IHOP 2010 Annual Report Download - page 138

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
15. Preferred Stock and Stockholders’ Equity (Continued)
premium has been included as part of dividends paid on Series A Perpetual Preferred Stock for the
year ended December 31, 2010.
Series B Convertible Preferred Stock
On November 29, 2007, the Company issued and sold 35,000 shares of Series B Convertible
Preferred Stock for an aggregate purchase price of $35.0 million in cash. Total issuance costs were
approximately $0.8 million. All of the shares were sold to affiliates of Chilton Investment
Company, LLC (collectively, ‘‘Chilton’’) pursuant to a purchase agreement dated as of July 15, 2007.
The shares of Series B Convertible Preferred Stock rank (i) senior to the common stock, and any series
of preferred stock specifically designated as junior to the Series B Convertible Preferred Stock, with
respect to the payment of dividends and distributions, in a liquidation, dissolution or winding up, and
upon any other distribution of the Company’s assets; and (ii) on a parity with all other series of
preferred stock, including the Series A Perpetual Preferred Stock, with respect to the payment of
dividends and distributions, in a liquidation, dissolution or winding up, and upon any other distribution
of the Company’s assets.
Each share of Series B Convertible Preferred Stock has an initial stated value of $1,000, that
increases at the rate of 6.0% per annum, compounded quarterly, commencing on the issue date of such
share of Series B Convertible Preferred Stock to and including the earlier of (i) the date of liquidation,
dissolution or winding up or the redemption of such share, or (ii) the date such share is converted into
the Company’s common stock. The stated value of a share as so accreted as of any date is referred to
as the accreted value of the share as of that date. Shares of Series B Convertible Preferred Stock may
be redeemed by the Company, in whole or in part at the Company’s option, on or after the fourth
anniversary of the issue date, at a redemption price equal to the accreted value as of the applicable
redemption date, subject to the terms set forth in the Certificate of Designations for the Series B
Convertible Preferred Stock (‘‘the ‘‘Series B Certificate of Designations’’). The Series B Convertible
Preferred Stock entitles the holders thereof to receive certain dividends and distributions to the extent
that any dividends or distributions paid on the Company’s common stock exceed the annual accretion
on the Series B Convertible Preferred Stock. Holders of Series B Convertible Preferred Stock are
entitled to vote on all matters (including the election of directors) submitted to the holders of the
Company’s common stock, as a single class with the holders of the Company’s common stock, with
each share of Series B Convertible Preferred Stock having one vote per share of the Company’s
common stock then issuable upon conversion of such share of Series B Convertible Preferred Stock. As
of December 31, 2009 and 2008, the aggregate accretion for the Series B Convertible Preferred Stock
was $4.6 million and $2.3 million, respectively.
At any time and from time to time, any holder of Series B Convertible Preferred Stock may
convert all or any portion of the Series B Convertible Stock held by such holder into a number of
shares of the Company’s common stock computed by multiplying (i) each $1,000 of aggregate accreted
value of the shares to be converted by (ii) the conversion rate then in effect (which initially is 14.44878
shares of common stock per $1,000 of accreted value, but subject to customary anti-dilution
adjustments). All outstanding shares of Series B Convertible Preferred Stock will automatically convert
into shares of the Company’s common stock on the fifth anniversary of the issue date, at the
conversion rate then in effect, without any action on the part of the holder thereof.
The Company also entered into a registration rights agreement, dated as of November 29, 2007,
with Chilton pursuant to which the Company granted Chilton certain registration rights with respect to
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