Document:

EXHIBIT 4.6

 

CERTIFICATE OF DESIGNATIONS

 

OF

 

SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK

 

OF

 

IAC/INTERACTIVECORP

 

(Pursuant
to Section 151 of the

Delaware General Corporation Law)

 

 

IAC/InterActiveCorp, a
corporation organized and existing under the General Corporation Law of the
State of Delaware (hereinafter called the “Corporation”), hereby
certifies that the following resolution was duly adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law:

RESOLVED, that pursuant to
the authority granted to and vested in the Board of Directors of the
Corporation (hereinafter called the “Board of Directors” or the “Board”)
in accordance with the provisions of the Certificate of Incorporation, the
Board of Directors hereby creates a series of preferred stock, par value $0.001
per share, of the Corporation (the “Preferred Stock”), and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:

Section 1.               Designation and Amount.  The designation of such series of Preferred
Stock authorized by this resolution shall be the Series B Cumulative
Convertible Preferred Stock (the “Series B Convertible
Preferred Stock”).  The number
of shares of Series B Convertible Preferred Stock shall be [___]. 
The face value of the Series B Convertible Preferred Stock shall equal $50.00
multiplied by a fraction (the “Adjustment Fraction”) equal to (a) 50% of
the opening price of common stock of the Corporation on [Month, Day], 2005 divided by (b) the
closing price of common stock of the Corporation on [Month, Day], 2005 (the “Face Value”).

Section 2.               Rank and Term.  All shares of Series B Convertible Preferred
Stock shall rank prior, both as to payment of dividends and as to distributions
of assets upon liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, to all of the now or hereafter issued classes
of common stock, $0.001 par value per share, of the Corporation (the “Common Stock”). 
No other preferred stock of the Corporation shall rank senior to the Series
B Convertible Preferred Stock with respect to payment upon liquidation or
payment of dividends without the consent of the holders of record of the Series
B Convertible Preferred Stock (the “Holders”)
representing a majority of the Series B Convertible Preferred Stock then
outstanding.  At the close of business on
February 4, 2022 (the “Expiration Date”),
without any further action

 

 

on the part of the Corporation
or any Holder, but subject to payment of all accrued and unpaid dividends on
the Series B Convertible Preferred Stock, all then outstanding shares of Series
B Convertible Preferred Stock shall automatically be converted to common stock
in conformance with the provisions of Section 6 and no shares of Series B
Convertible Preferred Stock shall thereafter be issued or outstanding.

Section 3.               Dividends.  The Holders shall be entitled to receive,
whether or not dividends are declared by the Board out of funds at the time
legally available therefor, annual dividends in the amount of (a) 1.99% of the
Face Value per annum per share of Series B Convertible Preferred Stock, plus
(b) the excess, if any, of the value of any dividends paid with respect to the
number of shares of Common Stock into which each outstanding share of the Series
B Convertible Preferred Stock is then convertible over the amount described in
clause (a), and no more.  Dividends on
the Series B Convertible Preferred Stock shall be fully cumulative, shall accrue
without interest from the date of first issuance, and shall be payable quarterly
in arrears on February 15, May 15, August 15 and November 15 (each, a “Dividend Date”) of each year (except that if any
such date is a Saturday, Sunday or Legal Holiday, then such dividend shall be
payable on the next succeeding day that is not a Saturday, Sunday or Legal
Holiday) to holders of record as they appear on the stock transfer books of the
Corporation on the close of business on the fifth Business Day prior to such
Dividend Date, it being understood that the first dividend payment hereunder
shall be made on August 15, 2005 and shall be made in respect of a full
quarterly dividend period.  All dividends
on the Series B Convertible Preferred Stock are payable, at the Corporation’s
option, in cash, shares of Common Stock or any combination thereof, with the
Common Stock valued at the Market Price (as defined below) as of the applicable
Dividend Date.  For purposes hereof, the
term “Legal Holiday” shall mean any day on
which banking institutions are authorized to close in New York, New York.  Dividends on account of arrears for any past
dividend period may be declared and paid at any time, without reference to any
regular dividend payment date.  The
amount of dividends payable per share of Series B Convertible Preferred Stock
with respect to the amounts determined pursuant to clause (a) of this paragraph
for each quarterly dividend period shall be computed by dividing the annual
amount determined pursuant to such clause (a) by four.  The amount of dividends payable for the
initial dividend period and any period shorter than a full quarterly dividend
period shall be computed on the basis of the number of days actually elapsed of
a 360-day year, provided that in no event shall the dividend amount for any
period shorter than a full quarterly dividend period be greater than the full
quarterly dividend amount.

If the Corporation elects to
pay all or any portion of a dividend in shares of Common Stock, the number of
shares of Common Stock to be delivered by the Corporation for each share of Series
B Convertible Preferred Stock held by a Holder shall equal (x) the cash value
of the dividend (or portion of a dividend) to be paid with Common Stock divided
by (y) the Market Price.  The “Market Price” shall be equal to the average of
the daily Closing Prices (as defined below) of the Common Stock for the 10
consecutive Trading Days (as defined below) ending on the second Trading Day
immediately preceding the applicable Dividend Date (or other date with respect
to which the Market Price is to be determined). 
The “Closing Price” for each Trading
Day shall be the last reported sales price regular way, during regular trading
hours, or, in case no such reported sales takes place on such day, the average
of the closing bid and asked prices regular way, during regular trading hours,
for such day, in each case on The Nasdaq Stock Market or, if not listed or
quoted on such market, on the principal national securities exchange on

 

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which
the shares of Common Stock are listed or admitted to trading or, if not listed
or admitted to trading on a national securities exchange, the last sale price
regular way for the Common Stock as published by the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”),
or if such last sale price is not so published by NASDAQ or if no such sale
takes place on such day, the mean between the closing bid and asked prices for
the Common Stock as published by NASDAQ. 
If the shares of Common Stock are not listed or admitted to trading on a
national securities exchange or quoted by NASDAQ, the Market Price shall be
determined in good faith by the Board of Directors of the Corporation or, if
such determination cannot be made, by a nationally recognized independent
investment banking firm selected in good faith by the Board of Directors of the
Corporation.  “Trading
Day” shall mean a day on which the securities exchange utilized for
the purpose of calculating the Market Price shall be open for business or, if
the shares of Common Stock shall not be listed on such exchange for such
period, a day with respect to which quotations of the character referred to in
the next preceding sentence shall be reported. 
In lieu of any fractional share of Common Stock which would otherwise be
issued in payment for a dividend on Series B Convertible Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount in cash (computed to the nearest cent) equal to the Market Price
multiplied by the fractional interest that otherwise would have been
deliverable as a dividend on such Series B Convertible Preferred Stock.

On each Dividend Date all
dividends which shall have accrued on each share of Series B Convertible
Preferred Stock outstanding on such Dividend Date shall accumulate and be
deemed to become “due” whether or not there shall be funds legally available
for the payment thereof.  Any dividend
which shall not be paid on the Dividend Date on which it shall become due shall
be deemed to be “past due” until such dividend shall be paid or until the share
of Series B Convertible Preferred Stock with respect to which such dividend
became due shall no longer be outstanding, whichever is the earlier to
occur.  No interest, sum of money in lieu
of interest, or other property or securities shall be payable in respect of any
dividend payment or payments which are past due.  Dividends paid on shares of Series B
Convertible Preferred Stock in an amount less than the total amount of such
dividends at the time accumulated and payable on such shares shall be allocated
pro  rata
on a share-by-share basis among all such shares at the time outstanding.

No dividends shall be paid
or declared and set apart for payment on the Corporation’s Common Stock or on
any class or series of the Corporation’s capital stock ranking, as to
dividends, on a parity with the Series B Convertible Preferred Stock (the “Parity
Dividend Stock”) for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for such payment on the Series
B Convertible Preferred Stock for all dividend payment periods terminating on
or prior to the date of payment of such full cumulative dividends.  No dividends shall be paid or declared and
set apart for payment on the Series B Convertible Preferred Stock for any
period unless cumulative dividends have been, or contemporaneously are, paid or
declared and set apart for payment on the Parity Dividend Stock for all
dividend periods terminating on or prior to the date of payment of such full
cumulative dividends.  When dividends are
not paid in full upon the Series B Convertible Preferred Stock and the Parity
Dividend Stock, all dividends paid or declared and set aside for payment upon
shares of Series B Convertible Preferred Stock and the Parity Dividend Stock
shall be paid or declared and set aside for payment pro
rata so that the amount of dividends

 

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paid
or declared and set aside for payment per share on the Series B Convertible
Preferred Stock and the Parity Dividend Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the shares
of Series B Convertible Preferred Stock and the Parity Dividend Stock bear to
each other.

Section 4.               Liquidation Preference.  In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the Holders
shall be entitled to receive out of the assets of the Corporation, whether such
assets are stated capital or surplus of any nature, an amount equal to the
dividends accrued and unpaid thereon to the date of final distribution to such
Holders, whether or not declared, without interest, plus a sum per share of Series
B Convertible Preferred Stock equal to the greater of (a) the Face Value and
(b) the liquidating distribution that would be paid with respect to the number
of shares of Common Stock into which a share of Series B Convertible Preferred
Stock is then convertible, and no more. 
Such final distribution on the shares of the Series B Convertible
Preferred Stock shall be made before any payment is made or assets are
distributed to the holders of Common Stock or any other class or series of the
Corporation’s capital stock ranking junior as to liquidation rights to the Series
B Convertible Preferred Stock (the “Junior Liquidation
Stock”).  In the event the
assets of the Corporation available for distribution to stockholders upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable with
respect to the Series B Convertible Preferred Stock and any other class or
series of the Corporation’s capital stock which may hereafter be created having
parity as to liquidation rights with the Series B Convertible Preferred Stock
(the “Parity Liquidation Stock”), the
Holders and the holders of the Parity Liquidation Stock shall share ratably in
any distribution of assets of the Corporation in proportion to the full
respective preferential amounts to which they are entitled (but only to the
extent of such preferential amounts). 
After payment in full of the liquidation preferences of the shares of Series
B Convertible Preferred Stock, the Holders shall not be entitled to any further
participation in any distribution of assets by the Corporation by virtue of
their ownership of the Series B Convertible Preferred Stock.  Except as set forth in Section 6(i), neither
a consolidation, merger or other business combination of the Corporation with
or into another corporation or other entity nor a sale or transfer of all or
part of the Corporation’s assets for cash, securities or other property or any
combination thereof shall be considered a liquidation, dissolution or winding
up of the Corporation for purposes of this Section 4 (unless in connection
therewith the liquidation of the Corporation is specifically approved).

A Holder shall not be entitled
to receive any payment owed for such shares under this Section 4 until such
Holder shall cause to be delivered to the Corporation (i) the certificate(s)
representing such shares of Series B Convertible Preferred Stock (or, in the
event such certificate(s) have been lost or destroyed, an affidavit of the
Holder of loss or destruction reasonably satisfactory to the Corporation as
well as other support as reasonably requested by the Corporation) and (ii) transfer
instrument(s) reasonably satisfactory to the Corporation and sufficient to
transfer such shares of Series B Convertible Preferred Stock to the Corporation
free of any adverse interest.  No
interest shall accrue on any payment upon liquidation after the due date
thereof.

Section 5.               Redemption.  (a)  Redemption at the Option of the Corporation.  Commencing on the tenth anniversary of the
Effective Time (for the purposes hereof, the

 

4

 

“Effective
Time” shall be February 4, 2002), the Corporation, at its option,
may from time to time redeem all or a portion of (but if a portion, shares
representing at least 25% of the originally issued aggregate Face Value, unless
there shall remain outstanding less than 25% of such amount, in which case all
outstanding shares may be redeemed) of the outstanding Series B Convertible
Preferred Stock at a redemption price equal to the Face Value plus all
dividends on the Series B Convertible Preferred Stock being redeemed that are
accrued and unpaid thereon, whether or not declared or due, to the date fixed
for redemption (the “Redemption Date”),
such sum being hereinafter referred to as the “Redemption
Price”.  The Redemption Price
may be paid in cash, shares of Common Stock or a combination thereof, at the
option of the Corporation.

If the Corporation elects to
pay the Redemption Price in Common Stock, the number of shares of Common Stock
to be paid per share of Series B Convertible Preferred Stock being redeemed
shall equal (x) the then-current Redemption Price of the Series B Convertible
Preferred Stock (or portion thereof to be paid in shares of Common Stock),
divided by (y) the Market Price as of the date of the notice for redemption
described below.

In case of the redemption
pursuant to this Section 5(a) of less than all of the then outstanding Series B
Convertible Preferred Stock, the shares of Series B Convertible Preferred Stock
to be redeemed shall be redeemed pro rata or by lot or in such other manner as
the Board of Directors may determine.

Not more than 60 nor less
than 20 days prior to the Redemption Date, notice by first class mail, postage
prepaid, shall be given to each Holder of Series B Convertible Preferred Stock
to be redeemed, at such Holder’s address as it shall appear upon the stock
transfer books of the Corporation.  Each
such notice of redemption shall specify the Redemption Date, the Redemption
Price, the place or places of payment, that payment will be made upon
presentation and surrender of the certificate(s) evidencing the shares of Series
B Convertible Preferred Stock to be redeemed, that on and after the Redemption
Date, dividends will cease to accrue on such shares of Series B Convertible
Preferred Stock to be redeemed, the then effective conversion price pursuant to
Section 6 and that the right of holders to convert such shares of Series B
Convertible Preferred Stock to be redeemed shall terminate at the close of
business on the Redemption Date (unless the Corporation defaults in the payment
of the Redemption Price).

Any notice that is mailed as
provided in Section 13 shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice; and failure to give such notice
by mail, or any defect in such notice, to the Holders of any shares designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Series B Convertible Preferred Stock.  On or after the Redemption Date as stated in
such notice, each Holder of the shares called for redemption shall surrender
the certificate evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive payment of
the Redemption Price as herein provided. 
If less than all the shares represented by any such surrendered certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares.  If, on the Redemption Date,

 

5

 

shares
of Common Stock and/or funds, as the case may be, necessary for the redemption
shall be available therefor and shall have been irrecoverably deposited or set
aside, then, notwithstanding that the certificates evidencing any shares so
called for redemption shall not have been surrendered the dividends with
respect to the shares so called shall cease to accrue after the Redemption
Date, the shares shall no longer be deemed outstanding, the Holders thereof
shall cease to be Holders, and all rights whatsoever with respect to the shares
so called for redemption (except the right of the Holders to receive payment of
the Redemption Price as herein provided without interest upon surrender of
their certificates therefor) shall terminate. 
At the close of business on the Redemption Date, each Holder of Series B
Convertible Preferred Stock so redeemed (unless the Corporation defaults on its
obligations to deliver shares of Common Stock or cash) shall be, without any
further action, to the extent the Corporation elected to pay the Redemption
Price in shares of Common Stock, deemed a holder of the number of shares, if
any, of Common Stock for which such Series B Convertible Preferred Stock is
redeemable, and, to the extent the Corporation elected to pay the Redemption
Price in cash, entitled to receive payment of the Redemption Price in cash,
without interest.

The shares of Series B
Convertible Preferred Stock shall not be subject to the operation of any
purchase, retirement, mandatory redemption (except as specified in this
Section) or sinking fund.

The Holder of any shares of Series
B Convertible Preferred Stock redeemed upon any exercise of the Corporation’s
redemption right shall not be entitled to receive payment of the Redemption
Price for such shares until such Holder shall cause to be delivered to the
place specified in the notice given with respect to such redemption (i) the
certificate(s) representing such shares of Series B Convertible Preferred Stock
redeemed (or, in the event such certificate(s) have been lost or destroyed, an
affidavit of the Holder of loss or destruction reasonably satisfactory to the
Corporation as well as other support as reasonably requested by the
Corporation) and (ii) transfer instrument(s) reasonably satisfactory to
the Corporation and sufficient to transfer such shares of Series B Convertible
Preferred Stock to the Corporation free of any adverse interest.  No interest shall accrue on the Redemption
Price of any share of Series B Convertible Preferred Stock after its Redemption
Date provided that the shares of Common Stock and/or funds sufficient for the
redemption shall have been made available therefor and shall have been
irrecoverably deposited or set aside.

In the event that, prior to
a Redemption Date, any shares of Series B Convertible Preferred Stock shall be
converted into Common Stock pursuant to Section 6, then (i) the Corporation
shall not have the right to redeem such shares and (ii) shares of Common Stock
and any funds which shall have been deposited for the payment of the Redemption
Price for such shares of Series B Convertible Preferred Stock shall be returned
to the Corporation immediately after such conversion (subject to declared
dividends payable to Holders on the record date for such dividends being so
payable, to the extent set forth in Section 6 hereof, regardless of whether
such shares are converted subsequent to such record date and prior to the
related dividend payment date).

(b)           Redemption at the Option of the Holder.  During the 20 Trading Day period preceding
each of the fifth, seventh, tenth and fifteenth anniversaries of the Effective
Time (each such period, a “Holder’s Redemption Period”), a Holder may
elect to cause the Corporation to redeem all or any of the shares of Series B
Convertible Preferred Stock held by such Holder.  The Corporation shall redeem each such share
for the Face Value, plus all accrued and unpaid dividends whether or not
declared through the applicable anniversary (the “Holder’s Redemption

 

6

 

Consideration”), for cash,
shares of Common Stock or a combination thereof, at the Corporation’s option.

For any shares of Series B
Convertible Preferred Stock that the Corporation elects to redeem for Common
Stock, the amount of Common Stock to be paid per share of Series B Convertible
Preferred Stock so redeemed shall equal (x) the Holder’s Redemption
Consideration (or portion thereof to be paid in shares of Common Stock),
divided by (y) the Market Price as of the applicable anniversary date.

A Holder electing to redeem
one or more shares of Series B Convertible Preferred Stock shall provide notice
in accordance with Section 13 to the transfer agent designated by the Corporation
for such purpose or, if there be none, to the principal business offices of the
Corporation (the “Holder’s Notice”),
postmarked (if not hand delivered) or received by the transfer agent or
principal business offices of the Corporation, as applicable (if hand
delivered), on a date within the applicable Holder’s Redemption Period.  Any Holder’s Notice that is mailed as herein
provided, and includes the documentation described in the next succeeding
paragraph, shall be conclusively presumed to have been duly given, and the
shares of Series B Convertible Preferred Stock shall be deemed to be subject to
redemption by the Corporation on the applicable anniversary upon receipt of
such notice by the Corporation.

A Holder shall include with
the Holder’s Notice (i) the certificate(s) representing such shares of Series B
Convertible Preferred Stock redeemed (or, in the event such certificate(s) have
been lost or destroyed, an affidavit of the Holder of loss or destruction
reasonably satisfactory to the Corporation as well as other support as
reasonably requested by the Corporation) and (ii) transfer instrument(s)
reasonably satisfactory to the Corporation and sufficient to transfer such
shares of Series B Convertible Preferred Stock to the Corporation free of any
adverse interest.  No interest shall
accrue on the Holder’s Redemption Consideration for any share of Series B
Convertible Preferred Stock after its redemption date.

If less than all the shares
represented by any such surrendered certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.  If, on or after the date the Corporation
receives the Holder’s Notice, shares of Common Stock and/or funds necessary for
the redemption shall have been made available therefor and shall have been
irrecoverably deposited or set aside, then the dividends with respect to the
shares to be so redeemed shall cease to accrue after the date fixed for redemption,
the shares shall no longer be deemed outstanding, the Holders thereof shall
cease to be Holders of Series B Convertible Preferred Stock, and all rights
whatsoever with respect to the shares so requested to be redeemed (except the
right of the Holders to receive payment of the redemption price as herein
provided without interest upon surrender of their certificates therefor) shall
terminate.

Section 6.               Conversion.  (a)  Right of Conversion/Automatic Conversion.  Subject to and upon compliance with the provisions
of this Section 6, each share of Series B Convertible Preferred Stock shall, at
the option of the Holder, be convertible at any time (unless such share is
called for redemption, then to and including but not after the close of
business on the date fixed for such redemption, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Common Stock (calculated as to each conversion to
the nearest 1/100th of a share) equal to the quotient obtained by dividing

 

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the Face Value by the
Conversion Price (as defined in Section 6(d)) in effect at such time and by
surrender of such share so to be converted in the manner provided in Section
6(b).

Each share of Series B
Convertible Preferred Stock shall automatically be converted into that number
of fully paid and non-assessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) equal to the quotient obtained by
dividing the Face Value by the Conversion Price in effect as of the Expiration
Date.

(b)           Manner of Exercise of Conversion.  In order to exercise the conversion privilege
(or, in the case of an automatic conversion, receive the Common Stock into
which the shares of Series B Convertible Preferred Stock have been converted),
the Holder of one or more shares of Series B Convertible Preferred Stock to be
converted (or that have been converted, in the case of an automatic conversion)
shall surrender the certificate(s) representing such shares (or, in the event
such certificate(s) have been lost or destroyed, an affidavit of the Holder of
loss or destruction reasonably satisfactory to the Corporation as well as other
support as reasonably requested by the Corporation) to the transfer agent
designated by the Corporation for such purpose or, if there be none, to the
principal business offices of the Corporation, accompanied by the funds, if
any, required by the last paragraph of this Section 6(b) and shall give written
notice of conversion in compliance with Section 13 in the form provided on such
shares of Series B Convertible Preferred Stock (or such other notice as is acceptable
to the Corporation) to the Corporation at such office or agency that the Holder
elects to convert the shares of Series B Convertible Preferred Stock specified
in said notice.  Such notice shall also
state the name or names, together with address or addresses, in which the
certificate or certificates for shares of Common Stock which shall be issuable
in such conversion shall be issued.  Each
share of Series B Convertible Preferred Stock surrendered for conversion shall,
unless the shares issuable on conversion are to be issued in the same name as
the name in which such share is registered, be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the Holder
or his duly authorized attorney and an amount sufficient to pay any transfer or
similar tax.  As promptly as practicable
after the surrender of such shares of Series B Convertible Preferred Stock and
the receipt of such notice, instruments of transfer and funds, if any, as aforesaid,
the Corporation shall issue and shall deliver at such office or agency to such
Holder, or on his written order, a certificate or certificates for the number
of full shares of Common Stock issuable upon the conversion of such share of Series
B Convertible Preferred Stock in accordance with the provisions of this Section
6 and a check or cash in respect of any fractional interest in a share of
Common Stock arising upon such conversion, as provided in Section 6(c).

Each conversion, other than
an automatic conversion, shall be deemed to have been effected immediately
prior to the close of business on the date on which such shares of Series B
Convertible Preferred Stock shall have been surrendered and such notice (and
any applicable instruments of transfer and any required taxes) is deemed
received by the Corporation as aforesaid (such date, the “Conversion Date”).  In the case of an automatic conversion, the
Expiration Date shall be the Conversion Date. 
The person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon a conversion,
including an automatic conversion, shall be deemed to have become the holder or
holders of record of the shares represented thereby at the close of business on
the Conversion Date, and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the stock transfer books of the Corporation
shall be closed on that date, in which event such person

 

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or
persons shall be deemed to have become such holder or holders of record at the
close of business on the next succeeding day on which such stock transfer books
are open, but such conversion shall be at the Conversion Price in effect on the
date upon which such shares of Series B Convertible Preferred Stock shall have
been surrendered and such notice received by the Corporation.

(c)           Cash Payments in Lieu of Fractional Shares.  No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon conversion of Series B
Convertible Preferred Stock.  If more
than one share of Series B Convertible Preferred Stock shall be surrendered for
conversion at one time by the same Holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate of the Face Value for each such share so surrendered.  In lieu of any fractional interest in a share
of Common Stock which would otherwise be deliverable upon the conversion of any
share of Series B Convertible Preferred Stock, the Corporation shall pay to the
Holder of such shares an amount in cash (computed to the nearest cent) equal to
the Closing Price on the Conversion Date (or the next Trading Day if such date
is not a Trading Day) multiplied by the fractional interest that otherwise
would have been deliverable upon conversion of such share.

(d)           Conversion Price.  The “Conversion Price” shall mean and be an
amount equal to $67.50 multiplied by the Adjustment Fraction, subject to
adjustment by the Corporation on the applicable Conversion Date as set forth in
Section 6(e) below, and subject to adjustment by the Corporation from time to
time as set forth in Section 6(f), below.

(e)           Market Price Adjustment to Conversion Price.  Solely with respect to shares of Series B
Convertible Preferred Stock being converted on an applicable Conversion Date:

(i)            If and only if the Market
Price on the applicable Conversion Date exceeds an amount equal to $70.20 multiplied
by the Adjustment Fraction (as such amount may be adjusted pursuant to Section
6(f)(v), the “Trigger Price”), the
Conversion Price with respect to the shares of Series B Convertible Preferred
Stock being converted on such Conversion Date shall be adjusted as set forth in
Section 6(e)(ii) (such adjustment, the “Market Price
Adjustment”).

(ii)           If the Market Price
Adjustment is applicable pursuant to Section 6(e)(i) above, the Conversion
Price on the applicable Conversion Date shall be calculated as follows:

	
   

  	
  (Face Value x Market Price)

  	
   

  	
  D

  	
   

  
	
  Revised
  Conversion Price =

  	
   

  	
  X

  	
   

  	
   

  
	
   

  	
  [(Market Price x A) + {B x (Market Price — C)}]

  	
   

  	
  E

  	
   

  

 

where:

	
  A

  	
   = 

  	
  0.7408

  	
   

  
	
  B

  	
   = 

  	
  0.2396

  	
   

  
	
  C

  	
   = 

  	
  Trigger Price

  	
   

  
	
  D

  	
   = 

  	
  Conversion Price in effect after giving effect to any adjustments
  described in Section 6(f) and without giving effect to this Section 6(e).

  

 

 

9

 

	
  E

  	
   = 

  	
  $67.50 multiplied by the Adjustment Fraction

  	
   

  

 

Any adjustment to the
Conversion Price pursuant to this Section 6(e)(ii) shall not require any adjustment
to the Trigger Price pursuant to Section 6(f) below.

(f)            Other Adjustments.

(i)            In case the Corporation
shall (A) pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, (B) subdivide its outstanding shares of Common Stock into a
greater number of shares, (C) combine its outstanding shares of Common Stock
into a smaller number of shares, or (D) issue by reclassification,
recapitalization or reorganization of its Common Stock (other than a
reorganization in which the provisions of Section 6(i) apply) any shares of
capital stock of the Corporation, then in each such case the Conversion Price
in effect immediately prior to such action shall be equitably adjusted so that
the Holder of any share of Series B Convertible Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock or other capital stock of the Corporation which such Holder would
have owned or been entitled to receive immediately following such action had
such share been converted immediately prior to the occurrence of such
event.  An adjustment made pursuant to this
subsection (f)(i) shall become effective immediately after the record date, in
the case of a dividend or distribution, or immediately after the effective
date, in the case of a subdivision, combination, reclassification,
recapitalization or reorganization.  If,
as a result of an adjustment made pursuant to this subsection (f)(i), the
Holder of any share of Series B Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes of capital stock or shares of Common Stock and other capital stock
of the Corporation, the Board of Directors in the exercise of its good faith
judgment (whose determination shall be described in a statement filed by the
Corporation with the stock transfer or conversion agent, as appropriate) shall
determine the allocation of the adjusted Conversion Price between or among
shares of such classes of capital stock or shares of Common Stock and other
capital stock.

(ii)           In case the Corporation
shall issue options, rights or warrants to holders of its outstanding shares of
Common Stock entitling them (for a period expiring within 45 days after the
date mentioned below) to subscribe for or purchase shares of Common Stock or
other securities convertible or exchangeable for shares of Common Stock at a
price per share less than the Current Market Price (as determined pursuant to
subsection (iv) of this Section 6(f)) (other than pursuant to any stock option,
restricted stock or other incentive or benefit plan or stock ownership or purchase
plan for the benefit of employees, directors or officers or any dividend reinvestment
plan of the Corporation in effect at the time hereof or any other similar plan
adopted or implemented hereafter, it being agreed that none of the adjustments
set forth in this Section 6(f) shall apply to the issuance of stock, options,
rights, warrants or other property pursuant to any stock option, restricted
stock or other incentive or benefit plan or stock ownership or purchase plan
for the benefit of employees, directors or officers or any dividend
reinvestment plan for the Corporation in effect at the time hereof or any other
similar plan adopted or implemented hereafter), then the Conversion Price in
effect immediately prior thereto shall be adjusted

 

10

 

so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the date of issuance of such rights or warrants by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants (immediately prior to such
issuance) plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Current Market Price,
and of which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants (immediately
prior to such issuance) plus the number of additional shares of Common Stock
offered for subscription or purchase. 
Such adjustment shall be made successively whenever any rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights or warrants;
provided, however, in the event that all the shares of Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights or
warrants, upon the expiration of such rights or warrants the Conversion Price
shall be readjusted to the Conversion Price which would have been in effect had
the numerator and the denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Common Stock actually
delivered upon the exercise of such rights or warrants rather than upon the
number of shares of Common Stock offered for subscription or purchase.  In determining whether any security covered
by this Section 6(f)(ii) entitles the holder thereof to subscribe for or
purchase shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Corporation for
such rights, warrants or convertible or exchangeable securities, plus the
aggregate amount of additional consideration (as set forth in the instruments
relating thereto) to be received by the Corporation upon the exercise, conversion
or exchange of such securities, the value of such consideration, if other than
cash, to be determined by the Board of Directors in the exercise of its good
faith judgment (whose determination shall be described in a statement filed by
the Corporation with the stock transfer or conversion agent, as appropriate).

(iii)          In case the Corporation
shall, by dividend or otherwise, distribute to holders of its outstanding
Common Stock that is not also distributed to holders of its Series B
Convertible Preferred Stock on an as-converted basis as of the record date for
the determination of stockholders entitled to receive such distribution,
evidences of its indebtedness or assets (including securities and cash, but
excluding any regular periodic cash dividend of the Corporation and dividends
or distributions payable in stock for which adjustment is made pursuant to
subsection (i) of this Section 6(f)) or options, rights or warrants to
subscribe for or purchase securities of the Corporation (excluding those
referred to in subsection (ii) of this Section 6(f)), then in each such case
the Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date of such distribution by a fraction of which the numerator shall
be the Current Market Price as of the Time of Determination less the fair
market value on such record date (as determined by the Board of Directors in
the exercise of its good faith judgment, whose determination shall be described
in a statement filed by the Corporation with the stock transfer or conversion
agent, as appropriate) of the portion of the capital stock or assets or the
evidences of indebtedness or assets so distributed to the holder of one share
of Common Stock or of

 

11

 

such subscription rights or
warrants applicable to one share of Common Stock, and of which the denominator
shall be such Current Market Price.  Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.

(iv)          For the purpose of any
computation under subsections (ii) and (iii) of this Section 6(f), the “Current Market Price” per share of Common Stock
on any date shall be deemed to be the average of the daily Closing Prices for
the shorter of (A) 10 consecutive Trading Days ending on the day immediately
preceding the applicable Time of Determination (as defined below) or (B) the
period commencing on the date next succeeding the first public announcement of
the issuance of such rights or warrants or such distribution through such last
day prior to the applicable Time of Determination.  For purposes of the foregoing, the term “Time of Determination” shall mean the time and
date of the record date for determining stockholders entitled to receive the
rights, warrants or distributions referred to in Section 6(f)(ii) and (iii).

(v)           In any case in which this
Section 6(f) shall require that an adjustment be made to the Conversion Price,
the Trigger Price shall be adjusted as follows:

	
   

  	
   

  	
  A

  	
   

  	
   

  
	
   

  	
  Revised Trigger Price = Revised Conversion Price x

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B

  	
   

  	
   

  

 

where:

	
  A

  	
   = 

  	
  $70.20 multiplied by the Adjustment Fraction

  	
   

  
	
  B

  	
   = 

  	
  $67.50 multiplied by the Adjustment Fraction

  	
   

  

 

(vi)          In any case in which this
Section 6(f) shall require that an adjustment be made immediately following a
record date or an effective date, the Corporation may elect to defer (but only
until the filing by the Corporation with the stock transfer or conversion
agent, as the case may be, of the certificate required by subsection (viii))
issuing to the holder of any share of Series B Convertible Preferred Stock
converted after such record date or effective date the shares of Common Stock
issuable upon such conversion over and above the shares of Common Stock issuable
upon such conversion on the basis of the Conversion Price prior to adjustment,
and paying to such holder any amount of cash in lieu of a fractional share.

(vii)         No adjustment in the
Conversion Price shall be required to be made pursuant to this Section 6(f)
unless such adjustment would require an increase or decrease of at least 1% of
such price; provided, however, that any adjustments which by reason of this
subsection (f)(vii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this Section 6(f)
shall be made to the nearest cent or to the nearest 1/1000th of a share, as the
case may be.  Anything in this Section
6(f) to the contrary notwithstanding, the Corporation shall be entitled to make
such reduction in the Conversion Price, in addition to those required by

 

12

 

this Section 6(f), as it in
its discretion shall determine to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients.  Except as set
forth in subsections (f)(i), (f)(ii), and (f)(iii) and Section 6(e) above, the
Conversion Price shall not be adjusted for the issuance of Common Stock, or any
securities convertible into or exchangeable for Common Stock or carrying the
right to purchase any of the foregoing, in exchange for cash, property or
services.

(viii)        Whenever the Conversion
Price is adjusted pursuant to this Section 6(f), (A) the Corporation shall
promptly file with the stock transfer or conversion agent, as appropriate, a
certificate setting forth the Conversion Price after such adjustment and a
brief statement of the facts requiring such adjustment and the manner of
computing the same, which certificate shall, absent manifest error (including
the failure to make any other required adjustment under this Section 6(f)), be
conclusive evidence of the correctness of such adjustment, and (B) the
Corporation shall also mail or cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each Holder a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.  The stock transfer or conversion
agent, as the case may be, shall not be under any duty or responsibility with
respect to the certificate required by this subsection (viii) except to exhibit
the same to any Holder who requests to inspect it.

(ix)           In the event that at any
time, as a result of an adjustment made pursuant to subsections (i), (ii) or
(iii) of this Section 6(f), the Holder of any share of Series B Convertible
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of the Corporation other than shares of Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any share of Series B Convertible Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Section.

(x)            The Corporation from time to
time in its sole discretion may decrease the Conversion Price by any amount for
any period of time if the period is at least 20 days and if the decrease is irrevocable
during the period.  Whenever the
Conversion Price is so decreased, the Corporation shall mail to all Holders a
notice of the decrease at least 15 days before the date the decreased
Conversion Price takes effect, and such notice shall state the decreased
Conversion Price and the period it will be in effect.

(g)           Reservation of Shares of Common Stock.  The Corporation covenants that it will at all
times reserve and keep available, free from preemptive rights (other than such
rights as do not affect the ownership of shares issued to a Holder), out of the
aggregate of its authorized but unissued shares of Common Stock or its issued
shares of Common Stock held in its treasury, or both, for the purpose of
effecting conversions of shares of Series B Convertible Preferred Stock, the
full number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of Series B Convertible Preferred Stock not theretofore
converted or redeemed and on or before taking any action that would cause an
adjustment of the Conversion Price resulting in an increase in the number of
shares of Common Stock deliverable upon conversion above the

 

13

 

number thereof previously
reserved and available therefor, the Corporation shall take all such action so
required.  For purposes of this Section
6(g), the number of shares of Common Stock which shall be deliverable upon the
conversion of all outstanding shares of Series B Convertible Preferred Stock
shall be computed as if at the time of computation all outstanding shares of Series
B Convertible Preferred Stock were held by a single holder.

Before taking any action
which would cause an adjustment reducing the Conversion Price below the then
par value (if any) of the shares of Common Stock deliverable upon conversion of
the shares of Series B Convertible Preferred Stock, the Corporation shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.

(h)           Transfer Taxes, Etc.  The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any other similar taxes payable
in respect of the issue or delivery of shares of Common Stock upon conversions
of shares of Series B Convertible Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock in a name other than that of the holder of the shares of Series
B Convertible Preferred Stock to be converted and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.

(i)            Consolidation or Merger or Sale of Assets.  For purposes of this paragraph (i), a “Sale
Transaction” means any transaction or event, including any merger,
consolidation, sale of assets, tender or exchange offer, reclassification,
compulsory share exchange or liquidation, in which all or substantially all
outstanding shares of the Corporation’s Common Stock are converted into or
exchanged for stock, other securities, cash or assets or following which any
remaining outstanding shares of Common Stock fail to meet the listing standards
imposed by each of the New York Stock Exchange, the American Stock Exchange and
the Nasdaq National Market at the time of such transaction, but shall not include
any transaction the primary purpose of which is the reincorporation of the
Corporation in another U.S. jurisdiction so long as in such transaction each
share of Series B Convertible Preferred Stock shall convert into an equity
security of the successor to the Corporation having identical dividends, rights
and preferences as the Series B Convertible Preferred Stock.  If a Sale Transaction occurs, then each
Holder shall have the right to elect one of the following:  (i) such Sale Transaction shall be deemed a
liquidation for purposes of Section 4, and the amount of the liquidating
distribution to holders of Common Stock for purposes of calculating the
liquidation preference payable under Section 4 shall be deemed to be zero, (ii)
provision shall be made so that such Holder receives in exchange for each
outstanding share of Series B Convertible Preferred Stock held by such Holder
the kind and amount of securities, cash or other property receivable upon such
Sale Transaction by a holder of the number of shares of Common Stock into which
such share of Series B Convertible Preferred Stock might have been converted
immediately prior to such Sale Transaction assuming such holder of Common Stock
did not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such Sale Transaction
(provided that, if the kind or amount of securities, cash or other property
receivable upon such Sale Transaction is not the same for each share of Common
Stock in respect of which such rights of

 

14

 

election shall not have been
exercised (“Non-Electing Share”), then for the purposes of this Section
6(i) the kind and amount of securities, cash or other property receivable upon
such Sale Transaction for each Non-Electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-Electing
Shares) or (iii) to the extent permitted under applicable law, lawful provision
shall be made by the corporation, if any, formed by the Sale Transaction or the
corporation, if any, whose securities, cash or other property will immediately
after the Sale Transaction be owned, by virtue of such Sale Transaction, by the
holders of Common Stock immediately prior to such Sale Transaction, or the
corporation, if any, which shall have acquired (whether directly or indirectly)
in such Sale Transaction such assets or securities of the Corporation
(collectively the “Formed, Surviving or Acquiring Corporation”), as the
case may be, providing that the Holder of each share of Series B Convertible
Preferred Stock then outstanding shall receive in exchange for each such share
of Series B Convertible Preferred Stock an equity security of the Formed,
Surviving or Acquiring Corporation having substantially equivalent dividends,
rights and preferences as the Series B Convertible Preferred Stock (“Mirror
Preferred Stock”), except that the Holder thereof shall have the right
thereafter to convert such Mirror Preferred Stock into the kind and amount of
securities, cash or other property receivable upon such Sale Transaction by a
holder of the number of shares of Common Stock into which such share of Series
B Convertible Preferred Stock might have been converted immediately prior to
such Sale Transaction assuming such holder of Common Stock did not exercise his
rights of election, if any, as to the kind or amount of securities, cash or
other property receivable upon such Sale Transaction.  Each Holder shall be provided notice of the
Sale Transaction not later than twenty (20) days prior to the effective date
thereof, which notice shall detail the material terms of the Sale Transaction,
including without limitation the nature and amount of consideration payable to
the holders of Common Stock in such Sale Transaction.  In the event that a Holder elects option
(iii) and such option is not permitted under applicable law, at the option of
the Corporation, (A) the Formed, Surviving or Acquiring Corporation will cause
a U.S. subsidiary of such Formed, Surviving or Acquiring Corporation to issue a
security satisfying the terms described in option (iii) above or (B) such Sale
Transaction shall be deemed a liquidation for purposes of Section 4, and the
amount of the liquidating distribution to holders of Common Stock for purposes
of calculating the liquidation preference payable under Section 4 shall be
deemed to be 20% of the amount of the liquidation preference payable to a
Holder of Series B Convertible Preferred Stock pursuant to clause (a) of Section
4 hereof (i.e., initially equal to the Face
Value), as such amount may be adjusted from time to time pursuant to the terms
of this Certificate.  The Formed,
Surviving or Acquiring Corporation shall, if applicable, make provision in its
certificate or articles of incorporation or other constituent documents to the
end that the provisions set forth in this Section 6(i) shall thereafter correspondingly
be made applicable, as nearly as may reasonably be, in relation to any shares
of stock or other securities or property thereafter deliverable on the
conversion of the Series B Convertible Preferred Stock.

Notwithstanding anything to
the contrary herein, there will be no adjustment in connection with a Sale
Transaction pursuant to Section 6(f) hereof except as provided in this Section
6(i).  The above provisions of this
Section 6(i) shall similarly apply to successive Sale Transactions; provided,
however, that in no event shall a Holder of a share of Series B Convertible
Preferred Stock be entitled to more than one adjustment pursuant to this
Section 6(i) in respect of a series of related transactions.

 

15

 

Section 7.               Voting Rights.  The Holders shall not have any voting rights
by virtue of their ownership of the Series B Convertible Preferred Stock except
as set forth herein or as otherwise from time to time may be required by
law.  In connection with any vote in
which the holders of Common Stock are entitled to vote (other than pursuant to
Section C(4) of Article IV of the Restated Certificate of Incorporation of the
Corporation relating to the separate right of the holders of Common Stock as a
class to elect 25% of the Corporation’s directors), a Holder will have two
votes for each share of Series B Convertible Preferred Stock held, such votes
to be cast together with the votes of the holders of the Common Stock, voting
together as a single class.  Any shares
of Series B Convertible Preferred Stock held by the Corporation or any entity
controlled by the Corporation shall not have voting rights hereunder and shall
not be counted in determining the presence of a quorum.

Section 8.               Outstanding Shares.  For purposes of this Certificate of Designation,
all shares of Series B Convertible Preferred Stock shall be deemed outstanding
except (i) from the date fixed for redemption pursuant to Section 5, all shares
of Series B Convertible Preferred Stock that have been so called for redemption
under Section 5 if shares of Common Stock and funds necessary for payment of
the redemption price, as the case may be, have been irrevocably set apart; (ii)
from the date of surrender of certificates representing shares of Series B
Convertible Preferred Stock, all shares of Series B Convertible Preferred Stock
converted into Common Stock; and (iii) from the date of registration of
transfer, all shares of Series B Convertible Preferred Stock held of record by
the Corporation or any subsidiary of the Corporation.

Section 9.               Status of Acquired Shares.  Shares of Series B Convertible Preferred Stock
redeemed by the Corporation, received upon conversion pursuant to Section 6,
cancelled pursuant to Section 2 or otherwise acquired by the Corporation will
be restored to the status of authorized and unissued shares of preferred stock,
without designation as to series, and may thereafter be issued, but not as
shares of Series B Convertible Preferred Stock.

Section 10.             Preemptive Rights.  The Series B Convertible Preferred Stock is
not entitled to any preemptive or subscription rights in respect of any securities
of the Corporation.

Section 11.             Covenant Regarding Shares of
Common Stock.  All shares
of Common Stock which may be delivered upon conversion or redemption of shares
of Series B Convertible Preferred Stock, or in connection with any dividend
payment, will upon delivery be duly and validly issued and fully paid and
non-assessable, free of all liens and charges and not subject to any preemptive
rights (other than rights which do not affect the Holder’s right to own the
shares of Common Stock to be issued), and prior to the applicable Redemption
Date, Dividend Date or Conversion Date, the Corporation shall take any
corporate action necessary therefor.  The
issuance of all such shares of Common Stock shall, to the extent permitted by
law, be registered under the Securities Act of 1933, as amended.

Section 12.             Severability of Provisions.  Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely
affecting the remaining provisions hereof. 
If a court of competent

 

16

 

jurisdiction should
determine that a provision hereof would be valid or enforceable if a period of
time were extended or shortened or a particular percentage were increased or
decreased, then such court may make such change as shall be necessary to render
the provision in question effective and valid under applicable law.

Section 13.             Notices.  Any notice to Holders or the Corporation
required pursuant to this Certificate of Designations shall be in writing and
shall be deemed effectively given:  (i)
upon personal delivery to the party to be notified, (ii) three (3) business
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, (iii) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with verification
of receipt, and (iv) five (5) business days after having been sent by first
class mail, postage prepaid.  All notices
to Holders shall be addressed to each Holder of record at the address of such
Holder appearing on the books of the Corporation.

 

17Exhibit 4.7

 

CERTIFICATE OF DESIGNATIONS

 

OF

 

SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK

 

OF

 

EXPEDIA, INC.

 

(Pursuant
to Section 151 of the

Delaware General Corporation Law)

 

 

Expedia, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (hereinafter called the “Corporation”), hereby certifies that
the following resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation Law:

RESOLVED, that pursuant to
the authority granted to and vested in the Board of Directors of the
Corporation (hereinafter called the “Board of Directors” or the “Board”)
in accordance with the provisions of the Certificate of Incorporation, the
Board of Directors hereby creates a series of preferred stock, par value $0.001
per share, of the Corporation (the “Preferred Stock”), and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:

Section
1.               Designation and Amount.  The designation of such series of Preferred
Stock authorized by this resolution shall be the Series A
Cumulative Convertible Preferred Stock (the “Series A
Convertible Preferred Stock”). 
The number of shares of Series A Convertible
Preferred Stock shall be [___].  The face value of the Series A Convertible
Preferred Stock shall equal $50.00 multiplied by a fraction (the “Adjustment
Fraction”) equal to (a) 50% of the opening price of common stock of the
Corporation on [Month, Day], 2005
divided by (b) the closing price of common stock of IAC/InterActiveCorp on [Month, Day], 2005 (the “Face Value”).

Section
2.               Rank and Term.  All shares of Series A Convertible Preferred
Stock shall rank prior, both as to payment of dividends and as to distributions
of assets upon liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, to all of the now or hereafter issued classes
of common stock, $0.001 par value per share, of the Corporation (the “Common Stock”). 
No other preferred stock of the Corporation shall rank senior to the Series
A Convertible Preferred Stock with respect to payment upon liquidation or
payment of dividends without the consent of the holders of record of the Series
A Convertible Preferred Stock (the “Holders”)
representing a majority of the Series A Convertible Preferred Stock then
outstanding.  At the close of business on
February 4, 2022 (the “Expiration Date”),
without any further action on the part of the Corporation or any Holder, but
subject to payment of all accrued and unpaid dividends on the Series A
Convertible Preferred Stock, all then outstanding shares of Series A
Convertible Preferred Stock shall automatically be converted to common stock in
conformance with the provisions of Section 6 and no shares of Series A
Convertible Preferred Stock shall thereafter be issued or outstanding.

 

 

Section
3.               Dividends.  The Holders shall be entitled to receive,
whether or not dividends are declared by the Board out of funds at the time
legally available therefor, annual dividends in the amount of (a) 1.99% of the
Face Value per annum per share of Series A Convertible Preferred Stock, plus
(b) the excess, if any, of the value of any dividends paid with respect to the
number of shares of Common Stock into which each outstanding share of the Series
A Convertible Preferred Stock is then convertible over the amount described in
clause (a), and no more.  Dividends on
the Series A Convertible Preferred Stock shall be fully cumulative, shall
accrue without interest from the date of first issuance, and shall be payable quarterly
in arrears on February 15, May 15, August 15 and November 15 (each, a “Dividend Date”) of each year (except that if any
such date is a Saturday, Sunday or Legal Holiday, then such dividend shall be
payable on the next succeeding day that is not a Saturday, Sunday or Legal
Holiday) to holders of record as they appear on the stock transfer books of the
Corporation on the close of business on the fifth Business Day prior to such Dividend
Date, it being understood that the first dividend payment hereunder shall be
made on August 15, 2005 and shall be made in respect of a  full quarterly dividend period.  All dividends on the Series A Convertible
Preferred Stock are payable, at the Corporation’s option, in cash, shares of
Common Stock or any combination thereof, with the Common Stock valued at the
Market Price (as defined below) as of the applicable Dividend Date.  For purposes hereof, the term “Legal Holiday” shall mean any day on which
banking institutions are authorized to close in New York, New York.  Dividends on account of arrears for any past
dividend period may be declared and paid at any time, without reference to any
regular dividend payment date.  The
amount of dividends payable per share of Series A
Convertible Preferred Stock with respect to the amounts determined pursuant to
clause (a) of this paragraph for each quarterly dividend period shall be
computed by dividing the annual amount determined pursuant to such clause (a) by
four.  The amount of dividends payable
for the initial dividend period and any period shorter than a full quarterly
dividend period shall be computed on the basis of the number of days actually
elapsed of a 360-day year, provided that in no event shall the dividend amount
for any period shorter than a full quarterly dividend period be greater than
the full quarterly dividend amount.

If the Corporation elects to
pay all or any portion of a dividend in shares of Common Stock, the number of
shares of Common Stock to be delivered by the Corporation for each share of Series
A Convertible Preferred Stock held by a Holder shall equal (x) the cash value
of the dividend (or portion of a dividend) to be paid with Common Stock divided
by (y) the Market Price.  The “Market Price” shall be equal to the average of
the daily Closing Prices (as defined below) of the Common Stock for the 10
consecutive Trading Days (as defined below) ending on the second Trading Day
immediately preceding the applicable Dividend Date (or other date with respect
to which the Market Price is to be determined). 
The “Closing Price” for each Trading
Day shall be the last reported sales price regular way, during regular trading
hours, or, in case no such reported sales takes place on such day, the average
of the closing bid and asked prices regular way, during regular trading hours,
for such day, in each case on The Nasdaq Stock

 

2

 

Market
or, if not listed or quoted on such market, on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if not listed or admitted to trading on a national securities
exchange, the last sale price regular way for the Common Stock as published by
the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), or if such last sale price is not so
published by NASDAQ or if no such sale takes place on such day, the mean
between the closing bid and asked prices for the Common Stock as published by
NASDAQ.  If the shares of Common Stock
are not listed or admitted to trading on a national securities exchange or
quoted by NASDAQ, the Market Price shall be determined in good faith by the
Board of Directors of the Corporation or, if such determination cannot be made,
by a nationally recognized independent investment banking firm selected in good
faith by the Board of Directors of the Corporation.  “Trading Day”
shall mean a day on which the securities exchange utilized for the purpose of
calculating the Market Price shall be open for business or, if the shares of
Common Stock shall not be listed on such exchange for such period, a day with
respect to which quotations of the character referred to in the next preceding
sentence shall be reported.  In lieu of
any fractional share of Common Stock which would otherwise be issued in payment
for a dividend on Series A Convertible Preferred Stock, the Corporation shall
pay a cash adjustment in respect of such fractional interest in an amount in
cash (computed to the nearest cent) equal to the Market Price multiplied by the
fractional interest that otherwise would have been deliverable as a dividend on
such Series A Convertible Preferred Stock.

On each Dividend Date all
dividends which shall have accrued on each share of Series A
Convertible Preferred Stock outstanding on such Dividend Date shall accumulate
and be deemed to become “due” whether or not there shall be funds legally
available for the payment thereof.  Any
dividend which shall not be paid on the Dividend Date on which it shall become
due shall be deemed to be “past due” until such dividend shall be paid or until
the share of Series A Convertible Preferred Stock with respect to which such
dividend became due shall no longer be outstanding, whichever is the earlier to
occur.  No interest, sum of money in lieu
of interest, or other property or securities shall be payable in respect of any
dividend payment or payments which are past due.  Dividends paid on shares of Series A Convertible Preferred Stock in an amount less than the
total amount of such dividends at the time accumulated and payable on such
shares shall be allocated pro  rata on a share-by-share basis among all such
shares at the time outstanding.

No dividends shall be paid
or declared and set apart for payment on the Corporation’s Common Stock or on
any class or series of the Corporation’s capital stock ranking, as to
dividends, on a parity with the Series A Convertible Preferred Stock (the “Parity
Dividend Stock”) for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for such payment on the Series
A Convertible Preferred Stock for all dividend payment periods terminating on
or prior to the date of payment of such full cumulative dividends.  No dividends shall be paid or declared and
set apart for payment on the Series A Convertible Preferred Stock for any
period unless cumulative dividends have been, or contemporaneously are, paid or
declared and set apart for payment on the Parity Dividend Stock for all
dividend periods terminating on or prior to the date of payment of such full
cumulative dividends.  When dividends are
not paid in full upon the Series A Convertible
Preferred Stock and the Parity Dividend

 

3

 

Stock,
all dividends paid or declared and set aside for payment upon shares of Series
A Convertible Preferred Stock and the Parity Dividend Stock shall be paid or
declared and set aside for payment pro  rata so that the amount of dividends paid or
declared and set aside for payment per share on the Series A Convertible
Preferred Stock and the Parity Dividend Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the shares
of Series A Convertible Preferred Stock and the Parity Dividend Stock bear to
each other.

Section
4.               Liquidation Preference.  In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the Holders
shall be entitled to receive out of the assets of the Corporation, whether such
assets are stated capital or surplus of any nature, an amount equal to the
dividends accrued and unpaid thereon to the date of final distribution to such
Holders, whether or not declared, without interest, plus a sum per share of Series
A Convertible Preferred Stock equal to the greater of (a) the Face Value and
(b) the liquidating distribution that would be paid with respect to the number
of shares of Common Stock into which a share of Series A Convertible Preferred
Stock is then convertible, and no more. 
Such final distribution on the shares of the Series A
Convertible Preferred Stock shall be made before any payment is made or assets
are distributed to the holders of Common Stock or any other class or series of
the Corporation’s capital stock ranking junior as to liquidation rights to the Series
A Convertible Preferred Stock (the “Junior Liquidation
Stock”).  In the event the
assets of the Corporation available for distribution to stockholders upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable with
respect to the Series A Convertible Preferred Stock and any other class or
series of the Corporation’s capital stock which may hereafter be created having
parity as to liquidation rights with the Series A Convertible Preferred Stock
(the “Parity Liquidation Stock”), the
Holders and the holders of the Parity Liquidation Stock shall share ratably in
any distribution of assets of the Corporation in proportion to the full
respective preferential amounts to which they are entitled (but only to the
extent of such preferential amounts). 
After payment in full of the liquidation preferences of the shares of Series
A Convertible Preferred Stock, the Holders shall not
be entitled to any further participation in any distribution of assets by the
Corporation by virtue of their ownership of the Series A Convertible Preferred
Stock.  Except as set forth in Section
6(i), neither a consolidation, merger or other business combination of the
Corporation with or into another corporation or other entity nor a sale or
transfer of all or part of the Corporation’s assets for cash, securities or
other property or any combination thereof shall be considered a liquidation,
dissolution or winding up of the Corporation for purposes of this Section 4
(unless in connection therewith the liquidation of the Corporation is
specifically approved).

A Holder shall not be
entitled to receive any payment owed for such shares under this Section 4 until
such Holder shall cause to be delivered to the Corporation (i) the
certificate(s) representing such shares of Series A Convertible Preferred Stock
(or, in the event such certificate(s) have been lost or destroyed, an affidavit
of the Holder of loss or destruction reasonably satisfactory to the Corporation
as well as other support as reasonably requested by the Corporation) and (ii) transfer
instrument(s) reasonably satisfactory to the Corporation and sufficient to
transfer such shares of Series A Convertible Preferred Stock to the Corporation
free of any adverse interest.  No
interest shall accrue on any payment upon liquidation after the due date
thereof.

 

4

 

Section
5.               Redemption.  (a)  Redemption at the Option of the Corporation.  Commencing on the tenth anniversary of the
Effective Time (for the purposes hereof, the “Effective
Time” shall be February 4, 2002), the Corporation, at its option,
may from time to time redeem all or a portion of (but if a portion, shares
representing at least 25% of the originally issued aggregate Face Value, unless
there shall remain outstanding less than 25% of such amount, in which case all
outstanding shares may be redeemed) of the outstanding Series A Convertible
Preferred Stock at a redemption price equal to the Face Value plus all
dividends on the Series A Convertible Preferred Stock being redeemed that are
accrued and unpaid thereon, whether or not declared or due, to the date fixed
for redemption (the “Redemption Date”),
such sum being hereinafter referred to as the “Redemption
Price”.  The Redemption Price
may be paid in cash, shares of Common Stock or a combination thereof, at the
option of the Corporation.

If the Corporation elects to
pay the Redemption Price in Common Stock, the number of shares of Common Stock
to be paid per share of Series A Convertible Preferred Stock being redeemed
shall equal (x) the then-current Redemption Price of the Series A Convertible
Preferred Stock (or portion thereof to be paid in shares of Common Stock),
divided by (y) the Market Price as of the date of the notice for redemption
described below.

In case of the redemption
pursuant to this Section 5(a) of less than all of the then outstanding Series A
Convertible Preferred Stock, the shares of Series A Convertible Preferred Stock
to be redeemed shall be redeemed pro rata or by lot or in such other manner as
the Board of Directors may determine.

Not more than 60 nor less
than 20 days prior to the Redemption Date, notice by first class mail, postage
prepaid, shall be given to each Holder of Series A Convertible Preferred Stock
to be redeemed, at such Holder’s address as it shall appear upon the stock
transfer books of the Corporation.  Each
such notice of redemption shall specify the Redemption Date, the Redemption
Price, the place or places of payment, that payment will be made upon
presentation and surrender of the certificate(s) evidencing the shares of Series
A Convertible Preferred Stock to be redeemed, that on and after the Redemption
Date, dividends will cease to accrue on such shares of Series A Convertible
Preferred Stock to be redeemed, the then effective conversion price pursuant to
Section 6 and that the right of holders to convert such shares of Series A
Convertible Preferred Stock to be redeemed shall terminate at the close of
business on the Redemption Date (unless the Corporation defaults in the payment
of the Redemption Price).

Any notice that is mailed as
provided in Section 13 shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice; and failure to give such notice
by mail, or any defect in such notice, to the Holders of any shares designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Convertible Preferred Stock.  On or after the Redemption Date as stated in
such notice, each Holder of the shares called for redemption shall surrender
the certificate evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price as herein provided.  If less than all the shares represented by
any such surrendered certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. 
If, on the Redemption Date, shares of Common Stock and/or funds, as the
case may be, necessary for the redemption shall be available therefor and shall
have been irrecoverably deposited or set aside, then, notwithstanding that the

 

5

 

certificates
evidencing any shares so called for redemption shall not have been surrendered
the dividends with respect to the shares so called shall cease to accrue after
the Redemption Date, the shares shall no longer be deemed outstanding, the
Holders thereof shall cease to be Holders, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the Holders
to receive payment of the Redemption Price as herein provided without interest
upon surrender of their certificates therefor) shall terminate.  At the close of business on the Redemption
Date, each Holder of Series A Convertible Preferred Stock so redeemed (unless
the Corporation defaults on its obligations to deliver shares of Common Stock
or cash) shall be, without any further action, to the extent the Corporation
elected to pay the Redemption Price in shares of Common Stock, deemed a holder
of the number of shares, if any, of Common Stock for which such Series A
Convertible Preferred Stock is redeemable, and, to the extent the Corporation
elected to pay the Redemption Price in cash, entitled to receive payment of the
Redemption Price in cash, without interest.

The shares of Series A Convertible Preferred Stock shall not be subject to the
operation of any purchase, retirement, mandatory redemption (except as
specified in this Section) or sinking fund.

The Holder of any shares of Series
A Convertible Preferred Stock redeemed upon any exercise of the Corporation’s
redemption right shall not be entitled to receive payment of the Redemption
Price for such shares until such Holder shall cause to be delivered to the
place specified in the notice given with respect to such redemption (i) the
certificate(s) representing such shares of Series A Convertible Preferred Stock
redeemed (or, in the event such certificate(s) have been lost or destroyed, an
affidavit of the Holder of loss or destruction reasonably satisfactory to the
Corporation as well as other support as reasonably requested by the
Corporation) and (ii) transfer instrument(s) reasonably satisfactory to
the Corporation and sufficient to transfer such shares of Series A Convertible
Preferred Stock to the Corporation free of any adverse interest.  No interest shall accrue on the Redemption
Price of any share of Series A Convertible Preferred
Stock after its Redemption Date provided that the shares of Common Stock and/or
funds sufficient for the redemption shall have been made available therefor and
shall have been irrecoverably deposited or set aside.

In the event that, prior to
a Redemption Date, any shares of Series A Convertible Preferred Stock shall be
converted into Common Stock pursuant to Section 6, then (i) the Corporation
shall not have the right to redeem such shares and (ii) shares of Common Stock
and any funds which shall have been deposited for the payment of the Redemption
Price for such shares of Series A Convertible Preferred Stock shall be returned
to the Corporation immediately after such conversion (subject to declared
dividends payable to Holders on the record date for such dividends being so
payable, to the extent set forth in Section 6 hereof, regardless of whether
such shares are converted subsequent to such record date and prior to the
related dividend payment date).

(b)           Redemption at the Option of the Holder.  During the 20 Trading Day period preceding
each of the fifth, seventh, tenth and fifteenth anniversaries of the Effective
Time (each such period, a “Holder’s Redemption Period”), a Holder may
elect to cause the Corporation to redeem all or any of the shares of Series A
Convertible Preferred Stock held by such Holder.  The Corporation shall redeem each such share
for the Face Value, plus all accrued and unpaid

 

6

 

dividends whether or not
declared through the applicable anniversary (the “Holder’s Redemption Consideration”),
for cash, shares of Common Stock or a combination thereof, at the Corporation’s
option.

For any shares of Series A
Convertible Preferred Stock that the Corporation elects to redeem for Common
Stock, the amount of Common Stock to be paid per share of Series A Convertible
Preferred Stock so redeemed shall equal (x) the Holder’s Redemption
Consideration (or portion thereof to be paid in shares of Common Stock),
divided by (y) the Market Price as of the applicable anniversary date.

A Holder electing to redeem
one or more shares of Series A Convertible Preferred Stock shall provide notice
in accordance with Section 13 to the transfer agent designated by the Corporation
for such purpose or, if there be none, to the principal business offices of the
Corporation (the “Holder’s Notice”),
postmarked (if not hand delivered) or received by the transfer agent or
principal business offices of the Corporation, as applicable (if hand
delivered), on a date within the applicable Holder’s Redemption Period.  Any Holder’s Notice that is mailed as herein
provided, and includes the documentation described in the next succeeding
paragraph, shall be conclusively presumed to have been duly given, and the
shares of Series A Convertible Preferred Stock shall
be deemed to be subject to redemption by the Corporation on the applicable
anniversary upon receipt of such notice by the Corporation.

A Holder shall include with
the Holder’s Notice (i) the certificate(s) representing such shares of Series A
Convertible Preferred Stock redeemed (or, in the event such certificate(s) have
been lost or destroyed, an affidavit of the Holder of loss or destruction
reasonably satisfactory to the Corporation as well as other support as
reasonably requested by the Corporation) and (ii) transfer instrument(s)
reasonably satisfactory to the Corporation and sufficient to transfer such
shares of Series A Convertible Preferred Stock to the Corporation free of any
adverse interest.  No interest shall
accrue on the Holder’s Redemption Consideration for any share of Series A Convertible Preferred Stock after its redemption date.

If less than all the shares
represented by any such surrendered certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.  If, on or after the date the Corporation
receives the Holder’s Notice, shares of Common Stock and/or funds necessary for
the redemption shall have been made available therefor and shall have been
irrecoverably deposited or set aside, then the dividends with respect to the
shares to be so redeemed shall cease to accrue after the date fixed for
redemption, the shares shall no longer be deemed outstanding, the Holders
thereof shall cease to be Holders of Series A Convertible Preferred Stock, and
all rights whatsoever with respect to the shares so requested to be redeemed
(except the right of the Holders to receive payment of the redemption price as
herein provided without interest upon surrender of their certificates therefor)
shall terminate.

Section
6.               Conversion.  (a)  Right of Conversion/Automatic Conversion.  Subject to and upon compliance with the
provisions of this Section 6, each share of Series A Convertible Preferred
Stock shall, at the option of the Holder, be convertible at any time (unless
such share is called for redemption, then to and including but not after the
close of business on the date fixed for such redemption, unless the Corporation
shall default in payment due upon redemption thereof), into that number of
fully paid and non-assessable shares of Common Stock (calculated

`

7

 

as to each conversion to the
nearest 1/100th of a share) equal to the quotient obtained by dividing the Face
Value by the Conversion Price (as defined in Section 6(d)) in effect at such
time and by surrender of such share so to be converted in the manner provided
in Section 6(b).

Each share of Series A Convertible Preferred Stock shall automatically be
converted into that number of fully paid and non-assessable shares of Common
Stock (calculated as to each conversion to the nearest 1/100th of a share)
equal to the quotient obtained by dividing the Face Value by the Conversion
Price in effect as of the Expiration Date.

(b)           Manner of Exercise of Conversion.  In order to exercise the conversion privilege
(or, in the case of an automatic conversion, receive the Common Stock into
which the shares of Series A Convertible Preferred Stock have been converted),
the Holder of one or more shares of Series A Convertible Preferred Stock to be
converted (or that have been converted, in the case of an automatic conversion)
shall surrender the certificate(s) representing such shares (or, in the event
such certificate(s) have been lost or destroyed, an affidavit of the Holder of
loss or destruction reasonably satisfactory to the Corporation as well as other
support as reasonably requested by the Corporation) to the transfer agent
designated by the Corporation for such purpose or, if there be none, to the
principal business offices of the Corporation, accompanied by the funds, if
any, required by the last paragraph of this Section 6(b) and shall give written
notice of conversion in compliance with Section 13 in the form provided on such
shares of Series A Convertible Preferred Stock (or such other notice as is acceptable
to the Corporation) to the Corporation at such office or agency that the Holder
elects to convert the shares of Series A Convertible Preferred Stock specified
in said notice.  Such notice shall also
state the name or names, together with address or addresses, in which the
certificate or certificates for shares of Common Stock which shall be issuable
in such conversion shall be issued.  Each
share of Series A Convertible Preferred Stock surrendered for conversion shall,
unless the shares issuable on conversion are to be issued in the same name as
the name in which such share is registered, be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the Holder
or his duly authorized attorney and an amount sufficient to pay any transfer or
similar tax.  As promptly as practicable
after the surrender of such shares of Series A Convertible Preferred Stock and
the receipt of such notice, instruments of transfer and funds, if any, as aforesaid,
the Corporation shall issue and shall deliver at such office or agency to such
Holder, or on his written order, a certificate or certificates for the number
of full shares of Common Stock issuable upon the conversion of such share of Series
A Convertible Preferred Stock in accordance with the provisions of this Section
6 and a check or cash in respect of any fractional interest in a share of
Common Stock arising upon such conversion, as provided in Section 6(c).

Each conversion, other than
an automatic conversion, shall be deemed to have been effected immediately
prior to the close of business on the date on which such shares of Series A
Convertible Preferred Stock shall have been surrendered and such notice (and
any applicable instruments of transfer and any required taxes) is deemed
received by the Corporation as aforesaid (such date, the “Conversion Date”).  In the case of an automatic conversion, the
Expiration Date shall be the Conversion Date. 
The person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon a conversion,
including an automatic conversion, shall be deemed to have become the holder or
holders of record of the shares represented thereby at the close of business on
the Conversion Date, and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the

 

8

 

stock
transfer books of the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price
in effect on the date upon which such shares of Series A Convertible Preferred
Stock shall have been surrendered and such notice received by the Corporation.

(c)           Cash Payments in Lieu of Fractional Shares.  No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon conversion of Series A Convertible Preferred Stock.  If more than one share of Series A
Convertible Preferred Stock shall be surrendered for conversion at one time by
the same Holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate of the Face Value for
each such share so surrendered.  In lieu
of any fractional interest in a share of Common Stock which would otherwise be
deliverable upon the conversion of any share of Series A Convertible Preferred
Stock, the Corporation shall pay to the Holder of such shares an amount in cash
(computed to the nearest cent) equal to the Closing Price on the Conversion
Date (or the next Trading Day if such date is not a Trading Day) multiplied by
the fractional interest that otherwise would have been deliverable upon
conversion of such share.

(d)           Conversion Price.  The “Conversion Price” shall mean and be an
amount equal to $67.50 multiplied by the Adjustment Fraction, subject to
adjustment by the Corporation on the applicable Conversion Date as set forth in
Section 6(e) below, and subject to adjustment by the Corporation from time to
time as set forth in Section 6(f), below.

(e)           Market Price Adjustment to Conversion Price.  Solely with respect to shares of Series A Convertible Preferred Stock being converted on an
applicable Conversion Date:

(i)            If and only if the Market
Price on the applicable Conversion Date exceeds an amount equal to $70.20 multiplied
by the Adjustment Fraction (as such amount may be adjusted pursuant to Section
6(f)(v), the “Trigger Price”), the
Conversion Price with respect to the shares of Series A Convertible Preferred
Stock being converted on such Conversion Date shall be adjusted as set forth in
Section 6(e)(ii) (such adjustment, the “Market Price
Adjustment”).

(ii)           If the Market Price
Adjustment is applicable pursuant to Section 6(e)(i)
above, the Conversion Price on the applicable Conversion Date shall be
calculated as follows:

	
   

  	
  (Face Value x Market Price)

  	
   

  	
  D

  	
   

  
	
  Revised
  Conversion Price =

  	
   

  	
  X

  	
   

  	
   

  
	
   

  	
  [(Market Price x A) + {B x (Market Price — C)}]

  	
   

  	
  E

  	
   

  

 

where:

	
  A

  	
   = 

  	
  0.7408

  	
   

  
	
  B

  	
   = 

  	
  0.2396

  	
   

  
	
  C

  	
   = 

  	
  Trigger Price

  	
   

  

 

9

 

	
  D

  	
   = 

  	
  Conversion Price in effect after giving effect to any adjustments
  described in Section 6(f) and without giving effect to this Section 6(e).

  
	
  E

  	
   = 

  	
  $67.50 multiplied by the Adjustment Fraction

  	
   

  

 

Any adjustment to the
Conversion Price pursuant to this Section 6(e)(ii)
shall not require any adjustment to the Trigger Price pursuant to Section 6(f)
below.

(f)            Other Adjustments.

(i)            In case the Corporation
shall (A) pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, (B) subdivide its outstanding shares of Common Stock into a
greater number of shares, (C) combine its outstanding shares of Common Stock
into a smaller number of shares, or (D) issue by reclassification,
recapitalization or reorganization of its Common Stock (other than a
reorganization in which the provisions of Section 6(i) apply) any shares of
capital stock of the Corporation, then in each such case the Conversion Price
in effect immediately prior to such action shall be equitably adjusted so that
the Holder of any share of Series A Convertible Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock or other capital stock of the Corporation which such Holder would
have owned or been entitled to receive immediately following such action had
such share been converted immediately prior to the occurrence of such
event.  An adjustment made pursuant to
this subsection (f)(i) shall become effective
immediately after the record date, in the case of a dividend or distribution,
or immediately after the effective date, in the case of a subdivision,
combination, reclassification, recapitalization or reorganization.  If, as a result of an adjustment made
pursuant to this subsection (f)(i), the Holder of any share of Series A
Convertible Preferred Stock thereafter surrendered for conversion shall become
entitled to receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Corporation, the Board of Directors
in the exercise of its good faith judgment (whose determination shall be
described in a statement filed by the Corporation with the stock transfer or
conversion agent, as appropriate) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes of capital
stock or shares of Common Stock and other capital stock.

(ii)           In case the Corporation
shall issue options, rights or warrants to holders of its outstanding shares of
Common Stock entitling them (for a period expiring within 45 days after the
date mentioned below) to subscribe for or purchase shares of Common Stock or
other securities convertible or exchangeable for shares of Common Stock at a
price per share less than the Current Market Price (as determined pursuant to
subsection (iv) of this Section 6(f)) (other than pursuant to any stock option,
restricted stock or other incentive or benefit plan or stock ownership or purchase
plan for

 

10

 

the benefit of employees,
directors or officers or any dividend reinvestment plan of the Corporation in
effect at the time hereof or any other similar plan adopted or implemented
hereafter, it being agreed that none of the adjustments set forth in this
Section 6(f) shall apply to the issuance of stock, options, rights, warrants or
other property pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the benefit
of employees, directors or officers or any dividend reinvestment plan for the
Corporation in effect at the time hereof or any other similar plan adopted or
implemented hereafter), then the Conversion Price in effect immediately prior
thereto shall be adjusted so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants (immediately prior to such issuance) plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants (immediately prior to such issuance)
plus the number of additional shares of Common Stock offered for subscription
or purchase.  Such adjustment shall be
made successively whenever any rights or warrants are issued, and shall become
effective immediately after the record date for the determination of stockholders
entitled to receive such rights or warrants; provided, however, in the event
that all the shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon the expiration
of such rights or warrants the Conversion Price shall be readjusted to the
Conversion Price which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting adjustment been made
based upon the number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number of shares of
Common Stock offered for subscription or purchase.  In determining whether any security covered
by this Section 6(f)(ii) entitles the holder thereof to subscribe for or
purchase shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Corporation for
such rights, warrants or convertible or exchangeable securities, plus the
aggregate amount of additional consideration (as set forth in the instruments
relating thereto) to be received by the Corporation upon the exercise, conversion
or exchange of such securities, the value of such consideration, if other than
cash, to be determined by the Board of Directors in the exercise of its good
faith judgment (whose determination shall be

 

11

 

described in a statement
filed by the Corporation with the stock transfer or conversion agent, as
appropriate).

(iii)          In case the Corporation
shall, by dividend or otherwise, distribute to holders of its outstanding
Common Stock that is not also distributed to holders of its Series A
Convertible Preferred Stock on an as-converted basis as of the record date for
the determination of stockholders entitled to receive such distribution,
evidences of its indebtedness or assets (including securities and cash, but
excluding any regular periodic cash dividend of the Corporation and dividends
or distributions payable in stock for which adjustment is made pursuant to
subsection (i) of this Section 6(f)) or options, rights or warrants to
subscribe for or purchase securities of the Corporation (excluding those
referred to in subsection (ii) of this Section 6(f)), then in each such case
the Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date of such distribution by a fraction of which the numerator shall
be the Current Market Price as of the Time of Determination less the fair
market value on such record date (as determined by the Board of Directors in
the exercise of its good faith judgment, whose determination shall be described
in a statement filed by the Corporation with the stock transfer or conversion
agent, as appropriate) of the portion of the capital stock or assets or the
evidences of indebtedness or assets so distributed to the holder of one share
of Common Stock or of such subscription rights or warrants applicable to one
share of Common Stock, and of which the denominator shall be such Current
Market Price.  Such adjustment shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.

(iv)          For the purpose of any
computation under subsections (ii) and (iii) of this Section 6(f), the “Current Market Price” per share of Common Stock
on any date shall be deemed to be the average of the daily Closing Prices for
the shorter of (A) 10 consecutive Trading Days ending on the day immediately
preceding the applicable Time of Determination (as defined below) or (B) the
period commencing on the date next succeeding the first public announcement of
the issuance of such rights or warrants or such distribution through such last
day prior to the applicable Time of Determination.  For purposes of the foregoing, the term “Time of Determination” shall mean the time and
date of the record date for determining stockholders entitled to receive the
rights, warrants or distributions referred to in Section 6(f)(ii) and (iii).

(v)           In any case in
which this Section 6(f) shall require that an adjustment be made to the Conversion
Price, the Trigger Price shall be adjusted as follows:

	
   

  	
   

  	
   

  	
  A

  	
   

  
	
   

  	
  Revised Trigger Price = Revised Conversion Price x

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  B

  	
   

  

 

where:

	
  A

  	
   = 

  	
  $70.20 multiplied by the Adjustment Fraction 

  	
   

  
	
  B

  	
   = 

  	
  $67.50 multiplied by the Adjustment Fraction

  	
   

  

 

(vi)          In any case in which this
Section 6(f) shall require that an adjustment be made immediately following a
record date or an effective date, the Corporation may elect to defer (but only
until the filing by the Corporation with the stock transfer or conversion
agent, as the case may be, of the certificate required by subsection (viii))
issuing to the holder of any share of Series A Convertible Preferred Stock
converted after such record date or effective date the shares of Common Stock
issuable upon such conversion over and above the shares of Common Stock
issuable upon such conversion on the basis of the Conversion Price prior to
adjustment, and paying to such holder any amount of cash in lieu of a
fractional share.

(vii)         No adjustment in the
Conversion Price shall be required to be made pursuant to this Section 6(f)
unless such adjustment would require an increase or decrease of at least 1% of
such price; provided, however, that any adjustments which by reason of this
subsection (f)(vii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this Section 6(f)
shall be

 

12

 

made to the nearest
cent or to the nearest 1/1000th of a share, as the case may be.  Anything in this Section 6(f) to the contrary
notwithstanding, the Corporation shall be entitled to make such reduction in
the Conversion Price, in addition to those required by this Section 6(f), as it
in its discretion shall determine to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients.  Except as set
forth in subsections (f)(i), (f)(ii), and (f)(iii) and Section 6(e) above, the
Conversion Price shall not be adjusted for the issuance of Common Stock, or any
securities convertible into or exchangeable for Common Stock or carrying the
right to purchase any of the foregoing, in exchange for cash, property or
services.

(viii)        Whenever the Conversion
Price is adjusted pursuant to this Section 6(f), (A) the Corporation shall
promptly file with the stock transfer or conversion agent, as appropriate, a
certificate setting forth the Conversion Price after such adjustment and a
brief statement of the facts requiring such adjustment and the manner of
computing the same, which certificate shall, absent manifest error (including
the failure to make any other required adjustment under this Section 6(f)), be
conclusive evidence of the correctness of such adjustment, and (B) the
Corporation shall also mail or cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each Holder a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.  The stock transfer or conversion
agent, as the case may be, shall not be under any duty or responsibility with
respect to the certificate required by this subsection (viii) except to exhibit
the same to any Holder who requests to inspect it.

(ix)           In the event that at any
time, as a result of an adjustment made pursuant to subsections (i), (ii) or
(iii) of this Section 6(f), the Holder of any share of Series A Convertible
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of the Corporation other than shares of Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any share of Series A Convertible Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Section.

(x)            The Corporation from time to
time in its sole discretion may decrease the Conversion Price by any amount for
any period of time if the period is at least 20 days and if the decrease is irrevocable
during the period.  Whenever the
Conversion Price is so decreased, the Corporation shall mail to all Holders a
notice of the decrease at least 15 days before the date the decreased
Conversion Price takes effect, and such notice shall state the decreased
Conversion Price and the period it will be in effect.

(g)           Reservation of Shares of Common Stock.  The Corporation covenants that it will at all
times reserve and keep available, free from preemptive rights (other than such
rights as do not affect the ownership of shares issued to a Holder), out of the
aggregate of its authorized but unissued shares of Common Stock or its issued
shares of Common Stock held in its treasury, or both, for the purpose of
effecting conversions of shares of Series A Convertible Preferred Stock, the
full number of shares of Common Stock deliverable upon the conversion of all
outstanding

 

13

 

shares of Series A
Convertible Preferred Stock not theretofore converted or redeemed and on or
before taking any action that would cause an adjustment of the Conversion Price
resulting in an increase in the number of shares of Common Stock deliverable
upon conversion above the number thereof previously reserved and available
therefor, the Corporation shall take all such action so required.  For purposes of this Section 6(g), the number
of shares of Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Series A Convertible Preferred
Stock shall be computed as if at the time of computation all outstanding shares
of Series A Convertible Preferred Stock were held by a single holder.

Before taking any action
which would cause an adjustment reducing the Conversion Price below the then
par value (if any) of the shares of Common Stock deliverable upon conversion of
the shares of Series A Convertible Preferred Stock, the Corporation shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.

(h)           Transfer Taxes, Etc.  The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any other similar taxes payable
in respect of the issue or delivery of shares of Common Stock upon conversions
of shares of Series A Convertible Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock in a name other than that of the holder of the shares of Series
A Convertible Preferred Stock to be converted and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery has
paid to the Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.

(i)            Consolidation or Merger or Sale of Assets.  For purposes of this paragraph (i), a “Sale
Transaction” means any transaction or event, including any merger,
consolidation, sale of assets, tender or exchange offer, reclassification,
compulsory share exchange or liquidation, in which all or substantially all
outstanding shares of the Corporation’s Common Stock are converted into or
exchanged for stock, other securities, cash or assets or following which any
remaining outstanding shares of Common Stock fail to meet the listing standards
imposed by each of the New York Stock Exchange, the American Stock Exchange and
the Nasdaq National Market at the time of such transaction, but shall not
include any transaction the primary purpose of which is the reincorporation of
the Corporation in another U.S. jurisdiction so long as in such transaction
each share of Series A Convertible Preferred Stock shall convert into an equity
security of the successor to the Corporation having identical dividends, rights
and preferences as the Series A Convertible Preferred Stock.  If a Sale Transaction occurs, then each
Holder shall have the right to elect one of the following:  (i) such Sale Transaction shall be deemed a
liquidation for purposes of Section 4, and the amount of the liquidating
distribution to holders of Common Stock for purposes of calculating the
liquidation preference payable under Section 4 shall be deemed to be zero, (ii)
provision shall be made so that such Holder receives in exchange for each
outstanding share of Series A Convertible Preferred Stock held by such Holder
the kind and amount of securities, cash or other property receivable upon such
Sale Transaction by a holder of the number of shares of Common Stock into which
such share of Series A Convertible Preferred Stock might have been converted
immediately prior to such Sale Transaction assuming such holder of Common Stock
did not exercise his rights of election, if any, as to the kind or

 

14

 

amount of securities, cash
or other property receivable upon such Sale Transaction (provided that, if the
kind or amount of securities, cash or other property receivable upon such Sale
Transaction is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised (“Non-Electing Share”),
then for the purposes of this Section 6(i) the kind and amount of securities,
cash or other property receivable upon such Sale Transaction for each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-Electing Shares) or (iii) to the extent
permitted under applicable law, lawful provision shall be made by the
corporation, if any, formed by the Sale Transaction or the corporation, if any,
whose securities, cash or other property will immediately after the Sale
Transaction be owned, by virtue of such Sale Transaction, by the holders of
Common Stock immediately prior to such Sale Transaction, or the corporation, if
any, which shall have acquired (whether directly or indirectly) in such Sale
Transaction such assets or securities of the Corporation (collectively the “Formed,
Surviving or Acquiring Corporation”), as the case may be, providing that
the Holder of each share of Series A Convertible Preferred Stock then
outstanding shall receive in exchange for each such share of Series A
Convertible Preferred Stock an equity security of the Formed, Surviving or
Acquiring Corporation having substantially equivalent dividends, rights and
preferences as the Series A Convertible Preferred Stock (“Mirror Preferred
Stock”), except that the Holder thereof shall have the right thereafter to
convert such Mirror Preferred Stock into the kind and amount of securities,
cash or other property receivable upon such Sale Transaction by a holder of the
number of shares of Common Stock into which such share of Series A Convertible
Preferred Stock might have been converted immediately prior to such Sale Transaction
assuming such holder of Common Stock did not exercise his rights of election,
if any, as to the kind or amount of securities, cash or other property
receivable upon such Sale Transaction. 
Each Holder shall be provided notice of the Sale Transaction not later
than twenty (20) days prior to the effective date thereof, which notice shall
detail the material terms of the Sale Transaction, including without limitation
the nature and amount of consideration payable to the holders of Common Stock
in such Sale Transaction.  In the event
that a Holder elects option (iii) and such option is not permitted under
applicable law, at the option of the Corporation, (A) the Formed, Surviving or
Acquiring Corporation will cause a U.S. subsidiary of such Formed, Surviving or
Acquiring Corporation to issue a security satisfying the terms described in
option (iii) above or (B) such Sale Transaction shall be deemed a liquidation
for purposes of Section 4, and the amount of the liquidating distribution to
holders of Common Stock for purposes of calculating the liquidation preference
payable under Section 4 shall be deemed to be 20% of the amount of the
liquidation preference payable to a Holder of Series A Convertible Preferred
Stock pursuant to clause (a) of Section 4 hereof (i.e.,
initially equal to the Face Value), as such amount may be adjusted from time to
time pursuant to the terms of this Certificate. 
The Formed, Surviving or Acquiring Corporation shall, if applicable,
make provision in its certificate or articles of incorporation or other constituent
documents to the end that the provisions set forth in this Section 6(i) shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares of stock or other securities or property thereafter
deliverable on the conversion of the Series A Convertible Preferred Stock.

Notwithstanding anything to
the contrary herein, there will be no adjustment in connection with a Sale
Transaction pursuant to Section 6(f) hereof except as provided in this Section
6(i).  The above provisions of this
Section 6(i) shall similarly apply to successive Sale Transactions; provided,
however, that in no event shall a Holder of a share of Series A 

 

15

 

Convertible Preferred Stock be
entitled to more than one adjustment pursuant to this Section 6(i) in respect
of a series of related transactions.

Section
7.               Voting
Rights.  The Holders shall not
have any voting rights by virtue of their ownership of the Series A Convertible
Preferred Stock except as set forth herein or as otherwise from time to time
may be required by law.  In connection
with any vote in which the holders of Common Stock are entitled to vote (other
than pursuant to Section C(4) of Article IV of the Restated Certificate of
Incorporation of the Corporation relating to the separate right of the holders
of Common Stock as a class to elect 25% of the Corporation’s directors), a
Holder will have two votes for each share of Series A Convertible
Preferred Stock held, such votes to be cast together with the votes of the
holders of the Common Stock, voting together as a single class.  Any shares of Series A
Convertible Preferred Stock held by the Corporation or any entity controlled by
the Corporation shall not have voting rights hereunder and shall not be counted
in determining the presence of a quorum.

Section
8.               Outstanding Shares.  For purposes of this Certificate of Designation,
all shares of Series A Convertible Preferred Stock shall be deemed outstanding
except (i) from the date fixed for redemption pursuant to Section 5, all shares
of Series A Convertible Preferred Stock that have been so called for redemption
under Section 5 if shares of Common Stock and funds necessary for payment of
the redemption price, as the case may be, have been irrevocably set apart; (ii)
from the date of surrender of certificates representing shares of Series A
Convertible Preferred Stock, all shares of Series A Convertible Preferred Stock
converted into Common Stock; and (iii) from the date of registration of
transfer, all shares of Series A Convertible Preferred Stock held of record by
the Corporation or any subsidiary of the Corporation.

Section
9.               Status of Acquired Shares.  Shares of Series A Convertible Preferred
Stock redeemed by the Corporation, received upon conversion pursuant to Section
6, cancelled pursuant to Section 2 or otherwise acquired by the Corporation
will be restored to the status of authorized and unissued shares of preferred
stock, without designation as to series, and may thereafter be issued, but not
as shares of Series A Convertible Preferred Stock.

Section
10.             Preemptive Rights.  The Series A
Convertible Preferred Stock is not entitled to any preemptive or subscription
rights in respect of any securities of the Corporation.

Section
11.             Covenant Regarding Shares of Common Stock.  All shares of Common Stock which may be
delivered upon conversion or redemption of shares of Series A Convertible
Preferred Stock, or in connection with any dividend payment, will upon delivery
be duly and validly issued and fully paid and non-assessable, free of all liens
and charges and not subject to any preemptive rights (other than rights which
do not affect the Holder’s right to own the shares of Common Stock to be
issued), and prior to the applicable Redemption Date, Dividend Date or
Conversion Date, the Corporation shall take any corporate action necessary
therefor.  The issuance of all such
shares of Common Stock shall, to the extent permitted by law, be registered
under the Securities Act of 1933, as amended.

Section
12.             Severability of Provisions.  Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any

 

16

 

provision hereof is held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or otherwise adversely affecting the remaining provisions
hereof.  If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid
under applicable law.

Section
13.             Notices.  Any notice to Holders or the Corporation
required pursuant to this Certificate of Designations shall be in writing and
shall be deemed effectively given:  (i)
upon personal delivery to the party to be notified, (ii) three (3) business
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, (iii) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with verification
of receipt, and (iv) five (5) business days after having been sent by first
class mail, postage prepaid.  All notices
to Holders shall be addressed to each Holder of record at the address of such
Holder appearing on the books of the Corporation.

 

17

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