EX-4.1



 






Exhibit 4.1




NRG ENERGY, INC.




CERTIFICATE OF DESIGNATIONS




establishing the




Voting Powers, Designations, Preferences, Limitations,




Restrictions and Relative Rights of




5.750% Mandatory Convertible Preferred Stock



 




Pursuant to Section 151 of the




General Corporation Law of the State of Delaware



 




 









 





          NRG ENERGY, INC., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “Issuer”), does hereby certify that (i) pursuant to authority conferred
upon the Board of Directors of the Issuer by its Amended and Restated Certificate of Incorporation,
as amended to date, and pursuant to the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors authorized the creation and issuance of the Issuer’s
5.750% Mandatory Convertible Preferred Stock (the “Preferred Stock”), and (ii) the following
resolution fixing the designations, preferences and rights of such Preferred Stock, which was duly
adopted by the Board of Directors, on January 25, 2006, remains in full force and effect. Certain
capitalized terms used herein are defined in Section 19.




          NOW THEREFORE IT IS RESOLVED, that pursuant to Section 151 of the General Corporation Law of
Delaware and the authority expressly granted to and vested in the Board of the Issuer by the
provisions of the Amended and Restated Certificate of Incorporation (the “Certificate of
Incorporation”) of the Issuer, the Board hereby creates a series of Preferred Stock, par value
$0.01 per share, to consist initially of 2,300,000 shares, with the designations, preferences and
relative, participating, optional or other special rights, and the qualifications, limitations and
restrictions as set forth in this Certificate of Designations:




1. Designation and Number of Shares.




          1.1 The series will be known as the “5.750% Mandatory Convertible Preferred Stock.”




          1.2 The Preferred Stock will be a series consisting of 2,300,000 shares with a Liquidation
Preference of $250 per share of the authorized but unissued preferred stock of the Issuer.




2. Dividends.




          2.1 Dividends on the Preferred Stock will be payable quarterly in arrears in cash when, as and
if declared by the Board, or a duly authorized committee thereof, when the Issuer is legally
permitted to do so, on each Dividend Payment Date, at the annual rate of $14.375 per share, subject
to adjustment as provided for in Section 14.6. The initial dividend on the Preferred Stock for the
first Dividend Period, commencing on the date of first issuance of the Preferred Stock (assuming a
date of first issuance of February 2, 2006), to but excluding March 15, 2006, will be $1.7170 per
share, and when, as and if declared, will be payable on March 15, 2006; provided that the Issuer is
legally permitted to pay such dividends at such time. The dividend for each subsequent Dividend
Period on the Preferred Stock, when, as and if declared, will be $3.59375 per share, subject to
adjustment as provided for in Section 14.6. 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 6.1.




          2.2 The amount of dividends payable on each share of Preferred Stock for each Dividend Period
will be computed as specified above. The amount of dividends payable for any other period that is
shorter or longer than a full Dividend Period will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Dividends on the Preferred Stock shall





 









 







accrue and cumulate if the Issuer fails to declare one or more dividends on the Preferred
Stock in any amount, whether or not the Issuer is then legally permitted to pay such dividends.




          2.3 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 Issuer will also not
be obligated to pay Holders of the Preferred Stock any dividend in excess of the full dividends on
the Preferred Stock that are payable as described above.




          2.4 Dividends in arrears on the 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 Record Holders as they appear on the stock register of the Issuer 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.




3. Payment Restrictions 




          3.1 For so long as any Preferred Stock is outstanding, unless all accrued, cumulated and
unpaid dividends on the Preferred Stock for all prior Dividend Periods have been paid, the Issuer
may not:




               (a) declare, pay or set apart funds for the payment of any dividend, or make any distribution
of assets, on any Junior Securities or Parity Securities;



               (b) redeem, purchase or otherwise acquire for consideration any Junior Securities or pay or
make any monies available for a sinking fund for Junior Securities; or



               (c) redeem, purchase or otherwise acquire for consideration any Parity Securities or pay or
make any monies available for a sinking fund for Parity Securities; provided that the Issuer may
redeem, purchase or otherwise acquire Parity Securities pursuant to a purchase offer or exchange
offer made on similar terms to all holders of the Preferred Stock and such other Parity Securities.



4. Ranking.




          4.1 The Preferred Stock will rank, with respect to dividend distributions and distributions
upon the liquidation, winding up or dissolution of the Issuer:




               (a) senior to all classes of Common Stock and each other class of Capital Stock or series of
preferred stock issued by the Issuer, the terms of which expressly provide that such class or
series will rank junior to the Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding up or dissolution of the Issuer (collectively, with the Common Stock,
referred to as the “Junior Securities”);



               (b) on a parity with the Issuer’s 4% Convertible Perpetual Preferred Stock, the Issuer’s
3.625% Convertible Perpetual Preferred Stock, and any class or series of the



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capital stock issued by the Issuer, the terms of which expressly provide that such class or
series will rank on a parity with the Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding up or dissolution of the Issuer (collectively, with the
Issuer’s 4% Convertible Perpetual Preferred Stock and 3.625% Convertible Perpetual Preferred Stock,
referred to as “Parity Securities”); and




               (c) junior to each class of capital stock of the Issuer other than (i) the Common Stock, (ii)
any other class or series of capital stock, the terms of which expressly provide that such class or
series will rank junior to the Preferred Stock and (iii) any other class or series of capital stock
of the Issuer that has terms that provide that such class or series will rank on a parity with the
Preferred Stock, as to dividend distributions and distributions upon liquidation, winding up or
dissolution of the Issuer (collectively referred to as “Senior Securities”);



in each case, whether now outstanding or to be issued in the future.




5. Voting Rights.




          5.1 General. Except as otherwise required by law, the Certificate of Incorporation or
as set forth in this Section 5, Holders of the Preferred Stock are not entitled to any voting
rights and their consent shall not be required for the taking of any corporate action.




          5.2 Amendments to Preferred Stock Terms. So long as any shares of Preferred Stock are
outstanding, the Issuer will not, without the consent of the Holders of at least two-thirds of the
shares of Preferred Stock then outstanding, voting as a class with all other series of preferred
stock upon which like voting rights have granted, given in person or by proxy either at an annual
meeting or at a special meeting called for that purpose, amend, alter or repeal (by merger,
consolidation, combination, reclassification or otherwise) any of the provisions of the Certificate
of Incorporation so as to affect adversely the rights, preferences or voting powers of the Holders
of the Preferred Stock or otherwise; 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 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 Preferred Stock. Notwithstanding anything in
this Section 5 to the contrary, any amendment, alteration or repeal of any of the provisions of the
Issuer’s Certificate of Incorporation occurring in connection with any merger or consolidation of
the Issuer of the type described in Section 14.5(a) or any statutory exchange of securities of the
Issuer with another Person (other than in connection with a merger or acquisition) of the type
described in Section 14.5(d) shall be deemed not to adversely affect the rights, preferences or
voting power of the Holders of the Preferred Stock.




          5.3 Preferred Stock Directors.




               (a) If, at any time, dividends on the then outstanding shares of Preferred Stock or any other
class or series of Parity Securities with respect to payment of dividends in an amount equivalent
to six quarterly dividends, whether or not consecutive, shall not have been:




	 	(i)	 	paid, or




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	 	(ii)	 	(A) declared and (B) a sum
sufficient for the payment thereof set aside,




the Holders, voting separately as a single class with holders of Parity Securities that contain
similar voting rights which are then exercisable (shares of such Parity Securities, together with
shares of Preferred Stock, the “Preferred Shares”), and not any holders of Common Stock or any
other class or series of the Issuer’s capital stock, 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.




               (b) 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:




	 	(i)	 	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 Issuer shall be increased by two, and
	 
	 	(ii)	 	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.





               (c) 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, and
(iii) the authorized number of directors of the Issuer shall be reduced accordingly. Not later
than 40 days after such entitlement arises, the Board will convene a special meeting of
shareholders 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 Preferred Stock Directors. Any director who shall
have been elected by the holders of Preferred Shares as a class pursuant to this Section 5 may be
removed at any time, either for or without cause by, and only by, the affirmative vote of the
Record Holders of a majority of the outstanding Preferred Shares given at a special meeting of such
shareholders called for such purpose by the Issuer 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 may be filled only by the holders of outstanding Preferred
Shares at a meeting called for such purpose by the Issuer. The provisions of the Certificate of
Incorporation and By-laws of the Issuer 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 Issuer not more than 10 days after the Issuer (or the holders of 10% of the
outstanding Preferred Shares, if applicable)



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has notified the holders of Preferred Shares of the date of the special meeting to elect the
initial Preferred Stock Directors.




          5.4 Protective Provisions. So long as any of the Preferred Stock is outstanding, the
Issuer will not, without the approval of the Holders of at least two-thirds of the shares of
Preferred Stock then outstanding and any class or series of Parity Securities then outstanding that
contain like voting rights that are then exercisable, 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 or
otherwise:




               (a) reclassify any of the Issuer’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 Preferred Stock as to payment of dividends or distribution of assets upon the
dissolution, liquidation or winding up of the Issuer; or



               (b) issue 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 Preferred Stock as to payment of dividends or distribution of assets upon the
dissolution, liquidation or winding up of the Issuer; provided that the Issuer 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 Preferred Stock as to payment of dividends or distribution of assets upon the
dissolution, liquidation or winding up of the Issuer without the vote of the Holders of the
Preferred Stock.



          5.5 Votes Per Share. In exercising the voting rights set forth in this Section 5,
each share of Preferred Stock shall have one vote per share. In any case where the Holders of the
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.




          6.1 General. In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer, subject to the rights of holders of any shares of capital stock of the
Issuer then outstanding ranking senior to or pari passu with the Preferred Stock in respect of
distributions upon liquidation, dissolution or winding up of the Issuer and before any amount shall
be paid or distributed with respect to holders of any shares of capital stock of the Issuer then
outstanding ranking junior to the Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Issuer, the Holders of the Preferred Stock at the time outstanding
will be entitled to receive, out of the net assets of the Issuer legally available for distribution
to shareholders, a liquidating distribution in the amount of $250 per share, subject to adjustment
as provided for in Section 14.6, 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
Record Holders for such Dividend Periods or portions thereof. After the payment to the Holders of
the Preferred Stock of the full amounts provided for in this Section




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6.1, the Holders of the Preferred Stock will have no right or claim to any of the Issuer’s
remaining assets.




          6.2 Liquidation, Dissolution Or Winding Up. 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 Issuer:




               (a) the voluntary sale, conveyance, exchange or transfer for cash shares of stock, securities
or other consideration of all or substantially all of the Issuer’s property or assets;



               (b) the consolidation, merger or amalgamation of the Issuer with or into any other Person; or



               (c) the consolidation, merger or amalgamation of any other Person with or into the Issuer.



          6.3 Distributions. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer, the amounts payable with respect to the Preferred Stock then outstanding
are not paid in full as provided in Section 6.1 hereof, no distribution shall be made on account of
any securities ranking pari passu with the Preferred Stock as to the distribution of assets upon
such liquidation, dissolution or winding up, unless a pro rata distribution is made on the
Preferred Stock. The Holders of the 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
(including all accumulated and unpaid dividends) to the aggregate liquidation preference (including
all accumulated and unpaid dividends) of the outstanding shares of each such series.




          6.4 Notice. Written notice of any voluntary or involuntary liquidation, dissolution
or winding up of the Issuer, stating the payment date or dates when, and the place or places where,
the amounts distributable to holders of 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 Preferred Stock, at the address shown
on the books of the Issuer or the Transfer Agent; provided, however, that a failure to give notice
as provided above or any defect therein shall not affect the Issuer’s ability to consummate a
voluntary or involuntary liquidation, dissolution or winding up of the Issuer.




7. Mandatory Conversion on the Mandatory Conversion Date.




          7.1 Each share of Preferred Stock will automatically convert (unless previously converted at
the option of the Holder in accordance with Section 8 or 10 hereof or converted at the option of
the Issuer pursuant to Section 9 hereof) on the Mandatory Conversion Date, into a number of shares
of Common Stock equal to the Conversion Rate.




          7.2 The “Conversion Rate” shall be as follows:




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               (a) if the Applicable Market Value of the Common Stock is equal to or greater than $60.45 (the
“Threshold Appreciation Price”), then the Conversion Rate shall be equal to 4.1356 shares of Common
Stock per share of Preferred Stock (the “Minimum Conversion Rate”);



               (b) if the Applicable Market Value of the Common Stock is less than the Threshold Appreciation
Price, but greater than $48.75 (the “Initial Price”), then the Conversion Rate shall be equal to
$250 divided by the Applicable Market Value of the Common Stock; and



               (c) 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 5.1282 shares of Common Stock per share of
Preferred Stock (the “Maximum Conversion Rate”).


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.




          7.3 The Holders of 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 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 Preferred Stock payable to Record Holders as of a prior date); provided that the Issuer is
legally permitted to pay such dividends at such time.




8. Early Conversion at the Option of the Holder.




          8.1 Conversion at the Option of the Holder. Shares of the 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.




          8.2 Conversion Notice. Any written notice of conversion pursuant to Section 8 hereof
shall be duly executed by the Holder, and specify:




               (a) the number of shares of Preferred Stock to be converted;



               (b) 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);



               (c) 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



               (d) any other transfer forms, tax forms or other relevant documentation required and specified
by the Transfer Agent, if necessary, to effect the conversion.



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          If specified by the Holder in the notice of conversion that shares of Common Stock issuable
upon conversion of the Preferred Stock shall be issued to a Person other than the Holder
surrendering the shares of 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.




               (e) Issuance of Shares of Common Stock. Upon receipt by the Transfer Agent of a
completed and duly executed notice of conversion as set forth in Section 8.2 and upon surrender of
a certificate representing share(s) of Preferred Stock to be converted (if held in certificated
form), together with evidence of payment of transfer or other taxes, if applicable, the Issuer
shall, within three Business Days or as soon as practicable 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 Preferred Stock in
certificated form, the Issuer 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 Preferred Stock, only part of which are to be converted, the
Issuer 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 Preferred Stock that shall not have been converted.



               (f) Effective Date of Issuance. The issuance by the Issuer of shares of Common Stock
upon a conversion of shares of 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 8.2, and the surrender
by such Holder or such Holder’s designee of the certificate or certificates representing the shares
of Preferred Stock to be converted (if held in certificated form), duly assigned or endorsed for
transfer to the Issuer (or accompanied by duly executed stock powers relating thereto).



               (g) Rights to Accrued Dividends. A Holder of a share of Preferred Stock on the Early
Conversion Date with respect to such share shall have the right to receive all accrued, cumulated
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 Preferred Stock payable to Record Holders as of a prior date); provided that the
Issuer is then legally permitted to pay such dividends. Except as described above, upon any
optional conversion of the Preferred Stock, the Issuer will make no payment or allowance for unpaid
dividends on the Preferred Stock.



9. Provisional Conversion.




          9.1 Conversion by the Issuer. 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





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Day prior to the date (the “Provisional Conversion Notice Date”) on which the Issuer notifies
the Holders (pursuant to Section 9.2 below) that it is exercising its option to cause the
conversion of the Preferred Stock pursuant to this Section 9, the Issuer may, at its option, cause
the conversion of all, but not less than all, the shares of Preferred Stock then outstanding into
shares of Common Stock at the Minimum Conversion Rate for each share of Preferred Stock, subject to
adjustment as set forth in Section 14. The Issuer shall be able to cause this conversion only if,
in addition to issuing the Holders shares of Common Stock, the Issuer 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 Preferred Stock then outstanding, whether or not declared (other than
previously declared dividends on the Preferred Stock payable to Record Holders as of a prior date),
plus (ii) the present value of all remaining future dividend payments on the shares of 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.




          9.2 Provisional Conversion Notice. A written notice (the “Provisional Conversion
Notice”) shall be sent by or on behalf of the Issuer, by first-class mail, postage prepaid, to the
Record Holders as they appear on the stock register of the Issuer on the Provisional Conversion
Notice Date (i) notifying such Holders of the election of the Issuer 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 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 Issuer 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 Issuer’s website shall not act to prevent or delay
conversion pursuant to this Section 9.




          9.3 Mechanics of Conversion. The Issuer shall deliver to the Transfer Agent written
instructions authorizing the Transfer Agent, on behalf and at the expense of the Issuer, to cause
the Provisional Conversion Notice to be duly mailed as soon as practicable after receipt of such
instructions from the Issuer and in accordance with the above provisions. The shares of Common
Stock to be issued upon conversion of the Preferred Stock pursuant to this Section 9 and all funds
necessary for the payment in cash of (i) an amount equal to any accrued, cumulated and unpaid
dividends on the shares of Preferred Stock then outstanding, whether or not declared (other than
previously declared dividends on the Preferred Stock payable to Record Holders as of a prior date),
plus (ii) the present value of all remaining future dividend payments on the shares of 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 Record Holders as they appear on the stock register of the Issuer, 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.




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          9.4 Rights of Holders. 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 Designations until
and including the Provisional Conversion Date. From and after the Provisional Conversion Date,
upon delivery by the Issuer of the Common Stock and payment of the funds to the Transfer Agent as
described in Section 9.3 above, the 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.




          9.5 Deposit With Transfer Agent. 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 Issuer 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 Issuer
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
Issuer, and after any such repayment, the Holders of the shares entitled to the funds so repaid to
the Issuer shall look only to the Issuer for such payment without interest.




10. Conversion Upon Cash Acquisition.




          10.1 Cash Acquisition Conversion. Subject to Section 10.8 below, in the event of a
Cash Acquisition, the Holders of the Preferred Stock shall have the right to convert their shares
of Preferred Stock during a period that begins on a date that is 15 days prior to the anticipated
effective time of such acquisition and ending on a date that is 15 days after the actual effective
date, which period must end prior to the Mandatory Conversion Date and the Provisional Conversion
Notice Date (such right of the Holders to convert their shares pursuant to this Section 10.1 being
the “Cash Acquisition Conversion”) at the Cash Acquisition Conversion Rate (as adjusted pursuant to
the definition of “Cash Acquisition Conversion Rate” and Section 14.3).




          10.2 Cash Acquisition Conversion Notice. On or before the twentieth day prior to the
date on which the Issuer anticipates consummating the Cash Acquisition, a written notice (the “Cash
Acquisition Conversion Notice”) shall be sent by or on behalf of the Issuer, by first-class mail,
postage prepaid, to the Record Holders as they appear on the stock register of the Issuer. Such
notice shall contain:





               (i) the date on which the Cash Acquisition is anticipated to be effected;




               (ii) whether Holders will have Cash Acquisition Conversion rights in connection with
such Cash Acquisition, or whether the Issuer has made a Public Acquirer Election pursuant to
Section 10.8 below;



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               (iii) if Holders have Cash Acquisition Conversion rights in connection with such Cash
Acquisition, the date, which shall be 15 days after the actual effective date of the Cash
Acquisition, by which the Cash Acquisition Conversion right must be exercised;




               (iv) if Holders have Cash Acquisition Conversion rights in connection with such Cash
Acquisition, the Cash Acquisition Conversion Rate applicable to such Cash Acquisition;




               (v) if Holders have Cash Acquisition Conversion rights in connection with such Cash
Acquisition, whether the Issuer will elect to pay any amount payable pursuant to Section
10.3 below in shares of Common Stock, cash or a combination cash and Common Stock; and




               (vi) the instructions a Holder must follow to exercise the Cash Acquisition Conversion
right, if any, in connection with such Cash Acquisition.



          10.3 Cash Acquisition Make-Whole Amount. Upon any conversion pursuant to Section
10.1, in addition to issuing the Holders shares of Common Stock at the Cash Acquisition Conversion
Rate, the Issuer shall either,




               (a) pay the Holders in cash (i) an amount equal to any accrued, cumulated and unpaid dividends
on the shares of Preferred Stock then outstanding, whether or not declared (other than previously
declared dividends on the Preferred Stock payable to Record Holders as of a prior date), plus (ii)
the present value of all remaining future dividend payments on the shares of Preferred Stock then
outstanding through and including the Mandatory Conversion Date; provided that at such time the
Corporation is then legally permitted to pay such dividends (the present value of the remaining
future dividend payments will be computed using a discount rate equal to the Treasury Yield plus
8.65%), or



               (b) increase the number of shares of Common Stock issuable upon conversion of the Preferred
Stock by an amount equal to (i) the amount set forth in Section 10.3(a) above, divided by (ii) the
average of the Closing Prices for each of the 10 consecutive Trading Days (appropriately adjusted
to take into account the occurrence during such period of stock splits and similar events) ending
on the effective date of the Cash Acquisition.



          10.4 Exercise of Cash Acquisition Conversion Right. To exercise a Cash Acquisition
Conversion right, a Holder shall deliver to the Transfer Agent at its Corporate Trust Office, no
earlier than 15 days prior to the anticipated effective date of the Cash Acquisition, and no later
than 5:00 p.m., New York City time on or before the date by which the Cash Acquisition 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 Preferred Stock with respect to which the Cash
Acquisition Conversion right is being exercised, duly assigned or endorsed for transfer to the
Issuer, or accompanied by duly executed stock powers relating thereto, or in blank, with a written
notice to the Issuer stating the Holder’s intention to convert early in connection with the Cash
Acquisition containing the information set forth in Section 8.2 and providing the Issuer with
payment instructions.




11









 








          10.5 Reorganizations. If a Holder does not elect to exercise the Cash Acquisition
Conversion right pursuant to this Section 10 in connection with a Reorganization Event, in lieu of
shares of Common Stock, the Issuer shall deliver to such Holder on the Mandatory Conversion Date,
the Provisional Conversion Date or an Early Conversion Date, such cash, securities and other
property as determined in accordance with Section 14.5 hereof.




          10.6 Delivery. Upon a Cash Acquisition Conversion, the Transfer Agent shall, in
accordance with the instructions provided by the Holder thereof in the written notice provided to
the Issuer as set forth above, deliver to the Holder such cash and securities issuable upon such
Cash Acquisition Conversion, together with payment in lieu of any fraction of a share, as provided
herein. Such delivery shall take place upon, and only to the extent of, the consummation of such
Cash Acquisition Conversion.




          10.7 Certificates. In the event that a Cash Acquisition Conversion is effected with
respect to shares of Preferred Stock representing less than all the shares of Preferred Stock held
by a Holder, upon such Cash Acquisition Conversion the Issuer shall execute and the Transfer Agent
shall countersign and deliver to the Holder thereof, at the expense of the Issuer, a certificate
evidencing the shares of Preferred Stock as to which Cash Acquisition Conversion was not effected.




          10.8 Public Acquirer Change of Control.




               (a) Public Acquirer Election. Notwithstanding anything to the contrary in this
Section 10, in the event of a Cash Acquisition that constitutes a Public Acquirer Change of
Control, the Issuer may, by delivery of notice pursuant to Section 10.2, elect to cause the
Preferred Stock to be convertible into Acquirer Common Stock (the “Public Acquirer Election”). If
the Issuer makes a Public Acquirer Election, Holders will not have the Cash Acquisition Conversion
rights set forth above.



               (b) Adjustments to Fixed Conversion Rates. Immediately after the effective date of
such Public Acquirer Change of Control, each Fixed Conversion Rate shall equal the product of,




               (i) such Fixed Conversion Rate in effect immediately prior to such effective date,
multiplied by




               (ii) the average of the quotients obtained, for each Trading Day in the 10 consecutive
Trading Day period commencing on the Trading Day next succeeding such effective date (the
“Valuation Period”), by dividing,




                    (1) the Public Acquirer Acquisition Value on each such Trading Day in the Valuation
Period, by




                    (2) the Closing Price of the Acquirer Common Stock on each such Trading Day in the
Valuation Period.



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11. Conversion Procedures.




          11.1 Conversion Date. 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 Preferred Stock on the Mandatory Conversion Date, the Early Conversion Date, the Provisional
Conversion Date, or the Cash Acquisition Conversion Date (each, a “Conversion Date”), dividends on
any shares of Preferred Stock converted to Common Stock shall cease to accrue and cumulate, and
such shares of 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, 9 or 10 hereof, as applicable.




          11.2 Record Holders. 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 applicable Conversion Date. 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 Preferred Stock
shall not be deemed outstanding for any purpose, and Holders of shares of 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 and rights to receive any dividends or other distributions on
the Common Stock) by virtue of holding shares of Preferred Stock.




          11.3 Status of Converted Preferred Stock. Shares of Preferred Stock duly converted in
accordance with this Certificate of Designations, or otherwise reacquired by the Issuer, will
resume the status of authorized and unissued Preferred Stock, undesignated as to series and
available for future issuance.




          11.4 Registration of Shares. In the event that a Holder of shares of 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 and any related payment should be sent, the Issuer shall be
entitled to register such shares, and make such payment, in the name of the Holder of such
Preferred Stock as shown on the records of the Issuer and to send the certificate or certificates
representing such shares and such payment to the address of such Holder shown on the records of the
Issuer.




12. Reservation of Common Stock.




          12.1 Obligation to Reserve Shares. The Issuer shall at all times reserve and keep
available out of its authorized and unissued Common Stock or shares held in the treasury of the
Issuer, solely for issuance upon the conversion of shares of 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 Preferred Stock then
outstanding on the Mandatory Conversion Date, subject to the adjustments described in Section 14.
For purposes of this Section 12.1, the number of shares of Common Stock that shall be





13









 







deliverable upon the conversion of all outstanding shares of Preferred Stock shall be computed
as if at the time of computation all such outstanding shares were held by a single Holder.




          12.2 Issuance of Treasury Shares. Notwithstanding the foregoing, the Issuer shall be
entitled to deliver upon conversion of shares of Preferred Stock, as herein provided, shares of
Common Stock reacquired and held in the treasury of the Issuer (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).




          12.3 Due Authorization. All shares of Common Stock delivered upon conversion of the
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).




          12.4 Compliance with Law. Prior to the delivery of any securities that the Issuer
shall be obligated to deliver upon conversion of the Preferred Stock, the Issuer 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.




          12.5 Listing. The Issuer 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 Issuer will, if permitted by the rules of such 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
Preferred Stock; provided, however, that if the rules of such exchange or automated quotation
system permit the Issuer to defer the listing of such Common Stock until the first conversion of
Preferred Stock into Common Stock in accordance with the provisions hereof, the Issuer covenants to
list such Common Stock issuable upon conversion of the Preferred Stock in accordance with the
requirements of such exchange or automated quotation system at such time.




13. Fractional Shares.




          13.1 No Fractional Shares. No fractional shares of Common Stock will be issued as a
result of any conversion of shares of Preferred Stock.




          13.2 Cash In Lieu of Fractional Shares. In lieu of any fractional share of Common
Stock otherwise issuable on any Conversion Date, the Issuer shall pay an amount in cash (computed
to the nearest cent) equal to the same fraction of:




               (a) in the case of a conversion pursuant to Section 7 or Section 9 hereof or a Cash
Acquisition Conversion pursuant to Section 10, the Current Market Price; or



               (b) 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.



14









 





          13.3 Aggregation. If more than one share of the 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 Preferred Stock so surrendered.




14. Anti-Dilution Adjustments to the Fixed Conversion Rates.




          14.1 Anti-Dilution Adjustments. Each Fixed Conversion Rate and the number of shares
of Common Stock to be delivered upon conversion shall be subject to the following adjustments.




               (a) Stock Dividends and Distributions. In case the Issuer 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 (a), the
number of shares of Common Stock at the time outstanding shall not include shares held in the
treasury of the Issuer but shall include any shares issuable in respect of any scrip certificates
issued in lieu of fractions of shares of Common Stock. The Issuer will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the Issuer.



               (b) 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.



               (c) Issuance of Stock Purchase Rights. In case the Issuer 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



15









 




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 (c), the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Issuer but shall include any shares issuable in respect
of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Issuer shall
not issue any such rights or warrants in respect of shares of Common Stock held in the treasury of
the Issuer. Such increase shall be subsequently adjusted for any shares of Common Stock not so
subscribed.




               (d) Debt or Asset Distribution.




               (i) In case the Issuer 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 14.1(a) or
Section 14.1(b) hereof, any rights or warrants referred to in Section 14.1(c) hereof, any
dividend or distribution paid exclusively in cash, any consideration payable in connection
with a tender or exchange offer made by the Issuer or any subsidiary of the Issuer, and any
dividend of 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 14.1(d)(ii) 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 (d)(i) is
applicable, clause (d)(ii) of this Section 14.1 shall not be applicable.




               (ii) 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 (d)(ii) of



16









 






this Section 14.1 will occur on the 15th Trading Day from, but excluding, the “ex-date”
with respect to the Spin-Off.



               (e) Cash Distributions. In case the Issuer 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
Issuer 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 14.5 applies or as part of a distribution referred to in
paragraph (d) of this Section 14.1, (ii) any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Issuer, or (iii) any consideration payable in
connection with a tender or exchange offer made by the Issuer or any subsidiary of the Issuer.



               (f) Self Tender Offers and Exchange Offers. In case a tender or exchange offer made
by the Issuer or any subsidiary of the Issuer 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”).



               (g) Rights Plans. To the extent that the Issuer has a rights plan in effect on any
Conversion Date, upon conversion of any Preferred Stock, Holders shall receive, in



17









 




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 Issuer made a
distribution to all holders of the Common Stock as described in clause (d)(i) above, subject to
readjustment in the event of the expiration, termination or redemption of such rights.




          14.2 Adjustment for Tax Reasons. The Issuer 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.




          14.3 Calculation of Adjustments; Adjustments to Threshold Appreciation Price, Initial
Price, and Cash Acquisition Stock Price.




               (a) 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 December 15, 2008, 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 earlier of Mandatory Conversion Date and the date on which the Issuer consummates a
Cash Acquisition, 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.



               (b) If an adjustment is made to the Conversion Rate pursuant to Sections 14.1(a), 14.1(b),
14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or 10.8(b), an inversely proportional adjustment shall be
made to the Threshold Appreciation Price and the Initial Price for purposes of determining which of
clauses (a), (b) and (c) of Section 7.2 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 14.1(a), 14.1(b), 14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or 10.8(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 14.1(a), 14.1(b), 14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or
10.8(b) during the period taken into consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the Conversion Rate.



               (c) If an adjustment is made to the Minimum Conversion Rate pursuant to Sections 14.1(a),
14.1(b), 14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or 10.8(b), a proportional adjustment shall be
made to each Cash Acquisition Stock Price set forth in the table included in the definition of
“Cash Acquisition Conversion Rate.” Such adjustment shall be made by multiplying each Cash
Acquisition Stock Price included in such table by a fraction, the



18









 




numerator of which is the Minimum Conversion Rate immediately prior to such adjustment and the
denominator of which is the Minimum Conversion Rate immediately after such adjustment.




               (d) 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 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
Preferred Stock. The applicable Conversion Rate shall not be adjusted:




               (i) 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 Issuer’s
securities and the investment of additional optional amounts in shares of Common Stock under
any plan;




               (ii) 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 Issuer or any of its subsidiaries;




               (iii) 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 Preferred Stock were first issued;




               (iv) for a change in the par value or no par value of the Common Stock; or




               (v) for accrued, cumulated and unpaid dividends.



          The Issuer 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.




          14.4 Notice of Adjustment. Whenever a Fixed Conversion Rate or the Cash Acquisition
Conversion Rate is to be adjusted, the Issuer shall:




               (a) compute such adjusted Fixed Conversion Rate or the Cash Acquisition Conversion Rate, as
applicable, and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth
such adjusted Fixed Conversion Rate or the Cash Acquisition Conversion Rate, as applicable, the
method of calculation thereof in reasonable detail, and the facts requiring such adjustment and
upon which such adjustment is based;



               (b) as soon as practicable following the occurrence of an event that requires an adjustment to
a Fixed Conversion Rate or the Cash Acquisition Conversion Rate, as applicable, or if the Issuer 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 Preferred Stock of the occurrence of such
event; and



19









 





               (c) as soon as practicable following the determination of a revised Fixed Conversion Rate or
the Cash Acquisition Conversion Rate, as applicable, provide, or cause to be provided, a written
statement to the Holders of the Preferred Stock setting forth in reasonable detail the method by
which the adjustment to such Fixed Conversion Rate was determined and setting forth such revised
Fixed Conversion Rate.



          14.5 Reorganization Events. Subject to Section 10, in the event of:




               (a) any consolidation or merger of the Issuer with or into another Person (other than a merger
or consolidation in which the Issuer 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 Issuer or another Person);



               (b) any sale, transfer, lease or conveyance to another Person of all or substantially all of
the property and assets of the Issuer;



               (c) any reclassification of Common Stock into securities including securities other than
Common Stock; or



               (d) any statutory exchange of securities of the Issuer with another Person (other than in
connection with a merger or acquisition);



          (any such event specified in this Section 14.5, a “Reorganization Event”) each share of 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 Issuer consolidated or into which the Issuer merged or which merged into the Issuer 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 Issuer 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 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
have been exercised (an “Electing Share”), then, for the purpose of this Section 14.5 the kind and
amount of securities, cash and other property receivable upon such Reorganization Event by each
Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of
the Electing Shares). The amount of Exchange Property receivable upon conversion of any 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 and the Applicable
Market Value at such time, in the case of the Mandatory Conversion Date. The Board, if it finds it





20










 





appropriate and equitable, may make corresponding changes to the Fixed Conversion Rates, the
initial Price and Threshold Appreciation Price.




          For purposes of this Section 14.5, “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 the Board, whose determination shall be final and conclusive. For purposes of this
Section 14.5, 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
14.5, 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 14.5 shall similarly apply to successive Reorganization
Events and the provisions of Section 14 shall apply to any shares of capital stock of the Issuer
(or any successor) received by the holders of Common Stock in any such Reorganization Event.




          The Issuer (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 14.5.




          14.6 Adjustments of Liquidation Preference and Dividend Rate. 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 Preferred Stock. Such adjustments shall be determined in good faith by the
Board and submitted by the Board to the Transfer Agent.




15. Replacement Stock Certificates.




          15.1 Mutilated, Lost, Stolen and Destroyed Certificates. If physical certificates are
issued, and any of the Preferred Stock certificates shall be mutilated, lost, stolen or destroyed,
the Issuer shall, at the expense of the Holder, issue, in exchange and in substitution for and upon
cancellation of the mutilated Preferred Stock certificate, or in lieu of and substitution for the
Preferred Stock certificate lost, stolen or destroyed, a new Preferred Stock certificate of like
tenor and representing an equivalent amount of shares of Preferred Stock, but only upon receipt of
evidence of such loss, theft or destruction of such Preferred Stock certificate and indemnity, if
requested, satisfactory to the Issuer and the Transfer Agent.




          15.2 Delivery After Conversion. The Issuer is not required to issue any certificates
representing the 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




21









 







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 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 Preferred Stock shall be
The Bank of New York. The Issuer may, in its sole discretion, remove the Transfer Agent in
accordance with the agreement between the Issuer and the Transfer Agent; provided that the Issuer
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 Issuer shall send notice
thereof by first-class mail, postage prepaid, to the Holders of the Preferred Stock.




17. Form.




          17.1 Global Shares. Preferred Stock shall be issued in the form of one or more
permanent global shares of Preferred Stock in definitive, fully registered form with the global
legend (the “Global Shares Legend”), as set forth on the form of 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 Designations. The Global
Preferred Share may have notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Issuer is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Issuer). The Global Preferred Share shall be
deposited on behalf of the holders of the 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 Issuer 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 17.1 shall apply only to a Global Preferred Share deposited with or on behalf of the
Depositary. The Issuer 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 Issuer, the Registrar and any agent of the Issuer
or the Registrar as the absolute owner of such Global Preferred Share for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Registrar or any agent
of the Issuer 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 Preferred Share. The Holder of the
Preferred Shares may grant proxies or otherwise authorize any Person

22









 








to take any action that a Holder is entitled to take pursuant to the Preferred Shares, this
Certificate of Designations 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 Preferred Stock, unless (x) the Depositary is unwilling or unable to continue as Depositary for
the Global Preferred Share and the Issuer 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 Issuer does not appoint a qualified replacement for the Depositary within 90
days or (z) the Issuer 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 Preferred Stock in registered form, with the same terms and of an equal
aggregate Liquidation Preference. Definitive shares of 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.




          17.2 Execution of Global Preferred Share. An Officer shall sign the Global Preferred
Share for the Issuer, in accordance with the Issuer’s bylaws and applicable law, by manual or
facsimile signature.




          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.




          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.




          18.1 Notices. 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 Designations) with postage prepaid, addressed: (i) if to the
Issuer, to its office at 211 Carnegie Center, Princeton, NJ 08540 (Attention: the Secretary) or to
the Transfer Agent at its Corporate Trust Office, or other agent of the Issuer designated as
permitted by this Certificate of Designations, or (ii) if to any Holder of the 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 Issuer (which may include the records of any transfer
agent for the Preferred Stock or Common Stock, as the case may be), or (iii) to such other address
as the Issuer or any such Holder, as the case may be, shall have designated by notice similarly
given.




          18.2 Taxes. The Issuer 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 Preferred Stock or
shares of Common Stock or other securities issued on account of Preferred Stock pursuant hereto or
certificates representing such shares or securities. The Issuer shall not, however, be required to
pay any such tax that may be payable in respect of any transfer involved

23









 








in the issuance or delivery of shares of Preferred Stock or Common Stock or other securities
in a name other than that in which the shares of 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 Issuer the amount of any such tax or has established, to the
satisfaction of the Issuer, that such tax has been paid or is not payable.




19. Definitions.




          Unless otherwise defined herein, capitalized terms used in this Certificate of Designations
shall have the following meanings:




          “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 17.1 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, as amended from time to time.




          “Board” means the Board of Directors of the Issuer.




          “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 Acquisition” means the consummation of any acquisition (whether by means of a
liquidation, share exchange, tender offer, consolidation, recapitalization, reclassification,
merger of the Issuer, or any sale, lease or other transfer of the consolidated assets of the Issuer
and its subsidiaries) or a series of related transaction or events pursuant to which all or
substantially all of the Issuer’s Common Stock is exchanged for, converted into or constitutes
solely the right to receive cash, securities or other property more than 10% of which consists of
cash or securities or other property that are not, or upon issuance will not be, traded on the New
York Stock Exchange or quoted on the Nasdaq National Market.




          “Cash Acquisition Conversion” shall have the meaning set forth in Section 10.1 hereof.




          “Cash Acquisition Conversion Date” means the effective date of any early conversion of
Preferred Stock pursuant to Section 10 hereof.




          “Cash Acquisition Conversion Notice” shall have the meaning set forth in Section 10.2 hereof.




24









 








          “Cash Acquisition Conversion Rate” means the Conversion Rate set forth in the table below for
the applicable effective date of the Cash Acquisition and the applicable Cash Acquisition Stock
Price on such effective date (as such Cash Acquisition Stock Prices are adjusted pursuant to
Section 14 hereof):




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Price on Effective Date
	Date
	 	$	35.00	 	 	$	40.00	 	 	$	45.00	 	 	$	48.75	 	 	$	55.00	 	 	$	60.45	 	 	$	70.00	 	 	$	80.00	 	 	$	100.00	 	 	$	125.00	 	 	$	150.00	 
	1/25/2006
	 	 	4.5630	 	 	 	4.4614	 	 	 	4.3776	 	 	 	4.3263	 	 	 	4.2603	 	 	 	4.2189	 	 	 	4.1724	 	 	 	4.1464	 	 	 	4.1272	 	 	 	4.1239	 	 	 	4.1251	 
	3/15/2007
	 	 	4.7351	 	 	 	4.6098	 	 	 	4.4967	 	 	 	4.4237	 	 	 	4.3267	 	 	 	4.2649	 	 	 	4.1961	 	 	 	4.1590	 	 	 	4.1333	 	 	 	4.1287	 	 	 	4.1292	 
	3/15/2008
	 	 	4.9471	 	 	 	4.8153	 	 	 	4.6671	 	 	 	4.5595	 	 	 	4.4066	 	 	 	4.3079	 	 	 	4.2044	 	 	 	4.1572	 	 	 	4.1338	 	 	 	4.1319	 	 	 	4.1324	 
	3/16/2009
	 	 	5.1282	 	 	 	5.1282	 	 	 	5.1282	 	 	 	5.1282	 	 	 	4.5455	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 






          If the Cash Acquisition Stock Price is in excess of the highest Cash Acquisition Stock
Price set forth in the table above (as such amount is adjusted from time to time), then the Cash
Acquisition Conversion Rate will be the Minimum Conversion Rate. If the Cash Acquisition Stock
Price is less than the lowest Cash Acquisition Stock Price set forth in the table above (as such
amount is adjusted from time to time), then the Cash Acquisition Conversion Rate will be the
Maximum Conversion Rate (as such amount is adjusted from time to time).




          If the effective date falls between the dates set forth under the heading “Effective Date of
Cash Acquisition” in the table above, or if the Cash Acquisition Stock Price falls between two
amounts set forth in the table above the Cash Acquisition Conversion Rate will be determined by
straight-line interpolation between the Cash Acquisition Conversion Rates set forth for the higher
and lower Cash Acquisition Stock Prices and effective dates, as applicable, based on a 365 day
year.




          “Cash Acquisition Stock Price” means the consideration paid per share of Common Stock in a
Cash Acquisition. If such consideration consists only of cash, the Cash Acquisition Stock Price
shall equal the amount of cash paid per share. If such consideration consists of any property
other than cash, the Cash Acquisition Stock Price shall be the average Closing Price per share of
our Common Stock on the 10 Trading Days up to, but not including, the effective date of the Cash
Acquisition.




          “Certificate of Designations” means this Certificate of Designations of the Certificate of
Incorporation dated January 26, 2006.




          “Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of
the Issuer, as amended.




          “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, Acquirer 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

25











 






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 Issuer.




          “Common Stock” means the Issuer’s Common Stock, par value $0.01 per share, as the same exists
at the date of filing of this Certificate of Designations relating to the Preferred Stock, or any
other class of stock resulting from successive changes or reclassifications of such Common Stock
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 10 and Section 14.5, shares of Common
Stock issuable on conversion of shares of Preferred Stock shall include only shares of the class
designated as Common Stock of the Issuer at the date of the filing of this Certificate of
Designations with the Secretary of State of the State of Delaware 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 Issuer and which are not subject to redemption by the
Issuer; 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 11.1 hereof.




          “Conversion Rate” shall have the meaning set forth in Section 7.2 hereof.




          “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 14.1(d)(ii) 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.




          “Depositary” means DTC or its nominee or any successor appointed by the Issuer.




26









 








          “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 Preferred Stock.




          “DTC” means The Depository Trust Company.




          “Early Conversion” shall have the meaning set forth in Section 8.1 hereof.




          “Early Conversion Date” means the effective date of any early conversion of Preferred Stock
pursuant to Section 8 hereof.




          “Electing Share” shall have the meaning set forth in Section 14.5 hereof.




          “Exchange Property” shall have the meaning set forth in Section 14.5 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.




          “Fixed Conversion Rates” means the Maximum Conversion Rate and the Minimum Conversion Rate.




          “Global Preferred Share” shall have the meaning set forth in Section 17.1 hereof.




          “Global Shares Legend” shall have the meaning set forth in Section 17.1 hereof.




          “Holder” means the Person in whose name the shares of the Preferred Stock are registered,
which may be treated by the Issuer and the Transfer Agent as the absolute owner of the shares of
Preferred Stock for the purpose of making payment and settling conversions and for all other
purposes.




          “Issuer” means NRG Energy, Inc., a Delaware corporation.




          “Initial Price” shall have the meaning set forth in Section 7.2 hereof.




          “Junior Securities” shall have the meaning set forth in Section 4.1(a) hereof.




          “Liquidation Preference” means, as to the Preferred Stock, $250 per share.




          “Mandatory Conversion Date” means March 16, 2009.




27









 








          “Maximum Conversion Rate” shall have the meaning set forth in Section 7.2(c) hereof.




          “Minimum Conversion Rate” shall have the meaning set forth in Section 7.2(a) hereof.




          “Officer” means the Chief Executive Officer, the Chief Financial Officer, any Executive Vice
President, any Vice President, the Treasurer, or the Secretary of the Issuer.




          “Officer’s Certificate” means a certificate of the Issuer, signed by any duly authorized
Officer of the Issuer.




          “Parity Securities” shall have the meaning set forth in Section 4.1(b) hereof.




          “Person” means a legal person, including any individual, corporation, estate, partnership,
joint venture, association, joint-stock company, limited liability company or trust.




          “Preferred Stock” means the Issuer’s 5.750% Mandatory Convertible Preferred Stock.




          “Preferred Stock Director” shall have the meaning set forth in Section 5.3(a) hereof.




          “Provisional Conversion Date” means the date fixed for conversion of shares of Preferred Stock
into shares of Common Stock pursuant to Section 9 above unless the Issuer shall default in the cash
payment of (1) an amount equal to any accrued, cumulated and unpaid dividends on the shares of
Preferred Stock then outstanding, whether or not declared (other than previously declared dividends
on the Preferred Stock payable to Record Holders as of a prior date), plus (2) the present value of
all remaining future dividend payments on the shares of Preferred Stock then outstanding, through
and including the Mandatory Conversion Date, in each case, when the Issuer is legally permitted to
and makes such payment.




          “Provisional Conversion Notice” shall have the meaning set forth in Section 9.2 hereof.




          “Provisional Conversion Notice Date” shall have the meaning set forth in Section 9.1 hereof.




          “Public Acquirer Acquisition Value” means, for each Trading Day in the Valuation Period, the
value of the consideration paid per share of Common Stock in connection with a Public Acquirer
Change of Control, which shall equal (a) the face amount of cash included in such consideration,
(b) the Closing Price of such Acquirer Common Stock on each such Trading Day, and (c) the fair
market value of any other security, asset or property on each such Trading Day, as determined by
two independent nationally recognized investment banks selected by the Transfer Agent for such
purpose. If the kind or amount of securities, cash and other property receivable upon such Public
Acquirer Change of Control is not the same for each share of Common Stock held immediately prior to
such Public Acquirer Change of Control by other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of

28









 








election shall have been exercised, then the kind and amount of securities, cash and other
property receivable upon such Public Acquirer Change of Control by each Electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the Electing Shares.




          “Public Acquirer Change of Control” means a Cash Acquisition in which the Person acquiring a
majority of the Issuer’s Common Stock or the Person formed by or surviving such Cash Acquisition,
or any entity that is a direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of more than 50% of the total voting power of all shares of such Person’s capital
stock that are entitled to vote generally in the election of directors, but in each case other than
the Issuer, has a class of common stock traded on the New York Stock Exchange or quoted on the
Nasdaq national Market (such class of common stock, the “Acquirer Common Stock”).




          “Public Acquirer Election” shall have the meaning set forth in Section 10.8 hereof.




          “Purchased Shares” shall have the meaning set forth in Section 14.1(f) 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 day on which the Board, or an authorized committee of the Board,
declares the dividend payable pursuant to Section 2.4.




          “Record Holder” means each Holder of record of the Preferred Stock as it appears on the stock
register of the Issuer at the close of business on a Record Date.




          “Reorganization Event” shall have the meaning set forth in Section 14.5 hereof.




          “Senior Securities” shall have the meaning set forth in Section 4.1(c) hereof.




          “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
Issuer.




          “Threshold Appreciation Price” shall have the meaning set forth in Section 7.2(a) hereof.




          “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.



29









 





          “Transfer Agent” means The Bank of New York acting as transfer agent, registrar and paying
agent for the 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.




          “Valuation Period” shall have the meaning set forth in Section 10.8 hereof.





30









 








          IN WITNESS WHEREOF, the Issuer has caused this Certificate of Designations to be duly executed
by the undersigned this 26th day of January, 2006.




	 	 	 	 	 
	 	NRG ENERGY, INC.

 	 
	 	By:  	/s/ George P. Schaefer
 	 
	 	 	Name:  	George P. Schaefer 	 
	 	 	Title:  	Vice President and Treasurer 	 



 









 






	 	 	 	 	 



EXHIBIT A




FORM OF 5.750% MANDATORY CONVERTIBLE PREFERRED STOCK




SEE REVERSE

FOR LEGEND




Number: [Ÿ]




			
	[_]% Mandatory Convertible Preferred Stock
	 	[Ÿ] Shares          






	 	 	 	 	 
	 

	 	NRG ENERGY, INC.
	 	CUSIP NO.: 629377870
	 
	 	 	 	 
	 

	 	FACE OF SECURITY	 	 






          This certifies that Cede & Co. is the owner of fully paid and non-assessable shares of the
5.750% Mandatory Convertible Preferred Stock, par value $.01 each of NRG Energy, Inc. (hereinafter
called the Issuer), transferable on the books of the Issuer 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 the Issuer 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 Issuer and the facsimile signatures of its duly authorized
officers.




	 	 	 
	Dated

	 	Countersigned and Registered
	 

	 	[                              ]
	 

	 	Transfer Agent and Registrar






	 	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Authorized Signature
	 	Secretary
	 	Chairman and Chief
	 

	 	 	 	 	 	 	 	Executive Officer






 









 






REVERSE OF SECURITY




NRG ENERGY, INC.




     The shares of 5.750% Mandatory Convertible Preferred Stock (the “Preferred Stock”) will
automatically convert on March 16, 2009 into a number of common stock, par value $0.01 per share,
of the Issuer (the “Common Stock”) as provided in the Certificate of Designations of the Issuer
relating to the Preferred Stock (the “Certificate of Designations”). The shares of the Preferred
Stock are also convertible at the option of either the holder or the Issuer, respectively, into
Common Shares at any time prior to March 16, 2009 as provided in the Certificate of Designations.
The preceding description is qualified in its entirety by reference to the Certificate of
Designations, a copy of which will be furnished by the Issuer to any shareholder without charge
upon request addressed to the Secretary of the Issuer at its principal office in Princeton, New
Jersey, or to the Transfer Agent named on the face of this certificate.



          The Issuer 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 Issuer at its principal office in Princeton, 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 ISSUER 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 DESIGNATIONS. 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




 





 




(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)




 





 





 




shares of the capital stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint




 




Attorney to transfer the said stock on the books of the within named Issuer with full power of
substitution in the premises.





	 	 	 
	Dated 	 	 










	 	 	 	 	 
	 	 	 	 	 
	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




	 	 	 
	 	 	 
	(Signature Must Be Guaranteed by a Member

	 	 
	of a Medallion Signature Program)