SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 6, 1999
United International Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21974 84-1116217
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification #)
incorporation)
4643 South Ulster Street, Suite 1300, Denver, CO 80237
(Address of Principal Executive Office)
(303) 770-4001
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On July 6, 1999, UnitedGlobalCom, d/b/a United International Holdings,
Inc., (the "Company") closed an unregistered offering of 425,000 shares of its
7% Series C Senior Cumulative Convertible Preferred Stock (the "Series C
Stock"), in the form of 8,500,000 Depositary Shares. Each Depositary Share
represents 1/20th of a share of Series C Stock. The Series C Stock is
convertible at any time in whole or in part into shares of the Company's Class A
Common Stock. The Depositary Shares are convertible into shares of Class A
Common Stock at an initial conversion price of $84.30, subject to certain
adjustments. The net proceeds to the Company were $382.5 million. In addition,
the purchasers deposited $29.75 million into a securities account pursuant to
which the purchasers will be entitled to quarterly payments in an amount equal
to $0.8750 per Depositary Share commencing September 30, 1999 through June 30,
2000. The other terms of the Series C Stock are set forth in the Company's
Certificate of Designations, a copy of which is attached hereto as an exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
4.1 Certificate of Designations of the Series C Stock
10.1 Deposit Agreement, dated as of July 6, 1999, among the Company,
Firstar Bank of Minnesota, N.A. ("Firstar"), as Depositary, and the
holder from time to time of the Receipts.
10.2 Securities Account Agreement, dated as of July 6, 1999, between the
Company and Firstar.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INTERNATIONAL HOLDINGS, INC.
Date: July 22, 1999 By: /S/ Valerie L. Cover
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Valerie L. Cover
Vice President and Controller
(a Duly Authorized Officer and
Principal Financial Officer)
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UNITED INTERNATIONAL HOLDINGS, INC.
CERTIFICATE OF DESIGNATION
establishing the
Voting Powers, Designations, Preferences, Limitations,
Restrictions, and Relative Rights of
7% SERIES C SENIOR CUMULATIVE CONVERTIBLE PREFERRED STOCK
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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UNITED INTERNATIONAL HOLDINGS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Issuer"), does
hereby certify that (i) pursuant to authority conferred upon the Board of
Directors of the Issuer by its Second Amended and Restated Certificate of
Incorporation, as amended to date, and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, the Board of Directors
authorized the creation and issuance of the Issuer's 7% Series C Senior
Cumulative Convertible Preferred Stock (the "Preferred Stock") and appointed a
committee (the "Preferred Stock Committee") to fix the designations, preferences
and rights of such Preferred Stock, and (ii) the following resolution fixing the
designations, preferences and rights of such Preferred Stock, which was duly
adopted by the Preferred Stock Committee of the Board of Directors, on July 1,
1999, which resolution remains in full force and effect. Certain capitalized
terms used herein are defined in Article 9.
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RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Issuer by the provisions of
Second Amended and Restated Certificate of Incorporation, as amended
from time to time (the "Certificate of Incorporation"), and pursuant
to Section 151(g) of the General Corporation Laws of the State of
Delaware, there be from the 3,000,000 shares of Preferred Stock, $0.01
par value, of the Issuer, authorized to be issued pursuant to the
Certificate of Incorporation, a series of Preferred Stock, consisting
of 425,000 shares of 7 % Series C Senior Cumulative Convertible
Preferred Stock (referred to herein as the "Preferred Stock"), having
the number of shares and, to the extent that the designations, powers,
preferences and relative and other special rights and the
qualifications, limitations and restrictions of such Preferred Stock
are not stated and expressed in the Certificate of Incorporation, the
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows:
1. DESIGNATION AND NUMBER OF SHARES
1.1 The series will be known as the 7 % Series C Senior Cumulative
Convertible Preferred Stock.
1.2 The Preferred Stock will be a series consisting of 425,000 shares of
the authorized but unissued preferred stock of the Issuer.
2. DIVIDENDS
2.1 Holders of Preferred Stock will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on each outstanding share of Preferred Stock, payable quarterly in
arrears at a rate per annum equal to 7% of the liquidation preference per share.
(a) All dividends will be cumulative, whether or not earned or
declared, on a quarterly basis on March 31, June 30, September 30 and December
31 of each year (each such date being referred to herein as a "Dividend Payment
Date"), commencing July 1, 2000. Dividends will accumulate on a day to day basis
from July 1, 2000. Each distribution in the form of a dividend shall be payable
in arrears to Holders of record as they appear on the stock books of the Issuer
on each record date as established by the Board of Directors of the Issuer (the
"Dividend Payment Record Date") not more than 60 nor less than ten days
preceding a Dividend Payment Date.
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(i) Dividends payable on the Preferred Stock for each full
dividend period will be computed by dividing the annual dividend rate
by four. Dividends payable on the Preferred Stock for any period less
than a full dividend period will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
(ii) The Preferred Stock will not be entitled to any dividend
whether payable in cash, property or securities, in excess of the full
cumulative dividends.
(iii) No interest, or sum of money in lieu of interest, will be
payable in respect of any accumulated and unpaid dividends which may
be in arrears.
(b) Dividends, to the extent declared by the Issuer's Board of
Directors may, at the option of the Issuer, be paid in cash, by delivery of
fully paid and nonassessable shares of Common Stock, or a combination thereof.
If the Issuer elects to pay dividends in shares of Common Stock, the number of
shares of Common Stock to be distributed will be calculated by dividing such
payment by the Market Value Amount as of the Dividend Payment Record Date.
2.2 No dividends or other distributions (other than a dividend or
distribution in Junior Securities) may be declared, made or paid or funds set
apart for payment on the Junior Securities or Parity Securities, and no Junior
Securities or any Parity Securities, including the Preferred Stock, may be
repurchased, redeemed or otherwise acquired for any consideration (or any money
paid to or made available for a sinking fund for the redemption of any shares of
any such stock) by the Issuer (except by conversion into or exchange for Junior
Securities and in the case that monies for such dividends, distributions,
redemptions, purchases, or other acquisitions are derived from the proceeds of a
substantially concurrent offering of such securities), unless full cumulative
dividends shall have been or contemporaneously are paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on all
outstanding shares of Preferred Stock for all Dividend Payment Dates on or prior
to such declaration, payment, redemption, purchase or acquisition.
(a) Notwithstanding the foregoing, if full dividends have not been
declared and paid or set apart on the Preferred Stock and any other Parity
Securities, dividends may be declared and paid on the Preferred Stock and such
other Parity Securities so long as the dividends are declared and paid pro rata
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so that the amounts of dividends declared per share on the Preferred Stock and
such other Parity Securities will in all cases bear to each other the same ratio
that accrued and unpaid dividends per share on the shares of the Preferred Stock
and such other Parity Securities bear to each other; provided, that if such
dividends are paid in cash on the other Parity Securities, dividends will also
be paid in cash on the Preferred Stock.
(b) (i) The Holders of shares of the Preferred Stock at the close of
business on a Dividend Payment Record Date will be entitled to receive the
dividend payment on those shares (except that Holders of shares called for
redemption or conversion on a Redemption Date or Conversion Date between the
record date and a date which is two days after the Dividend Payment Date will be
entitled to receive such dividend on such Redemption Date as indicated in
Section 5.1 hereof or such Conversion Date as indicated in Section 4 hereof, as
applicable) on the corresponding Dividend Payment Date notwithstanding the
subsequent conversion thereof or the Issuer's default in payment of the dividend
due on that Dividend Payment Date.
(ii) Except as provided in clause (i) of this Section 2.2(c) and
in Section 4.3, the Issuer shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the shares of Common Stock issued upon conversion.
3. RANKING
3.1 The Preferred Stock will, with respect to dividend distributions and
distributions upon the liquidation, winding up or dissolution of the Issuer,
rank:
(a) senior to all classes of Common Stock and each other class of
Capital Stock or series of preferred stock issued by the Issuer, which is
established after the date of this Certificate of Designation, the terms of
which do not expressly provide that such class or series will rank senior to or
on a parity with the Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding up or dissolution of the Issuer
(collectively, with the Common Stock, referred to as the "Junior Securities");
(b) on a parity with the Convertible Preferred Stock, Series A, par
value $0.01 per share, and the Convertible Preferred Stock, Series B, par value
$0.01 per share and any class of Capital Stock or series of preferred stock
issued by the Issuer, which is established after the date of this Certificate of
Designation by the Board of Directors, the terms of which expressly provide that
such class or series will rank on a parity with the Preferred Stock as to
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dividend distributions and distributions upon the liquidation, winding up or
dissolution of the Issuer (collectively referred to as "Parity Securities"); and
(c) subject to approval from holders of at least 66 2/3% of the
outstanding shares of Preferred Stock, junior to each class of Capital Stock or
series of preferred stock issued by the Issuer, which is established after the
date of this Certificate of Designation by the Board of Directors, the terms of
which expressly provide that such class or series will rank senior to the
Preferred Stock as to dividend distributions and distributions upon liquidation,
winding-up or dissolution of the Issuer (collectively referred to as "Senior
Securities").
3.2 Except as otherwise provided herein (including, without limitation,
Section 8.3 hereof), the Issuer is entitled to amend its Certificate of
Incorporation to authorize one or more additional series of preferred stock,
file certificates of designation, and issue without restriction from time to
time, any series of Junior Securities, Parity Securities, or Senior Securities.
4. CONVERSION
4.1 (a) Each Holder of Preferred Stock shall have the right, at its option,
at any time and from time to time to convert, subject to the terms and
provisions of this Article 4, any or all of such Holder's shares of Preferred
Stock. In such case, the shares of Preferred Stock shall be converted into such
whole number of fully paid and nonassessable shares of Common Stock as is equal,
subject to Section 4.6, to:
the product of the number of shares of Preferred Stock being so
converted multiplied by
the quotient of (i) the Liquidation Preference divided by (ii) the
Conversion Price then in effect,
except that with respect to any share which shall be called for redemption such
right shall terminate at the close of business on the second Business Day prior
to the Redemption Date unless the Issuer shall default in making the payment due
upon redemption thereof.
(b) The conversion right of a Holder of Preferred Stock shall be
exercised by the Holder by the surrender of the certificate representing shares
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to be converted to the Issuer or to the Transfer Agent accompanied by the
Conversion Notice.
(i) Immediately prior to the close of business on the Conversion
Date, each converting Holder of Preferred Stock shall be deemed to be
the Holder of record of Common Stock issuable upon conversion of such
Holder's Preferred Stock notwithstanding that the share register of
the Issuer shall then be closed or that certificates representing such
Common Stock shall not then be actually delivered to such person.
(ii) Upon notice from the Issuer, each Holder of Preferred Stock
so converted shall promptly surrender to the Issuer or the Transfer
Agent certificates representing the shares so converted (if not
previously delivered), duly endorsed in blank or accompanied by proper
instruments of transfer.
(iii) On any Conversion Date, all rights with respect to the shares
of Preferred Stock so converted, including the rights, if any, to
receive notices, will terminate, except the rights of Holders thereof
to: (1) receive certificates for the number of shares of Common Stock
into which such shares of Preferred Stock have been converted; (2)
receive the payment in cash or shares of Common Stock of any
accumulated and unpaid dividends accrued thereon pursuant to Section
4.3 hereof; and (3) exercise the rights to which they are entitled as
Holders of Common Stock.
(c) If the Conversion Date shall not be a Business Day, then such
conversion right shall be deemed exercised on the next Business Day.
(d) When shares of Preferred Stock are converted pursuant to this
Section 4.1, all accumulated and unpaid dividends, including dividends payable
on the Conversion Date pursuant to Section 2.2(c)(i), or liquidated damages
(whether or not in arrears or currently payable) on the Preferred Stock so
converted to (and not including) the Conversion Date shall immediately be due
and payable, at the Issuer's option:
(i) in cash;
(ii) in the whole number of fully paid and nonassessable shares of
Common Stock equal to the quotient of (i) the amount of accumulated
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and unpaid dividends payable to the Holders of Preferred Stock
hereunder, divided by (ii) the Market Value Amount for the period
ending on the Conversion Date, plus cash for any fractional shares
subject to Section 12.3 hereof; or
(iii) a combination thereof.
4.2 (a) The Company shall have the right, at its option, to convert all
(but not less than all) of the shares of Preferred Stock into shares of Common
Stock at the then Conversion Price, together with payment equal to the sum of
all accumulated but unpaid dividends or liquidated damages, if any, through the
conversion date, if, on or after, June 30, 2002, the Closing Price of the Common
Stock has equaled or exceeded 130% of the Conversion Price for at least 20
Trading Days within any 30 consecutive Trading Days. The Company may effect such
payment, at its option, in cash or by delivery of fully paid nonassessable
shares of Common Stock by issuing that whole number of shares of Common Stock
equal to the amount of such payment divided by the Market Value Amount, as of
the conversion date or by any combination thereof.
(b) The Company shall also have the right, at its option, to convert
all (but not less than all) of such shares of Preferred Stock into shares of
Common Stock at the then Conversion Price, plus accumulated and unpaid dividends
or liquidated damages, if any, whether or not declared, to the conversion date
(the "Provisional Conversion Date"), on or after December 31, 2000 (the
"Provisional Conversion"), if the closing price of the Common Stock has equaled
or exceeded 150% of the Conversion Price for at least 20 Trading Days within any
30 consecutive Trading Day period. In the event that the Company undertakes a
Provisional Conversion, holders of Preferred Stock to whom the Company shall
give notice of such Provisional Conversion, will, in addition to the shares of
Common Stock which such holders will receive pursuant to the preceding sentence,
also receive a payment (the "Additional Payment") in an amount equal to the
present value of the aggregate amount of the dividends that would thereafter
have been payable on the Preferred Stock (whether or not declared) from the
Provisional Conversion Date to June 30, 2002 (the "Additional Period"). The
present value shall be calculated using as the discount rate the bond equivalent
yield on U.S. Treasury notes or bills having a term nearest in length to that of
the Additional Period, calculated as of the day immediately preceding the date
on which a notice of Provisional Conversion is mailed. The Company may effect
the payment of accumulated and unpaid dividends, liquidated damages or
Additional Amounts, at its option, in cash or delivery of fully paid
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nonassessble shares of Common Stock by issuing that whole number of shares of
Common equal to the amount of such payment divided by the Market Value Amount as
of the conversion date or by any combination thereof.
(c) Notwithstanding the foregoing, the Company may not effect these
conversions into Common Stock at any time unless (i) such shares of Common Stock
are eligible for resale pursuant to Rule 144(k) under the Act, or (ii) a
registration statement relating to the resale of the shares of Common Stock
issuable upon such conversions is effective.
4.3 The Conversion Price shall be subject to adjustment if any Conversion
Price Adjustment Event described in Section 4.3(a) occurs. The adjustment will
be accomplished from time to time as described in Section 4.3(b).
(a) In case the Issuer shall at any time or from time to time:
(i) make any payment of a dividend (or other distribution)
payable in shares of Common Stock to all Holders of any class of
Capital Stock of the Issuer (other than the issuance of shares of
Common Stock in connection with the payment of dividends on,
redemption of or the conversion of the Preferred Stock or any
preferred stock pari passu to the Preferred Stock);
(ii) make any issuance to all Holders of shares of Common Stock of
rights, options or warrants entitling them to subscribe for or
purchase shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock at less than Market Value as
of the date of conversion or exchange; provided, however, that no
adjustment shall be made with respect to such a distribution if the
Holder of shares of Preferred Stock would be entitled to receive such
rights, options or warrants upon conversion at any time of shares of
Preferred Stock into Common Stock, and provided further, that if such
rights, options or warrants are only exercisable upon the occurrence
of certain triggering events, then the Conversion Price will not be
adjusted until such triggering events occur;
(iii) make any subdivision, combination or reclassification of any
class of Common Stock;
(iv) make any distribution consisting exclusively of cash
(excluding any cash distribution upon a merger or consolidation to
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which Section 4.6 applies) to all Holders of shares of any class of
Common Stock (which distribution is not also being made to the holders
of the Preferred Stock based on the number of shares of Common Stock
into which the Preferred Stock is then convertible) in an aggregate
amount that, combined together with (1) all other such all-cash
distributions made within the then-preceding 12-months in respect of
which no adjustment has been made and (2) any cash and the fair market
value of other consideration paid or payable in respect of any tender
offer by the Issuer or any of its Subsidiaries for shares of Common
Stock concluded within the then-preceding 12-months in respect of
which no adjustment has been made, exceeds 12.5% of the Issuer's
Market Capitalization on the record date of such distribution;
(v) completes a tender or exchange offer made by the Issuer or
any of its Subsidiaries for shares of any class of Common Stock that
involves an aggregate consideration that, together with (1) any cash
and other consideration payable in a tender or exchange offer by the
Issuer or any of its Subsidiaries for shares of any class of Common
Stock expiring within the then-preceding 12-months in respect of which
no adjustment has been made and (2) the aggregate amount of any such
all-cash distributions referred to in (iv) above to all Holders of
shares of any class of Common Stock within the then-preceding
12-months in respect of which no adjustment has been made, exceeds
12.5% of the Issuer's Market Capitalization just prior to the
expiration of such tender offer; or
(vi) makes a distribution to all Holders of Common Stock (which
distribution is not also being made to the holders of the Preferred
Stock based on the number of shares of Common Stock into which the
Preferred Stock is then convertible unless the Common Stock does not
share pro rata in such distribution) consisting of evidences of
indebtedness, shares of Capital Stock other than Common Stock of the
Issuer or assets (including securities, but excluding those dividends,
rights, options, warrants and distributions referred to above).
(b) If any Conversion Price Adjustment Event occurs, the Issuer will
calculate the adjustment to the Conversion Price as follows for each specific
event. In the following descriptions, the variables have the following
definitions:
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C equals the total number of shares of Preferred Stock outstanding at
the time of the Conversion Price Adjustment Event;
U equals the number of shares of Common Stock underlying rights,
options, or warrants issued entitling the holders to subscribe for or
purchase shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock issued in the Conversion Price
Adjustment Event;
X equals the total number of shares of Common Stock outstanding
immediately prior to the Conversion Price Adjustment Event (not
including unexercised options, warrants, or rights);
Y equals the total number of shares of Common Stock outstanding
immediately after the Conversion Price Adjustment Event (not including
unexercised options, warrants, or rights);
Z equals the total number of shares of Common Stock outstanding at the
time of the Conversion Price Adjustment Event;
Cash equals any distribution consisting exclusively of cash (excluding any
cash distributed upon a merger or consolidation to which Section 4.6
applies) to all Holders of shares of Common Stock in an aggregate
amount that, combined together with (1) all other such all-cash
distributions made within the then-preceding 12-months in respect of
which no adjustment has been made and (2) any cash and the fair market
value of other consideration paid or payable in respect of any tender
offer by the Issuer or any of its Subsidiaries for shares of Common
Stock concluded within the then-preceding 12 months in respect of
which no adjustment has been made pursuant to Section 4.3(a)(iv);
ExP equals the exercise or other consideration to be paid by the Holder
upon the exercise of or conversion of "U";
MC equals Market Capitalization;
MV equals Market Value per share of the Common Stock as of the date of
conversion or exchange of "U";
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#Sh equals the number of shares of Common Stock receiving the distribution
contemplated in Section 4.3(a)(vi) or subject to the tender offer
contemplated in Section 4.3(a)(v);
TOff equals the aggregate consideration that, together with (1) any cash
and other consideration payable in a tender or exchange offer by the
Issuer or any of its Subsidiaries for shares of Common Stock expiring
within the then-preceding 12-months in respect of which no adjustment
has been made and (2) the aggregate amount of any such all-cash
distributions referred to in Section 4.3(a)(iv) to all Holders of
shares of Common Stock within the then-preceding 12-months in respect
of which no adjustment has been made;
TOff/S equals the tender offer price, per share;
TPur equals the number of shares purchased in the tender offer;
Value equals the aggregate fair market value of the distribution described
in Section 4.3(a)(vi), as determined in good faith by the Board of
Directors of the Issuer;
CP equals the Conversion Price immediately prior to the Conversion Price
Adjustment Event;
ACP equals the Conversion Price immediately after the Conversion Price
Adjustment Event;
(i) In the case of an event described in Sections 4.3(a)(i) or
4.3(a)(iii), the Conversion Price in effect immediately before such
event shall be adjusted pursuant to the following formula: X/Y
multiplied by CP=ACP.1
(ii) In the case of an event described in section 4.3(a)(ii), the
Conversion Price in effect immediately before such event shall be
adjusted pursuant to the following formula: X/(X+U ((MV-ExP)/MV))
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1 For example, where X=12 million shares, and 500,000 shares are being
issued in the Conversion Price Adjustment Event (Y=12,500,000), and CP is
$32.00, the Adjusted Conversion Price (ACP) is $30.72.
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multiplied by CP=ACP.2 If any options, warrants, convertible
securities, or other rights of the nature described in Section
4.3(a)(ii) ("Rights") expire without exercise or conversion, the
Conversion Price will be readjusted to the Conversion Price which
would otherwise be in effect had the adjustment made upon the issuance
of such Rights had been made on the basis of delivery of only the
number of shares of Common Stock actually delivered upon the exercise
or conversion of such Rights.
(iii) In the case of an event described in Section 4.3(a)(iv), the
Conversion Price in effect immediately before such event shall be
adjusted pursuant to the following formula: CP-((Cash-12.5%
MC)/C)=ACP.3
There will be no adjustment to the Conversion Price pursuant to
Section 4.4(a)(iv) if (Cash-12.5% MC) is less than or equal to zero.
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2 For example, where X=12 million shares, and U=500,000 shares, MV is
$40, ExP is $35, and CP is $32.00, the Adjusted Conversion Price (ACP) is
$31.83. If ExP is $0, the Adjusted Conversion Price (ACP) is $30.72.
3 For example, where Cash distributed equals $20,000,000, Market
Capitalization equals $100,000,000 (12.5% MC=$12,500,000), CP equals $32.00 and
there are 2,000,000 shares of Preferred Stock outstanding (C), the Adjusted
Conversion Price (ACP) is $28.25.
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(iv) In the case of an event described in Section 4.4(a)(v), and
if the tender offer price or exchange offer price per share is greater
than Market Value, the Conversion Price in effect immediately before
such event shall be adjusted pursuant to the following formula:
CP-((TPur multiplied by (TOff/S-MV))/(#Sh-TPur))=ACP.4
There will be no adjustment to the Conversion Price pursuant to Clause
4.4(a)(v) if TOff/S is less than or equal to Market Value or if TPur
multiplied by TOff/S is less than 12.5% of MC.
(v) In the case of an event described in Section 4.4(a)(vi), the
Conversion Price in effect immediately before such event shall be
adjusted pursuant to the following formula: CP-(Value/#Sh)=ACP.5
An adjustment made pursuant to this Section 4.4 shall become effective
retroactively: (x) in the case of a Conversion Price Adjustment Event described
in Section 4.4(a)(i), (ii), (iv), or (vi), immediately following the close of
business on the record date for the determination of Holders of Common Stock
entitled to participate in such event; or (y) in the case of a Conversion Price
Adjustment Event described in Section 4.4(a)(ii), the close of business on the
day upon which such corporate action becomes effective; or (z) in the case of a
Conversion Price Adjustment Event described in Section 4.4(a)(v), the close of
business on the day of the completion of such tender offer or exchange offer.
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4 For example, where TOff/S is $45.00 at a time when MV is $35, CP
equals $32.00, 1,000,000 shares were purchased in the tender offer (TPur), and
there were 12,000,000 shares of the class outstanding (#SH), the Adjusted
Conversion Price (ACP) is $31.09.
5 For example, where CP is $32.00, Value equals $1,500,000, and there
were 12,000,000 shares of the class outstanding (#SH), ACP is $31.88.
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(c) Notwithstanding anything herein to the contrary, no adjustment
under this Section 4.4 need be made to the Conversion Price unless such
adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time, if ever, 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% of such
Conversion Price.
(d) Notwithstanding anything to the contrary contained in this
Certificate of Designation, no Conversion Price adjustment will be made as a
result of the issuance of Common Stock on conversion of the Preferred Stock.
(e) Each event requiring adjustment to the Conversion Price shall
require only a single adjustment even though more than one of the adjustment
clauses set forth in Section 4.4(a), Section 4.5 or Section 4.6, may be
applicable to such Conversion Price Adjustment Event.
(f) If the Issuer shall fix a record date for the Holders of any class
of its Capital Stock for the purpose of entitling them to receive a dividend or
other distribution which would otherwise constitute a Conversion Price
Adjustment Event, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the fixing of such record date.
(g) Upon any increase or decrease in the Conversion Price, then, and in
each such case, the Issuer promptly shall deliver to each registered Holder of
Preferred Stock a certificate signed by an authorized officer of the Issuer,
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the increased or
decreased Conversion Price then in effect following such adjustment.
(h) The Issuer reserves the right to make such reductions in the
Conversion Price in addition to those required in the foregoing provisions as it
considers to be advisable in order that any event treated for Federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients. In the event the Issuer elects to make such a reduction in the
Conversion Price, the Issuer will comply with the requirements of Rule 14e-1
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under the 1934 Act, and any other securities laws and regulations thereunder if
and to the extent that such laws and regulations are applicable in connection
with the reduction of the Conversion Price.
4.4 In the event the Issuer distributes rights or warrants (other than
those referred to in Section 4.4(a)(ii)) pro rata to all Holders of shares of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Issuer, the Holders of any Preferred Stock surrendered for
conversion will, in the discretion of the Issuer and subject to the last
paragraph of this Section 4.5, be entitled to receive upon such conversion, in
addition to the shares of Common Stock then issuable upon such conversion (the
"Conversion Shares"), a number of rights or warrants to be determined as
follows:
(a) if such conversion occurs on or prior to the date for the
distribution to Holders of rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same number of
rights or warrants to which a Holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions applicable to the rights or warrants,
and
(b) if such conversion occurs after such Distribution Date, the same
number of rights or warrants to which a Holder of the number of shares of Common
Stock of the Issuer into which such Preferred Stock was convertible immediately
prior to such Distribution Date would have been entitled on such Distribution
Date in accordance with the terms and provisions of and applicable to the rights
or warrants.
In the event the Holders of the Preferred Stock are not entitled to
receive such rights or warrants pursuant to Section 4.4(a) or 4.4(b), the
Conversion Price will be subject to adjustment upon any declaration or
distribution of such rights or warrants pursuant to Section 4.4, above.
4.5 (a) In case of:
(i) any capital reorganization or reclassification or other
change of outstanding shares of Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to
par value), or
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(ii) any consolidation or merger of the Issuer with or into
another Person (other than a consolidation or merger in which the
Issuer is the resulting or surviving Person and which does not result
in any reclassification or change of outstanding Common Stock), or
(iii) any sale, transfer or other conveyance to another Person of
all or substantially all of the assets of the Issuer computed on a
consolidated basis (other than the sale, transfer, assignment or
distribution of shares of Capital Stock or assets to a Subsidiary)
(any of the events described in Section 4.6(a) being referred to in this Section
4.6 as a "Transaction"), then the adjustment described in Section 4.5(b) will be
made.
(b) Each share of Preferred Stock then outstanding shall, without the
consent of any Holder of Preferred Stock, become convertible only into the kind
and amount of shares of stock or other securities (of the Issuer or another
issuer) or property or cash receivable upon such Transaction by a Holder of the
number of shares of Common Stock into which such share of Preferred Stock could
have been converted immediately prior to such Transaction after giving effect to
any adjustment event, provided, however that the adjustments described in
Section 4.6 may apply upon the occurrence of a Change of Control.
(c) The provisions of this Section 4.5 and any equivalent thereof in
any such certificate similarly shall apply to successive Transactions. The
provisions of this Section 4.5 shall be the sole right of Holders of Preferred
Stock in connection with any Transaction and such Holders shall have no separate
vote thereon.
4.6 (a) Upon a Change of Control, if the Market Value at such time is less
than the Conversion Price, then the Conversion Price will be subject to a
temporary adjustment for a period of 60 days such that the Conversion Price will
be equal to the greater of:
(i) the Market Value on the date on which a Change of Control
event occurs, and
(ii) 66.67% of the Market Value as of June 29, 1999.
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(b) In lieu of issuing the shares of Common Stock issuable upon
conversion in the event of a Change of Control, the Issuer may, at its option,
make a cash payment equal to the greater 4.6(a)(i) and (ii) above, or any
combination thereof.
(c) In the event of a Change of Control, notice of such Change of
Control shall be given, within five Business Days of the Change of Control Date,
by the Issuer by first-class mail to each record Holder of shares of Preferred
Stock, at such Holder's address as the same appears on the books of the Issuer.
Each such notice shall state: (i) that a Change of Control has occurred; (ii)
the last day on which the Change of Control Option may be exercised (the
"Expiration Date"); (iii) the name and address of the paying agent; and (iv) the
procedures that Holders must follow to exercise the Change of Control Option.
(d) On or before the Expiration Date, each Holder of shares of
Preferred Stock wishing to exercise the Change of Control option shall surrender
the certificate or certificates representing the shares of Preferred Stock to be
converted, in the manner and at the place designated in the notice described in
Section 4.6(c), and on such date the cash or shares of Common Stock due to such
Holder shall be delivered to the person whose name appears on such certificate
or certificates as the owner thereof and each surrendered certificate shall be
returned to authorized but unissued shares. Upon surrender (in accordance with
the notice described in Section 4.6(c) of the certificate or certificates
representing any shares to be so converted (properly endorsed or assigned for
transfer, if the Issuer shall so require and the notice shall so state), such
shares shall be converted by the Issuer at the Conversion Price as adjusted.
(e) The foregoing provisions are not waivable by the Issuer.
4.7 In the case of any distribution by the Issuer to its stockholders of
substantially all of its assets, each Holder of Preferred Stock will participate
pro rata in such distribution based on the number of shares of Common Stock into
which such Holders' shares of Preferred Stock would have been convertible
immediately prior to such distribution, unless the amount of such distribution
would result in a payment less than the Liquidation Preference, in which case
the Liquidation Preference shall be paid.
4.8 If, as a result of any Conversion Price Adjustment Event, a Holder of
the Preferred Stock becomes entitled to receive upon conversion shares of two or
more classes of Capital Stock, the Issuer shall determine the reasonable
allocation of the adjusted Conversion Price between the classes of Capital
Stock. After such allocation, the Conversion Price of each class of Capital
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Stock shall thereafter be subject to adjustment on terms applicable to the
Preferred Stock in this Article 4. 1.1
4.9 The Issuer shall at all times reserve and keep available for issuance
upon the conversion of the Preferred Stock, such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Preferred Stock, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized unissued shares of
Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Preferred Stock.
4.10 The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Preferred Stock shall be made without charge to the
converting Holder of shares of Preferred Stock for such certificates or for any
tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or in such names as may be directed by,
the Holders of the shares of Preferred Stock converted; provided, however, that
the Issuer shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the Holder of the shares of Preferred Stock converted,
and the Issuer shall not be required to issue or deliver such certificate unless
or until the Person or Persons requesting the issuance or delivery thereof shall
have paid to the Issuer the amount of such tax or shall have established to the
reasonable satisfaction of the Issuer that such tax has been paid.
5. OPTIONAL REDEMPTION OF PREFERRED STOCK
5.1 (a) Shares of the Preferred Stock will not be redeemable prior to June
30, 2002.
(b) On or after June 30, 2002, the Preferred Stock may be redeemed, in
whole or in part, at the option of the Issuer, in cash, by delivery of fully
paid and nonassessable shares of Common Stock or a combination thereof, upon
Redemption Notice given not less than 20 days' notice nor more than 60 days'
prior to the Redemption Date, during the 12-month periods commencing on June 30
of the years indicated below, at the following Redemption Prices per share, plus
in each case all accumulated and unpaid dividends to the Redemption Date:
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Redemption
Year Price Per Share
---- ---------------
2002 ......................................... $52.00
2003 ......................................... $51.50
2004 ......................................... $51.00
2005 ......................................... $50.50
2006 and thereafter .......................... $50.00
(c) In the event that fewer than all the outstanding shares of the
Preferred Stock are to be redeemed, the shares to be redeemed will be determined
pro rata or by lot.
(d) If the Issuer elects to pay the Redemption Price in shares of
Common Stock, the number of shares of Common Stock to be distributed will be
calculated by dividing the aggregate Redemption Price payable to any Holder by
the Market Value Amount as of the Redemption Notice Date.
(e) From and after the applicable Redemption Date (unless the Issuer
shall be in default of payment of the Redemption Price), dividends on the shares
of the Preferred Stock to be redeemed on such Redemption Date shall cease to
accumulate, such shares shall no longer be deemed to be outstanding, and all
rights of the Holders thereof as stockholders of the Issuer (except the right to
receive the Redemption Price and accumulated dividend amounts and liquidation
penalties, if any through the Redemption Date) will cease.
5.2 If any dividends on the Preferred Stock are in arrears, no shares of
the Preferred Stock will be redeemed unless all dividends in arrears are paid or
all outstanding shares of the Preferred Stock are simultaneously redeemed.
5.3 In the event the Issuer shall elect to redeem shares of the Preferred
Stock pursuant to Section 5.1 hereof, the Issuer must provide the Holders with
the Redemption Notice as described in Section 5.1(b), and
(a) (i) On or before any Redemption Date, each Holder of shares of
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares of Preferred Stock (properly endorsed or assigned, or
transferred, if the Issuer shall so require and the Redemption Notice shall so
state) to the Issuer or the Redemption Agent (if appointed) in the manner and at
the place designated in the Redemption Notice.
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(ii) On the Redemption Date, the Issuer or the Redemption Agent,
as applicable, shall pay or deliver to the Holder whose name appears
on such certificate or certificates as the owner thereof, the full
Redemption Price due such Holder in cash, in fully paid and
nonassessable shares of Common Stock or in a combination thereof.
(iii) The shares represented by each certificate to be surrendered
shall be automatically (and without any further action of the Issuer
or the Holder) canceled as of the Redemption Date whether or not
certificates for such shares are returned to the Issuer and returned
to authorized but unissued shares of preferred stock of no series.
(iv) If fewer than all the shares represented by any such
certificate are to be redeemed, a new certificate shall be issued
representing the unredeemed shares, without cost to the Holder,
together with the amount of cash, if any, in lieu of fractional
shares.
(b) If a Redemption Notice shall have been given as provided in Section
5.1, all rights of the Holders thereof as stockholders of the Issuer with
respect to shares so called for redemption (except for the right to receive from
the Issuer the Redemption Price) shall cease either (i) from and after the
Redemption Date (unless the Issuer shall default in the payment of the
Redemption Price, in which case such rights shall not terminate at the
Redemption Date) or (ii) if the Issuer shall so elect and state in the
Redemption Notice, from and after the time and date (which date shall be the
Redemption Date or an earlier date not less than 20 days after the date of
mailing of the Redemption Notice) on which the Issuer shall irrevocably deposit
in trust for the Holders of the shares to be redeemed with a designated
Redemption Agent as paying agent sufficient to pay at the office of such paying
agent, on the Redemption Date, the Redemption Price. Any money or shares of
Common Stock so deposited with such Redemption Agent which shall not be required
for such redemption shall be returned to the Issuer forthwith. Subject to
applicable escheat laws, any moneys or shares of Common Stock so set aside by
the Issuer and unclaimed at the end of one year from the Redemption Date shall
revert to the general funds of the Issuer, after which reversion the Holders of
such shares so called for redemption shall look only to the general funds of the
Issuer for the payment of the Redemption Price without interest. Any interest
accrued on funds held by the Redemption Agent shall be paid to the Issuer from
time to time.
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(c) In the event that fewer than all the outstanding shares of the
Preferred Stock are to be redeemed, the shares to be redeemed shall be
determined pro rata or by lot, as determined by the Issuer, except that the
Issuer may redeem such shares held by any Holder of fewer than 100 shares (or
shares held by Holders who would hold fewer than 100 shares as a result of such
redemption), as may be determined by the Issuer.
6. LIQUIDATION PREFERENCE
6.1 Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Issuer, Holders of the Preferred Stock will be entitled to be paid,
out of assets of the Issuer available for distribution the Liquidation
Preference per share plus an amount in cash equal to all accumulated and unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding up
(including an amount equal to a prorated dividend for the period from the last
dividend payment date to the date fixed for liquidation, dissolution or winding
up), before any distribution is made on any Junior Securities, including,
without limitation, the Common Stock.
6.2 If, upon any voluntary liquidation, dissolution or winding-up of the
Issuer, the amounts payable with respect to the liquidation performance of the
Preferred Stock and all other Parity Securities are not paid in full, the
Holders of the Preferred Stock and the Parity Securities will share pro rata in
proportion to the full distribution to which each is entitled.
6.3 After payment of the full amount of the Liquidation Preference to which
they are entitled, the Holders of shares of the Preferred Stock will have no
right or claim to any of the remaining assets of the Issuer.
6.4 Neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or business of the Issuer (other than in connection with the winding up
of its business), nor the merger or consolidation of the Issuer with or into any
other corporation, will be deemed to be a dissolution, liquidation, or winding
up, voluntary or involuntary, of the Issuer.
7. VOTING RIGHTS
7.1 Holders of the Preferred Stock have no voting rights with respect to
general corporate matters except as provided by law or as set forth herein.
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7.2 (a) If dividends or Quarterly Return Amounts (as defined in the
Securities Account Agreement) payable on the Preferred Stock are in arrears and
unpaid for six quarterly periods, the Holders of the Preferred Stock voting
separately as a class with the shares of any other preferred stock or preference
securities having similar voting rights (the "Voting Rights Class") will be
entitled at the next regular or special meeting of stockholders of the Issuer to
elect two directors of the Issuer to fill newly created directorships.
(b) Such voting rights may be exercised at a special meeting of the
holders of the shares of the Voting Rights Class, 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 Preferred Stock shall have been
paid in full, at which time or times such voting rights and the term of the
directors elected pursuant to Section 7.2(a) shall terminate.
(c) At any time when such voting rights shall have vested in holders of
shares of the Voting Rights Class described in Section 7.2(a), a proper officer
of the Issuer may call, and, upon the written request of the record holders of
shares representing twenty-five percent (25%) of the voting power of the shares
then outstanding of the Voting Rights Class, addressed to the Secretary of the
Issuer, shall call a special meeting of the holders of shares of the Voting
Rights Class. 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 Issuer, or, if none, at a place
designated by the Board of Directors. Notwithstanding the provisions of this
Section 7.2(c), no such special meeting shall be called during a period within
the 60 days immediately preceding the date fixed for the next annual meeting of
stockholders, in which such case the election of directors pursuant to Section
7.2(a) shall be held at such annual meeting of stockholders.
(d) At any meeting held for the purpose of electing directors at which
the holders of the Voting Rights Class 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 the Voting Rights Class shall be required and shall be
sufficient to constitute a quorum of such class for the election of directors by
such class.
(e) Any director elected pursuant to the voting rights created under
this Section 7.2 shall hold office until the next annual meeting of stockholders
(unless such term has previously terminated pursuant to Section 7.2(b)) and any
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vacancy in respect of any such director shall be filled only by vote of the
remaining director so elected by holders of the Voting Rights Class, or if there
be no such remaining director, by the holders of shares of the Voting Rights
Class at a special meeting called in accordance with the procedures set forth in
this Section 7.2, or, if no such special meeting is called, at the next annual
meeting of stockholders. Upon any termination of such voting rights, the term of
office of all directors elected pursuant to this Section 7 shall terminate.
7.3 The affirmative vote or consent of the Holders of at least 66-2/3% of
the outstanding Preferred Stock will be required for:
(a) the issuance of any class of Senior Securities (or security
convertible into Senior Securities or evidencing a right to purchase any shares
or any class or series of Senior Securities), and
(b) amendments to the Issuer's Certificate of Incorporation that would
affect adversely the rights of Holders of the Preferred Stock, including,
without limitation,
(i) any increase in the authorized number of shares of all series
of preferred stock in excess of 3,000,000 shares and
(ii) the issuance of any shares of Preferred Stock in excess of
the number of shares of such stock authorized in this Certificate of
Designation as of the date of the original issuance of the Preferred
Stock.
(c) In all such cases each share of Preferred Stock shall be entitled
to one vote.
7.4 Except as set forth in this Certificate of Designation, the creation,
authorization or issuance of any shares of Junior Securities or Parity
Securities or an increase or decrease in the amount of authorized Capital Stock
of any class, including any preferred stock, shall not require the consent of
the Holders of the Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of Holders of shares of the
Preferred Stock.
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8. AMENDMENT, SUPPLEMENT AND WAIVER
8.1 Without the consent of any Holder of the Preferred Stock, subject to
the requirements of the Delaware General Corporation Law, the Issuer may amend
or supplement this Certificate of Designation to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Preferred Stock in addition to or
in place of certificated Preferred Stock, to provide for the assumption of the
Issuer's obligations to Holders of the Preferred Stock in the case of a merger
or consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Preferred Stock or that does not adversely affect
the legal rights under this Certificate of Designation of any such Holder.
9. CERTAIN DEFINITIONS
Set forth below are certain defined terms used in this Certificate of
Designation.
9.1 "Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
9.2 "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by agreement of or otherwise.
9.3 "Business Day" means any day other than a Legal Holiday.
9.4 "Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock or
partnership or membership interests, whether common or preferred.
9.5 "Closing Price" for each day shall be the last sales price or in case
no such reported sales take place on such day, the average of the last reported
bid and asked price, in either case on the principal U.S. national securities
exchange on which the shares of Common Stock are admitted to trading or listed,
or if not listed or admitted to trading on such exchange, the representative
closing bid price as reported by the Nasdaq National Market, or if the Nasdaq
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National Market is no longer reporting such information, or if not so available,
the fair market price as determined, in good faith, by our Board of Directors.
9.6 "Change of Control" means: (a) the sale, lease, transfer, conveyance or
other disposition of all or substantially all of the assets of the Issuer to any
"person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act) other
than Existing Shareholders (except in connection with a liquidation or
dissolution of the Issuer that does not constitute a Change of Control under
clause (b) below), (b) the approval by the requisite shareholders of the Issuer
of a plan of liquidation or statutory dissolution (which shall not be construed
to include a plan or merger or consolidation) of the Issuer, unless Existing
Shareholders "beneficially own" (as defined in Rule 13d-3 under the Exchange
Act) at least the same percentage of voting power after the consummation of such
plan as before or otherwise retain the right or ability, by voting power, to
control the Person that acquire the proceeds of such liquidation or dissolution,
(c) any "person" or "group" (within a meaning of Sections 13(d)(3) and 14(d)(2)
of the Exchange Act or any successor provision to either of the foregoing,
including any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other
than Existing Shareholders, becomes the "beneficial owner" (as so defined) of
more than thirty-five percent (35%) of the total voting power of all classes of
the Voting Stock of the Issuer or a successor and/or warrants or options to
acquire such Voting Stock, calculated on a fully diluted basis, provided that
Existing Shareholders "beneficially own" (as so defined) in the aggregate a
percentage of such Voting Stock or warrants having a lesser percentage of voting
power than such other "person" or "group" and do not have the right or ability
by voting power, contract or otherwise to elect or designate for election a
majority of the Issuer's Board of Directors, or (d) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Issuer's Board of Directors (together with any new directors whose
nomination for election or appointment by such board or whose election by the
stockholders of the Issuer was approved by a vote of the Existing Shareholders
or a majority of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Issuer's Board of Directors then in office. Notwithstanding clause (c) above,
(i) the acquisition by a Qualified Investor of forty-nine percent (49%) or less
of the Voting Stock of the Issuer shall not constitute a Change of Control, and
(ii) a merger or consolidation that would otherwise constitute a Change of
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Control hereunder shall not constitute a Change of Control if at least ninety
percent (90%) of the consideration consists of common stock that is, or upon
issuance, will be traded on a United States national securities exchange or
quoted on the Nasdaq National Market.
9.7 "Common Stock" means the Issuer's authorized $.01 par value Class A
Common Stock.
9.8 The "Conversion Date" shall be the date the Issuer or the Transfer
Agent receives the Conversion Notice.
9.9 The "Conversion Notice" is written notice from the Holder to the Issuer
stating that the Holder elects to convert all or a portion of the shares of
Preferred Stock represented by certificates delivered to the Issuer or the
Transfer Agent contemporaneously. The Conversion Notice will specify or include:
(i) The number of shares of Preferred Stock being converted by
the Holder,
(ii) The name or names (with address and taxpayer identification
number) in which a certificate or certificates for shares of Common
Stock are to be issued,
(iii) A written instrument or instruments of transfer in form
reasonably satisfactory to the Issuer or the Transfer Agent, duly
executed by the Holder or its duly authorized legal representative, or
in blank, and
(iv) Transfer tax stamps or funds thereof, if required pursuant to
Section 4.9.
9.10 The "Conversion Price" shall initially be $84.30, subject to
adjustments as set forth in Section 4.3.
9.11 "Conversion Price Adjustment Events" are any of those events specified
in Section 4.3(a).
9.12 "Dividend Payment Date" is as defined in Section 2.1, above.
9.13 "Dividend Payment Record Date" is as defined in Section 2.1, above.
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9.14 "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
9.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
9.16 "Existing Shareholders" means Albert M. Carollo, Lawrence F. DeGeorge,
Lawrence J. DeGeorge, Curtis Rochelle, Marian Rochelle, Rochelle Investments,
Ltd. (so long as it is controlled by Curtis or Marian Rochelle), Gene W.
Schneider, G. Schneider Holdings, Co. and The Gene W. Schneider Family Trust (so
long as each is controlled by Gene W. Schneider or trustees appointed by him),
Janet S. Schneider and Mark L. Schneider, Apollo Cable Partners, L.P. and Apollo
Advisors L.P. (collectively, the "Principals") and with respect to any Principal
means:
(a) any controlling stockholder or 80% (or more) owned subsidiary of
such Principal, or with respect to each individual Principal, (1) family
partnerships, corporations or other entities holding our equity interests, the
transferee(s) or the surviving entities or entities solely for the benefit of
such Principal or any of the Persons listed in (2) through (5) below, (2) such
Principal's spouse, (3) such Principal's children, grandchildren, stepchildren,
step grandchildren and their spouses, (4) heirs, legatees and divisees, and (5)
trusts primarily for the benefit of any of the foregoing; or
(b) any trust corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% (or more) controlling interest of which consist of such Principal and/or
such other persons referred to in the immediately preceding clause (a).
9.17 "Holder" means a Person in whose name shares of Capital Stock is
registered.
9.18 "Issuer" means United International Holdings, Inc., a Delaware
corporation.
9.19 "Junior Security" is as defined in Section 3.1.
9.20 "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place payment is to be received are
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authorized by law, regulation or executive order to remain closed. If a payment
date is Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
9.21 "Liquidation Preference" means $1,000 per share of Preferred Stock.
9.22 "Market Capitalization" means the product of the then-current market
price times the total number of shares of Common Stock then outstanding.
9.23 "Market Value" means, as of any date, the average of the daily Closing
Price for the five consecutive Trading Days ending on such date.
9.24 "Market Value Amount" means (i) 97% of the Market Value of the Common
Stock, if a shelf registration statement registering the resale of such shares
is effective or the shares of Common Stock are eligible for resale pursuant to
Rule 144(k) under the Act, or (ii) 93% of the Market Value of the Common Stock,
in each case determined as of the date of such notice.
9.25 "Notice Date" means the tenth day prior to a Deposit Payment Date.
9.26 "Parity Security" is as defined in Section 3.1.
9.27 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock issuer, interest, trust or unincorporated
organization (including any subdivision or ongoing business of any such entity
or substantially all of the assets of any such entity, subdivision or business).
9.28 "Preferred Stock" means the Preferred Stock authorized in this
Certificate of Designation.
9.29 "Qualified Investor" means an investor approved by the Board of
Directors of the Company, which has debt securities rated by a nationally
recognized statistical rating organization in one of its four highest generic
rating categories and either (i) is in the telecommunications industry or (ii)
engages in a business which will benefit from strategic synergies from an
investment in the Company.
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9.30 "Redemption Agent" means that Person, if any, appointed by the Issuer
to hold funds deposited by the Issuer in trust to pay to the Holders of shares
to be redeemed.
9.31 "Redemption Date" means that certain date set forth in the Redemption
Notice on which date the redemption of the Preferred Stock is completed.
9.32 "Redemption Notice" means that notice to be given by the Issuer to the
Holders notifying the Holders as to the redemption, in whole or in part, of the
Preferred Stock pursuant to Article 5 hereof. The Redemption Notice shall
include the following information: (i) the Redemption Date and the time of day
on such date; (ii) the total number of shares of Preferred Stock to be redeemed
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; (iii) the Redemption
Price (whether to be paid in cash or shares of Common Stock); (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the Redemption Price and delivery of certificates representing shares of Common
Stock (if the Issuer so chooses); (v) that dividends on the shares to be
redeemed will cease to accrue on such Redemption Date unless the Issuer defaults
in the payment of the Redemption Price; and (vi) the name of any bank or trust
company, if any, performing the duties of Redemption Agent. Redemption Notice
shall be given by first-class mail to each record Holder of the shares to be
redeemed, at such holder's address as the same appears on the books of the
Company.
9.33 "Redemption Notice Date" means the date the Redemption Notice is first
mailed or delivered to any Holder.
9.34 "Redemption Price" means that price established for redemption of the
Preferred Stock established in Section 5.1(b) hereof.
9.35 "Securities Account" means the account created pursuant to the
Securities Account Agreement.
9.36 "Securities Account Agreement" means the Securities Account Agreement
dated July 6, 1999 between the Company and Firstar Bank of Minnesota, N.A., as
deposit agent.
9.37 "Senior Securities" is as defined in Section 3.1.
9.38 "Subsidiary" means, with respect to any person, any corporation,
association or other business entity of which more than 50% of the total voting
29
<PAGE>
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of such person or a combination
thereof.
9.39 The "Transfer Agent" shall be as established pursuant to Article 11
hereof.
9.40 "Trading Day" shall mean any business day on which the Nasdaq national
Market (or any U.S. national securities exchange or quotation system on which
the Common Stock is then listed) is open for the transaction of business.
9.41 "Voting Stock" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
10. TRANSFER AGENT AND REGISTRAR
The duly appointed Transfer Agent and registrar for the Preferred Stock
shall be Firstar Bank of Minnesota, N.A.. The Issuer may, in its sole
discretion, remove the Transfer Agent in accordance with the agreement between
the Issuer and the Transfer Agent; provided that the Issuer shall appoint a
successor transfer agent who shall accept such appointment prior to the
effectiveness of such removal.
11. OTHER PROVISIONS
11.1 With respect to any notice to a Holder of shares of the Preferred
Stock required to be provided hereunder, neither failure to mail such notice,
nor any defect therein or in the mailing thereof, to any particular Holder shall
affect the sufficiency of the notice or the validity of the proceedings referred
to in such notice with respect to the other Holders or affect the legality or
validity of any distribution, rights, 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.
11.2 Shares of Preferred Stock issued and reacquired will be retired and
canceled promptly after reacquisition thereof and, upon compliance with the
applicable requirements of Delaware law, have the status of authorized but
unissued shares of preferred stock of the Issuer undesignated as to series and
may with any and all other authorized but unissued shares of preferred stock of
30
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the Issuer be designated or redesignated and issued or reissued, as the case may
be, as part of any series of preferred stock of the Issuer except that any
issuance or reissuance of shares of Preferred Stock must be in compliance with
this Certificate of Designation.
11.3 In the Issuer's discretion, no fractional shares of Common Stock or
securities representing fractional shares of Common Stock will be issued upon
conversion, redemption, or as dividends payable in the Preferred Stock. Any
fractional interest in a share of Common Stock resulting from conversion,
redemption, or dividend payment will be paid in cash based on the last reported
sale price of the Common Stock on the Nasdaq National Market (or any national
securities exchange or authorized quotation system on which the Common Stock is
then listed) at the close of business on the trading day next preceding the date
of conversion or such later time as the Issuer is legally and contractually able
to pay for such fractional shares.
11.4 The shares of Preferred Stock shall be issuable in whole shares.
11.5 All notices periods referred to herein shall commence on the date of
the mailing of the applicable notice.
11.6 Until registered under the Securities Act of 1933, as amended, or the
expiration of the holding period with respect to such shares of Preferred Stock
set forth in clause (k) of Rule 144 promulgated under the Securities Act, each
stock certificate for the Preferred Stock shall bear the legend in substantially
the following form (unless otherwise agreed to by the Company and the holder
thereof):
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT, IN CONNECTION WITH EXEMPT RESALES OF THE
DEPOSITARY SHARES BY DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION, GOLDMAN, SACHS & CO., CREDIT SUISSE FIRST BOSTON
CORPORATION AND SALOMON SMITH BARNEY, INC. (THE "INITIAL PURCHASERS"),
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) (A "QIB");
31
<PAGE>
(2) AGREES THAT, IN CONNECTION WITH RESALES AND TRANSFERS OF THIS
SECURITY OTHER THAN EXEMPT RESALES OF THE DEPOSITARY SHARES BY THE
INITIAL PURCHASERS, IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (C) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY), OR (D) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN ADDITION, IN THE CASE OF RESALES OF
DEPOSITARY SHARES OR PREFERRED STOCK, (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
OR (B) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR 904 OF REGULATION S UNDER THE SECURITIES ACT IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
AS USED HEREIN, THE TERM "OFFSHORE TRANSACTION" HAS THE MEANING GIVEN
TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
32
<PAGE>
IN WITNESS WHEREOF, United International Holdings, Inc. caused this
Certificate to be signed and attested by this 2nd day of July, 1999.
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Ellen P. Spangler
---------------------------------------------
Name: Ellen P. Spangler
Title: Senior Vice President and Secretary
Attest:
/s/ Tina Wildes
- -----------------------------
Name: Tina Wildes
Title: Senior Vice President
33
UNITED INTERNATIONAL HOLDINGS, INC.
Firstar Bank of Minnesota, N.A., as Depositary
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
DEPOSIT AGREEMENT
FOR
7% SERIES C SENIOR CUMULATIVE CONVERTIBLE PREFERRED STOCK
Dated as of July 6, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I Definitions......................................................................... 1
ARTICLE II Book-Entry, Form of Receipts, Deposit of Preferred Stock, Execution and Delivery,
Transfer, Surrender and Redemption of Receipts ..................................... 3
Section 2.1 Book-Entry Form; Form and Transfer of Receipts....................... 3
Section 2.2 Deposit of Preferred Stock; Execution and Delivery of
Receipts in Respect Thereof.......................................... 5
Section 2.3 Redemption and Conversion of Preferred Stock......................... 7
Section 2.4 Registration of Transfer of Receipts................................. 11
Section 2.5 Surrender of Receipts and Withdrawal of Preferred Stock.............. 11
Section 2.6 Limitations on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts................................... 13
Section 2.7 Lost Receipts, etc................................................... 13
Section 2.8 Cancellation and Destruction of Surrendered
Receipts............................................................. 13
Section 2.9 Interchangeability of Book-Entry Receipts and
Receipts in Physical, Certificated Form.............................. 14
ARTICLE III Certain Obligations of Holders of Receipts and the Company.......................... 14
Section 3.1 Filing Proofs, Certificates and Other Information.................... 14
Section 3.2 Payment of Taxes or Other Governmental Charges....................... 15
Section 3.3 Warranty as to Preferred Stock....................................... 15
ARTICLE IV The Deposited Securities; Notices................................................... 15
Section 4.1 Cash and Common Stock Distributions.................................. 15
Section 4.2 Distributions Other than Cash, Rights, Preferences
or Privileges........................................................ 16
Section 4.3 Subscription Rights, Preferences or Privileges....................... 17
Section 4.4 Notice of Dividends, etc.; Fixing of Record Date
for Holders of Receipts.............................................. 18
Section 4.5 Voting Rights........................................................ 18
Section 4.6 Inspection of Reports................................................ 19
Section 4.7 Lists of Receipt Holders............................................. 19
Section 4.8 Tax and Regulatory Compliance........................................ 19
Section 4.9 Withholding.......................................................... 19
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ARTICLE V The Depositary, the Depositary's Agents, the Registrar
and the Company..................................................................... 20
Section 5.1 Maintenance of Offices, Agencies and Transfer Books
by the Depositary; Registrar......................................... 20
Section 5.2 Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company.................... 21
Section 5.3 Obligations of the Depositary, the Depositary's
Agents, the Registrar and the Company................................ 21
Section 5.4 Resignation and Removal of the Depositary;
Appointment of Successor Depositary.................................. 23
Section 5.5 Corporate Notices and Reports........................................ 24
Section 5.6 Indemnification by the Company....................................... 24
Section 5.7 Charges and Expenses................................................. 24
ARTICLE VI Amendment and Termination........................................................... 25
Section 6.1 Amendment............................................................ 25
Section 6.2 Termination.......................................................... 25
ARTICLE VII Miscellaneous....................................................................... 26
Section 7.1 Counterparts......................................................... 26
Section 7.2 Exclusive Benefit of Parties......................................... 27
Section 7.3 Invalidity of Provisions............................................. 27
Section 7.4 Notices.............................................................. 27
Section 7.5 Depositary's Agents.................................................. 28
Section 7.6 Holders of Receipts are Parties...................................... 28
Section 7.7 Governing Law........................................................ 28
Section 7.8 Inspection of Deposit Agreement...................................... 28
Section 7.9 Headings............................................................. 28
</TABLE>
ii
<PAGE>
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of July 6, 1999, among United International
Holdings, Inc., a Delaware corporation doing business as UnitedGlobalCom (the
"Company"), Firstar Bank of Minnesota, N.A., as Depositary, and the holders from
time to time of the Receipts (as hereinafter defined) issued hereunder.
WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of shares of the Preferred Stock (as hereinafter
defined) of the Company with the Depositary for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of Receipts evidencing
Depositary Shares (as hereinafter defined) in respect of the Preferred Stock so
deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement.
NOW, THEREFORE, in consideration of the premises contained herein, the
parties hereto agree as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement. Terms
not otherwise defined herein shall be given the meaning assigned to such terms
in the Certificate.
"Beneficial Owner" shall have the meaning set forth in Section 2.1 hereof.
"Certificate" shall mean the Certificate of Designation filed with the
Secretary of State of the State of Delaware establishing the Preferred Stock as
a series of preferred stock of the Company designated as 7% Series C Senior
Cumulative Convertible Preferred Stock."
<PAGE>
"Common Stock" shall mean the Company's Class A Common Stock, par value
$0.01 per share, or any security into which such Common Stock may be converted.
"Company" shall mean United International Holdings, Inc., a Delaware
corporation, and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended, modified
or supplemented from time to time.
"Depositary" shall mean Firstar Bank of Minnesota, N.A., and any successor
as Depositary hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
ownership of one-twentieth of a share of the Preferred Stock deposited with the
Depositary under this Deposit Agreement, all as evidenced by a Receipt. Subject
to the terms of this Deposit Agreement, each owner of a Depositary Share is
entitled, in proportion to the applicable fraction of a share of Preferred Stock
represented by such Depositary Share, to all the rights, preferences and
privileges of the Preferred Stock represented by such Depositary Share,
including dividend, voting, redemption, conversion and liquidation rights and
subject, proportionately, to all of the limitations of the Preferred Stock
represented thereby, contained in the Certificate, and to the benefits of all
obligations of the Company under the Certificate.
"Depositary's Agent" shall mean any agent appointed by the Depositary
pursuant to Section 7.5.
"Depositary's Office" shall mean the corporate trust office of the
Depositary in New York, New York, at which at any particular time its depositary
receipt business shall be administered.
"DTC" shall have the meaning set forth in Section 2.1.
"DTC Receipt" shall have the meaning set forth in Section 2.1.
"Officer's Certificate" shall mean a certificate signed by the Chairman of
the Board, the President or any Vice President of the Company and delivered to
the Depositary.
"Preferred Stock" shall mean the Company's 7% Series C Senior Cumulative
Convertible Preferred Stock, par value $0.01 per share.
"Receipt" shall mean one of the Depositary Receipts issued hereunder by the
Depositary, whether in definitive or temporary form, evidencing interests held
in Depositary Shares, in substantially the form set forth in Exhibit A hereto.
2
<PAGE>
Wherein the context requires, the term "Receipt" shall be deemed to include the
DTC Receipt.
"Record Holder" as applied to a Receipt shall mean the person in whose name
a Receipt is registered on the books of the Depositary maintained for such
purpose.
"Redemption Date" shall have the meaning specified in Section 2.3(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
Book-Entry, Form of Receipts, Deposit of Preferred Stock, Execution
and Delivery, Transfer, Surrender and Redemption of Receipts
Section 2.1 BOOK-ENTRY FORM; FORM AND TRANSFER OF RECEIPTS. The Company and
the Depositary shall make application to The Depository Trust Company ("DTC")
for acceptance of all or a portion of the Receipts for its book-entry settlement
system. The Company hereby appoints the Depositary acting through any authorized
officer thereof as its attorney-in-fact, with full power to delegate, for
purposes of executing any agreements, certifications or other instruments or
documents necessary or desirable in order to effect the acceptance of such
Receipts for DTC eligibility, including, but not limited to, a letter of
representations, in form satisfactory to the Company, the Depositary and DTC. So
long as the Receipts are eligible for book-entry settlement with DTC, except as
provided for in Section 2.9 of this Deposit Agreement, or unless otherwise
required by law, all Depositary Shares to be issued and sold in reliance on Rule
144A are expected to be eligible for trading in the Private Offerings, Resales
and Trading Through Automated Linkages ("PORTAL") market of the National
Association of Securities Dealers, Inc. with book-entry settlement through DTC,
shall be represented by a single receipt (the "DTC Receipt") which shall be
deposited with DTC (or its custodian) evidencing all such Depositary Shares and
registered in the name of the nominee of DTC (initially expected to be Cede &
Co.). Firstar Bank of Minnesota, N.A. or such other entity as is agreed to by
DTC may hold the DTC Receipt as custodian for DTC. During any period in which
any Depositary Shares are evidenced by the DTC Receipts, except as expressly
provided for in the following paragraph and in Section 2.9 of this Deposit
Agreement, Beneficial Owners acquiring Depositary Shares, issued and sold in
reliance on Rule 144A with book-entry settlement through DTC, shall not receive
or be entitled to receive physical delivery of the Receipts representing their
ownership interest in such Depositary Shares. Ownership of beneficial interests
3
<PAGE>
in the DTC Receipt ("Beneficial Owners") shall be shown on, and the transfer of
such ownership shall be effected through, records maintained by (i) DTC or its
nominee for such DTC Receipt, or (ii) institutions that have accounts with DTC.
If DTC subsequently ceases to make its book-entry settlement system
available for the Receipts, the Company may instruct the Depositary regarding
making other arrangements for book-entry settlement. In the event that the
Receipts are not eligible for, or it is no longer necessary to have the Receipts
available in book-entry form, the Depositary shall provide written instructions
to DTC to deliver to the Depositary for cancellation the DTC Receipt, and the
Company shall instruct the Depositary to deliver to the Beneficial Owners of the
Depositary Shares previously evidenced by the DTC Receipt definitive Receipts in
physical form evidencing such Depositary Shares. Such definitive Receipts shall
be in the form annexed hereto as Exhibit A with appropriate insertions,
modifications and omissions, as hereafter provided.
The Receipts shall be typewritten, in the case of the DTC Receipt, and
otherwise shall, upon notice by the Company to the Depositary, be definitive
Receipts which shall be engraved or printed or lithographed on steel-engraved
borders and shall be substantially in the form set forth as Exhibit A annexed to
this Deposit Agreement, with appropriate insertions, modifications and
omissions, as hereinafter provided. The DTC Receipt shall bear such legend or
legends as may be required by DTC in order for it to accept the Depositary
Shares for its book-entry settlement system. Until such time as the Receipts are
so engraved or printed or lithographed in accordance with the preceding
sentence, the Depositary, upon the written order of the Company or any holder of
Preferred Stock, as the case may be, delivered in compliance with Section 2.2,
shall execute and deliver temporary Receipts which are printed, lithographed,
typewritten, mimeographed or otherwise substantially identical to (and entitling
the Record Holders thereof to all the rights pertaining to) the definitive
Receipts in lieu of which they are issued, and with such appropriate insertions,
omissions, substitutions and other variations as the persons executing such
Receipts may determine, as evidenced by their execution of such Receipts. After
the preparation of definitive Receipts, the temporary Receipts shall be
exchangeable for definitive Receipts upon surrender of the temporary Receipts at
the Depositary's Office, without charge to the Record Holder. Upon surrender for
cancellation of any one or more temporary Receipts, the Depositary shall execute
and deliver in exchange therefor definitive Receipts representing the same
number of Depositary Shares as represented by the surrendered temporary Receipt
or Receipts. Such exchange shall be made at the Company's expense and without
any charge therefor to the Record Holder of the Receipts. Until so exchanged,
the temporary Receipts shall in all respects be entitled to the same benefits
under this Deposit Agreement, and with respect to the Preferred Stock, as
definitive Receipts.
4
<PAGE>
Receipts shall be executed by the Depositary by the manual signature of a
duly authorized signatory of the Depositary; provided, that such signature may
be a facsimile if a registrar for the Receipts (other than the Depositary) shall
have been appointed by the Depositary and such Receipts are countersigned by
manual signature of a duly authorized signatory of such registrar. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed manually by a duly
authorized signatory of the Depositary or, if a registrar for the Receipts
(other than the Depositary) shall have been appointed, by manual or facsimile
signature of a duly authorized signatory of the Depositary and countersigned
manually by a duly authorized signatory of such registrar. The Depositary shall
record on its books each Receipt so signed and delivered as hereinafter
provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement (in each case as set forth in an Officer's Certificate
delivered to the Depositary) as may be required by the Company or the Depositary
or required to comply with any applicable law or any regulation or with the
rules and regulations of any securities exchange upon which the Preferred Stock,
the Depositary Shares or the Receipts may be listed or to conform with any usage
with respect thereto, or to indicate any special limitations or restrictions to
which any particular Receipts are subject.
Subject to any limitations set forth in a Receipt or in this Deposit
Agreement, title to Depositary Shares evidenced by a Receipt which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.4, the
Depositary may, notwithstanding any notice to the contrary, treat the Record
Holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions, the exchange of Depositary Shares for Preferred Stock, the right
to exchange Receipts pursuant to Section 2.9 or to any notice provided for in
this Deposit Agreement and for all other purposes.
Section 2.2 DEPOSIT OF PREFERRED STOCK; EXECUTION AND DELIVERY OF RECEIPTS
IN RESPECT THEREOF. Concurrently with the execution of this Deposit Agreement,
the Company is delivering to the Depositary a certificate or certificates,
5
<PAGE>
registered in the name of the Depositary and evidencing 425,000 shares of
Preferred Stock, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary. Subject to the terms and conditions of this
Deposit Agreement, the Company or any holder of Preferred Stock may from time to
time deposit shares of the Preferred Stock under this Deposit Agreement by
delivery to the Depositary of a certificate or certificates for the Preferred
Stock to be deposited, properly endorsed or accompanied, if required by law or
the Depositary, by a duly executed instrument of transfer or endorsement, in
form satisfactory to the Depositary. Concurrently with each delivery of
certificates, the Company or the holder, as the case may be, is delivering or
shall deliver, as the case may be, to the Depositary (i) all such certifications
as may be required by the Depositary in accordance with the provisions of this
Deposit Agreement and (ii) a written order of the Company directing the
Depositary to execute and deliver to, or upon the written or oral order of, the
person or persons stated in such order a Receipt or Receipts for the Depositary
Shares representing such deposited Preferred Stock. The Depositary acknowledges
receipt of the deposited Preferred Stock delivered on the date of this Deposit
Agreement, together with all related documentation, and agrees to hold such
deposited Preferred Stock in an account to be established by the Depositary at
the Corporate Office or at such other office as the Depositary shall determine.
The Company hereby appoints the Depositary as the registrar, transfer agent and
paying agent for the Preferred Stock and the Depositary hereby accepts such
appointment and, as such, will reflect changes in the number of shares
(including any fractional shares) of deposited Preferred Stock held by notation,
book-entry or other appropriate method.
Upon receipt by the Depositary of a certificate or certificates for
Preferred Stock deposited in accordance with the provisions of this Section,
together with the other documents required as above specified, and upon
recordation of the Preferred Stock on the books of the Company in the name of
the Depositary or its nominee, the Depositary, subject to the terms and
conditions of this Deposit Agreement, shall execute and deliver, to or upon the
order of the Company or a holder of Preferred Stock depositing shares of
Preferred Stock in accordance with the first paragraph of this Section, a
Receipt or Receipts for the number of whole Depositary Shares representing the
Preferred Stock so deposited and registered in such name or names as may be
requested by the Company or such holder. The Depositary shall execute and
deliver such Receipt or Receipts at the Depositary's Office or such other
offices, if any, as the Depositary may designate. Delivery at other offices
shall be at the risk and expense of the person requesting such delivery. The DTC
Receipt shall provide that it shall evidence the aggregate number of Depositary
Shares from time to time indicated in the records of the Depositary and that the
6
<PAGE>
aggregate number of Depositary Shares evidenced thereby may from time to time be
increased or decreased by making adjustments on such records of the Depositary.
Other than in the case of splits, combinations or other reclassifications
affecting the Preferred Stock, or in the case of dividends or other
distributions of Preferred Stock, if any, there shall be deposited hereunder not
more than the number of shares constituting the Preferred Stock as set forth in
the Certificate, as such may be amended from time to time.
Section 2.3 REDEMPTION AND CONVERSION OF PREFERRED STOCK.
(a) OPTIONAL REDEMPTION AND CONVERSION AT THE OPTION OF THE COMPANY.
Whenever the Company shall elect to redeem or convert deposited shares of
Preferred Stock in accordance with the provisions of the Certificate, it shall
(unless otherwise agreed to in writing with the Depositary) give the Depositary
not less than five (unless a shorter period shall be acceptable to the
Depositary) nor more than 10 days' prior written notice of the proposed date of
the mailing of a notice of redemption or conversion of Depositary Shares to
Record Holders of Receipts in connection with a redemption or conversion of
Preferred Stock of the number of such shares of Preferred Stock held by the
Depositary to be so redeemed or converted as hereinafter provided and such other
information as shall be required by the Depository to furnish the notice of
redemption or conversion required by the next succeeding paragraph. Any such
notice shall be accompanied by an Officer's Certificate from the Company stating
that such redemption or conversion of Preferred Stock is in accordance with the
provisions of the Certificate. Such notice to the Depositary, if given more than
60 days prior to the redemption date or conversion date, shall be in addition to
the notice required to be given for redemption or conversion pursuant to the
Certificate. On the date of any such redemption or such conversion, provided
that the Company shall then have deposited with the Depositary the shares of
Common Stock as required by the Certificate, the Depositary shall redeem or
convert (using the shares of Common Stock and funds, if any, deposited with it)
the number of Depositary Shares representing such redeemed or converted
Preferred Stock.
The Depositary shall mail notice of redemption of Preferred Stock and the
number of Depositary Shares representing the Preferred Stock to be redeemed by
first-class mail, postage prepaid, not less than 20 and not more than 60 days
prior to the date fixed for redemption of such Preferred Stock and Depositary
Shares (the "Redemption Date"). Such notice shall be mailed to Record Holders of
the Receipts evidencing the Depositary Shares to be so redeemed, at the
addresses of such Record Holders as they appear on the Receipt register of the
Depositary; but neither failure to mail any such notice to one or more such
7
<PAGE>
Record Holders nor any defect in any notice to one or more such Record Holders
shall affect the sufficiency of the proceedings for redemption as to other
Record Holders. Each such notice shall state the record date for such
redemption; the Redemption Date that all outstanding Depositary Shares are to be
redeemed, in the case of a redemption of fewer than all outstanding Depositary
Shares in connection with a partial redemption of Preferred Stock, the number of
such Depositary Shares held by such Record Holder to be so redeemed; the
Redemption Price for the Depositary Shares, the number of shares of Common Stock
deliverable upon redemption of each Depositary Share to be redeemed; the amount
of cash, if any, that the Company is paying in lieu of fractional shares of
Common Stock and the Market Value (as defined in the Certificate) to be used to
calculate the number of shares of Common Stock to be delivered; the place or
places where Receipts evidencing Depositary Shares to be redeemed are to be
surrendered for redemption; and that dividends in respect of the Preferred Stock
represented by the Depositary Shares to be redeemed will cease to accumulate on
such Redemption Date. In case less than all the outstanding Depositary Shares
are to be redeemed, the Depositary Shares to be so redeemed shall be selected by
lot or pro rata (as nearly as practicable without creating fractional shares) or
by any other equitable method determined by the Depositary, except that the
Depositary may redeem Depositary Shares held by any Record Holder of fewer than
100 Depositary Shares (or Depositary Shares held by Record Holders of Preferred
Stock who would hold fewer than 100 Depositary Shares as a result of such
redemption).
The Depositary shall mail notice of conversion of Preferred Stock and the
number of Depositary Shares representing the Preferred Stock to be converted by
first-class mail, postage prepaid, at any time within 10 days after the
occurrence of the event giving rise to the right of conversion in accordance
with the provisions of the Certificate or for so long as such conditions giving
rise to such right of conversion are continuing. Such notice shall be mailed to
Record Holders of the Receipts evidencing the Depositary Shares to be so
converted, at the addresses of such Record Holders as they appear on the Receipt
register of the Depositary; but neither failure to mail any such notice to one
or more such Record Holders nor any defect in any notice to one or more such
Record Holders shall affect the sufficiency of the proceedings for conversion as
to other Record Holders. Such notice shall state the date for such conversion
(which date shall be the date of such notice); the closing price of the Common
Stock as of the date of such notice; a statement that the Company is exercising
its right to cause the mandatory conversion and a brief description of the
provsions of the Preferred Stock conferring such right upon the Company; a brief
summary of any transfer restrictions on the shares of Common Stock issuable upon
conversion; the amount of cash, if any, that the Company is paying in lieu of
fractional shares of Common Stock and the Market Value (as defined in the
Certificate) to be used to calculate the number of shares of Common Stock to be
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delivered; the approximate date and manner upon which shares of Common Stock
will be made available; the Conversion Price as of the date of the notice; the
amount of accumulated but unpaid dividends, liquidated damages and Quarterly
Return Amounts, if any; and a statement that unless the Company defaults in
delivery of the shares of Common Stock into which such Preferred Stock has been
converted, the rights as holders of Preferred Stock shall cease as of the date
of such notice and holders shall thereafter have all rights as other holders of
Common Stock.
Notice having been mailed by the Depositary as aforesaid with respect to
redemptions or conversions described in the preceding paragraphs, from and after
the Redemption Date or Conversion Date (unless the Company shall have failed to
redeem or convert the shares of Preferred Stock to be redeemed or converted as
set forth in the Company's notice provided for in the preceding paragraphs), all
dividends in respect of the shares of Preferred Stock so called for redemption
or conversion shall cease to accumulate, the Depositary Shares called for
redemption or conversion shall be deemed no longer to be outstanding, and all
rights of the Record Holders of Receipts evidencing such Depositary Shares
(except the right to receive shares of Common Stock and, if applicable, cash
upon redemption or conversion) shall, to the extent of such Depositary Shares,
cease and terminate. The foregoing shall be subject further to the terms and
conditions of the Certificate.
Anything herein to the contrary notwithstanding, the holders of record of
Receipts evidencing Depositary Shares representing Preferred Stock at the close
of business on a record date for the payment of dividends on the Preferred Stock
will be entitled to receive the dividend payable with respect to the Preferred
Stock represented by the Depositary Shares evidenced by such Receipts (except
that holders of Depositary Shares called for redemption on a redemption date
between the record date and a date which is two days after payment of the
dividend payment dated will be entitled to receive such dividend on such
redemption date) on the corresponding dividend payment date for the Preferred
Stock notwithstanding the subsequent conversion of such Preferred Stock or
Depositary Shares after such record date and on or prior to such dividend
payment date or the Company's default in the payment of the dividend due on such
dividend payment date, in which case the amount payable upon conversion of such
Depositary Shares will not include any amount in respect of such dividend (and
the full amount of the dividend payable for the applicable dividend period shall
instead be paid on such dividend payment date to the holders of record of such
Receipts on such record date as aforesaid).
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If less than all the Depositary Shares evidenced by a Receipt are called
for redemption, the Depositary will deliver to the Record Holder of such
Receipt, upon surrender of such Receipt to the Depositary, a new Receipt
evidencing the Depositary Shares evidenced by such prior Receipt and not called
for redemption, together with certificates representing the shares of Common
Stock issuable upon redemption of the Depositary Shares called for redemption.
(b) CONVERSION AT OPTION OF HOLDER. Whenever a Record Holder of Receipts
shall elect to convert shares of Preferred Stock underlying the Depositary
Shares evidenced by such Receipts in accordance with the provisions of the
Certificate, it shall deliver Receipts evidencing the Depositary Shares relating
to the shares of Preferred Stock to be converted, together with written notice
of conversion and a proper assignment of the Receipts to the Company or in blank
to the Depositary or its agent. Each optional conversion of shares of Preferred
Stock underlying Depositary Shares shall be deemed to have been effected
immediately prior to the close of business on the date of which the foregoing
requirements have been satisfied.
From and after the relevant date fixed for conversions (the "Conversion
Date")(unless the Company shall have failed to convert the shares of Preferred
Stock to be converted by it), all dividends or Quarterly Return Amounts in
respect of the shares of Preferred Stock so called for conversion shall cease to
accumulate, the shares of Preferred Stock and Depositary Shares so converted
shall be deemed no longer to be outstanding, and all rights of the Record
Holders of Receipts evidencing such Depositary Shares (except the right to
receive shares of Common Stock and, if applicable, cash upon conversion) shall,
to the extent of such Depositary Shares, cease and terminate. Upon any surrender
for conversion of the Receipts evidencing any such Depositary Shares (properly
endorsed or assigned for transfer, if the Depositary shall so require), shares
of Preferred Stock underlying such Depositary Shares shall be converted by the
Company (as nearly as may be practicable without creating fractional shares)
into shares of Common Stock at a conversion rate equal to one-twentieth of the
number of shares of Common Stock received upon conversion of each share of
Preferred Stock pursuant to the Certificate. The foregoing shall be subject
further to the terms and conditions of the Certificate.
(c) FRACTIONAL INTERESTS. To the extent that shares of Preferred Stock
underlying Depositary Shares are redeemed for or converted into shares of Common
Stock and all of such shares of Common Stock cannot be distributed to the Record
Holders of Receipts without creating fractional interests in such shares, the
Company shall cause the Depositary to distribute cash to Record Holders in lieu
of fractional shares. The amount distributed in the foregoing case will be
reduced by any amount required to be withheld by the Company or the Depositary
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on account of taxes or otherwise required pursuant to law, regulation or court
process. In the Company's discretion, no fractional shares of Common Stock or
securities respresenting fractional shares of Common Stock will be issued upon
conversion, redemption, change of control or in connection with dividend
payments. Any fractional interest in a share of Common Stock will be paid in
cash based on the closing price of the Common Stock on the trading day next
preceding the date of conversion or such later time as the Company is legally
and contractually able to purchase such fractional shares.
(d) LIMITATIONS ON DEPOSITARY REQUIREMENTS FOR TRANSFER AND EXCHANGE. The
Depositary shall not be required (a) to issue, register the transfer of or
exchange any Receipts for a period beginning at the opening of business 10 days
next preceding any selection of Depositary Shares to be redeemed and ending at
the close of business on the day of the mailing of notice of redemption of
Depositary Shares or (b) to register the transfer of or exchange for another
Receipt any Receipt evidencing Depositary Shares called or being called for
redemption in whole or in part.
Section 2.4 REGISTRATION OF TRANSFER OF RECEIPTS. Subject to the terms and
conditions of this Deposit Agreement, the Depositary shall register on its books
from time to time transfers of Receipts upon any surrender thereof by the Record
Holder in person or by such Record Holder's duly authorized attorney, properly
endorsed or accompanied by a properly executed instrument of transfer. No
service charge will be made for any registration of transfer or exchange of
Receipts, but the Company or the Depositary may require payment of any transfer
tax or similar governmental charge payable in connection therewith. Upon such
surrender, the Depositary shall execute a new Receipt or Receipts evidencing the
same aggregate number of Depositary Shares as those evidenced by the Receipt or
Receipts surrendered and deliver such new Receipt or Receipts to or upon the
order of the person entitled thereto.
Section 2.5 SURRENDER OF RECEIPTS AND WITHDRAWAL OF PREFERRED STOCK. Any
Record Holder of a Receipt or Receipts representing any number of whole shares
of Preferred Stock (or such Record Holder's duly authorized attorney), unless
the related Depositary Shares have been previously called for redemption, may
withdraw the Preferred Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts at the Depositary's
Office or at such other offices as the Depositary may designate for such
withdrawals. If such Record Holder's Depositary Shares are being held by DTC or
its nominee pursuant to Section 2.1, such Record Holder shall request, in
accordance with Section 2.9, withdrawal from the book-entry system of the number
of Depositary Shares specified in the preceding sentence. Thereafter, without
unreasonable delay, the Depositary shall deliver to Record Holder, or to the
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person or persons designated by such Record Holder as hereinafter provided, the
number of whole shares of Preferred Stock and all money and other property, if
any, represented by the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Preferred Stock will not thereafter be entitled
to receive Depositary Shares in exchange therefor except in compliance with
Section 2.2 hereof. If a Receipt delivered by the Record Holder to the
Depositary in connection with such withdrawal shall evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of Preferred Stock to be so withdrawn, the Depositary
shall at the same time, in addition to such number of whole shares of Preferred
Stock and such money and other property, if any, to be so withdrawn, deliver to
such Record Holder, or (subject to Section 2.4) upon his order, a new Receipt
evidencing such excess number of Depositary Shares. Delivery of the Preferred
Stock and money and other property being withdrawn may be made by the delivery
of such certificates, documents of title and other instruments as the Depositary
may deem appropriate.
Preferred Stock delivered pursuant to the preceding paragraph may be
endorsed with or have incorporated in the text thereof such legends or recitals
or changes not inconsistent with the provisions of this Deposit Agreement as may
be required by the Company or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange upon which the Preferred Stock may be listed or to conform with any
usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular shares of Preferred Stock are subject.
If the Preferred Stock and the money and other property being withdrawn are
to be delivered to a person or persons other than the Record Holder of the
Receipt or Receipts being surrendered for withdrawal of Preferred Stock, such
Record Holder shall execute and deliver to the Depositary a written order so
directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such Record Holder for withdrawal of such shares of
Preferred Stock be properly endorsed in blank or accompanied by a properly
executed instrument of transfer in blank.
Delivery of the Preferred Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the Record Holder surrendering such Receipt or Receipts and for the
account of the Record Holder thereof, such delivery may be made at such other
place as may be designated by such Record Holder.
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Section 2.6 LIMITATIONS ON EXECUTION AND DELIVERY, TRANSFER, SURRENDER AND
EXCHANGE OF RECEIPTS. As a condition precedent to the execution and delivery,
registration of transfer, split-up, combination surrender or exchange of any
Receipt, the Depositary, any of the Depositary's Agents or the Company may
require any or all of the following: (i) payment to it of a sum sufficient for
the payment (or, in the event that the Depositary or the Company shall have made
such payment, the reimbursement to it) of any charges or expenses payable by the
Record Holder of a Receipt pursuant to Section 5.7 (or evidence reasonably
satisfactory to the Company that such charges and expenses have been paid), (ii)
the production of evidence satisfactory to it as to the identity and genuineness
of any signature and (iii) compliance with such regulations, if any, as the
Depositary or the Company may establish not inconsistent with the provisions of
this Deposit Agreement.
The deposit of Preferred Stock may be refused, the delivery of Receipts
against Preferred Stock may be suspended, the registration of transfer of
Receipts may be refused and the registration of transfer, split-up, combination
surrender or exchange of outstanding Receipts may be suspended (i) during any
period when the register of Stockholders of the Company is closed or (ii) if any
such action is deemed necessary or advisable by the Depositary or the Company
any of the Depositary's Agents or the Company at any time or from time to time
because of any requirement of law or of any government or governmental body or
commission or under any provision of this Deposit Agreement.
Section 2.7 LOST RECEIPTS, ETC. In case any Receipt shall be mutilated,
destroyed, lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
mutilated Receipt, or in lieu of and in substitution for such destroyed, lost or
stolen Receipt, upon (i) the filing by the Record Holder thereof with the
Depositary of evidence satisfactory to the Depositary of such destruction or
loss or theft of such Receipt, of the authenticity thereof and of his or her
ownership thereof and (ii) the furnishing to the Depositary of indemnification
satisfactory to it.
Section 2.8 CANCELLATION AND DESTRUCTION OF SURRENDERED RECEIPTS . All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so cancelled.
Any Receipt evidenced in book-entry form shall be deemed cancelled when the
Depositary has caused the amount of Depositary Shares evidenced by the DTC
Receipt to be reduced in proportion to the number of Depositary Shares evidenced
by the surrendered Receipt.
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Section 2.9 INTERCHANGEABILITY OF BOOK-ENTRY RECEIPTS AND RECEIPTS IN
PHYSICAL, CERTIFICATED FORM. Subject to the terms and conditions of this
Deposit Agreement, upon receipt by the Depositary of written instructions from
DTC on behalf of any Beneficial Owner for the purpose of directing the
Depositary to execute and deliver a Receipt in physical, certificated form
evidencing such Depositary Shares, the Depositary shall follow the customary
procedures established by DTC for the purpose of reducing the number of
Depositary Shares evidenced by the DTC Receipt and, following such reduction,
shall execute and deliver to or upon the order of the person or persons named in
such order a Receipt or Receipts registered in the name or names requested by
such person and evidencing in the aggregate the number of Depositary Shares
equal to the reduction in the number evidenced by the DTC Receipt. The Company
may require in such written instructions any certification or representation as
it shall deem necessary to comply with applicable law.
Subject to the terms and conditions of this Deposit Agreement, upon receipt
by the Depositary of a Receipt or Receipts in physical, certificated form, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Depositary, including any required certifications, and
together with written instructions directing the Depositary to adjust its
records to reflect an increase in the aggregate amount of Depositary Shares
evidenced by the DTC Receipt (including, without limitation, information
regarding the DTC participant account to be credited with such increase), and
upon payment of the fees and expenses of the Depositary, the Depositary shall
cancel such Receipt or Receipts in physical, certificated form and shall follow
the customary procedures established by DTC for the purpose of reflecting such
increase in the number of Depositary Shares evidenced by the DTC Receipt.
ARTICLE III
Certain Obligations of
Holders of Receipts and the Company
Section 3.1 FILING PROOFS, CERTIFICATES AND OTHER INFORMATION. Any Record
Holder of a Receipt may be required from time to time to file such proof of
residence, or other information, to execute such certificates and to make such
representations and warranties as the Depositary or the Company may reasonably
deem necessary or proper. The Depositary or the Company may withhold the
delivery, or delay the registration of transfer, redemption or exchange, of any
Receipt or the withdrawal of the Preferred Stock represented by the Depositary
Shares evidenced by any Receipt or the distribution of any dividend or other
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distribution or the sale of any rights or of the proceeds thereof until such
proof or other information is filed or such certificates are executed or such
representations and warranties are made.
Section 3.2 PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES. Record Holders
of Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses as provided in Section 5.7, or provide reasonably
satisfactory evidence to the Depositary that such charges and expenses have been
paid. Registration of transfer of any Receipt or any withdrawal of Preferred
Stock and all money or other property, if any, represented by the Depositary
Shares evidenced by such Receipt may be refused until any such payment due is
made, and any dividends, interest payments or other distributions may be
withheld or any part of or all the Preferred Stock or other property represented
by the Depositary Shares evidenced by such Receipt and not theretofore sold may
be sold for the account of the Record Holder thereof (after attempting by
reasonable means to notify such Record Holder prior to such sale), and such
dividends, interest payments or other distributions or the proceeds of any such
sale may be applied to any payment of such charges or expenses, the Record
Holder of such Receipt remaining liable for any deficiency. The Depositary shall
at the direction of the Company withhold any payments, distributions and
exchanges made with respect to the Depositary Shares and Receipts, and the
Preferred Stock, Common Stock or other securities or assets represented thereby
(collectively, the "Securities"). In the event the Depositary is required to pay
any such amounts, the Company shall reimburse the Depositary for payment thereof
upon the request of the Depositary and the Depositary shall, upon the Company's
request and as instructed by the Company, pursue its rights against such Record
Holder at the Company's expense.
Section 3.3 WARRANTY AS TO PREFERRED STOCK. The Company hereby represents
and warrants that the Receipts, when issued, will evidence legal and valid
interests in the Depositary Shares and each Depositary Share will represent a
legal and valid one-twentieth fractional interest in a deposited share of
Preferred Stock and that the Preferred Stock, when issued, will be validly
issued, fully paid and nonassessable. Such representation and warranty shall
survive the deposit of the Preferred Stock and the issuance of the Receipts.
ARTICLE IV
The Deposited Securities; Notices
Section 4.1 CASH AND COMMON STOCK DISTRIBUTIONS. Whenever the Depositary
shall receive any cash dividend or other cash distribution on Preferred Stock
(including Liquidated Damages and Quarterly Return Amounts, each as defined in
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the Offering Memorandum pursuant to which the Preferred Stock was originally
issued) or distribution of Common Stock, the Depositary shall, subject to
Sections 3.1 and 3.2, distribute to Record Holders of Receipts on the record
date fixed pursuant to Section 4.4 such amounts of such dividend or distribution
as are, as nearly as practicable, in proportion to the respective numbers of
Depositary Shares evidenced by the Receipts held by such Record Holders; to the
extent that dividends are paid in shares of Common Stock and all of such shares
of Common Stock cannot be distributed to the Record Holders of Receipts without
creating fractional interests in such shares, the Company shall cause the
Depositary to distribute cash to Record Holders in lieu of fractional shares,
subject to Section 2.3(c) hereof; provided, however, that in case the Company or
the Depositary shall be required to withhold and shall withhold from any cash
dividend or other cash distribution in respect of the Preferred Stock an amount
on account of taxes, the amount made available for distribution or distributed
in respect of Depositary Shares shall be reduced accordingly. The Depositary
shall distribute or make available for distribution, as the case may be, only
such amount, however, as can be distributed without attributing any Record
Holder of Depositary Shares a fraction of one cent, and any balance not so
distributable shall be held by the Depositary (without liability for interest
thereon) and shall be added to and be treated as part of the next sum received
by the Depositary for distribution to Record Holders of Receipts then
outstanding.
Section 4.2 DISTRIBUTIONS OTHER THAN CASH, RIGHTS, PREFERENCES OR
PRIVILEGES. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Preferred Stock, the Depositary
shall, subject to Sections 3.1 and 3.2, distribute to Record Holders of Receipts
on the record date fixed pursuant to Section 4.4 such amounts of the securities
or property received by it as are, as nearly as practicable, in proportion to
the respective numbers of Depositary Shares evidenced by the Receipts held by
such Record Holders, in any manner that the Depositary may deem equitable and
practicable for accomplishing such distribution. If, in the opinion of the
Depositary such distribution cannot be made proportionately among such Record
Holders, or if for any other reason (including any requirement that the Company
or the Depositary withhold an amount on account of taxes) the Depositary deems,
after consultation with the Company, such distribution not to be feasible, the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the securities or property
thus received, or any part thereof, at such place or places and upon such terms
as it may deem proper. The net proceeds of any such sale shall, subject to
Sections 3.1 and 3.2, be distributed or made available for distribution, as the
case may be, by the Depositary to Record Holders of Receipts as provided by
Section 4.1 in the case of a distribution received in cash. The Company shall
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not make any distribution of such securities unless the Company shall have
provided an opinion of counsel stating that such securities have been registered
under the Securities Act or that the offering and sale of such securities by the
Company are exempt from registration under the Securities Act.
Section 4.3 SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If the Company
shall at any time offer or cause to be offered to the persons in whose names
Preferred Stock is recorded on the books of the Company any rights, preferences
or privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the Record Holders of Receipts in such manner as the Company may determine,
either by the issue to such Record Holders of warrants representing such rights,
preferences or privileges or by such other method as may be determined by the
Company in its discretion with the approval of the Depositary; provided,
however, that (i) if at the time of issue or offer of any such rights,
preferences or privileges the Company determines that it is not lawful or (after
consultation with the Depositary) not feasible to make such rights, preferences
or privileges available to Record Holders of Receipts by the issue of warrants
or otherwise or (ii) if and to the extent so instructed by Record Holders of
Receipts who do not desire to exercise such rights, preferences or privileges,
then the Company, in its discretion, may, if applicable laws or the terms of
such rights, preferences or privileges permit such transfer, sell such rights,
preferences or privileges at public or private sale, at such place or places and
upon such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Sections 3.1 and 3.2, be distributed by the Depositary to the Record
Holders of Receipts entitled thereto as provided by Section 4.1 in the case of a
distribution received in cash. The Company shall not make any distribution of
any such rights, preferences or privileges unless the Company shall have
provided an opinion of counsel stating that such rights, preferences or
privileges have been registered under the Securities Act or that the offering
and sale of such rights, preferences or privileges are exempt from registration
under the Securities Act.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for Record Holders
of Receipts to be offered or sold the securities to which such rights,
preferences or privileges relate, the Company agrees with the Depositary that it
will promptly file a registration statement pursuant to the Securities Act with
respect to such rights, preferences or privileges and securities and use its
best efforts and take all steps available to it to cause such registration
statement to become effective sufficiently in advance of the expiration of such
rights, preferences or privileges to enable such Record Holders to exercise such
rights, preferences or privileges. In no event shall the Depositary make
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available to the Record Holders of Receipts any right, preference or privilege
to subscribe for or to purchase any securities unless and until such
registration statement shall have become effective, or unless the offering and
sale of such securities to such Record Holders are exempt from registration
under the provisions of the Securities Act.
If any other action under the laws of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to Record Holders of
Receipts, the Company agrees with the Depositary that the Company will use its
best efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such Record Holders to exercise such rights, preferences or
privileges.
Section 4.4 NOTICE OF DIVIDENDS, ETC.; FIXING OF RECORD DATE FOR HOLDERS
OF RECEIPTS. Whenever (i) any cash dividend or other cash distribution shall
become payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered, with respect to
Preferred Stock, or (ii) the Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice or any solicitation of consents in
respect of the Preferred Stock, or any call of any shares of Preferred Stock or
at any time the Depositary and the Company shall decide it is appropriate, the
Depositary shall in each such instance fix a record date (which shall be the
same date as the record date fixed by the Company with respect to the Preferred
Stock) for the determination of the Record Holders of Receipts who shall be
entitled to (a) receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, (b) receive notice of, and
give instructions for the exercise of voting rights at, any such meeting or (c)
receive notice of any such call, subject to the provisions hereof.
Section 4.5 VOTING RIGHTS. Upon receipt of notice of any meeting at which
the holders of Preferred Stock are entitled to vote or any solicitation of
consents in respect of Preferred Stock, the Depositary shall, as soon as
practicable thereafter, mail to the Record Holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting or
consent solicitation and (ii) a statement that the Record Holders may, subject
to any applicable restrictions, instruct the Depositary as to the exercise of
the voting rights pertaining to the amount of Preferred Stock represented by
their respective Depositary Shares and a brief statement as to the manner in
which such instructions may be given. Upon the written request of a Record
Holder of a Receipt on the relevant record date, the Depositary shall use its
best efforts insofar as practicable to vote or cause to be voted or deliver a
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consent with respect to the amount of Preferred Stock represented by the
Depositary Shares evidenced by such Receipt, in accordance with the instructions
set forth in such request. The Company hereby agrees to take all reasonable
action which may be deemed necessary by the Depositary in order to enable the
Depositary to vote such Preferred Stock or cause such Preferred Stock to be
voted. In the absence of specific instructions from the Record Holder of a
Receipt, the Depositary will abstain from voting to the extent of the Preferred
Stock represented by the Depositary Shares evidenced by such Receipt.
Record Holders of Receipts shall also be entitled to vote on certain
amendments to this Deposit Agreement pursuant to Section 6.1 hereof.
Section 4.6 INSPECTION OF REPORTS. The Depository shall make available for
inspection by Record Holders of Receipts at the Depositary's Office during
normal business hours, and at such other places as it may from time to time deem
advisable, any reports and communications received from the Company which are
received by the Depositary as the holder of Preferred Stock.
Section 4.7 LISTS OF RECEIPT HOLDERS. Promptly upon request from time to
time by the Company, the Depositary shall furnish to it a list, as of recent
date, of the names, addresses and holdings of Depositary Shares of all persons
in whose names Receipts are registered on the books of the Depositary.
Section 4.8 TAX AND REGULATORY COMPLIANCE. The Depositary shall be
responsible for (i) preparation and mailing of Internal Revenue Service Forms
1099 for all open and closed accounts, (ii) foreign tax withholding, (iii)
back-up withholding (or any withholding as may be required at the then
applicable rate) on dividends paid and other distributions made to eligible
holders of Receipts, (iv) mailing Internal Revenue Service Forms W-9 to new
holders of Receipts without a certified taxpayer identification number, (v)
processing certified Internal Revenue Service Forms W-9, (vi) preparation and
filing of state information returns and (vii) escheatment services.
Section 4.9 WITHHOLDING. Notwithstanding any other provision of this
Deposit Agreement, in the event that the Depositary determines that any
distribution in property is subject to any tax which the Depositary is obligated
by law to withhold, the Depositary may dispose of all or a portion of such
property in such amounts and in such manner as the Depositary deems necessary
and practicable to pay such taxes, by public or private sale, and the Depositary
shall distribute the net proceeds of any such sale or the balance of any such
property after deduction of such taxes to the holders of Receipts entitled
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thereto in proportion to the number of Depositary Shares held by them
respectively.
ARTICLE V
The Depositary, the Depositary's
Agents, the Registrar and the Company
Section 5.1 MAINTENANCE OF OFFICES, AGENCIES AND TRANSFER BOOKS BY THE
DEPOSITARY; REGISTRAR. Upon execution of this Deposit Agreement, the Depositary
shall maintain at the Depositary's Office facilities for the execution and
delivery, registration and registration of transfer, surrender and exchange of
Receipts, all in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, and to reflect potential
split-ups and combinations of Depositary Shares, which books at all reasonable
times shall be open for inspection by the Record Holders of Receipts; provided,
that any such Record Holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close each such books only when the Depositary's Office
is not open for business, the register of stockholders of the Company is closed
or as otherwise required by law.
If the Receipts or the Depositary Shares evidenced thereby or the Preferred
Stock represented by such Depositary Shares shall be listed on a national
securities exchange or the Nasdaq National Market, the Depositary may appoint a
registrar (acceptable to the Company) for registration of such Receipts or
Depositary Shares in accordance with any requirements of such exchange or
quotation system. Such registrar (which may be the Depositary if so permitted by
the requirements of such exchange or quotation system may be removed and a
substitute registrar appointed by the Depositary upon the request or with the
approval of the Company. If the Receipts, such Depositary Shares or such
Preferred Stock are listed on one or more other stock exchanges or quotation
system, the Depositary will, at the request of the Company, arrange such
facilities for the delivery, registration, registration of transfer, surrender
and exchange of such Receipts, such Depositary Shares or such Preferred Stock as
may be required by law or applicable stock exchange or quotation system
regulation.
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Section 5.2 PREVENTION OF OR DELAY IN PERFORMANCE BY THE DEPOSITARY, THE
DEPOSITARY'S AGENTS, THE REGISTRAR OR THE COMPANY. None of the Depositary, any
Depositary's Agent or the Company shall incur any liability to any Record Holder
of any Receipt if by reason of any provision of any present or future law, or
regulation thereunder, of the United States of America or of any other
governmental authority or, in the case of the Depositary or any Depositary's
Agent, by reason of any provision, present or future, of the Company's Amended
and Restated Certificate of Incorporation, as amended (including the
Certificate) or by reason of any act of God or war or other circumstance beyond
the control of the relevant party, the Depositary, any Depositary's Agent, or
the Company shall be prevented or forbidden from, or subjected to any penalty on
account of, doing or performing any act or thing which the terms of this Deposit
Agreement provide shall be done or performed; nor shall the Depositary, any
Depositary's Agent or the Company incur any liability to any Record Holder of a
Receipt (i) by reason of any nonperformance or delay, caused as aforesaid, in
the performance of any act or thing which the terms of this Deposit Agreement
provide shall or may be done or performed, or (ii) by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement
except, in the case of any such exercise or failure to exercise discretion not
caused as aforesaid, if caused by the negligence, willful misconduct or bad
faith of the party charged with such exercise or failure to exercise.
Section 5.3 OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS, THE
REGISTRAR AND THE COMPANY. None of the Depositary, any Depositary's Agent or the
Company assumes any obligation or shall be subject to any liability under this
Deposit Agreement to Record Holders of Receipts other than for its negligence,
willful misconduct or bad faith.
None of the Depositary, any Depositary's Agent or the Company shall be
under any obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of the Preferred Stock, the Common Stock, the Depositary
Shares or the Receipts which in its opinion may involve it in expense or
liability unless indemnity satisfactory to it against all expense and liability
be furnished as often as may be required.
None of the Depositary, any Depositary's Agent or the Company shall be
liable for any action or any failure to act by it in reliance upon the written
advice of legal counsel or accountants, or information from any person
presenting Preferred Stock for deposit, any Record Holder of a Receipt or any
other person believed by it in good faith to be competent to give such
information. The Depositary, any Depositary's Agent, any Registrar and the
Company may each rely and shall each be protected in acting upon any written
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notice, request, direction or other document believed by it to be genuine and to
have been signed or presented by the proper party or parties.
The Depositary shall not be responsible for any failure to carry out any
instruction to vote any of the shares of Preferred Stock or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith or in accordance with the Deposit Agreement. The Depositary
undertakes, and any Registrar shall be required to undertake, to perform such
duties and only such duties as are specifically set forth in this Deposit
Agreement, and no implied covenants or obligations shall be read into this
Deposit Agreement against the Depositary or any Registrar. The Depositary and
the Depositary's Agents may own and deal in any class of securities of the
Company and its affiliates and in Receipts. The Depositary may also act as
transfer agent or registrar of any of the securities of the Company and its
affiliates.
It is intended that neither the Depositary nor any Depositary's Agent shall
be deemed to be an "issuer" of the securities under the federal securities laws
or applicable state securities laws, it being expressly understood and agreed
that the Depositary and any Depositary's Agent are acting only in a ministerial
capacity as depositary for the Preferred Stock.
None of the Depositary (or its officers, directors, employees or agents),
any Depositary's Agent or the Registrar makes any representation or has any
responsibility as to the validity of the shelf registration statement pursuant
to which the Depositary Shares will be registered under the Securities Act, the
Preferred Stock, the Depositary Shares or the Receipts (except its
countersignature thereon), or any instruments referred to therein or herein, or
as to the correctness of any statement made therein or herein; provided,
however, that the Depositary is responsible for its representations in this
Deposit Agreement.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Preferred Stock at any time deposited with the Depositary
hereunder or of the Depositary Shares or the Receipts, as to the validity or
sufficiency of this Deposit Agreement, as to the value of the Depositary Shares
or as to any right, title or interest of the Record Holders of Receipts in and
to the Depositary Shares, except that the Depositary hereby represents and
warrants as follows: (i) the Depositary has been duly organized and is validly
existing and in good standing under the laws of the United States, with full
power, authority and legal right under such law to execute, deliver and carry
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out the terms of this Deposit Agreement; (ii) this Deposit Agreement has been
duly authorized, executed and delivered by the Depositary; and (iii) this
Deposit Agreement constitutes a valid and binding obligation of the Depositary,
enforceable against the Depositary in accordance with its terms.
Section 5.4 RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF
SUCCESSOR DEPOSITARY. The Depositary may at any time resign as Depositary
hereunder by notice of its election so to do delivered to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 45 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 45 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Preferred Stock and any moneys or property held
hereunder to such successor, and shall deliver to such successor a list of the
Record Holders of all outstanding Receipts. Any successor Depositary shall
promptly mail notice of its appointment to the Record Holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted, or any corporation succeeding to all or substantially
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all of the corporate trust business of the Depositary, shall be the successor of
such Depositary without the execution or filing of any document or any further
act, and notice thereof shall not be required hereunder. Such successor
Depositary may authenticate the Receipts in the name of the predecessor
Depositary or in the name of the successor Depositary.
Section 5.5 CORPORATE NOTICES AND REPORTS. The Company agrees that it will
forward to the Depositary, and the Depositary shall in turn transmit to the
Record Holders of Receipts, in each case at the addresses furnished to it
pursuant to Section 4.8, all notices and reports (including without limitation
financial statements) required by law, by the rules of any national securities
exchange or quotation system upon which the Preferred Stock, the Depositary
Shares or the Receipts are listed or quoted by the Company's Second Amended and
Restated Certificate of Incorporation, as amended (including the Certificate),
to be furnished by the Company to holders of Preferred Stock. Such transmission
will be at the Company's expense.
Section 5.6 INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
the Depositary and any Depositary's Agent against, and hold each of them
harmless from, any loss, liability or expense (including the costs and expenses
of defending itself) which may arise out of (a) acts performed or omitted in
connection with this Deposit Agreement and the Receipts (i) by the Depositary or
any of its agents (including any Depositary's Agent), except for any liability
arising out of negligence, wilful misconduct or bad faith on the respective
parts of any such person or persons, or (ii) by the Company or any of its
agents, or (b) the offer, sale or registration of the Receipts, the Common Stock
or the Preferred Stock pursuant to the provisions hereof. The obligations of the
Company set forth in this Section 5.6 shall survive any resignation or removal
of any Depositary or Depositary's Agent and the termination of this Deposit
Agreement.
Section 5.7 CHARGES AND EXPENSES. The Company shall pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company shall pay all charges of the Depositary in
connection with the initial deposit of the Preferred Stock, the initial issuance
of the Depositary Shares and any redemption or conversion of the Preferred Stock
and all withdrawals of shares of the Preferred Stock by owners of Depositary
Shares. All other transfer and other taxes and governmental charges shall be at
the expense of Record Holders of Depositary Shares. The Depositary may refuse to
effect any registration of transfer of a Receipt or any withdrawal of Preferred
Stock evidenced thereby until all such taxes and charges with respect to such
Receipt or Preferred Stock are paid by the holder thereof. If a Record Holder of
Receipts requests the Depositary to perform duties not required under this
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Deposit Agreement, the Depositary shall notify the Record Holder of the
approximate cost of the performance of such duties. If such duties are
subsequently performed at the request of such Record Holder, such Record Holder
will be liable for such charges and expenses. All other charges and expenses of
the Depositary and any Depositary's Agent hereunder (including, in each case,
fees and expenses of counsel) incident to the performance of their respective
obligations hereunder will be paid pursuant to the terms of the fee letter
previously provided to the Company.
ARTICLE VI
Amendment and Termination
Section 6.1 AMENDMENT. The form of Receipt evidencing the Depositary Shares
and any provision of this Deposit Agreement may at any time be amended by
agreement between the Company and the Depositary. However, any amendment to such
documents which materially and adversely alters the rights of the holders of
Receipts or of the Depositary Shares evidenced thereby (or, which relates to or
affects rights to receive dividends or distributions, or voting or redemption
rights) will not be effective unless such amendment has been approved by the
Record Holders of at least 66b% of the Depositary Shares then outstanding. In no
event may any amendment impair the right of any Record Holders of Receipts,
subject to the conditions specified in this Deposit Agreement, upon such
surrender of the Receipts evidencing such Depositary Shares, to receive
Preferred Stock or upon conversion of the Preferred Stock represented by the
Depositary Receipts, to receive shares of Common Stock, and in each case any
money or other property represented thereby, including any accumulated dividends
and return of Liquidation Preference, except in order to comply with mandatory
provisions of applicable law. Every Record Holder of Receipts at the time any
such amendment becomes effective shall be deemed to consent and agree to such
amendment and to be bound by this Deposit Agreement.
Section 6.2 TERMINATION. This Deposit Agreement may be terminated by the
Company or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or converted, (ii) there has been a final distribution in respect
of the Preferred Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution has been distributed to the
Record Holders of Receipts or (iii) upon the consent of Record Holders of
Receipts representing not less than 66b% of the Depositary Shares then
outstanding.
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Whenever this Deposit Agreement has been terminated pursuant to clause
(iii) of the preceding paragraph the Depositary will mail notice of such
termination to the Record Holders of all Receipts then outstanding at least 30
days prior to the date fixed in such notice for such termination. The Depositary
may likewise terminate this Deposit Agreement if at any time 90 days shall have
expired after the Depositary shall have delivered to the Company a written
notice of its election to resign and a successor depositary shall not have been
appointed and accepted its appointment. If any Receipts remain outstanding after
the date of termination, the Depositary thereafter will discontinue the transfer
of Receipts, will suspend the distribution of dividends to the Record Holders
thereof, and will not give any further notices (other than notices of such
termination) or perform any further acts under this Deposit Agreement except as
provided below and except that the Depositary will continue to (i) collect
dividends on the Preferred Stock and any distributions with respect thereto and
(ii) deliver the Preferred Stock together with such dividends and distributions
and the net proceeds of any sales of rights, preferences, privileges or other
property, without liability for interest thereon, in exchange for Receipts
surrendered. At any time after the expiration of three years from the date of
termination, the Depositary may sell the Preferred Stock then held by it at
public or private sales, at such place or places and upon such terms as it deems
proper and may thereafter hold the net proceeds of any such sale, together with
any money and other property then held by it, without liability or interest
thereon, for the pro rata benefit of the Record Holders of Receipts which have
not been surrendered. Subject to applicable escheat laws, any monies set aside
by the Company in respect of any payment with respect to the Preferred Stock
represented by the Depositary Shares, or dividends thereon, and unclaimed at the
end of three years from the date upon which such payment is due and payable
shall revert to the general funds of the Company, after which time the Record
Holders of such Depositary Shares shall look only to the general funds of the
Company for the payment thereof.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary and any Depositary's Agent under Sections 5.6 and
5.7.
ARTICLE VII
Miscellaneous
Section 7.1 COUNTERPARTS. This Deposit Agreement may be executed in any
number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
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be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
Section 7.2 EXCLUSIVE BENEFIT OF PARTIES. This Deposit Agreement is for
the exclusive benefit of the parties hereto, including the holders of the
Receipts, and their respective successors hereunder, and shall not be deemed to
give any legal or equitable right, remedy or claim to any other person
whatsoever.
Section 7.3 INVALIDITY OF PROVISIONS. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
Section 7.4 NOTICES. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, telegram, telex or
facsimile confirmed by letter, addressed to the Company at 4643 South Ulster
Street, Denver, Colorado 80237, to the attention of Stan DiCieco, the Chief
Financial Officer, facsimile number (303) 770-4207, or at any other address of
which the Company shall have notified the Depositary in writing.
Any and all notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, telegram or facsimile confirmed by letter,
addressed to the Depositary at the Depositary's Office at 101 East Fifth Street
St. Paul, Minnesota 55101-1860 to the attention of the Corporate Trust
Department, facsimile (612) 229-6415or at any other address of which the
Depositary shall have notified the Company in writing.
Any and all notices to be given to any Record Holder of a Receipt hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail or by telegram or telex confirmed
by letter, addressed to such Record Holder at the address of such Record Holder
as it appears on the Receipt register of the Depositary, or if such Record
Holder shall have filed with the Depositary a written request that notices
intended for such Record Holder be mailed to some other address, at the address
designated in such request.
Delivery of a notice sent by mail, by telegram, telex or facsimile shall be
deemed to be effective at the time when a duly addressed letter containing the
same (or a confirmation thereof in the case of a telegram or telex message) is
deposited, postage prepaid, in a post office letter box. The Depositary or the
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Company may, however, act upon any telegram, telex or facsimile message received
by it from the other or from any Record Holder of a Receipt, notwithstanding
that such telegram, telex or facsimile message shall not subsequently be
confirmed by letter or as aforesaid.
Section 7.5 DEPOSITARY'S AGENTS. The Depositary may from time to time
appoint one or more agents (each, a "Depository's Agent") to act in any respect
for the Depositary for the purposes of this Deposit Agreement and may at any
time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
Section 7.6 HOLDERS OF RECEIPTS ARE PARTIES. The Record Holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by and entitled to the benefits of all of the terms and conditions hereof and of
the Receipts by acceptance of delivery thereof.
Section 7.7 GOVERNING LAW. This Deposit Agreement and the Receipts and all
rights hereunder and thereunder and provisions hereof and thereof shall be
governed by, and construed in accordance with, the laws of the State of Colorado
without giving effect to principles of conflict of laws.
Section 7.8 INSPECTION OF DEPOSIT AGREEMENT. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Depositary's Office and
the respective offices of the Depositary's Agents, if any, by any Record Holder
of a Receipt.
Section 7.9 HEADINGS. The headings of articles and sections in this Deposit
Agreement and in the form of Receipt set forth in Exhibit A hereto have been
inserted for convenience only and are not to be regarded as a part of this
Deposit Agreement or the Receipts or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.
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IN WITNESS WHEREOF, the Company and the Depositary have duly executed this
Deposit Agreement as of the day and year first above set forth, and all holders
of Receipts shall become parties hereto by and upon acceptance by them of
delivery of Receipts issued in accordance with the terms hereof.
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Ellen P. Spangler
----------------------------------------
Name: Ellen P. Spangler
Title: Senior Vice President and Secretary
FIRSTAR BANK OF MINNESOTA, N.A.,
as Depositary
By: /s/ Frank P. Leslie III
----------------------------------------
Name: Frank P. Leslie III
Title: Vice President
29
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ANNEX A
FORM OF DEPOSITARY RECEIPT
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT, IN CONNECTION WITH EXEMPT RESALES OF THE DEPOSITARY SHARES
BY DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, GOLDMAN, SACHS & CO.,
CREDIT SUISSE FIRST BOSTON CORPORATION AND SALOMON SMITH BARNEY INC. (THE
"INITIAL PURCHASERS"), IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB");
(2) AGREES THAT, IN CONNECTION WITH RESALES AND TRANSFERS OF THIS SECURITY OTHER
THAN EXEMPT RESALES OF THE DEPOSITARY SHARES BY THE INITIAL PURCHASERS, IT WILL
NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY
OF ITS SUBSIDIARIES, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (C) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY), OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN ADDITION, IN THE CASE OF RESALES OF DEPOSITARY SHARES OR
PREFERRED STOCK, (A) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A OR (B) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
AS USED HEREIN, THE TERM "OFFSHORE TRANSACTION," HAS THE MEANING GIVEN TO IT BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE AGENT
AUTHORIZED BY THE ISSUER FOR THE REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-1
<PAGE>
Number 001 8,500,000 DEPOSITARY SHARES
(each representing 1/20th of one share 7% Series C Senior Cumulative
Convertible Preferred Stock)
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES REPRESENTING
7% SERIES C SENIOR CUMULATIVE CONVERTIBLE PREFERRED STOCK OF
UNITED INTERNATIONAL HOLDINGS, INC. 913247 10 2
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN
DEFINITIONS AND INFORMATION
Firstar Bank of Minnesota, N.A., as Depositary
(the "Depositary"), hereby certifies that Cede & Co.
is the registered owner of EIGHT MILLION FIVE HUNDRED THOUSAND SHARES,
("Depositary Shares"), each Depositary Share representing one twentieth of one
share of 7% Series C Senior Cumulative Convertible Preferred Stock, par value
$0.01, of United International Holdings, Inc., a Delaware corporation (the
"Corporation"), on deposit with the Depositary, subject to the terms and
entitled to the benefits of the Deposit Agreement dated as of July 6, 1999 (the
"Deposit Agreement"), between the Corporation and the Depositary. By accepting
this Depositary Receipt the holder hereof becomes a party to and agrees to be
bound by all the terms and conditions of the Deposit Agreement. This Depositary
Receipt shall not be valid or obligatory for any purpose or entitled to any
benefits under the Deposit Agreement unless it shall have been executed by the
Depositary by the manual signature of a duly authorized officer or, if executed
in facsimile by the Depositary, countersigned by a Registrar in respect of the
Depositary Receipts by the manual signature of a duly authorized officer
thereof.
All Depositary Shares evidenced by this Depositary Receipt and all increases and
decreases of the number of Depositary Shares and the respective dates thereof
shall be endorsed by the holder or any appointed custodian hereof on the
schedule attached hereto and made a part hereof, or on a continuation thereof
which shall be attached hereto and made a part hereof.
Dated: July 6, 1999
Firstar Bank of Minnesota, N.A.
-------------------------------
Name: Frank P. Leslie, III
Title: Vice President
THE ADDRESS OF THE PRINCIPAL CORPORATE TRUST OFFICE
OF THE DEPOSITARY IS 101 EAST FIFTH STREET
ST. PAUL, MINNESOTA 55101-1860
A-2
<PAGE>
UNITED INTERNATIONAL HOLDINGS, INC.
UNITED INTERNATIONAL HOLDINGS, INC. WILL FURNISH WITHOUT CHARGE TO EACH
RECEIPTHOLDER WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A STATEMENT OR
SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OR STOCK OR SERIES THEREOF WHICH
THE CORPORATION IS AUTHORIZED TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST IS TO BE
ADDRESSED TO THE DEPOSITARY NAMED AND AT THE ADDRESS SET FORTH ON THE FACE OF
THIS RECEIPT.
------------------------------
The following abbreviations when used in the instructions on the face of this
receipt shall be construed as though they were written out in full according to
applicable laws or regulations.
TEN COM - as tenant in common UNIF GIFT MIN ACT - _____ Custodian ______
(Cust) (Minor)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors Act
JT TEN - as joint tenants with right of
survivorship and not as -------------------------------
tenants in comon (State)
Additional abbreviations may also be used though not in the above
list.
For value received, hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
Depositary Shares represented by the within Receipt, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the said
Depositary Shares on the books of the within named Depositary with full power of
substitution in the premises.
Dated: _________________ Signed:_______________________
NOTICE: The signature to the assignment must correspond with the name as written
upon the face of this Receipt in every particular, without alteration or
enlargement or any change whatever.
Signature(s) Guaranteed:
__________________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKHOLDERS, SAVING AND LOAN ASSOCIATIONS AND CREDIT UNIONS) WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT
TO S.E.C. RULE 17Ad-15.
A-3
<PAGE>
NOTICE OF CONVERSION
The undersigned holder of this Receipt hereby irrevocably exercises the option
to convert ____ shares of 7% Series C Senior Cumulative Convertible Preferred
Stock represented by this Receipt into shares of Class A Common Stock (par value
$.01 per share (the "Common Stock") and any other applicable securities or
property) of the Company. In accordance with the terms of and conditions of the
7% Series C Senior Cumulative Convertible Preferred Stock and further as
provided in the Deposit Agreement, and directs that the shares of Common Stock
deliverable upon such conversion be registered in the name of and delivered,
together with a check in payment for any fractional share and any other property
deliverable upon such conversion, to the undersigned unless a different name has
been indicated below. If securities are to be registered in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. If the number of shares of 7% Series C Senior Cumulative
Convertible Preferred Stock indicated above is less than the number of shares of
7% Series C Senior Cumulative Convertible Preferred Stock on deposit in respect
of this Receipt the undersigned directs that the Depositary issue to the
undersigned, unless a different name is indicated below, a new Receipt
evidencing the 7% Series C Senior Cumulative Convertible Preferred Stock for the
balance of the shares of 7% Series C Senior Cumulative Convertible Preferred
Stock not to be converted.
Dated: ___________________
Signature: __________________________________
NOTE: The above signature should correspond
exactly with the name on the face of this
Receipt or with the name of the assignee
appearing in the assignment form
(Please print name and address of registered holder)
Name:___________________________________________________________________________
Address_________________________________________________________________________
(Please indicate other delivery instructions, if applicable)
Name:___________________________________________________________________________
Address:________________________________________________________________________
A-4
<PAGE>
SCHEDULE OF EXCHANGES/CONVERSIONS OF DEPOSITARY SHARES
The following exchanges or conversions of a part of this Depositary Receipt
have been made:
<TABLE>
<CAPTION>
- ------------------------------ -------------------- --------------------- -------------------- -----------------------
Number of
Depositary Shares
Exchanged
for 7% Series C Number of
Senior Cumulative Depositary Shares Number of Signature of
Date of Convertible Converted to Depositary Shares Authorized Signatory
Exchange/Conversion Preferred Stock Class A Common Stock Remaining of Custodian
- ------------------------------ -------------------- --------------------- -------------------- -----------------------
<S> <C> <C> <C> <C>
- ------------------------------ -------------------- --------------------- -------------------- -----------------------
- ------------------------------ -------------------- --------------------- -------------------- -----------------------
- ------------------------------ -------------------- --------------------- -------------------- -----------------------
</TABLE>
A-5
UNITED INTERNATIONAL HOLDINGS, INC.
SECURITIES ACCOUNT AGREEMENT
This Securities Account Agreement (the "Agreement"), dated as of the 6th
day of July, 1999, by and between United International Holdings, Inc., a
Delaware corporation doing business as UnitedGlobalCom (the "Company"), and
Firstar Bank of Minnesota, N.A. (the "Deposit Agent"), for the benefit of the
holders (individually a "Holder" and collectively the "Holders") of the
depositary shares (the "Depositary Shares"), each of which is equivalent to 1/20
of a share of 7% Series C Senior Cumulative Convertible Preferred Stock (the
"Preferred Stock").
This Agreement is made to induce all present and future Holders to purchase
the Depositary Shares by establishing for their exclusive benefit a securities
account (the "Securities Account") to provide for a quarterly cash payment to
the Holders in an amount equal to $0.875 per Depositary Share (the "Quarterly
Return Amount") in the manner hereinafter provided. Notwithstanding any other
provision of this document to the contrary, pending release of the Deposit Funds
(as defined) in the manner specified herein, the parties hereto consider the
Deposit Funds and any other assets in the Securities Account (as defined) to be
assets of the Holders of Depositary Shares and not the Company.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS.
(a) "Common Stock" means the common stock of the Company, par value
$0.01 per share.
(b) "Certificate" means the Certificate of Designation filed with the
Delaware Secretary of State establishing the Preferred Stock as a series of
preferred stock of the Company designated as "7% Series C Senior Cumulative
Convertible Preferred Stock."
(c) "Closing Price" means, for each Trading Day, the last sales price
or, in case no such reported sale takes place on such day, the average of the
last reported bid and asked price, in either case on the principal national U.S.
securities exchange on which the shares of Common Stock are admitted to trading
or listed, or if not listed or admitted to trading on such exchange, the
representative closing bid price as reported by the Nasdaq National Market, or
if the Nasdaq National Market is no longer reporting such information, or if not
<PAGE>
so available, the fair market price as determined, in good faith, by the Board
of Directors of the Company.
(d) "Deposit Fund" means $29,750,000.
(e) "Deposit Expiration Date" means June 30, 2000.
(f) "Deposit Payment Date" means March 31, June 30, September 30 and
December 31 of each year commencing September 30, 1999 and continuing through
and including Deposit Expiration Date.
(g) "Depositary" means Firstar Bank of Minnesota, N.A.
(h) "Depositary Receipt" means a written receipt evidencing ownership
of Depositary Shares.
(i) "Direction Notice" means a notice from the Company, delivered to
the Deposit Agent on or prior to the Notice Date, directing the Deposit Agent to
purchase from the Company, for transfer to each Holder, in lieu of all or a
portion of the Quarterly Return Amount on the next Deposit Payment Date, that
number of whole shares of Common Stock determined by dividing such Quarterly
Return Amount by the Market Value Amount as of the date of such notice.
(j) "Market Value" means, as of any date, the average of the daily
Closing Price for the five consecutive Trading Days ending on such date. The
Deposit Agent shall have no duty or responsibility for the calculation of the
Market Value.
(k) "Market Value Amount" means (i) 97% of the Market Value of the
Common Stock, if a shelf registration statement registering the resale of such
shares is effective or the shares of Common Stock are eligible for resale
pursuant to Rule 144(k) under the Securities Act of 1933, as amended or (ii) 93%
of the Market Value of the Common Stock, in each case determined as of the date
of such notice.
(l) "Notice Date" means the tenth day prior to any Deposit Payment
Date.
(m) "Offering" means the offering of Depositary Shares described in the
Company's Offering Memorandum dated June 29, 1999.
2
<PAGE>
(n) "Preferred Stock" has the meaning given it in the opening paragraph
of this Agreement.
(o) "Record Date" means the tenth business day prior to the Deposit
Payment Date.
(p) "Trading Day" means any business day on which the Nasdaq National
Market (or any U.S. national securities exchange or quotation system on which
the Common Stock is then listed) is open for the transaction of business.
(q) Any capitalized terms not otherwise defined herein shall have the
meaning attributed to them in the Offering Memorandum.
2. ESTABLISHMENT OF SECURITIES ACCOUNT.
(a) The Company hereby agrees that the Securities Account shall be
established in connection with the Offering and shall be held subject to the
terms and conditions of this Agreement.
(b) Simultaneously with the closing of the Offering or any
over-allotment closing of the Offering, the Initial Holders shall deliver the
Deposit Fund to the Deposit Agent against the Deposit Agent's written
acknowledgment and receipt of the Deposit Fund, in the form attached hereto as
Exhibit A, which amount the Deposit Agent will deposit into or credit to the
Securities Account and hold on behalf of and for the benefit of the Holders
pursuant to the terms of this Agreement. Any amounts held by the Deposit Agent
in the Securities Account shall be invested in any United States treasury
securities or any money market fund, sponsored by any registered broker dealer
or mutual fund distributor, investing solely in direct obligations of the United
States of America or any agency thereof or obligations fully and unconditionally
guaranteed by the United States of America or any agency thereof. All interest
accruing on moneys held in the Securities Account and any earnings realized from
investments permitted hereunder shall be credited to the Securities Account and
any loss resulting from investments permitted hereunder shall be similarly
charged. The Deposit Agent shall have no responsibility for determining whether
funds held in the Securities Account shall have been invested in such a manner
so as to comply with the requirements of this Section 2(b).
3
<PAGE>
3. DISTRIBUTION, REDUCTION AND TERMINATION OF SECURITIES ACCOUNT.
(a) Unless on or prior to a Notice Date the Company shall have
delivered to the Deposit Agent a Direction Notice, the Deposit Agent shall
deliver to each Holder the Quarterly Return Amount on each Deposit Payment Date.
If the Company shall have delivered a Direction Notice, substantially in the
form attached hereto as Exhibit B, to the Deposit Agent on or prior to the
Notice Date, the Deposit Agent shall, as instructed by the Company in such
Direction Notice, purchase from the Company, for transfer to each Holder in lieu
of all or a portion of the Quarterly Return Amount on the next Deposit Payment
Date, that number of whole shares of Common Stock determined by dividing the
Quarterly Return Amount (or portion thereof to be paid in shares of Common
Stock) by the Market Value Amount as of the Notice Date. In consideration for
the issuance of such shares the Deposit Agent shall pay to the Company all or
that portion (as the case may be) of the Quarterly Return Amount for such
period.
(b) Immediately after any conversion of the Depositary Shares, the
Company shall be paid by the Deposit Agent any funds remaining in the Securities
Account allocable to the Depositary Shares so converted. Such allocation shall
be made pro rata based upon the number of Depositary Shares so converted.
(c) On the Deposit Expiration Date, after distributing all Quarterly
Return Amounts, the Deposit Agent shall deliver to the Company any cash
remaining in the Securities Account as of such date and terminate the Securities
Account.
(d) Delivery of a Direction Notice directing the Deposit Agent to
purchase Common Stock for the accounts of Holders shall also authorize the
Company to issue and deliver such shares to the Holders immediately upon receipt
by the Company of the purchase price for them.
(e) This Agreement shall remain in full force and effect until all
amounts held hereunder by the Deposit Agent have been finally distributed in
accordance herewith.
(f) Any fractional interest in a share of Common Stock resulting from
payment of the Quarterly Return Amount in Common Stock will be paid in cash
based on the last reported sale price of the Common Stock on the Nasdaq National
Market (or any national securities exchange or authorized quotation system on
which the Common Stock is then listed) at the close of business on the trading
day next preceding the date of conversion or such later time as the Company is
legally and contractually able to pay for such fractional shares.
4
<PAGE>
4. RECORD DATE. The Quarterly Return Amount or, if a Direction Notice has
been delivered by the Company, Common Stock, shall be paid or delivered to the
Holders of record of the Depositary Shares, as they appear on the Company's
stock register 10 business days prior to each Deposit Payment Date.
5. RIGHTS, DUTIES AND IMMUNITIES OF THE DEPOSIT AGENT. In order to induce
the Deposit Agent to act as Deposit Agent hereunder, the Company hereby
covenants and agrees with the Deposit Agent as follow:
(a) The Deposit Agent shall not in any way be bound or affected by any
amendment, modification or cancellation of this Securities Account Agreement,
unless the same shall have been agreed to in writing by the Deposit Agent.
(b) The Deposit Agent shall be entitled to rely, and shall be fully
protected in acting in reliance upon, any Direction Notice or other instructions
or directions furnished to the Deposit Agent in writing by the proper party
under this Securities Account Agreement and shall be entitled to treat as
genuine, and as the document it purports to be, any letter, instruction or other
document or instrument delivered to the Deposit Agent hereunder and believed by
the Deposit Agent to be genuine and to have been presented by the proper party
or parties, without being required to determine the authenticity or correctness
of any fact stated therein, the propriety or validity thereof, or the authority
or authorization of the party or parties making and/or delivering the same to do
so.
(c) This Agreement sets forth exclusively the duties and obligations of
the Deposit Agent with respect to any and all matters pertinent to its acting as
Deposit Agent hereunder.
(d) The Deposit Agent undertakes to perform only such duties as are
expressly set forth in this Securities Account Agreement, and no other duty,
obligation or covenant shall be implied or enforceable against the Deposit Agent
by any person. Without limiting the effect of this Section 5(d), the Deposit
Agent shall have no liability or obligation to the Company, any Holder or any
person claiming by or through any of them: (i) to review or examine any
instrument, agreement or document other than this Agreement and any notice
provided for herein; (ii) to determine whether any conditions precedent to a
disbursement of funds from the Securities Account, other than the receipt of
written notices provided for in Section 3 hereof, have been or will be satisfied
or otherwise to investigate any notice received by the Deposit Agent hereunder;
(iii) to evaluate or determine the validity, legality or veracity of any action
or omission by any person; (iv) to communicate with any person other than as
expressly provided for in this Agreement; (v) to make any payment hereunder from
5
<PAGE>
any source other than funds in the Securities Account; (vi) for the issuance of,
delivery to or receipt by a Holder of Common Stock purchased by the Deposit
Agent hereunder; (vii) for any action or omission of the Deposit Agent taken or
made upon the written instructions of the Company, whether or not the persons
giving such instructions were in fact authorized to do so; (viii) for any other
action or omission of, or for errors in judgment by, the Deposit Agent under or
in connection with this Agreement taken or made in good faith and without
negligence or willful misconduct; (ix) for any action or omission of any third
party, including the Company or any Holder; (x) for any change in the value of
any asset held in the Securities Account or for any loss on disposition of any
investment of the Deposit funds; and (xi) for incidental, consequential or
punitive damages in any event.
(e) The Company covenants and agrees to indemnify and hold the Deposit
Agent and each of its directors, officers, employees and agents (the Deposit
Agent and any such person or entity seeking indemnification hereunder being
hereinafter referred to as an "Indemnified Party") harmless from and against,
and upon demand reimburse each indemnified party for, any and all losses,
claims, damages, liabilities, costs and expenses (including expenses of its
legal counsel) (collectively, "Indemnified Losses") which may be paid, incurred
or suffered by such Indemnified Party or to which such Indemnified Party may
become subject by reason of or in connection with the administration of the
Deposit Agent's duties as Deposit Agent hereunder (including, but not limited
to, any action taken or omitted by the Deposit Agent in connection with this
Agreement or any action allegedly so taken or omitted) or by reason of, or as a
result of, the Deposit Agent's compliance with the instructions set forth herein
or with any instructions delivered to the Deposit Agent pursuant hereto, except
with respect to Indemnified Losses which shall be the result of negligence or
willful misconduct on the part of such Indemnified Party.
(f) In the event of any controversy or dispute hereunder, or with
respect to any question as to the construction of this Agreement or any action
so taken by it hereunder, the Deposit Agent may, in its discretion, obtain the
advice of counsel and shall incur no liability for any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(g) If any part of the Deposit Fund is at any time attached, garnished
or levied upon or under any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any of the Deposit Fund shall be stayed or
enjoined by any court order, or in case any order, writ, judgment or decree
shall be made or entered by any court affecting the Deposit Fund or any part
thereof, then and in any of such events, the Deposit Agent is authorized, in its
6
<PAGE>
sole discretion, to rely upon and comply with any such order, writ, judgment or
decree. The Deposit Agent shall not be liable to any of the parties hereto, to
any Holder or to any other person, firm or corporation by reason of such
compliance even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside, vacated, found to have been entered
without jurisdiction, or found to be in violation of or beyond the scope of a
constitution or a law.
(h) Notwithstanding anything to the contrary contained therein, if the
Deposit Agent shall be uncertain as to its duties or rights hereunder, shall
receive any notice, advice, direction, or other document from the Company with
respect to the Deposit Fund which, in its opinion, is in conflict with any of
the provisions of this Agreement, or should be advised that a dispute has arisen
with respect to the payment, ownership, or right of possession of the Deposit
Fund or any part thereof (or as to the delivery, non-delivery, or content of any
notice, advice, direction, or other document), the Deposit Agent shall be
entitled (but not obligated), without liability to anyone, under any
circumstance to refrain from taking any action other than to use its best
efforts to keep safely the Deposit Fund until the Deposit Agent shall be
directed otherwise in writing by the Company and a majority of the Holders or by
an order, decree or judgment of a court of competent jurisdiction which has been
finally affirmed on appeal or which by lapse of time or otherwise is no longer
subject to appeal, but the Deposit Agent shall be under no duty to institute or
defend any proceeding, although it may do so.
(i) The Company shall have the right to cause the Deposit Agent to be
relieved of its duties hereunder and to select a substitute Deposit Agent, upon
the expiration of thirty (30) days following delivery of written notice of
substitution to the Deposit Agent. Upon selection of such substitute Deposit
Agent, such substitute Deposit Agent and the Company shall enter into an
agreement substantially identical to this Agreement and, thereafter, the
replaced Deposit Agent shall be relieved of its duties and obligations to
perform hereunder, except that the replaced Deposit Agent shall transfer to the
substitute Deposit Agent upon request therefor the Securities Account and copies
of all books, records, plans and other documents in the replaced Deposit Agent's
possession relating to such funds or this Agreement.
(j) Upon not less than 30 days' written notice to the Company and the
Holders of its intention to resign under this Agreement, the Deposit Agent may
resign as Deposit Agent hereunder by selecting, as a successor Deposit Agent,
any other Deposit Agent as directed or approved by the Company (which approval
shall not be unreasonably withheld). Such resignation shall take effect upon
7
<PAGE>
delivery by the resigning Deposit Agent of the Securities Account to such
successor Deposit Agent: the resigning Deposit Agent shall thereupon be
discharged of all its duties and obligations hereunder. In addition, the Deposit
Agent shall be discharged of all of its duties and obligations hereunder upon
its deposit of the Securities Account with a court of competent jurisdiction.
The Company and the Holders each hereby irrevocably consents and submits to the
jurisdiction of such court in any such action and waives all rights to contest
the jurisdiction of such court.
(k) The Company hereby authorizes the Deposit Agent, if the Deposit
Agent is threatened with litigation or is sued, to interplead all interested
parties in any court of competent jurisdiction and to deposit the Securities
Account with the clerk of that court.
(l) The Deposit Agent's duties, obligations and liabilities hereunder,
except as a result of the Deposit Agent's negligence or willful misconduct, will
terminate upon its delivery of all the Securities Account under any provision of
this Agreement. The provisions of Section 5(e) and of this Section 5(l) shall
survive any such termination.
6. EXPENSES. The Deposit Agent shall be entitled to customary fees and
expenses for performing its duties hereunder, as may be agreed from time to time
by the Company and the Deposit Agent. The Deposit Agent shall be entitled to
prompt reimbursement of all reasonable expenses incurred by the Deposit Agent in
carrying out its duties hereunder, including, without limitation, travel and
other out-of-pocket expenses.
7. NOTICES. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid:
(a) if to the Holders, to their address as set forth in the stock
transfer records of the Company:
(b) if to the Company, to UnitedGlobalCom, 4643 South Ulster, Suite
1300, Denver, Colorado, 80237, Attn: President, or to such person or address as
the Company shall designate in writing, with a copy to Holme Roberts & Owen LLP,
1700 Lincoln Street, Suite 4100, Denver, Colorado 80203, Attn: Garth B. Jensen.
8
<PAGE>
(c) if to Deposit Agent, to Firstar Bank of Minnesota, N.A., 101 East
Fifth Street, St. Paul, Minnesota 55101-1860, Attn: Frank Leslie.
Any party may change the address (or the person to whose attention such notice
is directed) by notice given to the other parties hereto as aforesaid.
8. MISCELLANEOUS.
(a) BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and their respective heirs, personal representatives, executors,
successors and assigns.
(b) COUNTERPARTS. This Agreement may be executed in any number of
counterparts all of which, taken together shall constitute one fully executed
agreement.
(c) NO AMENDMENTS. This Agreement may not be modified or amended, nor
any provision hereof be waived, except by a writing duly executed by the Deposit
Agent, the Company and by a majority of the Holders.
(d) GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Colorado, without
reference to or application of rules or principles of conflicts of law.
(e) HEADINGS. Headings, sections and subsections contained in this
Agreement are for convenience or reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(f) SPECIFIC PERFORMANCE. In the event of the failure by a party hereto
to give any notice required under the terms of this Agreement, the other parties
hereto shall be entitled to specific performance by such non-performing party.
(g) SEVERABILITY. If any provisions of this Agreement shall be declared
by any court of competent jurisdiction illegal, void or unenforceable, the other
provisions shall not be affected, but shall remain in full force and effect.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Ellen P.Spangler
----------------------------------------
Name: Ellen P. Spangler
Title: Senior Vice President and Secretary
FIRSTAR BANK OF MINNESOTA, N.A.,
as Depositary
By: /s/ Frank P. Leslie III
----------------------------------------
Name: Frank P. Leslie III
Title: Vice President
10
<PAGE>
EXHIBIT A
DEPOSIT RECEIPT
THE UNDERSIGNED hereby acknowledges receipt from the Initial Purchasers (as
defined in the Offering Memorandum dated June 29, 1999) of Treasury Securities
with a value of $ representing a portion of the sales proceeds from that certain
private placement of 8,500,000 Depositary Shares (each such Depositary Share is
equivalent to 1/20 of a share of 7 % Series C Senior Cumulative Convertible
Preferred Stock, par value $0.01 per share) of the Company.
The undersigned, as Deposit Agent for the Company (the "Deposit Agent")
has, in accordance with that certain Securities Account Agreement, dated July 6,
1999 by and between the Company and the Deposit Agent, as deposit agent (the
"Securities Account Agreement"), deposited the Deposit Fund in the Securities
Account (as such term is defined in the Securities Account Agreement).
FIRSTAR BANK
OF MINNESOTA, N.A.
By:
Name:
Title:
Date: _____, 1999
<PAGE>
EXHIBIT B
FORM OF DIRECTION NOTICE
[LETTERHEAD OF THE COMPANY]
[DATE]
[DEPOSITARY]
Re: Direction Notice No. [_______________]
Ladies and Gentlemen:
We refer to the Securities Account Agreement dated as of the 6th day of
July, 1999 between you, as Deposit Agent, and United International Holdings,
Inc., a Delaware corporation (the "Company"). Unless otherwise specified,
capitalized terms used herein shall have the meaning given in the Securities
Account Agreement. This letter constitutes a Direction Notice under the
Securities Account Agreement.
The undersigned hereby notifies you that you are directed, pursuant to
Paragraph 3(a) of the Securities Account Agreement, to purchase from the
Company, for delivery to each holder of Depositary Shares in lieu of the
Quarterly Return Amount on the next Deposit Payment Date, shares of Common Stock
for $ of Quarterly Return Amount.
In connection with the requested disbursement, the undersigned hereby
notifies you that; the Company will issue and deliver, for and on your behalf,
the shares of Common Stock acquired by you directly to the holders of the
Depositary Shares. The Deposit Agent is entitled to rely on the foregoing in
disbursing funds related to this Direction Notice.
UNITED INTERNATIONAL
HOLDINGS, INC.
By:
Name:
Title:
