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 B OF
NTL INCORPORATED
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PURSUANT TO SECTION 151(g) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
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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. 2,000,000 shares of the Preferred
Stock of the Corporation shall be designated as 5% Cumulative Participating
Convertible Preferred Stock, Series B (the "5% Preferred Stock, Series B"), and
no other shares of Preferred Stock shall be designated as 5% Preferred Stock,
Series B.
(2) Definitions. For purposes of the 5% Preferred Stock,
Series B, the following terms shall have the meanings indicated:
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"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Additional Preferred" shall have the meaning set forth in
paragraph (4)(a) hereof.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with such specified Person.
"All But One Outstanding Share" shall have the meaning set
forth in paragraph (6)(c) hereof.
"Alliance" means any joint venture, co-ownership or
cooperation agreement or similar relationship with any
telecommunications provider.
"Authorized Officer" includes any of the following officers of
France Telecom S.A.: the Chief Executive Officer, the Chief Financial
Officer, the General Counsel, the Executive Director - Finance and
Human Resources, or the Treasurer.
"Bankruptcy Event" shall mean either of the following: (I) a
court having jurisdiction in the premises entering 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) commencing a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereinafter in effect, or consenting to the entry of
an order for relief in an involuntary case under any such law, (B)
consenting 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) effecting any general
assignment for the benefit of creditors.
"Benefit Plan" means each of the Company's and Significant
Subsidiaries' plan, program, policy, payroll practice, contract,
agreement or other arrangement providing for compensation, retirement
benefits, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits of any
kind, whether formal or informal, funded or unfunded, written or oral
and whether or not legally binding, including, without limitation, each
"employee benefit plan", within the meaning of Section 3(3) of ERISA,
and each "multi-employer plan", within the meaning of Section 3(37) of
4001(a)(3) of ERISA.
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"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, Series B.
"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 or Paris, France are not required to
be open.
"By-laws" means the by-laws of the Corporation as amended as
of the date hereof and as may be amended from time to time, provided
that such amendment does not adversely affect the rights of the holders
of the 5% Preferred Stock, Series B.
"Common Stock" shall mean the Corporation's Common Stock, par
value $.01 per share.
"Conflicting Investment" means any investment of funds or
assets of the Corporation or any Corporation Subsidiary directly or
indirectly in any French Operator or in any joint venture entity which
is partly owned by any French Operator (the joint venture entity being
known as the "Entity"), in connection with operations in France of such
French Operator or Entity other than any purchase (either in a stock or
asset purchase transaction) for cash by the Corporation and/or any
Corporation Subsidiary of not less than 51% (based on the fair market
value and voting power) of any company or business from any French
Operator or the investment of funds or assets in any Entity in which
the Corporation and/or any Corporation Subsidiary will, following such
investment, own at least 51% (based on fair market value and voting
power) of such Entity.
"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.
"Convertible Debentures" means the 7% Convertible Subordinated
Notes due 2008 of the Corporation and NTL Communications Corp., a
Delaware corporation, and the 5 3/4% Convertible Subordinated Notes due
2009 of the Corporation and NTL (Delaware), Inc., a Delaware
corporation.
"Core Business Assets" means assets that are used in a
business that operates directly or indirectly, or holds a license to
operate (i) a cable system or service, (ii) a fixed-line telephone or
telecommunications system or service or (iii) a broadcasting
transmission system or service.
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"Corporation" shall have the meaning set forth in the
preamble.
"Corporation Subsidiary" or "Corporation Subsidiaries" means
any Subsidiary or all of the Subsidiaries of the Corporation,
respectively.
"Corporation Systems" means all computers, hardware, software,
systems, facilities and equipment (including, without limitation,
cable, wireline, wireless, microwave, satellite and any other
telecommunications equipment and facilities, and embedded
microcontrollers in noncomputer equipment) owned, leased or licensed by
the Corporation or any Significant Subsidiary and material to, or
necessary for, the Corporation or any Significant Subsidiary to carry
on its business as currently conducted or intended to be conducted.
"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
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.
"DGCL" shall have the meaning set forth in the preamble.
"Diluted Shares" means, as of any applicable time, shares of
Common Stock issued and outstanding as of such time plus shares of
Common Stock issuable upon conversion, redemption, exchange, exercise
of, or as a dividend declared as of the time of measurement with
respect to, any shares of preferred stock, options, warrants,
debentures and other securities or any subscription rights.
"Dividend Payment Date" shall mean September 30, December 31,
March 31 and June 30 of each year, commencing on June 30, 2000;
provided, however, that, if any Dividend Payment Date falls on any day
other than a Business Day, the dividend payment
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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 and including 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 (other than the
initial Dividend Period which shall commence on the Issue Date and end
on and include June 29, 2000).
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens),
charge, encumbrance, adverse claim, preferential arrangement or
restriction of any kind, including, without limitation, any restriction
on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, but excluding Permitted Encumbrances.
"Equity Securities" shall have the meaning set forth in
paragraph (10).
"ERISA" means Employee Retirement Income Security Act of 1974,
as amended.
"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% Cumulative Preferred, Series A" shall have the meaning set
forth in paragraph (3)(d) hereof.
"5% Preferred Stock, Series A" shall have the meaning set
forth in paragraph (3)(d) hereof.
"5% Preferred Stock, Series B" shall have the meaning set
forth in paragraph (1) hereof.
"5% Series A" shall have the meaning set forth in paragraph
(3)(d) hereof.
"French Operator" means any significant provider of
telecommunications services in France (or that provider's Affiliates)
or any Person whose primary line of business in France is to provide
telecommunications services (or such Person's Affiliates) other than
the Corporation or its Affiliates.
"GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time and applied
consistently throughout the periods involved.
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"Governmental Authority" means any United States or foreign
federal, state, provincial, local, supranational government,
governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or
with any Governmental Authority.
"Holdco" shall have the meaning set forth in paragraph
8(e)(ii) hereof.
"Indebtedness" means (a) indebtedness for borrowed money, (b)
obligations evidenced by bonds, notes, debentures or other similar
instruments or by letters of credit, including purchase money
obligations or other obligations relating to the deferred purchase
price of property (other than trade payables incurred in the ordinary
course of business), (c) obligations as lessee under leases which have
been or should have been, in accordance with GAAP, recorded as capital
leases, (d) obligations under direct or indirect guaranties in respect
of Liabilities of others, including indebtedness of others secured by
an Encumbrance on any asset of such Person, whether or not such
indebtedness is assumed by such Person, (e) obligations in respect of
outstanding or unpaid checks or drafts or overdraft obligations and (f)
accrued interest, if any, on and all other amounts owed in respect of
any of the foregoing.
"Investment Agreement" means the agreement, dated July 26,
1999, between France Telecom S.A. and NTL (Delaware), Inc., a Delaware
corporation (f/k/a NTL Incorporated), as amended by the letter
agreement, dated as of August 6, 1999, between NTL (Delaware), Inc. and
France Telecom S.A., as further amended by the second letter agreement,
dated October 8, 1999, between NTL (Delaware), Inc. and France Telecom
S.A., and as further amended by the third letter agreement, dated
February 8, 2000 between NTL (Delaware), Inc. and France Telecom S.A.,
to which an agreed form of this Certificate of Designation has been
attached as Attachment I.
"Issue Date" shall mean the date on which shares of 5%
Preferred Stock, Series B are first issued.
"Junior Securities" shall have the meaning set forth in
paragraph (3)(c) hereof.
"Junior Securities Distributions" shall have the meaning set
forth in paragraph (4)(f) hereof.
"Law" means any supranational, United States or foreign
federal, national, state, regional or local statute, law, ordinance,
regulation, rule, code, order, other requirement or rule of law.
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"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured
or unmatured or determined or determinable, including, without
limitation, those arising under any Law, Action or Governmental Order
and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"Liquidation Right" shall mean, for each share of 5% Preferred
Stock, Series B, 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,
Series B into Common Stock.
"Major Entity" shall mean any of the Corporation, NTL
(Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited, Diamond Holdings Limited, NTL (Triangle) LLC 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.
"Market Value" shall mean (A) the market value of the
Corporation's outstanding shares of capital stock plus (B) the market
value of any debt securities of the Corporation and the Corporation
Subsidiaries (provided that, in the case of any Corporation Subsidiary
that is not wholly owned, such amount shall be included only to the
extent of the Corporation's ownership interest in the Corporation
Subsidiary) for which quotes are available from brokerage companies of
national reputation plus (C) with respect to shares of preferred stock
for which no such quotes are available, the aggregate amount of
liquidation preference thereof and the aggregate amount of accumulated
and unpaid dividends with respect thereto plus (D) the principal amount
and the amount of accrued and unpaid interest with respect to any
borrowings of the Corporation and the Corporation Subsidiaries
(provided that, in the case of any Corporation Subsidiary that is not
wholly owned, such amount shall be included only to the extent of the
Corporation's ownership interest in the Corporation Subsidiary).
"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.
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"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.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced or is reasonably expected to
commence: (a) liens for taxes, assessments and governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
conducted, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made
therefor; (b) Encumbrances imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business; (c) pledges
or deposits to secure obligations under workers' compensation laws or
similar legislation or to secure public or statutory obligations or
other obligations of a like nature incurred in the ordinary course of
business; (d) minor survey exceptions, reciprocal easement agreements
and other customary encumbrances on title to real property that (i)
were not incurred in connection with any indebtedness, (ii) do not
render title to the property encumbered thereby unmarketable and (iii)
do not, individually or in the aggregate, materially adversely affect
the value or use of such property for its current and anticipated
purposes; (e) Encumbrances permitted under any of the indentures to
which the Corporation or a Corporation Subsidiary is a party as of the
date of the Investment Agreement; (f) purchase money security interests
in supplier equipment; (g) precautionary liens filed by lessors with
respect to leased equipment; and (h) any single or series of related
Encumbrances which are not in excess of $2,500,000 and do not
materially impair the value or use of the property subject thereto or
the operation of the Corporation's business at the relevant date.
"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.
"Preferred Shares" has the meaning set forth in paragraph
(9)(c).
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"Preferred Stock" shall have the meaning set forth in the
first resolution above.
"Pro Forma Rating" has the meaning set forth in paragraph
(9)(h)(ix).
"Purchase Shares" shall have the meaning set forth in
paragraph (8)(d)(v) hereof.
"Qualified Holder" shall mean France Telecom, a societe
anonyme formed under the laws of France, or an Affiliate, so long as
such Person holds at least one share of the 5% Preferred Stock, Series
B.
"Qualified Holding Condition" shall be satisfied so long as a
Qualified Holder is the holder of at least 15.0% of the Diluted Shares.
"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, Series B, 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 (12)
hereof.
"Rights Agreement" shall have the meaning set forth in
paragraph (12) 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.
"Series A Certificate" means the Certificate of Designation in
respect of the 5% Series A.
"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, Series B 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.
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"Significant Subsidiary" shall have the meaning given to such
term in Regulation S-X under the Exchange Act.
"Strategic Acquisition" has the meaning set forth in the
Investment Agreement.
"Subsidiaries" of any Person means any corporation,
partnership, joint venture, limited liability company, trust, estate or
other Person of which (or in which), directly or indirectly, more than
50% of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (b) the interest in the
capital or profits of such partnership, joint venture or limited
liability company or other Person or (c) the beneficial interest in
such trust or estate is at the time owned by such first Person, or by
such first Person and one or more of its other Subsidiaries or by one
or more of such Person's other Subsidiaries.
"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.
"Transaction Agreement" shall mean the Restated Transaction
Agreement, dated as of July 26, 1999, among NTL (Delaware), Inc., Bell
Atlantic Corporation, Cable & Wireless plc and Cable & Wireless
Communications plc.
"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:
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(a) prior to the 5% Preferred Stock, Series B, 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, Series B ("Senior Securities");
(b) on a parity with the 5% Preferred Stock, Series B, either
as to the payment of dividends or as to distribution 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, Series B, if the holders of the 5%
Preferred Stock, Series B 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, Series B, 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, Series B 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) The 13% Series B Senior Redeemable Exchangeable Preferred
Stock (the "13% Preferred") is a Senior Security. The 9.9% Non-Voting
Mandatorily Redeemable Preferred Stock, Series B ("9.9% Series B Preferred") is
a Junior Security. Each of (i) the 5% Cumulative Participating Convertible
Preferred Stock, Series A (the "5% Series A") and any dividends paid on the 5%
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% 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% Series A (the 5% Series A and all such in-kind
dividends being hereinafter referred to as the "5% Preferred Stock, Series A")
and (ii) the 5% Cumulative Preferred Stock, Series A (the "5% Cumulative
Preferred, Series A") is a Parity Security. 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, Series B pursuant to
paragraph 9(f).
(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,
Series B shall be subject to the creation of Junior Securities, Parity
Securities and Senior Securities as set forth herein.
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(4) Dividends. (a) Subject to paragraph (8)(b)(ii), the
holders of shares of 5% Preferred Stock, Series B 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, Series B, 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, Series B) by the Relevant Compounding Factor (except that for purposes of
additional shares of Preferred Stock payable as a dividend for the initial
Dividend Period, the Conversion Rate shall be the quotient resulting from the
division of the Conversion Rate (as then in effect) by 1.0041667 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, Series B, 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, Series B, 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, Series B shall be
entitled to receive an amount equal to the amount (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, Series B 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, Series B 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.
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(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 the initial Dividend Period, or
any other period shorter than a full Dividend Period, on the 5% Preferred Stock,
Series B 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, Series B that may be in arrears except as otherwise
provided herein.
(e) So long as any shares of the 5% Preferred Stock, Series B
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, Series
B 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, Series B and (iii) the Corporation is not in default with
respect to any redemption of shares of 5% Preferred Stock, Series B 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, Series B 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, Series B and accumulated and unpaid on such Parity Securities.
(f) So long as any shares of the 5% Preferred Stock, Series B
are outstanding, no dividends (other than (i) any rights issued pursuant to the
Rights Agreement 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
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
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exchange for Junior Securities, including pursuant to 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, Series B 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, Series B and all other
Parity Securities, (C) the Corporation is not in default with respect to any
redemption of shares of 5% Preferred Stock, Series B by the Corporation pursuant
to paragraph (6) below, and (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, Series B
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, Series B 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, Series B and any such other Parity Securities ratably in
accordance with the respective amounts that would be payable on such shares of
5% Preferred Stock, Series B 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, Series B, 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,
Series B shall not be entitled to share therein.
(6) Redemption. (a) On and after the first Business Day
following the earlier to occur of (i) the seventh anniversary of the Issue Date
and (ii) the date on which both (A) the 25-Day Average Market Price of the
Common Stock shall have exceeded $96.00 and (B) the fourth anniversary of the
Issue Date, to the extent the Corporation shall have funds legally available for
such payment, the Corporation may redeem at its option shares of 5% Preferred
Stock, Series B, from time to time in part, All But One Outstanding Share or, if
the Qualified Holding Condition is not satisfied, 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,
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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 the tenth
anniversary of the Issue Date, each holder of shares of 5% Preferred Stock,
Series B 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, Series B, from time to time in part, All But One
Outstanding Share or, if the Qualified Holding Condition is not satisfied, 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, Series B 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,
Series B to be redeemed and a statement that the election to exercise a
redemption right is being made thereby, and, subject to paragraph (11)(d), shall
deliver to the Corporation on or before the date of redemption certificates
evidencing the shares of 5% Preferred Stock, Series B 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, Series B pursuant to paragraphs (6)(a) or (6)(b),
on the twentieth anniversary of the Issue Date (the "Mandatory Redemption
Date"), to the extent the Corporation shall have funds legally available for
such payment, the Corporation shall redeem All But One Outstanding Share of 5%
Preferred Stock, Series B, or, if the Qualified Holding Condition is not
satisfied, all outstanding shares of 5% Preferred Stock, Series B, 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. For
purposes of the 5% Preferred Stock, Series B, "All But One Outstanding Share"
means all but one share of 5% Preferred Stock, Series B outstanding at the
relevant time. For the avoidance of doubt, so long as the Qualified Holding
Condition is satisfied, at least one share of 5% Preferred Stock, Series B shall
remain outstanding in perpetuity. As soon as (i) the Qualified Holding Condition
is no longer satisfied and (ii) there is only one share of 5% Preferred Stock,
Series B that has not been redeemed pursuant to this paragraph (6) or converted
pursuant to paragraph (8), that one outstanding share of 5% Preferred Stock,
Series B shall be redeemed, payable, at the option of the holder, in cash or in
Common Stock.
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(d) If the Corporation is unable or shall fail to discharge
its obligation to redeem all outstanding shares or All But One Outstanding Share
of 5% Preferred Stock, Series B 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, Series B 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 pro rata with the 5% Preferred Stock, Series
B) 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, Series B, 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, Series B 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, Series B shall be redeemed, and no sum shall be set aside for
such redemption, unless shares of 5% Preferred Stock, Series B 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, Series B 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, Series B 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
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<PAGE>
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 where the notice under paragraph (11)(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, Series B so called 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, Series B 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 (11)(d)) of their
certificates if so required, and to receive any dividends payable thereon).
(c) Upon surrender (including a constructive surrender under
paragraph (11)(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, Series
B 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
(11)(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,
Series B shall have the right, at any time and from time to time, at such
holder's option, to convert any or All But One Outstanding Share or, if the
Qualified Holding Condition is not satisfied, all outstanding shares, of 5%
Preferred Stock, Series B 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, Series B shall be equal to 12.50 (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
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<PAGE>
unpaid dividends on the 5% Preferred Stock, Series B at the date of conversion
shall be paid to the holder thereof in accordance with the provisions of
paragraph (4), except that, upon conversion of All But One Outstanding Share or,
if the Qualified Holding Condition is not satisfied, all outstanding shares, of
5% Preferred Stock, Series B held by such holder, all such accrued and unpaid
dividends at the date of conversion shall be paid in Common Stock at the
applicable Conversion Rate.
(b) (i) In order to exercise the conversion privilege, the
holder of each share of 5% Preferred Stock, Series B to be converted shall
surrender (or constructively surrender in accordance with paragraph (11)(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, Series B 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 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, Series B 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, Series B 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, Series B 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 (11)(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 (11)(d),
as promptly as practicable after the surrender (including a constructive
surrender under paragraph (11)(d)) by a holder of the certificates for shares of
5% Preferred Stock, Series B 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 (11)(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
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<PAGE>
such conversion shall be settled as provided in paragraph (8)(c). Upon
conversion of only a portion of the shares of 5% Preferred Stock, Series B
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 (11)(d), upon the
surrender (including a constructive surrender under paragraph (11)(d)) of
certificates representing shares of 5% Preferred Stock, Series B 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, Series B shall have been surrendered (or
deemed surrendered pursuant to an election under paragraph (11)(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, Series
B 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, Series B. 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, Series B, 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, Series B 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, Series B 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, Series B surrendered
times the Conversion Rate in effect at such time on such date, unless
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<PAGE>
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, Series B thereafter 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, Series B
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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 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
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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, Series B 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 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, Series B 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, Series B 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
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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, Series B 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, Series B 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
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
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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 income tax purposes to the holders of
shares of 5% Preferred Stock, Series B 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
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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, Series B 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, Series B
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, Series B 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, Series B 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 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)(i) 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
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recognized securities exchange or automated quotation system, then the
Corporation, by notice to and consultation with the holders of the 5% Preferred
Stock, Series B, may cause the exchange of this 5% Preferred Stock, Series B 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,
Series B (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, Series B 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 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.
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(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, Series
B 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, Series B 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 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, Series B, 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, Series B
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
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purpose of effecting conversion of the 5% Preferred Stock, Series B, the full
number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of 5% Preferred Stock, Series B 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, Series B 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, Series B 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 $80.00) would be reduced below the then-par value of the shares of
Common Stock deliverable upon conversion of the 5% Preferred Stock, Series B,
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, Series B, the Corporation shall comply with all applicable federal and
state laws and regulations which require 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, Series B 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, Series B 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.
(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, Series B are entitled to participate in
such transaction pursuant to paragraph 4(b).
(9) Governance. (a) The holders of record of shares of 5%
Preferred Stock, Series B 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, Series B have
not been paid in full, (ii) the Corporation shall have failed to discharge its
Mandatory Redemption Obligation, or (iii) there
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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, Series B, 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,
Series B 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, Series B 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) In addition to the power to elect directors in accordance
with paragraph (9)(d), 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, Series B, together with the holders
of 5% Preferred Stock, Series A, the 5% Cumulative Preferred, Series A, and
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) (the 5% Preferred
Stock, Series A and any such other series are collectively 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, Series B
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,
Series B 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, Series B 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,
Series B and the Preferred Shares, the Secretary of the Corporation may, and
upon the written request of any holder of 5% Preferred Stock, Series B
(addressed to the secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the 5% Preferred Stock, Series B 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 By-laws 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, Series B may call
such meeting, upon the notice above provided, and for that purpose shall have
access to the stock books of the Corporation. The
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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, Series B 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, Series B 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) (i) (A) In addition to any other rights granted in this
paragraph (9) to elect directors or to vote on any matter submitted to
stockholders, all holders of shares of 5% Preferred Stock, Series B, voting
separately as a class, shall have the right to elect directors to serve on the
Board of Directors in accordance with the provisions of this paragraph (9)(d),
so long as the Qualified Holding Condition is satisfied.
(B) If there are twelve or fewer members of the Board of
Directors, the Qualified Holder shall be entitled to elect three directors. If
there are fourteen or more members of the Board of Directors, the Qualified
Holder shall be entitled to elect four directors. In either case, any director
that is appointed by a holder of shares of 5% Series A, pursuant to paragraph
(9)(d) of the Series A Certificate, shall be counted toward the three or four
directors, as the case may be, that a Qualified Holder is entitled to appoint
pursuant to this paragraph (9)(d).
(C) Immediately upon failure of the Qualified Holding
Condition, this paragraph (9)(d), paragraphs (9)(h), (9)(i) and (9)(j) shall be
of no effect and the rights granted in such paragraphs to the holders of the 5%
Preferred Stock, Series B shall cease to apply.
(ii) The Qualified Holder may appoint, remove or replace such
directors by way of a written notice by the Qualified Holder to the Corporation,
at a special meeting called pursuant to subparagraph (iii) of this paragraph
(9)(d) or at any annual meeting of stockholders, provided that such voting
rights may not be exercised at any meeting unless an Authorized Officer of the
Qualified Holder shall be present at such meeting in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not affect the exercise
by the holders of shares of 5% Preferred Stock, Series B of such rights. At any
meeting at which the holders of shares of 5% Preferred Stock, Series B shall
exercise such voting rights initially, they shall have the right, voting
separately as a class, to elect the number of directors provided under paragraph
(9)(d)(i)(B) to fill vacancies in the Board of Directors, to the extent that
such number of vacancies then exist, or, if such right is exercised at an annual
meeting, to elect such number of directors. If necessary, the holders of the
shares of 5% Preferred Stock, Series B shall have the right to make such
increase in the number of members of the Board of Directors as shall be
necessary to permit them to so elect such number of directors. If the Qualified
Holder exercises its right to appoint, remove or replace a director by way of a
written notice to the Corporation,
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any such appointment, removal or replacement shall be effective immediately upon
the sending of such written notice to the Corporation.
(iii) Unless the holders of shares of 5% Preferred Stock,
Series B shall have previously exercised their right to elect the number of
directors provided under paragraph (9)(d)(i)(B), the Board of Directors shall
order, and any stockholder or stockholders owning in the aggregate not less than
25% of the total number of the shares of 5% Preferred Stock, Series B
outstanding may request, the calling of a special meeting of the holders of
shares of 5% Preferred Stock, Series B, which meeting shall thereupon promptly
be called by the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of shares of 5% Preferred Stock, Series B are
entitled to vote pursuant to this paragraph (9)(d) shall be given to each holder
of record of shares of 5% Preferred Stock, Series B by mailing a copy of such
notice to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20 days
and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than 25% of the total number of outstanding shares of 5%
Preferred Stock, Series B.
(iv) The holders of shares of Common Stock and shares of 5%
Preferred Stock, Series B, and other classes or series of stock of the
Corporation, if applicable, shall continue to be entitled to elect all the
directors until holders of the shares of 5% Preferred Stock, Series B shall have
exercised their right to elect the number of directors provided under paragraph
(9)(d)(i)(B), voting as a separate class (or exercised such right pursuant to a
written notice, as set forth under paragraph (9)(d)(ii)), after the exercise of
which right (x) the directors so elected by the holders of shares of 5%
Preferred Stock, Series B shall continue in office until their successors shall
have been elected by such holders (or appointed pursuant to a written notice, as
set forth under paragraph (9)(d)(ii)), and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (9)(d)(ii)) be filled by vote of
a majority of the remaining directors theretofore elected by the holders of the
class of capital stock which elected the directors whose offices shall have
become vacant. References in this paragraph (9)(d)(iv) to directors elected by
the holders of a particular class of capital stock shall include directors
elected by such directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(e) Without the written consent of the holders of at least
66-2/3% in liquidation preference of the outstanding shares of 5% Preferred
Stock, Series B or the vote of holders of at least 66-2/3% in liquidation
preference of the outstanding shares of 5% Preferred Stock, Series B at a
meeting of the holders of 5% Preferred Stock, Series B 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, Series B; 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,
Series B shall require the affirmative vote at a meeting of holders of 5%
Preferred Stock,
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Series B called for such purpose or written consent of the holder of each share
of 5% Preferred Stock, Series B.
(f) Without the written consent of the holders of at least
66-2/3% in liquidation preference of the outstanding shares of 5% Preferred
Stock, Series B or the vote of holders of at least 66-2/3% in liquidation
preference of the outstanding shares of 5% Preferred Stock, Series B at a
meeting of such holders called for such purpose, the Corporation will not issue
any additional 5% Preferred Stock, Series B 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(f) shall not limit
the right of the Corporation to (i) issue Additional Preferred as dividends
pursuant to paragraph 4 or (ii) issue Parity Securities or Senior Securities in
order to refinance, redeem or refund the 13% Preferred, 5% Cumulative Preferred,
Series A, or the 5% Preferred Stock, Series A, provided that the maximum value
of such Parity Securities or Senior Securities issued by the Corporation in such
refinancing as shall be reflected on the Corporation's consolidated balance
sheet prepared in accordance with GAAP applied on a basis consistent with the
Corporation's prior practice, shall not exceed in the aggregate the aggregate
value of the 13% Preferred, 5% Cumulative Preferred, Series A, or the 5%
Preferred Stock, Series A, respectively, as reflected on the Corporation's
consolidated balance sheet as contained in the report filed by the Corporation
with the United States Securities and Exchange Commission pursuant to the
Exchange Act that is most recent prior to such refinancing.
(g) In exercising the voting rights set forth in this
paragraph (9), each share of 5% Preferred Stock, Series B 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, Series B as a single class on any
matter, then the 5% Preferred Stock, Series B 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, Series B 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.
(h) So long as the Qualified Holding Condition is met:
(i) there shall be no more than sixteen members of the Board
of Directors;
(ii) at least one director appointed by the Qualified Holder
shall be a member of each committee of the Board of Directors, other than a
committee formed to evaluate transactions with that holder;
(iii) the directors elected by the Qualified Holder to the
Board of Directors pursuant to paragraph (9)(d) shall be elected as members of
the boards of directors of the Corporation Subsidiaries, if such boards of
directors include substantially all of the other members of the Board of
Directors;
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(iv) the By-laws shall contain provisions (A) requiring
notices to be given to directors in a reasonable and customary form and allowing
directors enough time to take any action that directors may deem necessary with
respect to such notice and (B) allowing participation of directors in any
meeting of the Board of Directors and any committee thereof by means of
telephonic conference;
(v) the Corporation shall not offer, issue, sell or transfer
any securities to any Person or amend or waive the Rights Agreement to permit a
transaction by any Person, if as a result of such offer, issuance, sale or
transfer, such Person will beneficially own 15.0% or more of the Diluted Shares;
provided, however, that this paragraph (9)(h)(v) shall not apply to a
transaction or series of related transactions involving a contractual sale or
other acquisition of 100% of the capital stock of the Corporation, so long as
(a) such transaction is definitive or provides for a make-whole premium or
similar significant penalty payable to shareholders of the Corporation other
than the potential acquirer if the potential acquirer does not complete such a
transaction, and (b) the transactions contemplated by such agreement are
approved by the Board of Directors and are (A) submitted for approval by the
holders of Common Stock or (B) subject to the tender offer rules under the
Exchange Act;
(vi) if the Corporation offers, issues, sells or transfers any
securities to any Person that would result in such Person owning less than 15.0%
of the Diluted Shares, the Corporation shall comply with the provisions of
paragraph (10) and shall not (A) grant to such Person a right to elect more than
one director to the Board of Directors or (B) agree to standstill or transfer
restrictions more favorable than those granted to the Qualified Holder under the
Investment Agreement and shall not grant any rights to such Person that the
Qualified Holder does not have herein or under the Investment Agreement;
(vii) the Corporation shall not consummate, without the
approval of a majority of holders of the Common Stock or the unanimous approval
by the Board of Directors or a committee thereof (if such committee includes a
director appointed by the Qualified Holder), any transaction or a series of
related transactions involving (A) an acquisition (either in an asset or stock
purchase transaction) or (B) a sale or transfer (either in an asset or stock
purchase transaction) (other than a spin-off (to the Corporation's stockholders)
of the Corporation's and the Corporation Subsidiaries' broadcast assets or
assets located outside of the United Kingdom, it being understood that the
Purchaser shall have the corporate governance and other rights with respect to
such spun-off entity, as provided pursuant to the Investment Agreement) of Core
Business Assets, if the fair market value of the Core Business Assets to be so
acquired, sold or transferred exceeds, in the aggregate, 10% of the Market
Value;
(viii) the acquisition of any assets or stock of a business
that does not constitute Core Business Assets, in any transaction or series of
related transactions that represents, individually or when aggregated with all
such transactions completed during the immediately preceding 24 months, 10% or
more of the Market Value at the time of the proposed new acquisition, will
require the approval of at least 66-2/3% of the holders of the then-outstanding
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Common Stock, unless the Board of Directors or a committee thereof (if such
committee includes a director appointed by the Qualified Holder) approves such
transaction unanimously, and a transaction shall be considered to be completed
in the preceding 24-month period if it shall have been either completed (in
which case the fair market value of the acquired assets shall be determined at
the time of completion) or announced pursuant to a definitive agreement (in
which case the fair market value of the acquired assets shall be determined at
the time of such announcement);
(ix) the Corporation shall not, without the unanimous approval
by the Board of Directors or a committee thereof (if such committee includes a
director appointed by the Qualified Holder), incur any Indebtedness (other than
any refinancing of any existing Indebtedness that would not result in a material
increase of the principal amount of such existing Indebtedness) after the date
on which the Corporation receives its first credit rating from a rating agency
of national reputation giving effect to the Strategic Acquisition (the "Pro
Forma Rating"), if the Board of Directors has reason to believe (after
reasonable inquiry of an internationally recognized rating agency or a major
investment bank having expertise in credit rating advisory work) that the effect
of incurring such Indebtedness would reduce the credit rating of NTL
Communications Corp. below (i) the lower of (x) the equivalent of Standard &
Poor's rating of BB- or (y) the Pro Forma Rating, if such Indebtedness is
incurred prior to January 1, 2001 or (ii) the equivalent of Standard & Poor's
rating of BB, if the Indebtedness is incurred on or after January 1, 2001; and
(x) the Corporation shall maintain the total number of
directors at a level that enables the Qualified Holder to elect at least ten
percent of the members of the Board of Directors.
(i) So long as the Qualified Holding Condition is met, none of
the following shall be permitted without the prior written approval of one of
the Authorized Officers:
(I) a reclassification, combination, stock dividend or any
similar transaction that may adversely affect the rights of the holders
of the 5% Preferred Stock, Series B;
(II) an amendment to the Certificate of Incorporation or
By-laws that may adversely affect the rights of the holders of the 5%
Preferred Stock, Series B;
(III) commencement or institution of a Bankruptcy Event;
(IV) issuance by the Corporation of any security that would
adversely affect the rights of holders of the 5% Preferred Stock,
Series A or the 5% Preferred Stock, Series B; or
(V) any agreement by the Corporation or any of its Affiliates
to enter into a Conflicting Investment.
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(j) Before entering into any Alliance to provide
telecommunications services in any country in the European Union, the
Corporation shall consult with the Qualified Holder with a view to mutually
cooperating in such venture.
(k) Nothing in this paragraph (9) shall be in derogation of
any rights that a holder of shares of 5% Preferred Stock, Series B may have in
its capacity as a holder of shares of Common Stock.
(10) Preemptive Rights. The Corporation shall not issue, sell,
transfer to any Person or grant to any Person a right to acquire any shares of
capital stock or options, warrants or similar instruments or any other security
convertible or exchangeable for shares of capital stock of the Corporation
(other than (i) through exercise of any options, warrants, Convertible
Debentures, the 13% Preferred, 5% Cumulative Preferred, Series A or the 9.9%
Series B Preferred, in each case, that is outstanding on the Issue Date or the
issuance of options to the employees of the Corporation and the Corporation
Subsidiaries pursuant to Benefit Plans existing on the Issue Date, as such
Benefit Plans may be amended or replaced (provided that such amended or replaced
Benefit Plans shall have terms similar to and consistent with the terms of
Existing Benefit Plans), and the exercise of such options, (ii) as consent
payments contemplated by and in accordance with Section 5.01(d)(iv) of the
Investment Agreement, (iii) as contemplated by the Transaction Agreement, or
(iv) as dividends on or conversion or in redemption of shares of preferred stock
contemplated by and in accordance with Section 5.01(d)(iii) of the Investment
Agreement (the "Equity Securities")), unless the Qualified Holder is notified in
writing of any such issuance, sale or transfer and is offered the right to
purchase at the sale price and on the terms and conditions of the sale such
quantity of Equity Securities as would be necessary for the Purchaser to
maintain its then current beneficial ownership level of the Diluted Shares. The
preemptive rights of the Qualified Holder pursuant to this paragraph (10) shall
be exercised in a manner and based on a timetable that will not restrict or
adversely affect the Corporation's ability to raise equity capital in a flexible
and cost-effective manner.
(11) 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, Series B
pursuant to paragraph (6) hereof, the holders of shares of 5% Preferred Stock,
Series B 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, Series B shall continue.
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(c) The shares of 5% Preferred Stock, Series B shall bear the
following legend:
THE SHARES OF PREFERRED STOCK, PAR VALUE $.01, OF THE COMPANY
(THE "PREFERRED STOCK") (AND THE SHARES OF COMMON STOCK, PAR
VALUE $.01, OF THE COMPANY (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 INVESTMENT AGREEMENT, DATED JULY 26, 1999, AS
AMENDED, AMONG NTL (DELAWARE), INC. AND FRANCE TELECOM, A COPY
OF WHICH IS ON FILE AT THE EXECUTIVE OFFICES OF THE COMPANY AND
WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH
PREFERRED STOCK UPON WRITTEN REQUEST TO THE COMPANY.
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
MAY BE CONVERTED INTO COMMON STOCK, PAR VALUE $.01, OF THE
COMPANY (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 COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO
THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST TO THE
COMPANY.
The shares of Common Stock issuable upon conversion of the 5%
Preferred Stock, Series B shall bear the following legend:
THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE
COMPANY (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
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STOCK EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE
RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE INVESTMENT
AGREEMENT, DATED AS OF JULY 26, 1999, AS AMENDED, AMONG NTL
(DELAWARE), INC. AND FRANCE TELECOM, A COPY OF WHICH IS ON FILE
AT THE EXECUTIVE OFFICES OF THE COMPANY AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER OF SUCH COMMON STOCK UPON WRITTEN
REQUEST TO THE COMPANY.
(d) (i) Whenever in connection with any conversion or
redemption of the 5% Preferred Stock, Series B in exchange for Common Stock the
holder is required to surrender certificates representing such shares of 5%
Preferred Stock, Series B, 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 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, Series B in accordance with
paragraph (11)(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 11(c))
for the number of duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock represented by the certificates so surrendered.
(12) Shareholder Rights Plan. The shares of 5% Preferred
Stock, Series B shall be entitled to the benefits of a number of rights
("Rights") issuable under the Shareholder Rights Agreement, dated as of October
1, 1993, as amended, between the Company and Continental
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Stock Transfer & Trust Company or any successor plan of similar purpose and
effect (the "Rights Agreement") equal to the number of shares of Common Stock
then issuable upon conversion of the 5% Preferred Stock, Series B at the
prevailing Conversion Rate. Any shares of Common Stock deliverable upon
conversion of a share of 5% Preferred Stock, Series B or upon payment of a
dividend shall be accomplished by a Right."
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