UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D/A
(Amendment No. 1)
Under the Securities Exchange Act of 1934
NTL Incorporated
(Name of Issuer)
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Common Stock, par value $0.01 per share
(Title of Class of Securities)
-----------------------------------------------
629407107 (Common Stock)
(CUSIP Number)
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France Telecom S.A. Compagnie Generale des Communications
Jean-Louis Vinciguerra (COGECOM) S.A.
Senior Executive Vice President Pierre Dauvillaire
6 place d'Alleray Chairman of the Board of Directors
75505 Paris Cedex 15 6 place d'Alleray
France 75505 Paris Cedex 15
(33-1) 44-44-01-59 France
(33-1) 44-44-8472
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Copy to:
Alfred J. Ross, Jr.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
October 23, 1999
(Date of Event which requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 629407107
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
France Telecom S.A.
IRS Identification Number: N/A
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e).
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6. Citizenship or Place of Organization
France
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7. Sole Voting Power
0
------------------------------------------------------------
Number of
8. Shares Shared Voting Power
Beneficially
Owned 14,228,047 shares of Common Stock
By ------------------------------------------------------------
9. Each Sole Dispositive Power
Reporting
Person 0
With ------------------------------------------------------------
10. Shared Dispositive Power
14,228,047 shares of Common Stock
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
14,228,047 shares of Common Stock
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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13. Percent of Class Represented by Amount in Row (11)
12.6% of the aggregate number of all outstanding shares of Common Stock
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14. Type of Reporting Person (See Instructions)
CO
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<PAGE>
CUSIP No. 629407107
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Compagnie Generale des Communications (COGECOM) S.A.
IRS Identification Number: N/A
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e).
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6. Citizenship or Place of Organization
France
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7. Sole Voting Power
0
------------------------------------------------------------
Number of
8. Shares Shared Voting Power
Beneficially
Owned 14,228,047 shares of Common Stock
By ------------------------------------------------------------
9. Each Sole Dispositive Power
Reporting
Person 0
With ------------------------------------------------------------
10. Shared Dispositive Power
14,228,047 shares of Common Stock
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
14,228,047 shares of Common Stock
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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<PAGE>
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13. Percent of Class Represented by Amount in Row (11)
12.6% of the aggregate number of all outstanding shares of Common Stock
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14. Type of Reporting Person (See Instructions)
CO
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This Amendment No.1 (the "Amendment") amends and supplements the
Schedule 13D filed on August 25, 1999 (as amended and supplemented, the
"Schedule 13D") of France Telecom S.A., a societe anonyme organized under the
laws of France ("FT") and Compagnie Generales des Communications (COGECOM) S.A.
("COGECOM"), a societe anonyme organized under the laws of France and a wholly
owned subsidiary of FT, with respect to the common stock, par value $0.01 per
share (the "Common Stock") of NTL Incorporated, a Delaware corporation with its
principal executive offices at 110 East 59th Street, New York, NY 10022 (the
"Issuer"). All capitalized terms used in this Amendment that are not otherwise
defined herein have the meanings ascribed to such terms in the Schedule 13D as
filed on August 25, 1999.
FT and COGECOM are filing this Amendment to reflect (i) the purchase by
COGECOM of 3,300,000 shares of Common Stock pursuant to a purchase agreement
(the "Selling Shareholder Purchase Agreement"), attached hereto as Exhibit 10.2,
with shareholders of the Issuer listed in Annex I to that agreement (the
"Selling Shareholders"), and (ii) the issuance by the Issuer to COGECOM of 5,000
shares of 5% Cumulative Participating Convertible Preferred Stock, Series C (the
"Series C Preferred Stock"), as a dividend on the Series A Preferred Stock
beneficially owned by FT and COGECOM.
Item 1. Security and Issuer
Item 1 is hereby amended by adding the following paragraph:
On October 7, 1999 the Issuer effected a five-for-four stock split
through stock dividend (the "Stock Split"). The number of shares reflected
herein is adjusted for the Stock Split. In addition, due to the Stock Split, the
conversion price for the Series A Preferred Stock has been adjusted and is now
set at $100.00 per share of Common Stock. On September 30, 1999, the Issuer
issued to COGECOM 5,000 shares of Series C Preferred Stock as a dividend with
respect to the Series A Preferred Stock beneficially owned by FT and COGECOM.
Each share of the Series C Preferred Stock is convertible into Common Stock,
anytime at the option of the holder thereof, at a conversion price of $100.67
per share (after giving effect to the Stock Split).
Item 2. Identity and Background
No change.
Item 3. Source and Amount of Funds or Other Consideration
Item 3 is hereby amended by adding the following paragraph:
FT will provide the funds for all purchases by COGECOM pursuant to the
Selling Shareholder Purchase Agreement from cash on hand.
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Item 4. Purpose of Transaction
Item 4 is hereby amended by adding the following paragraph:
FT has caused COGECOM to enter into the Selling Shareholder Purchase
Agreement in order to increase its total investment and strengthen its exposure
to the markets in which the Issuer operates. In a letter agreement, dated
October 23, 1999, the Issuer consented to the transactions contemplated by the
Selling Shareholder Purchase Agreement.
Item 5. Interest in Securities of the Issuer
Item 5 is hereby amended and restated as follows:
(a) On October 23, 1999, FT and COGECOM were the joint beneficial
owners of 14,228,047 shares of Common Stock, which represents approximately
12.6% of the Common Stock outstanding. This percentage is calculated on the
basis of 112,915,185 shares, a sum of 105,365,517 shares of Common Stock
outstanding as of October 22, 1999, a figure that the Issuer has provided to FT
and COGECOM; and 7,549,668, the number of shares of Common Stock issuable to
COGECOM upon conversion of the Series A Preferred Stock and the Series C
Preferred Stock.
(b) FT and COGECOM share the power to vote and the power to dispose of
all such 14,228,047 shares of Common Stock.
(c) On October 23, 1999, COGECOM entered into the Selling Shareholder
Purchase Agreement, attached hereto as Exhibit 10.2, with the Selling
Shareholders. Pursuant to the Selling Shareholder Purchase Agreement, COGECOM
agreed to purchase 3,300,000 shares of Common Stock from the Selling
Shareholders, for an aggregate purchase price of $226,050,000. On September 30,
1999, the Issuer paid a dividend on the Series A Preferred Stock to COGECOM. The
Issuer paid this dividend by issuing 5,000 shares of Series C Preferred Stock to
COGECOM. Each such share of Series C Preferred Stock is convertible into 9.9334
shares of Common Stock. A copy of the certificate of designation for the Series
C Preferred Stock is attached hereto as Exhibit 10.1. Following the closing
under the Selling Shareholder Purchase Agreement, which is expected to occur on
October 27, 1999, and after giving effect to Stock Split and the issuance to
COGECOM of the Series C Preferred Stock, COGECOM and FT will become the joint
beneficial owners of an aggregate number of shares of the Common Stock
representing 12.6% of the shared voting power of the outstanding Common Stock.
Except as described above, neither FT nor COGECOM, nor, to the best of
their knowledge, any of the persons listed in Schedules I and II of the Schedule
13D, effected any transactions in Common Stock, Series A Preferred Stock or
Series C Preferred Stock since August 13, 1999.
(d) No one other than FT or COGECOM is known to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, Common
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Stock, Series A Preferred Stock or Series C Preferred Stock beneficially owned
by FT and COGECOM.
Item 6. Contracts, Arrangements, Understanding of Relationships with Respect
to Securities of the Issuer
Item 6 is hereby amended (i) to include the Selling Shareholder
Purchase Agreement described in Item 5 above and (ii) by adding the following
paragraph:
The Selling Shareholders and certain other shareholders of the Issuer
are parties to a registration rights agreement, dated as of March 8, 1999 (the
"Registration Rights Agreement"). The Registration Rights Agreement provides
that if the Selling Shareholders transfer Common Stock in certain private
transactions, other parties to that agreement are entitled to sell the same
proportion of their shares of Common Stock on the same terms and conditions. For
that reason, the Selling Shareholder Purchase Agreement includes, among other
things, a representation of COGECOM that it is willing to purchase up to 1.389
million shares of Common Stock from parties to the Registration Rights
Agreement.
Item 7. Material to be Filed as Exhibits
Item 7 is hereby amended to include the following exhibits, attached
hereto:
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Exhibit 10.1
Form of Certificate of Designation of the Voting Powers, Designation,
Preferences and Relative, Participating, Optional or Other Special Rights and
Qualifications, Limitations and Restrictions of the 5% Cumulative Participating
Convertible Preferred Stock, Series C of the Issuer.
Exhibit 10.2
Purchase Agreement, dated October 23, 1999 among COGECOM and the
shareholders listed in Annex I thereto.
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After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 26, 1999
France Telecom S.A.
By: /s/ Jean-Louis Vinciguerra
--------------------------------------
Name: Jean-Louis Vinciguerra
Title: Senior Executive Vice President
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After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 26, 1999
Compagnie Generale des Communications
(COGECOM) S.A.
By: /s/ Pierre Dauvillaire
-----------------------------------------
Name: Pierre Dauvillaire
Title: Chairman of the Board of Directors
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CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
5% CUMULATIVE PARTICIPATING CONVERTIBLE
PREFERRED STOCK, SERIES C OF
NTL INCORPORATED
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PURSUANT TO SECTION 151(g) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
------------------------------
The undersigned, Executive Vice President, General Counsel and
Secretary of NTL Incorporated, a Delaware corporation (the "Corporation"),
HEREBY CERTIFIES that the Board of Directors, in accordance with Article FOURTH,
Section B of the Corporation's Restated Certificate of Incorporation and Section
151(g) of the Delaware General Corporation Law (the "DGCL"), has authorized the
creation of the series of Preferred Stock hereinafter provided for and has
established the dividend, redemption, conversion and voting rights thereof and
has adopted the following resolution, creating the following new series of the
Corporation's Preferred Stock:
"BE IT RESOLVED that, pursuant to authority expressly granted
to the Board of Directors by the provisions of Article FOURTH, Section B of the
Restated Certificate of Incorporation of the Corporation and Section 151(g) of
the DGCL, there is hereby created and authorized the issuance of a new series of
the Corporation's Preferred Stock, par value $.01 per share ("Preferred Stock"),
with the following powers, designations, dividend rights, voting powers, rights
on liquidation, conversion rights, redemption rights and other preferences and
relative, participating, optional or other special rights and with the
qualifications, limitations or restrictions on the shares of such series (in
addition to the powers, designations, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof set forth in the Restated Certificate of Incorporation that
are applicable to each series of Preferred Stock) hereinafter set forth.
(1) Number and Designation. 5,000 shares of the Preferred
Stock of the Corporation shall be designated as 5% Cumulative Participating
Convertible Preferred Stock, Series C (the "5% Preferred Stock") and no other
shares of Preferred Stock shall be designated as 5% Preferred Stock.
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(2) Definitions. For purposes of the 5% Preferred Stock, the
following terms shall have the meanings indicated:
"Additional Preferred" shall have the meaning set forth in
paragraph (4)(a) hereof.
"Bankruptcy Event" shall mean any of the following: (I) a
court having jurisdiction in the premises enters a decree or order for
(A) relief in respect of any Major Entity in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect, (B) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of any
Major Entity or for all or substantially all of the property and assets
of any Major Entity or (C) the winding up or liquidation of the affairs
of any Major Entity; or (II) any Major Entity (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereinafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of any
Major Entity, or for all or substantially all of the property and
assets of any Major Entity or (C) effects any general assignment for
the benefit of creditors.
"Board of Directors" shall mean the board of directors of the
Corporation. Except as such term is used in paragraph (9), "Board of
Directors" shall also mean the Executive Committee, if any, of such
board of directors or any other committee duly authorized by such board
of directors to perform any of its responsibilities with respect to the
5% Preferred Stock.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par
value $.01 per share.
"Constituent Person" shall have the meaning set forth in
paragraph (8)(e)(i) hereof.
"Conversion Rate" shall have the meaning set forth in
paragraph (8)(a) hereof.
"Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security of the
Corporation or any other issuer for any day shall mean the last
reported sale price for such security on the principal exchange or
quotation system on which such security is listed or traded. If the
security is not admitted for trading on any national securities
exchange or the Nasdaq National Market, "Current Market Price" shall
mean the average of the last reported closing bid and asked prices
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reported by the Nasdaq as furnished by any member in good standing of
the National Association of Securities Dealers, Inc., selected from
time to time by the Corporation for that purpose or as quoted by the
National Quotation Bureau Incorporated. In the event that no such
quotation is available for such day, the Current Market Price shall be
the average of the quotations for the last five Trading Days for which
a quotation is available within the last 30 Trading Days prior to such
day. In the event that five such quotations are not available within
such 30-Trading Day period, the Board of Directors shall be entitled to
determine the Current Market Price on the basis of such quotations as
it reasonably considers appropriate.
"Determination Date" shall have the meaning set forth in
paragraph (8)(d)(ii) hereof.
"Dividend Payment Date" shall mean September 30, December 31,
March 31 and June 30 of each year, commencing on December 31, 1999;
provided, however, that if any Dividend Payment Date falls on any day
other than a Business Day, the dividend payment due on such Dividend
Payment Date shall be paid on the Business Day immediately following
such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods
commencing on September 30, December 31, March 31 and June 30 of each
year and ending on and including the day preceding the first day of the
next succeeding Dividend Period.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"Expiration Time" shall have the meaning set forth in
paragraph (8)(d)(v) hereof.
"5% Preferred Stock" shall have the meaning set forth in
paragraph (1) hereof.
"5 1/4% Preferred" shall have the meaning set forth in
paragraph (3)(d) hereof.
"5 1/4% Series A" shall have the meaning set forth in
paragraph (3)(d) hereof.
"Issue Date" shall mean the date on which shares of 5%
Preferred Stock are first issued.
"Junior Securities" shall have the meaning set forth in
paragraph (3)(c) hereof.
"Junior Securities Distribution" shall have the meaning set
forth in paragraph (4)(f) hereof.
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"Liquidation Right" shall mean, for each share of 5% Preferred
Stock, the greater of (i) an amount equal to $1,000 per share, plus an
amount equal to all dividends (whether or not earned or declared)
accrued and unpaid thereon to the date of final distribution to such
holders, and (ii) the amount that would be received in liquidation
following conversion of a share of 5% Preferred Stock into Common
Stock.
"Major Entity" shall mean any of the Corporation, NTL
Communications Corp., Diamond Cable Communications Limited, Diamond
Holdings Limited, NTL (Bermuda) Limited or any Significant Subsidiary.
"Mandatory Redemption Date" shall have the meaning set forth
in paragraph (6)(c) hereof.
"Mandatory Redemption Obligation" shall have the meaning set
forth in paragraph (6)(d) hereof.
"Nasdaq" means the Nasdaq Stock Market, Inc., the electronic
securities market regulated by the National Association of Securities
Dealers, Inc.
"Nasdaq National Market" shall have the meaning set forth in
Rule 4200(a)(23) of the rules of the National Association of Securities
Dealers, Inc.
"9.9% Series A Preferred" shall have the meaning set forth in
paragraph (3)(d) hereof.
"9.9% Series B Preferred" shall have the meaning set forth in
paragraph (3)(d) hereof.
"non-electing share" shall have the meaning set forth in
paragraph (8)(e)(i) hereof.
"NYSE" means the New York Stock Exchange.
"outstanding", when used with reference to shares of stock,
shall mean issued shares, excluding shares held by the Corporation or a
subsidiary.
"Parity Securities" shall have the meaning set forth in
paragraph (3)(b) hereof.
"Person" shall mean any individual, partnership, association,
joint venture, corporation, business, trust, joint stock company,
limited liability company, any unincorporated organization, any other
entity, a "group" of such persons, as that term is defined in Rule
13d-5(b) under the Exchange Act, or a government or political
subdivision thereof.
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"Preferred Shares" has the meaning set forth in paragraph
(9)(c).
"Preferred Stock" shall have the meaning set forth in the
first resolution above.
"Purchase Shares" shall have the meaning set forth in
paragraph (8)(d)(v) hereof.
"Record Date" shall have the meaning set forth in paragraph
(8)(d)(iv) hereof.
"Relevant Compounding Factor" shall mean, with respect to each
share of 5% Preferred Stock, upon initial issuance 1.00, and shall on
each Dividend Payment Date be increased to equal the product of the
Relevant Compounding Factor in effect immediately prior to such
Dividend Payment Date and 1.0125.
"Rights" shall have the meaning set forth in paragraph (11)
hereof.
"Securities" shall have the meaning set forth in paragraph
(8)(d)(iii) hereof.
"Senior Securities" shall have the meaning set forth in
paragraph (3)(a) hereof.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Corporation
in its accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Securities or any
class or series of Parity Securities are placed in a separate account
of the Corporation or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to the 5%
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent,
as the case may be.
"Significant Subsidiary" shall have the meaning given to such
term in Regulation S-X under the Exchange Act.
"13% Preferred" shall have the meaning set forth in paragraph
(3)(d) hereof.
"Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed
or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or
if not listed or admitted for trading on any national securities
exchange, on the Nasdaq National Market, or if such securities are not
quoted thereon, in the applicable securities market in which the
securities are traded.
"Transaction" shall have the meaning set forth in paragraph
(8)(e)(i) hereof.
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"Trigger Event" shall have the meaning set forth in paragraph
(9)(b) hereof.
"Trigger Event Cure" shall have the meaning set forth in
paragraph (9)(b) hereof.
"25-Day Average Market Price" shall mean, for any security,
the volume-weighted average of the Current Market Prices of that
security for the twenty-five Trading Days immediately preceding the
date of determination.
(3) Rank. Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the 5% Preferred Stock, either as to the payment
of dividends or as to distribution of assets upon liquidation, dissolution or
winding up, or both, if the holders of such class or series shall be entitled by
the terms thereof to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, in preference or priority to the holders
of 5% Preferred Stock ("Senior Securities");
(b) on a parity with the 5% Preferred Stock, either as to the
payment of dividends or as to distributions of assets upon liquidation,
dissolution or winding up, or both, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof be different
from those of the 5% Preferred Stock, if the holders of the 5% Preferred Stock
and of such class of stock or series shall be entitled by the terms thereof to
the receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, or both, in proportion to their respective amounts of
accrued and unpaid dividends per share or liquidation preferences, without
preference or priority one over the other and such class of stock or series is
not a class of Senior Securities ("Parity Securities"); and
(c) junior to the 5% Preferred Stock, either as to the payment
of dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, or both, if such stock or series shall be Common Stock or if the
holders of the 5% Preferred Stock shall be entitled to receipt of dividends, and
of amounts distributable upon liquidation, dissolution or winding up, in
preference or priority to the holders of shares of such stock or series ("Junior
Securities").
(d) Each of (i) the 13% Series B Senior Redeemable
Exchangeable Preferred Stock (the "13% Preferred") and (ii) the 5 1/4%
Convertible Preferred Stock, Series A, (the "5 1/4% Series A") and any dividends
paid on the 5 1/4% Series A in accordance with its terms, to the extent that
such dividends are paid in preferred stock having terms substantially identical
to the 5 1/4% Series A and any dividends paid on preferred stock issued as
in-kind dividends thereon, to the extent such dividends are paid in preferred
stock having terms substantially identical to the 5 1/4% Series A (the 5 1/4%
Series A and all such in-kind dividends being hereinafter referred to as the "5
1/4% Preferred") is a Senior Security. Each of the 9.9% Non-Voting Mandatorily
Redeemable Preferred Stock, Series A ("9.9% Series A Preferred"), and 9.9%
Non-Voting Mandatorily Redeemable Preferred Stock, Series B ("9.9% Series B
Preferred"), is a Junior
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Security. The 5% Cumulative Participating Convertible Preferred Stock, Series A
and one or more classes of Additional Preferred (as defined below) shall be
Parity Securities; provided, however, that there shall be no issue of other
Senior Securities, Parity Securities or rights or options exercisable for or
convertible into any such securities, except as approved by the holders of the
5% Preferred Stock pursuant to paragraph 9(e).
(e) The respective definitions of Senior Securities, Junior
Securities and Parity Securities shall also include any rights or options
exercisable for or convertible into any of the Senior Securities, Junior
Securities and Parity Securities, as the case may be. The 5% Preferred Stock
shall be subject to the creation of Junior Securities, Parity Securities and
Senior Securities as set forth herein.
(4) Dividends. (a) Subject to paragraph (8)(b)(ii), the
holders of shares of 5% Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of funds legally available for
the payment of dividends, dividends at the quarterly rate of $12.50 per share
(assuming a $1,000.00 face amount) payable in cash, shares of Common Stock (such
Common Stock for this purpose to be assigned a value equal to the 25-Day Average
Market Price as of the record date for such Dividend Payment Date) or additional
shares of Preferred Stock of a class to be designated by the Board of Directors
having terms substantially identical to the 5% Preferred Stock except as
follows: (A) the Conversion Rate (as set forth in Section 8(a)) on such
Preferred Stock initially shall be the quotient resulting from the division of
the Conversion Rate (as then in effect on the 5% Preferred Stock) by the
Relevant Compounding Factor and (B) the number of shares of such Preferred Stock
payable as a dividend on any Dividend Payment Date shall increase for each
Dividend Payment Date from the first Dividend Payment Date by the Relevant
Compounding Factor (such classes of Preferred Stock singularly and collectively,
the "Additional Preferred"). All dividends on the 5% Preferred Stock, in
whatever form, shall be payable in arrears quarterly on each Dividend Payment
Date and shall be cumulative from the Issue Date (except that dividends on
Additional Preferred shall accrue from the date such Additional Preferred is
issued or would have been issued in accordance with this Certificate of
Designation if such dividends had been declared), whether or not in any Dividend
Period or Dividend Periods there shall be funds of the Corporation legally
available for the payment of such dividends. Each such dividend shall be payable
to the holders of record of shares of the 5% Preferred Stock, as they appear on
the stock records of the Corporation at the close of business on the record date
for such dividend. Upon the declaration of any such dividend, the Board of
Directors shall fix as such record date on the fifth Business Day preceding the
relevant Dividend Payment Date and shall give notice on or prior to the record
date of the form of payment of such dividend. Accrued and unpaid dividends for
any past Dividend Payment Date may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such record
date, not more than 45 days nor less than five Business Days preceding the
payment date thereof, as may be fixed by the Board of Directors.
(b) In addition to the dividends described in the preceding
paragraph, holders of shares of the 5% Preferred Stock shall be entitled to
receive an amount equal to the amount
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(and in the form of consideration) that such holders would be entitled to
receive if, pursuant to paragraph (8), they had converted such 5% Preferred
Stock fully into Common Stock immediately before the record date for the payment
of any such dividends on Common Stock. Each such dividend shall be payable to
the holders of record of shares of the 5% Preferred Stock as they appear on the
stock records of the Corporation at the close of business on the record date for
such dividend on Common Stock, and the Corporation shall pay each such dividend
on the applicable payment date for such dividend on the Common Stock.
(c) For the purpose of determining the number of Additional
Preferred to be issued pursuant to paragraph (4)(a), each such Additional
Preferred shall be valued at $1,000.00. Holders of such Additional Preferred
shall be entitled to receive dividends payable at the rates specified in
paragraph (4)(a).
(d) The dividends payable for any period shorter than a full
Dividend Period on the 5% Preferred Stock shall accrue daily and be computed on
the basis of a 360-day year and the actual number of days in such period. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the 5% Preferred Stock that may be in
arrears except as otherwise provided herein.
(e) So long as any shares of the 5% Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on Parity Securities or
Junior Securities, for any period, nor shall any Parity Securities or Junior
Securities be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any such Parity Securities or Junior Securities) by the
Corporation (except for conversion into or exchange into other Parity Securities
or Junior Securities, as the case may be) unless, in each case, (i) full
cumulative dividends on all outstanding shares of the 5% Preferred Stock for all
Dividend Periods terminating on or prior to the date of such redemption,
repurchase or other acquisition shall have been paid or set apart for payment,
(ii) sufficient funds shall have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the 5% Preferred Stock
and (iii) the Corporation is not in default with respect to any redemption of
shares of 5% Preferred Stock by the Corporation pursuant to paragraph (6) below.
When dividends are not fully paid in Common Stock or Additional Preferred or are
not paid in full in cash or a sum sufficient for such payment is not set apart,
as aforesaid, all dividends declared upon shares of the 5% Preferred Stock and
all dividends declared upon Parity Securities shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on the
5% Preferred Stock and accumulated and unpaid on such Parity Securities.
(f) So long as any shares of the 5% Preferred Stock are
outstanding, no dividends (other than (i) any rights issued pursuant to a
shareholder rights plan as provided in paragraph (11) and (ii) dividends or
distributions paid in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Junior Securities) shall be declared or paid or set apart
for payment or other distribution declared or made upon Junior Securities, nor
shall any Junior
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Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase, or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) (all such dividends, distributions, redemptions or purchases being
hereinafter referred to as "Junior Securities Distributions") for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Junior Securities,
including pursuant to paragraph 4(c) of the 9.9% Series A Preferred and
paragraph 4(d) of the 9.9% Series B Preferred), unless in each case (A) full
cumulative dividends on all outstanding shares of the 5% Preferred Stock and all
other Parity Securities shall have been paid or set apart for payment for all
past Dividend Periods and dividend periods for such other stock, (B) sufficient
funds shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the 5% Preferred Stock and all other
Parity Securities, (C) the Corporation is not in default with respect to any
redemption of shares of 5% Preferred Stock by the Corporation pursuant to
paragraph (6) below, (D) the Corporation has fully performed its obligations
under paragraphs (4)(b) and (6) hereof.
(5) Liquidation Preference. (a) In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
Junior Securities, the holders of the shares of 5% Preferred Stock shall be
entitled to receive the Liquidation Right. If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of 5% Preferred Stock
shall be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any Parity Securities, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of 5% Preferred Stock
and any such other Parity Securities ratably in accordance with the respective
amounts that would be payable on such shares of 5% Preferred Stock and any such
other stock if all amounts payable thereon were paid in full. For the purposes
of this paragraph (5), (i) a consolidation or merger of the Corporation with one
or more corporations, or (ii) a sale or transfer of all or substantially all of
the Corporation's assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of the 5% Preferred
Stock, as provided in this paragraph (5), any other series or class or classes
of Junior Securities shall, subject to the respective terms and provisions (if
any) applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of the 5% Preferred Stock shall not be
entitled to share therein.
(6) Redemption. (a) On and after the first Business Day
following the earlier to occur of (i) August 13, 2006 or (ii) the date on which
both (A) the 25-Day Average Market Price of the Common Stock shall have exceeded
$150.00 and (B) August 13, 2003, to the extent the Corporation shall have funds
legally available for such payment, the Corporation may redeem
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at its option shares of 5% Preferred Stock, from time to time in part, or in
whole, payable at the option of the Corporation in (A) cash, at a redemption
price of $1,000.00 per share, (B) in shares of Common Stock, at a redemption
price of $1,000.00 per share, or (C) in a combination of cash and Common Stock,
at a redemption price based on the respective combination of consideration,
together in each case with accrued and unpaid dividends thereon, whether or not
declared, to, but excluding, the date fixed for redemption, without interest.
For purposes of determining the number of shares of Common Stock to be issued
pursuant to this paragraph (6)(a), the price per share of Common Stock shall be
the 25-Day Average Market Price.
(b) On and after the first Business Day following August 13,
2009, each holder of shares of 5% Preferred Stock shall have the right to
require the Corporation, to the extent the Corporation shall have funds legally
available therefor, to redeem such holder's shares of 5% Preferred Stock, from
time to time in part, or in whole, at a redemption price of $1,000.00 per share,
payable at the option of the Corporation in cash, shares of Common Stock or a
combination thereof, together with accrued and unpaid dividends thereon to, but
excluding, the date fixed for redemption, without interest. For purposes of
determining the number of shares of the Common Stock to be issued pursuant to
this paragraph (6)(b), the price per share of Common Stock shall equal the
25-Day Average Market Price. Any holder of shares of 5% Preferred Stock who
elects to exercise its rights pursuant to this paragraph (6)(b) shall deliver to
the Corporation a written notice of election not less than 20 days prior to the
date on which such holder demands redemption pursuant to this paragraph 6(b),
which notice shall set forth the name of the Holder, the number of shares of 5%
Preferred Stock to be redeemed and a statement that the election to exercise a
redemption right is being made thereby; and, subject to paragraph (10)(d), shall
deliver to the Corporation on or before the date of redemption certificates
evidencing the shares of 5% Preferred Stock to be redeemed, duly endorsed for
transfer to the Corporation.
(c) If the Corporation shall not have redeemed all outstanding
shares of 5% Preferred Stock pursuant to paragraphs (6)(a) or (6)(b), on August
13, 2019 (the "Mandatory Redemption Date"), to the extent the Corporation shall
have funds legally available for such payment, the Corporation shall redeem all
outstanding shares of 5% Preferred Stock, at a redemption price of $1,000.00 per
share, payable at the option of the Corporation in cash, shares of Common Stock
or a combination thereof, together with accrued and unpaid dividends thereon to,
but excluding, the Mandatory Redemption Date, without interest. For purposes of
determining the number of shares of the Common Stock to be issued pursuant to
this paragraph (6)(c), the price per share of Common Stock shall be the 25-Day
Average Market Price.
(d) If the Corporation is unable or shall fail to discharge
its obligation to redeem all outstanding shares of 5% Preferred Stock pursuant
to paragraphs 6(b) or 6(c) (each, a "Mandatory Redemption Obligation"), the
Mandatory Redemption Obligation shall be discharged as soon as the Corporation
is able to discharge such Mandatory Redemption Obligation. If and so long as any
Mandatory Redemption Obligation with respect to the 5% Preferred Stock shall not
be fully discharged, the Corporation shall not (i) directly or indirectly,
redeem, purchase, or otherwise acquire any Parity Security or discharge any
mandatory or optional redemption, sinking fund or other similar obligation in
respect of any Parity Securities (except in connection with a redemption,
sinking fund or other similar obligation to be satisfied
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pro rata with the 5% Preferred Stock) or (ii) declare or make any Junior
Securities Distribution (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Securities), or, directly or indirectly, discharge any mandatory or
optional redemption, sinking fund or other similar obligation in respect of the
Junior Securities.
(e) Upon any redemption of 5% Preferred Stock, the Corporation
shall pay the redemption price and any accrued and unpaid dividends in arrears
to, but excluding, the applicable redemption date.
(f) For purposes of paragraph (6)(a) only, unless full
cumulative dividends (whether or not declared) on all outstanding shares of 5%
Preferred Stock and any Parity Securities shall have been paid or
contemporaneously are declared and paid or set apart for payment for all
Dividend Periods terminating on or prior to the applicable redemption date and
notice has been given in accordance with paragraph (7), none of the shares of 5%
Preferred Stock shall be redeemed, and no sum shall be set aside for such
redemption, unless shares of 5% Preferred Stock are redeemed pro rata and notice
has previously been given in accordance with paragraph (7).
(7) Procedure for Redemption. (a) If the Corporation shall
redeem shares of 5% Preferred Stock pursuant to paragraph 6(a), notice of such
redemption shall be given by certified mail, return receipt requested, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the Corporation
and confirmed by facsimile transmission to each holder of record if the
Corporation has been furnished with such facsimile address by the holder(s);
provided, however, that neither the failure to give such notice nor confirmation
nor any defect therein or in the mailing thereof, to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice that was mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such notice shall state: (i) the redemption date; (ii) the number of shares of
5% Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed from such holder;
(iii) the amount payable, whether such amount shall be paid in Common Stock or
in cash and if the payment is in Common Stock an explanation of the
determination of the amount to be paid; (iv) the place or places where
certificates for such shares are to be surrendered or the notice under paragraph
(10)(d) should be sent for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date, except as otherwise provided herein.
(b) If notice has been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
for the payment of the redemption price of the shares called for redemption and
dividends accrued and unpaid thereon, if any), (i) except as otherwise provided
herein, dividends on the shares of 5% Preferred Stock so called
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<PAGE>
for redemption shall cease to accrue, (ii) said shares shall no longer be deemed
to be outstanding, and (iii) all rights of the holders thereof as holders of the
5% Preferred Stock shall cease (except the right to receive from the Corporation
the redemption price without interest thereon, upon surrender and endorsement
(or a constructive surrender under paragraph (10)(d)) of their certificates if
so required, and to receive any dividends payable thereon).
(c) Upon surrender (including a constructive surrender
under paragraph (10)(d)) in accordance with notice given pursuant to this
paragraph (7) of the certificates for any shares so redeemed (properly endorsed
or assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid, plus any dividends payable
thereon. If fewer than all the outstanding shares of 5% Preferred Stock are to
be redeemed, the number of shares to be redeemed shall be determined by the
Board of Directors and the shares to be redeemed shall be selected pro rata
(with any fractional shares being rounded to the nearest whole share). In case
fewer than all the shares represented by any such certificate are redeemed, a
new certificate shall be issued, subject to a holder's election under paragraph
(10)(d), representing the surrendered shares without cost to the holder thereof.
(8) Conversion. (a) Subject to and upon compliance with the
provisions of this paragraph (8), a holder of shares of 5% Preferred Stock shall
have the right, at any time and from time to time, at such holder's option, to
convert any or all outstanding shares of 5% Preferred Stock held by such holder,
but not fractions of shares, into fully paid and non-assessable shares of Common
Stock by surrendering such shares to be converted, such surrender to be made in
the manner provided in paragraph (8)(b) hereof. The number of shares of Common
Stock deliverable upon conversion of each share of 5% Preferred Stock shall be
equal to 7.947017, as adjusted as provided herein (the "Conversion Rate"). The
Conversion Rate is subject to adjustment from time to time pursuant to paragraph
(8)(d) hereof. The right to convert shares called for redemption pursuant to
paragraph 6(a) shall terminate at the close of business on the date immediately
preceding the date fixed for such redemption unless the Corporation shall
default in making payment of the amount payable upon such redemption, in which
case such right of conversion shall be reinstated. Upon conversion, any accrued
and unpaid dividends on the 5% Preferred Stock at the date of conversion shall
be paid to the holder thereof in accordance with the provisions of paragraph
(4).
(b) (i) In order to exercise the conversion privilege, the
holder of each share of 5% Preferred Stock to be converted shall surrender (or
constructively surrender in accordance with paragraph (10)(d)) the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Corporation, or to any transfer agent of the
Corporation previously designated by the Corporation to the holders of the 5%
Preferred Stock for such purposes, with a written notice of election to convert
completed and signed, specifying the number of shares to be converted. Such
notice shall state that the holder has satisfied any legal or regulatory
requirement for conversion, including compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976; provided, however, that the Corporation
shall use its best
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efforts in cooperating with such holder to obtain such legal or regulatory
approvals to the extent its cooperation is necessary. Such notice shall also
state the name or names (with address and social security or other taxpayer
identification number, if applicable) in which the certificate or certificates
for Common Stock are to be issued. Unless the shares issuable on conversion are
to be issued in the same name as the name in which such share of 5% Preferred
Stock is registered, each share surrendered for conversion shall be accompanied
by instruments of transfer, in form satisfactory to the Corporation, duly
executed by the holder or the holder's duly authorized attorney and an amount
sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
All certificates representing shares of 5% Preferred Stock surrendered for
conversion shall be canceled by the Corporation or the transfer agent.
(ii) Subject to the last sentence of paragraph (8)(a), holders
of shares of 5% Preferred Stock at the close of business on a dividend payment
record date shall not be entitled to receive the dividend payable on such shares
on the corresponding Dividend Payment Date if such holder shall have surrendered
(or made a constructive surrender under paragraph (10)(d)) for conversion such
shares at any time following the preceding Dividend Payment Date and prior to
such Dividend Payment Date.
(iii) Subject to a holder's election under paragraph (10)(d),
as promptly as practicable after the surrender (including a constructive
surrender under paragraph (10)(d)) by a holder of the certificates for shares of
5% Preferred Stock as aforesaid, the Corporation shall issue and shall deliver
to such holder, or on the holder's written order, a certificate or certificates
(which certificate or certificates shall have the legend set forth in paragraph
(10)(c)) for the whole number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this paragraph (8), and any
fractional interest in respect of a share of Common Stock arising on such
conversion shall be settled as provided in paragraph (8)(c). Upon conversion of
only a portion of the shares of 5% Preferred Stock represented by any
certificate, a new certificate shall be issued representing the unconverted
portion of the certificate so surrendered without cost to the holder thereof.
Subject to a holder's election under paragraph (10)(d), upon the surrender
(including a constructive surrender under paragraph (10)(d)) of certificates
representing shares of 5% Preferred Stock to be converted, such shares shall no
longer be deemed to be outstanding and all rights of a holder with respect to
such shares so surrendered shall immediately terminate except the right to
receive the Common Stock and other amounts payable pursuant to this paragraph
(8).
(iv) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of 5% Preferred Stock shall have been surrendered (or deemed
surrendered pursuant to an election under paragraph (10)(d)) and such notice
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall
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be deemed to have become the holder or holders of record of the shares of Common
Stock represented thereby at such time on such date and such conversion shall be
into a number of shares of Common Stock equal to the product of the number of
shares of 5% Preferred Stock surrendered times the Conversion Rate 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 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 based upon the Conversion Rate in effect on the date upon
which such shares shall have been surrendered and such notice received by the
Corporation.
(c) (i) No fractional shares or scrip representing fractions
of shares of Common Stock shall be issued upon conversion of the 5% Preferred
Stock. Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of 5% Preferred Stock,
the Corporation shall pay to the holder of such share an amount in cash based
upon the Current Market Price of Common Stock on the Trading Day immediately
preceding the date of conversion. If more than one share shall be surrendered
for conversion (or deemed surrendered under paragraph (10)(d)) 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 number of
shares of 5% Preferred Stock surrendered (or deemed surrendered under paragraph
(10)(d)) for conversion by such holder.
(ii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of 5% Preferred Stock shall have been surrendered (or deemed
surrendered under paragraph (10)(d)) and such notice received by the Corporation
as aforesaid, and the Person or Persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Common Stock represented thereby at such time on such date and such
conversion shall be into a number of shares of Common Stock equal to the product
of the number of shares of 5% Preferred Stock surrendered times the Conversion
Rate 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 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 based upon the Conversion Rate in effect on the
date upon which such shares shall have been surrendered (or deemed surrendered
under paragraph (10)(d)) and such notice received by the Corporation.
(d) The Conversion Rate shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) declare
a dividend or make a distribution on its Common Stock in shares of its Common
Stock, (B) subdivide its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller number of
shares, or (D) effect any reclassification of its outstanding Common Stock, the
Conversion Rate in effect on the record date for such dividend or distribution,
or the effective date of such subdivision, combination or reclassification, as
the case may be, shall be proportionately adjusted so that the holder of any
share of 5% Preferred Stock thereafter
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surrendered for conversion shall be entitled to receive the number and kind of
shares of Common Stock that such holder would have owned or have been entitled
to receive after the happening of any of the events described above had such
share been converted immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as provided
in paragraph (8)(h)) in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the Business Day next
following the effective date in the case of a subdivision, combination or
reclassification. Adjustments in accordance with this paragraph (8)(d)(i) shall
be made whenever any event listed above shall occur.
(ii) If the Corporation shall after the Issue Date fix a
record date for the issuance of rights or warrants (in each case, other than any
rights issued pursuant to a shareholder rights plan) to all holders of Common
Stock entitling them (for a period expiring within 45 days after such record
date) to subscribe for or purchase Common Stock (or securities convertible into
Common Stock) at a price per share (or, in the case of a right or warrant to
purchase securities convertible into Common Stock, having an effective exercise
price per share of Common Stock, computed on the basis of the maximum number of
shares of Common Stock issuable upon conversion of such convertible securities,
plus the amount of additional consideration payable, if any, to receive one
share of Common Stock upon conversion of such securities) less than the 25- Day
Average Market Price on the date on which such issuance was declared or
otherwise announced by the Corporation (the "Determination Date"), then the
Conversion Rate in effect at the opening of business on the Business Day next
following such record date shall be adjusted so that the holder of each share of
5% Preferred Stock shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock determined by multiplying (I) the
Conversion Rate in effect immediately prior to such record date by (II) a
fraction, the numerator of which shall be the sum of (A) the number of shares of
Common Stock outstanding on the close of business on the Determination Date and
(B) the number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights or warrants (or in the case of a right or
warrant to purchase securities convertible into Common Stock, the aggregate
number of additional shares of Common Stock into which the convertible
securities so offered are initially convertible), and the denominator of which
shall be the sum of (A) the number of shares of Common Stock outstanding on the
close of business on the Determination Date and (B) the number of shares that
the aggregate proceeds to the Corporation from the exercise of such rights or
warrants for Common Stock would purchase at such 25-Day Average Market Price on
such date (or, in the case of a right of warrant to purchase securities
convertible into Common Stock, the number of shares of Common Stock obtained by
dividing the aggregate exercise price of such rights or warrants for the maximum
number of shares of Common Stock issuable upon conversion of such convertible
securities, plus the aggregate amount of additional consideration payable, if
any, to convert such securities into Common Stock, by such 25-Day Average Market
Price). Such adjustment shall become effective immediately after the opening of
business on the Business Day next following such record date (except as provided
in paragraph (8)(h)). Such
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adjustment shall be made successively whenever such a record date is fixed. In
the event that after fixing a record date such rights or warrants are not so
issued, the Conversion Rate shall be readjusted to the Conversion Rate which
would then be in effect if such record date had not been fixed. In determining
whether any rights or warrants entitle the holders of Common Stock to subscribe
for or purchase shares of Common Stock at less than such 25-Day Average Market
Price, there shall be taken into account any consideration received by the
Corporation upon issuance and upon exercise of such rights or warrants, the
value of such consideration, if other than cash, to be determined by the Board
of Directors in good faith. In case any rights or warrants referred to in this
subparagraph (ii) shall expire unexercised after the same have been distributed
or issued by the Corporation (or, in the case of rights or warrants to purchase
securities convertible into Common Stock once exercised, the conversion right of
such securities shall expire), the Conversion Rate shall be readjusted at the
time of such expiration to the Conversion Rate that would have been in effect if
no adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(iii) If the Corporation shall fix a record date for the
making of a distribution to all holders of its Common Stock of evidences of its
indebtedness, shares of its capital stock or assets (excluding regular cash
dividends or distributions declared in the ordinary course by the Board of
Directors and dividends payable in Common Stock for which an adjustment is made
pursuant to paragraph (8)(d)(i)) or rights or warrants (in each case, other than
any rights issued pursuant to a shareholder rights plan) to subscribe for or
purchase any of its securities (excluding those rights and warrants issued to
all holders of Common Stock entitling them (for a period expiring within 45 days
after such record date) to subscribe for or purchase Common Stock or securities
convertible into shares of Common Stock, which rights and warrants are referred
to in and treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) called the "Securities"), then in each
such case the Conversion Rate shall be adjusted so that the holder of each share
of 5% Preferred Stock shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock determined by multiplying (I) the
Conversion Rate in effect immediately prior to the close of business on such
record date by (II) a fraction, the numerator of which shall be the 25-Day
Average Market Price per share of the Common Stock on such record date, and the
denominator of which shall be the 25-Day Average Market Price per share of the
Common Stock on such record date less the then-fair market value (as determined
by the Board of Directors in good faith, whose determinations shall be
conclusive) of the portion of the assets, shares of its capital stock or
evidences of indebtedness so distributed or of such rights or warrants
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that after
fixing a record date such distribution is not so made, the Conversion Rate shall
be readjusted to the Conversion Rate which would then be in effect if such
record date had not been fixed. Such adjustment shall become effective
immediately at the opening of business on the Business Day next following
(except as provided in paragraph (8)(h)) the record date for the determination
of shareholders entitled to receive such distribution. For the purposes of this
subparagraph (iii), the distribution of a Security, which is distributed not
only to the holders of the Common Stock on the date fixed for the determination
of shareholders entitled to such
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distribution of such Security, but also is distributed with each share of Common
Stock delivered to a Person converting a share of 5% Preferred Stock after such
determination date, shall not require an adjustment of the Conversion Rate
pursuant to this subparagraph (iii); provided, however, that on the date, if
any, on which a Person converting a share of 5% Preferred Stock would no longer
be entitled to receive such Security with a share of Common Stock (other than as
a result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Rate shall be
adjusted as provided in this subparagraph (iii) (and such day shall be deemed to
be "the date fixed for the determination of shareholders entitled to receive
such distribution" and "the record date" within the meaning of the three
preceding sentences). If any rights or warrants referred to in this subparagraph
(iii) shall expire unexercised after the same shall have been distributed or
issued by the Corporation, the Conversion Rate shall be readjusted at the time
of such expiration to the Conversion Rate that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash in the amount per share that,
together with the aggregate of the per share amounts of any other cash
distributions to all holders of its Common Stock made within the 12 months
preceding the date of payment of such distribution and in respect of which no
adjustment pursuant to this paragraph (iv) has been made exceeds 5.0% of the
25-Day Average Market Price immediately prior to the date of declaration of such
dividend or distribution (excluding any dividend or distribution in connection
with the liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, and any cash that is distributed upon a merger,
consolidation or other transaction for which an adjustment pursuant to paragraph
8(e) is made), then, in such case, the Conversion Rate shall be adjusted so that
the same shall equal the rate determined by multiplying the Conversion Rate in
effect immediately prior to the close of business on the Record Date for the
cash dividend or distribution by a fraction the numerator of which shall be the
Current Market Price of a share of the Common Stock on the Record Date and the
denominator shall be such Current Market Price less the per share amount of cash
so distributed during the 12-month period applicable to one share of Common
Stock, such adjustment to be effective immediately prior to the opening of
business on the Business Day following the Record Date; provided, however, that
in the event the denominator of the foregoing fraction is zero or negative, in
lieu of the foregoing adjustment, adequate provision shall be made so that each
holder of 5% Preferred Stock shall have the right to receive upon conversion, in
addition to the shares of Common Stock to which the holder is entitled, the
amount of cash such holder would have received had such holder converted each
share of 5% Preferred Stock at the beginning of the 12-month period. In the
event that such dividend or distribution is not so paid or made, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such dividend or distribution had not been declared. Notwithstanding
the foregoing, if any adjustment is required to be made as set forth in this
paragraph (8)(d)(iv), the calculation of any such adjustment shall include the
amount of the quarterly cash dividends paid during the 12-month reference period
only to the extent such dividends exceed the regular quarterly cash dividends
paid during the 12 months preceding the
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<PAGE>
12-month reference period. For purposes of this paragraph (8)(d)(iv), "Record
Date" shall mean, with respect to any dividend or distribution in which the
holders of Common Stock have the right to receive cash, the date fixed for
determination of shareholders entitled to receive such cash.
In the event that at any time cash distributions to holders of
Common Stock are not paid equally on all series of Common Stock, the provisions
of this paragraph 8(d)(iv) will apply to any cash dividend or cash distribution
on any series of Common Stock otherwise meeting the requirements of this
paragraph, and shall be deemed amended to the extent necessary so that any
adjustment required will be made on the basis of the cash dividend or cash
distribution made on any such series.
(v) In case of the consummation of a tender or exchange offer
(other than an odd-lot tender offer) made by the Corporation or any subsidiary
of the Corporation for all or any portion of the outstanding shares of Common
Stock to the extent that the cash and fair market value (as determined in good
faith by the Board of Directors of the Corporation, whose determination shall be
conclusive and shall be described in a resolution of such Board) of any other
consideration included in such payment per share of Common Stock at the last
time (the "Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as amended) exceed by more than 5.0%, with any smaller
excess being disregarded in computing the adjustment to the Conversion Rate
provided in this paragraph (8)(d)(v), the first reported sale price per share of
the Common Stock on the Trading Day next succeeding the Expiration Time, then
the Conversion Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior to the
Expiration Time by a fraction the numerator of which shall be the sum of (x) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to shareholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchase Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchase Shares) on the Expiration Time and the first reported sale price of
the Common Stock on the Trading Day next succeeding the Expiration Time, and the
denominator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Expiration Time multiplied
by the first reported sale price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such adjustment to become effective immediately
prior to the opening of business on the day following the Expiration Time.
(vi) No adjustment in the Conversion Rate shall be required
unless such adjustment would require a cumulative increase or decrease of at
least 1% in the Conversion Rate; provided, however, that any adjustments that by
reason of this subparagraph (vi) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made, and
provided further that any adjustment shall be required and made in accordance
with the provisions of this paragraph (8) (other than this subparagraph (vi))
not later than such time as may be required in order to preserve the tax-free
nature of a distribution for United States
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<PAGE>
income tax purposes to the holders of shares of 5% Preferred Stock or Common
Stock. Notwithstanding any other provisions of this paragraph (8), the
Corporation shall not be required to make any adjustment of the Conversion Rate
for the issuance of any shares of Common Stock pursuant to any plan providing
for the reinvestment of dividends or interest payable on securities of the
Corporation and the investment of additional optional amounts in shares of
Common Stock under such plan. All calculations under this paragraph (8) shall be
made to the nearest dollar or to the nearest 1/1,000 of a share, as the case may
be. Anything in this paragraph (8)(d) to the contrary notwithstanding, the
Corporation shall be entitled, to the extent permitted by law, to make such
adjustments in the Conversion Rate, in addition to those required by this
paragraph (8)(d), as it in its discretion shall determine to be advisable in
order that any stock dividends subdivision of shares, reclassification or
combination of shares, distribution or rights or warrants to purchase stock or
securities, or a distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be taxable.
(vii) In the event that, at any time as a result of shares of
any other class of capital stock becoming issuable in exchange or substitution
for or in lieu of shares of Common Stock or as a result of an adjustment made
pursuant to the provisions of this paragraph (8)(d), the holder of 5% Preferred
Stock upon subsequent conversion shall become entitled to receive any shares of
capital stock of the Corporation other than Common Stock, the number of such
other shares so receivable upon conversion of any shares of 5% Preferred Stock
shall thereafter be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions contained herein.
(e) (i) If the Corporation shall be a party to any transaction
(including without limitation, a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Stock and excluding any transaction as to which paragraph (8)(d)(i) applies)
(each of the foregoing being referred to herein as a "Transaction"), in each
case as a result of which shares of Common Stock shall be converted into the
right to receive stock, securities or other property (including cash or any
combination thereof), there shall be no adjustment to the Conversion Rate but
each share of 5% Preferred Stock which is not converted into the right to
receive stock, securities or other property in connection with such Transaction
shall thereafter be convertible into the kind and amount of shares of stock,
securities and other property (including cash or any combination thereof)
receivable upon the consummation of such Transaction by a holder of that number
of shares or fraction thereof of Common Stock into which one share of 5%
Preferred Stock was convertible immediately prior to such Transaction, assuming
such holder of Common Stock (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of stock
securities and other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of stock, securities and other property
(including cash) receivable upon such Transaction is not the same for each share
of Common Stock of the Corporation held immediately prior to such Transaction by
other than a Constituent Person or an
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<PAGE>
affiliate thereof and in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purpose of this paragraph
(8)(e) the kind and amount of stock, securities and other property (including
cash) receivable upon such Transaction by 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). The provisions of this paragraph (8)(e) shall similarly
apply to successive Transactions.
(ii) Notwithstanding anything herein to the contrary ,
if the Corporation is reorganized such that the Common Stock is exchanged for
the common stock of a new entity ("Holdco") whose common stock is traded on the
Nasdaq National Market or another recognized securities exchange or automated
quotation system, then the Corporation, by notice to and consultation with the
holders of the 5% Preferred Stock, may cause the exchange of this 5% Preferred
Stock for preferred stock of Holdco having the same terms and conditions as set
forth herein; provided that the rights attaching to the preferred stock of
Holdco shall be adjusted so as to comply with the local law of the country of
incorporation of Holdco or the new share structure of Holdco subject to such
rights effectively giving the same economic rights as the 5% Preferred Stock
(including for these purposes any resultant change in the tax treatment for the
holders of such stock).
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock; or
(ii) the Corporation shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or any other rights or warrants; or
(iii) there shall be any subdivision, combination or
reclassification of the Common Stock or any consolidation or merger to
which the Corporation is a party and for which approval of any
shareholders of the Corporation is required, or the sale or transfer of
all or substantially all of the assets of the Corporation as an
entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with any transfer agent designated
by the Corporation pursuant to paragraph (8)(b) and shall cause to be mailed to
the holders of shares of the 5% Preferred Stock at their addresses as shown on
the stock records of the Corporation, as promptly as possible, but at least ten
days prior to the applicable date hereinafter specified, a notice stating (A)
the date on which a record is to be taken for the purpose of such dividend (or
such other distribution) or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or
20
<PAGE>
rights or warrants are to be determined or (B) the date on which such
subdivision, combination, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up or other action is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities or other property, if any, deliverable upon such subdivision,
combination, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give or receive such notice
or any defect therein shall not affect the legality or validity of any
distribution, right, warrant subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, winding up or
other action, or the vote upon any of the foregoing.
(g) Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall prepare an officer's certificate with respect to
such adjustment of the Conversion Rate setting forth the adjusted Conversion
Rate and the effective date of such adjustment and shall mail a copy of such
officer's certificate to the holder of each share of 5% Preferred Stock at such
holder's last address as shown on the stock records of the Corporation. If the
Corporation shall have designated a transfer agent pursuant to paragraph (8)(b),
it shall also promptly file with such transfer agent an officer's certificate
setting forth the Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment.
(h) In any case in which paragraph (8)(d) provides that an
adjustment shall become effective on the day next following a record date for an
event, the Corporation may defer until the occurrence of such event (i) issuing
to the holder of any share of 5% Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the adjustment required by such
event over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment and (ii) paying to such holder any amount in
cash in lieu of any fraction pursuant to paragraph (8)(c).
(i) For purposes of this paragraph (8), the number of shares
of Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation. The
Corporation shall not pay a dividend or make any distribution on shares of
Common Stock held in the treasury of the Corporation.
(j) There shall be no adjustment of the Conversion Rate in
case of the issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this paragraph (8). If any single action would require adjustment of the
Conversion Rate pursuant to more than one subparagraph of this
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<PAGE>
paragraph (8), only one adjustment shall be made and such adjustment shall be
the amount of adjustment that has the highest absolute value.
(k) If the Corporation shall take any action affecting the
Common Stock, other than action described in this paragraph (8), that in the
opinion of the Board of Directors materially adversely affects the conversion
rights of the holders of the shares of 5% Preferred Stock, the Conversion Rate
may be adjusted, to the extent permitted by law, in such manner, if any, and at
such time, as the Board of Directors may determine to be equitable in the
circumstances; provided that the provisions of this paragraph (8)(k) shall not
affect any rights the holders of 5% Preferred Stock may have at law or in
equity.
(l) (i) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, 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
conversion of the 5% Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of 5% Preferred Stock
not theretofore converted. For purposes of this paragraph (8)(l) the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of 5% Preferred Stock shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
(ii) The Corporation covenants that any shares of Common Stock
issued upon conversion of the 5% Preferred Stock shall be duly authorized,
validly issued, fully paid and non-assessable. Before taking any action that
would cause an adjustment increasing the Conversion Rate such that the quotient
of $1,000.00 and the Conversion Rate (which quotient initially shall be
$125.8333) would be reduced below the then-par value of the shares of Common
Stock deliverable upon conversion of the 5% Preferred Stock, the Corporation
will take any corporate action that, in the opinion of its counsel, may be
necessary in order that the Corporation may validly and legally issue fully paid
and non-assessable shares of Common Stock based upon such adjusted Conversion
Rate.
(iii) Prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of the 5% Preferred
Stock, the Corporation shall comply with all applicable federal and state laws
and regulations which required action to be taken by the Corporation.
(m) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock or other securities or property on conversion of the 5%
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the 5% 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 established, to the satisfaction of the Corporation, that
such tax has been paid.
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<PAGE>
(n) No adjustment in the Conversion Rate need be made for a
transaction referred to in paragraph (8)(d)(i) through (v) above to the extent
that all holders of 5% Preferred Stock are entitled to participate in such
transaction pursuant to paragraph 4(b).
(9) Voting Rights. (a) The holders of record or shares of 5%
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this paragraph (9) or as otherwise provided by law.
(b) If and whenever either (i) six quarterly dividends
(whether or not consecutive) payable on the 5% Preferred Stock have not been
paid in full, (ii) the Corporation shall have failed to discharge its Mandatory
Redemption Obligation, or (iii) there occurs a Bankruptcy Event (any such event
described in the preceding subparagraphs (i) through (iii) being hereinafter
referred to as a "Trigger Event"), a vote of the holders of shares of 5%
Preferred Stock, voting as a single class, will be required on all matters
brought to shareholders of the Corporation. Whenever all arrears in dividends on
the 5% Preferred Stock then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been paid or
declared and set apart for payment, the Corporation shall have fulfilled its
Mandatory Redemption Obligation, and all Bankruptcy Events shall have been cured
(the "Trigger Event Cure"), then the right of the holders of the 5% Preferred
Stock to vote as described in this paragraph 9(b) shall cease (but subject
always to the same provisions for the vesting of such voting rights if any
Trigger Event occurs).
(c) Upon the occurrence of any Trigger Event, the number of
directors then constituting the Board of Directors shall be increased by two and
the holders of shares of 5% Preferred Stock, together with the holders of shares
of every other series of preferred stock (including, without limitation,
Additional Preferred) upon which like rights to vote for the election of two
additional directors have been conferred and are exercisable (resulting from
either the failure to pay dividends or the failure to redeem) (any such other
series is referred to as the "Preferred Shares"), voting as a single class
regardless of series, shall be entitled to elect the two additional directors to
serve on the Board of Directors at any annual meeting of stockholders or special
meeting held in place thereof, or at a special meeting of the holders of 5%
Preferred Stock and the Preferred Shares, called as hereinafter provided.
Whenever all arrears in dividends on the Preferred Shares then outstanding shall
have been paid and dividends thereon for the current quarterly dividend period
shall have been paid or declared and set apart for payment, the Corporation
shall have fulfilled any redemption obligation in respect of the Preferred
Shares, and the Trigger Event Cure has occurred, then the right of the holders
of the 5% Preferred Stock and the Preferred Shares to elect such additional two
directors shall cease (but subject always to the same provisions for the vesting
of such voting rights if any Trigger Event occurs), and the terms of office of
all persons elected as directors by the holders of 5% Preferred Stock and the
Preferred Shares shall forthwith terminate and the number of members of the
Board of Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in holders of shares of 5% Preferred Stock and
the Preferred Shares, the Secretary of the Corporation may, and upon the written
request of any holder of 5% Preferred Stock (addressed to
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<PAGE>
the secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of the 5% Preferred Stock and of the Preferred Shares for
the election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary of the Corporation within 20 days after receipt of any
such request, then any holder of shares of 5% Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the stock books of the Corporation. The directors elected at any such special
meeting shall hold office until the next annual meeting of the stockholders or
special meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the directors
elected by the holders of the 5% Preferred Stock and the Preferred Shares, a
successor shall be elected by the Board of Directors, upon the nomination of the
then-remaining director elected by the holders of the 5% Preferred Stock and the
Preferred Shares or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place thereof
if such office shall not have previously terminated as provided above.
(d) Without the written consent of the holders of at least
662/3% in liquidation preference of the outstanding shares of 5% Preferred Stock
or the vote of holders of at least 662/3% in liquidation preference of the
outstanding shares of 5% Preferred Stock at a meeting of the holders of 5%
Preferred Stock called for such purpose, the Corporation will not amend, alter
or repeal any provision of the Certificate of Incorporation (by merger or
otherwise) so as to adversely affect the preferences, rights or powers of the 5%
Preferred Stock; provided that any such amendment that changes the dividend
payable on, the Conversion Rate with respect to, or the liquidation preference
of the 5% Preferred Stock shall require the affirmative vote at a meeting of
holders of 5% Preferred Stock called for such purpose or written consent of the
holder of each share of 5% Preferred Stock.
(e) Without the written consent of the holders of at least
662/3% in liquidation preference of the outstanding shares of 5% Preferred Stock
or the vote of holders of at least 662/3% in liquidation preference of the
outstanding shares of 5% Preferred Stock at a meeting of such holders called for
such purpose, the Corporation will not issue any additional 5% Preferred Stock
or create, authorize or issue any Parity Securities or Senior Securities or
increase the authorized amount of any such other class or series; provided that
this paragraph 9(e) shall not limit the right of the Corporation to (i) issue
Additional Preferred as dividends pursuant to paragraph 4 or (ii) to issue
Parity Securities or Senior Securities in order to refinance, redeem or refund
the 13% Preferred or the 5 1/4% Preferred, provided that the maximum accrual
value (i.e., the sum of stated value and maximum amount payable in kind over the
term from issuance to first date of mandatory redemption or redemption at the
option of the holder) of such Parity Securities may not exceed the maximum
accrual value of the 13% Preferred or the 5 1/4% Preferred, respectively.
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<PAGE>
(f) In exercising the voting rights set forth in this
paragraph (9), each share of 5% Preferred Stock shall have one vote per share,
except that when any other series of preferred stock shall have the right to
vote with the 5% Preferred Stock as a single class on any matter, then the 5%
Preferred Stock and other series shall have with respect to such matters one
vote per $1,000 of stated liquidation preference. Except as otherwise required
by applicable law or as set forth herein, the shares of 5% Preferred Stock shall
not have any relative, participating, optional or other special voting rights
and powers and the consent of the holders thereof shall not be required for the
taking of any corporate action.
(g) Nothing in this paragraph (9) shall be in derogation of
any rights that a holder of shares of 5% Preferred Stock may have in his
capacity as a holder of shares of Common Stock.
(10) General Provisions. (a) The headings of the paragraphs,
subparagraphs, clauses and subclauses of this Certificate of Designation are for
convenience of reference only and shall not define, limit or affect any of the
provisions hereof.
(b) If the Corporation shall have failed to declare or pay
dividends as required pursuant to paragraph (4) hereof or shall have failed to
discharge any obligation to redeem shares of 5% Preferred Stock pursuant to
paragraph (6) hereof, the holders of shares of 5% Preferred Stock shall be
entitled to receive, in addition to all other amounts required to be paid
hereunder, when, as and if declared by the Board of Directors, out of funds
legally available for the payment of dividends, cash dividends on the aggregate
dividends which the Corporation shall have failed to declare or pay or the
redemption price, together with accrued and unpaid dividends thereon, as the
case may be, at a rate of 2% per quarter, compounded quarterly, for the period
during which the failure to pay dividends or failure to discharge an obligation
to redeem shares of 5% Preferred Stock shall continue.
(c) The shares of 5% Preferred Stock shall bear the following
legend:
THE SHARES OF PREFERRED STOCK, PAR VALUE $.01, OF THE
CORPORATION (THE "PREFERRED STOCK") (AND THE SHARES OF COMMON
STOCK, PAR VALUE $.01, OF THE CORPORATION (THE "COMMON STOCK")
INTO WHICH THE PREFERRED STOCK MAY BE CONVERTED) REPRESENTED
BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION
REQUIREMENTS. THE TRANSFER OF THE PREFERRED STOCK (OR COMMON
STOCK, IF THE PREFERRED STOCK HAS BEEN CONVERTED) EVIDENCED BY
THIS CERTIFICATE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER
PROVIDED FOR IN THE PURCHASE AGREEMENT, DATED JULY 15, 1999,
AS MAY BE
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<PAGE>
AMENDED, AMONG THE CORPORATION AND FRANCE TELECOM, A COPY OF
WHICH IS ON FILE AT THE EXECUTIVE OFFICES OF THE CORPORATION
AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH
PREFERRED STOCK UPON WRITTEN REQUEST TO THE CORPORATION.
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
MAY BE CONVERTED INTO COMMON STOCK, PAR VALUE $.01, OF THE
CORPORATION (THE "COMMON STOCK") OR REDEEMED IN EXCHANGE FOR
COMMON STOCK WITHOUT THE SURRENDER AND EXCHANGE OF THIS
CERTIFICATE FOR CERTIFICATES REPRESENTING SUCH COMMON STOCK. A
NOTICE OF SUCH CONVERSION EVENT, IF ANY, IS ON FILE AT THE
EXECUTIVE OFFICES OF THE CORPORATION AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN
REQUEST TO THE CORPORATION.
The shares of Common Stock issuable upon conversion of the 5%
Preferred Stock shall bear the following legend:
THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE CORPORATION
(THE "COMMON STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM REGISTRATION REQUIREMENTS. THE TRANSFER OF THE
COMMON STOCK EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE
RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE PURCHASE
AGREEMENT, DATED JULY 15, 1999, AS MAY BE AMENDED, AMONG THE
CORPORATION AND FRANCE TELECOM, A COPY OF WHICH IS ON FILE AT
THE EXECUTIVE OFFICES OF THE CORPORATION AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER OF SUCH COMMON STOCK UPON WRITTEN
REQUEST TO THE CORPORATION.
(d) (i) Whenever in connection with any conversion or
redemption of the 5% Preferred Stock in exchange for Common Stock the holder is
required to surrender certificates representing such shares of 5% Preferred
Stock, such holder may, by written notice to the Corporation and its transfer
agent, elect to retain such certificates. In such case, the certificates so
retained by the holder thereof shall be deemed to represent, at and from the
date of such conversion or redemption, the number of shares of Common Stock
issuable upon such
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<PAGE>
conversion or redemption (subject to paragraph (8)(c), if applicable), and shall
be so reflected upon the books of the Corporation and its transfer agent.
(ii) (A) A holder who has previously elected to retain
certificates representing the 5% Preferred Stock in accordance with paragraph
(10)(d)(i) upon conversion or redemption may subsequently elect to receive
certificates representing the shares of Common Stock issued upon such conversion
or redemption. To receive certificates representing such shares of Common Stock,
the holder of such certificate shall surrender it, duly endorsed or assigned to
the Corporation or in blank, at the office of the Corporation, or to any
transfer agent of the Corporation previously designated by the Corporation for
such purposes, with a written notice of that election.
(B) Unless the certificates to be issued shall be registered
in the same name as the name in which such surrendered certificates are
registered, each certificate so surrendered shall be accompanied by instruments
of transfer, in form satisfactory to the Corporation, duly executed by the
holder or the holder's duly authorized attorney and an amount sufficient to pay
any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid). All certificates so
surrendered shall be canceled by the Corporation or the transfer agent.
(C) As promptly as practicable after the surrender by a holder
of such certificates, the Corporation shall issue and shall deliver to such
holder, or on the holder's written order, a certificate or certificates (which
certificate or certificates shall have the legend set forth in paragraph
(10)(c)) for the number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock represented by the certificates so
surrendered.
(11) Shareholder Rights Plan. The shares of 5% Preferred Stock
shall be entitled to the benefits of a number of rights issuable under the
Rights Agreement, dated as of October 13, 1993, as amended, between the Company
and Continental Stock Transfer & Trust Company or any successor plan of similar
purpose and effect ("Rights") equal to the number of shares of Common Stock then
issuable upon conversion of the 5% Preferred Stock at the prevailing Conversion
Rate. Any shares of Common Stock deliverable upon conversion of a share of 5%
Preferred Stock or upon payment of a dividend shall be accompanied by a Right."
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IN WITNESS WHEREOF, NTL Incorporated has caused this
Certificate of Designation to be signed by the undersigned this 30th day of
September, 1999.
NTL Incorporated
By: /s/ Richard J. Lubasch
-----------------------------------------
Name: Richard J. Lubasch
Title: Executive Vice President, General
Counsel and Secretary
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PURCHASE AGREEMENT, made as of the 23rd day of October, 1999
BETWEEN
(1) The Shareholders of NTL Incorporated (the "Sellers"), listed in Annex I
hereto; and
(2) Compagnie Generale des Communications (COGECOM) S.A. ("Cogecom"), a
company registered in France and having its registered office at 6
Place d'Alleray, 75505 Paris Cedex 15, France, and a wholly owned
subsidiary of France Telecom S.A. (the Sellers and Cogecom are
hereafter referred to as the "Parties").
WHEREAS
The Sellers desire to sell to Cogecom and Cogecom, subject to the terms
and conditions set out in this Agreement, desires to purchase from the
Sellers, an aggregate of 3,300,000 shares of Common Stock, par value
$0.01 per share (the "Sale Shares"), of NTL Incorporated (the
"Company"), a Delaware corporation having its principal executive
office at 110 East 59th Street, New York, NY 10022, at a price per Sale
Share as set forth below and otherwise on the terms set out in this
Agreement;
NOW IT IS HEREBY AGREED as follows:
1. Purchase and Sale.
On and subject to the terms and conditions of this Agreement, the
Sellers hereby severally agree to sell to Cogecom that number of the
Sale Shares listed opposite its name in Annex I hereto, and Cogecom
agrees to purchase all of such Sale Shares, at the purchase price set
out below, free from any and all pledges, liens, security interests or
other encumbrances.
2. Settlement.
(A) The third business day at 12.00 noon. (New York time) after
the date of this Agreement shall be the Settlement Day unless
otherwise agreed by the Parties in writing.
(B) On the Settlement Day, the Sellers shall cause to be delivered
to Cogecom certificates representing the Sale Shares in the
manner agreed by the Parties against payment in full made in
accordance with Section 3.
<PAGE>
3. Purchase Price.
The purchase price per share to be paid by Cogecom for the Sale Shares
on the Settlement Day shall be $68.50 per Sale Share, for an aggregate
of $226,050,000 for all of the Sale Shares to be paid by wire transfer
to a single account designated by the Sellers to Cogecom.
4. Representations, Warranties and Undertakings.
(A) The Sellers hereby severally make the representations,
warranties and undertakings set forth in Annex II hereto as of
the date hereof and as of the Settlement Day.
(B) Cogecom makes to each of the Sellers the representations,
warranties and undertakings set forth in Annex III hereto as
of the date hereof and as of the Settlement Day.
(C) The Sellers and Cogecom shall each notify the others forthwith
if, on or prior to the Settlement Day, it comes to its
knowledge that any of its representations, warranties,
undertakings or agreements set out in Annex II or Annex III
hereto ceases to be true and accurate or becomes misleading in
any respect or that there has been any breach of any of such
representations, warranties, undertakings or agreements.
5. Miscellaneous.
The Sellers and Cogecom each undertake to execute all such documents
and do all such acts and things as the other may reasonably require in
order to give effect to the terms of this Agreement and to enable the
sale and purchase of the Sale Shares to be carried out and given full
force and effect.
The representations, warranties, agreements and undertakings in this
Agreement shall continue in full force and effect despite any
completion of the purchase and sale of the Sale Shares under the
Agreement.
The Sellers agree that, except as otherwise specifically contemplated
in this Agrement and as otherwise may be required to comply with
applicable law and stock exchange regulations, no press release or
similar public announcement or communication will be made by them
concerning the execution, performance or terms of this Agreement unless
specifically approved in advance and in writing by Cogecom. The
Sellers agree that any public announcement required by applicable law
or stock exchange regulations shall only be made after reasonable
notice to Cogecom.
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<PAGE>
6. Expenses.
Each party to this Agreement shall pay all of its expenses in
connection with this Agreement and the transactions contemplated
hereby.
7. Notices.
(A) Any notice to be given under this Agreement shall be in writing and
shall be delivered to or sent by facsimile transmission, to the
respective numbers set out in sub-clause (B) below. Any such notice
shall be deemed served on the business day of actual receipt; where
actual receipt occurs on a day which is a Saturday, Sunday or bank
holiday the effective date of service shall be the first business day
following the date of actual receipt or, if earlier, the date upon
which receipt shall have been acknowledged.
(B) The respective facsimile numbers of the Parties are as follows:
The Sellers: To the addressees set forth on Annex I hereto:
With a copy to:
Sullivan & Cromwell
9a Ironmonger Lane
London EC2V 8EY, England
Telecopy No.: 44-171-710-6565
Attention: Scott D. Miller
and to:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy No.: 1-212-357 5505
Attention: Ben Adler
Cogecom: 212, rue Raymond Losserand
75505 Paris Cedex 15
France
Attention: Philippe McAllister
Telecopy No.: 331-4444-2154
Attention: Olivier Froissart
Telecopy No.: 331-4444-7799
With a copy to: Shearman & Sterling
599 Lexington Avenue
New York, NY
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<PAGE>
Attention: Alfred Ross
Telecopy No.: 1-212-848-4051
8. Entire Agreement.
This Agreement embodies the entire understanding of the Parties and
there are no other agreements or understandings, written or oral, in
effect between Parties relating to the subject matter hereof. This
Agreement may be amended or modified only by an instrument executed by
the Parties.
9. Successors and Assigns.
No Party hereto may assign this Agreement without the prior written
consent of the others provided that Cogecom may assign this Agreement
to any of its affiliates provided that it will remain responsible for
performance under this Agreement. Any impermissible attempted
assignment of this Agreement without such prior written consent shall
be void. This Agreement and the provisions thereof shall be binding
upon and inure to the benefit of the Parties and their permitted
successors and assigns.
10. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
11. Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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<PAGE>
IN WITNESS WHEREOF this Agreement has been duly executed as of the day and year
first before written.
COMPAGNIE GENERALE DES COMMUNICATIONS, (COGECOM) S.A.
By
--------------------------
By
--------------------------
EUROPEAN CABLE CAPITAL PARTNERS, L.P.
By
--------------------------
Name:
Title:
BRIDGE STREET FUND 1996, L.P.
By
--------------------------
Name:
Title:
GS CAPITAL PARTNERS L.P.
By
--------------------------
Name:
Title:
STONE STREET FUND 1996, L.P.
By
--------------------------
Name:
Title:
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<PAGE>
ANNEX I
Sellers Information
- ------------------------------------- ------------------------ -----------
Name Address No. of Shares
- ------------------------------------- ------------------------ -----------
European Cable Capital Partners, L.P. 85 Broad Street
New York, NY 10004 3,079,697
- ------------------------------------- ------------------------ -----------
Bridge Street Fund 1996, L.P. 85 Broad Street
New York, NY 10004 44,184
- ------------------------------------- ------------------------ -----------
- ------------------------------------- ------------------------ -----------
GS Capital Partners L.P. 85 Broad Street
New York, NY 10004 110,967
- ------------------------------------- ------------------------ -----------
- ------------------------------------- ------------------------ -----------
Stone Street Fund 1996, L.P. 85 Broad Street
New York, NY 10004 65,152
- ------------------------------------- ------------------------ -----------
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<PAGE>
ANNEX II
Sellers Several Representations, Warranties and Undertakings
Each of the Sellers severally hereby represents, warrants and undertakes to
COGECOM with respect to itself, that:
1. it has full corporate power, and all authorizations, approvals,
consents and licenses required by it, to permit it to enter into and
perform this Agreement have been obtained and are in full force and
effect; the execution and delivery by such Seller of, and the
performance by such Seller of, this Agreement will not contravene the
constitutional documents of such Seller, any provision of applicable
law any agreement or other instrument binding upon such Seller or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over such Seller or any of its assets, and no
consent, approval, authorization or order of, or qualification or
filing with, any governmental body or agency is required for the
performance by such Seller of its obligations under this Agreement,
except such as have already been obtained and are in full force and
effect; and this Agreement has been duly authorized, executed and
delivered by such Seller and is a valid and binding agreement of such
Seller enforceable in accordance with its terms; provided, however,
that the Sellers are bound by the restrictions of Section 2.7 of the
Registration Rights Agreement, dated as of March 8, 1999 (the
"Registration Rights Agreement") among NTL Incorporated and the
Shareholders listed therein; and
2. such Seller has valid title free and clear of all security interests,
liens, encumbrances, equities or other claims to, and the legal right
and power to sell and transfer the Sale Shares, and transfer of such
Sale Shares to Cogecom will pass title to such shares, free and clear
of all security interests, liens, encumbrances, equities or other
claims.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NO
SELLER MAKES ANY REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
SUCH REPRESENTATIONS OR WARRANTIES, WHETHER BY SELLERS OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, AGENTS OR REPRESENTATIVES,
WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR THE COMPANY.
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<PAGE>
ANNEX III
Cogecom Representations, Warranties and Undertakings
Cogecom hereby represents, warrants and agrees for the benefit of the Sellers
that:
1. it has full corporate power, and all authorizations, approvals,
consents and licenses required by it, to permit it to enter into and
perform this Agreement have been obtained and are in full force and
effect; the execution and delivery by it of, and the performance by it
of, this Agreement will not contravene its constitutional documents,
any provision of applicable law any agreement or other instrument
binding upon it or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over it or any of its assets,
and no consent, approval, authorization or order of, or qualification
or filing with, any governmental body or agency is required for the
performance by it of its obligations under this Agreement, except such
as have already been obtained and are in full force and effect; and
this Agreement has been duly authorized, executed and delivered by it
and is a valid and binding agreement of it; the purchase of the Sale
Shares by Cogecom will not require notification under the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
2. the Sale Shares have not been and, in connection with the purchase of
the Sale Shares by Cogecom, will not be registered under the United
States Securities Act of 1933, as amended (the "Securities Act"); as a
result the Sale Shares will be "restricted securities" within the
meaning of Rule 144 under the Securities Act and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons except in a transaction exempt from, or not subject to,
the registration requirements of the Securities Act;
3. it is an institutional "accredited investor" (an "Institutional
Accredited Investor") within the meaning of Rule 501(a)(1),(2),(3) or
(7) under the United States Securities Act of 1933, as amended (the
"Securities Act"); as a purchaser in a private placement of Shares
which have not been registered under the Securities Act, it is
purchasing Sale Shares for its own account without a view to any resale
or distribution thereof; it has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its decision to invest in Shares, and it has the
financial ability to bear the economic risk of its investment in the
Sale Shares; and it acknowledges that it has had access to such
information as it deems necessary and has made its own investigation to
the extent it deems necessary in connection with its decision to
purchase the Sale Shares;
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<PAGE>
4. it agrees that the certificates evidencing the Sale Shares currently
bear a legend and certificates delivered to it will continue to bear a
legend evidencing the restrictions; and
5. in order to enable the Sellers to comply with their obligations under
Section 2.7 of the Registration Rights Agreement, Cogecom is willing to
purchase up to 1.389 million NTL Shares from the Y Holders (as defined
in the Registration Rights Agreement) on a pro rata basis in accordance
with their holdings on the same terms and conditions as are provided in
this Agreement.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT, COGECOM MAKES NO REPRESENTATIONS OR WARRANTIES, AND HEREBY DISCLAIMS
ANY SUCH REPRESENTATIONS OR WARRANTIES, WHETHER BY IT OR ANY OF ITS OFFICERS,
DIRECTORS, PARTNERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, WITH RESPECT TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY,
OR THE COMPANY.
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