<PAGE>
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement [_] Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d) (2))
[_] Definitive Information Statement
AIR & WATER TECHNOLOGIES CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee previously paid with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
AIR & WATER TECHNOLOGIES CORPORATION
U.S. HIGHWAY 22 WEST AND STATION ROAD
BRANCHBURG, NEW JERSEY 08876
----------------
NOTICE OF ACTION TAKEN BY STOCKHOLDERS
----------------
NOTICE IS HEREBY GIVEN that on , 1997 the Board of Directors and holders of
a majority of the voting power of Air & Water Technologies Corporation, a
Delaware corporation (the "Company"), approved the following:
An amendment to Article Fourth of the Restated Certificate of
Incorporation of AIR & WATER TECHNOLOGIES CORPORATION as described in the
attached Information Statement under the caption "CHARTER AMENDMENT."
Section 228 of the General Corporation Law of the State of Delaware provides
that any action which may be taken at a meeting of the stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted, provided that prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing and who, if the action had been taken at a meeting, would
have been entitled to notice of the meeting if the record date for such
meeting had been the date that written consents signed by a sufficient number
of holders to take the action were delivered to the corporation.
A consent in writing approving the foregoing amendment to the Restated
Certificate of Incorporation approved and proposed by the Board of Directors
on , 1997 was signed by Compagnie Generale des Eaux and Anjou International
Company, which are holders of outstanding stock having 18,409,975 votes, said
votes representing greater than a majority of the aggregate outstanding voting
power of the Company, and was delivered to the Company. Accordingly, the
Company is notifying you of the actions so taken by delivering this Notice
along with the attached Information Statement.
WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT AND YOU ARE REQUESTED NOT TO
SEND US A PROXY OR CONSENT WITH RESPECT TO THE MATTERS SET FORTH HEREIN.
Douglas A. Satzger
Corporate Secretary
Branchburg, New Jersey
, 1997
<PAGE>
AIR & WATER TECHNOLOGIES CORPORATION
U.S. HIGHWAY 22 WEST AND STATION ROAD
BRANCHBURG, NEW JERSEY 08876
----------------
INFORMATION STATEMENT
----------------
ACTION TAKEN BY WRITTEN CONSENT OF STOCKHOLDERS
----------------
EFFECTIVE
, 1997
WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT AND YOU ARE REQUESTED NOT TO
SEND US A PROXY OR CONSENT WITH RESPECT TO THE MATTERS SET FORTH HEREIN.
GENERAL INFORMATION
Introduction. This Information Statement is furnished by the Board of
Directors of Air & Water Technologies Corporation, a Delaware corporation (the
"Company") pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in connection with certain actions taken by
certain of the stockholders of the Company. This Information Statement is first
being sent to the Company's stockholders on or about , 1997.
On , 1997, the Board of Directors of the Company adopted a resolution
setting forth a proposed amendment to the Restated Certificate of Incorporation
of the Company (the "Charter Amendment") (i) increasing the number of shares of
the Company's Class A Common Stock, par value $.001 per share (the "Class A
Common Stock") and the Company's Class B Common Stock, par value $.001 per
share (the "Class B Common Stock"), which the Company will have the authority
to issue and (ii) amending certain terms of the Class B Common Stock. The
Charter Amendment was adopted by the Board of Directors to consummate the
transactions contemplated by the Recapitalization Agreement (as hereinafter
defined). See "Charter Amendment--Background--Recapitalization" and "--Reasons
for the Charter Amendment." Thereafter, and as agreed to pursuant to the
Recapitalization Agreement, two stockholders, Compagnie Generale des Eaux, a
company organized under the laws of the Republic of France ("CGE"), and its
indirect wholly owned subsidiary, Anjou International Company, a Delaware
corporation ("Anjou") (together, the "Consenting Stockholders"), each executed
a written consent approving the Charter Amendment, effective upon the
expiration of the twenty calendar day period following the mailing of this
Information Statement to the Company's stockholders, and delivered such written
consent to the Company (the "Written Consent").
Section 228 of the General Corporation Law of the State of Delaware provides
that any action which may be taken at a meeting of the stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted, provided that prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing and who, if the action had been taken at a meeting, would
have been entitled to notice of the meeting if the record date for such meeting
had been the date that written consents signed by a sufficient number of
holders to take the action were delivered to the corporation.
As of , 1997, the date the Written Consent was executed and delivered by
the Consenting Stockholders (the "Action Date"), the Company had outstanding
32,019,254 shares of its Class A Common
<PAGE>
Stock and 1,200,000 shares of its 5 1/2% Series A Convertible Exchangeable
Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"). The
approval of the holders of a majority of the outstanding shares of Class A
Common Stock and the Series A Preferred Stock, voting together as a single
class, is necessary to adopt the Charter Amendment. Each outstanding share of
Class A Common Stock is entitled to one vote on the proposal to adopt the
Charter Amendment and each outstanding share of Series A Preferred Stock is
entitled to four votes on the proposal to adopt the Charter Amendment.
Accordingly, because CGE and Anjou own collectively greater than a majority of
the voting power of the Company and the Written Consent approves the Charter
Amendment by greater than a majority of the number of votes of outstanding
shares entitled to vote thereon, the approval of the Charter Amendment is
complete and the Company is notifying you of the actions so taken. NO MEETING
OF STOCKHOLDERS IS BEING HELD TO CONSIDER THE CHARTER AMENDMENT.
Appraisal Rights. The stockholders of the Company do not have appraisal
rights or similar rights of dissent with respect to the matter acted upon.
CHARTER AMENDMENT
GENERAL
The Board of Directors duly approved and recommended that the stockholders
consider and approve a proposal to amend the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") by amending Article Fourth
thereof as follows:
(i) That the first paragraph of Article FOURTH of the Certificate of
Incorporation be deleted in its entirety and the following paragraph be
inserted in lieu thereof:
"FOURTH: The total number of shares of stock which the Corporation
shall have the authority to issue is 262,500,000 shares, of which
260,000,000 shares shall be Common Stock, par value $.001 per share,
and 2,500,000 shares shall be Preferred Stock, par value $.01 per
share."
(ii) That the first paragraph of Paragraph B of Article FOURTH of the
Certificate of Incorporation be deleted in its entirety and the following
paragraph be inserted in lieu thereof:
"B. The Common Stock shall consist of 230,000,000 shares of Class A
Common Stock ("Class A Common") and 30,000,000 shares of Class B Common
Stock ("Class B Common"). Except as otherwise provided herein, all
shares of Class A Common and Class B Common will be identical and will
entitle the holders thereof to the same rights and privileges."
(iii) That Paragraph 3A. of Paragraph B.3 of Article FOURTH of the
Certificate of Incorporation be deleted in its entirety and the following
paragraph be inserted in lieu thereof:
"3A. Conversion of Class B Common. On the Conversion Date (as such
term is defined below), each holder's shares of Class B Common shall
automatically convert into the same number of shares of Class A Common.
For purposes of this Paragraph 3, the "Conversion Date" shall mean the
date which is the earlier of August 1, 2000 or seventy-five days
following the termination of the "Right to Require Repurchase" provided
in Section 1501 of the Indenture governing the Corporation's 8%
Convertible Subordinated Debentures due 2015 (the "Debentures") which
grants holders the right to require the corporation to repurchase the
Debentures when any person becomes the beneficial owner of 75% or more
of the voting stock of the Corporation."
Attached as Exhibit A is Article FOURTH of the Company's Certificate of
Incorporation, reflecting the changes proposed and approved by the Board of
Directors. THE BOARD OF DIRECTORS BELIEVES THE CHARTER AMENDMENT IS IN THE BEST
INTEREST OF THE STOCKHOLDERS AND DOES NOT ADVERSELY AFFECT THE RIGHTS OF THE
HOLDERS OF THE CLASS A COMMON STOCK.
2
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BACKGROUND--RECAPITALIZATION
On September 24, 1997, the Company, CGE and Anjou entered into a
recapitalization agreement (the "Recapitalization Agreement"). The
Recapitalization Agreement provides, among other things, for the exchange (the
"Exchange") by CGE and its subsidiaries of $60 million of Series A Preferred
Stock for shares of Class A Common Stock. In addition, the Recapitalization
Agreement provides for a rights offering (the "Rights Offering") in which the
Company will distribute on a pro rata basis to holders of record of shares of
Class A Common Stock transferable subscription rights (the "Rights") to
subscribe for and purchase additional shares of Class A Common Stock (the
"Underlying Shares"). Each Right will allow the holder to acquire at the
subscription price determined in the Rights Offering one share of Class A
Common Stock (the "Basic Subscription Privilege") (subject to the Company's
obligation to issue shares of Class B Common Stock in certain circumstances).
In addition, Rights holders other than CGE and Anjou which exercise their
Basic Subscription Privilege will also be eligible to subscribe (the
"Oversubscription Privilege") at the subscription price in the Rights Offering
for shares of Class A Common Stock that are not otherwise purchased pursuant
to the exercise of Rights (subject to availability and proration and the
Company's obligation to issue Class B Common Stock in certain circumstances).
Public Rights holders (the "Public") (other than CGE and Anjou) who exercise
Rights in the Rights Offering also will receive a certain number of
transferable warrants (the "Warrants") to acquire shares of Class A Common
Stock.
In the Rights Offering, CGE has agreed to exercise its Basic Subscription
Privilege in full. In addition in the event that all Underlying Shares are not
purchased pursuant to the Rights Offering (including pursuant to the
Oversubscription Privilege), CGE will subscribe for and purchase, at the
subscription price in the Rights Offering, such number of shares of Class A
Common Stock (subject to the Company's obligation to issue Class B Common
Stock in certain circumstances) (the "Conditional CGE Subscription"), such
that (i) the total number of shares of Class A Common Stock subscribed for by
CGE in the Conditional CGE Subscription shall be no greater than (A) the total
number of shares of Class A Common Stock available to be purchased by the
Public, minus (B) the total number of shares of Class A Common Stock actually
purchased by the Public, and (ii) in no event shall the gross proceeds
resulting from CGE's Basic Subscription Privilege and the Conditional CGE
Subscription exceed $185 million.
Other than the first $25 million of gross proceeds received from
subscriptions by the Public, which shall be retained by the Company for
general corporate purposes, the gross proceeds of the Rights Offering,
including the Conditional CGE Subscription, if any, will be used to repay the
$185 million aggregate principal amount of debt of CGE and its subsidiaries
consisting of (i) the $125 million aggregate principal amount note from CGE
under an unsecured term loan and (ii) the $60 million aggregate principal
amount note from Anjou under an unsecured revolving credit facility. Expenses
payable by the Company in connection with the Rights Offering will be paid out
of existing cash of the Company.
Concurrently with the Rights Offering, the Company is soliciting the consent
(the "Consent Solicitation") of the holders of at least a majority in
principal amount (the "Requisite Consents") of the Company's outstanding 8%
Convertible Subordinated Debentures due 2015 (the "Convertible Debentures") to
amend certain provisions of the indenture governing the Convertible Debentures
(the "Indenture") permitting the holders thereof to require the Company to
repurchase the Convertible Debentures if any person acquires beneficial
ownership of 75% or more of the voting power of the Company (the "Change of
Control Provision"). In the event the Requisite Consents are not obtained
prior to the expiration date of the Rights Offering and the exercise of Rights
in the Rights Offering would cause a Rights holder's beneficial ownership of
Class A Common Stock to exceed 74%, the Company will be obligated to issue to
such holder only such number of shares of Class A Common Stock as would cause
such holder's beneficial ownership of the Company's voting power to be no
greater than 74% of the outstanding voting power and any additional shares to
be issued thereunder would be shares of Class B Common Stock. The Class A
Common Stock and the Class B Common Stock will be identical in all respects
except that (i) the Class B Common Stock will not be entitled to vote and (ii)
the Class B Common Stock will convert into Class A Common Stock immediately
upon the earlier of August 1, 2000 or seventy-five days following the
termination of the Change of Control Provision.
3
<PAGE>
REASONS FOR THE CHARTER AMENDMENT
At the time the Company entered into the Recapitalization Agreement, there
were insufficient shares of Class A Common Stock and Class B Common Stock
authorized to permit issuance of Class A Common Stock upon the exercise of
Rights or Warrants or to permit issuance of Class B Common Stock pursuant to
the Rights Offering in the event the Requisite Consents are not obtained. In
order to consummate the transactions contemplated by the Recapitalization, the
Board of Directors duly approved and adopted the Charter Amendment and sought
by written consent the approval of the Company's stockholders in respect to
the Charter Amendment.
The Certificate of Incorporation currently authorizes the Company to issue
97,000,000 shares of Class A Common Stock and 3,000,000 shares of Class B
Common Stock. The Charter Amendment to increase by 133,000,000 the number of
shares of Class A Common Stock the Company may issue and to increase by
27,000,000 the number of shares of Class B Common Stock the Company may issue
will authorize the Company to issue 230,000,000 shares of Class A Common Stock
and 30,000,000 shares of Class B Common Stock. The Charter Amendment will
increase the authorized capital stock of the Company such that it will have a
sufficient number of shares of Class A Common Stock and Class B Common Stock
to consummate the transactions contemplated by the Recapitalization. The
amendments to the conversion feature of the Class B Common stock will permit
the Company to issue the maximum number of shares of Common Stock in the
Rights Offering without triggering the Change of Control Provision.
No preemptive rights exist with respect to any outstanding shares of Class A
Common Stock. The issuance of additional shares of Class A Common Stock could
have the effect of delaying, deferring or preventing a change in control of
the Company and could cause dilution in the equity of present stockholders.
DESCRIPTION OF CLASS B COMMON STOCK
The following is a summary of the terms of the Class B Common Stock, which
terms are set forth in Article FOURTH of the Company's Certificate of
Incorporation attached hereto as Exhibit A.
Voting Rights. Holders of Class B Common Stock have no right to vote on any
matters to be voted on by the stockholders of the Company; provided that the
holders of the Class B Common Stock have the right to vote as a separate class
on any merger, consolidation, recapitalization, reclassification or
reorganization of the Company in which shares of Class B Common Stock would be
treated differently than shares of Class A Common Stock (other than with
respect to voting rights).
Dividends Rights. Holders of Class B Common Stock are entitled to receive
dividends as may from time to time be declared by the Board of Directors of
the Company and are entitled to share equally with the holders of Class A
Common Stock in such dividends. The Company has not paid cash dividends on the
Class A Common Stock in recent years, and does not expect to pay dividends in
the foreseeable future.
Terms of Conversion. On the Conversion Date, each holder's shares of Class B
Common Stock will automatically convert into the same number of shares of
Class A Common Stock. The "Conversion Date" is defined as the date which is
the earlier of August 1, 2000 or seventy-five days following the termination
of the Change of Control Put.
STOCKHOLDER APPROVAL PREVIOUSLY OBTAINED
Pursuant to the Recapitalization Agreement, CGE and Anjou have given their
written consent to the Charter Amendment. CGE and Anjou did so by executing a
Written Consent approving the Charter Amendment and delivering such Written
Consent to the Company on the Action Date. Such action by written consent is
sufficient to satisfy the applicable requirements of Delaware law that any
amendment to the Company's certificate of incorporation be approved by the
Stockholders.
4
<PAGE>
INTEREST AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's capital stock as of , 1997 with respect to (i) each
person known by the Company to beneficially own in excess of 5% of the
outstanding shares of Class A Common Stock, (ii) each of the Company's
Directors, (iii) each named executive officer of the Company, and (iv) all
Directors and executive officers as a group. Unless otherwise indicated, each
of the stockholders has sole voting and investment power with respect to the
shares beneficially owned.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF CLASS A SHARES OF CLASS A
COMMON STOCK COMMON STOCK
NAME OF PERSON OR GROUP BENEFICIALLY OWNED OUTSTANDING
----------------------- ------------------ -----------------
<S> <C> <C>
Carol L. Green........................ 0 *
William Kriegel....................... 0 *
John W. Morris........................ 3,079 *
Robert B. Sheh........................ 50,000(1) *
Alain Brunais......................... 35,900(2) *
Donald A. Deieso...................... 500(3) *
George C. Mammola..................... 18,759(4) *
Michael M. Stump...................... 1,000(5) *
Patrick L. McMahon.................... 7,000(6) *
Jekabs P. Vittands.................... 20,272(7) *
Compagnie Generale des Eaux........... 18,409,975(8) 50.0009
52 Rue d'Anjou
75384 Paris Cedex 08
France
State of Wisconsin Investment Board... 3,116,775(9) 9.7
P.O. Box 7842
Madison, Wisconsin 53207
U.S. Bancorp and Qualivest Capital
Management, Inc...................... 2,829,300(10) 8.8
111 S.W. Fifth St. 1500
Portland, Oregon 97204
All directors and officers as a group
(14 persons)......................... 1,610,049(11) 50.3
</TABLE>
- --------
* Less than 1% ownership
(1) Represents 50,000 shares of Class A Common Stock which may be acquired
within 60 days of the date of the table. On October 24, 1997, Mr. Sheh
and the Company terminated the Employment Agreement dated November 7,
1996, and entered into a Separation Agreement relating to their
relationship following the termination of his employment.
(2) Includes 34,900 shares of Class A Common Stock which may be acquired
within 60 days of the date of the table.
(3) On February 26, 1997, Mr. Deieso resigned from his position as President
and Chief Executive Officer of Metcalf & Eddy. Pursuant to the terms of
the Company's 1989 Long-Term Incentive Compensation Plan, the options
held by Mr. Deieso to acquire 24,258 shares of Class A Common Stock
expired on May 26, 1997.
(4) Represents 18,759 shares of Class A Common Stock which may be acquired
within 60 days of the date of the table.
(Footnotes continued on next page)
5
<PAGE>
(5) On December 4, 1996, Mr. Stump resigned as President and Chief Executive
Officer of PSG. PSG and Mr. Stump have entered into a Separation
Agreement dated December 16, 1996 (the "Stump Separation Agreement")
relating to their relationship following the termination of his
employment. Under the terms of the Stump Separation Agreement, all stock
options held by Mr. Stump at the time of the termination of his
employment were canceled.
(6) Represents 7,000 shares of Class A Common Stock which may be acquired
within 60 days of the date of the table.
(7) Includes 14,790 shares of Class A Common Stock which may be acquired
within 60 days of the date of the table.
(8) Includes 6,702,500 shares of Class A Common Stock owned indirectly
through Anjou. Includes 4,800,000 shares of Class A Common Stock
underlying the 1,200,000 shares of the Series A Preferred Stock
beneficially owned by CGE. CGE owns all of the outstanding shares of the
Series A Preferred Stock.
(9) As reported by The State of Wisconsin Investment Board in a Report on
Schedule 13G for the year ended December 31, 1996, filed with the
Securities and Exchange Commission (the "Commission").
(10) As reported by U.S. Bancorp and Qualivest Capital Management, Inc., a
wholly-owned subsidiary of U.S. Bancorp, in a Report on Schedule 13G for
the year ended December 31, 1996, filed with the Commission on February
14, 1997. Pursuant to such Schedule 13G, U.S. Bancorp reports that it has
sole power to vote or direct the vote of 2,781,500 shares, sole power to
dispose or direct the disposition of 1,338,700 shares and shared power to
dispose or direct the disposition of 77,000 shares.
(11) Includes 185,613 shares of Class A Common Stock which may be acquired
within 60 days of the date of the table. Includes 18,409,975 shares of
Class A Common Stock beneficially owned by CGE.
6
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OTHER MATTERS
The Company is presenting no other matters to the stockholders of the
Company.
By Order of the Board of Directors,
Douglas A. Satzger
Corporate Secretary
Branchburg, New Jersey
, 1997
7
<PAGE>
EXHIBIT A
CHANGES TO ARTICLE FOURTH
OF THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION
FOURTH: The total number of shares of stock which the Corporation shall have
the authority to issue is 102,500,000 262,500,000 shares, of which 100,000,000
260,000,000 shares shall be Common Stock, par value $.001 per share, and
2,500,000 shares shall be Preferred Stock, par value $.01 per share.
A. Shares of the Preferred Stock of the Corporation may be issued from time
to time in one or more classes or series, each of which class or series shall
have such distinctive designation or title as shall be fixed by the Board of
Directors of the Corporation (the "Board of Directors") prior to the issuance
of any shares thereof. Each such class or series of Preferred Stock shall have
such voting powers, full or limited, or no voting powers and such preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated in
such resolution or resolutions providing for the issue of such class or series
of Preferred Stock as may be adopted from time to time by the Board of
Directors prior to the issuance of any shares thereof pursuant to the
authority hereby expressly vested in it, all in accordance with the laws of
the State of Delaware.
B. The Common Stock shall consist of 97,000,000 230,000,000 shares of Class
A Common Stock ("Class A Common") and 3,000,000 30,000,000 shares of Class B
Common Stock ("Class B Common"). Except as otherwise provided herein, all
shares of Class A Common and Class B Common will be identical and will entitle
the holders thereof to the same rights and privileges.
1. Voting Rights. Except as otherwise required by law, the holders of
Class A Common will be entitled to one vote per share on all matters to be
voted on by the stockholders of the Corporation, and the holders of Class B
Common will have no right to vote on any matters to be voted on by the
stockholders of the Corporation; provided that the holders of Class B
Common shall have the right to vote as a separate class on any merger,
consolidation, recapitalization, reclassification or reorganization of the
Corporation in which shares of Class B Common would be treated differently
than shares of Class A Common (other than with respect to voting rights
consistent with the provisions of this paragraph 1).
2. Dividends. When and as dividends are declared thereon, whether payable
in cash, property or securities of the Corporation, the holders of Class A
Common and the holders of Class B Common will be entitled to share equally,
share for share, in such dividends; provided that if dividends are declared
which are payable in shares of Class A Common or Class B Common, dividends
will be declared which are payable at the same rate on both classes of
stock, and the dividends payable in shares of Class A Common will be
payable to holders of that class of stock and the dividends payable in
shares of Class B Common will be payable to holders of that class of stock.
3. Conversion.
3A. Conversion of Class B Common. On the Conversion Date (as such term is
defined below), each holder's shares of Class B Common shall automatically
convert into the same number of shares of Class A Common. For purposes of
this Paragraph 3, the "Conversion Date" shall mean the date which is the
earlier of August 1, 2000 or seventy-five days following the termination of
the "Right to Require Repurchase" provided in Section 1501 of the Indenture
governing the Corporation's 8% Convertible Subordinated Debentures due 2015
(the "Debentures") which grants holders the right to require the
corporation to repurchase the Debentures when any person becomes the
beneficial owner of 75% or more of the voting stock of the Corporation.
A-1
<PAGE>
(1) Upon the occurrence (or the expected occurrence as described in (iii)
below) of any Conversion Event (as such term is defined in (ii) below),
each holder of Class B Common shall be entitled to convert into the same
number of shares of Class A Common any or all of the shares of such
holder's Class B Common being (or expected to be) distributed, disposed of
or sold in connection with such Conversion Event.
(ii) For purpose of this paragraph 3A, a "Conversion Event" shall mean
(a) any public offering or public sale of securities of the Corporation
(including a public offering registered under the Securities Act of 1933
and a public sale pursuant to Rule 144 of the Securities and Exchange
Commission or any similar rule then in force), (b) any sale of securities
of the Corporation to a person or group of persons (within the meaning of
the Securities and Exchange Act of 1934, as amended (the "1934 Act")) if,
after such sale, such person or group of persons in the aggregate would own
or control securities which posses in the aggregate the ordinary voting
power to elect a majority of the Corporation's directors (provided that
such sale has been approved by the Corporation's Board of Directors or a
committee thereof), (c) any sale of securities of the Corporation to a
person or group of persons (within the meaning of the 1934 Act) if, after
such sale, such person or group of persons in the aggregate would own or
control securities of the Corporation (excluding any Class B Common being
converted and disposed of in connection with such Conversion Event) which
possess in the aggregate the ordinary voting power to elect a majority of
the Corporation's directors and (d) a merger, consolidation or similar
transaction involving the Corporation if, after such transaction, a person
or group of persons (within the meaning of the 1934 Act) in the aggregate
would own or control securities which possess in the aggregate the ordinary
voting power to elect a majority of the surviving corporation's directors
(provided that the transaction has been approved by the Corporation's Board
of Directors or a committee thereof). A "person" shall include any natural
person and any corporation, partnership, joint venture, trust,
unincorporated organization and any similar entity or organization.
(iii) Each holder of Class B Common will be entitled to convert shares of
Class B Common in connection with any Conversion Event if such holder
reasonably believes that such Conversion Event will be consummated, and a
written request for conversion to the Corporation from any holder of Class
B Common stating such holder's reasonable belief that a Conversion Event
shall occur shall be conclusive and shall obligate the Corporation to
effect such conversion in a timely manner so as to enable each such holder
to participate in such Conversion Event. If any shares of Class B Common
are converted into shares of Class A Common in connection with a Conversion
Event and such shares of Class A Common are not actually distributed,
disposed of or sold pursuant to such Conversion Event, such shares of Class
A Common shall be promptly converted back into the same number of shares of
Class B Common.
3B. Conversion Procedure.
(i) Unless otherwise provided in this Section 3, each conversion of
shares of Class B Common into shares of Class A Common will be effected by
the surrender of the certificate or certificates representing the shares to
be converted at the principal office of the Corporation at any time during
normal business hours, together with a written notice by the holder of such
Class B Common stating that such holder desires to convert the shares, or a
stated number of the shares, of such Class B Common represented by such
certificate or certificates into shares of Class A Common. Such conversion
will be deemed to have been effected as of the close of business on the
date on which such certificate or certificates have been surrendered and
such notice has been received, and at such time the rights of the holder of
the converted Class B Common as such holder will cease and the person or
persons in whose name or names the certificate or certificates for shares
of Class A Common are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the shares of Class A Common
represented thereby.
(ii) Promptly after such surrender and the receipt of such written
notice, the Corporation will issue and deliver in accordance with the
surrendering holder's instructions (a) the certificate or certificates for
the Class A Common issuable upon such conversion and (b) a certificate
representing any Class B Common which was represented by the certificate or
certificates delivered to the Corporation in connection with such
conversion but which was not converted.
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(iii) The issuance of certificates for Class A Common upon conversion of
Class B Common will be made without charge to the holder of such shares for
any issuance tax in respect thereof or other cost incurred by the
Corporation in connection with such conversion and the related issuance of
Class A Common.
(iv) The Corporation will at all times reserve and keep available out of
its authorized but unissued shares of Class A Common, solely for the
purpose of issuance upon the conversion of the Class B Common, such number
of shares of Class A Common issuable upon the conversion of all outstanding
Class B Common. All shares of Class A Common which are so issuable will,
when issued, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Corporation will take all such
actions as may be necessary to assure that all such shares of Class A
Common may be so issued without violation of any applicable law or
governmental regulation of any requirements of any domestic securities
exchange upon which shares of Class A Common may be listed (except for
official notice of issuance which will be immediately transmitted by the
Corporation upon issuance).
(v) The Corporation will not close its books against the transfer of
shares of Class A Common or Class B Common in any manner which would
interfere with the timely conversion of any shares of Class B Common.
3C. Stock Splits. If the Corporation in any manner subdivides or combines
the outstanding shares of Class A Common, the outstanding shares of Class B
Common will be proportionately subdivided or recombined in a similar
manner.
4. Registration of Transfer. The Corporation will keep at its principal
office (or such other place as the Corporation reasonably designates) a
register for the registration of shares of Common Stock. Upon the surrender
of any certificate representing shares of any class of Common Stock at such
place, the Corporation will, at the request of the registered holder of
such certificate, execute and deliver a new certificate or certificates in
exchange therefor representing in the aggregate the number of shares of
such class represented by the surrendered certificate, and the Corporation
forthwith will cancel such surrendered certificate. Each such new
certificate will be registered in such name and will represent such number
of shares of such class as is requested by the holder of the surrendered
certificate. The issuance of new certificates will be made without charge
to the holders of the surrendered certificates for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection
with such issuance.
5. Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder will be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing one or more shares of any class of Common Stock, and
in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Corporation (provided that if the
holder is a financial institution its own agreement will be satisfactory),
or, in the case of any mutilation upon surrender of such certificate
(provided it is identifiable), the Corporation will (at its expense)
execute and deliver in lieu of such certificate a new certificate of like
kind representing the number of shares of such class represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated, certificate.
6. Transfer Taxes. Notwithstanding the provisions of Section 3B(iii) and
4 above, the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of
stock in any name other than that of the registered holder of the shares,
and the Corporation shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the
issuance thereof shall have paid to the Corporation the amount of any such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
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