This excerpt taken from the NDAQ DEF 14A filed Aug 22, 2005.
Description of the Voting Charter Amendment
The Voting Charter Amendment provides the holders of the New Notes with voting rights similar to those that existed with respect to the Old Notes. The holders of the New Notes would have the right to vote on all matters submitted to a vote of the Holders, including the election of directors. The holders of the New Notes would be entitled to cast votes equal to the number of shares of common stock of Nasdaq issuable upon conversion of such holders New Notes as of the record date established in connection with such vote. The Voting Charter Amendment provides that the holders of the New Notes will be deemed to be stockholders of Nasdaq, and the New Notes will be deemed to be shares of common stock, solely for the purposes of any provision of the General Corporation Law of the State of Delaware or the Certificate of Incorporation that requires the vote of Holders as a prerequisite to any corporate action. The holders of the New Notes will vote as a single class with the holders of Nasdaq Securities.
The proposed Voting Charter Amendment also will subject the holders of the New Notes to the 5% Limitation contained in the Certificate of Incorporation. As amended by the Voting Charter Amendment, the 5% Limitation will provide that a holder of Nasdaq Securities and/or New Notes may not cast votes on any matter in excess of 5% of the votes entitled to be cast in respect of such matter. The limitation would not apply, however,
to (i) NASD until such time as it controls 5% or less of the outstanding shares of the Nasdaq Securities and/or New Notes entitled to vote on the election of a majority of directors, (ii) any person that the Nasdaq Board exempts, in accordance with certain restrictions on the Nasdaq Boards discretion, from the limitation prior to the time that such person beneficially owns more than 5% of the outstanding shares of the Nasdaq Securities and/or New Notes entitled to vote on the election of a majority of directors, or (iii) the H&F Entities and the SLP Entities and certain of their respective affiliates, but only in the event that the Nasdaq Board approves an exemption from the limitation for any person (other than an exemption granted in connection with a strategic market alliance) provided that such exemption does not cause a registered broker dealer or a broker affiliate (as defined in the Voting Charter Amendment) to receive an exemption for a greater percentage of voting securities than has been granted to another broker affiliate by the Nasdaq Board.
The Certificate of Incorporation is considered a rule of a self-regulatory organization under the Exchange Act. As such, amendments to the Certificate of Incorporation must be filed with the SEC. Nasdaq has filed the proposed Voting Charter Amendment with the SEC and, if approved by the SEC, and by Holders at the special meeting, Nasdaq will promptly file the amendment with the Secretary of State of the State of Delaware, whereupon it will immediately be effective.
The complete text of the Voting Charter Amendment is attached as Annex A to this Proxy Statement.