EXHIBIT 99.26
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
THE SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
BOSTON PROPERTIES, INC.
________________
Boston Properties, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), does hereby certify:
That, pursuant to authority conferred upon the Board of Directors of the
Corporation by the Amended and Restated Certificate of Incorporation of said
Corporation, and pursuant to the provisions of Section 151 the Delaware General
Corporation Law, said Board of Directors, at a meeting duly held on September
__, 1998, adopted a resolution providing for the designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of a series of preferred stock, which
resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Amended and Restated
Certificate of Incorporation of the Corporation, a series of preferred stock of
the Corporation designated as Series A Convertible Redeemable Preferred Stock
be, and it hereby is, created and authorized, and the issuance thereof is
provided for, and that the designation and number of shares, and relative
rights, preferences and powers thereof, shall be as set forth in the form
appended hereto as Exhibit A.
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IN WITNESS WHEREOF, Boston Properties, Inc. has caused this certificate to
be executed in its name and on its behalf by its _____________ as of this ___
day of ______, 1998.
BOSTON PROPERTIES, INC.
By:
-------------------------
Name:
Title:
EXHIBIT A
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(1) Designation and Number. A series of Preferred Stock, designated the
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"Series A Convertible Redeemable Preferred Stock" (the "Series A Preferred
Stock") is hereby established. The number of shares of Series A Preferred
Stock hereby authorized shall be two million (2,000,000).
(2) Definitions. For purposes of the Series A Preferred Stock, the following
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terms shall have the meanings indicated:
"Cash Business Combination" means a Transaction in which the fair market
value of the aggregate consideration into which the outstanding shares of
Common Stock are or will be exchanged or converted, or which holders of
such shares will be entitled to receive, consists of 40% or less voting
common equity. In determining whether a Transaction is a Cash Business
Combination, the following will apply: (a) if elections for the type of
consideration may be made by the holders of Common Stock, it will be
assumed that all holders of Common Stock elect or will elect consideration
other than voting common equity, (b) the determination shall be made in
good faith by the Board of Directors, based on the fair market values of
the consideration to be issued in the Transaction as of the date the
definitive merger or other agreement relating thereto is entered into, and
(c) if any of the consideration to be issued in the Transaction is a
publicly traded security, the fair market value of that security shall be
the Current Market Price of such security as of the date the definitive
merger or other agreement relating thereto is entered into.
"Common Stock" shall mean the common stock, par value $.01 per share, of
the Corporation.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which each share of Series A Preferred Stock is convertible, as
such Conversion Price may be adjusted pursuant to Section 7 hereof. The
initial Conversion Price shall be an amount equal to $38.10.
"Conversion Date" shall have the meaning set forth in paragraph (d) of
Section 7 hereof.
"Conversion Period" shall have the meaning set forth in paragraph (a) of
Section 7 hereof.
"Conversion Right" shall have the meaning set forth in paragraph (a) of
Section 7 hereof.
"Current Market Price" of a share of Common Stock or of a publicly traded
security of any other issuer for any day shall mean the last reported sales
price, regular way, on
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such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either
case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on the Nasdaq National Market or, if such
security is not quoted on such Nasdaq National Market, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by Nasdaq or, if bid and asked prices for such security on such
day shall not have been reported through Nasdaq, the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly
making a market in such security selected for such purpose by the Chief
Executive Officer of the Corporation.
"Dividend Payment Date" shall mean the fifteenth day of February, May,
August and November, in each year, commencing on ___________, 199_;
provided, however, that if any Dividend Payment Date falls on any day other
than a Business Day, the dividend payment due on such Dividend Payment Date
shall be paid on the first Business Day immediately following such Dividend
Payment Date.
"Dividend Periods" shall mean quarterly dividend periods from and after a
Dividend Payment Date and to and excluding the next succeeding Dividend
Payment Date (other than the initial Dividend Period, which shall commence
on the day after the Issue Date and end on and exclude __________, 199_)
"Fair Market Value" shall mean the average of the daily Current Market
Prices per share of Common Stock during the ten (10) consecutive Trading
Days selected by the Corporation commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day 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 day on which shares of Common
Stock trade regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, used to
determine that day's Current Market Price.
"Forced Conversion" has the meaning set forth in Section 7(b) hereof.
"Forced Conversion Amount" shall mean the number of shares of Series A
Preferred Stock which the Corporation may require to be converted as
provided in paragraph 7(b).
"Forced Conversion Option" shall have the meaning set forth in paragraph
(b) of Section 7 hereof.
"Issue Date" shall mean ____________, 199_ [the date the shares are
purchased].
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"Junior Preferred Stock" shall mean any class or series of capital stock of
the Corporation the holders of which are entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, junior in priority to the holders of the
Series A Preferred Stock, but senior in priority to the holders of Common
Stock.
"Junior Stock" shall mean the Common Stock and any other class or series of
capital stock of the Corporation constituting junior stock within the
meaning set forth in paragraph (a) of Section 9 hereof.
"Liquidation Preference" shall have the meaning set forth in paragraph (a)
of Section 4 hereof.
"Option Strike Date" shall have the meaning set forth in paragraph (a) of
Section 5 hereof.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section
9 hereof.
"Partnership" shall mean Boston Properties Limited Partnership, a Delaware
limited partnership, or any successor entity.
"Preferred Rate" shall mean, at any given time, the rate per annum as to
which dividends accrue on each share of Series A Preferred Stock, based on
the Liquidation Preference, for purposes of determining the Stated
Quarterly Dividend in effect at such time, as set forth in the following
schedule:
Time Period Preferred Rate
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[Issue Date] to March 31, 1999 5.0%
April 1, 1999 to December 31, 1999 5.5%
January 1, 2000 to December 31, 2000 5.625%
January 1, 2001 to December 31, 2001 6.0%
January 1, 2002 to December 31, 2002 6.5%
January 1, 2003 to _______, 2009
[up to the midpoint of year 11] 7.0%
________, 2009 and thereafter 6.0%
"Ratchet Dividend" shall mean for each Dividend Payment Date a dividend
payable, if applicable, per share of Series A Preferred Stock in respect of
the Dividend Period ending on such Dividend Payment Date. The Ratchet
Dividend for each Dividend Period shall be equal to the dividend which
would have been paid in respect of such share of Series A Preferred Stock
had (i) such share of Series A Preferred Stock been converted into (x) a
number of shares of Common Stock determined by dividing the Liquidation
Preference by the Conversion Price in effect on such Dividend Payment Date
and any (y) Other Securities (as defined below) issuable upon such
conversion and (ii) there had been paid in respect of each such share of
Common Stock and Other Securities (including any fractional portion thereof
to the fourth decimal) a dividend (the "Regular Dividend") equal to the
regular, quarterly cash dividend paid to holders
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of record of Common Stock and Other Securities on that record date (the
"Reference Record Date") which is closest to the end of the calendar
quarter preceding such Dividend Payment Date. For purposes of determining
the Ratchet Dividend, in the event that a special cash dividend or
distribution was paid to holders of Common Stock and Other Securities on
the Reference Record Date or at any time prior to the Reference Record Date
and after the last record date for regular, quarterly cash dividends, then
in such event the Ratchet Dividend shall include, in addition to the
Regular Dividend paid in respect of the Reference Record Date, the amount
of such special cash dividend or distribution paid in respect of each share
of Common Stock or Other Security (for clarity, it is noted that the effect
of this sentence is to assure that in calculating the Ratchet Dividend the
holders of Series A Preferred Stock will benefit from any cash dividends or
distributions paid in respect of Common Stock and Other Securities even if
such cash dividends or distributions might not be characterized as
"regular, quarterly cash dividends"). In the event that a share of Series A
Preferred Stock is outstanding for only a portion of a Dividend Period,
then the Ratchet Dividend with respect to such share of Series A Preferred
Stock and such Dividend Period shall be determined as provided in the
preceding sentence but shall then be adjusted by multiplying such amount by
a fraction, the numerator of which equals the number of days such share of
Series A Preferred Stock had been outstanding during such period and the
denominator of which shall equal the total number of days during such
Dividend Period. As used herein, the term "Other Security" means any
security in addition to Common Stock (including Junior Preferred Stock)
which may be issuable to a holder of Series A Preferred Stock upon
conversion of a share of Series A Preferred Stock.
"Redemption Notice" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"Redemption Right" shall have the meaning set forth in paragraph (a) of
Section 5 hereof.
"Securities" shall have the meaning set forth in paragraph (g)(iii) of
Section 7 hereof.
"Series A Preferred Nominee" shall have the meaning set forth in Section
3(j).
"Series A Preferred Stock" shall have the meaning set forth in Section 1
hereof.
"Source Agreements" shall mean that certain Master Transaction Agreement
dated September __, 1998 by and among the Corporation, the Partnership and
certain other parties listed therein, and each of the other agreements
contemplated therein.
"Stated Quarterly Dividend" shall mean for each Dividend Payment Date a
dividend payable, if applicable, per share of Series A Preferred Stock in
respect of the Dividend Period ending on such Dividend Payment Date. The
Stated Quarterly Dividend for
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each Dividend Period shall equal the sum of the following products for each
day in such Dividend Period on which the share of Series A Preferred Stock
is outstanding: (i) the Preferred Rate in effect on such day divided by
365, multiplied by (ii) the Liquidation Preference.
"Target Amount" shall mean that number of shares of Series A Preferred
Stock having a Liquidation Preference equal to one-sixth of the aggregate
Liquidation Preference of the Series A Preferred Stock created hereby and
issued on the Issue Date.
"Trading Day" shall mean any day on which the securities in question are
traded on the New York Stock Exchange ("NYSE"), or if such securities are
not listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or if
not listed or admitted for trading on any national securities exchange, on
the Nasdaq National Market, or if such securities are not quoted on such
Nasdaq National Market, in the applicable securities market in which the
securities are traded.
"Transaction" shall have the meaning set forth in paragraph (h) of Section
7 hereof.
(3) Dividends.
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(a) The holders of Series A Preferred Stock shall be entitled to receive,
in respect of each Dividend Payment Date, when, as and if authorized
and declared by the Board of Directors out of assets legally available
for that purpose, cumulative preferential dividends payable in cash in
an amount per share of Series A Preferred Stock equal to the greater
of (i) the Stated Quarterly Dividend for such Dividend Payment Date or
(ii) the Ratchet Dividend for such Dividend Payment Date. Such
dividends shall, with respect to each share of Series A Preferred
Stock, be cumulative from and including the Issue Date, whether or not
in, or with respect to, any Dividend Period or Periods (i) such
dividends are declared, (ii) the Corporation is contractually
prohibited from paying such dividends or (iii) there shall be assets
of the Corporation legally available for the payment of such
dividends, and shall be payable quarterly, when, as and if authorized
and declared by the Board of Directors, in arrears on Dividend Payment
Dates, commencing on the first Dividend Payment Date after the Issue
Date. Dividends are cumulative from the most recent Dividend Payment
Date to which dividends have been paid, whether or not in, or with
respect to, any Dividend Period or Periods (i) such dividends are
declared, (ii) the Corporation is contractually prohibited from paying
such dividends or (iii) there shall be assets legally available
therefor. Each such dividend shall be payable in arrears to the
holders of record of the Series A Preferred Stock, as they appear on
the stock records of the Corporation at the close of business on such
record dates, not more than 30 days preceding the applicable Dividend
Payment Date (the "Dividend Payment Record Date") (or, in the case of
a Dividend Payment
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Record Date that coincides with a record date for payment of dividends
on Common Stock, not more than 60 days preceding the applicable
Dividend Payment Date), as shall be fixed by the Board of Directors;
provided, however, that with respect to the first Dividend Period, the
Dividend Payment Record Date for such period will be on or after the
Issue Date. Accrued and unpaid dividends for any past Dividend Periods
and any additional amounts as provided in subsection (f) may be
authorized and declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof (or, in the case
of a record date that coincides with a record date for payment of
dividends on Common Stock, not more than 60 days preceding the
applicable payment date thereof), as may be fixed by the Board of
Directors.
(b) The first Dividend Period with respect to the Series A Preferred Stock
shall be for the period from on and after the Issue Date to the first
Dividend Payment Date of (and excluding) ____________, 199_.
(c) So long as any shares of Series A Preferred Stock are outstanding, no
dividends (whether in cash or in kind or upon liquidation of the
Corporation), except as described in the immediately following
sentence, shall be authorized and declared or paid on any series or
class or classes of Parity Stock for any period nor shall any shares
of Parity Stock be redeemed, purchased or otherwise acquired for any
consideration or any moneys to be paid to or made available for a
sinking fund for the redemption of any shares of Parity Stock,
directly or indirectly (except by conversion into or exchange for
shares of Parity Stock or Junior Stock), unless full cumulative
dividends, including, if applicable, the further preferential dividend
provided in subsection (f), have been or contemporaneously are
authorized and declared and paid on the Series A Preferred Stock for
all Dividend Periods terminating on or prior to the dividend payment
date on (or date of purchase, redemption or other acquisition of) such
class or series of Parity Stock. When dividends are not paid in full
upon the Series A Preferred Stock and any other class or classes of
Parity Stock, all dividends authorized upon the Series A Preferred
Stock and any other class or classes of Parity Stock shall be
authorized and declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Series A Preferred
Stock and such Parity Stock (which shall not include any accrual in
respect of unpaid dividends for prior dividend periods if such Parity
Stock does not have a cumulative dividend).
(d) So long as any shares of Series A Preferred Stock are outstanding, no
dividends (other than dividends or distributions paid solely in shares
of Junior Stock, or options, warrants or rights to subscribe for or
purchase shares of Junior Stock) shall be authorized and declared or
paid or other distribution authorized and declared or made upon shares
of Junior Stock for any period, nor shall any
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shares of Junior Stock be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of Common
Stock made for purposes of and in compliance with requirements of
employee incentive or employee benefit plans of the Corporation or any
of its subsidiaries), for any consideration (or any moneys to be paid
to or made available for a sinking fund for the redemption of any
shares of Junior Stock) by the Corporation, directly or indirectly
(except by conversion into or exchange for Junior Stock), unless in
each case (i) the full cumulative dividends on all outstanding shares
of Series A Preferred Stock, including, if applicable, the further
preferential dividend provided in subsection (f), and any other Parity
Stock of the Corporation shall have been paid for all past Dividend
Periods with respect to the Series A Preferred Stock and all past
dividend periods with respect to such Parity Stock and (ii) sufficient
funds shall have been paid for or irrevocably set aside and designated
for payment of the dividend due for the current Dividend Period with
respect to the Series A Preferred Stock.
(e) Without limiting the other provisions hereof, no dividends on shares
of Series A Preferred Stock (other than liquidating distributions made
in accordance with Section 4 hereof) shall be paid by the Corporation
at such time as the terms and provisions of any agreement of the
Corporation or its affiliates or subsidiaries, relating to bona fide
indebtedness for borrowed money, prohibits such declaration or payment
or provides that such declaration or payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment
shall be restricted or prohibited by law (and such failure to pay
dividends on the Series A Preferred Stock shall prohibit other
dividends and distributions by the Corporation as described in
Sections 3(c) and (d)).
(f) Notwithstanding the foregoing, dividends on the Series A Preferred
Stock shall accrue whether or not the terms and provisions set forth
in Section 3(e) hereof at any time prohibit the current payment of
dividends, whether or not the Corporation has earnings, whether or not
there are funds legally available for the payment of such dividends
and whether or not such dividends are declared. Accrued but unpaid
dividends on the Series A Preferred Stock will accumulate as of the
Dividend Payment Date on which they first become payable and a further
preferential dividend at the per annum rate then applicable for the
period or periods specified in subsection (a) above shall accrue
during the period of accumulation and be paid in respect of such
unpaid dividends until the amount thereof and the further preferential
amount thereon shall have been paid in full.
(g) Upon liquidation, dissolution or winding up of the Corporation, no
dividends shall be paid to any series or class or classes of Junior
Stock until after payment shall have been made in full to the holders
of the Series A Preferred Stock, as provided in Section 4(a).
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(h) Any dividend made on the Series A Preferred Stock shall first be
credited against the further preferential dividend provided in
subsection (f) above and then against the earliest accrued but unpaid
dividend due with respect to such Series A Preferred Stock which
remains payable. The only dividends to which the Series A Preferred
Stock shall be entitled are those described in this Section 3.
(j) The holders of Series A Preferred Stock will be eligible to nominate,
and to have appointed, one director to the Company's Board of
Directors, subject to the following conditions, qualifications and
procedures:
(I) The provisions of this subparagraph (j) shall only apply for
so long as The Prudential Insurance Company of America
("Prudential"), directly or indirectly through affiliates,
beneficially owns 2,000,000 shares of Series A Preferred Stock
(subject to adjustment in the event of a stock split or reverse
stock split in the Series A Preferred Stock). As used in the
preceding sentence, "beneficially owns" has the meaning ascribed
thereto in Rule 13d-3, as in effect on the date hereof, under the
Securities Exchange Act of 1934, except that it shall not include
"shared" voting or investment power (i.e., Prudential will be
deemed to beneficially own the Series A Preferred Stock only if
it and its affiliates have sole voting or investment power with
respect thereto). The provisions of this subparagraph (j) shall
not benefit any subsequent transferee of the Series A Preferred
Stock except for affiliates of Prudential (i.e., transferees that
are controlled by, control or are under common control with
Prudential), and in any event only if Prudential or such
affiliate is deemed to beneficially own the shares of Series A
Preferred Stock acquired by such affiliate. As a condition to
implementation of the rights of the holders of Series A Preferred
Stock set forth in this subparagraph (j), the Corporation may
require certification by Prudential that the condition set forth
in this clause (I) is met.
(II) If and for so long as an aggregate of six quarterly
dividends payable on the Series A Preferred Stock are in arrears
(which shall, with respect to any such quarterly dividend, mean
that any such dividend has not been paid in full), whether or not
(i) such dividends are declared, (ii) the Corporation is
contractually prohibited from paying such dividends or (iii)
there shall be assets of the Corporation legally available for
the payment of such dividends, the number of directors then
constituting the Board of Directors shall be increased by one and
the Board of Directors shall appoint a Series A Preferred Nominee
to fill the vacancy thus created. A "Series A Preferred Nominee"
means a person that the holders of a majority of the Series A
Preferred Stock, by written consent of such
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holders or by vote at a special meeting of the holders of Series
A Preferred Stock, have formally nominated to be appointed to the
Board of Directors to fill such vacancy, provided that the Board
of Directors shall only be obligated to appoint a Series A
Preferred Nominee to fill such vacancy if:
(A) The holders of Series A Preferred Stock nominate three
Series A Preferred Nominees, from which the Board of
Directors may select one such person to fill such vacancy,
and
(B) Each Series A Preferred Nominee (other than any Series
A Preferred Nominee that is an employee of Prudential or an
affiliate of Prudential) is reasonably acceptable to the
Board of Directors, and
(C) Each such Series A Preferred Nominee submits to the
Board of Directors a duly-executed, binding and enforceable
letter of resignation from the Board, to be effective
immediately upon the date on which all arrears in dividends
on the Series A Preferred Stock shall have been paid and
dividends thereon for the current quarterly dividend period
shall have been paid or declared and set apart for payment.
(III) Whenever all arrears in dividends on the Series A Preferred
Stock shall have been paid and full dividends thereon for the
current quarterly dividend period shall have been paid or
declared and set apart for payment, then the right of the holders
of the Series A Preferred Stock to have a Series A Preferred
Nominee appointed to, and remain on, the Board of Directors shall
cease (but subject always to the same provision for the vesting
of the rights set forth in this subparagraph (j) in the case of
any similar future arrearages in six quarterly dividends), and
the term of office of the Series A Preferred Nominee that was
appointed to the Board of Directors shall forthwith terminate and
the number directors constituting the Board of Directors shall be
reduced accordingly.
(IV) At any time after the rights of the holders of Series A
Preferred Stock set forth in this subparagraph (j) shall be in
effect, the Secretary of the Corporation shall upon the written
request of any holder of Series A Preferred Stock (addressed to
the Secretary at the principal office of the Corporation), call a
special meeting of the holders of the Series A Preferred Stock
for the election of three Series A Preferred Nominees.
(V) The Series A Preferred Nominee that is appointed to the
Board of Directors shall hold office until the next annual
meeting of the stockholders if such office shall not have
previously terminated as above
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provided. At such annual meeting, the holders of the Series A
Preferred Stock may (i) reelect such Series A Preferred Nominee
by majority consent or vote or (ii) repeat the procedures
described above to have a successor appointed by the Board of
Directors. If any vacancy shall occur in the office reserved for
the Series A Preferred Nominee, a successor shall be appointed by
the Board of Directors after repeating the procedures described
above.
(4) Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or
surplus) shall be made to the holders of Junior Stock, the holders of
the Series A Preferred Stock shall be entitled to receive Fifty
Dollars ($50.00) per share of Series A Preferred Stock (the
"Liquidation Preference") or, if greater, the amount which each holder
would receive in respect of the Common Stock and Other Securities and
property it would receive upon conversion of its shares of Series A
Preferred Stock if all shares of Series A Preferred Stock were
converted pursuant to Section 7 immediately prior to the distribution
of liquidation proceeds, plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon
pursuant to Section 3 to the date of final distribution to such
holder; but such holders of Series A Preferred Stock shall not be
entitled to any further payment. If, upon any such liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of
Series A Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any other
Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of such Series A Preferred Stock and any
such other Parity Stock ratably in accordance with the respective
amounts that would be payable on such Series A Preferred Stock and any
such other Parity Stock if all amounts payable thereon were paid in
full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of the
Series A Preferred Stock and Parity Stock, as provided in this Section
4, any series or class or classes of Junior Stock shall, subject to
any respective terms and provisions applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed.
(c) After payment of the full amount of the liquidating distributions to
which they are entitled pursuant to Sections 4(a) and (b), the holders
of Series A Preferred Stock will have no right or claim to any of the
remaining assets of the Corporation.
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(d) The consolidation or merger of the Corporation with or into any other
corporation, partnership, trust or entity or of any other corporation,
partnership, trust or entity with or into the Corporation, or an
exchange of capital stock, or the sale, lease or conveyance of all or
substantially all of the property or business of the Corporation
(unless the net proceeds of any of the foregoing transactions shall be
distributed to the holders of capital stock rather than reinvested),
shall not be deemed to constitute a liquidation, dissolution or
winding up of the Corporation.
(5) Redemption.
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(a) Subject to adjustment as provided in this Section 5, on each of [each
of those Business Days which is six months after the tenth, eleventh,
twelfth, thirteenth, fourteenth and fifteenth anniversary of the
Closing Date of the transactions contemplated in the Master
Transaction Agreement] (each an "Option Strike Date") (i) each of the
holders of Series A Preferred Stock, upon giving prior written notice
as provided below, shall have the right (the "Redemption Right") to
require that the Corporation redeem for cash, at a redemption price of
$50 per share of Series A Preferred Stock, shares of Series A
Preferred Stock held by such holder; provided that the maximum number
of shares of Series A Preferred Stock that may be required to be
redeemed from all such holders is equal to the Target Amount;
provided, further, that a holder may not exercise the Redemption Right
for less than one thousand (1,000) shares of Series A Preferred Stock
or, if such holder holds less than one thousand shares of Series A
Preferred Stock, all of the shares of Series A Preferred Stock held by
such holder; and (ii) the Corporation, upon giving prior written
notice as provided below, shall have the Redemption Right to require
the redemption for cash, at a redemption price of $50 per share of
Series A Preferred Stock, of a number of shares of Series A Preferred
Stock equal to, but not in excess of, the Target Amount (in the
aggregate from all holders); provided, however, that the Corporation
may not require the redemption on any Option Strike Date of more than
the lesser of (A) the Target Amount in respect of such Option Strike
Date or (B) such number of shares of Series A Preferred Stock as shall
have an aggregate Liquidation Preference equal to the excess of (i)
the aggregate Liquidation Preference of the sum of the Target Amounts
for all prior Option Strike Dates and the currently applicable Option
Strike Date over (ii) the aggregate Liquidation Preference of all
shares of Series A Preferred Stock previously converted (including
Forced Conversions), noticed for conversion on such Option Strike
Date, previously redeemed, and noticed for redemption on such Option
Strike Date.
The exercise of a Redemption Right on any Option Strike Date shall not
be cumulative (i.e., the Target Amount with respect to any Option
Strike Date is the maximum number of shares of Series A Preferred
Stock subject to
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mandatory redemption by either the Corporation or the holders of
Series A Preferred Stock on each Option Strike Date); any shares of
Series A Preferred Stock that are not converted pursuant to Section 7
or redeemed pursuant to this Section 5 on or before ______ [the last
Option Strike Date] shall remain outstanding and shall have all of the
rights and preferences set forth in this Certificate except that the
provisions of this Section 5 shall not apply to any shares of Series A
Preferred Stock outstanding after such date.
(b) In order to exercise its Redemption Right, a holder of Series A
Preferred Stock shall deliver a notice (a "Redemption Notice," such
term to also include the notice required to be delivered by the
Corporation upon exercise of its Redemption Right) in the form
attached hereto as Exhibit B to the Corporation not less than 40 nor
more than 70 days prior to an Option Strike Date. If a holder of
Series A Preferred Stock who has delivered a Redemption Notice
pursuant to this Section 5 converts the shares tendered for redemption
prior to the redemption date, the Redemption Notice shall be deemed
revoked. The Corporation may exercise its Redemption Right by
delivering in writing a Redemption Notice, containing the information
provided in subsection (d), to each holder of record of Series A
Preferred Stock, not less than 30 nor more than 70 days prior to an
Option Strike Date.
If, pursuant to the exercise of a Redemption Right by holders of the
Series A Preferred Stock, with such redemption to be effective on an
Option Strike Date, holders tender for redemption a number of shares
of Series A Preferred Stock having an aggregate Liquidation Preference
greater than the Target Amount, the Corporation may redeem all such
shares tendered for redemption or a lesser number of shares, as the
Corporation determines in its sole discretion, but not less than the
Target Amount; provided, however, that if the Corporation does not
redeem all shares of Series A Preferred Stock so tendered for
redemption, the Corporation shall redeem shares ratably from each
tendering holder in proportion to the respective number of shares
tendered. If the holders have tendered for redemption a number of
shares of Series A Preferred Stock less than the Target Amount and the
Corporation delivers a Redemption Notice to redeem a number of shares
of Series A Preferred Stock greater than the number of shares tendered
for redemption by the holders, the Corporation shall first redeem the
shares of Series A Preferred Stock of those holders exercising their
Redemption Right pursuant to this Section 5 and shall then redeem, on
a pro rata basis, shares of Series A Preferred Stock from all holders
who hold shares after giving effect to such redemption; provided,
however, that in such case, (i) the Corporation shall deliver a
separate notice at least 30 days prior to the Option Strike Date,
containing the information provided in subsection (d), to all holders
of the shares of Series A Preferred Stock to be so redeemed indicating
the number of shares to be so redeemed, and (ii) the total number of
shares to be
13
redeemed (upon notice by the Corporation and the holders,
collectively) shall not exceed the Target Amount.
If the Corporation delivers a Redemption Notice to the holders of the
Series A Preferred Stock, the holders shall have the right, subject to
Section 7(a), to convert their shares of Series A Preferred Stock into
Common Stock, pursuant to Section 7, on or before the Option Strike
Date. To the extent that such shares of Series A Preferred Stock are
so converted, the right of the Corporation to require the redemption
of Series A Preferred Stock shall be reduced by the aggregate
Liquidation Preference of the shares of Series A Preferred Stock so
converted (and the reduction in the number of shares of Series A
Preferred Stock to be redeemed from each holder shall be allocated
first to the holders who so elected to convert their shares and second
pro rata among all other holders).
Within two Business Days of a redemption of Series A Preferred Stock,
the Corporation shall pay the redemption price by certified check to
or on the order of those holders whose shares of Series A Preferred
Stock have been redeemed.
(c) Immediately prior to any redemption of Series A Preferred Stock and as
a condition to such redemption, the Corporation shall pay, in cash,
all accumulated and unpaid dividends, including the further
preferential dividend provided in Section 3(f), through the Option
Strike Date in respect of all shares of Series A Preferred Stock,
including those shares to be redeemed. Unless full cumulative
dividends on all shares of Series A Preferred Stock have been paid,
the Corporation may not require the shares of Series A Preferred Stock
to be redeemed.
(d) A Redemption Notice shall be provided in the manner provided in
Section 11. Any defect in a Redemption Notice or in the mailing
thereof to any particular holder or the Corporation shall not affect
the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Any notice that was
mailed in the manner herein provided shall be conclusively presumed to
have been duly given on the date of deemed delivery provided in
Section 11, whether or not the holder receives the notice. Each of
the Corporation's Redemption Notices shall state, as appropriate: (1)
the Option Strike Date; (2) the number of shares of Series A Preferred
Stock to be redeemed in the aggregate from all holders and, if fewer
than all the shares of Series A Preferred Stock held by such holder
are to be redeemed, the number of such shares of Series A Preferred
Stock to be redeemed from such holder; and (3) that dividends on the
shares of Series A Preferred Stock to be redeemed shall cease to
accrue on such Option Strike Date except as otherwise provided herein.
Notice having been delivered as aforesaid, from and after the Option
Strike Date (unless the Corporation shall fail to pay the redemption
price on the date
14
required), (i) except as otherwise provided herein, dividends on the
shares of Series A Preferred Stock so called for redemption shall
cease to accrue, (ii) said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as holders of
Series A Preferred Stock of the Corporation shall cease (except the
right to receive the redemption price and the amounts required to be
paid under subsection (c)).
After the redemption of Series A Preferred Stock as aforesaid, the
Corporation shall deliver to such holder, upon his written request, a
certificate of the Corporation certifying the number of shares of
Common Stock and Series A Preferred Stock held by such person
immediately after such redemption. The Corporation shall also advise
each holder as to the number of shares of Series A Preferred Stock
redeemed and the number of shares of Series A Preferred Stock which
remain outstanding.
(e) Each holder of Series A Preferred Stock covenants and agrees with the
Corporation that all shares of Series A Preferred Stock delivered for
redemption pursuant to this Section 5 shall be delivered to the
Corporation free and clear of all liens, and, notwithstanding anything
contained herein to the contrary, the Corporation shall not be under
any obligation to acquire shares of Series A Preferred Stock which are
subject to any liens.
(6) Intentionally Omitted.
(7) Conversion. Holders of Series A Preferred Stock shall have the right (the
----------
"Conversion Right") to convert all or a portion of their shares of Series A
Preferred Stock into shares of Common Stock (provided, however, that a
holder may not exercise the Conversion Right for less than one thousand
(1,000) shares of Series A Preferred Stock or, if such holder holds less
than one thousand shares of Series A Preferred Stock, all of the shares of
Series A Preferred Stock held by such holder), and the Corporation shall
have the right on each Option Strike Date to cause a conversion of shares
of Series A Preferred Stock into shares of Common Stock, subject, in each
case, to the following conditions and procedures:
(a) Subject to and upon compliance with the provisions of this Section 7,
a holder of Series A Preferred Stock shall have the right, at his or
her option, at any time and from time to time during the period on or
after the earlier of (i) __________ [the last Business Day of the
calendar year of the fourth anniversary of the Closing Date of the
transactions contemplated in the Master Transaction Agreement] and
(ii) the effective time of a Cash Business Combination (the period
beginning on and after the earlier of such dates, the "Conversion
Period"), to convert its shares of Series A Preferred Stock into the
number of fully paid and non-assessable shares of Common Stock
obtained by dividing the aggregate Liquidation Preference of such
shares of Series A Preferred Stock by
15
the Conversion Price as in effect as of such time (i.e. after
adjustment as described in subsection (g)) by delivering a Conversion
Notice in the form attached hereto as Exhibit A within the time period
specified in paragraph (d) below and in the manner provided in Section
11; provided, however, that the right to deliver a conversion notice
with respect to shares of Series A Preferred Stock called or tendered
for redemption pursuant to Section 5 hereof shall terminate on that
day which is the fifth business day prior to the applicable Option
Strike Date on which such shares are to be redeemed, unless the
Corporation shall default in making any cash payment required upon a
redemption on such date as provided in Section 5 hereof. A conversion
of shares of Series A Preferred Stock specified in the Conversion
Notice shall occur automatically at the close of business on the
applicable Conversion Date without any action on the part of the
holders of Series A Preferred Stock, and immediately after the close
of business on the Conversion Date the holders of Series A Preferred
Stock who had all or a portion of their shares of Series A Preferred
Stock converted shall be credited on the books and records of the
Corporation with the issuance as of the opening of business on the
next day of the shares of Common Stock issuable upon such conversion.
(b) If, as of an applicable Option Strike Date, the Target Amount for such
Option Strike Date has not been redeemed and/or converted (or noticed
for conversion and/or redemption on such Option Strike Date) as a
result of holders of Series A Preferred Stock and/or the Corporation
exercising Redemption Rights pursuant to Section 5 and/or such holders
exercising their conversion rights pursuant to this Section 7, the
Corporation, subject to and upon compliance with the provisions of
this Section 7, may convert (a "Forced Conversion") not more than the
lesser of (A) the Target Amount in respect of such Option Strike Date
or (B) such number of shares of Series A Preferred Stock as shall have
an aggregate Liquidation Preference equal to the excess of (i) the
aggregate Liquidation Preference of the sum of the Target Amounts for
all prior Option Strike Dates and the currently applicable Option
Strike Date over (ii) the aggregate Liquidation Preference of all
shares of Series A Preferred Stock previously converted, noticed for
conversion by the holders on such Option Strike Date, previously
redeemed, and noticed for redemption on such Option Strike Date (the
"Forced Conversion Amount") of Series A Preferred Stock into a number
of shares of Common Stock determined in accordance with the Conversion
Price in effect on such date as determined in accordance with
subsection (a) by transmitting for delivery a Conversion Notice, in
the manner prescribed in Section 11 within one business day after the
applicable Option Strike Date, to the holders of the shares of Series
A Preferred Stock which are to be so converted (the "Forced Conversion
Option") ratably in proportion to the shares of Series A Preferred
Stock then outstanding from the holders thereof (after giving effect
to the redemptions and conversions otherwise noticed to occur on such
Option Strike Date); provided, further, however, that such
16
Forced Conversion Option may only be exercised by the Corporation if
the value of a share of Common Stock, calculated on its weighted
average closing price during the 10 Trading Days prior to the second
Trading Day preceding the exercise of the Forced Conversion Option, is
equal to or greater than 110% of the Conversion Price.
(c) Immediately prior to any conversion of shares of Series A Preferred
Stock, the Corporation shall pay, in cash, all accumulated and unpaid
dividends including the further preferential dividends provided in
Section 3(f) through the Conversion Date on all shares of Series A
Preferred Stock. A holder of shares of Series A Preferred Stock shall
have no right with respect to any shares of Series A Preferred Stock
so converted to receive any distributions paid after the Conversion
Date with respect to such shares and his interest in the Corporation
as to such converted shares shall be terminated; provided, however,
that in the event the Corporation is legally or contractually
prohibited from paying, or fails for any other reason to pay, such
accumulated and unpaid dividends prior to any conversion and such
holder elects to continue with and permit such conversion after notice
from the Corporation of such inability or failure, such holder shall
still be entitled to receive all such accumulated and unpaid
dividends, if any, that remain unpaid after such conversion, as well
as a further preferential dividend on such unpaid dividends as
provided in Section 3(f), which dividends shall be paid by the
Corporation as soon as it is legally and contractually permitted to do
so.
(d) After the conversion of shares of Series A Preferred Stock as
aforesaid, the Corporation shall deliver to such holder, upon his
written request, a certificate of the Corporation certifying the
number of shares of Common Stock and Series A Preferred Stock held by
such person immediately after such conversion.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date (the "Conversion Date")
specified in the Conversion Notice (which shall not be earlier than 5
days after mailing of the Conversion Notice nor later than sixty (60)
days after such date) or upon the Option Strike Date in the case of a
Forced Conversion pursuant to Section 7(b) and the shares of Series A
Preferred Stock so presented for conversion shall be deemed converted
into shares of Common Stock at the close of business on such date, and
such conversion shall be in accordance with the Conversion Price in
effect on such date (unless such day is not a Business Day, in which
event such conversion shall be deemed to have become effective at the
close of business on the next succeeding Business Day) as determined
in accordance with subsection (a).
(e) No fractions of shares of Common Stock shall be issued upon conversion
of shares of Series A Preferred Stock. Instead of any fractional
interest in a share
17
of Common Stock that would otherwise be deliverable upon the
conversion of a share of Series A Preferred Stock, the Corporation
shall pay to the holder of such share of Series A Preferred Stock an
amount in cash based upon the Current Market Price of the Common Stock
on the Trading Day immediately preceding the date of conversion. If
more than one share of Series A Preferred Stock shall be surrendered
for conversion at one time by 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 Series A
Preferred Stock so surrendered.
(f) Intentionally Omitted.
(g) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution to holders of its Common Stock in shares
of Common Stock, (B) subdivide its outstanding Common Stock into
a greater number of shares of Common Stock, (C) combine its
outstanding Common Stock into a smaller number of shares of
Common Stock or (D) issue any shares of Common Stock by
reclassification of its Common Stock, the Conversion Price in
effect at the opening of business on the day following the date
fixed for the determination of holders of Common Stock entitled
to receive such dividend or distribution or at the opening of
business on the day following the day on which such subdivision,
combination or reclassification becomes effective, as the case
may be, shall be adjusted so that the holder of any share of
Series A Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock
that such holder would have owned or have been entitled to
receive after the happening of any of the events described above
had such share of Series A Preferred Stock been converted
immediately prior to the record date in the case of a dividend or
distribution or the effective date in the case of a subdivision,
combination, or reclassification. An adjustment made pursuant to
this subsection (g)(i) shall become effective immediately after
the opening of business on the day next following the record date
in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the day
next following the effective date in the case of a subdivision,
combination, or reclassification and automatically without any
further required action of the Corporation or the holders of
Series A Preferred Stock.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Stock entitling them
to subscribe for or purchase Common Stock (or securities
convertible into or
18
exchangeable for Common Stock) at a price per share of Common
Stock less than the Fair Market Value per share of Common Stock
on the record date for the determination of holders of Common
Stock entitled to receive such rights, options or warrants, then
the Conversion Price in effect at the opening of business on the
day next following such record date shall be adjusted to equal
the price determined by multiplying (I) the Conversion Price in
effect immediately prior to the opening of business on the day
following the record date fixed for such determination by (II) a
fraction, the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on the close of
business on the record date fixed for such determination and (B)
the number of shares of Common Stock that the aggregate proceeds
to the Corporation from the exercise of such rights, options or
warrants for Common Stock would purchase at such Fair Market
Value, and the denominator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination and (B) the
number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately upon
the opening of business on the day next following such record
date (subject to paragraph (l) below). In determining whether any
rights, options or warrants entitle the holders of Common Stock
to subscribe for or purchase Common Stock at less than such Fair
Market Value, there shall be taken into account any consideration
received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such
consideration, if other than cash, to be determined in good faith
by the Board of Directors.
(iii) If the Corporation shall distribute to all holders of its Common
Stock any shares of capital stock of the Corporation (other than
Common Stock) or evidence of its indebtedness or assets
(excluding (x) cash dividends and distributions that were taken
into account in calculating the dividend payable under Section
3(a), and (y) cash dividends and cash distributions to the extent
that after giving effect to such dividends and distributions the
fair market value of the assets of the Corporation exceed the sum
of the liabilities of the Corporation, as determined in good
faith by the Board of Directors) or rights or warrants to
subscribe for or purchase any of its securities (excluding those
rights and warrants issued to all holders of Common Stock
entitling them to subscribe for or purchase Common Stock or
securities convertible into or exchangeable for Common Stock,
which rights and warrants and convertible or exchangeable
securities are referred to in and treated under subparagraph (ii)
above) (any of the foregoing being hereinafter in this
subparagraph (iii) called the "Securities"), then in each case
the Conversion Price shall
19
be adjusted so that it shall equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior
to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution by (II) a
fraction, the numerator of which shall be the Fair Market Value
per share of Common Stock on the record date mentioned below less
the then fair market value (as determined by the Board of
Directors in good faith) of the portion of the capital stock or
assets or evidences of indebtedness so distributed or of such
rights or warrants applicable to one share of Common Stock, and
the denominator of which shall be the Fair Market Value per share
of Common Stock on the record date mentioned below. Such
adjustment shall become effective immediately upon the opening of
business on the day next following the record date for the
determination of stockholders entitled to receive such
distribution (subject to paragraph (l) below). For the purposes
of this subparagraph (iii), the distribution of a Security, which
is distributed not only to the holders of the Common Stock on the
date fixed for the determination of stockholders entitled to such
distribution of such Security, but also is required to be
distributed with each share of Common Stock delivered to a person
converting a share of Series A Preferred Stock after such
determination date, shall not require an adjustment of the
Conversion Price pursuant to this subparagraph (iii); provided
that on the date, if any, on which a person converting a share of
Series A Preferred Stock would no longer be entitled to receive
such Security with a share of Common Stock (other than as a
result of the termination of all such Securities), a distribution
of such Securities shall be deemed to have occurred, and the
Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date
fixed for the determination of the stockholders entitled to
receive such distribution" and "the record date" within the
meaning of the two preceding sentences).
(iv) Notwithstanding the foregoing, no adjustment shall be made
pursuant to the preceding clauses (ii) and (iii) that would
result in any increase in the Conversion Price. No adjustment in
the Conversion Price shall be required unless such adjustment
would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by
reason of this subsection (g)(iv) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment
shall be required and made in accordance with the provisions of
this Section 7 (other than this subsection (g)(iv)) not later
than such time as may be required in order to preserve the tax-
free nature of a distribution to the holders of Common Stock.
Notwithstanding any other provisions of this Section 7, the
Corporation shall not be required to
20
make any adjustment of the Conversion Price for the issuance of
any shares of Common Stock pursuant to any employee benefit or
compensation plan or other plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation
and the investment of additional optional amounts in shares of
Common Stock under such plan. All calculations under this Section
7 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with .05 of a
share being rounded upward), as the case may be. Anything in this
paragraph (g) to the contrary notwithstanding, the Corporation
shall be entitled, to the extent permitted by law, to make such
adjustments in the Conversion Price (but without adversely
affecting the economic value of a share of Series A Preferred
Stock), in addition to those required by this paragraph (g), as
it in its discretion shall determine to be advisable in order
that any Series A Preferred Stock dividends, subdivision of
shares of Series A Preferred Stock, reclassification or
combination of shares of Series A Preferred Stock, distribution
of rights, options or warrants to purchase stock or securities,
or a distribution of other assets (other than cash dividends)
hereafter made by the Corporation to the holders of the Series A
Preferred Stock shall not be taxable.
(h) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, share exchange, self
tender offer for all or substantially all of the shares of Common
Stock, sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock and excluding any transaction as
to which subparagraph (g)(i) of this Section 7 applies) (each of the
foregoing being referred to herein as a "Transaction"), in each case
as a result of which shares of Common Stock shall be exchanged for or
converted into the right, or the holders of such shares shall
otherwise be entitled, to receive securities or other property
(including cash or any combination thereof), each share of Series A
Preferred Stock shall upon the commencement of the Conversion Period
be convertible into the kind and amount of shares of stock or
securities and other property (including cash or any combination
thereof) (the "Series A Preferred Stock Merger Consideration")
receivable upon the consummation of such Transaction by a holder of
that number of shares of Common Stock into which one share of Series A
Preferred Stock was convertible immediately prior to such Transaction
(unless, in connection with such Transaction, the shares of Series A
Preferred Stock had been converted into the right to receive such
consideration (and thus, are no longer outstanding)), assuming such
holder of Common Stock 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 (a "Constituent Person"), or an affiliate of a Constituent
Person. In the event that holders of Common Stock have the opportunity
to
21
elect the form or type of consideration to be received upon
consummation of the Transaction, prior to such transaction the
Corporation shall give prompt written notice to the holders of Series
A Preferred Stock of such election, and the holders of Series A
Preferred Stock shall also have the right to elect, by written notice
to the Corporation, the form or type of consideration to be received
upon conversion of shares of Series A Preferred Stock following
consummation of such Transaction, and after such election the
consideration thereby elected by holders of a majority of the shares
of Series A Preferred Stock shall be the "Series A Preferred Stock
Merger Consideration" for each share of Series A Preferred Stock. If
holders of a majority of shares of Series A Preferred Stock fail to
make such an election, the "Series A Preferred Stock Merger
Consideration" for each share of Series A Preferred Stock shall be the
consideration that a holder of that number of shares of Common Stock
into which one share of Series A Preferred Stock was convertible
immediately prior to such Transaction would receive if such holder of
Common Stock failed to make such an election.
The Corporation shall not be a party to any Transaction unless
the terms of such Transaction are consistent with the provisions of
this paragraph (h), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into
an agreement with the successor or purchasing entity, as the case may
be, for the benefit of the holders of the Series A Preferred Stock
that will contain provisions enabling the holders of the Series A
Preferred Stock that remains outstanding after such Transaction to
convert their shares of Series A Preferred Stock into the
consideration provided for herein and that shall preserve the
distribution preference, conversion, redemption, and other rights set
forth in this Certificate.
(i) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (excluding cash dividends and
cash distributions to the extent that after giving effect to such
dividends and distributions the fair market value of the assets
of the Corporation exceed the sum of the liabilities of the
Corporation, as determined in good faith by the Board of
Directors); or
(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or series of capital stock of
the Corporation or any other rights or warrants; or
22
(iii) there shall be any reclassification of the Common Stock (other
than an event to which subparagraph (g)(i) of this Section 7
applies) or any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the
Corporation is required, or a share exchange involving the
conversion or exchange of Common Stock into securities or other
property, or a self tender offer by the Corporation for all or
substantially all of its outstanding Common Stock, or the sale or
transfer of all or substantially all of the assets of the
Corporation as an entirety and for which approval of any
stockholders of the Corporation is required; or
(iv) if there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be mailed to the holders of the
Series A Preferred Stock at their addresses as shown on the stock
records of the Corporation, as promptly as possible, but at least 15
days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose
of such dividend, distribution or granting of rights or warrants, or,
if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution or
granting of rights or warrants are to be determined or (B) the date on
which such reclassification, consolidation, merger, share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to
become effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or
receive such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 7.
(j) In the event that a Cash Business Combination is to be consummated or
proposed to the holders of Common Stock, the notice referred to in
subparagraph (i)(iii) above shall specify such fact and such notice
shall be mailed to the holders of the Series A Preferred Stock
simultaneously with the mailing of notice to holders of Common Stock of
the holding of a meeting or written consent or making of elections with
respect to the Cash Business Combination. In such event, the holders of
Series A Preferred Stock shall be permitted to tender their shares for
conversion, in accordance with Section 7 hereof, and may condition such
tender upon the consummation of such Cash Business Combination. Any
such conversion of Series A Preferred Stock shall happen simultaneously
with the consummation of the Cash Business Combination such that
holders of Series A Preferred Stock receive, at the
23
consummation of the Cash Business Combination, the consideration
described in Section 7(h).
(k) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file in the books and records of the
Corporation and provide to each holder an officer's certificate
setting forth the Conversion Price after such adjustment as required
by the terms hereof and setting forth a brief statement of the facts
requiring such adjustment, which certificate shall be conclusive
evidence of the correctness of such adjustment absent manifest error.
Promptly after filing of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting
forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holders of each share of
Series A Preferred Stock at such holder's last address as shown on the
stock records of the Corporation.
(l) In any case in which paragraph (g) of this Section 7 provides that an
adjustment shall become effective on the day next following the record
date for an event, the Corporation may defer until the occurrence of
such event (A) issuing to the holder of any share of Series A
Preferred Stock converted after such record date and before the
occurrence of such event the additional Common Stock issuable upon
such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment and (B) paying to such holder any
amount of cash in lieu of any fractional share of Common Stock.
(m) There shall be no adjustment of the Conversion Price in case of the
issuance of any capital stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set
forth in this Section 7. If any action would require adjustment of the
Conversion Price pursuant to more than one paragraph of this Section
7, only one adjustment shall be made, and such adjustment shall be the
amount of adjustment that has the highest absolute value; provided,
however, that multiple actions taken at or about the same time shall
be subject to separate adjustments.
(n) If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 7, that in the opinion of
the Board of Directors would materially adversely affect the
conversion rights of the holders of the Series A Preferred Stock, the
Conversion Price for the Series A Preferred Stock may be adjusted, to
the extent permitted by law, in such manner, if any, and at such time,
as the Board of Directors, in its sole discretion, may determine to be
equitable in the circumstances.
24
(8) Voting Rights.
-------------
(a) Holders of the Series A Preferred Stock will not have any voting
rights, except as set forth in Section 3(j) or as set forth below or
as otherwise from time to time required by law.
(b) So long as any shares of Series A Preferred Stock remain outstanding,
the Corporation shall not, without the affirmative vote of the holders
of at least a majority of the shares of Series A Preferred Stock
outstanding at the time, given in person or by proxy, either in
writing or at a meeting (voting separately as a class), amend, alter
or repeal the provisions of this Certificate, the Amended and Restated
Certificate of Incorporation or the amended and Restated Bylaws of the
Corporation, increase the number of authorized shares of Series A
Preferred Stock or create any additional class or series of Preferred
Stock, whether by merger, consolidation or otherwise, so as to
materially and adversely affect any right, preference, privilege or
voting power of the Series A Preferred Stock or the holders thereof in
their capacity as holders of Series A Preferred Stock; but subject, in
any event, to the following provisions:
(i) With respect to the occurrence of any merger, consolidation or
other business combination or reorganization, so long as shares
of the Series A Preferred Stock remain outstanding with the
terms thereof materially unchanged or, if the Corporation is not
the surviving entity in such transaction, are exchanged for a
security of the surviving entity with terms that are materially
the same with respect to rights to dividends, liquidation or
other distributions, voting, redemption and conversion as the
Series A Preferred Stock (and with the terms of the Common Stock
or such other securities for which the Series A Preferred Stock
(or the substitute security therefor) is convertible materially
the same with respect to rights to dividends, liquidation or
other distributions, voting, redemption and conversion), the
occurrence of any such event shall not be deemed to materially
and adversely affect such rights, preferences, privileges or
voting powers of the holders of the Series A Preferred Stock.
(ii) Any creation or issuance of any class or series of capital stock
of the Corporation ranking junior to the Series A Preferred
Stock with respect to payment of dividends, redemption rights
and the distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers of
the holders of the Series A Preferred Stock.
(iii) Any creation or issuance of any class or series of Preferred
Stock (other than an issuance of additional shares of Series A
Preferred Stock, as to which a class vote shall be required), or
any increase in the amount of authorized shares of such series,
in each case ranking on a parity with
25
the Series A Preferred Stock with respect to payment of
dividends, voting, redemption and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences,
privileges or voting powers of the holders of the Series A
Preferred Stock if such issuance is done (x) in connection with
an issuance of Preferred Stock in exchange for non-cash assets
(including, without limitation, (i) securities, partnership
interests, membership interests or other interests in an entity
and (ii) real estate, personal property and intangibles), or (y)
in connection with a bona fide capital raising transaction.
(iv) Any creation or issuance of any class or series of Preferred
Stock ranking senior to the Series A Preferred Stock with respect
to the payment of dividends, redemption rights and the
distribution of assets upon liquidation, dissolution or winding
up, to the extent the issuance of such Preferred Stock was in
compliance with the standard set forth in Section 9(c) hereof,
shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers of the holders
of the Series A Preferred Stock.
(c) The foregoing voting provisions will not apply if, at or prior to the
time when the act, with respect to which such vote would otherwise be
required, will be effected, all outstanding shares of Series A
Preferred Stock shall have been converted and/or redeemed.
(9) Ranking. The Series A Preferred Stock shall be deemed to rank:
-------
(a) Senior to any class or series of capital stock of the Corporation, if
such class or series shall be Common Stock or if the holders of Series
A Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of shares of
such class or series, including Junior Preferred Stock ("Junior
Stock");
(b) On a parity with any other class or series of capital stock of the
Corporation, if the holders of such other class or series of capital
stock and the Series A Preferred Stock shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of
accrued and unpaid distributions per share or liquidation preferences,
without preference or priority one over the other ("Parity Stock");
and
(c) Junior only to (I) any indebtedness issued by the Corporation and (II)
senior preferred stock (A) issued only for cash by the Corporation in
a public offering,
26
or (B) issued only for cash or property in an arm's length transaction
(x) to one or more institutional investors who are (but for the shares
of preferred stock so issued) not affiliated with the Corporation or
any Affiliate (as defined in Section 10) thereof and (y) not in
connection with any other transaction or transactions with any of such
Affiliates and (z) which would be permitted by Section 10 if such
shares of preferred stock were Junior Preferred Stock, and (C) in
either case, the entire cash proceeds (net of any arm's length
commissions paid to third parties who are not Affiliates) of which are
contributed by the Corporation to the Partnership and used by the
Partnership solely for (i) the acquisition of assets to be held in the
Partnership's business, (ii) capital expenditures or maintenance
expenses in respect of assets held by the Partnership, (iii) other
ordinary course expenses of the Partnership, or (iv) repayment of
indebtedness of the Partnership (including indebtedness convertible
into preferred units of the Partnership junior to the Series Two
Preferred Units and the Series Three Preferred Units of the
Partnership or common units of the Partnership), and (v) none of which
proceeds are used (AA) to purchase, redeem, retire or otherwise
acquire directly or indirectly any preferred units of the Partnership
junior to the Series Two Preferred Units and the Series Three
Preferred Units of the Partnership or common units of the Partnership,
or shares of Junior Preferred Stock or Common Stock of the
Corporation, or options, warrants, rights to purchase or any other
securities convertible into the foregoing (other than debt repayable
pursuant to subclause (iv)) or (BB) to make distributions or to pay
dividends in respect of any securities described in subclause (AA).
Any references to the term "Affiliate" in this Section 9(c) (including
by way of the cross-reference and incorporation in clause (z) of the
preceding sentence) shall have the meaning given thereto in the
Amended and Restated By-laws of the Corporation as of the date hereof
(except that the 5% threshold referred to therein shall be deemed for
these purposes to be a 10% threshold).
(10) Junior Preferred Stock. The Corporation may, at its option, issue Junior
----------------------
Preferred Stock in exchange for arm's length consideration, the adequacy of
such consideration to be determined in good faith by the Board of
Directors; provided, however, that the Corporation may not, without the
consent of holders of a majority of the shares of the Series A Preferred
Stock, (i) issue Junior Preferred Stock to any Affiliate (as such term is
defined in the Amended and Restated By-Laws of the Corporation as of the
date hereof) of the Corporation, (ii) distribute Junior Preferred Stock to
any holder of Common Stock, (iii) issue Junior Preferred Stock ratably to
holders of Common Stock for cash or any other consideration, or (iv) issue
Junior Preferred Stock in exchange for Common Stock.
(11) Notices. All notices, demand, requests or other communications which may
-------
be or are required to be given, served or sent hereunder will be in writing
and delivered by certified U.S. mail, return receipt required, with postage
prepaid, or by nationally recognized overnight courier service that
provides tracking and proof of receipt.
27
Notices shall be deemed delivered upon the earlier of (i) delivery, (ii)
refusal of delivery by addressee, (iii) two Business Days after deposit in
the U.S. Mails in the case of certified U.S. mail, or (iv) one Business Day
after deposit with a nationally recognized overnight courier. Notices to
holders of Series A Preferred Stock shall be sent to their address of
record with the Corporation. Any holder of Series A Preferred Stock may
change its address of record by written notice as given as aforesaid.
Notices delivered to the Corporation shall be addressed to Boston
Properties, Inc. Attn.: Chief Financial Officer, 8 Arlington Street,
Boston, MA 02116 or to such other address as the Corporation may have
notified holders in the manner provided in this Section 11.
(12) Certificates. Notwithstanding anything to the contrary contained in the
------------
foregoing Sections:
(a) In the event of a redemption pursuant to Section 5, on or before the
applicable Option Strike Date, a holder of shares of Series A
Preferred Stock subject to such redemption shall surrender
certificates ("Series A Certificates") representing such shares to the
place or places designated by the Corporation in writing. The date on
which the Corporation shall be required to pay to such holder the
redemption price and the amounts required to be paid under Section
5(c) shall be the later of (i) the date set forth in the last
paragraph of Section 5(b) and (ii) two Business Days after the date
such Series A Certificates have been so surrendered. From and after
the Option Strike Date, such Series A Certificates shall (subject to
the last sentence of the first paragraph of Section 5(d)) represent
only the right to receive the redemption price and the amounts
required to be paid under Section 5(c), without interest thereon.
(b) In the event of a conversion pursuant to Section 7, within 5 days of
the Conversion Date, a holder of shares of Series A Preferred Stock
subject to such conversion shall surrender Series A Certificates
representing such shares to the place or places designated by the
Corporation in writing. As promptly as practicable after the surrender
of such Series A Certificates, the Corporation shall cause to be
issued and delivered to such holder a certificate or certificates
representing the number of full shares of Common Stock issuable upon
such conversion. From and after the Conversion Date, such Series A
Certificates shall represent only the right to receive the number of
full shares of Common Stock issuable upon such conversion and the
amounts required to be paid under Sections 7(c) and 7(e) (if such
amounts have not yet been paid) without interest thereon.
(c) A holder of Series A Preferred Stock shall be deemed to have
surrendered the certificate or certificates representing such stock
only if (i) the holder surrenders such certificate to the
Corporation's headquarters, attention Chief Financial Officer, or to
such other place as the Corporation may specify in writing in its
Redemption Notice or Conversion Notice, and (ii) such surrendered
certificate is
28
duly endorsed or assigned to the Corporation or in blank and is
accompanied by any other duly executed instruments of transfer that
the Corporation or its transfer agent may reasonably specify.
(13) Status of Reacquired Stock. All shares of Series A Preferred Stock which
--------------------------
shall have been issued and reacquired in any manner by the Corporation
shall be restored to the status of authorized, but unissued, shares or
Preferred Stock, without designation as to series.
(14) In the event this Certificate of Designations is amended or modified by the
parties hereto, the holders of the Series Two Preferred Units issued by the
Partnership and the Series Three Preferred Units issued by the Partnership
in accordance with the Source Agreements shall each have the right to
elect, by vote of a majority-in-interest of such securities, to adopt
amendments or modifications of their respective securities comparable to
the amendments or modifications of this Certificate, and in the event of
any modification or amendment of such securities, the holders of Series A
Preferred Stock shall have the right to elect, by vote of a majority-in-
interest of the Series A Preferred Stock, to adopt amendments or
modifications of this Certificate of Designations comparable to amendments
and modifications of such securities. The Corporation agrees for the
benefit of the holders of Series A Preferred Stock that the Corporation, as
the general partner of the Partnership, shall not permit the amendment or
modification of such other securities without causing this Section 14 to be
given full effect, and the Corporation shall take such action as is
reasonably appropriate or necessary to give full effect to this Section 14.
29
Exhibit A to the Certificate of Designations for the Series A Preferred Stock
NOTICE OF ELECTION BY HOLDER TO CONVERT
SERIES A PREFERRED STOCK INTO COMMON STOCK
The undersigned holder of Series A Preferred Stock hereby (i) elects to
convert the number of shares of Series A Preferred Stock in Boston Properties,
Inc. (the "Corporation") set forth below into shares of Common Stock in
accordance with the terms of the Certificate of Designations relating to the
Series A Preferred Stock; and (ii) directs that any cash in lieu of fractional
shares of Common Stock that may be deliverable upon such conversion be delivered
to the address specified below. The undersigned hereby represents, warrants,
and certifies that the undersigned (a) has title to such shares of Series A
Preferred Stock, free and clear of the rights or interests of any other person
or entity other than the Corporation; (b) has the full right, power, and
authority to cause the conversion of such shares of Series A Preferred Stock as
provided herein; and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consent or approve such conversion.
Name of holder of Series A Preferred Stock: ___________________________________
(Please Print: Exact Name as
Registered with Corporation)
Date of this Notice:_________________________
Date the shares of Series A Preferred Stock are to be converted:_____________/1/
Number of shares of Series A Preferred Stock to be converted:_________________
_____________________________________________________________________
(Signature of Holder: Sign Exact Name as Registered with Corporation)
_____________________________________________________________________
(Street Address)
_____________________________________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_____________________________________________
________________________
/1/ Not earlier than 15 days nor later than 60 days after the date this Notice
is deposited in the U.S. mails (certified mail, postage prepaid, return receipt
requested) or deposited with a nationally recognized overnight courier
guaranteeing next business day delivery.
30
Exhibit B to the Certificate of Designations for the Series A Preferred Stock
NOTICE OF ELECTION BY HOLDER TO REDEEM
SERIES A PREFERRED STOCK FOR CASH
The undersigned holder of Series A Preferred Stock hereby (i) elects to
redeem the number of shares of Series A Preferred Stock in Boston Properties,
Inc. (the "Corporation") set forth below for the redemption price determined in
accordance with the terms of the Certificate of Designations (the "Certificate")
relating to the Series A Preferred Stock; and (ii) directs that such redemption
price be delivered by certified check to the address specified below. The
undersigned hereby represents, warrants, and certifies that the undersigned (a)
has title to such shares of Series A Preferred Stock, free and clear of the
rights or interests of any other person or entity other than the Corporation;
(b) has the full right, power, and authority to cause the redemption of such
shares of Series A Preferred Stock as provided herein; and (c) has obtained the
consent or approval of all persons or entities, if any, having the right to
consent or approve such redemption. The undersigned hereby acknowledges that,
except as provided in the Certificate, dividends on the shares of Series A
Preferred Stock to be redeemed shall cease to accrue on the redemption date
indicated below.
Name of holder of Series A Preferred Stock: ___________________________________
(Please Print: Exact Name as
Registered with Corporation)
Date of this Notice:_________________________
Option Strike Date on which the shares of Series A Preferred Stock are to be
redeemed:________________
Number of shares of Series A Preferred Stock to be redeemed:_________________
_____________________________________________________________________
(Signature of Holder: Sign Exact Name as Registered with Corporation)
_____________________________________________
(Street Address)
_____________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_____________________________________________
Note: Redemptions are subject to reduction and proration as provided in the
Certificate of Designations in respect of the Series A Preferred Stock.
31