (which may include the records of any transfer agent for the
Convertible Preferred Stock or Common Stock, as the case may be), or (iii) to
such other address as the Corporation or any such Holder, as the case may be,
shall have designated by notice similarly given.
(b) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of Convertible Preferred Stock or shares of Common Stock or other securities
issued on account of Convertible Preferred Stock pursuant hereto or certificates
representing such shares or securities. The Corporation shall not, however, be
required to pay any such tax that may be payable in respect of
23
any transfer involved in the issuance or delivery of shares of Convertible
Preferred Stock or Common Stock or other securities in a name other than that in
which the shares of Convertible Preferred Stock with respect to which such
shares or other securities are issued or delivered were registered, or in
respect of any payment to any person other than a payment to the registered
holder thereof, and shall not be required to make any such issuance, delivery or
payment unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid or is not payable.
(c) The Liquidation Preference and the annual dividend rate set forth
herein each shall be subject to equitable adjustment whenever there shall occur
a stock split, combination, reclassification or other similar event involving
the Convertible Preferred Stock. Such adjustments shall be determined in good
faith by the Board and submitted by the Board to the Transfer Agent.
(19) Definitions. Unless otherwise defined herein, capitalized terms used
in this Certificate of Amendment shall have the following meanings:
"ACCEPTED PURCHASED SHARES" shall have the meaning set forth in Section
14(a)(vii) hereof.
"AFFILIATE" shall have the meaning given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"AGENT MEMBERS" shall have the meaning set forth in Section 17(a) hereof.
"APPLICABLE MARKET VALUE" means the average of the Closing Prices per share
of the Common Stock on each of the 20 consecutive Trading Days ending on the
third Trading Day immediately preceding the Mandatory Conversion Date.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar federal
or state law for the relief of debtors.
"BOARD" means the Board of Directors of the Corporation.
"BUSINESS DAY" means any day other than a Saturday or Sunday or any other
day on which banks in The City of New York are authorized or required by law or
executive order to close.
"CASH MERGER" shall have the meaning set forth in Section 10(a) hereof.
"CERTIFICATE OF AMENDMENT" means the Certificate of Amendment of the
Certificate of Incorporation dated August 5, 2004.
"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation of
the Corporation, as amended.
24
"CLOSING PRICE" means, as of any date of determination, the closing sale
price or, if no closing sale price is reported, the last reported sale price, of
the Common Stock or any securities distributed in a Spin-Off, as the case may
be, on the New York Stock Exchange on that date. If the Common Stock or any such
securities distributed in a Spin-Off, as the case may be, is not then traded on
the New York Stock Exchange on any date of determination, the Closing Price of
the Common Stock or such securities on any date of determination means the
closing sale price as reported in the composite transactions for the principal
U.S. national or regional securities exchange on which the Common Stock or such
securities is so listed or quoted, or if the Common Stock or such securities is
not so listed or quoted on a U.S. national or regional securities exchange, as
reported by the Nasdaq stock market, or, if no closing price for the Common
Stock or such securities is so reported, the last quoted bid price for the
Common Stock or such securities in the over-the-counter market as reported by
the National Quotation Bureau or similar organization, or, if that bid price is
not available, the market price of the Common Stock or such securities on that
date as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Corporation. For the purposes of this
Certificate of Amendment, all references herein to the closing sale price of the
Common Stock on the New York Stock Exchange shall be such closing sale price as
reflected on the website of the New York Stock Exchange (www.nyse.com) and as
reported by Bloomberg Professional Service; provided that in the event that
there is a discrepancy between the closing sale price as reflected on the
website of the New York Stock Exchange and as reported by Bloomberg Professional
Service, the closing sale price on the website of the New York Stock Exchange
shall govern.
"COMMON STOCK" as used in this Certificate of Amendment means the
Corporation's Common Shares, par value $0.50 per share, as the same exists at
the date of filing of this Certificate of Amendment relating to the Convertible
Preferred Stock, or any other class of stock resulting from successive changes
or reclassifications of such Common Shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
However, subject to the provisions of Section 14(e), shares of Common Stock
issuable on conversion of shares of Convertible Preferred Stock shall include
only shares of the class designated as Common Shares of the Corporation at the
date of the filing of this Certificate of Amendment with the Secretary of State
of the State of New Jersey or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation and which
are not subject to redemption by the Corporation; PROVIDED that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to the
total number of shares of all classes resulting from all such reclassifications.
"CONVERSION DATE" shall have the meaning set forth in Section 11(a) hereof.
"CONVERSION RATE" shall have the meaning set forth in Section 7(b) hereof.
"CONVERTIBLE PREFERRED STOCK" shall have the meaning set forth in Section 1
hereof.
25
"CORPORATE TRUST OFFICE" means the principal corporate trust office of the
Transfer Agent at which, at any particular time, its corporate trust business
shall be administered.
"CURRENT MARKET PRICE" per share of Common Stock on any date means the
average of the daily Closing Prices for the five consecutive Trading Days
preceding the earlier of the day preceding the date in question and the day
before the "ex date" with respect to the issuance or distribution requiring such
computation. The term "ex date," when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades without the
right to receive the issuance or distribution. For the purposes of determining
the adjustment to the Conversion Rate for the purposes of Section 14(a)(iv)(B)
hereof the Current Market Price per share of Common Stock means the average of
the Closing Prices over the first ten Trading Days commencing on and including
the fifth Trading Day following the "ex-date" for such distribution.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
"DEPOSITARY" means DTC or its nominee or any successor appointed by the
Corporation.
"DIVIDEND PAYMENT DATE" means (i) the 15th calendar day of March, June,
September and December of each year, or the following Business Day if such day
is not a Business Day, prior to the Mandatory Conversion Date and (ii) the
Mandatory Conversion Date.
"DIVIDEND PERIOD" means the period ending on the day before a Dividend
Payment Date and beginning on the preceding Dividend Payment Date or, if there
is no preceding Dividend Payment Date, on the first date of issuance of the
Convertible Preferred Stock.
"DIVIDEND THRESHOLD AMOUNT" shall have the meaning set forth in Section
14(a)(v) hereof.
"DTC" means The Depository Trust Company.
"EARLY CONVERSION" shall have the meaning set forth in Section 8(a) hereof.
"EARLY CONVERSION DATE" means the effective date of any early conversion of
Convertible Preferred Stock pursuant to Section 8 hereof.
"EXCHANGE PROPERTY" shall have the meaning set forth in Section 14(e)
hereof.
"EXPIRATION TIME" shall have the meaning set forth in Section
14(a)(vi) hereof.
"FAIR MARKET VALUE" means (a) in the case of any Spin-Off, the fair market
value of the portion of those shares of capital stock or similar equity
interests so distributed applicable to one share of Common Stock as of the
fifteenth Trading Day after the "ex-date" for such Spin-Off, and (b) in all
other cases the fair market value as determined in good faith by the Board,
whose determination shall be conclusive and described in a resolution of the
Board.
26
"FIXED CONVERSION RATES" means the Maximum Conversion Rate and the Minimum
Conversion Rate.
"GLOBAL PREFERRED SHARE" shall have the meaning set forth in Section 17(a)
hereof.
"GLOBAL SHARES LEGEND" shall have the meaning set forth in Section 17(a)
hereof.
"HOLDER" means the person in whose name the shares of the Convertible
Preferred Stock are registered, which may be treated by the Corporation and the
Transfer Agent as the absolute owner of the shares of Convertible Preferred
Stock for the purpose of making payment and settling conversions and for all
other purposes.
"INITIAL PRICE" shall have the meaning set forth in Section 7(b) hereof.
"JUNIOR SECURITIES" shall have the meaning set forth in Section 2 hereof.
"LIQUIDATION PREFERENCE" means, as to the Convertible Preferred Stock,
$50.00 per share.
"MANDATORY CONVERSION DATE" means September 14, 2007 or as otherwise
treated as having occurred pursuant to Section 10(b)(iii), 10(d) or 14(e), as
applicable.
"MAXIMUM CONVERSION RATE" shall have the meaning set forth in Section
7(b)(iii) hereof.
"MERGER EARLY CONVERSION" shall have the meaning set forth in Section 10(a)
hereof.
"MERGER EARLY CONVERSION DATE" shall have the meaning set forth in Section
10(b) hereof.
"MINIMUM CONVERSION RATE" shall have the meaning set forth in Section
7(b)(i) hereof.
"NON-ELECTING SHARE" shall have the meaning set forth in Section 14(e)
hereof.
"OFFER EXPIRATION TIME" shall have the meaning set forth in Section
14(a)(vii) hereof.
"OFFICER" means the Chief Executive Officer, the Chief Operating Officer,
any Vice President, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Corporation.
"OFFICER'S CERTIFICATE" means a certificate of the Corporation, signed by
any duly authorized Officer of the Corporation.
"PARITY SECURITIES" shall have the meaning set forth in Section 2 hereof.
27
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company or trust.
"PREFERRED STOCK DIRECTOR" shall have the meaning set forth in Section 5(c)
hereof.
"PROVISIONAL CONVERSION DATE" means the date fixed for conversion of shares
of Convertible Preferred Stock into shares of Common Stock pursuant to Section 9
above or, if the Corporation shall default in the cash payment of (1) an amount
equal to any accrued, cumulated and unpaid dividends on the shares of
Convertible Preferred Stock then outstanding, whether or not declared (other
than previously declared dividends on the Convertible Preferred Stock payable to
Holders of record as of a prior date), plus (2) the present value of all
remaining future dividend payments on the shares of Convertible Preferred Stock
then outstanding, through and including the Mandatory Conversion Date, in each
case, when the Corporation is legally permitted to and makes such payment.
"PROVISIONAL CONVERSION NOTICE" shall have the meaning set forth in Section 9(b)
hereof.
"PROVISIONAL CONVERSION NOTICE DATE" shall have the meaning set forth in
Section 9(a) hereof.
"PURCHASED SHARES" shall have the meaning set forth in Section 14(a)(vi)
hereof.
"RECORD DATE" means the later of (i) the 1st calendar day (or the following
Business Day if the 1st calendar day is not a Business Day) of the calendar
month in which the applicable Dividend Payment Date falls and (ii) the close of
business on the day on which the Board, or an authorized committee of the Board,
declares the dividend payable.
"RECORD HOLDER" means the Holder of record of the Convertible Preferred
Stock as they appear on the stock register of the Corporation at the close of
business on a Record Date.
"REORGANIZATION EVENT" shall have the meaning set forth in Section 14(e)
hereof.
"SENIOR SECURITIES" shall have the meaning set forth in Section 2 hereof.
"SERIES A PREFERRED STOCK" means the Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Corporation.
"SPIN-OFF" means a dividend or other distribution of shares of capital
stock of any class or series, or similar equity interests, of or relating to a
subsidiary or other business unit of the Corporation.
"SURVIVING CORPORATION" shall have the meaning set forth in Section 10(b)
hereof.
"THRESHOLD APPRECIATION PRICE" shall have the meaning set forth in Section
7(b) hereof.
28
"TRADING DAY" means a day on which the Common Stock:
(a) is not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at the close
of business; and
(b) has traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the primary
market for the trading of the Common Stock.
"TRANSFER AGENT" means The Bank of New York acting as transfer agent,
registrar and paying agent for the Convertible Preferred Stock, and its
successors and assigns.
"TREASURY YIELD" means the yield to maturity at the time of computation of
U.S. Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two Business Days prior to the Provisional
Conversion Date (or, if such Statistical Release is no longer published, any
publicly available source for similar market data)) most nearly equal to the
then remaining term to the Mandatory Conversion Date; PROVIDED, HOWEVER, that if
the then remaining term to the Mandatory Conversion Date is not equal to the
constant maturity of a U.S. Treasury security for which a weekly average yield
is given, the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of U.S. Treasury securities for which such yields are given, except that if the
then remaining term to the Mandatory Conversion Date is less than one year, the
weekly average yield on actually traded U.S. Treasury securities adjusted to a
constant maturity of one year shall be used.
29
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be duly executed by the undersigned this 5th day of
August, 2004.
SCHERING-PLOUGH CORPORATION
By: /s/ E. Kevin Moore
-----------------------------------------------
Name: E. Kevin Moore
Title: Vice President & Treasurer
EXHIBIT A
FORM OF 6.00% MANDATORY CONVERTIBLE PREFERRED STOCK
SEE REVERSE
FOR LEGEND
Number: [ ]
6.00% Mandatory Convertible Preferred Stock [ ] Shares
SCHERING-PLOUGH CORPORATION CUSIP NO.: [ ]
FACE OF SECURITY
This certifies that Cede & Co. is the owner of fully paid and
non-assessable shares of the 6.00% Mandatory Convertible Preferred Stock, par
value $1.00 each of Schering-Plough Corporation (hereinafter called the
Corporation), transferable on the books of the Corporation by the holder hereof
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed. This Certificate and the shares represented hereby are issued
and shall be held subject to all the provisions of the Certificate of
Incorporation of Schering-Plough Corporation and all amendments thereto (copies
of which are on file at the office of the Transfer Agent) to all of which the
holder of this Certificate by acceptance hereof assents. This Certificate is not
valid until countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated Countersigned and Registered
The Bank of New York
Transfer Agent and Registrar
By
-------------------------- --------------- -----------------
Authorized Signature Secretary Chairman and Chief
Executive Officer
REVERSE OF SECURITY
SCHERING-PLOUGH CORPORATION
The shares of 6.00% Mandatory Convertible Preferred Stock (the "MANDATORY
CONVERTIBLE PREFERRED STOCK") will automatically convert on September 14, 2007
into a number of common shares, par value $0.50 per share, of the Corporation
(the "COMMON SHARES") as provided in the Certificate of Amendment of the
Certificate of Incorporation of the Corporation relating to the Mandatory
Convertible Preferred Stock (the "CERTIFICATE OF AMENDMENT"). The shares of the
Mandatory Convertible Preferred Stock are also convertible at the option of
either the holder or the Corporation, respectively, into Common Shares at any
time prior to September 14, 2007 as provided in the Certificate of Amendment.
The preceding description is qualified in its entirety by reference to the
Certificate of Amendment, a copy of which will be furnished by the Corporation
to any shareholder without charge upon request addressed to the Secretary of the
Corporation at its principal office in Kenilworth, New Jersey, or to the
Transfer Agent named on the face of this certificate.
The Corporation will furnish to any shareholders, upon request, and without
charge, a full statement of the designations, relative rights, preferences and
limitations of the shares of each class and series authorized to be issued so
far as the same have been determined and of the authority of the Board to divide
the shares into classes or series and to determine and change the relative
rights, preferences and limitations of any class or series. Any such request
should be addressed to the Secretary of the Corporation at its principal office
in Kenilworth, New Jersey, or to the Transfer Agent named on the face of this
certificate.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CORPORATION OR
THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
CERTIFICATE OF AMENDMENT. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE SUCH
CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE
TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
ASSIGNMENT
FOR VALUE RECEIVED, ------------------ HEREBY SELL, ASSIGN AND TRANSFER UNTO
Please Insert Social Security or
Other Identifying Number of Assignee
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(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)
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SHARES OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
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ATTORNEY TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION
WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED __________________
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NOTICE: The Signature to this Assignment Must Correspond
with the Name As Written Upon the Face
of the Certificate in Every Particular,
Without Alteration or Enlargement or Any
Change Whatever.
SIGNATURE GUARANTEED
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(Signature Must Be Guaranteed by a Member
of a Medallion Signature Program)