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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 (DATE OF EARLIEST EVENT REPORTED) OCTOBER 8, 1996
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INTERNATIONAL CABLETEL INCORPORATED
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-22616 52-1822078
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
110 East 59th Street, New York, New York 10022
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (212)906-8440
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________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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On October 3, 1996 International CableTel Incorporated ("CableTel")
announced that it had acquired the remaining 40% interest it did not already own
in its South Wales, U.K. cable/telephony franchises. The interest being
acquired is owned by Hyder Plc, through various subsidiaries, in a joint venture
created in 1993. This joint venture operates U.K. cable/telephony franchises
comprising approximately 540,000 franchised homes.
CableTel is acquiring the interest in exchange for $78 million stated value
of a new class of CableTel non-voting convertible preferred stock. The
preferred stock issued to Swalec Telco Investments Limited will be convertible
into shares of CableTel common stock having an aggregate value of $78 million.
Dividends will not be payable for five years on the preferred stock, but
thereafter will be payable at a rate of 5% per annum payable in cash, CableTel
common stock or additional preferred stock, at CableTel's option. Resale of the
common stock into which the preferred stock is convertible is subject to certain
resale restrictions and compliance with U.S. securities laws.
CableTel also operates telecommunications and cable television franchises
in the West of Scotland, Hertfordshire, Bedfordshire, Northern Ireland, Surrey,
East Hampshire and West Yorkshire.
A copy of the press release issued by the Company announcing the above is
attached hereto as an exhibit and incorporated herein by reference.
The terms of the non-voting preferred stock are set forth in full in the
Certificate of Designations filed with this report as Exhibit 3.4. On the basis
that (except in extraordinary circumstances) the conversion price of the
preferred stock is the greater of $40.00 or the market price of CableTel's
common stock for a period prior to conversion, the maximum number of shares of
CableTel common stock issuable upon conversion of the $78 million of stated
value of preferred stock is 1,950,000 shares.
Item 7. Financial Statements and Exhibits
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Exhibits
3.4 Certificate of Designations of Preferred Stock of International
CableTel Incorporated
99 Press Release issued October 8, 1996.
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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.
INTERNATIONAL CABLETEL INCORPORATED
(Registrant)
By: \s\ Richard J. Lubasch
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Name: Richard J. Lubasch
Title: Senior Vice President-General Counsel
Dated: October 8, 1996
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EXHIBIT INDEX
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Exhibit Page
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3.4 Certificate of Designations of Preferred Stock of
International CabelTel Incorporated.
99 Press Release issued on October 8, 1996.
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CERTIFICATE OF DESIGNATIONS
OF
PREFERRED STOCK
OF
INTERNATIONAL CABLETEL INCORPORATED
_________________
PURSUANT TO SECTION 151(G) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
___________________
The undersigned, Senior Vice President and the Secretary of
International CableTel Incorporated, a Delaware corporation (the "COMPANY"),
HEREBY CERTIFIES that (i) the Board of Directors, in accordance with Article IV,
Section B of the Company's Restated Certificate of Incorporation and Section
151(g) of the Delaware General Corporation Law (the "DGCL"), has authorized the
creation of the series of Preferred Stock hereafter provided for and has
established the dividend, redemption, conversion and voting rights thereof and
has adopted the following resolution, creating the following new series of the
Company's Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted to the
Board of Directors by the provisions of Article IV, Section B of the Restated
Certificate of Incorpo ration of the Company and Section 151(g) of the DGCL,
there is hereby created and autho rized the issuance of a new series of the
Company's Preferred Stock, par value $.01 per share ("PREFERRED STOCK"), with
the following powers, designations, dividend rights, voting powers, rights on
liquidation, conversion rights, redemption rights and other preferences and
relative, participating, optional or other special rights and with the
qualifications, limitations or restrictions of the shares of such series (in
addition to the powers, designations, preferenc es and relative, participating,
optional or other special rights and the qualifications, limita tions or
restrictions thereof set forth in the Restated Certificate of Incorporation that
are applicable to each series of Preferred Stock) hereinafter set forth:
(1) DESIGNATION; NUMBER OF SHARES. The designation of the series of
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Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "5% Non-voting Convertible Preferred Stock, Series A" (including, in the case
of any reclassifica tion, recapitalization, or other change to such Preferred
Stock or, in the case of a consolida tion or merger of the Company with or into
another Person affecting such Preferred Stock, such capital stock to which a
holder of such Preferred Stock shall be entitled upon the
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occurrence of such event, the "CONVERTIBLE PREFERRED STOCK"). The authorized
number of shares of Convertible Preferred Stock shall be 2,000, of which the
number of shares of Convertible Preferred Stock initially issued by the Company
shall be 780, which number may from time to time be increased or decreased (but
not below the number then outstanding). Each share of Convertible Preferred
Stock shall have a stated value of $100,000; provided that a share of
Convertible Preferred Stock issued in accordance with subparagraphs (3)(d) or
(10)(a) may have a lesser stated value computed as provided in such
subparagraphs (the "STATED VALUE").
Any shares of Convertible Preferred Stock redeemed or otherwise
acquired by the Company shall be retired and shall resume the status of
authorized and unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series of Preferred Stock by the Board of Directors.
(2) CERTAIN DEFINITIONS. Unless the context otherwise requires, the
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terms defined in this paragraph (2) shall have, for all purposes of this
Certificate of Designations, the meanings herein specified:
"APPLICABLE PRICE" shall mean the aggregate of (A) in the event of a
Non-Change Reorganization in which the holders of Common Stock receive cash, the
amount of such cash receivable by the holder of one share of Common Stock (as
such share is in effect immediately prior to the consummation of such Non-Change
Reorganization); and (B) in the event of a Non-Change Reorganization in which
the holders of Common Stock receive securities or other property which are
traded on an established market (within the meaning of Treasury Regulation
1.1273-2(f)(1) of the Internal Revenue Code of 1986, as in effect on September
30, 1990), the average (or if there be more that one security or item of
property the sum of the averages) of the daily Trading Prices of such securities
and/or property receivable by the holder of one share of Common Stock (as such
share is in effect immedi ately prior to such consummation) for the period of
twenty consecutive Trading Days ending on the second Trading Day immediately
preceding the applicable Conversion Date, date of occurrence of the Change of
Control or Redemption Date, as the case may be, appropriately adjusted to take
into account any stock dividend on such security or property, or any sub-
division, split, combination, reclassification of such security or property that
occurs or the "ex" date for which occurs on or prior to such Conversion Date,
date of occurrence or Redemption Date.
"AVERAGE MARKET PRICE" on any Determination Date, shall mean the
average of the daily Closing Prices for the period of 20 consecutive Trading
Days ending on the second Trading Day immediately preceding such Determination
Date, appropriately adjusted
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to take into account any stock dividend on the Common Stock or any subdivision,
split, combination or reclassification of the Common Stock that occurs, or the
Ex-Dividend Date for which occurs, during the period following the first Trading
Day in such twenty-Trading Day period to and including the Determination Date.
"BOARD" shall mean the Board of Directors of the Company, and, unless
the context indicates otherwise, shall also mean, to the extent permitted by
law, any committee thereof authorized, with respect to any particular matter, to
exercise the power of the Board of Directors of the Company with respect to such
matter.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York and London, England are
authorized to close or not obligated by law or executive order to open.
"CHANGE OF CONTROL" shall mean:
(i) the closing of the sale, lease or transfer of all or substantially
all of the assets of the Company 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 any Permitted Holder;
(ii) the liquidation or dissolution of the Company;
(iii) any "PERSON" or "GROUP" (as defined in sub-paragraph (i)
above), other than any Permitted Holder, becomes the "BENEFICIAL OWNER" (as
defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power of all classes of the voting stock of the Company or its successor
by merger or consolidation and/or warrants or options to acquire such voting
stock, calculated on a fully diluted basis, unless, as a result of such
transaction, the ultimate direct or indirect ownership of the Company or such
successor is substantially the same immediately after such transaction as it was
immediately prior to such transaction, provided, however, that in the case of a
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tender offer by any "person" or "group" (as defined in subparagraph (i) above),
other than any Permitted Holder, for such amount of voting stock and/or warrants
or options to acquire such voting stock as would (if accepted in full) result in
such "person" or "group" becoming the "beneficial owner" (each as defined above)
of more than 35% of such total voting power, the Change of Control shall be
deemed to occur on the date such tender offer is made; or
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(iv) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board (together with any new
directors whose election or appointment by such board or whose nomination for
election by the shareholders of the Company was approved by a vote of 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 Board then in
office.
"CHANGE OF CONTROL NOTICE" shall have the meaning set forth in
paragraph (7)(b).
"CHANGE OF CONTROL DENOMINATOR" shall mean an amount per share of
Common Stock, determined as of the time immediately preceding the occurrence of
the Change of Control, equal to the lesser of either (i) the Fixed Price; or
(ii) the value of the consideration per share of Common Stock receivable by a
holder of Common Stock by reason of the Change of Control or, if no such
consideration is receivable, then the Closing Price of a share of Common Stock
as of such time.
"CLOSING PRICE" shall mean, on any day:
(i) the average between the high and low reported sale price of a
share of Common Stock on and as reported by the Nasdaq Stock Market's National
Market on such day;
(ii) if the primary trading market for the Common Stock on such day is
not the Nasdaq Stock Market's National Market, then the closing sale price
regular way on such day, or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way on such day, in
either case as reported by the Nasdaq System, the National Quotations Bureau,
Inc. or a comparable service;
(iii) if the Closing Price on such day is not available pursuant
to one of the methods specified above, then the average of the bid and asked
prices for the Common Stock on such day as furnished by any New York Stock
Exchange member firm selected from time to time by the Board for that purpose;
or
(iv) if the Closing Price on such day is not available pursuant to the
method specified in (iii) above, the determination of Closing Price shall be
determined in good faith by the Board exercising its reasonable discretion.
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"COMMON STOCK" shall mean the shares of common stock, par value $0.01
per share, of the Company, which term shall include, where appropriate, in the
case of any reclassification, recapitalization or other change in the Common
Stock, or in the case of a consolidation or merger of the Company with or into
another Person affecting the Common Stock, such capital stock to which a holder
of Common Stock shall be entitled upon the occurrence of such event.
"COMMON STOCK DIVIDEND AMOUNT" shall have the meaning set forth in
subparagraph (3) (c).
"COMPUTATION DATE" shall mean the earlier of (a) the date on which the
Company shall enter into a firm contract or commitment for the issuance of
Options or Convertible Securities or (b) the date of actual issuance of such
Options or Convertible Securities.
"CONVERSION DATE" shall have the meaning set forth in subparagraph
5(c).
"CONVERTIBLE PREFERRED STOCK" shall have the meaning set forth in
paragraph (1).
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness or
shares of stock which are, at the option of the holder hereof, convertible into
or exchangeable for shares of Common Stock.
"CURRENT MARKET PRICE" on the Determination Date for any issuance of
Options or Convertible Securities or any distribution in respect of which the
Current Market Price is being calculated, shall mean the average of the daily
Closing Prices of the Common Stock for the shortest of:
(i) the period of 20 consecutive Trading Days ending on the last
full Trading Day before such Determination Date,
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of Options or Convertible Securities or the
distribution in respect of which the Current Market Price is being calculated
and ending on the last full Trading Day before such Determination Date , and
(iii) the period, if any, commencing on the date next succeeding
the Ex-Dividend Date with respect to the relevant issuance of Options or
Convertible Securities or the relevant distribution for which an adjustment is
required by the provisions of subpara-
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graphs (6) (a) (ii) or (iii), and ending on the last full Trading Day before
such Determination Date.
If multiple events occur which require adjustment pursuant to
paragraph (6)(a), the adjustment required by each such event shall be given
effect in the order of occur rence but without duplication.
"DENOMINATOR" shall mean the Fixed Price on the applicable
Determination Date or, if, on such Determination Date, the Average Market Price
is greater than the Fixed Price on such Determination Date, then such Average
Market Price.
"DETERMINATION DATE" shall mean: (i) in the case of a dividend
payment, the Record Date, (ii) in the case of a redemption payment, the related
Redemption Date, (iii) in the case of a conversion, the applicable Conversion
Date, (iv) in the case of a Change of Control, the date the Change of Control
occurs, (v) in the case of a Liquidating Payment, the Liquidating Payment Date
and (vi) in the case of any issuance of Options or Convertible Securities or any
distribution to which subparagraphs (6) (a) (ii) or (iii) respectively apply,
the earlier of (a) the record date for the determination of stockholders
entitled to receive the Options, Convertible Securities, or the distribution to
which such subparagraphs apply and (b) the Ex-Dividend Date for such Options,
Convertible Securities or distribution.
"DIVIDEND PAYMENT DATE" shall mean, for any Dividend Period, the last
day of such Dividend Period, which shall be the fifteenth day of each June and
December, commencing with December 15, 2001, or the next succeeding Business Day
if any such day is not a Business Day.
"DIVIDEND PERIOD" shall mean the period from the date that is the
fifth anniversary of the Issue Date to but excluding the first Dividend Payment
Date and, thereaf ter, each semi-annual period from and including a Dividend
Payment Date to but excluding the next Dividend Payment Date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute, and the rules and
regulations promulgated thereunder.
"EX-DIVIDEND DATE" shall mean the date on which "ex-dividend" trading
commences for a dividend, an issuance of Options or Convertible Securities or a
distribution to which subparagraphs (6)(a) applies in the Nasdaq Stock Market's
National Market or on the principal exchange on which the Common Stock is then
quoted or traded.
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"FIXED PRICE", on any Determination Date, shall mean $40.00, subject
to adjustment as prescribed in paragraph (6)(a).
"ISSUE DATE" shall mean October 7, 1996.
"JPPF" shall mean the Series A Junior Participating Preferred Stock of
the Company issuable upon exercise of the Rights pursuant to the Rights
Agreement.
"JUNIOR STOCK" shall mean:
(i) each class or series of common stock of the Company;
(ii) the JPPF issuable upon exercise of the Rights;
(iii) any other class or series of capital stock of the Company
hereafter created, other than (a) any class or series of Parity Stock (except to
the extent provided under clause (iv) hereof) and (b) any class or series of
Senior Stock, and
(iv) any class or series of Senior Stock or Parity Stock to the extent
that it ranks junior to the Convertible Preferred Stock as to dividend rights,
rights of redemption or rights on liquidation, as the case may be. For purposes
of clause (iii) above, a class or series of Senior Stock or Parity Stock shall
rank junior to the Convertible Pre ferred Stock as to dividend rights, rights of
redemption or rights on liquidation if the holders of shares of Convertible
Preferred Stock shall be entitled to dividend payments, payments on redemption
or payments of amounts distributable upon dissolution, liquidation or winding up
of the Company, as the case may be, in preference or priority to the holders of
shares of such class or series of Senior Stock or Parity Stock.
"LIQUIDATING PAYMENT" shall mean an amount equal to the Liquidation
Preference of a share of Convertible Preferred Stock or, if less, the amount
payable in respect of one share of Convertible Preferred Stock pursuant to
subparagraph (9) (a) upon the voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company.
"LIQUIDATING PAYMENT DATE" shall mean the date on which the Company
makes the aggregate Liquidating Payment to all holders of outstanding shares of
Convertible Preferred Stock.
"LIQUIDATION PREFERENCE" measured per share of the Convertible
Preferred Stock, shall mean an amount equal to (a) the Stated Value per share of
Convertible Preferred Stock, plus (b) for purposes of determining the amount
payable pursuant to paragraph (9)
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only, an amount equal to all dividends accrued but unpaid on such share, whether
or not such unpaid dividends have been declared or there are funds of the
Company legally available for the payment of dividends, to the Liquidating
Payment Date.
"NON-CHANGE REORGANIZATION" shall mean any of the following events,
but only to the extent that such event does not also constitute a Change of
Control:
(i) any consolidation or merger of the Company with another entity
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation remains unchanged),
(ii) the sale or other transfer of all or substantially all of
its assets to another entity,
(iii) any reorganization or reclassification of the Common Stock
or other equity securities of the Company (other than a transaction to which
paragraph 6(a)(i) applies), and
(iv) any statutory exchange of any shares of capital stock of the
Company with another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation and in which the Common
Stock outstanding immediately prior to the merger or consolidation remains
unchanged).
"OPTION" shall mean any right, option or warrant entitling the holder
thereof to subscribe for, purchase, or otherwise acquire Common Stock in the
Company (other than the Rights).
"PARITY STOCK" shall mean the Convertible Preferred Stock and any
class or series of capital stock, whether now existing or hereafter created, of
the Company to the extent ranking on a parity basis with the Convertible
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series, whether now existing or
hereafter created, shall rank on a parity as to dividend, rights of redemption
or rights on liquidation with the Convertible Preferred Stock, whether or not
the dividend rates, dividend payment dates, redemption or liquidation prices per
share or sinking fund or mandatory redemption provisions, if any, are different
from those of the Convertible Preferred Stock, if the holders of shares of such
class or series shall be entitled to dividend payments, payments on redemption
or payments of amounts distributable upon dissolution, liquidation or winding up
of the Company, as the case may be, in proportion to their respective
accumulated and accrued and unpaid dividends, redemption prices or liquidations
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prices, respectively, without preference or priority, one over the other, as
between the holders of shares of such class or series and the holders of
Convertible Preferred Stock. No class or series of capital stock that ranks
junior to the Convertible Preferred Stock as to rights on liquidation shall rank
or be deemed to rank on a parity basis with the Convertible Preferred Stock as
to dividend rights or rights of redemption.
"PERMITTED DESIGNEE" shall mean (i) a spouse or a child of a Permitted
Holder, (ii) trusts for the benefit of a spouse or child of a Permitted Holder,
(iii) in the event the death or incompetence of a Permitted Holder, his estate,
heirs, executor, administrator, committee or other personal representative or
(iv) any person so long as a Permitted Holder owns at least 50% of the voting
power of all classes of the voting stock of such person.
"PERMITTED HOLDER" shall mean George S. Blumenthal, J. Barclay Knapp
and their Permitted Designees.
"PERSON" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organiza tion, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"PREFERRED STOCK DIVIDEND AMOUNT" shall have the meaning set forth in
paragraph 3(d).
"RECORD DATE" for the dividends payable on any Dividend Payment Date
shall mean the date (not exceeding 45 days preceding such Dividend Payment Date)
fixed by the Board as the record date for such Dividend Payment Date.
"REDEMPTION AGENT" shall have the meaning set forth under paragraph
4(f).
"REDEMPTION DATE" as to any share of Convertible Preferred Stock,
shall mean the date fixed by the Board for the redemption of such share.
"REDEMPTION NOTICE" shall have the meaning set forth in paragraph (4)
(c).
"RIGHTS" means the rights issuable pursuant to the Rights Agreement.
"RIGHTS AGREEMENT" means the rights agreement dated as of October 13,
1993 between the Company and Continental Transfer & Trust Company as rights
agent.
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"REORGANIZATION UNIT" means the kind or amount of securities, cash or
other property receivable upon consummation of a Non-Change Reorganization in
substitution of or in exchange for a share of Common Stock as such share is in
effect immediately prior to such consummation (provided that if the kind or
amount of securities, cash or other property receivable upon consummation of
such Non-Change Reorganization is not the same with respect to each such share,
then the kind and amount of securities, cash or other property which shall be
deemed receivable upon consummation of such Non-Change Reorganization with
respect to each such share for purposes hereof shall be the kind and amount so
receivable per share by a plurality of such shares).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations
promulgated thereunder.
"SENIOR STOCK" shall mean any class or series of capital stock of the
Company hereafter created to the extent ranking prior to the Convertible
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series shall rank prior to the
Convertible Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in preference or priority to the holders of shares of Convertible
Preferred Stock. No class or series of capital stock that ranks on a parity
basis with or junior to the Convertible Preferred Stock as to rights on
liquidation shall rank or be deemed to rank prior to the Convertible Preferred
Stock as to dividend rights or rights of redemption, notwithstanding that the
dividend rate, dividend payment dates, sinking fund provisions, if any, or
mandatory redemption provisions thereof are different from those of the
Convertible Preferred Stock.
"STATED VALUE" shall have the meaning set forth in paragraph (1).
"TRADING DAY" shall mean a day on which the Nasdaq Stock Market's
National Market or, if different, the principal exchange on which the Common
Stock is quoted or traded is each open for the transaction of business.
"TRADING PRICE" of a security or property for any day means the
closing sale price regular way on such day, or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices of such
security or property on such day on the applicable established market on which
such security or property is traded.
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(3) DIVIDENDS.
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(a) Payment. The holders of outstanding shares of Convertible
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Preferred Stock shall be entitled to receive, when, as and if declared by the
Board out of funds legally available therefor (without prejudice to paragraph
(3)(b)), cumulative dividends, in preference to dividends on any Junior Stock,
from date that is the fifth anniversary of the Issue Date at the rate per annum
of 5% of the Stated Value per share, rounded to the nearest cent, payable semi-
annually in arrears on each Dividend Payment Date for each share of Convertible
Preferred Stock outstanding on such Dividend Payment Date; provided, however,
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that with respect to any Dividend Period during which a redemption or conversion
occurs, the Board shall declare accrued dividends to, and pay such dividends on,
the related Redemption Date or Conversion Date, respectively, in which case such
dividends shall be payable on such Redemption Date or Conversion Date,
respectively, to the holders of the shares of Convertible Preferred Stock as of
a special record date (not to exceed 45 days preceding the payment date) for
such dividend payment. Each dividend on the shares of Convertible Preferred
Stock shall be payable to holders of record as they appear on the stock register
of the Company on the Record Date or, as the case may be, the special record
date for such dividend and, for purposes of calculating the accrual of
dividends, dividends will accrue to, but not including, the date fixed for
payment. For purposes of determining the amount of dividends "accrued" (i) as
of the first Dividend Payment Date and as of any date that is not a Dividend
Payment Date, such amount shall be calculated on the basis of the rate per annum
of 5% of the Stated Value per share of Convertible Preferred Stock outstanding
on such date for actual days elapsed from the date that is the fifth anniversary
of the Issue Date (in the case of the first Dividend Payment Date and any date
prior to the first Dividend Payment Date) or the last preceding Dividend Payment
Date (in the case of any other date) to but excluding the date as of which such
determination is being made, based on a 365- or 366-day year, as the case may
be, and (ii) as of any Dividend Payment Date (other than the first Dividend
Payment Date), such amount shall be calculated on the basis of the rate per
annum of 5% of the Stated Value per share of Convertible Preferred Stock
outstanding on such date, based on a 360-day year of twelve 30-day months.
Dividends on the outstanding shares of Convertible Preferred Stock
will accrue on a daily basis (without interest or compounding) whether or not
there are funds legally available for the payment of such dividends and whether
or not such dividends are declared. Dividends will cease to accrue in respect
of shares of Convertible Preferred Stock on the date of their redemption or
conversion.
Accrued but unpaid dividends for any past Dividend Period or Dividend
Periods: (i) shall accrue additional dividends, from the Dividend Payment Date
on which they were due, or would have been due but for want of declaration by
the Board, at the rate
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of 7% per annum of the aggregate amount of such accrued but unpaid dividends per
share of Convertible Preferred Stock outstanding, rounded to the nearest cent in
accordance with the provisions of this paragraph (a) and such additional
dividends shall be declared and paid at the times described in this paragraph
(3) and in one of the forms referred to in paragraph (3)(b) until such accrued
but unpaid dividends have been paid in accordance with this paragraph (3); (ii)
shall not bear interest and (iii) may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be fixed by the
Board. References in this Certificate to accrued dividends or arrearage of
dividends shall, unless the context otherwise requires, be construed as
including any additional dividends accrued pursuant to subparagraph (i) above.
No interest, or sum of money in lieu of interest (except to the extent that such
additional dividends are paid in cash pursuant to the provisions of this
Certificate), shall be payable in respect of any accrued dividend payment or
payments that may be in arrears.
The shares of Convertible Preferred Stock will not be entitled to any
dividend, whether payable in cash, Common Stock, additional Convertible
Preferred Stock or other securities, assets or property, in excess of full
cumulative dividends determined in accordance with the foregoing provisions of
this paragraph (a).
(b) Declaration and Manner of Payment of Dividends. The Board shall
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declare and cause to be paid accrued but unpaid dividends, whether or not
cumulated, on the Convertible Preferred Stock at the rates, times and one of the
forms described herein to the maximum extent that the Company has funds legally
available therefor; provided, however, that without prejudice to the accrual
thereof, such dividends need not be declared or paid in cash to the extent the
payment thereof is prohibited by the terms and provisions of any agreement of
the Company referred to in paragraph (3)(e). Any dividends may be paid, in the
sole discretion of the Board: (i) in cash out of funds legally available
therefor; (ii) through the delivery of shares of Common Stock; (iii) through the
delivery of additional shares of Convertible Preferred Stock; or (iv) through
any combination of the foregoing forms of consideration elected by the Board in
its sole discretion; provided, however, that if Board shall fail to declare and
-------- -------
cause to be paid an accrued dividend payment in cash on any Dividend Payment
Date (whether or not there are unrestricted funds legally available for the
payment of such dividends in cash), then, the Board shall declare and cause to
be paid accrued dividends, whether or not cumulated, through the delivery of
shares of Common Stock or additional shares of Convertible Preferred Stock to
the extent permitted by applica ble law, regardless of the terms and provisions
of any agreement of the Company of the type referred to in paragraph (3)(e)
including any agreement relating to any indebtedness of the Company. If any
dividend declared by the Board is to be paid, in whole or in part, through the
delivery of shares of Common Stock or additional shares of Convertible Preferred
Stock,
12
<PAGE>
each holder of Convertible Preferred Stock shall receive the same proportion of
cash and/or shares of Common Stock and/or additional Convertible Preferred Stock
(except for cash paid in lieu of fractional shares) delivered in payment of such
dividend to other holders of shares of Convertible Preferred Stock.
(c) Payment of Dividends by Delivery of Common Stock. If the Company
------------------------------------------------
elects to pay any dividend payment, in whole or in part, by delivery of shares
of Common Stock, the amount of such dividend payment to be paid per share of
Convertible Preferred Stock in shares of Common Stock (the "COMMON STOCK
DIVIDEND AMOUNT") shall be paid through the delivery to the holders of record of
such shares of Convertible Preferred Stock on the Record Date for such dividend
payment of a number of shares of Common Stock determined by dividing the Common
Stock Dividend Amount by the Average Market Price. No fractional shares of
Common Stock shall be delivered to a holder of shares of Convertible Preferred
Stock, but the Company shall instead pay a cash adjustment deter mined as
provided in paragraph (10)(b).
(d) Payment of Dividends by Delivery of Additional Convertible
----------------------------------------------------------
Preferred Stock. If the Company elects to pay a dividend payment, in whole or
- ---------------
in part, by delivery of additional shares of Convertible Preferred Stock, the
amount of such dividend payment to be paid per share of Convertible Preferred
Stock in additional shares of Convert ible Preferred Stock (the "PREFERRED STOCK
DIVIDEND AMOUNT") shall be paid through the delivery to the holders of record of
such shares of Convertible Preferred Stock on the Record Date for such dividend
payment of a number of shares of Convertible Preferred Stock deter mined (i) if
on such date the Fixed Price is higher than the Average Market Price, then by
dividing (A) the product of multiplying Fixed Price by the Preferred Stock
Dividend Amount by (B) the product of multiplying the Average Market Price of
the Common Stock by the Stated Value, or (ii) if on such date the Fixed Price is
lower than the Average Market Price, then by dividing the Preferred Stock
Dividend Amount by the Stated Amount. No fractional shares of Convertible
Preferred Stock shall be delivered to a holder of shares of Convertible
Preferred Stock, but the Company shall instead, in its sole discretion, either
(i) pay an amount in cash (rounded to the nearest whole cent) equal to such
fraction or (ii) issue a share of Convertible Preferred Stock having a Stated
Value (rounded to the nearest whole cent) equal to such fraction.
(e) Prohibitions on Cash Dividends. Notwithstanding anything
------------------------------
contained in this Certificate to the contrary, but without effect on the accrual
thereof, no cash dividends on shares of Convertible Company Preferred Stock
shall be declared by the Board or paid or set apart for payment by the Company
at such time as the terms and provisions of any agreement of the Company,
including, without limitation, any agreement, contract, indenture, bond, note,
debenture, guarantee or other instrument relating to or evidencing its
13
<PAGE>
indebtedness, prohibits such declaration, payment or setting apart for payment
or provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder; provided, however, that
-------- -------
nothing contained in this paragraph (e) shall alter, limit or restrict the
Company's obligation to declare and pay accrued dividends, to the extent
permitted by applicable law, through the delivery of shares of Common Stock or
additional shares of Convertible Preferred Stock pursuant to the proviso
contained in the second sentence of paragraph (3)(b), whether permitted by any
such agreement or not.
(f) Credit. Any dividend payment made on the shares of Convert ible
------
Preferred Stock shall first be credited against the earliest accrued but unpaid
dividend due with respect to the shares of Convertible Preferred Stock.
(g) Pro Rata. All dividends paid with respect to the shares of
--------
Convertible Preferred Stock shall be paid pro rata (as nearly as may be
practicable) to the shareholders entitled thereto.
(h) Priority. Payment of dividends to the holders of shares of
--------
Convertible Preferred Stock shall be subject to the prior preferences and other
rights of any Senior Stock and to the provisions of paragraph (8).
(4) REDEMPTION AT THE OPTION OF THE COMPANY.
---------------------------------------
(a) The shares of Convertible Preferred Stock will not be subject to
the operation of any purchase, retirement, mandatory redemption or any sinking
fund. Unless redeemed by the Company pursuant to this paragraph (4), or
converted into shares of Common Stock pursuant to the provisions of paragraphs
(5) or (7), the Convertible Preferred Stock will be perpetual. At any time and
from time to time the Company shall have the right to redeem, in whole or from
time to time in part, the outstanding shares of Convertible Preferred Stock at a
price equal to the aggregate Stated Value of the shares of Convertible Preferred
Stock to be redeemed, together with an amount equal to all dividends accrued but
unpaid thereon to the date fixed for redemption (the "REDEMPTION PRICE").
If fewer than all of the outstanding shares of Convertible Preferred
Stock are to be redeemed on any Redemption Date, the shares of Convertible
Preferred Stock to be redeemed shall be chosen by the Company pro rata (as
nearly as may be practicable) among all holders of outstanding shares of
Convertible Preferred Stock, by lot or by such other method as the Board may
determine to be fair and appropriate. The Company shall not be required to
register a transfer of (i) any shares of Convertible Preferred Stock for a
period of 5 Business Days next preceding any selection of shares of Convertible
Preferred Stock to be redeemed or (ii) any shares of Convertible Preferred Stock
called for redemption.
14
<PAGE>
(b) Company's Right to Elect Manner of Payment of Redemption Price.
--------------------------------------------------------------
The Company may effect the redemption of shares of Convertible Preferred Stock
at the Redemption Price, in the sole discretion of the Board: (i) in cash out
of funds legally available therefor, (ii) in exchange for and through the
delivery of shares of Common Stock (iii) or through any combination of the
foregoing forms of consideration elected by the Board in its sole discretion.
(c) Notice of Redemption. The Company shall provide notice of any
--------------------
redemption of shares of Convertible Preferred Stock to holders of record of
Convertible Preferred Stock to be called for redemption not less than 10 nor
more than 60 days prior to the Redemption Date. Such notice (a "REDEMPTION
NOTICE") shall, subject to paragraph (4)(f)(z), be provided in accordance with
paragraph (15); provided, however, that neither failure to give such notice nor
-------- -------
any defect therein shall affect the validity of the proceedings for the
redemption of any shares of Convertible Preferred Stock to be redeemed.
In addition to any information required by law, each Redemption Notice
shall state, as appropriate, the following (and may contain such other
information as the Company deems advisable):
(A) the Redemption Date;
(B) that all outstanding shares of Convertible Preferred Stock are to
be redeemed or, in the case of a redemption of fewer than all
outstanding shares of Convertible Preferred Stock, the number of
shares of Con vertible Preferred Stock to be redeemed;
(C) the then applicable Redemption Price and the form or forms of
consid eration that the Company has elected to pay and/or deliver
upon such redemption and, if more than one form of consideration
has been elected by the Company, the designated portions of the
Redemption Price to be paid in each form of consideration so
elected;
(D) if the Company has elected to exchange and deliver shares of
Common Stock in payment of the Redemption Price (or a designated
portion thereof), the Company's computation of the number of
shares of Common Stock exchangeable and deliverable as provided
in subpara graph (4)(c) below;
15
<PAGE>
(E) the place or places in the United States or England and Wales
where certificates for Convertible Preferred Stock to be redeemed
are to be surrendered for redemption; and
(F) that dividends on the shares of Convertible Preferred Stock to be
redeemed shall cease to accrue on the Redemption Date (unless the
Company defaults in making payment of the Redemption Price).
(e) Redemption by Delivery of Common Stock. If the Company elects to
--------------------------------------
pay, in whole or in part, the Redemption Price in respect of shares of
Convertible Preferred Stock in exchange for and through the delivery of shares
of Common Stock, then the Company shall deliver to each holder of shares of
Convertible Preferred Stock to be redeemed on the applicable Redemption Date a
number of shares of Common Stock equal to the aggregate Redemption Price (or
designated portion thereof) of such shares of Convertible Preferred Stock
divided by the Average Market Price. No fractional shares of Common Stock shall
be delivered to a holder of shares of Convertible Preferred Stock in payment of
the Redemption Price, but the Company shall instead pay a cash adjustment
determined as provided in paragraph (10)(b).
(f) Deposit of Funds and/or Shares. If on or before the applicable
------------------------------
Redemption Date: (x) the Company shall have deposited with any bank or trust
company organized under the laws of the United States of America or any state
thereof having capital, undivided profits and surplus aggregating at least $250
million (the "REDEMPTION AGENT"), cash (including cash for any adjustment in
lieu of delivering fractional shares) and/or shares of Common Stock, as
applicable, sufficient to pay in full the aggregate Redemption Price (calculated
through the Redemption Date) for such shares of Convertible Preferred Stock on
such Redemption Date, (y) such cash and/or shares of Common Stock are readily
available to, but only to, the holders of Convertible Preferred Stock in
satisfaction of the obligations of the Company with respect to the payment of
the Redemption Price and (z) the Company shall prior to the Redemption Date have
so notified each record holder of Convertible Preferred Stock, which notice
shall be given to each holder of Convertible Preferred Stock by courier and
shall identify the Redemption Agent, its address and telephone and telecopier
numbers and the contact person(s) at the Redemption Agent responsible for
administration of the deposit then, effective as of the close of business on
such Redemption Date (and notwith standing that any certificate therefor shall
not have been surrendered for cancellation): (i) such shares of Convertible
Preferred Stock shall no longer be deemed outstanding but any shares of Common
Stock so deposited in accordance with this paragraph (f) for which such
Convertible Preferred Stock was redeemed shall be deemed to be outstanding; (ii)
the holders thereof shall cease to be holders of Convertible Preferred Stock but
shall be shown on the records of the Company as holders of the Common Stock so
deposited in accordance with
16
<PAGE>
this paragraph (f) in redemption of such Convertible Preferred Stock; (iii)
dividends with respect to the shares so called for redemption shall cease to
accrue on the Redemption Date but, subject to paragraph (4)(g), such holders
shall be entitled to, any dividends which shall thereafter accrue on, and shall
be entitled to exercise all other rights associated with, any shares of Common
Stock so deposited in accordance with this paragraph (f) in redemption of such
Convertible Preferred Stock; and (iv) all rights whatsoever with respect to the
shares so called for redemption shall forthwith cease and terminate (except the
right of such holders, upon the surrender of certificates evidencing the shares
of Convertible Preferred Stock so redeemed, to receive the cash and/or Common
Stock as applicable, payable or deliverable in payment of the Redemption Price
therefor, and the applicable cash adjustment, if any, in lieu of fractional
shares, without interest). Any cash and/or shares of Common Stock so deposited
or set apart which shall remain unclaimed at the end of one year after the
Redemp tion Date shall be returned or released to the Company, after which time
the holders of shares of Convertible Preferred Stock called for redemption on
such Redemption Date that remain outstanding after such one-year period shall
look only to the Company for the payment of the Redemption Price for such
shares, without interest.
A deposit made in compliance with the immediately preceding sentence
shall, except to the extent released or returned to the Company, be deemed to
constitute full payment for the shares of Convertible Preferred Stock to be
redeemed. Any interest accrued on funds so deposited shall be paid by the
Redemption Agent to the Company from time to time. If any shares of Convertible
Preferred Stock called for redemption on such Redemp tion Date are converted, in
accordance with paragraphs (5) or (7), between the date such cash and/or shares
of Common Stock are so deposited with the Redemption Agent and the close of
Business on the Redemption Date, then the cash (including cash for any
adjustment in lieu of delivering fractional shares) and/or shares of Common
Stock, as applicable, so deposited for the redemption of such shares so
converted shall be promptly thereafter returned by the Redemption Agent to the
Company.
(g) Surrender of Certificates; Status. Each holder of shares of
---------------------------------
Convertible Preferred Stock to be redeemed shall not be entitled to receive
payment of the Redemption Price for such shares until such holder shall
surrender the certificates evidencing such shares duly endorsed by, or
accompanied by, an instrument of transfer (in form reasonably satisfactory to
the Company) duly executed by, the holder or such holder's duly authorized
attorney-in-fact or, if the shares issuable upon redemption are to be issued in
the same name as the name in which such share of the Convertible Preferred Stock
is registered, in blank to the Redemption Agent (or to the Company if there is
no Redemption Agent) at the place designated in the Redemption Notice for such
redemption and shall thereupon be entitled to receive the consideration for such
shares specified in the Redemption Notice in an aggregate amount equal to the
Redemption Price for such shares. If fewer than all the shares
17
<PAGE>
of Convertible Preferred Stock represented by any such surrendered certificate
are called for redemption, a new certificate shall be issued to each holder of
Convertible Preferred Stock representing the unredeemed shares of Convertible
Preferred Stock, if any, owned of record by such holder. Holders of shares of
Convertible Preferred Stock that are redeemed on any Redemption Date shall not
be entitled to receive dividends declared and paid on any shares of Common Stock
exchangeable and deliverable in payment of the Redemption Price (or designated
portion thereof) for such shares of Convertible Preferred Stock, and such shares
of Common Stock shall not be entitled to vote, until such shares of Common Stock
are delivered upon the surrender of the certificates representing such shares of
Convertible Preferred Stock. Upon such surrender, such holders shall be
entitled to receive such dividends declared and paid subsequent to such
Redemption Date and prior to such delivery.
(h) If any shares of Convertible Preferred Stock have been surren
dered for conversion into Common Stock pursuant to paragraphs (5) or (7), then
(i) the Company shall not be obligated to redeem such shares and (ii) shares of
Common Stock and any funds which shall have been deposited for the payment of
the Redemption Price for such surrendered shares of Convertible Preferred Stock
shall be returned to the Company immedi ately after such conversion (subject to
declared dividends payable to holders of shares of Convertible Preferred Stock
on the record date for such dividends being so payable, to the extent set forth
in paragraph (5) or (7) hereof, regardless of whether such shares are con verted
subsequent to such record date and prior to the related Dividend Payment Date).
(i) Priority. The right of the Company to redeem shares of
--------
Convertible Preferred pursuant to this paragraph (4) shall be subject to the
prior preferences and other rights of any Senior Stock and to the provisions of
paragraph (8).
(5) CONVERSION.
----------
(a) Optional Conversion. A holder of one or more shares of the
-------------------
Convertible Preferred Stock shall have the right, exercisable at any time and
from time to time after the Issue Date and before the date which is 5 days
before the Redemption Date with respect to the affected shares, to convert
shares of the Convertible Preferred Stock into such number of shares of Common
Stock (calculated as to each conversion to the nearest 1/1000th of a share) as
is equal to the aggregate Stated Value of the shares of Convertible Preferred
Stock surrendered for conversion divided by the Denominator. In the case of
shares of Convertible Preferred Stock called for redemption, conversion rights
will expire at the close of business on the date which is 5 days before the
Redemption Date. Holders of record of shares of the Convertible Preferred Stock
at the close of business on a record date fixed for the payment of a dividend on
such shares shall be entitled to receive the dividend notwithstanding the
conversion of the shares prior to the dividend payment date. In addition
18
<PAGE>
to the right to receive accrued dividends not in arrears as provided for in
paragraph (3)(a), if there is an arrearage of dividends in respect of any of the
shares of Convertible Preferred Stock surrendered for conversion, upon such
conversion the Company shall pay to the holder of the Convertible Preferred
Stock so surrendered such arrearage: (i) in cash out of funds legally available
therefor; (ii) through the delivery of shares of Common Stock; or (iii) through
any combination of the foregoing elected by the Board in its sole discretion, in
each case, subject to, and in accordance with, the provisions of paragraph (3).
If the Company elects, or is required by proviso contained in paragraph (3)(b),
to pay any dividend arrearage on the Convertible Preferred Stock, in whole or in
part, in shares of Common Stock, each holder of the Convertible Preferred Stock
entitled to such dividend payment shall be issued that number of shares of
Common Stock equal to the aggregate amount of such dividend arrearage to be paid
through the delivery of shares of Common Stock divided by the Average Market
Price as of the Conversion Date (with a cash payment in lieu of the issuance of
fractional shares determined in accordance with paragraph (10)). Except as
provided above and in paragraph (3)(a), the Company shall make no other payment
of or allowance for unpaid dividends, whether or not in arrears, on such
Convertible Preferred Stock or for previously declared dividends or
distributions on the shares of Common Stock issued upon such conversion. A
share of Convertible Preferred Stock may be converted in whole or in part.
(b) Conversion Procedure. To exercise the conversion right, the
--------------------
holder of each share of the Convertible Preferred Stock to be converted shall
surrender the certificate representing such share, duly endorsed or assigned to
the Company or in blank, at any office of any transfer agent for the Convertible
Preferred Stock in New York, New York previously appointed by the Company and
identified in a notice given to the holders of Convertible Preferred Stock in
accordance with paragraph (15), or, if no such transfer agent has been so
appointed and identified, at the office of the Company and (whether or not a
transfer agent has been so appointed and identified) shall give notice to the
Company in accordance with paragraph (15) that such holder elects to convert the
shares represented by such certificate or a portion thereof. Such notice shall
also state the name or names (with address(es)) in which the certificate or
certificates for the shares of Common Stock which shall be issuable upon such
conversion shall be issued, and shall be accompanied by funds in an amount
sufficient to pay any transfer or similar tax required by the provisions of para
graph (11). Each share surrendered for conversion shall, unless the shares
issuable on conversion are to be issued in the same name as the name in which
such share of the Convertible Preferred Stock is registered, be duly endorsed
by, or be accompanied by an instrument of transfer (in form reasonably
satisfactory to the Company), duly executed by the holder or such holder's duly
authorized attorney-in-fact.
19
<PAGE>
(c) Issuance of Common Stock. As promptly as practicable after the
------------------------
surrender of certificates for shares of the Convertible Preferred Stock for
conversion, the giving of the notice and the delivery of the funds, if any,
referred to in paragraph (5)(b) above, the Company shall issue and shall deliver
to such holder, or on such holder's written order: (i) a certificate or
certificates for the number of whole shares of Common Stock issuable upon the
conversion of such shares of Convertible Preferred Stock in accordance with the
provisions of this paragraph (5); (ii) a check or cash in respect of any
fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in paragraph (10)(b) below; and (iii) in respect of any
part of any share of Convertible Preferred Stock that is surrendered for
conversion in part, a new certificate for a share of Convertible Preferred Stock
having a Stated Value (rounded to the nearest whole cent) equal to the part of
the share surrendered that was not converted into shares of Common Stock. Each
conversion with respect to any shares of the Convertible Preferred Stock shall
be deemed to have been effected (irrespective of whether the Company shall have
delivered certificates representing the Common Stock) on the date on which the
certificates for shares of the Convertible Preferred Stock shall have been
surrendered (accompanied by the funds, if any, required by paragraph (11)
below), such notice shall have been given and such instruments of transfer, if
any, shall have been delivered to the Company or the transfer agent as
aforesaid, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be deemed for all purposes to be the record
holder or holders of such Common Stock upon that date at that time (the
"CONVERSION DATE").
(d) No Fractional shares of Common Stock. No fractional shares of
------------------------------------
Common Stock or scrip representing fractional shares shall be issued upon
conversion of shares of the Convertible Preferred Stock. If more than one share
of the Convertible Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of the Convertible Preferred Stock so surrendered. Instead of any
fractional share of Common Stock otherwise issuable upon conversion of any
shares of the Convertible Preferred Stock, the Company shall pay a cash amount
determined in accordance with paragraph (10)(b) below in respect of such
fraction.
(e) Reservation of shares of Common Stock. The Company shall reserve
-------------------------------------
out of its authorized but unissued Common Stock or its Common Stock held in
treasury sufficient shares of Common Stock to permit the conversion of all of
the outstanding shares of the Convertible Preferred Stock. The Company shall at
no time permit the autho rized but unissued amount of its Common Stock to be
insufficient to permit the conversion of all shares of the Convertible Preferred
Stock at the time outstanding. All shares of Common Stock delivered upon
conversion of the shares of the Convertible Preferred Stock will, upon
20
<PAGE>
delivery, be duly authorized and validly issued, fully paid and nonassessable,
free from any adverse claims and preemptive rights with respect thereto.
(6) ADJUSTMENTS.
-----------
(a) Common Stock Dividends, Splits, Subdivisions and Combina tions.
--------------------------------------------------------------
The Fixed Price shall be subject to adjustment from time to time as follows:
(i) If, after the Issue Date, the Company shall (A) pay a dividend or
make a distribution on its outstanding Common Stock in shares of its Common
Stock, (B) split or subdivide its outstanding Common Stock into a greater
number of shares or (C) combine its outstanding Common Stock into a smaller
number of shares, then, in each case, the Fixed Price in effect immediately
prior to such action shall be adjusted concurrently with the occurrence of
such event and without any action on the part of the Company or any holder
of Convertible Preferred Stock to that price determined by multiplying the
Fixed Price in effect immediately prior to such event by a fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such time, and
(2) the denominator of which shall be the total number of shares of
Com mon Stock outstanding immediately after such time.
An adjustment made pursuant to this paragraph (i) shall become effective
immediately after the record date, in the case of a dividend or
distribution (except as provided in paragraph (6)(e) below), and shall
become effective immediately after the effective date in the case of a
subdivision, split or combination.
(ii) If, after the Issue Date, the Company issues Options or
Convertible Securities to substantially all holders of Common Stock
entitling them (for a period commencing no earlier than the record date for
the determination of holders of Common Stock entitled to receive such
Options or Convertible Securities and expiring not more than within 45 days
after such record date) to subscribe for, purchase, otherwise acquire or
convert into shares of Common Stock at a price per share less than the
Current Market Price per share of such shares of Common Stock on such
record date, then the Fixed Price in effect immediately prior to the
Computation Date shall be adjusted on the Computation Date (without any
action on the part of the Company or any holder of Convertible Preferred
Stock) so that the same shall equal
21
<PAGE>
the price determined by multiplying the Fixed Price in effect immediately
prior to such Computation Date by a fraction:
(1) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the Computation Date plus
the number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock issuable
pursuant to such Options or pursuant to the terms of such
Convertible Securities would purchase at the then Current Market
Price on such Computation Date, and
(2) the denominator of which shall be the number of shares of Common
Stock outstanding on such Computation Date plus the maximum
number of additional shares of Common Stock issuable pursuant to
all such Options or necessary to effect the conversion or
exchange of all such Convertible Securities.
To the extent of expiration, unexercised, of the right of conversion or
exchange of any Convertible Securities, or to the extent of the expiration,
unexercised, of any Options, or upon any increase in the minimum
consideration receivable by the Company for the issuance of additional
shares of Common Stock pursuant to such Convertible Securities or Options,
in either case previously adjusted as aforesaid, then the number of shares
of Common Stock deemed to be issued and outstanding by reason of the fact
that they were issuable upon conversion or exchange of any such Convertible
Securities or upon exercise of any such Options shall no longer be computed
as set forth above, and the Fixed Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any other
adjustments in the Fixed Price made pursuant to the provisions of this
paragraph (6)(a) after the Issue Date) had the adjustment of the Fixed
Price made upon the issuance or sale of such Convertible Securities or the
issuance of such Options not been made or made upon the basis of such
increased minimum consideration, as the case may be. Such adjustment shall
be made successively wherever any such Options or Convertible Securities
are issued at a price below the Current Market Price therefor as in effect
on the date of issuance. In determining whether any Options or Convertible
Securities entitle the holders to subscribe for or purchase shares of
Common Stock at less than the Current Market Price therefor, and in
determining the aggregate offering price of shares of Common Stock, there
shall be taken into account any consideration received by the Company for
such Options or Convertible Securities, the value of such consid eration,
if other than cash, to be determined in good faith by the Board. Notwith
standing the foregoing, if the Options or Convertible Securities are
exercisable,
22
<PAGE>
convertible or exchangeable only upon the occurrence of certain triggering
events or the arrival of a specified date, then the Fixed Price will not be
adjusted until such triggering events or specified dates occur.
(iii) If, after the Issue Date, the Company shall distribute, by way
of dividend or otherwise, to all holders of Common Stock shares of any
class of stock other than Common Stock, evidences of indebtedness or other
assets (other than cash dividends out of current or retained earnings), or
shall distribute to substantially all holders of Common Stock, Options
(other than those referred to in paragraph (6)(a) (ii) above), then, in
each such case, the Fixed Price shall be adjusted on the record date
(without any action on the part of the Company or any holder of Convertible
Preferred Stock) so that the same shall equal the price determined by
multiplying the Fixed Price in effect immediately prior to the date of such
distribution by a fraction:
(1) the numerator of which shall be the Current Market Price of
the Common Stock on the record date mentioned below less the
then fair market value (as reasonably determined in good
faith by the Board) of the portion of the assets so
distributed or of such subscription Options applicable to
one share of Common Stock, and
(2) the denominator of which shall be such Current Market Price
of the Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of
the holders of Common Stock entitled to receive such
distribution.
In addition to the foregoing, if, upon the occurrence of the
Distribution Date (as defined in the Rights Agreement), the Company shall
distribute the Rights: (x) the record holders of Convertible Preferred
Stock on the Distribution Date (as so defined) shall be deemed to have been
holders of Common Stock issued on or after the Merger (as defined in the
Rights Agreement) and prior to the Distribution Date (as so defined) for
purposes of the Rights Agreement; and (y) the Company shall make lawful and
proper provision so that each such record holder shall receive, in addition
to the shares of Common Stock which may then be issuable upon conversion
pursuant to the provisions of this Certificate, the same number of Rights
to which a holder of the number of shares of Common Stock into which the
shares of Convert ible Preferred Stock held by such record holder was
convertible immediately prior to the Distribution Date (as so defined)
would have been entitled on such Distribution Date pursuant to the Rights
Agreement if all the shares of Convertible Preferred Stock held by such
record holder had been converted pursuant to the provisions of para-
23
<PAGE>
graph (5)(a) or, in the case where the Distribution Date (as so defined)
occurs as a result of a Change of Control, paragraph (7)(a).
(iv) Without prejudice to paragraph (8)(a) of this Certificate, if
after the Issue Date, the Company shall, by dividend or otherwise, at any
time distribute to all holders of its Common Stock cash (including any
distributions of cash out of current or retained earnings of the Company
but excluding any cash that is distributed as part of a distribution
requiring an adjustment pursuant to paragraph (iii) of this paragraph) in
an aggregate amount that, together with the aggregate amount of any other
distributions to all holders of its Common Stock made in cash within the
12 months preceding the date fixed for determining the stockholders
entitled to such distribution (the "DISTRIBUTION RECORD DATE") and in
respect of which no adjustment pursuant to paragraph (iii) of this
paragraph (6) or this paragraph (iv) has been made, exceeds 10% of the
product of (A) the Current Market Price per share of the Common Stock on
the Distribution Record Date times (B) the number of shares of Common Stock
outstanding on the Distribution Record Date (excluding shares held in the
treasury of the Company), the Fixed Price shall be reduced on the
Distribution Record Date (without any action on the part of the Company or
any holder of Convertible Pre ferred Stock) so that the same shall equal
the price determined by multiplying such Fixed Price in effect immediately
prior to the effectiveness of the Fixed Price reduction contemplated by
this paragraph (iv) by a fraction:
(1) the numerator of which shall be the Current Market Price per
share of the Common Stock on the Distribution Record Date
less the amount of such cash and other consideration so
distrib uted applicable to one share (based on the pro rata
portion of the aggregate amount of such cash and other
consideration, divided by the shares of Common Stock
outstanding on the Distribution Record Date) of Common
Stock; and
(2) the denominator of which shall be such Current Market Price
per share of the Common Stock on the Distribution Record
Date, such reduction to become effective immediately prior
to the opening of business on the day following the
Distribution Record Date.
Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such
distribution, except as provided in paragraph (6)(e) below. Such
adjustment shall be made successively whenever any such dividend or
distribution shall be made.
24
<PAGE>
(v) All calculations under this paragraph (6)(a) shall be made to the
nearest cent or nearest 1/1000th of a share of Common Stock.
(vi) Notwithstanding anything to the contrary set forth in this
paragraph (6), no adjustment shall be made to the Fixed Price (A) upon the
issuance or distribution of Options or Convertible Securities (or upon the
exercise of such Options or the conversion of such Convertible Securities)
pursuant to any stock option, restricted stock or other incentive or
benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers of the Company and its subsidiaries or any
dividend reinvestment plan of the Company in effect or adopted on or before
the Issue Date or approved by the stockholders or compensation committee of
the Company after the Issue Date; (B) upon exercise of warrants to acquire
Common Stock pursuant to a warrant agreement dated as of February 14, 1996
between the Company and Chemical Bank, as warrant agent; (C) upon exercise
of the Rights or upon the issuance of the JPPF; (D) upon conversion of the
Company's 7 1/4% Convertible Subordinated Notes Due 2005 or the Company's
7% Convertible Subordinated Notes Due 2008; (E) upon the issuance of Common
Stock, Options or Convertible Securi ties, the exercise of Options or the
conversion of Convertible Securities for which adjustment was previously
made pursuant to paragraph (6)(a)(ii), (iii) or (iv); or (F) upon the
deemed issuance of Common Stock (provided, however, that such issuance does
-------- -------
not involve an actual issuance of Common Stock) by reason of adjustments
required pursuant to anti-dilution provisions applicable to securities of
the Company as in effect on the Issue Date.
(vii) The Company shall also be entitled to make such reductions, in
addition to those required by paragraph 6(a)(i), (ii) and (iii), to the
Fixed Price as it considers to be advisable in order to avoid or diminish
any tax to holders of Common Stock, Options or Convertible Securities
resulting from any stock dividends, subdivi sions of shares, distributions
of Options or Convertible Securities (or any transaction which would be
treated as any of the foregoing transactions pursuant to Section 305 of the
Internal Revenue Code of 1986, as amended) made by the Company. In
addition, the Company from time to time may decrease the Fixed Price by any
amount for any period of time if the period is at least 20 days and if the
decrease is irrevocable during the period. Whenever the Fixed Price is so
decreased, the Company shall give holders of record of shares of
Convertible Preferred Stock a notice of the decrease in accordance with
paragraph (15) at least 15 days before the date the decreased Fixed Price
takes effect, and such notice shall state the decreased Fixed Price and the
period it will be in effect. A voluntary adjustment of the Fixed Price
shall not change or adjust the Fixed Price otherwise in effect for purposes
of this paragraph (6).
25
<PAGE>
(viii) If, at any time as a result of an adjustment made pursuant to
paragraph (6)(a)(i), (ii) or (iii), the holder of any share of the
Convertible Preferred Stock thereafter surrendered for conversion or
redemption shall become entitled to receive any securities of the Company
other than shares of the Common Stock, thereafter the number of such other
securities so receivable upon conversion of any share of the Convertible
Preferred Stock shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in paragraphs (6)(a)(i) through
(6)(a)(vii) above, and the other provisions of this paragraph (6)(a)(viii)
with respect to the Common Stock shall apply on like terms to any such
other shares.
(b) (i) Non-Change Reorganizations. If there is to occur any Non-
--------------------------
Change Reorganization, and there is determinable for the entirety of each
Reorganization Unit (as hereinafter defined) to be issued in connection with
such Non-Change Reorganization an Applicable Price (as hereinafter defined),
then as a condition precedent to such Non-Change Reorganization proper provision
shall be made such that each share of Convertible Preferred Stock, or each share
of convertible preferred stock of the Company or its successor by merger or
consolidation issuable to each holder of Convertible Preferred Stock in exchange
or substitution therefor (provided, however, that such share of convertible
preferred stock has the same Stated Value and substantially the same rights,
benefits and privileges as a share of Convertible Preferred Stock), shall be
convertible or redeemable upon and from and after the occurrence of such Non-
Change Reorganization into, in lieu of Common Stock as provided herein (and
without prejudice to the right of the Company or its successor to redeem convert
ible preferred stock for cash in accordance herewith), a number of
Reorganization Units determined as follows:
(A) upon conversion at the option of the holder, that number of
Reorganiza tion Units determined by dividing the Stated Value of such share
by the higher of (x) the Fixed Price on the Conversion Date and (y) the
Applicable Price of a Reorga nization Unit on the Conversion Date;
(B) upon conversion resulting from the occurrence of a Change of
Control, that number Reorganization Units determined by dividing the Stated
Value of such share by the lesser of (x) the Fixed Price as of the Change
of Control; and (y) the Applicable Price of a Reorganization Unit as of the
time of occurrence of the Change of Control; and
(C) upon redemption, that number of Reorganization Units determined by
dividing the Stated Value of such share by the Applicable Price of a
Reorganization Unit on the Redemption Date.
26
<PAGE>
If there is to occur any Non-Change Reorganization, and any Reorganization Unit
to be issued in connection with such Non-Change Reorganization does not have in
whole or in part a determinable Applicable Price, then prior to the occurrence
of such Non-Change Reorgani zation and on a basis such that the holders of
Convertible Preferred Stock shall be holders of Common Stock for all purposes of
such Non-Change Reorganization, the Company will redeem all Convertible
Preferred Stock in accordance herewith. The Company shall not effect any Non-
Change Reorganization unless prior to or simultaneously with the consumma tion
thereof, the successor entity resulting from such consolidation or merger or the
entity purchasing such assets or compelling such exchange, as the case may be,
shall make provisions in its certificate or articles of incorporation or other
constituent document to establish such right. The provisions of this paragraph
(6)(b) shall similarly apply to successive Non-Change Reorganizations.
(ii) Other Adjustments. In the event that, as a result of an adjust
------------------
ment made pursuant to subparagraphs (6)(a) or (b), the holder of any Convertible
Preferred Stock thereafter surrendered for conversion or redemption shall become
entitled to receive any shares of capital stock of the Company other than shares
of its Common Stock, thereaf ter the number of such shares issuable upon
conversion or redemption of such security shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in such paragraphs this
Article V.
(c) Notices of Corporate Action. If:
---------------------------
(i) the Company shall take any action which would require an
adjustment of the Fixed Price pursuant to paragraph (6)(a); or
(ii) the Company or the Board shall approve any Change of Control or a
Non-Change Reorganization to which the Company is a party and for which
approval of any Stockholders of the Company is required; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each case, without prejudice to paragraph (7), the Company shall cause
to be filed with the transfer agent for the Convertible Preferred Stock, if any,
and shall cause to be given to the holders of shares of the Convertible
Preferred Stock in accordance with paragraph (15), as promptly as possible, but
at least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend or distribution, or, if a record is not to be taken, the date as of
27
<PAGE>
which the holders of Common Stock of record to be entitled to such dividend or
distribution are to be determined or (B) the date on which the event giving rise
to an adjustment of the type described in paragraph (6)(a), such a Change of
Control, a Non-Change Reorganization, dissolution, liquidation or winding up may
occur, as the case may be, is expected to become effective or occur, and, if
earlier, the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for stock of
the Company, securities, cash or other property deliverable upon such Non-Change
Reorganiza tion, dissolution, liquidation or winding up. Failure to give or
receive such notice or any defect therein shall not affect the legality or
validity of the action or transaction described in sub-paragraphs (i) through
(iii) above.
(d) Notice of Adjustments. Whenever any adjustment is required by the
---------------------
terms of paragraph (6)(a), the Company shall promptly cause a notice of such
adjust ment and a computation thereof to be mailed to each registered holder of
shares of the Convertible Preferred Stock.
(e) Deferral of Issuance and Payment. In any case in which paragraph
--------------------------------
(6) shall require an adjustment be made immediately following a record date, the
Company may elect to defer (but only until 5 Business Days following the mailing
of the notice referred to in paragraph 6(d)) (i) issuing to the holder of any
shares of the Convertible Preferred Stock converted after such record date the
additional shares of Common Stock and other capital stock of the Company
issuable upon such conversion over and above the Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
conversion rate prior to adjustment, provided, however, that in lieu of the
-------- -------
shares the issuance of which is so deferred, the Company shall issue or cause
its transfer agent to issue due bills or other appropriate evidence of the right
to receive such shares and (ii) paying to such holder any amount in cash in lieu
of any fraction pursuant to paragraphs 5(d) and (10)(b) hereof.
(f) Listing of Common Stock. The Company will list the shares of
-----------------------
Common Stock required to be delivered as payment of dividends or upon redemption
or conversion of shares of the Convertible Preferred Stock, prior to delivery,
upon each national securities exchange, the Nasdaq Stock Market's National
Market or any similar system of automated dissemination of securities prices, if
any, upon which the Common Stock is listed at the time of delivery.
(g) Provision of Information. So long as any shares of Convertible
------------------------
Preferred Stock remain outstanding, the Company undertakes to provide without
charge to each record holder of such shares copies of each: (i) annual report
of the Company on Form 10-K filed pursuant Section 13(a) of the Exchange Act
concurrently with such filing;
28
<PAGE>
(ii) quarterly reports of the Company on Form 10-Q and current report of the
Company on Form 8-K filed pursuant to Section 13(a) or 15(d) of the Exchange Act
concurrently with such filing; (iii) definitive proxy or information statement,
form of proxy or other material of the Company filed pursuant to Section 14(a)
of the Exchange Act concurrently with such filing; and (iv) notice, press
release and other information delivered to holders of Common Stock generally
concurrently with such delivery.
(7) CONVERSION UPON CHANGE OF CONTROL OF THE COMPANY.
------------------------------------------------
(a) Change of Control. If a Change of Control with respect to the
-----------------
Company shall occur, then all the shares of Convertible Preferred Stock then
outstanding shall be deemed to have automatically converted effective as of the
time immediately preceding such Change of Control, and shall be treated for all
purposes as having been converted at such time, into such number of shares of
Common Stock as is equal to the aggregate Stated Value of such shares of
Convertible Preferred Stock divided by the Change of Control Denominator.
(b) Notice. Within 30 days after the occurrence of a Change of
------
Control the Company shall mail to each registered holder of shares of the
Convertible Preferred Stock a notice (the "CHANGE OF CONTROL NOTICE") of the
occurrence setting forth the following:
(i) the event constituting the Change of Control;
(ii) the Change of Control Denominator;
(iii) the name and address of any paying agent and conversion agent
appointed by the Company to assist the Company with the conversion and any
payment in connection with the conversion of the shares of Convertible
Preferred Stock; and
(iv) all information required by applicable securities laws. The
Change of Control Notice shall be given to the holders of record of the
shares of the Convertible Preferred Stock in accordance with paragraph
(15). No failure of the Company to give the foregoing notice nor any
defect therein shall either limit the Change of Control conversion right
hereunder or affect the validity of the conversion of any shares of
Convertible Preferred Stock upon a Change of Control.
(c) Change of Control Conversion Procedures. Paragraph 5 hereof shall
---------------------------------------
apply to the conversion procedure following a Change of Control to the extent
the
29
<PAGE>
procedures therein are not inconsistent with the provisions of this paragraph
(7). Dividends on shares of the Convertible Preferred Stock tendered for
conversion shall cease to accrue from and after the Conversion Date.
(8) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
--------------------------------------------------------------
STOCK.
- -----
(a) Limitations on Junior Stock Dividends. As long as any shares of
-------------------------------------
Convertible Preferred Stock are outstanding, no dividends shall be paid or
declared in cash on Junior Stock, nor shall any other distribution be made on
any Junior Stock, unless: (i) full dividends on all Parity Stock have been paid,
or declared and set aside for payment, for all dividend periods terminating on
or prior to the date of such Junior Stock dividend or distribution payment, to
the extent such dividends are cumulative; (ii) the Company has paid or set aside
all amounts, if any, then or therefore required to be paid or set aside for all
purchase, retirement, and sinking funds, if any, for any Parity Stock; and (iii)
the Company is not in default on any of its obligations to redeem any Parity
Stock.
(b) Limitations on Purchases of Junior Stock. As long as any shares
----------------------------------------
of Convertible Preferred Stock are outstanding, no shares of any Junior Stock
may be purchased, redeemed, or otherwise acquired by the Company or any of its
Subsidiaries (except in connection with a reclassification of any Junior Stock
through the issuance of other Junior Stock and/or Convertible Securities for
shares of Junior Stock and cash in lieu of fractional shares in connection
therewith or the purchase, redemption or other acquisition of any Junior Stock
from any wholly-owned subsidiary), nor may any funds be set aside or made
available for any sinking fund for the purchase, redemption or other acquisition
of any Junior Stock, unless: (i) full dividends on all Parity Stock have been
paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such purchase, redemption or acquisition,
to the extent such dividends are cumulative; (ii) the Company has paid or set
aside all amounts if any, then or theretofore required to be paid or set aside
for all purchases retirement, and sinking funds, if any, for any Parity Stock;
and (iii) the Company is not in default on any, of its obligations to redeem any
Parity Stock.
(c) Junior Stock Dividends Otherwise Permitted. Subject to the
------------------------------------------
provisions of paragraphs (8)(a) and 8(b), dividends or distributions (payable in
cash, property or securities) may be declared and paid on the shares of any
Junior Stock from time to time and any Junior Stock may be purchased, redeemed
or otherwise acquired by the Company or any of its subsidiaries from time to
time. In the event of the declaration and payment of any such dividends or
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of shares of Convertible Preferred Stock (but without
prejudice of their
30
<PAGE>
right to convert such Convertible Preferred Stock to Common Stock or other
securities in accordance herewith), to share therein according to their
respective interests.
(d) Limitations on Parity Stock Dividends and Redemptions. As long as
-----------------------------------------------------
any shares of Convertible Preferred Stock are outstanding, dividends or other
distributions may not be declared or paid on any Parity Stock, and the Company
may not purchase, redeem or otherwise acquire any Parity Stock (except (x) from
any wholly owned subsidiaries of the Company or (y) in connection with a
mandatory conversion or exchange of such Parity Stock or a conversion or
exchange of such Parity Stock at the option of the holder for securities other
than Parity Stock or Senior Stock and cash in lieu of fractional shares in
connection therewith) unless either:
(a) (i) full dividends on all Parity Stock have been paid, or
declared and set aside for payment, for all dividend periods terminating on
or prior to the date of such Parity Stock dividend, distribution, purchase,
redemption or other acquisition payment, to the extent such dividends are
cumulative;
(ii) the Company has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any, Parity Stock; and
(iii) the Company is not in default on any of its obligations to
redeem any Parity Stock; or
(b) with respect to the payment of dividends only, any such
dividends are declared and paid pro rata so that the amounts of any
dividends declared and paid per share on shares of Convertible Preferred
Stock and each other share of such Parity Stock will in all cases bear to
each other the same ratio that accrued and unpaid dividends (including any
accumulation with respect to unpaid dividends for prior dividend periods,
if such dividends are cumulative) per share on shares of Convertible
Preferred Stock and such other share of Parity Stock bear to each other.
(e) Certain Permitted Dividends and Redemptions. Nothing contained in
-------------------------------------------
this paragraph (8) shall prevent: (i) the payment of dividends or the making of
distributions on any Junior Stock solely in shares of Junior Stock and/or
Convertible Securi ties for shares of Junior Stock (together with a cash
adjustment for fractional shares, if any) or the redemption, purchase or other
acquisition of Junior Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Junior Stock and/or Convertible Securities
for shares of Junior Stock; (ii) the payment of dividends or the making of
distributions on any class or
31
<PAGE>
series of Parity Stock solely in (together with a cash adjustment for fractional
shares, if any) shares of Junior Stock and/or Convertible Securities for shares
of Junior Stock or the redemption, exchange, purchase or other acquisition of
any class or series of Parity Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of shares of Junior Stock and/or Convertible Securities
for shares of Junior Stock or (iii) the conversion or exchange of Convertible
Preferred Stock into shares of Common Stock (together with a cash adjustment for
fractional shares, if any) and other securities, assets or property, if any
pursuant to the provisions of paragraphs (4), (5), (6) or (7).
(f) Waiver. The provisions of subparagraphs (8)(a), (b) and (d) are
------
for the sole benefit of the holders of Convertible Preferred Stock and any other
class or series of Parity Stock having the terms described therein and
accordingly, at any time when (i) there are no shares of any such other class or
series of Parity Stock outstanding or if the holders of each such other class or
series of Parity Stock have, by such vote or consent of the holders thereof as
may be provided for in the instrument creating or evidencing such class or
series, waived in whole or in part the benefit of such provisions (either
generally or in the specific instance), and (ii) the holders of shares of
Convertible Preferred Stock shall have waived (as provided in paragraph (16)) in
whole or in part the benefit of such provision (either generally or in the
specific instance), then the provisions of subparagraphs (8)(a), (b) and (d)
shall not (to the extent waived, in the case of any partial waiver) restrict the
payment of dividends or the making of distributions on, or the redemption,
purchase or other acquisition of any shares of, Convertible Preferred Stock, any
other class or series of Parity Stock or any Junior Stock.
(9) LIQUIDATION RIGHTS.
------------------
(a) Payment of Liquidation Preference. If there is any liquidation,
---------------------------------
dissolution, or winding up of the Company, whether voluntary or involuntary,
then the holders of shares of Convertible Preferred Stock then outstanding,
after payment, or provision for payment of the debts and other liabilities of
the Company and the payment or provision for payment of any distribution on any
shares of Senior Stock, and before any distribution to the holders of Junior
Stock, shall be entitled to be paid out of the assets of the Company available
for distribution to its stockholders an amount per share of Convertible
Preferred Stock in cash equal to the Liquidation Preference. If the assets of
the Company available for distribution to the holders of the shares of
Convertible Preferred Stock upon any dissolution, liquidation or winding up of
the Company shall be insufficient to pay in full the Liquidation Preference
payable to the holders of outstanding shares of Convertible Preferred Stock and
the liquidation preference payable to all other shares of Parity Stock (as set
forth in the instrument or instruments creating such Parity Stock), then the
holders of shares of
32
<PAGE>
Convertible Preferred Stock and of all other shares of Parity Stock shall share
ratably in such distribution of assets in proportion to the amount which would
be payable on such distribu tion if the amounts to which the holders of
outstanding shares of Convertible Preferred Stock and the holders of outstanding
shares of such other Parity Stock were paid in full. Except as provided in this
subparagraph (9) (a) holders of Convertible Preferred Stock shall not be
entitled to any distribution in the event of the liquidation, dissolution or
winding up of the affairs of the Company.
(b) Certain Events Not Deemed Liquidation, Etc. For the purposes of
------------------------------------------
this paragraph (9) a Non-Change Reorganization shall not be deemed to be a
voluntary or involuntary liquidation, dissolution or winding up of the Company.
(10) NO FRACTIONAL SHARES.
--------------------
(a) No Fractional Shares of Convertible Preferred Stock. No
---------------------------------------------------
fractional shares of Convertible Preferred Stock shall be delivered to a holder
of shares of Convertible Preferred Stock, but the Company shall instead, in its
sole discretion, either (i) pay an amount in cash (rounded to the nearest whole
cent) equal to such fraction or (ii) issue a share of Convertible Preferred
Stock having a Stated Value (rounded to the nearest whole cent) equal to such
fraction.
(b) No Fractional Shares of Common Stock. No fractional shares of
------------------------------------
Common Stock or scrip shall be issued in connection with the delivery of shares
of Common Stock upon conversion of shares of Convertible Preferred Stock or in
payment, in whole or in part, of any dividend, Redemption Price or Liquidating
Payment. Whether or not a fractional share would be delivered to a holder of
Convertible Preferred Stock shall be based upon, in the case of the payment, in
whole or in part, of dividends, a Redemption Price or a Liquidating Payment
pursuant to paragraphs (3), (4) or (9) , respectively, and, in the case of
conversion pursuant to paragraphs (5) or (7), through the delivery of shares of
Common Stock, on the total number of shares of Convertible Preferred Stock at
the time held by such holder and the total number of shares of Common Stock
otherwise deliverable in respect thereof. Instead of the issuance of a fraction
of a share of Common Stock or scrip, the Company shall pay instead an amount in
cash (rounded to the nearest whole cent) equal to the same fraction of the
Closing Price of a share of Common Stock on the Trading Day immediately
preceding the Determination Date.
(11) PAYMENT OF TAXES.
----------------
The Company shall pay any and all documentary, stamp or similar
transfer taxes payable in respect of the delivery of shares of Common Stock,
pursuant to paragraphs
33
<PAGE>
(3), (4), (5), (7) or (9); provided, however, the Company shall not be required
-------- -------
to pay any such tax that may be payable because any such shares are issued in a
name other than the name of the holder of such Convertible Preferred Stock.
(12) NO PREEMPTIVE RIGHTS. The holders of shares of Convertible
--------------------
Preferred Stock shall have no preemptive rights, including preemptive rights
with respect to any shares of capital stock or other securities of the Company
convertible into or carrying rights or options to purchase any such shares.
(13) VOTING RIGHTS. (a) The holders of shares of Convertible
-------------
Preferred Stock shall have no voting rights, except as otherwise required by law
and except as set forth in this paragraph (13). When and if the holders of
Convertible Preferred Stock are entitled to vote by law or pursuant to this
paragraph (13), each holder will be entitled to one vote per share.
(b) Certain Changes to Charter. For as long as any shares of
--------------------------
Convertible Preferred Stock remain outstanding, the affirmative vote of the
holders of at least a majority of such outstanding shares (voting separately as
a class) given in Person or by proxy at an annual meeting or a special
meeting called for such purpose, shall be necessary (i) before the Company may
amend any of the provisions of this Certificate of Designations or the Restated
Certificate of Incorporation of the Company which would alter or change the
powers, preferences or special rights of the holders of the shares of Convert
ible Preferred Stock then outstanding so as to affect them adversely; provided,
--------
however, that:
- -------
(x) any such amendment that would authorize, create or increase the
autho rized amount of any additional shares of Junior Stock or shares
of any other class or series of Parity Stock (whether or not already
authorized); and
(y) any such amendment that would increase the number of authorized
shares of Preferred Stock of the Company (but not the number of
authorized shares of Convertible Preferred Stock) or that would
decrease (but not below the number of shares then outstanding) the
number of authorized shares of Preferred Stock (but not the number of
authorized shares of Convertible Preferred Stock);
shall be deemed not to adversely affect such powers preferences or rights and
shall not be subject to approval by the holders of shares of Convertible
Preferred Stock; and (ii) before the Company may reclassify the outstanding
shares of Convertible Preferred Stock into another class or series of capital
stock of the Company; provided further, however, that no consent described in
-------- ------- -------
clause (i) of this paragraph of the holders of the shares of Convertible
Preferred Stock shall be required if, at or prior to the time when such
amendment is to take
34
<PAGE>
effect, provision is made for the redemption of all shares of Convertible
Preferred Stock at the time outstanding.
(c) Creation of Senior Stock. No consent or vote of the holders of
------------------------
the shares of Convertible Preferred Stock shall be necessary before the Company
or the Board may authorize, create or issue any class or series of Senior Stock.
(d) No Other Vote. Except as otherwise set forth in this paragraph
-------------
(13) or as required by law, the holders of Convertible Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers and the consent or vote of such holders shall not be required for the
taking of any corporate action by the Company or the Board. The provisions of
this paragraph (13) are in lieu of, and not in addition to, any voting rights
specified in the Restated Certificate of Incorporation as applicable to a series
of Preferred Stock.
(14) PAYMENTS.
--------
Payment of cash amounts due in respect of the Convertible Preferred
Stock will be paid to the holders of shares of Convertible Preferred Stock (or,
in the case of joint holders, the first-named) as appearing in the stock
register of the Company for the Convert ible Preferred Stock as at opening of
business (New York time) on the date specified in this Certificate for the
purpose of determining the holders of Convertible Preferred Stock entitled to
such payment, or, if no such date is specified, the fifteenth Business Day
before the due date for such payment (the "PAYMENT RECORD DATE").
Payments of cash amounts due in respect of the Convertible Preferred
Stock will be made by a check in U.S. dollars drawn on a bank in New York and
mailed to the address (as recorded in the stock register of the Company for the
Convertible Preferred Stock) of the holder thereof (or, in the case of joint
holders, the first-named) not later than the relevant date for payment unless,
prior to the relevant Payment Record Date, the Company has received from the
holder thereof (or, in the case of joint holders, the first-named) written
instructions for payment to be made by wire transfer to a specified designated
account. If the due date for payment of any cash amount in respect of the
Convertible Preferred Stock is not a Business Day, then the holder thereof will
not be entitled to payment thereof until the next following day which is a
Business Day and, if such payment is to be made by transfer to a designated
account rather than by check, a day on which commercial banks and foreign
exchange markets settle payments in U.S. dollars in the place where the relevant
designated account is located.
35
<PAGE>
(15) NOTICES.
-------
Any notice or communication by a holder of Convertible Preferred Stock
to the Company is duly given if in writing and delivered in person or mailed by
first-class mail to the Company at its address as set forth in its then most
recently filed Form 10-K or 10-Q, as the case may be.
Any notice or communication to a holder of Convertible Preferred Stock
shall be mailed by first-class mail to his address shown on the stock register
of the Company for the Convertible Preferred Stock or, if there are more than 20
holders of record of the Convertible Preferred Stock and the Company in its sole
discretion so elects, in a leading daily newspaper having general circulation in
New York (which is expected to be the Wall Street Journal) or England and Wales
(which is expected to be The Financial Times). Failure to mail a notice or
communication to one holder or any defect in it shall not affect its sufficiency
with respect to other holders.
If a notice or communication is given in the manner provided in this
paragraph (15) within the time prescribed by this Certificate, it shall be
conclusively presumed to have been duly given, whether or not the person
entitled to such notice receives it.
(16) WAIVER.
------
Any provision of this Certificate of Designations which, for the
benefit of the holders of Convertible Preferred Stock, prohibits, limits or
restricts actions by the Company may be waived in whole or in part, or the
application of all or any part of such provision in any particular circumstance
or generally may be waived, in each case with the consent of the holders of at
least a majority of the number of shares of Convertible Preferred Stock then
outstanding, either in writing or by vote at a meeting called for such purpose
at which the holders of Convertible Preferred Stock shall vote as a separate
class.
(17) EXCLUSION OF OTHER RIGHTS.
-------------------------
Except as may otherwise be required by law, the shares of Convertible
Preferred Stock shall not have any designations, preferences, limitations or
relative rights other than those specifically set forth in this Certificate of
Designations.
(18) SEVERABILITY OF PROVISIONS. Whenever possible, each provision of
--------------------------
this Certificate of Designations shall be interpreted in a manner as to be
effective and valid under applicable law, but if any provision hereof is held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or
36
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invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of time were extended
or shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
37
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The undersigned has signed this Certificate of Designations on
this 7th day of October, 1996.
_______________________________________
Senior Vice President & Secretary of
International CableTel Incorporated
38
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EXHIBIT 99
[LOGO OF INTERNATIONAL CABLETEL INCORPORATED]
FOR IMMEDIATE RELEASE
INTERNATIONAL CABLETEL INCORPORATED ACQUIRES THE
REMAINING 40% MINORITY INTEREST IN THE SOUTH WALES
TELECOMMUNICATIONS AND CABLE FRANCHISES
(New York, New York and Farnborough, Hampshire, Cardiff, South Wales; October
8th, 1996)
International CableTel Incorporated (NASDAQ: ICTL) ("CableTel") announced
today that it had acquired the remaining 40% interest it did not already own in
its South Wales, U.K. cable/telephony franchises. The interest being acquired
is owned by Hyder Plc, through various subsidiaries, in a joint venture created
in 1993. This joint venture operates U.K. cable/telephony franchises comprising
approximately 540,000 franchised homes.
CableTel is acquiring the interest in exchange for $78 million stated value
of a new class of CableTel non-voting convertible preferred stock. The
preferred stock issued to Swalec Telco Investments Limited will be convertible
into shares of CableTel common stock having an aggregate value of $78 mil lion.
Dividends will not be payable for five years on the preferred stock, but
thereafter will be payable at a rate of 5% per annum payable in cash, CableTel
common stock or additional preferred stock, at CableTel's option. Resale of the
common stock into which the preferred stock is convertible is subject to certain
resale restrictions and compliance with U.S. securities laws.
CableTel also operates telecommunications and cable television franchises
in the West of Scotland, Hertfordshire, Bedfordshire, Northern Ireland, Surrey,
East Hampshire and West Yorkshire.
*****
FOR FURTHER INFORMATION, IN THE U.S., CONTACT: J. Barclay Knapp, President or
Richard J. Lubasch, Senior Vice President at 212-371-3714; in the U.K. contact
Allison Smith at 011 44 1252 402 662.
