Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On March 8, 2018, Disney filed a Certificate of Designation of Series B Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) with the Secretary of State of the State of Delaware. Disney has authorized 40,000 shares of Series B Convertible Preferred Stock, par value $0.01 per share. The following description of the Series B Convertible Preferred Stock does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Certificate of Designation of Series B Convertible Preferred Stock, which is attached as Exhibit 3.1 and incorporated herein by reference.
Dividends
. No dividend will be payable on any share of Series B Convertible Preferred Stock, except in the case of dividends payable in shares of Series B Convertible Preferred Stock, or securities convertible into, or exercisable or exchangeable for, Series B Convertible Preferred Stock or shares or other equity interests of any corporation or other entity which immediately prior to the time of the dividend or distribution is a subsidiary of Disney (or securities convertible into, or exercisable or exchangeable for, such shares or equity interests).
Liquidation Preference
. In the event of Disney’s liquidation, dissolution or winding up, the holders of shares of Series B Convertible Preferred Stock then outstanding will be entitled to be paid in cash out of Disney’s assets available for distribution to its stockholders an amount per share equal to the Conversion Rate (as defined below) multiplied by the per share amount of all cash and other property to be distributed in respect of the Disney common stock upon such liquidation, dissolution or winding up (treating all outstanding shares of Series B Convertible Preferred Stock as having been converted into Disney common stock for purposes of calculating such per share amount), before any payment will be made or any assets distributed to the holders of any stock ranking junior to the Series B Convertible Preferred Stock. If Disney’s assets are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of Series B Convertible Preferred Stock and any other class or series of preferred stock having liquidation rights on parity with the shares of Series B Convertible Preferred Stock, then the holders of all such shares will share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series B Convertible Preferred Stock and all the holders of outstanding shares of such other series of preferred stock are entitled were paid in full.
Redemption
. The Series B Convertible Preferred Stock will not be subject to redemption.
Voting Rights
. No shares of Series B Convertible Preferred Stock are entitled to vote or be counted for quorum purposes. No shares of Series B Convertible Preferred Stock are treated as or deemed outstanding for purposes of determining voting requirements.
Automatic Conversion
. Each share of Series B Convertible Preferred Stock will automatically be converted into a number of fully paid and non-assessable shares of Disney common stock equal to the Conversion Rate upon transfer to any person who is not Disney or a subsidiary of Disney. The Conversion Rate initially will be equal to 10,000 shares of Disney common stock per share of Series B Convertible Preferred Stock. In the event Disney changes the number of shares of Disney common stock as a result of a recapitalization, reclassification, stock split (including a reverse stock split), stock dividend, distribution, subdivision or other similar transaction, then in each such case the Conversion Rate will be adjusted by multiplying such Conversion Rate by a fraction the numerator of which is the number of shares of Disney common stock outstanding immediately after such event and the denominator of which is the number of shares of Disney common stock that were outstanding immediately prior to such event.
Ranking
. The Series B Convertible Preferred Stock will rank junior to all other series of Disney preferred stock as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, unless the terms of any such series shall provide otherwise, and will rank senior to the Disney common stock as to the distribution of assets upon liquidation, dissolution or winding up.
No Preemptive Rights
. The holders of shares of Series B Convertible Preferred Stock have no preemptive rights or preferential rights to purchase or subscribe for any stock, obligations, warrants or other securities of Disney of any class.