SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
Time Warner Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
887315 10 9
(CUSIP Number)
Stephen W. Naeve
Vice President -
Strategic Planning &
Administration
Houston Industries Incorporated
5 Post Oak Park
4400 Post Oak Park Parkway
Houston, Texas
(713) 629-3000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 6, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 6
CUSIP No. 887315 10 9
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(1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
Houston Industries Incorporated, I.R.S. Identification No. 74-1885573
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds
00
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Texas
- --------------------------------------------------------------------------------
Number of (7) Sole Voting Power 23,909,040 shares
Shares Bene- -----------------------------------------------------------
ficially (8) Shared Voting Power
Owned by -----------------------------------------------------------
Each Report- (9) Sole Dispositive Power 23,909,040 shares
ing Person -----------------------------------------------------------
With (10) Shared Dispositive Power
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
23,909,040 shares
- --------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11) 5.899% (based on
information contained in documents filed by Time Warner Inc. with the
Securities and Exchange Commission)
(14) Type of Reporting Person CO
Page 2 of 6
ITEM 1. SECURITY AND ISSUER
The class of securities to which this statement relates is common
stock, par value $1.00 per share (the "TW Common Stock"), of Time Warner Inc.,
a Delaware corporation (the "Issuer"). The address of the principal executive
offices of the Issuer is 75 Rockefeller Plaza, New York, New York 10019.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by Houston Industries Incorporated, a Texas
corporation ("Houston Industries"). Houston Industries is a holding company and
conducts its business through subsidiaries involved in the electric utility
business in the United States and in foreign markets. The address of the
principal business office of Houston Industries is 5 Post Oak Park, 4400 Post
Oak Parkway, Houston, Texas 77027.
During the last five years, no executive officer or director of
Houston Industries has been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On July 6, 1995, TWI Cable Inc., a Delaware corporation (formerly
known as TW KBLCOM Acquisition Corp.) ("Sub") and a wholly owned subsidiary of
the Issuer, merged with and into KBLCOM Incorporated, a Delaware corporation
("KBLCOM") and a wholly owned subsidiary of Houston Industries (the "Merger"),
pursuant to the Agreement and Plan of Merger dated as of January 26, 1995 (the
"Merger Agreement"), among KBLCOM, Houston Industries, the Issuer and Sub. As a
result of the Merger, the separate corporate existence of Sub ceased, KBLCOM
continued as the surviving corporation and as a wholly owned subsidiary of the
Issuer, and KBLCOM changed its name to TWI Cable Inc.
In connection with the Merger, on July 6, 1995, Parent issued to
Houston Industries (i) 1,000,000 fully paid and nonassessable shares of TW
Common Stock and (ii) 11,000,000 fully paid and nonassessable shares of Series D
Convertible Preferred Stock of the Issuer, par value $1.00 per share (the
"Series D Preferred"). The Series D Preferred currently may be converted into
22.9 million shares of common stock of the Issuer and, until the earlier of
conversion or July 6, 1999, is expected to pay an annual dividend of $3.75 per
share. After four years, the Issuer will have the right to exchange the Series D
Preferred for TW Common Stock at a stated conversion rate of 2.08264 shares of
TW Common Stock per share of Series D Preferred, subject to adjustment.
Page 3 of 6
The foregoing is a summary description of certain terms of the
Merger Agreement and is qualified in its entirety by reference to the Merger
Agreement, which is incorporated into this Schedule 13D by reference as Exhibit
1. The foregoing description of certain terms of the Series D Preferred is
qualified in its entirety by reference to the Certificate of the Voting Powers,
Designations, Preferences and Relative, Participating, Optional or Other Special
Rights, and Qualifications, Limitations or Restriction Thereof, of Series D
Convertible Preferred Stock of Time Warner Inc., which is attached hereto as
Exhibit 4.
ITEM 4. PURPOSE OF TRANSACTION
Houston Industries has acquired the TW Common Stock and Series D
Preferred beneficially owned by it in connection with the Merger and for
investment purposes. Except as described in this statement or in the documents
referred to herein, Houston Industries has no present plans which would relate
to or result in the events described in paragraphs (a) through (j) of Item 4 of
Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Houston Industries beneficially owns an aggregate of 1,000,000
shares of TW Common Stock and 11,000,000 shares of Series D Preferred, which is
convertible into TW Common Stock at any time at a conversion rate of 2.08264
shares of TW Common Stock per share of Series D Preferred, subject to
adjustment. Assuming full conversion of the Series D Preferred as of the date
hereof, and based on information contained in documents filed by the Issuer with
the Securities and Exchange Commission, Houston Industries currently
beneficially owns 5.899% of the outstanding TW Common Stock. Houston Industries
possesses sole voting and dispositive power with respect to all of such shares,
which were acquired on July 6, 1995 pursuant to the Merger.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Except as described in this statement or in the documents referred
to herein, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 of this statement or
between such persons and any other person with respect to any securities of the
Issuer.
The information set forth in Item 3 with respect to the Merger
Agreement and the Series D Preferred is incorporated herein by reference. In
addition, the Merger Agreement provides that, in the event that amounts related
to indemnity obligations are payable by the Issuer to Houston Industries, the
Issuer may elect to pay such amounts in shares of TW Common Stock, and, if
reasonably required by Houston Industries, such payments by the Issuer shall be
made in shares of TW Common Stock, in each case pursuant to a valuation
mechanism set forth in the Merger Agreement.
Page 4 of 6
In conjunction with the Merger, Houston Industries and the Issuer
entered into a Stockholder's Agreement and a Registration Rights Agreement, each
dated as of July 6, 1995. The Stockholder's Agreement, with limited exceptions,
prohibits Houston Industries, its affiliates and associates, from acquiring
securities of the Issuer and from taking certain actions in relation to the
Issuer or its assets. The Stockholder's Agreement also contains certain
restrictions on the ability of Houston Industries to transfer the shares of TW
Common Stock or Series D Preferred.
The Registration Rights Agreement covers the shares of TW Common
Stock issued at the time of the Merger as well as shares of TW Common Stock into
which the Series D Preferred is converted, any shares of TW Common Stock issued
in connection with indemnification under the Merger Agreement and any shares
received by way of dividends or distributions. Houston Industries may make four
demands for registration during the term of the Registration Rights Agreement,
one of which may be a shelf registration statement. The Issuer may delay filing
a registration statement or suspend its use under certain circumstances. Houston
Industries will also have the right to "piggy-back" onto other registration
statements of the Issuer under certain circumstances.
The foregoing descriptions of the Stockholder's Agreement and the
Registration Rights Agreement are summaries only and are qualified in their
entirety by reference to the applicable agreements, which are attached hereto as
Exhibits 2 and 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 -- Agreement and Plan of Merger dated as of January 26,
1995 among KBLCOM Incorporated, Houston Industries
Incorporated, Time Warner Inc. and TWI Cable Inc.
(formerly known as TW KBLCOM Acquisition Corp.),
including certain exhibits and a list of schedules and
exhibits thereto, incorporated by reference to Exhibit
2(a) in Houston Industries' Form 8-K, dated January 26,
1995 (File No. 1-7629).
Exhibit 2 -- Stockholder's Agreement dated as of July 6, 1995,
between Houston Industries Incorporated and Time Warner
Inc.
Exhibit 3 -- Registration Rights Agreement dated as of July 6, 1995,
between Houston Industries Incorporated and Time Warner
Inc.
Exhibit 4 -- Certificate of the Voting Powers, Designations,
Preferences and Relative, Participating, Optional or
Other Special Rights, and Qualifications, Limitations or
Restrictions Thereof, of Series D Convertible Preferred
Stock of Time Warner Inc.
Page 5 of 6
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: July 17, 1995.
HOUSTON INDUSTRIES INCORPORATED
By: /s/ MARY P. RICCIARDELLO
Mary P. Ricciardello
COMPTROLLER
Page 6 of 6
<PAGE>
Exhibit 2
STOCKHOLDER'S AGREEMENT dated as of July 6, 1995 by and
between TIME WARNER INC., a Delaware corporation ("Parent"),
and HOUSTON INDUSTRIES INCORPORATED, a Texas corporation (the
"Stockholder").
This Agreement is made pursuant to Sections 7.01(f) and 7.02(g) of
the Agreement and Plan of Merger dated as of January 26, 1995 (as such agreement
may be amended from time to time, the "Merger Agreement") among KBLCOM
Incorporated, a Delaware corporation (the "Company"), the Stockholder, Parent
and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.), a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"). Pursuant to the
Merger Agreement, Sub will be merged with and into the Company (the "Merger"),
whereby all of the shares of Common Stock, par value $1.00 per share, of the
Company ("Company Common Stock") issued and outstanding immediately prior to the
Effective Time of the Merger will be converted into the right to receive (i)
1,000,000 (as such number may be adjusted pursuant to Section 3.01(c) of the
Merger Agreement) fully paid and nonassessable shares of Common Stock, par value
$1.00 per share, of Parent ("Parent Common Stock") and (ii) 11,000,000 fully
paid and nonassessable shares of Series D Preferred Stock, par value $1.00 per
share, of Parent ("Parent Preferred Stock" and, together with the Parent Common
Stock, the "Parent Stock"), each of which is convertible into shares of Parent
Common Stock. As a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that the Stockholder enter into, and the
Stockholder has agreed to enter into, this Agreement.
Accordingly, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Merger Agreement.
For purposes of this
1
Agreement, the following terms shall have the indicated meanings:
"AFFILIATE" and "ASSOCIATE", when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
Exchange Act, as in effect on the date of this Agreement.
The Stockholder shall be deemed the "BENEFICIAL OWNER" of, and shall
be deemed to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL
OWNERSHIP" of:
(i) any securities which the Stockholder or any of its Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 under the Exchange Act, as in effect on the date of this Agreement;
and
(ii) any securities (the "underlying securities") which the
Stockholder or any of its Affiliates or Associates has the right to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise (it being understood
that the Stockholder shall also be deemed to be the Beneficial Owner of
the securities convertible into or exchangeable for the underlying
securities).
Any Person other than the Stockholder shall be deemed the
"BENEFICIAL OWNER" of, and shall be deemed to "BENEFICIALLY OWN", and shall be
deemed to have "BENEFICIAL OWNERSHIP" of any securities which such Person or any
of such Person's Affiliates or Associates is deemed to "beneficially own" within
the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of
this Agreement.
"CHANGE OF CONTROL" shall mean the occurrence of one or more of the
following events: (a) individuals who would constitute a majority of the members
of Parent's board of directors elected at any meeting of stockholders or by
written consent (without regard to any members of Parent's board of directors
elected pursuant to the terms of any series of preferred stock of Parent) shall
be elected to Parent's board of directors and the election or the nomination for
election by Parent's stockholders of such directors was not approved by a vote
of at least a majority
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of the directors in office immediately prior to such election, (b) a Person or
group of Persons acting in concert as a partnership, limited partnership,
syndicate or other group (within the meaning of Rule 13d-3 under the Exchange
Act) shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases, share repurchases, or redemptions or otherwise,
have become the Beneficial Owner of 40% or more of the outstanding shares of
Parent Common Stock or (c) a merger, consolidation or reclassification of the
capital stock of Parent such that the holders of capital stock of Parent
immediately prior to such transaction fail to hold, immediately after such
transaction, a majority of the aggregate Voting Power represented by all
outstanding capital stock of Parent (or the survivor or successor corporation,
in the case of a merger or consolidation).
"RELEASE EVENT" shall mean the occurrence of any of the following
events:
(i) a Change of Control; PROVIDED, HOWEVER, that the Stockholder
shall at the time be in compliance in all material respects with its
obligations under Section 2.01 hereof and the Change of Control shall not
have involved any violation of such section by the Stockholder;
(ii) Parent defaults in the timely payment of dividends on the
Parent Preferred Stock; or
(iii) on or after the fifth anniversary of the Closing, the
Stockholder no longer beneficially owns a number of shares of Parent
Common Stock and Parent Preferred Stock which represents (in the case of
the Parent Preferred Stock, on an as-converted basis) at least 50% of the
total number of shares of Parent Common Stock represented by the Merger
Consideration (treating the Parent Preferred Stock on an as-converted
basis), after giving retroactive effect to any stock splits, stock
dividends, combinations or other similar changes in Parent Common Stock or
Parent Preferred Stock occurring subsequent to the date hereof; PROVIDED,
HOWEVER, that the Stockholder shall at the time be in compliance in all
material respects with its obligations under Section 2.02 hereof and no
disposition by the Stockholder of shares of Parent Stock shall have
involved any violation of such section by the Stockholder.
3
"VOTING POWER", when used with reference to any class or series of
securities of Parent, or any classes or series of securities of Parent entitled
to vote together as a single class or series, shall mean the power of such class
or series (or such classes or series) to vote for the election of directors. For
purposes of determining the percentage of Voting Power of any class or series
(or classes or series) beneficially owned by any Person, any securities not
outstanding which are subject to conversion rights, exchange rights, rights,
warrants, options or similar securities held by the Stockholder, or in the case
of any Person other than the Stockholder, any such securities which are
exercisable, exchangeable or convertible within sixty days, shall be deemed to
be outstanding, but shall not be deemed to be outstanding for the purpose of
computing the percentage of the class or series (or classes or series)
beneficially owned by any other Person.
"VOTING SECURITIES", when used with reference to any Person, shall
mean any securities of such Person having Voting Power or any securities
convertible into or exchangeable for any securities having Voting Power.
ARTICLE II
STANDSTILL AGREEMENT AND TRANSFER RESTRICTIONS
SECTION 2.01. STANDSTILL RESTRICTIONS. The Stockholder agrees that
it shall not (and shall use commercially reasonable efforts to cause its
Affiliates and Associates not to), without the prior written consent of the
board of directors of Parent, (i) in any manner acquire, agree to acquire or
make any proposal to acquire, directly or indirectly, any securities of Parent,
or any rights or options to acquire any such securities, if after giving effect
to such acquisition, the Stockholder would beneficially own more than five
percent of the Voting Securities of any class or series of Parent, (ii) propose
to enter into, directly or indirectly, any merger or other business combination
involving Parent or propose to purchase, directly or indirectly, a material
portion of the assets of Parent, (iii) make, or in any way participate, directly
or indirectly, in any "solicitation" of "proxies" (as such terms are used in
Regulation 14A promulgated under the Exchange Act) to vote or consent, or
knowingly advise or influence any Person with respect to the voting of, or
granting of a consent with respect to, any Voting Securities
4
of Parent in opposition to the recommendation of the majority of Parent's board
of directors, (iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting
Securities of Parent, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management or policies of Parent, (vi) disclose
any intention, plan or arrangement inconsistent with the foregoing or (vii)
advise, assist (including by knowingly providing or arranging financing for that
purpose) or knowingly encourage any other Person in connection with any of the
foregoing; PROVIDED, HOWEVER, that clause (v) shall not prohibit actions by the
Stockholder (A) through its representative on the TWE Partners Operating
Committee with respect to matters before such committee or (B) alone, and not in
concert with others, to express its views privately to Parent concerning the
management or polices of Parent and its subsidiaries. Notwithstanding anything
to the contrary in this Section 2.01, the Stockholder may continue to
beneficially own directly or indirectly (i) the Merger Consideration, (ii) any
Parent Common Stock into which the Parent Preferred Stock issued in the Merger
may be converted or for which it is exchanged pursuant to the terms thereof,
including any shares of Parent Common Stock issued to the Stockholder pursuant
to Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued
and unpaid dividends on the Parent Preferred Stock, (iii) any shares of Parent
Common Stock issued to the Stockholder pursuant to Section 8.01(g)(ii) of the
Merger Agreement, (iv) any shares of Parent Common Stock held by one or more
employee benefit plans (or trusts for such plans) of the Stockholder and its
Subsidiaries, PROVIDED that all decisions whether to purchase or sell such
shares are made by Persons independent of the Stockholder and its Affiliates,
(v) any shares of capital stock of Parent issued pursuant to Section 3.03(b) of
the Merger Agreement, (vi) any shares of capital stock distributed by Parent to
the Stockholder, including pursuant to Section 2.3 or 3.7 of the Certificate of
Designations and, in addition to the foregoing, (vii) any shares of Parent
Common Stock representing in the aggregate not more than two-tenths of one
percent (.2%) of the outstanding shares of Parent Common Stock (calculated on
the basis of the number of such shares reported in Parent's most recent annual
report on Form 10-K or quarterly report on Form 10-Q, as applicable), which
shares are held directly or indirectly by individuals that are Affiliates and
Associates of the Stockholder.
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SECTION 2.02. RESTRICTIONS ON TRANSFER. The Stockholder agrees that
it shall not (and shall use commercially reasonable efforts to cause its
Affiliates and Associates not to), without the prior written consent of the
board of directors of Parent, sell, transfer, pledge, encumber or otherwise
dispose of, or agree to sell, transfer, pledge, encumber or otherwise dispose
of, any securities of Parent, or any rights or options to acquire such
securities, except that such consent shall not be necessary if any such
disposition is (i) to the underwriters in connection with an underwritten public
offering of shares of such securities on a firm commitment basis registered
under the Securities Act, pursuant to which the sale of such securities is in a
manner that will effect a broad distribution, (ii) to a third party in a
transaction that complies with the volume and manner of sale provisions
contained in Rule 144(e) and (f) as in effect on the date hereof under the
Securities Act, (iii) to a third party in a transaction or series of related
transactions whenever occurring (provided that this clause (iii) will be
unavailable where the senior executives of the Stockholder know or, after
reasonable inquiry should have known, that such third party directly or
indirectly beneficially owns or, after giving effect to such sale will
beneficially own, more than five percent of the aggregate Voting Power of any
class or series of Voting Securities of Parent or, if such class or series votes
together with any other classes or series as a single class or series, more than
five percent of the aggregate Voting Power of such classes or series), (iv) to
holders of the Stockholder's outstanding equity securities in a spin-off or
exchange transaction, PROVIDED that such spin-off or exchange is intended in
good faith by the Stockholder to be reasonably available to all holders of the
Stockholder's outstanding equity securities, (v) to a financial institution as a
bona fide pledge as security for money borrowed, (vi) pursuant to the terms of
any tender or exchange offer for Voting Securities of Parent approved by the
board of directors of Parent and (vii) to an Affiliate of the Stockholder;
PROVIDED, HOWEVER, that the restrictions set forth in this Section 2.02 shall
not apply to (A) the transfer of any Voting Securities of Parent to Parent, (B)
Voting Securities of Parent held by one or more employee benefit plans (or
trusts for such plans) of the Stockholder and its Subsidiaries, provided that
all decisions whether to purchase or sell such shares are made by Persons
independent of the Stockholder and its Affiliates, (C) shares of Parent Common
Stock held by individuals that are Affiliates and Associates of the Stockholder
within the limits set forth in clause (vii) of the last sentence of Section
2.01, (D) any
6
shares of Parent Common Stock issued to the Stockholder pursuant to Section
8.01(g)(ii) of the Merger Agreement and (E) any shares of Parent Common Stock
issued to the Stockholder pursuant to Section 3.1 or 4.1 of the Certificate of
Designations in payment of accrued and unpaid dividends on the Parent Preferred
Stock. Notwithstanding anything in the first sentence of this Section 2.02 to
the contrary, any transfer pursuant to clause (v) or (vii) of this Section 2.02,
and any transfer or series of related transfers to any Person pursuant to clause
(iii) of this Section 2.02 of Voting Securities representing (on an as-converted
basis) one percent (1%) or more of the outstanding shares of Parent Common Stock
(determined on the basis of the most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as applicable), shall include the written
agreement of the transferee in a form reasonably satisfactory to Parent to be
bound by the terms of this Section 2.02. Except as set forth in the immediately
preceding sentence, no transferee will be required to be bound by this Section
2.02.
SECTION 2.03. RESTRICTIONS ON CERTAIN ACTIONS. The Stockholder
agrees not to (and to use commercially reasonable efforts to cause its
Affiliates and Associates not to) (i) request Parent or any of its agents,
directly or indirectly, to amend or waive any provision of Section 2.01 or this
Section 2.03 or (ii) take any action which might require Parent to make a public
announcement regarding the possibility of a transaction with the Stockholder;
PROVIDED, HOWEVER, that this Section 2.03 shall not be deemed to prohibit the
Stockholder from communicating with the board of directors of Parent, so long as
such communication is not intended to elicit a public response by such board of
directors.
ARTICLE III
TRANSFERS OF PARENT STOCK;
APPOINTMENT OF COMMITTEE MEMBER
SECTION 3.01. TRANSFERS OF PARENT STOCK; LEGENDS ON CERTIFICATES FOR
PARENT STOCK. (a) The Stockholder agrees that it will not offer, sell, assign,
pledge, encumber, transfer, or otherwise dispose of any shares of Parent Stock
acquired pursuant to the Merger Agreement, or any interest therein, except
pursuant to a registration of such securities under the Securities Act and
applicable state securities laws or in a transaction that, in the
7
opinion of counsel reasonably satisfactory to Parent, is exempt from, or not
subject to, the registration requirements of the Securities Act and applicable
state securities laws.
(b) The Stockholder agrees that each certificate for shares of
Parent Stock issued pursuant to the Merger Agreement (and shares of Parent
Common Stock issued upon conversion or exchange of Parent Preferred Stock) shall
bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
HEREIN MAY BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED,
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
(c) The Stockholder agrees that each certificate for shares of
Parent Stock (other than shares of Parent Common Stock issued to the Stockholder
pursuant to (i) Section 8.01(g)(ii) of the Merger Agreement or (ii) Section 3.1
or 4.1 of the Certificate of Designations in payment of accrued and unpaid
dividends on the Parent Preferred Stock) issued to or held (directly or
indirectly, including through a nominee) by a Person that is subject to the
provisions of this Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDER'S AGREEMENT DATED AS OF July 6, 1995 (THE "STOCKHOLDER'S
AGREEMENT"), BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE
STOCKHOLDER'S AGREEMENT MAY BE OBTAINED FROM THE CORPORATION FREE OF
CHARGE. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE
AGREES TO COMPLY IN ALL RESPECTS WITH THE REQUIREMENTS OF THE
STOCKHOLDER'S AGREEMENT.
(d) Parent shall deliver new certificates for the shares of Parent
Preferred Stock and Parent Common Stock issued pursuant to the Merger Agreement
and the Certificate of Designations, without the legends specified in
8
paragraphs (b) and (c) of this Section 3.01, (w) in connection with any
underwritten public offering as referred to in Section 2.02(i), (x) upon any
sale meeting the requirements of Rule 144(e) and (f) under the Securities Act,
(y) in connection with any transaction referred to in Section 2.02(iii), the
securities of which are registered under the Securities Act and represent (on an
as-converted basis) less than one percent of the outstanding shares of Parent
Common Stock (determined on the basis of the most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as applicable) and (z) in connection with
any transaction referred to in Section 2.02(iv), in exchange for (i) in the case
of clause (w), (x), (y) or (z), surrender of existing certificates representing
such shares and (ii) in the case of clause (x) evidence reasonably satisfactory
to Parent (consisting of an officer's certificate or an opinion of counsel, as
reasonably determined by Parent) that the applicable requirements of Rule 144
(e) and (f) under the Securities Act have been satisfied.
(e) Parent shall deliver new certificates for the shares of Parent
Preferred Stock and Parent Common Stock issued pursuant to the Merger Agreement
and the Certificate of Designations, without the legend specified in paragraph
(b) of this Section 3.01, (x) in connection with any transaction referred to in
Section 2.02(iii), the securities of which are registered under the Securities
Act and represent (on an as-converted basis) one percent or more of the
outstanding shares of Parent Common Stock (determined on the basis of the most
recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
applicable), (y) after the expiration of three years from the Closing Date and
(z) in connection with the registration under the Securities Act of (i) any
shares of Parent Common Stock issued to the Stockholder pursuant to Section
8.01(g)(ii) of the Merger Agreement or (ii) any shares of Parent Common Stock
issued to the Stockholder pursuant to Section 3.1 or 4.1 of the Certificate of
Designations in payment of accrued and unpaid dividends on the Parent Preferred
Stock pursuant to Section 4(c) of the Registration Rights Agreement, in exchange
for (A) in the case of clause (x), (y) and (z), surrender of existing
certificates representing such shares and (B) in the case of clause (y) evidence
reasonably satisfactory to Parent (consisting of an officer's certificate or an
opinion of counsel, as reasonably determined by Parent) that the requirements of
Rule 144(k) under the Securities Act have been satisfied.
9
(f) Parent shall deliver new certificates for the Parent Preferred
Stock and shares of Parent Common Stock without the legend specified by
paragraph (c) of this Section 3.01, (x) after the termination of this Agreement
(other than the covenants and agreements of this Article III), (y) in connection
with any transaction referred to in Section 2.02(vi) and (z) in connection with
any transaction referred to in Section 2.02(iii), the securities of which are
not registered under the Securities Act and represent (on an as-converted basis)
less than one percent of the outstanding shares of Parent Common Stock
(determined on the basis of the most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as applicable), in each case in exchange for
surrender of existing certificates representing such shares.
SECTION 3.02. APPOINTMENT OF COMMITTEE MEMBER. Promptly following
the Effective Time, Parent agrees to cause a senior executive of the Stockholder
to be appointed a member of the TWE Partners Operating Committee for a term of
three years, which period shall be subject to early termination at any time for
cause.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. TERMINATION. The covenants and agreements contained
herein shall terminate on the first to occur of (i) the tenth anniversary of the
Closing Date and (ii) the first to occur of any of the Release Events; PROVIDED,
HOWEVER, that the provisions of Article III shall survive any termination of
this Agreement.
SECTION 4.02. ENTIRE AGREEMENT. This Agreement, the Merger Agreement
and the Registration Rights Agreement constitute the entire agreement between
the parties with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
SECTION 4.03. AMENDMENTS. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
10
SECTION 4.04. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
If to the Stockholder to:
Houston Industries Incorporated
Five Post Oak Park
4400 Post Oak Parkway
Houston, TX 77027
Facsimile: (713) 629-3065
Attention: Mr. Stephen W. Naeve
with a copy (which shall not constitute
notice) to:
Houston Industries Incorporated
611 Walker, 25th Floor
Houston, TX 77002
Facsimile: (713) 220-5503
Attention: Hugh Rice Kelly, Esq.
with a copy (which shall not constitute
notice) to:
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana Street
Houston, TX 77002
Facsimile: (713) 229-1522
Attention: Margo S. Scholin, Esq.
If to Parent to:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 333-3987
Attention: Peter R. Haje, Esq.
11
with a copy (which shall not constitute
notice) to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: William P. Rogers, Jr., Esq.
SECTION 4.05. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 4.06. SPECIFIC PERFORMANCE. The Stockholder recognizes and
acknowledges that a breach by it of Article II hereto will cause Parent to
sustain damages for which it would not have an adequate remedy at law for money
damages, and therefore the Stockholder agrees that in the event of any such
breach Parent shall be entitled to the remedy of specific performance of such
Article II and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
SECTION 4.07. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 4.08. DESCRIPTIVE HEADINGS. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 4.09. SEVERABILITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
12
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
SECTION 4.10. OTHER PROVISIONS. (a) ATTORNEYS' FEES. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements, in addition to any other relief to which he
or it may be entitled.
(b) WAIVER. The waiver by either party of a breach of any provision
of this Agreement shall not operate, or be construed, as a waiver of any
subsequent breach thereof.
IN WITNESS WHEREOF, Parent and the Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
TIME WARNER INC.,
by /s/ SPENCER B. HAYS
Name: Spencer B. Hays
Title: Vice President
HOUSTON INDUSTRIES
INCORPORATED,
by /s/ STEPHEN W. NAEVE
Name: Stephen W. Naeve
Title: Vice President -
Strategic Planning and
Administration
13
<PAGE>
Exhibit 3
REGISTRATION RIGHTS AGREEMENT dated as of July 6, 1995,
between TIME WARNER INC., a Delaware corporation (the
"Company"), and HOUSTON INDUSTRIES INCORPORATED, a Texas
corporation (the "Stockholder").
This Agreement is made pursuant to Sections 7.01(f) and 7.02(g) of
the Agreement and Plan of Merger dated as of January 26, 1995 (as such agreement
may be amended from time to time, the "Merger Agreement"), among KBLCOM
Incorporated, a Delaware corporation ("KBLCOM"), the Stockholder, the Company
and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.), a Delaware
corporation and a wholly owned subsidiary of the Company. In order to induce the
Stockholder to consummate the transactions contemplated by the Merger Agreement,
and in further consideration therefor, the Company has agreed to execute and
deliver this Agreement and provide the registration rights set forth in this
Agreement.
Accordingly, it is hereby agreed as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Merger Agreement.
For purposes of this Agreement, the following terms shall have the following
meanings:
"BLACKOUT PERIOD" means any Section 6(a) Period and any Section 6(b)
Period.
"COUNSEL TO THE HOLDERS" means the single law firm from time to time
representing the Holders, as appointed by the Holders of a majority in number of
the Registrable Securities.
"DESIGNATED SHELF REGISTRATION" has the meaning specified in Section
4(b).
"EFFECTIVE PERIOD" means a period commencing on the date of this
Agreement and ending on the earliest of (i) the first date as of which all
Registrable Securities cease to be Registrable Securities and no Holder holds
any shares of Parent Preferred Stock, (ii) the tenth anniversary of the Closing
Date (subject to extension as provided in Section 4(b), 6 or 7 hereof) and (iii)
the later of (A) the date on which the Stockholder's Agreement shall terminate
1
and (B) the third anniversary of the date of the last issuance of Registrable
Securities, other than the issuance of shares of Parent Common Stock upon
conversion or exchange of Parent Preferred Stock; PROVIDED, HOWEVER, that the
Effective Period shall not terminate pursuant to clause (i) or (iii) so long as
the Company may in the future issue Registrable Securities pursuant to the
Merger Agreement.
"HOLDER" means (i) the Stockholder or any Affiliate of the
Stockholder that is a holder of Registrable Securities or Parent Preferred Stock
and (ii) each Person that is a registered holder of Registrable Securities or
Parent Preferred Stock that (A) acquired such Registrable Securities or Parent
Preferred Stock in accordance with Section 2.02 of the Stockholder's Agreement
and (B) received or will receive certificates for Registrable Securities bearing
a legend pursuant to Section 3.01(b) of the Stockholder's Agreement; PROVIDED,
HOWEVER, that, if such Person is not the Stockholder, such Person has agreed in
writing to become a Holder hereunder and to be bound by the terms and conditions
of this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means, collectively, (i) the shares of
Parent Common Stock issued pursuant to the Merger, (ii) the shares of Parent
Common Stock or other securities of Parent issued pursuant to the conversion or
exchange provisions of the Parent Preferred Stock issued pursuant to the Merger,
(iii) any shares of Parent Common Stock issued pursuant to Section 8.01(g)(ii)
of the Merger Agreement (the securities referred to in (i), (ii) and (iii) are,
collectively, the "Shares") and (iv) any securities paid, issued or distributed
in respect of any Shares by way of stock dividend or distribution or stock split
or in connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise. Securities will cease to be Registrable
Securities in accordance with Section 2 hereof.
2
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation,
(i) all SEC, NASD and securities exchange registration and filing fees, (ii) all
fees and expenses of complying with state securities or blue sky laws (including
fees and disbursements of counsel for any underwriters in connection with blue
sky qualifications of the Registrable Securities), (iii) all printing, messenger
and delivery expenses, (iv) all fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange pursuant to
Section 7(h), (v) the fees and disbursements of counsel for the Company and of
its independent public accountants, (vi) the reasonable fees and expenses of any
special experts retained in connection with the requested registration and (vii)
the reasonable fees and expenses of Counsel to the Holders, but excluding (x)
underwriting discounts and commissions and transfer taxes, if any, and (y) any
fees or disbursements of counsel to the Holders or any Holder (other than
Counsel to the Holders).
"REGISTRATION STATEMENT" means any registration statement (including
a Shelf Registration) of the Company referred to in Section 3 or 4, including
any Prospectus, amendments and supplements to any such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in any such registration statement.
"RELATED SECURITIES" means any securities of the Company similar or
identical to any of the Registrable Securities, including, without limitation,
Parent Common Stock and all options, warrants, rights and other securities
convertible into, or exchangeable or exercisable for, Parent Common Stock.
"SALE PERIOD" has the meaning specified in Section 4(b).
"SECTION 6(A) PERIOD" has the meaning specified in Section 6(a).
"SECTION 6(B) PERIOD" has the meaning specified in Section 6(b).
"SHELF REGISTRATION" means a "shelf" registration statement on an
appropriate form pursuant to Rule 415 under
3
the Securities Act (or any successor rule that may be adopted by the SEC).
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean an
underwritten offering in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities entitled to
the benefits of this Agreement are the Registrable Securities. For the purposes
of this Agreement, Registrable Securities will cease to be Registrable
Securities when and to the extent that (i) a Registration Statement covering
Registrable Securities has been declared effective under the Securities Act and
Registerable Securities have been disposed of pursuant to such effective
Registration Statement, (ii) Registrable Securities are distributed to the
public pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) Registrable Securities have been otherwise transferred to
a party that is not an Affiliate of the Stockholder and new certificates for
such Registrable Securities not bearing the legend specified in Section 3.01(b)
of the Stockholder's Agreement shall have been delivered by the Company, (iv)
the Effective Period ends or (v) Registrable Securities have ceased to be
outstanding.
3. PIGGY-BACK REGISTRATION RIGHTS. (a) Whenever during the Effective
Period the Company shall propose to file a registration statement under the
Securities Act relating to the public offering of Parent Common Stock for cash
pursuant to a firm commitment underwritten offering (other than pursuant to a
registration statement on Form S-4 or Form S-8 or any successor forms, or filed
in connection with an exchange offer or an offering of securities solely to
existing stockholders or employees of the Company), for sale for its own
account, the Company shall (i) give written notice at least seven Business Days
prior to the filing thereof to each Holder of Registrable Securities then
outstanding, specifying the approximate date on which the Company proposes to
file such registration statement and advising such Holder of his right to have
any or all of the Registrable Securities then held by such Holder included among
the securities to be covered thereby and (ii) at the written request of any such
Holder given to the Company at least two Business Days prior to the proposed
filing date, include among the securities covered by such registration statement
the number of Registrable Securities which such
4
Holder shall have requested be so included (subject, however, to reduction in
accordance with paragraph (b) of this Section). The Company shall use its
commercially reasonable efforts to cause the managing underwriter of the
proposed underwritten offering to permit the Holders of Registrable Securities
requested to be included in the Registration Statement for such offering to
include such securities in such offering on the same terms and conditions as any
similar securities of the Company included therein.
(b) Each Holder of Registrable Securities desiring to participate in
an offering pursuant to Section 3(a) may include shares of Parent Common Stock
in any Registration Statement relating to such offering to the extent that the
inclusion of such shares of Parent Common Stock shall not reduce the number of
shares of Parent Common Stock to be offered and sold by the Company pursuant
thereto. If the lead managing underwriter selected by the Company for an
underwritten offering pursuant to Section 3(a) determines that marketing factors
require a limitation on the number of shares of Parent Common Stock to be
offered and sold by the stockholders of the Company in such offering, there
shall be included in the offering only that number of shares of Parent Common
Stock, if any, that such lead managing underwriter reasonably and in good faith
believes will not jeopardize the success of the offering of all the shares of
Parent Common Stock that the Company desires to sell for its own account. In
such event and provided the managing underwriter has so notified the Company in
writing, the number of shares of Parent Common Stock to be offered and sold by
stockholders of the Company, including Holders of Registrable Securities,
desiring to participate in such offering shall be allocated among such
stockholders of the Company on a pro rata basis based on their holdings of
Parent Common Stock (subject to any written agreements requiring a different
priority).
(c) Nothing in this Section 3 shall create any liability on the part
of the Company to the Holders of Registrable Securities if the Company for any
reason should decide not to file a registration statement proposed to be filed
under Section 3(a) or to withdraw such registration statement subsequent to its
filing, regardless of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by the Company of any notice hereunder or
otherwise.
(d) A request by Holders to include Registrable Securities in a
proposed underwritten offering pursuant to
5
Section 3(a) shall not be deemed to be a request for a demand registration
pursuant to Section 4.
4. DEMAND REGISTRATION RIGHT. (a) Upon the written request of
Holders of at least 25% of the Registrable Securities that the Company effect
the registration with the SEC under and in accordance with the provisions of the
Securities Act of all or part of such Holder's or Holders' Registrable
Securities and specifying the aggregate number of shares of Registrable
Securities requested to be registered and the name or names of the proposed
managing underwriter or underwriters (or in the case of a Designated Shelf
Registration or a transaction covered by Section 2.02(iv) of the Stockholder's
Agreement, the intended method of distribution and the name or names of any
managing underwriters or agents), the Company will use all commercially
reasonable efforts to file a Registration Statement covering such Holder's or
Holders' Registrable Securities requested to be registered within 20 Business
Days after receipt of such request for disposition pursuant to an underwritten
offering (or, in the case of a Designated Shelf Registration or a transaction
covered by Section 2.02(iv) of the Stockholder's Agreement, the intended method
of distribution) (the terms of such underwritten offering or other distribution
to be determined by the Holders of a majority of the Registrable Securities so
requested to be registered); PROVIDED, HOWEVER, that, subject to Section 4(c),
the Company shall not be required to take any action pursuant to this Section 4:
(1) if prior to the date of such request the Company shall have
effected four (4) registrations pursuant to this Section 4;
(2) if the Company has effected a registration (other than a
Designated Shelf Registration) pursuant to this Section 4 within the
120-day period next preceding such request which permitted Holders of
Registrable Securities to register Registrable
Securities;
(3) if the Company shall at the time have effective a Shelf
Registration pursuant to which the Holder or Holders that requested
registration could effect the disposition of such Holder's or Holders'
Registrable Securities in the manner requested;
(4) if the Registrable Securities which the Company shall have been
requested to register shall
6
have a then current market value of less than $50,000,000, unless such
registration request is for all remaining Registrable Securities;
PROVIDED, HOWEVER, that this restriction shall not apply to the 1,000,000
(as such number may be adjusted pursuant to Section 3.01(c) of the Merger
Agreement) shares of Parent Common Stock issued at the Effective Time so
long as the request to register such shares covers all of such shares;
(5) during the pendency of any Blackout Period; or
(6) if the intended method of distribution is not permitted under
Section 2.02(i) or 2.02(iv) of the Stockholder's Agreement or, in the case
of a Designated Shelf Registration, Section 2.02(ii) or (iii) of the
Stockholder's Agreement;
PROVIDED FURTHER, HOWEVER, that the Company shall be permitted to satisfy its
obligations under this Section 4(a) by amending (to the extent permitted by
applicable law) any registration statement (including any Shelf Registration)
previously filed by the Company under the Securities Act so that such
registration statement (as amended) shall permit the disposition (in accordance
with the intended methods of disposition specified as aforesaid) of all of the
Registrable Securities for which a demand for registration has been made under
this Section 4(a). If the Company shall so amend a previously filed registration
statement, it shall be deemed to have effected a registration for purposes of
this Section 4.
(b) The holders of a majority in number of the Registrable
Securities shall be entitled to specify in a request that one registration that
is effected pursuant to this Section 4 shall be for a Shelf Registration (a
"Designated Shelf Registration"). Subject to any Blackout Period, a Designated
Shelf Registration shall be available for transactions described in Section
2.02(ii) or (iii) of the Stockholder's Agreement during the 15 Business Day
period beginning on the third Business Day after the Company's public
announcement of its quarterly or year-end financial results (each a "Sale
Period"); PROVIDED, HOWEVER, that dispositions pursuant to this Section 4(b),
together with all other sales pursuant to Section 2.02(ii) of the Stockholder's
Agreement within the same three month period, shall not exceed 1% of the
outstanding shares of Parent Common Stock as reported on the Company's most
recent
7
Form 10-K or 10-Q, as applicable. Notwithstanding the foregoing, if a Blackout
Period or a suspension by the Company of the use by the Holders of the
Designated Shelf Registration or any related Prospectus pursuant to Section
7(e), eliminates more than seven Business Days in any Sale Period, then (i) the
length of the next Sale Period shall be thirty Business Days and (ii) the volume
restriction specified in the preceding sentence shall be 2% of the outstanding
shares of Parent Common Stock for the three month period which includes such
extended Sale Period. Notwithstanding the provisions of Section 7(b), the
Company shall be required to maintain the effectiveness of the Designated Shelf
Registration for at least 36 calendar months (which period shall be extended if
necessary to cover any and all extended Sale Periods provided for under the
immediately preceding sentence), or, if earlier, until all Registrable
Securities covered thereby have ceased to be Registrable Securities.
(c) Upon the written request of a Holder that the Company effect the
registration with the SEC under and in accordance with the provisions of the
Securities Act of all of the then outstanding (x) shares of Parent Common Stock
issued pursuant to Section 8.01(g)(ii) of the Merger Agreement or (y) shares of
Parent Common Stock issued pursuant to Section 3.1 or 4.1 of the Certificate of
Designations in payment of accrued and unpaid dividends on the Parent Preferred
Stock and specifying the aggregate number of shares of Registrable Securities
requested to be registered and the intended method of distribution and the name
or names of any managing underwriters or agents, the Company will use
commercially reasonable efforts to file a Registration Statement covering such
Holder's Registrable Securities requested to be registered within 20 Business
Days after receipt of such request. Notwithstanding anything to the contrary in
Section 4(a) or 6(b), (A) the registration of Registrable Securities pursuant to
this Section 4(c) shall not be subject to the provisions of Section 4(a) or 6(b)
and (B) the number of registration requests pursuant to this Section 4(c) shall
be unlimited.
(d) A registration requested pursuant to this Section 4 shall not be
deemed to be effected for purposes of this Section 4 if it has not been declared
effective by the SEC or become effective in accordance with the Securities Act
and the rules and regulations thereunder.
(e) Holders of a majority in number of the Registrable Securities to
be included in a Registration
8
Statement pursuant to this Section 4 may, at any time prior to the effective
date of the Registration Statement relating to such registration, revoke such
request by providing a written notice to the Company revoking such request. The
Holders of Registrable Securities who revoke such request shall reimburse the
Company for all its out-of-pocket expenses incurred in the preparation, filing
and processing of the Registration Statement; PROVIDED, HOWEVER, that, if such
revocation was based on (x) the Company's failure to comply in all material
respects with its obligations hereunder or (y) the occurrence of a Blackout
Period, such reimbursement shall not be required and the remaining provisions of
this Section 4(d) shall not apply. If such reimbursement is made within 10
Business Days following a request therefor, such registration shall not be
deemed to have been effected for purposes of this Section 4. If such
reimbursement is not so received within such time (i) such registration shall be
deemed to have been effected for purposes of this Section 4 and (ii) the Company
shall have no further obligations to such Holders with respect to piggy-back
registrations pursuant to Section 3 or demand registrations pursuant to this
Section 4 until such reimbursement is made.
(f) The Company will not include any securities which are not
Registrable Securities in any Registration Statement filed pursuant to a demand
made under this Section 4 without the prior written consent of the Holders of a
majority in number of the Registrable Securities covered by such Registration
Statement.
5. SELECTION OF UNDERWRITERS. In connection with any underwritten
offering pursuant to a Registration Statement filed pursuant to a demand made
pursuant to Section 4, Holders of a majority in number of the Registrable
Securities to be included in the Registration Statement shall have the right to
select a managing underwriter or underwriters to administer the offering, so
long as such managing underwriter or underwriters shall be reasonably
satisfactory to the Company; PROVIDED, HOWEVER, that the Company shall have the
right to select one co-managing underwriter, so long as such co-managing
underwriter shall be reasonably satisfactory to the Holders of a majority in
number of the Registrable Securities to be included in such offering. The
managing underwriter or underwriters selected by the Holders of a majority in
number of the Registrable Securities to be registered shall be deemed
satisfactory to the Company unless the Company sends a written notice of
objection to the Holders of a majority
9
in number of such Registrable Securities within 10 days of receipt of notice
from such Holders of the appointment of a managing underwriter or underwriters
and the co-managing underwriter selected by the Company shall be deemed to be
satisfactory to such Holders unless such Holders send a written notice of
objection to the Company within 10 days of receipt of notice from the Company of
the appointment of a co-managing underwriter.
6. BLACKOUT PERIODS FOR HOLDERS. (a) Subject to Section 4(c), if the
Company determines in good faith that the registration and distribution of
Registrable Securities (or the use of the Registration Statement or related
Prospectus) would interfere with any pending financing, acquisition, corporate
reorganization or any other corporate development involving the Company or any
of its subsidiaries or would require premature disclosure thereof and promptly
gives the Holders of Registrable Securities written notice of such
determination, the Company shall be entitled to (i) postpone the filing of the
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to Section 3 or 4 or (ii) elect that the Registration Statement
not be used, in either case, for a reasonable period of time, but not to exceed
90 days (a "Section 6(a) Period"). Any such written notice shall be signed by an
officer of the Company and contain a general statement of the reasons for such
postponement or restriction on use and an estimate of the anticipated delay. The
Company shall promptly notify each Holder of the expiration or earlier
termination of a Section 6(a) Period.
(b) Subject to Section 4(c), if (i) during the Effective Period, the
Company shall file a registration statement (other than in connection with the
registration of securities issuable pursuant to a continuous "at the market
offering" pursuant to Rule 415(a)(4) under the Securities Act, an employee stock
option, stock purchase, dividend reinvestment plan or similar plan or pursuant
to a merger, exchange offer or a transaction of the type specified in Rule
145(a) under the Securities Act) with respect to any Related Securities and (ii)
with reasonable prior notice, (A) the Company (in the case of a non-underwritten
offering pursuant to such registration statement) advises the Holders in writing
that a sale or distribution of Registrable Securities would adversely affect
such offering or (B) the managing underwriter or underwriters (in the case of an
underwritten offering) advise the Company in writing (in which case the Company
shall notify the Holders), that a
10
sale or distribution of Registrable Securities would adversely affect such
offering, then each Holder of Registrable Securities shall, to the extent not
inconsistent with applicable law, refrain from effecting any sale or
distribution of Registrable Securities, including sales pursuant to Rule 144
under the Securities Act, during the 10-day period prior to, and during (x) the
60-day period, in the case of sales or distributions pursuant to a Designated
Shelf Registration or pursuant to Rule 144 under the Securities Act, and (y) the
90-day period, in all other cases, in each case beginning on the effective date
of such registration statement (a "Section 6(b) Period").
(c) The Effective Period and (in the case where the use of an
effective Registration Statement (other than a Designated Shelf Registration) is
prohibited under Section 6(a)) the period for which a Registration Statement
shall be kept effective pursuant to Section 7(b), as the case may be, shall be
extended by a number of days equal to the number of days of any Blackout Period
occurring during such period (except that, in the case of the occurrence of a
Blackout Period during the effectiveness of a Designated Shelf Registration, the
Effective Period will only be extended to the extent, if any, necessary to
comply with Section 4(b)). Except as provided below, the beginning of any
Blackout Period shall be at least 120 days after the end of the prior Blackout
Period and the aggregate number of days included in all Blackout Periods during
any consecutive 12 month period during the Effective Period shall not exceed 180
days; PROVIDED, HOWEVER, that once during any consecutive 12 month period during
the Effective Period a Section 6(b) Period may begin on or within five days of
the last day of a Section 6(a) Period.
(d) Without limiting the rights of the Company under Section 6(a),
unless the Company shall exercise its right to declare a Section 6(b) Period
prior to the 10th day preceding the effectiveness of a Registration Statement
effected pursuant to Section 4 (other than a Designated Shelf Registration), it
shall not, during the period beginning on such 10th day and continuing during
the period of the offering covered by such Registration Statement (other than a
Designated Shelf Registration) file or effect a registration statement of the
type for which it would be entitled to declare a Section 6(b) Period.
7. REGISTRATION PROCEDURES. If and whenever the Company is required
to use commercially reasonable efforts to effect or cause the registration of
any Registrable
11
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate,
and which form shall be available for the sale of the Registrable
Securities in accordance with the intended methods of distribution
thereof, and use its best efforts to cause such Registration Statement to
become and remain effective;
(b) prepare and file with the SEC amendments and post-effective
amendments to such Registration Statement and such amendments and
supplements to the Prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act or
rules and regulations thereunder for shelf registration or otherwise
necessary to keep such Registration Statement effective for up to 90 days
(except to the extent otherwise provided in Section 4(b) with respect to a
Designated Shelf Registration) and cause the Prospectus as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to
otherwise comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement
until the earlier of (x) such 90th day (except to the extent otherwise
provided in Section 4(b) with respect to a Designated Shelf Registration)
and (y) such time as all Registrable Securities covered by such
Registration Statement have ceased to be Registrable Securities (it being
understood that the Company at its option may determine to maintain such
effectiveness for a longer period, whether pursuant to a Shelf
Registration or otherwise); PROVIDED that a reasonable time before filing
a Registration Statement or Prospectus, or any amendments or supplements
thereto (other than reports required to be filed by it under the Exchange
Act and the rules and regulations adopted by the SEC thereunder), the
Company will furnish to the Holders, the managing underwriter and their
respective counsel for review and comment, copies of all documents
proposed to be filed and will not file any such documents (other than as
aforesaid)
12
to which any of them reasonably object prior to the filing thereof;
(c) furnish to each Holder of such Registrable Securities such
number of copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all exhibits),
any Prospectus or Prospectus supplement and such other documents as such
Holder may reasonably request in order to facilitate the disposition of
the Registrable Securities by such Holder (the Company hereby consenting
to the use (subject to the limitations set forth in the last paragraph of
this Section 7) of the Prospectus or any amendment or supplement thereto
in connection with such disposition);
(d) use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such Holder, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this Section 7(d), it
would not be obligated to be so qualified, to subject itself to taxation
in any such jurisdiction, or to consent to general service of process in
any such jurisdiction;
(e) notify each Holder of any such Registrable Securities covered by
such Registration Statement, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 7(b), of the Company's becoming
aware that the Prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to
such Holder a reasonable number of copies of an amendment or supplement to
such Registration Statement or related Prospectus as may be necessary so
13
that, as thereafter delivered to the purchasers of such Registrable
Securities, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(f) notify each Holder of Registrable Securities covered by such
Registration Statement at any time,
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information;
(3) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation or any
overt threats of any proceedings for such purposes;
(4) of the receipt by the Company of any written notification
of the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or any
overt threats of any proceeding for that purpose; and
(5) if at any time the representations and warranties of the
Company contemplated by paragraph (i)(1) below cease to be true and
correct;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders an earnings statement which shall satisfy the provisions of
Section 11(a) of the Securities Act, provided that the Company shall be
deemed to have complied with this paragraph if it has complied with Rule
158 under the Securities Act;
14
(h) use commercially reasonable efforts to cause all such
Registrable Securities to be listed on any securities exchange on which
the Parent Common Stock is then listed, if such Registrable Securities are
not already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and registrar for
such Registrable Securities covered by such Registration Statement no
later than the effective date of such Registration Statement;
(i) enter into agreements (including underwriting agreements) and
take all other appropriate and all commercially reasonable actions in
order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration:
(1) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in firm commitment underwritten offerings;
(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if
any, and the Holders of a majority in number of the Registrable
Securities being sold) addressed to such Holders and the
underwriters covering the matters customarily covered in opinions
requested in firm commitment underwritten offerings and such other
matters as may be reasonably requested by the Holders of a majority
in number of the Registrable Securities being sold and the managing
underwriter, if any;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
selling Holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters by
independent accountants in connection with firm commitment
underwritten offerings on such date or
15
dates as may be reasonably requested by the Holders of a majority in
number of the Registrable Securities being sold and the managing
underwriter, if any;
(4) if requested, provide indemnification in accordance with
the provisions and procedures of Section 10 hereof to all parties to
be indemnified pursuant to said Section; and
(5) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority in number of the
Registrable Securities being sold and the managing underwriters, if
any, to evidence compliance with clause (f) above and with any
customary conditions contained in the underwriting agreement or
other agreement entered into by the Company.
The matters set forth in this Section 7(i) shall be effected at each
closing under any underwriting or similar agreement as and to the extent
required thereunder.
(j) cooperate with the Holders of Registrable Securities covered by
such Registration Statement and the managing underwriter or underwriters
or agents, if any, to facilitate, to the extent commercially reasonable
under the circumstances, the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing the
securities to be sold under such Registration Statement, and enable such
securities to be in such denominations and registered in such names as the
managing underwriter or underwriters or agents, if any, or such Holders
may request;
(k) if reasonably requested by the managing underwriter or
underwriters or a Holder of Registrable Securities being sold in
connection with an underwritten offering, incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Holders of a majority in number of the Registrable
Securities being sold agree should be included therein relating to the
plan of distribution with respect to such Registrable Securities,
including, without limitation, information with respect to the principal
amount of Registrable Securities being sold to such underwriters, the
16
purchase price being paid therefor by such underwriters and with respect
to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering and make all required filings of
such Prospectus supplement or post-effective amendment promptly upon being
notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(l) make available for inspection by any Holder of Registrable
Securities included in such Registration Statement, any underwriter
participating in any disposition pursuant to such Registration Statement
and any attorney, accountant or other agent retained by any such Holder or
underwriter (collectively, the "Inspectors"), reasonable access to
appropriate officers of the Company and the Company's subsidiaries to ask
questions and to obtain information reasonably requested by any such
Inspector and all financial and other records and other information,
pertinent corporate documents and properties of any of the Company and its
subsidiaries and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility; PROVIDED, HOWEVER, that the Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors in writing are confidential shall not be disclosed to any
Inspector unless such Inspector signs a confidentiality agreement
reasonably satisfactory to the Company or either (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission
of a material fact in such Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction; PROVIDED FURTHER, HOWEVER, that any decision
regarding the disclosure of information pursuant to subclause (i) shall be
made only after consultation with counsel for the applicable Inspectors.
Each Holder of Registrable Securities agrees that it will, promptly after
learning that disclosure of such Records is sought in a court having
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent disclosure
of such Records; and
(m) in the event of the issuance of any stop order suspending the
effectiveness of the Registration
17
Statement or of any order suspending or preventing the use of any related
Prospectus or suspending the qualification of any Registrable Securities
included in the Registration Statement for sale in any jurisdiction, the
Company will use all commercially reasonable efforts promptly to obtain
its withdrawal.
The Company may require each Holder of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such Holder and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 7(e), such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Prospectus or Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 7(e), and, if
so directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the Effective Period and (in the case where the use of an
effective Registration Statement (other than a Designated Shelf Registration) or
any related Prospectus is prohibited under Section 7(e)) the period mentioned in
Section 7(b), as the case may be, shall be extended by the number of days during
the period from the date of the giving of such notice pursuant to Section 7(e)
and through the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 7(e) (except that, in the case of
such a prohibition during the effectiveness of a Designated Shelf Registration,
the Effective Period will only be extended to the extent necessary to comply
with Section 4(b)).
8. REGISTRATION EXPENSES. The Company will pay all Registration
Expenses in connection with all registrations of Registrable Securities pursuant
to Sections 3 and 4 upon the written request of any of the Holders, and each
Holder shall pay (x) any fees or
18
disbursements of counsel to such Holder (other than Counsel to the Holders) and
(y) all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Registration Statement.
9. REPORTS UNDER THE EXCHANGE ACT. The Company agrees to:
(a) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(b) furnish to any Holder, during the Effective Period, forthwith
upon request (A) a written statement by the Company that it has complied
with the current public information and reporting requirements of Rule 144
under the Securities Act and the Exchange Act and (B) a copy of the most
recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company.
10. INDEMNIFICATION; CONTRIBUTION. (a) INDEMNIFICATION BY THE
COMPANY. The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities, its officers and directors and each Person who controls
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), and any agent or investment adviser thereof against all
losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and expenses) incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out of or based
upon (i) any untrue or alleged untrue statement of material fact contained in
the Registration Statement, any Prospectus or preliminary Prospectus, or any
amendment or supplement to any of the foregoing or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus or a
preliminary Prospectus, in light of the circumstances then existing) not
misleading, except in each case insofar as the same arise out of or are based
upon any such untrue statement or omission made in reliance on and in conformity
with information with respect to such indemnified party furnished in writing to
the Company by such indemnified party or its counsel expressly for use therein.
In connection with an underwritten offering, the Company will indemnify the
underwriters thereof, their officers, directors and agents and each
19
Person who controls such underwriters (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the Holders of Registrable
Securities. Notwithstanding the foregoing provisions of this Section 10(a), the
Company will not be liable to any Holder of Registrable Securities, any Person
who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such Holder or underwriter
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), under the indemnity agreement in this Section 10(a) for any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense that arises out of such Holder's or other Person's failure to send or
deliver a copy of the final Prospectus to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of the Registrable Securities to
such Person if such statement or omission was corrected in such final Prospectus
and the Company has previously furnished copies thereof to such Holder or other
Person in accordance with this Agreement.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In
connection with the Registration Statement, each Holder will furnish to the
Company in writing such information, including the name, address and the amount
of Registrable Securities held by such Holder, as the Company reasonably
requests for use in such Registration Statement or the related Prospectus and
agrees to indemnify and hold harmless (in the same manner and to the same extent
as set forth in Section 10(a)) the Company, all other Holders or any
underwriter, as the case may be, and any of their respective affiliates,
directors, officers and controlling Persons (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act), against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact contained in, or any omission or alleged
omission of a material fact required to be stated in, such Registration
Statement or Prospectus or any amendment or supplement to either of them or
necessary to make the statements therein (in the case of a Prospectus, in the
light of the circumstances then existing) not misleading, but only to the extent
that any such untrue statement or omission is made in reliance on and in
conformity with information with respect to such Holder furnished in writing to
the Company by such Holder or its counsel specifically for inclusion therein.
20
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such indemnified party of any written
notice of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such indemnified party may claim
indemnification or contribution pursuant to this Section 10 (provided that
failure to give such notification shall not affect the obligations of the
indemnifying party pursuant to this Section 10 except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure). In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under these indemnification provisions for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation, unless in the reasonable judgment of any indemnified
party a conflict of interest is likely to exist between such indemnified party
and any other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel or counsels. No indemnifying party, in
defense of any such action, suit, proceeding or investigation, shall, except
with the consent of each indemnified party, consent to the entry of any judgment
or entry into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such action, suit, proceeding or
investigation to the extent the same is covered by the indemnity obligation set
forth in this Section 10. No indemnified party shall consent to entry of any
judgment or enter into any settlement without the consent of each indemnifying
party.
(d) CONTRIBUTION. If the indemnification from the indemnifying party
provided for in this Section 10 is
21
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages,
liabilities and expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 10(c), any legal and other fees and expenses
reasonably incurred by such indemnified party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 10(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Each Holder's obligation to
contribute is several in the proportion that the proceeds of the offering
received by such Holder bears to the total proceeds of the offering, and not
joint.
22
If indemnification is available under this Section 10, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 10(a) or (b), as the case may be, without regard to the
relative fault of said indemnifying parties or indemnified party or any other
equitable consideration provided for in this Section 10(d).
(e) LIMITATION ON LIABILITY AND CONTRIBUTION OF A HOLDER. In no
event shall any Holder of Registrable Securities be liable or required to
contribute any amount under this Section 10 or otherwise in respect of any
untrue or alleged untrue statement or omission or alleged omission for amounts
in excess of the amount by which the total price at which the Registrable
Securities of such Holder were offered to the public exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue statement or omission.
(f) The provisions of this Section 10 shall be in addition to any
liability which any indemnifying party may have to any indemnified party and
shall survive the termination of this Agreement.
11. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Holder of
Registrable Securities may participate in any underwritten offering hereunder
unless such Holder (a) agrees to sell such Holder's securities on the basis
provided in any underwriting arrangements approved by the Company in its
reasonable discretion and (b) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
12. MISCELLANEOUS. (a) REMEDIES. Each Holder of Registrable
Securities in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of at least a
majority in number of the Registrable Securities then outstanding.
23
(c) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
to the parties at the following addresses (or at such other address for any
party as shall be specified by like notice).
(i)(A) if to the Stockholder to:
Houston Industries Incorporated
Five Post Oak Park
4400 Post Oak Parkway
Houston, TX 77027
Facsimile: (713) 629-3065
Attention: Mr. Stephen W. Naeve
with a copy (which shall not constitute
notice) to:
Houston Industries Incorporated
611 Walker, 25th Floor
Houston, TX 77002
Facsimile: (713) 220-5503
Attention: Hugh Rice Kelly, Esq.
with a copy (which shall not constitute
notice) to:
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana
Houston, TX 77002
Facsimile: (713) 229-1522
Attention: Margo S. Scholin, Esq.
(B) if to a Holder of Registrable Securities, other than the
Stockholder, at the address of such Holder as such Holder may designate to
the Company in writing; and
24
(ii) if to the Company to:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 333-3987
Attention: Peter R. Haje, Esq.
with a copy (which shall not constitute
notice) to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: William P. Rogers, Jr., Esq.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, any Holder other than the
Stockholder and any successors thereof; PROVIDED, HOWEVER, that (i) any Holder
(other than the Stockholder) shall have agreed in writing to become a Holder
under this Agreement and to be bound by the terms and conditions hereof and (ii)
subject to clause (i), this Agreement and the provisions of this Agreement that
are for the benefit of the Holders shall not be assignable by any Holder to any
Person that is not so permitted to be a Holder, and any such purported
assignment shall be null and void.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
(f) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
25
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby and that all remaining provisions contained herein shall not be
in any way impaired thereby, it being intended that all of the rights and
privileges of the Stockholder shall be enforceable to the fullest extent
permitted by law.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression and a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter hereof.
There are no restrictions, promises, warranties or undertakings with respect to
the subject matter hereof, other than those set forth or referred to herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
TIME WARNER INC.,
by /s/ SPENCER B. HAYS
Name: Spencer B. Hays
Title: Vice President
HOUSTON INDUSTRIES
INCORPORATED,
by /s/ STEPHEN W. NAEVE
Name: Stephen W. Naeve
Title: Vice President -
Strategic Planning
and Administration
26
<PAGE>
Exhibit 4
I.
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES D CONVERTIBLE
PREFERRED STOCK
OF
TIME WARNER INC.
____________________
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
____________________
TIME WARNER INC., a corporation organized and existing by virtue of
the General Corporation Law of the State of Delaware (as defined below, the
"Corporation"), does hereby certify that the following resolution was duly
adopted by action of the Board of Directors of the Corporation at a meeting duly
held on the 16th day of March, 1995.
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Section 2 of Article IV of the Restated Certificate of Incorporation of the
Corporation, as amended from time to time (the "Certificate of Incorporation"),
and Section 151(g) of the General Corporation Law of the State of Delaware, such
Board of Directors hereby creates, from the authorized shares of Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), of the Corporation
authorized to be issued pursuant to the Certificate of Incorporation, a series
of Preferred Stock, and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of the shares of such
series as follows:
The series of Preferred Stock hereby established shall consist of
11,000,000 shares designated as Series D Convertible Preferred Stock. The
rights, preferences and limitations of such series shall be as follows:
1
1. DEFINITIONS. As used herein, the following terms shall have the
indicated meanings:
1.1 "Accrued Dividend Amount" shall mean the aggregate amount
of accrued and unpaid dividends on a share of Series D Stock to and including
the Conversion Date, except that if the Conversion Date shall occur after a
Record Date and prior to a related Dividend Payment Date, the Accrued Dividend
Amount shall not include any accrued and unpaid dividends for the period from
and after the most recent Dividend Payment Date.
1.2 "Board of Directors" shall mean the Board of Directors of
the Corporation or, with respect to any action to be taken by the Board of
Directors, any committee of the Board of Directors duly authorized to take such
action.
1.3 "Capital Stock" shall mean any and all shares of corporate
stock of a Person (however designated and whether representing rights to vote,
rights to participate in dividends or distributions upon liquidation or
otherwise with respect to such Person, or any division or subsidiary thereof, or
any joint venture, partnership, corporation or other entity).
1.4 "Certificate" shall mean the certificate of the voting
powers, designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, of
Series D Convertible Preferred Stock filed with respect to this resolution with
the Secretary of State of the State of Delaware pursuant to Section 151 of the
General Corporation Law of the State of Delaware.
1.5 "Change of Control" and "Change of Control Date" shall
have the following meanings: "Change of Control" shall mean the occurrence of
one or both of the following events: (a) individuals who would constitute a
majority of the members of the Board of Directors elected at any meeting of
stockholders or by written consent (without regard to any members of the Board
of Directors elected pursuant to the terms of any series of Preferred Stock)
shall be elected to the Board of Directors and the election or the nomination
for election by the Corporation's stockholders of such directors was not
approved by a vote of at least a majority of the directors in office immediately
prior to such election (in which event "Change of Control
2
Date" shall mean the date of such election) or (b) a Person or group of Persons
acting in concert as a partnership, limited partnership, syndicate or other
group within the meaning of Rule 13d-3 under the Exchange Act (the "Acquiring
Person") shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases, share repurchases or redemptions or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 40% or more of the outstanding shares of Common Stock
(in which event "Change of Control Date" shall mean the date of the event
resulting in such 40% ownership).
1.6 "Closing Price" of the Common Stock shall mean the last
reported sale price of the Common Stock (regular way) as shown on the Composite
Tape of the NYSE, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices on the NYSE, or, if the Common Stock is not
listed or admitted to trading on the NYSE, on the principal national securities
exchange on which such stock is listed or admitted to trading, or, if it is not
listed or admitted to trading on any national securities exchange, the last
reported sale price of the Common Stock, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, in either case as
reported by NASDAQ.
1.7 "Common Dividend Deficiency" shall be applicable in the
event that a Conversion Date shall fall after a record date and prior to the
related payment date for a regularly scheduled cash dividend on the Common Stock
(the "Common Dividend Payment Date"), and in such event shall mean the product
of (i) the Conversion Rate, (ii) the amount per share of Common Stock of the
regularly scheduled cash dividend for which the record date has been set but a
payment date has not yet occurred and (ii) a fraction (A) the numerator of which
is the number of calendar days from and excluding the Conversion Date (or in the
event the Conversion Date falls after a Record Date and on or prior to a related
Dividend Payment Date, from and excluding the Dividend Payment Date) to and
including the Common Dividend Payment Date and (B) the denominator of which is
91 (provided that such fraction shall not be greater than one (1)).
1.8 "Common Dividend Excess" shall be applicable in all
circumstances where a Common Dividend Deficiency is not applicable, and in such
event shall mean the product of (i) the Conversion Rate, (ii) the regular
3
quarterly cash dividend per share, if any, paid by the Corporation on the Common
Stock (the "Historical Dividend") on the most recent dividend payment date for
the Common Stock (the "Prior Dividend Payment Date") occurring during the four
months immediately preceding the Conversion Date and (iii) a fraction (A) the
numerator of which is the number of calendar days from and excluding (1) the
Prior Dividend Payment Date to and including (2) the Conversion Date (or in the
event the Conversion Date falls after a Record Date and on or prior to a related
Dividend Payment Date, to and including the Dividend Payment Date) and (B) the
denominator of which is 91 days (provided that in no event shall the fraction be
greater than one (1)).
1.9 "Common Stock" shall mean the class of Common Stock, par
value $1.00 per share, of the Corporation authorized at the date of the
Certificate, or any other class of stock resulting from (x) successive changes
or reclassifications of such Common Stock consisting of changes in par value, or
from par value to no par value, (y) a subdivision or combination or (z) any
other changes for which an adjustment is made under Section 3.6(a), and in any
such case including any shares thereof authorized after the date of the
Certificate, together with any associated rights to purchase other securities of
the Corporation which are at the time represented by the certificates
representing such shares of Common Stock.
1.10 "Conversion Date" shall have the meaning set forth in
Section 3.5 hereof.
1.11 "Conversion Price" at any time shall mean the Liquidation
Value per share divided by the Conversion Rate in effect at such time (rounded
to the nearest one hundredth of a cent).
1.12 "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.
1.13 "Converting Holder" shall have the meaning set forth in
Section 3.5 hereof.
1.14 "Corporation" shall mean Time Warner Inc., a Delaware
corporation, and any of its successors by operation of law, including by merger,
consolidation or sale or conveyance of all or substantially all of its property
and assets.
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1.15 "Current Market Price" of the Common Stock on any date
shall mean the average of the daily Closing Prices per share of the Common Stock
for the five (5) consecutive Trading Days ending on the Trading Day immediately
preceding the applicable record date, conversion date, redemption date or
exchange date referred to in Section 3 or Section 4.
1.16 "Dividend Payment Date" shall have the meaning set forth
in Section 2.1 hereof.
1.17 "Effective Time" shall mean the time of filing (or if
later the time of effectiveness specified therein) of a certificate of merger
with the Secretary of State of the State of Delaware pursuant to Section 1.03 of
the Agreement and Plan of Merger dated as of January 26, 1995, among KBLCOM
Incorporated, Houston Industries Incorporated, the Corporation and TWI Cable
Inc. (formerly known as TW KBLCOM Acquisition Corp.), as the same may be amended
from time to time.
1.18 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.19 "Exchange Price" shall have the meaning set forth in
Section 4.1 hereof.
1.20 "Junior Stock" shall mean the Common Stock, the Series A
Stock and the shares of any other class or series of Capital Stock of the
Corporation which, by the terms of the Certificate of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority granted
in the Certificate of Incorporation, shall fix the relative rights, preferences
and limitations thereof, shall be junior to the Series D Stock in respect of the
right to receive dividends or to participate in any distribution of assets other
than by way of dividends.
1.21 "Liquidation Value" shall have the meaning set forth in
Section 7.1 hereof.
1.22 "NASDAQ" shall mean the National Association of
Securities Dealers Automated Quotation System.
1.23 "Net Dividend Amount" shall have the meaning set forth in
Section 3.1 hereof.
5
1.24 "NYSE" shall mean the New York Stock Exchange, Inc.
1.25 "Parity Stock" shall mean the Series B Stock and the
shares of any other class or series of Capital Stock of the Corporation which,
by the terms of the Certificate of Incorporation or of the instrument by which
the Board of Directors, acting pursuant to authority granted in the Certificate
of Incorporation, shall fix the relative rights, preferences and limitations
thereof, shall, in the event that the stated dividends thereon are not paid in
full, be entitled to share ratably with the Series D Stock in the payment of
dividends, including accumulations, if any, in accordance with the sums which
would be payable on such shares if all dividends were declared and paid in full,
or shall, in the event that the amounts payable thereon on liquidation are not
paid in full, be entitled to share ratably with the Series D Stock in any
distribution of assets other than by way of dividends in accordance with the
sums which would be payable in such distribution if all sums payable were
discharged in full; PROVIDED, HOWEVER, that the term "Parity Stock" shall be
deemed to refer (i) in Section 2.2 hereof, to any stock which is Parity Stock in
respect of dividend rights; (ii) in Section 7 hereof, to any stock which is
Parity Stock in respect of the distribution of assets; and (iii) in Sections 6.2
and 6.3 hereof, to any stock which is Parity Stock in respect of either dividend
rights or the distribution of assets and which, pursuant to the Certificate of
Incorporation or any instrument in which the Board of Directors, acting pursuant
to authority granted in the Certificate of Incorporation, shall so designate, is
entitled to vote with the holders of Series D Stock.
1.26 "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
1.27 "Preferred Stock" shall mean the class of Preferred
Stock, par value $1.00 per share, of the Corporation authorized at the date of
the Certificate, including any shares thereof authorized after the date of the
Certificate.
1.28 "Pro Rata Portion" shall have the meaning set forth in
Section 5.6 hereof.
1.29 "Pro Rata Repurchase" shall mean the purchase of shares
of Common Stock by the Corporation or by
6
any of its subsidiaries, whether for cash or other property or securities of the
Corporation, which purchase is subject to Section 13(e) of the Exchange Act or
is made pursuant to an offer made available to all holders of Common Stock, but
excluding any purchase made in open market transactions that satisfies the
conditions of clause (b) of Rule 10b-18 under the Exchange Act or has been
designed (as reasonably determined by the Board of Directors or a committee
thereof) to prevent such purchase from having a material effect on the trading
market of the Common Stock. The "Effective Date" of a Pro Rata Repurchase shall
mean the applicable expiration date (including all extensions thereof) of any
tender or exchange offer which is a Pro Rata Repurchase or the date of purchase
with respect to any Pro Rata Repurchase which is not a tender or exchange offer.
1.30 "Record Date" shall have the meaning set forth in Section
2.1 hereof.
1.31 "Redemption Price" shall have the meaning set forth in
Section 4.1 hereof.
1.32 "Redemption Rescission Event" shall mean the occurrence
of (a) any general suspension of trading in, or limitation on prices for,
securities on the principal national securities exchange on which shares of
Common Stock are registered and listed for trading (or, if shares of Common
Stock are not registered and listed for trading on any such exchange, in the
over-the-counter market) for more than six-and-one-half (6-1/2) consecutive
trading hours, (b) any decline in either the Dow Jones Industrial Average or the
Standard & Poor's Index of 400 Industrial Companies (or any successor index
published by Dow Jones & Company, Inc. or Standard & Poor's Corporation) by
either (i) an amount in excess of 10%, measured from the close of business on
any Trading Day to the close of business on the next succeeding Trading Day
during the period commencing on the Trading Day preceding the day notice of any
redemption of shares of this Series is given (or, if such notice is given after
the close of business on a Trading Day, commencing on such Trading Day) and
ending at the earlier of (x) the time and date fixed for redemption in such
notice and (y) the time and date at which the Corporation shall have irrevocably
deposited funds with a designated bank or trust company pursuant to Section 4.4
or (ii) an amount in excess of 15% (or, if the time and date fixed for
redemption is more than 15 days following the date on which notice of redemption
is given, 20%), measured from the close of
7
business on the Trading Day preceding the day notice of such redemption is given
(or, if such notice is given after the close of business on a Trading Day, from
such Trading Day) to the close of business on any Trading Day on or prior to the
earlier of the dates specified in clauses (x) and (y) above, (c) a declaration
of a banking moratorium or any suspension of payments in respect of banks by
Federal or state authorities in the United States or (d) the commencement of a
war or armed hostilities or other national or international calamity directly or
indirectly involving the United States which in the reasonable judgment of the
Corporation could have a material adverse effect on the market for the Common
Stock.
1.33 "Rescission Date" shall have the meaning set forth in
Section 4.5 hereof.
1.34 "Senior Stock" shall mean the shares of any class or
series of Capital Stock of the Corporation which, by the terms of the
Certificate of Incorporation or of the instrument by which the Board of
Directors, acting pursuant to authority granted in the Certificate of
Incorporation, shall fix the relative rights, preferences and limitations
thereof, shall be senior to the Series D Stock in respect of the right to
receive dividends or to participate in any distribution of assets other than by
way of dividends.
1.35 "Series A Stock" shall mean the series of Preferred Stock
authorized and designated as Series A Participating Preferred Stock at the date
of the Certificate, including any shares thereof authorized and designated after
the date of the Certificate.
1.36 "Series B Stock" shall mean the series of Preferred Stock
authorized and designated as Series B 6.40% Preferred Stock at the date of the
Certificate, including any shares thereof authorized and designated after the
date of the Certificate.
1.37 "Series D Stock" and "this Series" shall mean the series
of Preferred Stock authorized and designated as the Series D Convertible
Preferred Stock, including any shares thereof authorized and designated after
the date of the Certificate.
1.38 "Surrendered Shares" shall have the meaning set forth in
Section 3.5 hereof.
8
1.39 "Trading Day" shall mean, so long as the Common Stock is
listed or admitted to trading on the NYSE, a day on which the NYSE is open for
the transaction of business, or, if the Common Stock is not listed or admitted
to trading on the NYSE, a day on which the principal national securities
exchange on which the Common Stock is listed is open for the transaction of
business, or, if the Common Stock is not so listed or admitted for trading on
any national securities exchange, a day on which the National Market System of
NASDAQ is open for the transaction of business.
2. CASH DIVIDENDS.
2.1 The holders of the outstanding Series D Stock shall be
entitled to receive quarter-annual dividends, as and when declared by the Board
of Directors out of funds legally available therefor. Each quarter-annual
dividend shall be an amount per share equal to (i) in the case of each Dividend
Payment Date (as defined below) occurring after the Effective Time through the
Dividend Payment Date coinciding with the fourth anniversary of the Effective
Time, the greater of (A) $.9375 per $100 of Liquidation Value of Series D Stock
(which is equivalent to $3.75 per annum), and (B) an amount per $100 of
Liquidation Value of Series D Stock equal to the product of (1) the Conversion
Rate and (2) the aggregate per share amount of regularly scheduled dividends
paid in cash on the Common Stock during the period from but excluding the
immediately preceding Dividend Payment Date to and including such Dividend
Payment Date and (ii) in the case of each Dividend Payment Date occurring
thereafter, an amount per $100 of Liquidation Value of Series D Stock equal to
the product of (1) the Conversion Rate and (2) the aggregate per share amount of
regularly scheduled dividends paid in cash on the Common Stock during the period
from but excluding the immediately preceding Dividend Payment Date to and
including such Dividend Payment Date. All dividends shall be payable in cash on
or about the first day of January, April, July and October in each year,
beginning on the first such date that is more than 15 days after the Effective
Time, as fixed by the Board of Directors, or such other dates as are fixed by
the Board of Directors (provided that the fourth
9
anniversary of the Effective Time shall be a Dividend Payment Date) (each a
"Dividend Payment Date"), to the holders of record of Series D Stock at the
close of business on or about the Trading Day next preceding such first day of
January, April, July or October (or fourth anniversary of the Effective Time) as
the case may be, as fixed by the Board of Directors, or such other dates as are
fixed by the Board of Directors (each a "Record Date"). In the case of dividends
payable in respect of periods prior to the fourth anniversary of the Effective
Time, (i) such dividends shall accrue on each share on a daily basis, whether or
not there are unrestricted funds legally available for the payment of such
dividends and whether or not earned or declared, from and after the day
immediately succeeding the Effective Time and (ii) any such dividends that
become payable for any partial dividend period shall be computed on the basis of
the actual days elapsed in such period. From and after the fourth anniversary of
the Effective Time, dividends on the Series D Stock (determined as to amount as
provided herein) shall accrue to the extent, but only to the extent, that
regularly scheduled cash dividends are declared by the Board of Directors on the
Common Stock with a payment date after the fourth anniversary of the Effective
Time (or, in the case of Series D Stock originally issued after the fourth
anniversary of the Effective Time, after the Dividend Payment Date next
preceding such date of original issuance). All dividends that accrue in
accordance with the foregoing provisions shall be cumulative from and after the
day immediately succeeding the Effective Time (or such date of issuance). The
amount payable to each holder of record on any Dividend Payment Date shall be
rounded to the nearest cent.
2.2 Except as hereinafter provided in this Section 2.2, unless
all dividends on the outstanding shares of Series D Stock and any Parity Stock
that shall have accrued and become payable as of any date shall have been paid,
or declared and funds set apart for payment thereof, no dividend or other
distribution (payable other than in shares of Junior Stock) shall be paid to the
holders of Junior Stock or Parity Stock, and no shares of Series D Stock, Parity
Stock or Junior Stock shall be purchased, redeemed or otherwise acquired by the
Corporation or any of its subsidiaries (except by conversion into or exchange
for Junior Stock), nor shall any monies be paid or made available for a
purchase, redemption or sinking fund for the purchase or redemption of any
Series D Stock, Junior Stock or Parity Stock. When dividends are not paid in
full upon
10
the shares of this Series and any Parity Stock, all dividends declared upon
shares of this Series and all Parity Stock shall be declared pro rata so that
the amount of dividends declared per share on this Series and all such Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series and all such Parity Stock bear
to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series which may
be in arrears.
2.3 In case the Corporation shall at any time distribute
(other than a distribution in liquidation of the Corporation) to the holders of
its shares of Common Stock any assets or property, including debt or equity
securities of the Corporation (other than Common Stock subject to a distribution
or reclassification covered by Section 3.6(a)) or of any other Person (including
common stock of such Person) or cash (but excluding regularly scheduled cash
dividends payable on shares of Common Stock), or in case the Corporation shall
at any time distribute (other than a distribution in liquidation of the
Corporation) to such holders rights, options or warrants to subscribe for or
purchase shares of Common Stock (including shares held in the treasury of the
Corporation), or rights, options or warrants to subscribe for or purchase any
other security or rights, options or warrants to subscribe for or purchase any
assets or property (in each case, whether of the Corporation or otherwise, but
other than any distribution of rights to purchase securities of the Corporation
if the holder of shares of this Series would otherwise be entitled to receive
such rights upon conversion of shares of this Series for Common Stock; PROVIDED,
HOWEVER, that if such rights are subsequently redeemed by the Corporation, such
redemption shall be treated for purposes of this Section 2.3 as a cash dividend
(but not a regularly scheduled cash dividend) on the Common Stock), the
Corporation shall simultaneously distribute such assets, property, securities,
rights, options or warrants pro rata to the holders of Series D Stock on the
record date fixed for determining holders of Common Stock entitled to
participate in such distribution (or, if no such record date shall be
established, the effective time thereof) in an amount equal to the amount that
such holders of Series D Stock would have been entitled to receive had their
shares of Series D Stock been converted into Common Stock immediately prior to
such record date (or effective time). In the event of a distribution to holders
of Series D Stock
11
pursuant to this Section 2.3, such holders shall be entitled to receive
fractional shares or interests only to the extent that holders of Common Stock
are entitled to receive the same. The holders of Series D Stock on the
applicable record date (or effective time) shall be entitled to receive in lieu
of such fractional shares or interests the same consideration as is payable to
holders of Common Stock with respect thereto. If there are no fractional shares
or interests payable to holders of Common Stock, the holders of Series D Stock
on the applicable record date (or effective time) shall receive in lieu of such
fractional shares or interests the fair value thereof as determined by the Board
of Directors.
2.4 If a distribution is made in accordance with the
provisions of Section 2.3, anything in Section 3 to the contrary
notwithstanding, no adjustment pursuant to Section 3 shall be effected by reason
of the distribution of such assets, property, securities, rights, options or
warrants or the subsequent modification, exercise, expiration or termination of
such securities, rights, options or warrants.
2.5 In the event that the holders of Common Stock are entitled
to make any election with respect to the kind or amount of securities or other
property receivable by them in any distribution that is subject to Section 2.3,
the kind and amount of securities or other property that shall be distributable
to the holders of the Series D Stock shall be based on (i) the election, if any,
made by the record holder (as of the date used for determining the holders of
Common Stock entitled to make such election) of the largest number of shares of
Series D Stock in writing to the Corporation on or prior to the last date on
which a holder of Common Stock may make such an election or (ii) if no such
election is timely made, an assumption that such holder failed to exercise any
such rights (provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount of
securities or other property receivable by holders of the Series D Stock shall
be based on the kind or amount of securities or other property receivable by a
plurality of shares held by the nonelecting holders of Common Stock).
Concurrently with the mailing to holders of Common Stock of any document
pursuant to which such holders may make an election of the type referred to in
this Section, the Corporation shall mail a copy thereof to the record holders of
the Series D Stock as of the date used for determining
12
the holders of record of Common Stock entitled to such mailing.
3. CONVERSION RIGHTS.
3.1 Each holder of a share of this Series shall have the right
at any time or as to any share of this Series called for redemption or exchange,
at any time prior to the close of business on the date fixed for redemption or
exchange (unless the Corporation defaults in the payment of the Redemption Price
or fails to exchange the shares of this Series for the applicable number of
shares of Common Stock and any cash portion of the Exchange Price or exercises
its right to rescind such redemption pursuant to Section 4.5, in which case such
right shall not terminate at the close of business on such date), to convert
such share into (i) a number of shares of Common Stock equal to 2.08264 shares
of Common Stock for each share of this Series, subject to adjustment as provided
in this Section 3 (such rate, as so adjusted from time to time, is herein called
the "Conversion Rate") plus (ii) a number of shares of Common Stock equal to
(A)(1) the Accrued Dividend Amount MINUS (2) the Common Dividend
Excess, if applicable, or PLUS (3) the Common Dividend Deficiency, if
applicable (the "Net Dividend Amount"), DIVIDED BY
(B) the Closing Price of the Common Stock on the last Trading Day
prior to the Conversion Date;
PROVIDED, HOWEVER, that in the event that the Net Dividend Amount is a negative
number, the number of shares deliverable upon conversion of a share of Series D
Stock shall be equal to
(I) the number of shares determined pursuant to clause (i) MINUS
(II) a number of shares equal to (x) the absolute value of the Net
Dividend Amount DIVIDED BY (y) the Closing Price of the Common Stock on
the last Trading Day prior to the Conversion Date;
AND PROVIDED FURTHER THAT, in the event that the Net Dividend Amount is a
positive number, the Corporation shall have the right to deliver cash equal to
the Net Dividend Amount or any portion thereof, in which case its obligation to
deliver shares of Common Stock pursuant to clause (ii)
13
shall be reduced by a number of shares equal to (x) the aggregate amount of cash
so delivered DIVIDED BY (y) the Closing Price of the Common Stock on the last
Trading Day prior to the Conversion Date, unless the Corporation shall deliver
cash equal to the entire Net Dividend Amount, in which case its entire
obligation under clause (ii) shall be discharged. The obligations of the
Corporation to issue the Common Stock or make the cash payments provided by this
Section 3.1 shall be absolute whether or not any accrued dividend by which such
issuance or payment is measured has been declared by the Board of Directors and
whether or not the Corporation would have adequate surplus or net profits to pay
such dividend if declared or is otherwise restricted from making such dividend.
3.2 Except as provided in this Section 3, no adjustments in
respect of payments of dividends on shares surrendered for conversion or any
dividend on the Common Stock issued upon conversion shall be made upon the
conversion of any shares of this Series (it being understood that if the
Conversion Date for shares of Series D Stock occurs after a Record Date and on
or prior to a Dividend Payment Date, the holder of record on such Record Date
shall be entitled to receive the dividend payable with respect to such shares on
the related Dividend Payment Date pursuant to Section 2.1 hereof).
3.3 The Corporation may, but shall not be required to, in
connection with any conversion of shares of this Series, issue a fraction of a
share of Common Stock, and if the Corporation shall determine not to issue any
such fraction, the Corporation shall, subject to Section 3.6(c), make a cash
payment (rounded to the nearest cent) equal to such fraction multiplied by the
Closing Price of the Common Stock on the last Trading Day prior to the
Conversion Date.
3.4 Any holder of shares of this Series electing to convert
such shares into Common Stock shall surrender the certificate or certificates
for such shares at the office of the transfer agent or agents therefor (or at
such other place as the Corporation may designate by notice to the holders of
shares of this Series) during regular business hours, duly endorsed to the
Corporation or in blank, or accompanied by instruments of transfer to the
Corporation or in blank, or in form satisfactory to the Corporation, and shall
give written notice to the Corporation at such office that such holder elects to
convert such shares of this Series. The Corporation shall, as soon as
14
practicable (subject to Section 3.6(d)) after such deposit of certificates for
shares of this Series, accompanied by the written notice above prescribed, issue
and deliver at such office to the holder for whose account such shares were
surrendered, or to his nominee, certificates representing the number of shares
of Common Stock and the cash, if any, to which such holder is entitled upon such
conversion.
3.5 Conversion shall be deemed to have been made as of the
date (the "Conversion Date") that certificates for the shares of this Series to
be converted, and the written notice prescribed in Section 3.4 are received by
the transfer agent or agents for this Series; and the Person entitled to receive
the Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such Common Stock on such date. Notwithstanding anything
to the contrary contained herein, in the event the Corporation shall have
rescinded a redemption of shares of this Series pursuant to Section 4.5, any
holder of shares of this Series that shall have surrendered shares of this
Series for conversion following the day on which notice of the subsequently
rescinded redemption shall have been given but prior to the close of business on
the later of (a) the Trading Day next succeeding the date on which public
announcement of the rescission of such redemption shall have been made and (b)
the Trading Day on which the notice of rescission required by Section 4.5 is
deemed given pursuant to Section 8.2 (a "Converting Holder"), may rescind the
conversion of such shares surrendered for conversion by (i) properly completing
a form prescribed by the Corporation and mailed to holders of shares of this
Series (including Converting Holders) with the Corporation's notice of
rescission, which form shall provide for the certification by any Converting
Holder rescinding a conversion on behalf of any beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of shares of this Series that the
beneficial ownership (within the meaning of such Rule) of such shares shall not
have changed from the date on which such shares were surrendered for conversion
to the date of such certification and (ii) delivering such form to the
Corporation no later than the close of business on that date which is ten (10)
Trading Days following the date on which the Corporation's notice of rescission
is deemed given pursuant to Section 8.2. The delivery of such form by a
Converting Holder shall be accompanied by (x) any certificates representing
shares of Common Stock issued to such Converting Holder upon a conversion of
shares of this Series that shall be rescinded
15
by the proper delivery of such form (the "Surrendered Shares"), (y) any
securities, evidences of indebtedness or assets (other than cash) distributed by
the Corporation to such Converting Holder by reason of such Converting Holder's
being a record holder of Surrendered Shares and (z) payment in New York Clearing
House funds or other funds acceptable to the Corporation of an amount equal to
the sum of (I) any cash such Converting Holder may have received in lieu of the
issuance of fractional shares upon conversion and (II) any cash paid or payable
by the Corporation to such Converting Holder by reason of such Converting Holder
being a record holder of Surrendered Shares. Upon receipt by the Corporation of
any such form properly completed by a Converting Holder and any certificates,
securities, evidences of indebtedness, assets or cash payments required to be
returned or made by such Converting Holder to the Corporation as set forth
above, the Corporation shall instruct the transfer agent or agents for shares of
Common Stock and shares of this Series to cancel any certificates representing
Surrendered Shares (which Surrendered Shares shall be deposited in the treasury
of the Corporation) and reissue certificates representing shares of this Series
to such Converting Holder (which shares of this Series shall be deemed to have
been outstanding at all times during the period following their surrender for
conversion). The Corporation shall, as promptly as practicable, and in no event
more than five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of indebtedness,
assets or cash payments required to be so returned or made, pay to the
Converting Holder or as otherwise directed by such Converting Holder any
dividend or other payment made on such shares during the period from the time
such shares shall have been surrendered for conversion to the rescission of such
conversion. All questions as to the validity, form, eligibility (including time
or receipt) and acceptance of any form submitted to the Corporation to rescind
the conversion of shares of this Series, including questions as to the proper
completion or execution of any such form or any certification contained therein,
shall be resolved by the Corporation, whose determination shall be final and
binding. The Corporation shall not be required to deliver certificates for
shares of Common Stock while the stock transfer books for such stock or for this
Series are duly closed for any purpose or during any period commencing at a
Redemption Rescission Event and ending at either (i) the time and date at which
the Corporation's right of rescission shall expire pursuant to Section 4.5 if
the Corporation
16
shall not have exercised such right or (ii) the close of business on that day
which is ten (10) Trading Days following the date on which notice of rescission
pursuant to Section 4.4 is deemed given pursuant to Section 8.2 if the
Corporation shall have exercised such right of rescission, but certificates for
shares of Common Stock shall be delivered as soon as practicable after the
opening of such books or the expiration of such period.
3.6 The Conversion Rate shall be adjusted from time to time as
follows for events occurring after January 26, 1995:
(a) In case the Corporation shall, at any time or from time to
time while any of the Series D Stock is outstanding, (i) pay a dividend in
shares of its Common Stock, (ii) combine its outstanding shares of Common
Stock into a smaller number of shares, (iii) subdivide its outstanding
shares of Common Stock or (iv) reclassify (other than by way of a merger
that is subject to Section 3.7) its shares of Common Stock, then the
Conversion Rate in effect immediately before such action shall be adjusted
so that immediately following such event the holders of the Series D Stock
shall be entitled to receive upon conversion or exchange thereof the kind
and amount of shares of Capital Stock of the Corporation which they would
have owned or been entitled to receive upon or by reason of such event if
such shares of Series D Stock had been converted or exchanged immediately
before the record date (or, if no record date, the effective date) for
such event (it being understood that any distribution of cash or of
Capital Stock (other than Common Stock), including any distribution of
Capital Stock that shall accompany a reclassification of the Common Stock,
shall be subject to Section 2.3 rather than this Section 3.6(a)). An
adjustment made pursuant to this Section 3.6(a) shall become effective
retroactively immediately after the record date in the case of a dividend
or distribution and shall become effective retroactively immediately after
the effective date in the case of a subdivision, combination or
reclassification. For the purposes of this Section 3.6(a), in the event
that the holders of Common Stock are entitled to make any election with
respect to the kind or amount of securities receivable by them in any
transaction that is subject to this Section 3.6(a) (including any election
that would result in all or a
17
portion of the transaction becoming subject to Section 2.3), the kind and
amount of securities that shall be distributable to the holders of the
Series D Stock shall be based on (i) the election, if any, made by the
record holder (as of the date used for determining the holders of Common
Stock entitled to make such election) of the largest number of shares of
Series D Stock in writing to the Corporation on or prior to the last date
on which a holder of Common Stock may make such an election or (ii) if no
such election is timely made, an assumption that such holder failed to
exercise any such rights (provided that if the kind or amount of
securities is not the same for each nonelecting holder, then the kind and
amount of securities receivable shall be based on the kind or amount of
securities receivable by a plurality of nonelecting holders of Common
Stock). Concurrently with the mailing to holders of Common Stock of any
document pursuant to which such holders may make an election of the type
referred to in this Section, the Corporation shall mail a copy thereof to
the record holders of the Series D Stock as of the date used for
determining the holders of record of Common Stock entitled to such
mailing.
(b) In case a Change of Control shall occur, the Conversion
Rate in effect immediately prior to the Change of Control Date shall be
increased (but not decreased) by multiplying such rate by a fraction as
follows: (i) in the case of a Change of Control specified in Section
1.5(a), a fraction in which the numerator is the Conversion Price prior to
adjustment pursuant hereto and the denominator is the Current Market Price
of the Common Stock at the Change of Control Date, (ii) in the case of a
Change of Control specified in Section 1.5(b), the greater of the
following fractions: (x) a fraction the numerator of which is the highest
price per share of Common Stock paid by the Acquiring Person in connection
with the transaction giving rise to the Change of Control or in any
transaction within six months prior to or after the Change of Control Date
(the "Highest Price"), and the denominator of which is the Current Market
Price of the Common Stock as of the date (but not earlier than six months
prior to the Change of Control Date) on which the first public
announcement is made by the Acquiring Person that it intends to acquire or
that it has acquired 40% or more of the outstanding shares of
18
Common Stock (the "Announcement Date") or (y) a fraction the numerator of
which is the Conversion Price prior to adjustment pursuant hereto and the
denominator of which is the Current Market Price of the Common Stock on
the Announcement Date and (iii) in the case where there co-exists a Change
of Control specified in both Section 1.5(a) and Section 1.5(b), the
greatest of the fractions determined pursuant to clauses (i) and (ii).
Such adjustment shall become effective immediately after the Change of
Control Date and shall be made, in the case of clauses (ii) and (iii)
above, successively for six months thereafter in the event and at the time
of any increase in the Highest Price after the Change of Control Date;
PROVIDED, HOWEVER, that no such successive adjustment shall be made with
respect to the Conversion Rate of the shares of this Series in respect of
any event occurring after the Conversion Date.
(c) The Corporation shall be entitled to make such additional
adjustments in the Conversion Rate, in addition to those required by
subsections 3.6(a) and 3.6(b), as shall be necessary in order that any
dividend or distribution in Common Stock or any subdivision,
reclassification or combination of shares of Common Stock referred to
above, shall not be taxable to the holders of Common Stock for United
States Federal income tax purposes so long as such additional adjustments
pursuant to this Section 3.6(c) do not decrease the Conversion Rate.
(d) In any case in which this Section 3.6 shall require that
any adjustment be made effective as of or retroactively immediately
following a record date, the Corporation may elect to defer (but only for
five (5) Trading Days following the occurrence of the event which
necessitates the filing of the statement referred to in Section 3.6(f))
issuing to the holder of any shares of this Series converted after such
record date (i) the shares of Common Stock and other Capital Stock of the
Corporation issuable upon such conversion over and above (ii) the shares
of Common Stock and other Capital Stock of the Corporation issuable upon
such conversion on the basis of the Conversion Rate prior to adjustment;
PROVIDED, HOWEVER, that the Corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's
19
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(e) All calculations under this Section 3 shall be made to the
nearest cent, one-hundredth of a share or, in the case of the Conversion
Rate, one hundred-thousandth. Notwithstanding any other provision of this
Section 3, the Corporation shall not be required to make any adjustment of
the Conversion Rate unless such adjustment would require an increase or
decrease of at least 1.00000% of such Conversion Rate. Any lesser
adjustment shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall amount to an increase
or decrease of at least 1.00000% in such rate. Any adjustments under this
Section 3 shall be made successively whenever an event requiring such an
adjustment occurs.
(f) Whenever an adjustment in the Conversion Rate is required,
the Corporation shall forthwith place on file with its transfer agent or
agents for this Series a statement signed by a duly authorized officer of
the Corporation, stating the adjusted Conversion Rate determined as
provided herein. Such statements shall set forth in reasonable detail such
facts as shall be necessary to show the reason for and the manner of
computing such adjustment. Promptly after the adjustment of the Conversion
Rate, the Corporation shall mail a notice thereof to each holder of shares
of this Series.
(g) In the event that at any time as a result of an adjustment
made pursuant to this Section 3, the holder of any share of this Series
thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Corporation other than shares of Common
Stock, the conversion rate of such other shares so receivable upon
conversion of any such share of this Series shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subparagraphs (a) through (f) and (h) of this Section 3.6, and the
provisions of Section 3.1 through 3.5 and 3.7 through 3.10 shall apply on
like or similar terms to any such other shares and the determination of
20
the Board of Directors as to any such adjustment shall be conclusive.
(h) No adjustment shall be made pursuant to this Section 3.6
(i) if the effect thereof would be to reduce the Conversion Price below
the par value of the Common Stock or (ii) subject to Section 3.6(c)
hereof, with respect to any share of Series D Stock that is converted,
prior to the time such adjustment otherwise would be made.
3.7 In case after January 26, 1995 (a) any consolidation or
merger to which the Corporation is a party, other than a merger or consolidation
in which the Corporation is the surviving or continuing corporation and which
does not result in any reclassification of, or change (other than a change in
par value or from par value to no par value or from no par value to par value,
or as a result of a subdivision or combination) in, outstanding shares of Common
Stock or (b) any sale or conveyance of all or substantially all of the property
and assets of the Corporation, then lawful provision shall be made as part of
the terms of such transaction whereby the holder of each share of Series D Stock
shall have the right thereafter, during the period such share shall be
convertible or exchangeable, to convert such share into or have such share
exchanged for the kind and amount of shares of stock or other securities and
property receivable upon such consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which such shares of this
Series could have been converted or exchanged immediately prior to such
consolidation, merger, sale or conveyance, subject to adjustment which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3 (based on (i) the election, if any, made in writing to the
Corporation by the record holder (as of the date used for determining holders of
Common Stock entitled to make such election) of the largest number of shares of
Series D Stock on or prior to the last date on which a holder of Common Stock
may make an election regarding the kind or amount of securities or other
property receivable by such holder in such transaction or (ii) if no such
election is timely made, an assumption that such holder failed to exercise any
such rights (provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount of
securities or other property receivable shall be based upon the kind and amount
of securities or other property
21
receivable by a plurality of the nonelecting holders of Common Stock)). In the
event that any of the transactions referred to in clauses (a) or (b) involves
the distribution of cash (or property other than equity securities) to a holder
of Common Stock, lawful provision shall be made as part of the terms of the
transaction whereby the holder of each share of Series D Stock on the record
date fixed for determining holders of Common Stock entitled to receive such cash
or property (or if no such record date is established, the effective date of
such transaction) shall be entitled to receive the amount of cash or property
that such holder would have been entitled to receive had such holder converted
his shares of Series D Stock into Common Stock immediately prior to such record
date (or effective date) (based on the election or nonelection made by the
record holder of the largest number of shares of Series D Stock, as provided
above). Concurrently with the mailing to holders of Common Stock of any document
pursuant to which such holders may make an election regarding the kind or amount
of securities or other property that will be receivable by such holder in any
transaction described in clause (a) or (b) of the first sentence of this Section
3.7, the Corporation shall mail a copy thereof to the holders of the Series D
Stock as of the date used for determining the holders of record of Common Stock
entitled to such mailing. The Corporation shall not enter into any of the
transactions referred to in clauses (a) or (b) of the preceding sentence unless
effective provision shall be made in the certificate or articles of
incorporation or other constituent documents of the Corporation or the entity
surviving the consolidation or merger, if other than the Corporation, or the
entity acquiring the Corporation's assets, as the case may be, so as to give
effect to the provisions set forth in this Section 3.7. The provisions of this
Section 3.7 shall apply similarly to successive consolidations, mergers, sales
or conveyances. For purposes of this Section 3.7 the term "Corporation" shall
refer to the Corporation (as defined in Section 1.14) as constituted immediately
prior to the merger, consolidation or other transaction referred to in this
Section.
3.8 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of the shares of this Series,
such number of its duly authorized shares of Common Stock (or, if applicable,
any other shares of Capital Stock of the Corporation) as shall from time to time
be sufficient to
22
effect the conversion of all outstanding shares of this Series into such Common
Stock (or such other shares of Capital Stock) at any time (assuming that, at the
time of the computation of such number of shares, all such Common Stock (or such
other shares of Capital Stock) would be held by a single holder); PROVIDED,
HOWEVER, that nothing contained herein shall preclude the Corporation from
satisfying its obligations in respect of the conversion of the shares by
delivery of purchased shares of Common Stock (or such other shares of Capital
Stock) that are held in the treasury of the Corporation. All shares of Common
Stock (or such other shares of Capital Stock of the Corporation) which shall be
deliverable upon conversion of the shares of this Series shall be duly and
validly issued, fully paid and nonassessable. For purposes of this Section 3,
any shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Corporation.
3.9 If any shares of Common Stock or other shares of Capital
Stock of the Corporation which would be issuable upon conversion of shares of
this Series hereunder require registration with or approval of any governmental
authority before such shares may be issued upon conversion, the Corporation will
in good faith and as expeditiously as possible cause such shares to be duly
registered or approved, as the case may be. The Corporation will use
commercially reasonable efforts to list the shares of (or depositary shares
representing fractional interests in) Common Stock or other shares of Capital
Stock of the Corporation required to be delivered upon conversion of shares of
this Series prior to such delivery upon the principal national securities
exchange upon which the outstanding Common Stock or such other shares of Capital
Stock is listed at the time of such delivery.
3.10 The Corporation shall pay any and all issue or other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock or other shares of Capital Stock of the Corporation on conversion
of shares of this Series pursuant hereto. The Corporation shall not, however, be
required to pay any tax which is payable in respect of any transfer involved in
the issue or delivery of Common Stock or such other shares of Capital Stock in a
name other than that in which the shares of this Series so converted were
registered, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Corporation the amount of such tax,
or
23
has established, to the satisfaction of the Corporation, that such tax has been
paid.
3.11 In case of (i) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, (ii) any Pro Rata Repurchase or
(iii) any action triggering an adjustment to the Conversion Rate pursuant to
this Section 3, then, in each case, the Corporation shall cause to be filed with
the transfer agent or agents for the Series D Stock, and shall cause to be
mailed, first-class postage prepaid, to the holders of record of the outstanding
shares of Series D Stock, at least fifteen (15) days prior to the applicable
record date for any such transaction (or if no record date will be established,
the effective date thereof), a notice stating (x) the date, if any, on which a
record is to be taken for the purpose of any such transaction (or, if no record
date will be established, the date as of which holders of record of Common Stock
entitled to participate in such transaction are determined), and (y) the
expected effective date thereof. Failure to give such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 3.11.
4. REDEMPTION OR EXCHANGE.
4.1 (a) The Corporation may, at its sole option, subject to
Section 2.2 hereof, from time to time on and after the fifth anniversary of the
Effective Time in the case of clause (i) or (iii) of Section 4.1(b), and on and
after the fourth anniversary, in the case of clause (ii) of Section 4.1(b),
redeem, out of funds legally available therefor, or, as provided below, exchange
shares of Common Stock for, all (or in the case of Section 4.1(b)(i), any part)
of the outstanding shares of this Series. The redemption price for each share of
this Series called for redemption pursuant to clause (i) of Section 4.1(b) shall
be the Liquidation Value together with an amount equal to the accrued and unpaid
dividends to the date fixed for redemption (hereinafter collectively referred to
as the "Redemption Price"). The exchange price for each share of this Series
called for exchange pursuant to clause (ii) of Section 4.1(b) shall be a number
of shares of Common Stock equal to the Conversion Rate, together with, at the
option of the Corporation, either (x) cash or (y) a number of shares of Common
Stock, valued at the Closing Price on the Trading Day immediately preceding the
date fixed for exchange, equal, in either case, to the aggregate amount of
24
accrued and unpaid dividends on the Series D Stock to the date fixed for
exchange (provided that any dividends which are in arrears must be paid in cash)
(hereinafter collectively referred to as the "Exchange Price").
(b) On the date fixed for redemption or exchange the Corporation
shall, at its option, effect either
(i) a redemption of the shares of this Series to be redeemed
by way of payment, out of funds legally available therefor, of cash equal
to the aggregate Redemption Price for the shares of this Series then being
redeemed;
(ii) an exchange of the shares of this Series for the Exchange
Price in shares of Common Stock (PROVIDED that the Corporation (A) shall
be entitled to deliver cash (1) in lieu of any fractional share of Common
Stock (determined in a manner consistent with Section 3.3) and (2) equal
to accrued and unpaid dividends to the date fixed for exchange in lieu of
shares of Common Stock and (B) shall be required to deliver cash in
respect of any dividends that are in arrears); or
(iii) any combination thereof with respect to each share of
this Series called for redemption or exchange.
(c) Notwithstanding clauses (ii) and (iii) of Section 4.1(b), the
Corporation shall be entitled to effect an exchange of shares of Series D Stock
for Common Stock or other shares of Capital Stock of the Corporation only to the
extent that duly and validly issued, fully paid and nonassessable shares of
Common Stock (or such other shares of Capital Stock) shall be available for
issuance (including delivery of previously issued shares of Common Stock held in
the Corporation's treasury on the date fixed for exchange). The Corporation
shall comply with Section 3.9 and 3.10 with respect to shares of Common Stock or
other shares of Capital Stock of the Corporation which would be issuable upon
exchange of shares of this Series. Certificates for shares of Common Stock
issued in exchange for surrendered shares of this Series pursuant to this
Section 4.1 shall be made available by the Corporation not later than the fifth
Trading Day following the date for exchange.
25
4.2 In the event that fewer than all the outstanding shares of
this Series are to be redeemed pursuant to Section 4.1(b)(i), the number of
shares to be redeemed from each holder of shares of this Series shall be
determined by the Corporation by lot or pro rata or by any other method as may
be determined by the Board of Directors in its sole discretion to be equitable,
and the certificate of the Corporation's Secretary or an Assistant Secretary
filed with the transfer agent or transfer agents for this Series in respect of
such determination by the Board of Directors shall be conclusive.
4.3 In the event the Corporation shall redeem or exchange
shares of this Series pursuant to Section 4.1, notice of such redemption or
exchange shall be given by first class mail, postage prepaid, mailed not less
than fifteen (15) nor more than sixty (60) days prior to the date fixed for
redemption or exchange, as the case may be, to each record holder of the shares
to be redeemed or exchanged, at such holder's address as the same appears on the
books of the Corporation. Each such notice shall state: (i) whether the shares
of this Series are to be redeemed or exchanged; (ii) the time and date as of
which the redemption or exchange shall occur; (iii) the total number of shares
of this Series to be redeemed or exchanged and, if fewer than all the shares
held by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iv) the Redemption Price or the Exchange Price, as the case
may be; (v) that shares of this Series called for redemption or exchange may be
converted at any time prior to the time and date fixed for redemption or
exchange (unless the Corporation shall, in the case of a redemption, default in
payment of the Redemption Price or, in the case of an exchange, fail to exchange
the shares of this Series for the applicable number of shares of Common Stock
and any cash portion of the Exchange Price or shall exercise its right to
rescind such redemption pursuant to Section 4.5, in which case such right of
conversion shall not terminate at such time and date); (vi) the applicable
Conversion Price and Conversion Rate; (vii) the place or places where
certificates for such shares are to be surrendered for payment of the Redemption
Price, in the case of redemption, or for delivery of certificates representing
the shares of Common Stock and the payment of any cash portion of the Exchange
Price, in the case of exchange; and (viii) that dividends on the shares of this
Series to be redeemed or exchanged will cease to accrue on such redemption or
exchange date.
26
4.4 If notice of redemption or exchange shall have been given
by the Corporation as provided in Section 4.3, dividends on the shares of this
Series so called for redemption or exchange shall cease to accrue, such shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation with respect to shares so called for
redemption or exchange (except (i) in the case of redemption, the right to
receive from the Corporation the Redemption Price without interest and in the
case of exchange, the right to receive from the Corporation the Exchange Price
without interest and (ii) the right to convert such shares in accordance with
Section 3) shall cease (including any right to receive dividends otherwise
payable on any Dividend Payment Date that would have occurred after the time and
date of redemption or exchange) either (i) in the case of a redemption or
exchange pursuant to Section 4.1, from and after the time and date fixed in the
notice of redemption or exchange as the time and date of redemption or exchange
(unless the Corporation shall (x) in the case of a redemption, default in the
payment of the Redemption Price, (y) in the case of an exchange, fail to
exchange the applicable number of shares of Common Stock and any cash portion of
the Exchange Price or (z) exercise its right to rescind such redemption pursuant
to Section 4.5, in which case such rights shall not terminate at such time and
date) or (ii) if the Corporation shall so elect and state in the notice of
redemption or exchange, from and after the time and date (which date shall be
the date fixed for redemption or exchange or an earlier date not less than
fifteen (15) days after the date of mailing of the redemption or exchange
notice) on which the Corporation shall irrevocably deposit with a designated
bank or trust company doing business in the Borough of Manhattan, City and State
of New York, as paying agent, money sufficient to pay at the office of such
paying agent, on the redemption date, the Redemption Price, in the case of
redemption, or certificates representing the shares of Common Stock to be so
exchanged and any cash portion of the Exchange Price, in the case of an
exchange. Any money or certificates so deposited with any such paying agent
which shall not be required for such redemption or exchange because of the
exercise of any right of conversion or otherwise shall be returned to the
Corporation forthwith. Upon surrender (in accordance with the notice of
redemption or exchange) of the certificate or certificates for any shares of
this Series to be so redeemed or exchanged (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice of redemption or
27
exchange shall so state), such shares shall be redeemed or exchanged by the
Corporation at the Redemption Price or the Exchange Price, as applicable, as set
forth in Section 4.1 (unless the Corporation shall have exercised its right to
rescind such redemption pursuant to Section 4.5). In case fewer than all the
shares represented by any such certificate are to be redeemed, a new certificate
shall be issued representing the unredeemed shares (or fractions thereof as
provided in Section 8.4), without cost to the holder thereof, together with the
amount of cash, if any, in lieu of fractional shares other than those issuable
in accordance with Section 8.4. Subject to applicable escheat laws, any moneys
so set aside by the Corporation in the case of redemption and unclaimed at the
end of one year from the redemption date shall revert to the general funds of
the Corporation, after which reversion the holders of such shares so called for
redemption or exchange shall look only to the general funds of the Corporation
for the payment of the Redemption Price or the Exchange Price, as applicable,
without interest. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.
4.5 In the event that a Redemption Rescission Event shall
occur following any day on which a notice of redemption shall have been given
pursuant to Section 4.3 but at or prior to the earlier of (a) the time and date
fixed for redemption as set forth in such notice of redemption and (b) the time
and date at which the Corporation shall have irrevocably deposited funds or
certificates with a designated bank or trust company pursuant to Section 4.4,
the Corporation may, at its sole option, at any time prior to the earliest of
(i) the close of business on that day which is two (2) Trading Days following
such Redemption Rescission Event, (ii) the time and date fixed for redemption as
set forth in such notice and (iii) the time and date on which the Corporation
shall have irrevocably deposited such funds with a designated bank or trust
company, rescind the redemption under Section 4.1(b)(i) to which such notice of
redemption shall have related by making a public announcement of such rescission
(the date on which such public announcement shall have been made being
hereinafter referred to as the "Rescission Date"). The Corporation shall be
deemed to have made such announcement if it shall issue a release to the Dow
Jones News Service, Reuters Information Services or any successor news wire
service. From and after the making of such announcement, the Corporation shall
have no obligation
28
to redeem shares of this Series called for redemption pursuant to such notice of
redemption or to pay the redemption price therefor and all rights of holders of
shares of this Series shall be restored as if such notice of redemption had not
been given. The Corporation shall give notice of any such rescission by one of
the means specified in Section 8.2 as promptly as practicable, but in no event
later than the close of business on that date which is five (5) Trading Days
following the Rescission Date to each record holder of shares of this Series at
the close of business on the Rescission Date and to any other Person or entity
that was a record holder of shares of this Series and that shall have
surrendered shares of this Series for conversion following the giving of notice
of the subsequently rescinded redemption. Each notice of rescission shall (w)
state that the redemption described in the notice of redemption has been
rescinded, (x) state that any Converting Holder shall be entitled to rescind the
conversion of shares of this Series surrendered for conversion following the day
on which notice of redemption was given but prior to the close of business on
the later of (1) the Trading Day next succeeding the date on which public
announcement of the rescission of such redemption shall have been made and (2)
the Trading Day on which the Corporation's notice of rescission is deemed given
pursuant to Section 8.2, (y) be accompanied by a form prescribed by the
Corporation to be used by any Converting Holder rescinding the conversion of
shares so surrendered for conversion (and instructions for the completion and
delivery of such form, including instructions with respect to payments that may
be required to accompany such delivery shall be in accordance with Section 3.5)
and (z) state that such form must be properly completed and received by the
Corporation no later than the close of business on a date that shall be ten (10)
Trading Days following the date of the mailing of such notice of rescission is
deemed given pursuant to Section 8.2.
4.6 The shares of this Series shall not be subject to the
provisions of Section 5 of Article IV of the Certificate of Incorporation.
5. PRO RATA REPURCHASE.
5.1 Upon a Pro Rata Repurchase, each holder of shares of this
Series shall have the right to require that the Corporation repurchase, out of
funds legally available therefor, a Pro Rata Portion (as defined below) of
29
the shares of such holder, or any lesser number requested by the holder, at a
price per share equal to the highest price per share of Common Stock paid in the
Pro Rata Repurchase multiplied by the Conversion Rate then in effect plus an
amount equal to the accrued but unpaid dividends on such shares to the date of
repurchase.
5.2 At any time prior to or within thirty (30) days following
any Pro Rata Repurchase, the Corporation shall mail a notice to each holder of
shares of this Series stating:
(a) that a Pro Rata Repurchase will occur or has occurred and that
such holder will have (upon such Pro Rata Repurchase) or has the right to
require the Corporation to repurchase such holder's shares in an amount
not in excess of the Pro Rata Portion at a repurchase price in cash
determined as set forth above plus an amount equal to accrued and unpaid
dividends, if any, to the date of repurchase;
(b) the repurchase date for the Series D Stock (which shall be no
earlier than fifteen (15) days nor later than sixty (60) days from the
date such notice is mailed); and
(c) the instructions determined by the Corporation, consistent with
this Section, that a holder must follow in order to have its shares
repurchased.
5.3 Holders electing to have any shares repurchased will be
required to surrender such shares, with an appropriate form duly completed, to
the Corporation at the address specified in the notice at least five (5) days
prior to the repurchase date. Holders will be entitled to withdraw their
election if the Corporation receives, not later than three (3) days prior to the
repurchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the holder, the certificate numbers of the shares delivered
for purchase by the holder and a statement that such holder is withdrawing his
election to have such shares repurchased. Holders will have such additional
withdrawal and other rights as may be required pursuant to applicable law.
5.4 On the repurchase date, the Corporation shall (i) pay the
repurchase price plus an amount equal to
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accrued and unpaid dividends as provided in Section 5.1, if any, to the holders
entitled thereto and (ii) issue to such holders any equity securities of the
Corporation (other than Common Stock) that would at the time be issuable upon
conversion of the shares of Series D Stock which are then being repurchased
pursuant hereto.
5.5 The Board of Directors will not approve any tender or
exchange offer by the Corporation or a third party for shares of Common Stock or
recommend that the holders of Common Stock accept any offer or tender their
shares into any offer unless a Pro Rata Portion of the shares of this Series of
all holders are entitled to be tendered into such offer at a price not less than
the price per share for shares of Common Stock pursuant to such offer multiplied
by the Conversion Rate then in effect plus an amount equal to accrued but unpaid
dividends on such shares to the date of payment for such shares in such tender
or exchange offer.
5.6 For purposes hereof, "Pro Rata Portion" with respect to
the shares of this Series held by any holder shall mean all the shares of this
Series then owned by such holder times a fraction, the numerator of which is the
number of outstanding shares of Common Stock (a) purchased in the applicable Pro
Rata Repurchase or (b) for which a tender or exchange offer referred to in
Section 5.5 is made, as the case may be, and the denominator of which is the
number of outstanding shares of Common Stock immediately prior to such Pro Rata
Repurchase or the commencement of such tender or exchange offer, as the case may
be.
6. VOTING. The shares of this Series shall have no voting rights
except as required by law or as set forth below.
6.1 Each share of this Series shall be entitled to vote
together with holders of the shares of Common Stock (and any other class or
series which may similarly be entitled to vote with the shares of Common Stock)
as a single class upon all matters upon which holders of Common Stock are
entitled to vote. In any such vote, the holders of this Series shall be entitled
to two (2) votes per $100 of Liquidation Value of Series D Stock, subject to
adjustment at the same time and in the same manner as each adjustment of the
Conversion Rate pursuant to Section 3, so that the holders of this Series shall
be entitled following such adjustment to the number of votes equal to the number
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of votes such holders were entitled to under this Section 6.1 immediately prior
to such adjustment multiplied by a fraction (x) the numerator of which is the
Conversion Rate as adjusted pursuant to Section 3 and (y) the denominator of
which is the Conversion Rate immediately prior to such adjustment.
6.2(a) So long as any shares of this Series remain
outstanding, unless a greater percentage shall then be required by law, the
Corporation shall not, without the affirmative vote at a meeting or the written
consent with or without a meeting of the holders of shares of this Series
representing at least 66-2/3% of the aggregate voting power of shares of this
Series then outstanding (i) authorize any Senior Stock or reclassify (by merger,
consolidation or otherwise) any Junior Stock or Parity Stock as Senior Stock,
(ii) merge into or consolidate with any Person where the surviving or continuing
corporation will have any authorized Senior Stock (other than capital stock
corresponding to shares of Senior Stock of the Corporation existing immediately
before such merger or consolidation) or (iii) amend, alter or repeal (by
operation of law or otherwise) any of the provisions of the Certificate or the
Certificate of Incorporation, so as in any such case to adversely affect the
voting powers, designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions of the
shares of this Series.
(b) No consent of holders of shares of this Series shall be
required for (i) the creation of any indebtedness of any kind of the
Corporation, (ii) the authorization or issuance of any class of Junior Stock or
Parity Stock, (iii) the authorization, designation or issuance of additional
shares of Series D Stock or (iv) subject to Section 6.2(a), the authorization or
issuance of any other shares of Preferred Stock.
6.3(a) If and whenever at any time or times dividends payable
on shares of this Series shall have been in arrears and unpaid in an aggregate
amount equal to or exceeding the amount of dividends payable thereon for six
quarterly dividend periods, then the number of directors constituting the Board
of Directors shall be increased by two and the holders of shares of this Series,
together with the holders of any shares of any Parity Stock as to which in each
case dividends are in arrears and unpaid in an aggregate amount equal to or
exceeding the amount of
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dividends payable thereon for six quarterly dividend periods, shall have the
exclusive right, voting separately as a class with such other series, to elect
two directors of the Corporation.
(b) Such voting right may be exercised initially either by
written consent or at a special meeting of the holders of the Preferred Stock
having such voting right, called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and
thereafter at each such annual meeting until such time as all dividends in
arrears on the shares of this Series shall have been paid in full and all
dividends payable on the shares of this Series on four subsequent consecutive
Dividend Payment Dates shall have been paid in full on such dates or funds shall
have been set aside for the payment thereof, at which time such voting right and
the term of the directors elected pursuant to Section 6.3(a) shall terminate.
(c) At any time when such voting right shall have vested in
holders of shares of such series of Preferred Stock described in Section 6.3(a),
and if such right shall not already have been exercised by written consent, a
proper officer of the Corporation may call, and, upon the written request,
addressed to the Secretary of the Corporation, of the record holders of shares
representing ten percent (10%) of the voting power of the shares then
outstanding of such Preferred Stock having such voting right, shall call, a
special meeting of the holders of such Preferred Stock having such voting right.
Such meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation, or, if none, at a place designated
by the Board of Directors. Notwithstanding the provisions of this Section
6.3(c), no such special meeting shall be called during a period within 60 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing directors
at which the holders of such Preferred Stock shall have the right to elect
directors as provided herein, the presence in Person or by proxy of the holders
of shares representing more than fifty percent (50%) in voting power of the then
outstanding shares of such Preferred Stock having such right shall be required
and shall be sufficient
33
to constitute a quorum of such class for the election of directors by such
class.
(e) Any director elected by holders of Preferred Stock
pursuant to the voting right created under this Section 6.3 shall hold office
until the next annual meeting of stockholders (unless such term has previously
terminated pursuant to Section 6.3(b)) and any vacancy in respect of any such
director shall be filled only by vote of the remaining director so elected, or
if there be no such remaining director, by the holders of such Preferred Stock
entitled to elect such director or directors by written consent or at a special
meeting called in accordance with the procedures set forth in Section 6.3(c),
or, if no special meeting is called or written consent executed, at the next
annual meeting of stockholders. Upon any termination of such voting right,
subject to applicable law, the term of office of all directors elected by
holders of such Preferred Stock voting separately as a class pursuant to this
Section 6.3 shall terminate.
(f) In exercising the voting rights set forth in this Section
6.3, each share of this Series shall have a number of votes equal to its
Liquidation Value.
7. LIQUIDATION RIGHTS.
7.1 Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of this
Series shall be entitled to receive out of the assets of the Corporation
available for distribution to stockholders, in preference to the holders of, and
before any payment or distribution shall be made on, Junior Stock, the amount of
$100 per share (the "Liquidation Value"), plus an amount equal to all accrued
and unpaid dividends to the date of final distribution.
7.2 Neither the sale, exchange or other conveyance (for cash,
shares of stock, securities or other consideration) of all or substantially all
the property and assets of the Corporation nor the merger or consolidation of
the Corporation into or with any other corporation, or the merger or
consolidation of any other corporation into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up, voluntary or involuntary,
for the purposes of this Section 7.
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7.3 After the payment to the holders of the shares of this
Series of full preferential amounts provided for in this Section 7, the holders
of this Series as such shall have no right or claim to any of the remaining
assets of the Corporation.
7.4 In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to Section 7.1, no such distribution shall be made on account
of any shares of any Parity Stock upon such dissolution, liquidation or winding
up unless proportionate distributive amounts shall be paid on account of the
shares of this Series, ratably, in proportion to the full distributable amounts
for which holders of all Parity Stock are entitled upon such dissolution,
liquidation or winding up.
8. OTHER PROVISIONS.
8.1 All notices from the Corporation to the holders shall be
given by one of the methods specified in Section 8.2. With respect to any notice
to a holder of shares of this Series required to be provided hereunder, neither
failure to give such notice, nor any defect therein or in the transmission
thereof, to any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings referred to in such notice with respect to the
other holders or affect the legality or validity of any distribution, right,
warrant, reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any such action. Any
notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the notice.
8.2 All notices and other communications hereunder shall be
deemed given (i) on the first Trading Day following the date received, if
delivered personally, (ii) on the Trading Day following timely deposit with an
overnight courier service, if sent by overnight courier specifying next day
delivery and (iii) on the first Trading Day that is at least five days following
deposit in the mails, if sent by first class mail to (x) a holder at its last
address as it appears on the transfer records or registry for the Series D Stock
and (y) the Corporation at
35
the following address (or at such other address as the Corporation shall specify
in a notice pursuant to this Section): Time Warner Inc., 75 Rockefeller Plaza,
New York, New York 10019, Attention: General Counsel.
8.3 Any shares of this Series which have been converted,
redeemed, exchanged or otherwise acquired by the Corporation shall, after such
conversion, redemption, exchange or acquisition, as the case may be, be retired
and promptly cancelled and the Corporation shall take all appropriate action to
cause such shares to obtain the status of authorized but unissued shares of
Preferred Stock, without designation as to series, until such shares are once
more designated as part of a particular series by the Board of Directors. The
Corporation may cause a certificate setting forth a resolution adopted by the
Board of Directors that none of the authorized shares of this Series are
outstanding to be filed with the Secretary of State of the State of Delaware.
When such certificate becomes effective, all references to Series D Stock shall
be eliminated from the Certificate of Incorporation and the shares of Preferred
Stock designated hereby as Series D Stock shall have the status of authorized
and unissued shares of Preferred Stock and may be reissued as part of any new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors.
8.4 The shares of this Series shall be issuable in whole
shares or, if authorized by the Board of Directors (or any authorized committee
thereof), in any fraction of a whole share so authorized or any integral
multiple of such fraction.
8.5 The Corporation shall be entitled to recognize the
exclusive right of a Person registered on its records as the holder of shares of
this Series, and such record holder shall be deemed the holder of such shares
for all purposes.
8.6 All notice periods referred to in the Certificate shall
commence on the date of the mailing of the applicable notice.
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8.7 Certificates for shares of this Series shall bear such
legends as the Corporation shall from time to time deem appropriate.
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this 6th day of July, 1995.
TIME WARNER INC.,
by /s/ SPENCER B. HAYS
Name: Spencer B. Hays
Title: Vice President
Attest: /s/ ELI T. BRUNO
Name: Eli T. Bruno
Title: Assistant Secretary
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