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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1999
REGISTRATION NO. 333-72335
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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NTL INCORPORATED
NTL COMMUNICATIONS CORP.
(EXACT NAME OF EACH OF THE REGISTRANTS AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4899 13-4051921
DELAWARE 4899 52-1822078
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
(212) 906-8440
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
</TABLE>
<TABLE>
<S> <C>
RICHARD J. LUBASCH, ESQ. COPY TO:
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY THOMAS H. KENNEDY, ESQ.
NTL INCORPORATED SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
110 EAST 59TH STREET 919 THIRD AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10022
(212) 906-8440 (212) 735-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At
such time or times on and after which the Registration Statement becomes
effective as the Selling Stockholders may determine.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
THE REGISTRANTS AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. The
selling securityholders identified in this prospectus may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
Subject to completion, dated June 2, 1999
Prospectus
[NTL LOGO]
NTL COMMUNICATIONS CORP.
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008
NTL INCORPORATED
SHARES OF COMMON STOCK
- - Selling securityholders who are identified in this prospectus may offer and
sell an indeterminate number of:
-- 7% Convertible Subordinated Notes Due
2008 of NTL Communications Corp.
-- shares of common stock of NTL Incorporated
by using this prospectus.
- - The offering price for the convertible notes is not set but will be determined
according to negotiation between a selling securityholder and the prospective
purchaser. The offering price for the common stock will be negotiated or, if
sold on the Nasdaq National Market, at prevailing market price.
- - NTL Incorporated's common stock is traded on the Nasdaq National Market under
the symbol NTLI. On May 28, 1999, the last reported sales price of the common
stock was $94 7/16 per share. There is no public market for the convertible
notes, and we do not intend to apply to the Nasdaq National Market or any
other securities exchange to list the convertible notes.
WE URGE YOU TO CAREFULLY READ THE RISK FACTORS SECTION BEGINNING ON PAGE 6,
WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH THESE SECURITIES, BEFORE YOU
MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 1999
<PAGE> 3
EXPLANATORY NOTE REGARDING CORPORATE RESTRUCTURING OF NTL
On April 1, 1999, NTL Incorporated completed a corporate restructuring to
create a new holding company structure. The restructuring was accomplished
through a merger under section 251(g) of the Delaware General Corporation Law.
At the effective time of the merger, all stockholders of NTL Incorporated became
stockholders in the new holding company and NTL became a wholly owned subsidiary
of the new holding company. The new holding company took the NTL Incorporated
name and the old NTL Incorporated was renamed NTL Communications Corp.
The new holding company's stock trades under the same NTLI symbol on the
Nasdaq National Market with the same CUSIP number. In the merger, all
outstanding shares of old NTL Incorporated were converted into shares of the new
holding company with the same voting powers, designations, preferences and
rights, and the same qualifications, restrictions, and limitations, as the
shares of old NTL Incorporated.
At the effective time of the merger, the only material asset of the new
holding company was the capital stock of NTL Communications Corp. and it had no
material liabilities.
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You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of the securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
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In this prospectus, references to "pounds sterling," "L" "pence" or "p" are
to the lawful currency of the United Kingdom and references to "U.S. dollars,"
"dollars," "$" or "c" are to the lawful currency of the United States. For your
convenience only we have translated some pound sterling amounts into U.S.
dollars and certain U.S. dollar amounts into pounds sterling. We are not making
any representation to you regarding those translated amounts. Unless we
otherwise clearly indicate, the translations of pounds sterling into U.S.
dollars have been made at $1.6595 per L1.00, the noon buying rate in The City of
New York for cable transfers in pounds sterling as certified for customers
purposes by the Federal Reserve Bank of New York on December 31, 1998. See
"Exchange Rates" for information regarding the noon buying rate for the past ten
fiscal years. On May 28, 1999, the noon buying rate was 1.602 per L1.00.
<PAGE> 4
PROSPECTUS SUMMARY
This summary highlights information about us which is contained elsewhere
or incorporated by reference in this prospectus. This summary may not contain
all the information that is important to you. You should read the entire
prospectus, including the financial statements and related notes, before making
a decision to exchange your old notes. When we refer to NTL in this prospectus,
we mean NTL Incorporated and its consolidated subsidiaries, except where we make
it clear that we are only referring to NTL Incorporated.
ABOUT NTL
We are a leading communications company in the United Kingdom, providing
residential, business and wholesale customers with the following services:
- residential telecoms and television services, including residential
telephony, cable television and Internet access services;
- national telecoms services including national business telecoms, national
and international carrier telecommunications, Internet services and
satellite and radio communications services; and
- broadcast services including digital and analog television and radio
broadcast transmission services.
Our objective is to exploit the convergence of the telecommunications,
entertainment and information services industries to become a premier new era
communications company in the United Kingdom, which will offer these services to
residential, business and wholesale customers on a national scale. We believe
that we will be able to deliver our strategy, based on our entrepreneurial
approach, innovative marketing and technical excellence.
On April 1, 1999, we completed a corporate restructuring to create a
holding company structure. The holding company was created to pursue
opportunities outside of the United Kingdom and Ireland.
RECENT DEVELOPMENTS
NTL ENTERS CONTINENTAL EUROPE
On May 10, 1999, NTL Incorporated announced its first broadband venture in
Continental Europe with an acquisition in France. Following a competitive
tendering process, France Telecom and France Telecom Cable have announced that
NTL Incorporated is the winning bidder to acquire the "1G Networks" of France
Telecom representing over 266,000 franchise homes. NTL Incorporated will acquire
the 1G Networks for 350 million French Francs (approximately US$57 million).
This will be initially funded from internal sources. The closing of the
transaction is expected in the third quarter of 1999, subject to regulatory
approvals.
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NTL WINS IRISH CABLELINK BID
On May 6, 1999, NTL Incorporated announced its first broadband venture
outside the United Kingdom with the acquisition of Cablelink Limited, Ireland's
largest cable television provider. Telecom Eireann and Radio Telefis Eireann
announced NTL Incorporated as the successful bidder after a competitive
tendering process. NTL Incorporated will acquire Cablelink for 535.180 million
Irish Pounds (approximately US$730 million). This will be financed in the
immediate term from existing resources. In addition, NTL Incorporated has
secured a bridge financing commitment for the full purchase price. NTL
Incorporated expects to close the acquisition in the second or third quarter of
1999.
AUSTRALIAN NATIONAL TRANSMISSION NETWORK
On April 30, 1999, NTL Incorporated announced that its wholly-owned
subsidiary, NTL Australia, had completed the previously announced acquisition of
the Australian Transmission Network ("NTN"). NTN operates from over 560 tower
sites and provides exclusive television and radio transmission services to
Australia's national TV and radio broadcasters, ABC and SBS.
RECENT FINANCING
On April 14, 1999, NTL Incorporated, through its subsidiary NTL
Communications Corp., raised approximately $340 million gross proceeds from the
issuance of 9 3/4% Senior Deferred Coupon Notes due 2009. The use of proceeds of
these offerings was principally to refinance existing indebtedness.
CORPORATE STRUCTURE DEVELOPMENTS
On April 1, 1999, we completed a corporate restructuring to create a
holding company structure. The holding company restructuring was accomplished
through a merger under Section 251(g) of the Delaware General Corporation Law so
that all stockholders of NTL Incorporated at the effective time of the merger
became stockholders of the new holding company. Existing NTL became a subsidiary
of the new holding company and changed its name to NTL Communications Corp.
Through other subsidiaries, the new holding company will pursue activities
outside the United Kingdom and Ireland. The first such opportunities are those
in Australia and France. The new holding company has taken the NTL Incorporated
name and trades under the same NTLI (NASDAQ) and NTLI.ED (EASDAQ) symbols, with
the same CUSIP numbers as before.
NTL Incorporated also announced that its board had approved the pursuit of
alternative corporate financial strategies with regard to its broadcasting and
tower related opportunities. These strategies are intended to provide the
division with more flexibility to pursue future opportunities and to illuminate
the value of those assets, while leaving the cash flow from its UK operations
within NTL Communications.
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STRATEGIC ALLIANCE WITH MICROSOFT
In January 1999, Microsoft Corp. and NTL Incorporated announced an
agreement to jointly develop new, broadband services for delivery to customers
in the United Kingdom and Ireland. Microsoft made a $500 million investment to
accelerate deployment of high-speed voice, video and data services. The
investment is in the form of an NTL Convertible Preferred Stock, convertible at
$100 per NTL Incorporated share. In addition, Microsoft received 1.2 million
five-year warrants to purchase NTL Incorporated common stock at an exercise
price of $84 per share.
REDEMPTION OF EXISTING CONVERTIBLE NOTES
On May 26, 1999, NTL Communications Corp. announced that it was calling for
redemption of all the existing convertible notes. The redemption date is June
25, 1999 and the redemption price is 104.9% of the principal amount, plus
accrued and unpaid interest through the date of redemption.
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THE OFFERING
Securities offered............ Up to $600,000,000 aggregate principal amount
of 7% convertible subordinated notes due 2008
of NTL Communications Corp. and up to 9,795,918
shares of common stock of NTL Incorporated,
plus such indeterminate number of additional
shares of common stock that may be issued from
time to time upon conversion of the convertible
notes by reason of adjustment to the conversion
price in certain circumstances described
herein.
Maturity...................... December 15, 2008.
Interest payment dates........ June 15 and December 15 of each year,
commencing June 15, 1999.
Conversion.................... The convertible notes, unless previously
redeemed, are convertible at the option of the
holder of those notes at any time prior to
maturity into shares of common stock of NTL
Incorporated at a conversion price of $61.25
per share, subject to adjustment in certain
events. See "Description of the convertible
notes -- conversion."
Optional redemption........... The convertible notes will be redeemable, in
whole or from time to time in part, at NTL
Communications Corp.'s option, on at least 30
but not more than 60 days' prior notice, at any
time on or after December 15, 2001, at the
redemption prices set forth in this prospectus
together with accrued and unpaid interest and
liquidated damages, if any, to the date of
redemption. See "Description of the convertible
notes -- optional redemption."
Subordination................. The convertible notes are general unsecured
obligations of NTL Communications Corp. and are
subordinate in right of payment to all of NTL
Communications Corp.'s existing and future
senior debt as we define it in this prospectus.
In addition, the convertible notes are
effectively subordinated to all existing and
future liabilities of our subsidiaries,
partnerships and affiliated joint ventures,
including trade payables. As of December 31,
1998, NTL Communications Corp. had
approximately $3.7 billion of senior debt
outstanding and NTL Communications Corp.'s
subsidiaries would have had approximately
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$1.1 billion of liabilities that effectively
rank senior to the convertible notes.
Change of control............. Upon a change of control as we define it in
this prospectus, holders of the convertible
notes will have the right, subject to some
restrictions and conditions, to require NTL
Communications Corp. to repurchase all or any
part of the convertible notes at a purchase
price equal to 101% of the principal amount of
those notes together with accrued and unpaid
interest and liquidated damages, if any, to the
date of repurchase.
NTL Communications Corp. may not have
sufficient funds or the financial resources
necessary to satisfy, or may be precluded by
the terms governing its indebtedness from
satisfying, our obligations to repurchase the
convertible notes and other debt that may
become repayable upon a change of control.
Use of proceeds............... The selling securityholders will receive all of
the net proceeds from the sale of the offered
securities sold pursuant to this prospectus. We
will not receive any proceeds from sales by the
selling securityholders of the offered
securities.
United States federal tax
considerations............. There are various federal income tax
considerations associated with purchasing,
holding and disposing of the convertible notes.
See "United States federal tax considerations."
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RISK FACTORS
You should consider carefully all of the information set forth in this
prospectus and incorporated by reference in this prospectus. See "Where you can
find more information about us." You should particularly evaluate the following
risks before deciding to purchase the convertible notes or the common stock
issuable on conversion of the convertible notes.
OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT
US FROM FULFILLING OUR OBLIGATION UNDER THE NOTES
We are and, for the foreseeable future will continue to be, highly
leveraged. The agreements which govern our existing indebtedness also allow us
to assume additional debt. If our substantial indebtedness adversely affects our
financial health we may not be able to fulfill our obligations under the notes.
On March 31, 1999, our total long-term indebtedness, including our 13%
senior redeemable exchangeable preferred stock, was approximately $6.5 billion.
Our substantial indebtedness could adversely affect our financial health
by, among other things:
- increasing our vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates particularly if any
of our borrowings are at variable interest rates,
- limiting our ability to obtain the additional financing we need to
operate, develop and expand our business, and
- requiring us to dedicate a substantial portion of our cash flow from
operations to service our debt, which reduces the funds available for
dividends, operations and future business opportunities.
IN SOME CIRCUMSTANCES INVOLVING A CHANGE OF CONTROL OF NTL, NTL
COMMUNICATIONS CORP. WILL BE REQUIRED TO REPURCHASE SOME OF ITS INDEBTEDNESS
INCLUDING THE CONVERTIBLE NOTES -- IF THIS OCCURS, NTL COMMUNICATIONS CORP. MAY
NOT HAVE THE FINANCIAL RESOURCES NECESSARY TO MAKE THOSE REPURCHASES.
NTL Communications Corp. may under some circumstances involving a change of
control of NTL Communications Corp. be obligated to offer to repurchase
outstanding debt securities, including the convertible notes, before maturity.
We cannot assure you that NTL Communications Corp. will have available financial
resources necessary to repurchase those securities in those circumstances.
THE ANTICIPATED CONSTRUCTION COSTS OF OUR NETWORK WILL INCREASE AS A RESULT OF
OUR RECENT ACQUISITIONS AND WILL REQUIRE SUBSTANTIAL AMOUNTS OF ADDITIONAL
FUNDING
Following our recent acquisitions, our capital expenses and cost of
operations for the development, construction and operation of our networks will
significantly increase. We estimate that significant amounts of additional
funding will be necessary to meet these capital expenditure and operational
requirements.
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We cannot be certain that:
- we will be able to obtain additional financing with acceptable terms,
- we will satisfy conditions precedent to advances under future credit
facilities, or
- we will be able to generate sufficient cash from operations to meet
capital requirements, debt service and other obligations when required.
We do not have any firm additional financing plans to address the factors
enumerated above, except in relation to our new credit facility.
WE WILL REQUIRE ADDITIONAL FINANCING BECAUSE WE DO NOT EXPECT TO GENERATE
SUFFICIENT CASH FLOW TO REPAY AT MATURITY ALL OF OUR OUTSTANDING INDEBTEDNESS
We anticipate that we will not generate sufficient cash flow from
operations to repay at maturity all of our outstanding indebtedness, including
the notes. As a result, we will have to consider, among other things:
- refinancing all or portions of that indebtedness,
- seeking modifications to the terms of that indebtedness,
- seeking additional debt financing, which may require us to obtain the
consent of some of our lenders, and
- seeking additional equity financing.
We cannot be certain that we will succeed in executing any of these
measures.
WE CANNOT BE CERTAIN THAT WE WILL BE SUCCESSFUL IN INTEGRATING ACQUIRED
BUSINESSES INTO OURS, OR THAT WE WILL REALIZE THE BENEFITS WE ANTICIPATE FROM
ANY ACQUISITION
We will continue to consider strategic acquisitions and combinations that
involve operators or owners of licenses to operate cable, telephone, television
or telecommunications systems or services and related businesses that operate
principally in the UK. If consummated, some of these transactions would
significantly alter our holdings and might require us to incur substantial
indebtedness or raise additional equity. We cannot assure you that, with respect
to the recent acquisitions of Comcast, ComTel, Eastern and Diamond, as well as
future acquisitions, that we:
- will realize any anticipated benefits,
- will successfully integrate the businesses with our operations, or
- will manage such integration without adversely affecting us.
NTL INCORPORATED AND NTL COMMUNICATIONS CORP. ARE HOLDING COMPANIES THAT ARE
DEPENDENT UPON CASH FLOW FROM THEIR SUBSIDIARIES TO MEET THEIR
OBLIGATIONS -- THEIR ABILITY TO ACCESS THAT CASH FLOW MAY BE LIMITED IN SOME
CIRCUMSTANCES
NTL Incorporated and NTL Communications Corp. are holding companies with no
independent operations or significant assets other than their investments in and
advances to their subsidiaries and affiliated joint ventures. The terms of
existing and future
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indebtedness of their subsidiaries may limit the payment of dividends, loans and
other distributions to them by their subsidiaries. NTL Incorporated and NTL
Communications Corp. depend upon the receipt of sufficient funds from their
subsidiaries and affiliated joint ventures to meet their obligations, including
in the case of NTL Communications Corp., its obligations on the convertible
notes.
Your right to receive payments on the convertible notes could be adversely
affected in the event of a bankruptcy of any of NTL Communications Corp.'s
subsidiaries. Following the liquidation of a subsidiary or joint venture of NTL
Communications Corp., the creditors of that subsidiary or joint venture will
generally be entitled to be paid in full before NTL Communications Corp. is
entitled to a distribution of any assets in the liquidation. The claims of the
lenders under NTL Communications Corp.'s credit facility also rank ahead of any
obligations of NTL Communications Corp.'s subsidiaries to NTL Communications
Corp. On March 31, 1999, the total liabilities of NTL Communications Corp.'s
subsidiaries was approximately $2.5 billion.
WE HAVE HISTORICALLY INCURRED LOSSES AND GENERATED NEGATIVE CASH FLOWS AND
CANNOT ASSURE YOU THAT WE WILL BE PROFITABLE IN THE FUTURE
Construction and operating expenditures have resulted in negative cash
flow, which we expect will continue at least until we establish an adequate
customer base. We also expect to incur substantial additional losses. We cannot
assure you that we will achieve or sustain profitability in the future. Failure
to achieve profitability could diminish our ability to sustain our operations
and obtain additional required funds. In addition, a failure to achieve or
sustain profitability would adversely affect our ability to make required
payments on our indebtedness, including, in the case of NTL Communications
Corp., the convertible notes.
NTL Communications Corp. had net losses for
- the three months ended March 31, 1999 of $230.4 million
and for the years ended December 31,
- 1998: $534.6 million
- 1997: $333.1 million
- 1996: $254.5 million
- 1995: $90.8 million
- 1994: $29.6 million
As of March 31, 1999, our accumulated deficit was $1.3 billion.
NTL COMMUNICATIONS CORP. HAS HISTORICALLY HAD A DEFICIENCY OF EARNINGS TO FIXED
CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS AND
OUR EARNINGS IN THE FUTURE MAY NOT BE SUFFICIENT TO COVER THOSE FIXED CHARGES,
INCLUDING OUR OBLIGATIONS ON THE CONVERTIBLE NOTES
For the three months ended March 31, 1999 and the years ended December 31,
1998, 1997, 1996, 1995 and 1994, NTL Communications Corp.'s earnings were
insufficient to cover fixed charges by approximately $240.8 million, $565.7
million,
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$355.4 million, $257.1 million, $105.4 million and $31.8 million, respectively.
NTL Communications Corp.'s earnings for the three months ended March 31, 1999
and for the year ended December 31, 1998 and 1997 were insufficient to cover
combined fixed charges and preferred stock dividends by approximately $253.9
million, $584.5 million and $367.4 million, respectively. Fixed charges consist
of interest expense, including capitalized interest, amortization of fees
related to debt financing and rent expense deemed to be interest. NTL
Communications Corp.'s earnings in the future may not be sufficient to cover
those fixed charges, including its obligations on the convertible notes.
NTL COMMUNICATIONS CORP. HAS UTILIZED SOME OF ITS EXISTING FINANCIAL RESOURCES
TO DISTRIBUTE FUNDS TO NTL INCORPORATED TO FINANCE AN ACQUISITION BY NTL
INCORPORATED -- NTL INCORPORATED IS UNDER NO OBLIGATION TO REPAY THE FUNDS TO
NTL COMMUNICATIONS CORP.
Under NTL Communications Corp.'s existing indentures including the
indenture relating to the convertible notes, NTL Communications Corp. is
permitted to dividend or distribute funds to NTL Incorporated, up to limits
specified in those indentures. NTL Communications Corp. made a distribution to
NTL Incorporated to finance NTL Incorporated's purchase of the Australian
National Transmission Network for approximately $407.0 million. NTL Incorporated
may, but is not required to, recontribute those funds to NTL Communications
Corp. as and if it obtains alternative financing for the purchase price.
Dividends and distribution to NTL Incorporated, to the extent permitted, may be
made at other times for other purposes.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION, WHICH WE EXPECT TO INTENSIFY, IN EACH
OF OUR BUSINESS AREAS -- IF WE ARE UNABLE TO COMPETE SUCCESSFULLY OUR FINANCIAL
HEALTH COULD BE ADVERSELY AFFECTED
We face significant competition from established and new competitors in the
areas of residential telephony, business telecoms services and cable television.
As existing technology develops and new technologies emerge, we believe that
competition will intensify in each of these business areas, particularly
business telecommunications and the Internet. Some of our competitors have
substantially greater financial and technical resources than we do. If we are
unable to compete successfully our financial condition and results of operations
could be adversely affected.
OUR PRINCIPAL BUSINESSES ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION,
INCLUDING PRICING REGULATION, WHICH MAY CHANGE ADVERSELY TO US
Our principal business activities in the UK are regulated and supervised by
various governmental bodies. Changes in laws, regulations or governmental policy
or the interpretations of those laws or regulations affecting our activities and
those of our competitors, such as licensing requirements, changes in price
regulation and deregulation of interconnection arrangements, could have a
material adverse effect on us.
In addition, we are also subject to regulatory initiatives of the European
Commission. Changes in EU Directives may reduce the range of programing and
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increase the costs of purchasing television programming or require us to provide
access to our cable network infrastructure to other service providers, which
could have a material adverse effect on us.
OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON SITE SHARING ARRANGEMENTS WITH
OUR PRINCIPAL COMPETITOR
As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, the Castle Tower Corporation Consortium and NTL have
made arrangements to share a large number of sites. We cannot assure you that
the site sharing arrangements will not be terminated. Termination of the site
sharing arrangements would have a material adverse effect on us.
Under the present arrangements, one of the parties is the owner, lessor or
licensor of each site and the other party is entitled to request a license to
use specified facilities at that site. Each site license granted pursuant to the
site sharing agreement is for an initial period expiring on December 31, 2005,
subject to title to the site and to the continuation in force of the site
sharing agreement. Each site sharing agreement provides that, if requested by
the sharing party, it will be extended for further periods. Either party may
terminate the agreement by 5 years' notice in writing to the other expiring on
December 31, 2005 or at any date which is a date 10 years or a multiple of 10
years after December 31, 2005.
FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD HAVE A MATERIAL ADVERSE EFFECT
ON US
We have experienced rapid growth and development in a relatively short
period, and we plan to meet our strategic objectives and regulatory milestones.
Management of that growth will require, among other things:
- stringent control of construction and other costs,
- continued development of our financial and management controls,
- increased marketing activities, and
- the training of new personnel.
Failure to manage our rapid growth and development successfully could have
a material adverse effect on us.
WE ARE DEPENDENT UPON A SMALL NUMBER OF KEY PERSONNEL
A small number of key executive officers manage our businesses, and the
loss of one or more of them could have a material adverse effect on us. We
believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel. We have
not entered into written employment contracts or non-compete agreements with,
nor have we obtained life insurance policies covering, those key executive
officers. Some of our senior managers also serve as members of
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senior management of other companies in the telecommunications business which
may reduce the amount of time they are able to dedicate to our businesses.
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND WE
CANNOT PREDICT THE EFFECT OF ANY CHANGES ON OUR BUSINESSES
The telecommunications industry is subject to rapid and significant changes
in technology and we cannot predict the effect of technological changes on our
businesses. However, the cost of implementation for emerging and future
technologies could be significant, and our ability to fund such implementation
may depend on our ability to obtain additional financing.
WE ARE SUBJECT TO CURRENCY RISK BECAUSE WE OBTAIN A SUBSTANTIAL AMOUNT OF
FINANCING IN US DOLLARS BUT GENERALLY GENERATE REVENUES AND INCUR EXPENSES IN
POUNDS STERLING
We will encounter currency exchange rate risks because we generate revenues
and incur construction and operating expenses primarily in British pounds
sterling while we pay interest and principal obligations with respect to most of
our existing indebtedness in United States dollars. We cannot assure you that
any hedging transaction we might enter into will be successful and that shifts
in the currency exchange rates will not have a material adverse effect on us.
WE DO NOT INSURE THE UNDERGROUND PORTION OF OUR CABLE NETWORK
We obtain insurance of the type and in the amounts that we believe are
customary in the UK for similar companies. Consistent with this practice, we do
not insure the underground portion of our cable network. Substantially all of
our cable network is constructed underground. Any catastrophe that affects a
significant portion of one of our system's underground cable network would
result in substantial uninsured losses and may have a material adverse effect on
us.
SOME PROVISIONS OF NTL COMMUNICATIONS CORP.'S INDENTURES MAY DELAY OR PREVENT
TRANSACTIONS INVOLVING A CHANGE OF CONTROL
Some provisions of the indenture and the indentures governing the senior
notes and NTL Communications Corp.'s outstanding 7% convertible subordinated
notes due 2008, may have the effect of delaying or preventing transactions
involving a change of control of NTL, including transactions in which
stockholders might otherwise receive a possible substantial premium for their
shares over then current market prices, and may limit the ability of
stockholders to approve transactions that they may deem to be in their best
interest.
NTL Incorporated's restated certificate of incorporation, as amended and
presently in effect, contains various provisions which may have the effect,
alone or in combination with each other or with the existence of authorized but
unissued common stock and any series of preferred stock, of precluding or
rendering more difficult a hostile takeover, making it more difficult to remove
or change the composition of our incumbent board of directors and our officers,
being adverse to stockholders who desire to participate in a
11
<PAGE> 15
tender offer and depriving stockholders of possible opportunities to sell their
shares at temporarily higher prices. See "Description of capital
stock -- Certain special provisions." As a result of the provisions of NTL
Incorporated's restated certificate of incorporation and the ownership of NTL,
no change of control requiring stockholder approval is possible without the
consent of the owners of its rights preferred stock.
THE INSTRUMENTS GOVERNING SOME OF OUR INDEBTEDNESS MAY INDIRECTLY LIMIT NTL
INCORPORATED'S ABILITY TO PAY DIVIDENDS
The indentures governing NTL Communications Corp.'s senior notes impose
limitations on the payment of dividends to NTL Incorporated and consequently
restrict NTL Incorporated's ability to pay dividends on its common stock.
Further, the terms of the new credit facility restrict, and the terms of other
future indebtedness of our subsidiaries may, subject to the terms of the
indentures governing the senior notes, restrict, the ability of some of our
subsidiaries to distribute earnings to NTL Communications Corp. or make other
payments to NTL Communications Corp.
Before our recent corporate restructuring, NTL Communications Corp. never
paid cash dividends on its common stock and NTL Incorporated has never paid cash
dividends on its common stock. In addition, the payment of any dividends by NTL
Incorporated in the future will be at the discretion of its board of directors
and will depend upon, among other things, future earnings, operations, capital
requirements, its general financial condition and the general financial
condition of our subsidiaries and general business conditions.
THE MARKET PRICE OF THE COMMON STOCK AND THE CONVERTIBLE NOTES IS SUBJECT TO
VOLATILITY
The market price of the common stock has been subject to volatility and, in
the future, the market price of the common stock and the convertible notes could
be subject to wide fluctuations in response to numerous factors, many of which
are beyond our control. These factors include, among other things, actual or
anticipated variations in our operating results, our earnings releases and our
competitors' earnings releases, announcements of technological innovations,
changes in financial estimates by securities analysts, market conditions in the
industry and the general state of the securities markets, governmental
legislation or regulation, currency and exchange rate fluctuations, as well as
general economic and market conditions, such as recessions.
LACK OF PUBLIC MARKET FOR THE CONVERTIBLE NOTES
There has been no public market for the convertible notes prior to the
offering of the convertible notes in December 1998. The registration rights
agreement does not obligate us to keep the registration statement of which this
prospectus forms a part effective beyond the second anniversary of the date of
issuance of the convertible notes. Although the initial purchasers have advised
us that they currently intend to make a market in the convertible notes, they
are not obligated to do so and any such market making may be discontinued at any
time without notice. Accordingly, there can be no
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<PAGE> 16
assurance as to the ongoing development or liquidity of any market that may
develop for the convertible notes.
YOU SHOULD BE AWARE THAT ACTUAL RESULTS OR OUTCOMES MAY TURN OUT TO BE
MATERIALLY DIFFERENT FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENTS
INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
This prospectus includes or incorporates by reference projections of
broadcast transmission revenues, build-out results and other forward-looking
statements, including those using words such as "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions. In reviewing that
forward-looking information you should keep in mind that actual results may
differ materially from those expressed or implied in those forward-looking
statements. Important assumptions and factors that could cause actual results to
differ materially from those contemplated or projected, forecast, estimated or
budgeted in or expressed or implied by such projections and forward-looking
statements include those specified in this risk factors section, as well as
- industry trends,
- our ability to
-- continue to design network routes and install facilities,
-- obtain and maintain any required government licenses or approvals,
-- finance construction and development,
all in a timely manner, at reasonable costs and on satisfactory terms and
conditions,
- assumptions about
-- customer acceptance,
-- churn rates,
-- overall market penetration and competition from providers of
alternative services, and
-- availability, terms and deployment of capital.
We assume no obligation to update projections or other forward-looking
statements to reflect actual funding requirements, capital expenditures and
results, changes in assumptions or in the factors affecting such projections or
other forward-looking statements. We cannot assure you that:
- any financings will be obtained when required, on acceptable terms or at
all;
- actual amounts required to complete our planned build out will not exceed
the amount we estimate or that additional financing substantially in
excess of that amount will not be required; (see -- "The anticipated
construction costs of our
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<PAGE> 17
network will increase as a result of our recent acquisitions and will require
substantial amounts of additional funding");
- we will not acquire franchises, licenses or other new businesses that
would require additional capital;
- operating cash flow will meet expectations or that we will be able to
access such cash from our subsidiaries' operations to meet any unfunded
portion of our capital requirements when required or to satisfy the terms
of the notes, or our other debt instruments and agreements for the
incurrence of additional debt financing (see "-- NTL Incorporated and NTL
Communications Corp. are holding companies that are dependent upon cash
flow from their subsidiaries to meet their obligations -- their ability
to access that cash flow may be limited in some circumstances and your
right to receive payments on the notes could be adversely affected in the
event of a bankruptcy of any of their subsidiaries");
- our subsidiaries will not incur losses from their exposure to exchange
rate fluctuations or be adversely affected by interest rate fluctuations
(see "-- We are subject to currency risk because we obtain a substantial
amount of financing in US dollars but generally generate revenues and
incur expenses in pounds sterling");
- there will not be adverse changes in applicable United States, United
Kingdom or Bermuda tax laws; or
- the effects of monetary union in Europe will not be materially adverse to
us.
All forward-looking statements included or incorporated by reference in this
prospectus are expressly qualified by the foregoing.
14
<PAGE> 18
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of the securities sold pursuant to this prospectus. We will not receive any of
the proceeds from sales by the selling securityholders of the offered
securities.
EXCHANGE RATES
The following table sets forth, for the periods indicated, the noon buying
rate for pounds sterling expressed in U.S. dollars per Ll.00.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(1) HIGH LOW
- ----------------------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C>
1988.......................................... $1.81 $1.78 $1.91 $1.66
1989.......................................... 1.61 1.63 1.82 1.51
1990.......................................... 1.93 1.79 1.98 1.59
1991.......................................... 1.87 1.76 2.00 1.60
1992.......................................... 1.51 1.76 2.00 1.51
1993.......................................... 1.48 1.50 1.59 1.42
1994.......................................... 1.57 1.53 1.64 1.46
1995.......................................... 1.55 1.58 1.64 1.53
1996.......................................... 1.71 1.56 1.72 1.49
1997.......................................... 1.65 1.64 1.71 1.56
1998.......................................... 1.66 1.66 1.72 1.61
1999 (through May 28)......................... 1.60 1.62 1.66 1.59
</TABLE>
- ---------------
(1) The average of the noon buying rates on the last day of each month during
the relevant period.
15
<PAGE> 19
PRICE RANGE OF COMMON STOCK
NTL Incorporated's common stock is quoted and traded on the Nasdaq National
Market System under the symbol "NTLI." From October 14, 1993 through March 26,
1997, NTL Incorporated's common stock was quoted and traded on the Nasdaq
National Market System under the symbol "ICTL." The following table sets forth,
for the periods indicated, the high and low reported sales prices per share of
common stock as reported on the Nasdaq National Market System. Until April 1,
1999, the common stock quoted was common stock of NTL Communications Corp.
(formerly NTL Incorporated). From April 1, 1999, the common stock quoted is
common stock of the new holding company NTL Incorporated formed in the corporate
restructuring of NTL.
<TABLE>
<CAPTION>
NTL
--------------
COMMON STOCK
--------------
HIGH LOW
---- ----
<S> <C> <C>
1996
First Quarter............................................. $ 30 1/8 $ 21 5/8
Second Quarter............................................ 34 1/8 27 3/4
Third Quarter............................................. 30 22 5/8
Fourth Quarter............................................ 28 1/4 22 5/8
1997
First Quarter............................................. $ 26 3/4 $ 18 1/8
Second Quarter............................................ 27 1/4 19
Third Quarter............................................. 27 7/8 20 1/8
Fourth Quarter............................................ 29 3/8 25 1/4
1998
First Quarter............................................. $ 45 3/4 $ 26 3/4
Second Quarter............................................ 54 35 3/4
Third Quarter............................................. 65 35 1/2
Fourth Quarter............................................ 59 1/2 32
1999
First Quarter............................................. $ 83 1/8 $ 53 3/4
Second Quarter (through May 28, 1999)..................... 100 1/8 73 1/2
</TABLE>
The market price of shares of NTL Incorporated's common stock is subject to
fluctuation. As a result, you are urged to obtain current market quotations. On
May 28, 1999, the last reported sales price per share of common stock, as
reported on the Nasdaq National Market System, was $94 7/16. As of May 28, 1999
there were approximately 599 recordholders of common stock. This figure does not
reflect beneficial ownership of shares held in nominee name.
DIVIDEND POLICY
Since NTL Incorporated's inception, NTL Incorporated has not declared or
paid any cash dividends on its common stock. Prior to our recent corporate
restructuring, NTL Communications Corp. had not declared or paid any dividends
on its common stock. We currently intend to retain our earnings for future
growth and, therefore, do not anticipate paying cash dividends in the
foreseeable future.
16
<PAGE> 20
DESCRIPTION OF THE CONVERTIBLE NOTES
GENERAL
The convertible notes were issued under an indenture dated as of December
16, 1998, by and between NTL Communications Corp. and The Chase Manhattan Bank,
as trustee. The indenture and the registration rights agreement are filed as
exhibits to the registration statement of which this prospectus forms a part.
The following summary of selected provisions of the convertible notes, the
indenture and the registration rights agreement is not complete and is qualified
in its entirety by reference to the provisions of the convertible notes, the
indenture and the registration rights agreement, including the definitions in
the indenture of some of the terms used below. The definitions of some terms
used in the following summary are set forth below under "-- Selected
definitions."
The convertible notes are general unsecured obligations of NTL
Communications Corp., subordinated in right of payment to all existing and
future senior debt of NTL Communications Corp. as described under
"-- Subordination of convertible notes" and convertible into common stock of NTL
Incorporated as described under "-- Conversion." The convertible notes rank
equal in right of payment to the existing convertible notes of NTL
Communications Corp. The indenture does not contain any financial covenants or
restrictions on the payment of dividends, the incurrence of senior debt or
issuance or repurchase of securities of NTL Communications Corp. The indenture
contains no covenants or other provisions to afford protection to holders of the
convertible notes in the event of a highly leveraged transaction or a change in
control of NTL Communications Corp. except to the extent described under
"-- Repurchase at the option of holders."
The operations of NTL Communications Corp. are conducted through its
subsidiaries, partnerships and joint ventures and, therefore, NTL Communications
Corp. is dependent upon the cash flow of its subsidiaries, partnerships and
affiliated joint ventures to meet its obligations, including its obligations
under the convertible notes. As a result, the convertible notes are effectively
subordinated to all existing and future liabilities of NTL Communications
Corp.'s subsidiaries, partnerships and affiliated joint ventures, including
trade payables.
In this section of the prospectus "Description of the Convertible Notes,"
references to NTL are to NTL Communications Corp. only and not to any of its
subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
The convertible notes are limited to $600,000,000 aggregate principal
amount. The convertible notes bear interest from the date of original issuance,
at the rate per annum set forth on the cover page of this prospectus and mature
on December 15, 2008.
Interest on the convertible notes is payable semiannually on June 15 and
December 15 of each year (each an "Interest Payment Date"), commencing on June
15, 1999, to holders of record at the close of business on June 1 or December 1
(each a
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<PAGE> 21
"Regular Record Date") immediately preceding such Interest Payment Date.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.
Interest on the convertible notes accrues from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance.
The convertible notes are payable both as to principal interest and
Liquidated Damages, if any, at the office or agency of NTL maintained for such
purpose within the City and State of New York or, at the option of NTL, payment
of interest may be made by check mailed to the holders of the convertible notes
at their respective addresses set forth in the register of holders of
convertible notes. However, a holder of convertible notes with an aggregate
principal amount in excess of $5,000,000 will be paid by wire transfer in
immediately available funds at the election of such holder if such holder
previously specified in writing to NTL and the paying agent wire transfer
instructions. Until otherwise designated by NTL, NTL's office or agency in New
York will be the office of the Trustee maintained for such purpose. The
convertible notes were issued in registered form, without coupons, and in
denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
Except as referred to in this prospectus under "-- Optional tax
redemption," the convertible notes are redeemable, in whole or from time to time
in part, in any integral multiple of $1,000, at the option of NTL at any time on
or after December 15, 2001, at the following redemption prices, expressed as
percentages of the principal amount set forth below, upon not less than 30 nor
more than 60 days' prior notice, if redeemed during the 12-month period
beginning December 15 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2001...................................................... 104.375%
2002...................................................... 103.500
2003...................................................... 102.625
2004...................................................... 101.750
2005...................................................... 100.875
2006 and thereafter....................................... 100.000%
</TABLE>
In the case of a redemption of any convertible notes referred to under
"-- Optional tax redemption," redemption of such convertible notes shall be made
at the principal amount thereof together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date.
OPTIONAL TAX REDEMPTION
The convertible notes may be redeemed at the option of NTL, in whole but
not in part, upon not less than 30 nor more than 60 days' prior notice, at any
time at a redemption price equal to the principal amount of those notes together
with accrued and unpaid interest to the date fixed for redemption if after the
date on which the provisions described under "-- Additional amounts" become
applicable (the "Relevant Date") there has occurred any change in or amendment
to the laws (or any regulations or
18
<PAGE> 22
official rulings promulgated thereunder) of the United Kingdom, the Netherlands,
Netherlands Antilles, Bermuda or the Cayman Islands, (or any political
subdivision or taxing authority thereof or therein), or any change in or
amendment to the official application or interpretation of such laws,
regulations or rulings (a "Change in Tax Law") which becomes effective after the
Relevant Date, as a result of which NTL is or would be so required on the next
succeeding Interest Payment Date to pay Additional Amounts with respect to the
convertible notes with respect to withholding taxes imposed by the United
Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands,
(or any political subdivision or taxing authority thereof or therein)(a
"Withholding Tax") and such Withholding Tax is imposed at a rate that exceeds
the rate (if any) at which Withholding Tax was imposed on the Relevant Date;
provided, however, that
(1) this paragraph shall not apply to the extent that, at the Relevant
Date it was known or would have been known had professional advice of a
nationally recognized accounting firm in the United Kingdom, the
Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, as the
case may be, been sought, that a Change in Tax Law in the United Kingdom,
the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, was
to occur after the Relevant Date,
(2) no such notice of redemption may be given earlier than 90 days
prior to the earliest date on which NTL would be obliged to pay such
Additional Amounts were a payment in respect of the Convertible Notes then
due,
(3) at the time such notice of redemption is given, such obligation to
pay such Additional Amounts remains in effect and
(4) the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to NTL.
The convertible notes may also be redeemed, in whole but not in part, at
any time at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to the date fixed
for redemption if the person formed after the Relevant Date by a consolidation,
amalgamation, reorganization or reconstruction (or other similar arrangement) of
NTL or the person into which NTL is merged after the Relevant Date or to which
NTL conveys, transfers or leases its properties and assets after the Relevant
Date substantially as an entirety (collectively, a "Subsequent Consolidation")
is required, as a consequence of such Subsequent Consolidation and as a
consequence of a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands occurring after the date of
such Subsequent Consolidation to pay Additional Amounts with respect to
Withholding Tax on the Convertible Notes and such Withholding Tax is imposed at
a rate that exceeds the rate (if any) at which Withholding Tax was or would have
been imposed on the date of such Subsequent Consolidation; provided, however,
that this paragraph shall not apply to the extent that, at the date of such
Subsequent Consolidation it was known or would have been known had professional
advice of a nationally recognized accounting firm in the United Kingdom been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles,
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<PAGE> 23
Bermuda or the Cayman Islands was to occur after such date. NTL will also pay,
or make available for payment, to holders on the redemption date any Additional
Amounts (as described, but subject to the exceptions referred to, under
"Additional Amounts") resulting from the payment of such redemption price.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the option of holders," NTL
is not required to make mandatory redemption or sinking fund payments with
respect to the convertible notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Change of Control, each holder of convertible
notes shall have the right to require NTL to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such holder's Convertible Notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the Change of Control
Payment Date (the "Change of Control Payment"). Within 40 days following any
Change of Control, NTL shall mail a notice to each holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all Convertible Notes
tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days from the date such notice is mailed
(the "Change of Control Payment Date");
(3) that any convertible notes not tendered will continue to accrue
interest;
(4) that, unless NTL defaults in the payment of the Change of Control
Payment, all convertible notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that holders electing to have any convertible notes purchased
pursuant to a Change of Control Offer will be required to surrender the
convertible notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the convertible notes completed, to the Paying
Agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of convertible notes delivered for purchase,
and a statement that such holder is withdrawing his election to have such
convertible notes purchased; and
20
<PAGE> 24
(7) that holders whose convertible notes are being purchased only in
part will be issued new convertible notes equal in principal amount to the
unpurchased portion of the convertible notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof.
NTL will comply with the requirements of Rules 13e-4 and 14e-1 under the
Securities Exchange Act of 1934, as amended, and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the convertible notes in connection with a
Change of Control.
On the Change of Control Payment Date, NTL will, to the extent lawful,
(1) accept for payment convertible notes or portions thereof tendered
pursuant to the Change of Control Offer,
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all convertible notes or portions thereof so
tendered and
(3) deliver or cause to be delivered to the Trustee the convertible
notes so accepted together with an officers' certificate stating the
convertible notes or portions thereof tendered to NTL. The paying agent
shall promptly mail to each holder of convertible notes so accepted for
payment (or, if such holder of convertible notes holds an aggregate
principal amount in excess of $5,000,000 will be paid by wire transfer in
immediately available funds at the election of such holder if such holder
previously specified in writing to NTL and the paying agent) an amount
equal to the purchase price for such convertible notes, and the trustee
shall promptly authenticate and mail to each holder a new convertible note
equal in principal amount to any unpurchased portion of the convertible
notes surrendered, if any; provided that each such new convertible note
shall be in a principal amount of $1,000 or an integral multiple thereof.
NTL will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
indenture does not contain any other provisions that permit the holders of the
convertible notes to require that NTL repurchase or redeem the convertible notes
in the event of a takeover, recapitalization or similar restructuring. Although
the indenture contains several covenants, including the provision described
under "-- Merger, Consolidation or Sale of Assets" below, the provisions of the
indenture may not necessarily afford holders of the convertible notes protection
in the event of a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction involving NTL that may adversely affect the
holders of the convertible notes.
The Change of Control Offer requirement of the convertible notes may in
certain circumstances make more difficult or discourage a takeover of NTL, and,
thus, the removal of incumbent management. The Change of Control Offer
requirement, however, is not the result of management's knowledge of any
specific effort to accumulate NTL's stock or to obtain control of NTL by means
of a merger, tender offer, solicitation or
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<PAGE> 25
otherwise, or part of a plan by management to adopt a series of antitakeover
provisions. Instead, the Change of Control Offer requirement is a result of
negotiations between NTL and the initial purchasers. Management has no present
intention to engage in a transaction involving a Change of Control, although it
is possible that NTL would decide to do so in the future. Subject to the
limitations discussed below, NTL could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the indenture, but that
could increase the amount of indebtedness outstanding at such time or otherwise
affect NTL's capital structure or credit ratings.
Change of control provisions are contained in each of the indentures for
NTL's 11 1/2% notes, in an aggregate principal amount of $625 million, NTL's
12 3/8% notes, in an aggregate principal amount at maturity of $450 million,
NTL's 9 1/2% Senior Notes Due 2008 (the "9 1/2% Notes"), in an aggregate
principal amount of L125 million ($207 million), NTL's 10 3/4% Senior Deferred
Coupon Notes Due 2008 (the "10 3/4% Notes"), in an aggregate principal amount at
maturity of L300 million ($498 million), NTL's 9 3/4% Senior Deferred Coupon
Notes Due 2008 (the "9 3/4% Notes"), in an aggregate principal amount at
maturity of $1.3 billion, NTL's 10% Senior Notes Due 2007 (the "10% Notes"), in
an aggregate principal amount of $400 million, NTL's 12 3/4% Senior Deferred
Coupon Notes Due 2005 (the "12 3/4% Notes"), in an aggregate principal amount at
maturity of $277,803,500, and NTL's 11 1/2% Deferred Coupon Notes Due 2006 (the
"11 1/2% Deferred Coupon Notes" and, together with the 11 1/2% Notes, the
12 3/8% Notes, the 9 1/2% Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 10%
Notes and the 12 3/4% Notes, the "Senior Notes"), in an aggregate principal
amount at maturity of $1.05 billion and NTL's 9 3/4% Senior Deferred Coupon
Notes Due 2009 in an aggregate principal amount at maturity of L330 million
($548 million), which rank senior to the Convertible Notes. The indentures for
the Existing Convertible Notes, for the outstanding indebtedness of Diamond and
for the Partners 11.20% Debentures also contain change of control provisions.
NTL's ability to pay cash to the holders of Convertible Notes pursuant to a
Change of Control Offer may be limited by NTL's then existing financial
resources. See "Risk Factors -- Our substantial leverage could adversely affect
our financial health and prevent us from fulfilling our obligation under the
notes" and "-- NTL Incorporated and NTL Communications Corp. are holding
companies that are dependent upon cash flow from their subsidiaries to meet
their obligations -- their ability to access that cash flow may be limited in
some circumstances." NTL's credit facility does, and any future credit
agreements or other agreements relating to indebtedness of NTL may, contain
prohibitions or restrictions on NTL's ability to effect a Change of Control
Payment. In the event a Change of Control occurs at a time when such
prohibitions or restrictions are in effect, NTL could seek the consent of its
lenders to the purchase of the convertible notes and other indebtedness
containing change of control provisions or could attempt to refinance the
borrowings that contain such prohibition. If NTL does not obtain such a consent
or repay such borrowings, NTL will be effectively prohibited from purchasing the
convertible notes. In such case, NTL's failure to purchase tendered convertible
notes would constitute an Event of Default under the indenture. Moreover, the
events that
22
<PAGE> 26
constitute a Change of Control under the indenture constitute events of default
under NTL's credit facility and may also constitute events of default under
future debt instruments or credit agreements of NTL or NTL's subsidiaries. Such
events of default may permit the lenders under such debt instruments or credit
agreements to accelerate the debt and, if such debt is not paid or repurchased,
to enforce their security interests in what may be all or substantially all of
the assets of NTL's subsidiaries. Any such enforcement may limit NTL's ability
to raise cash to repay or repurchase the convertible notes.
For the reasons described in the three immediately preceding paragraphs,
there can be no assurance that NTL will be able to repurchase the convertible
notes upon a Change of Control.
The Board of Directors of NTL may not, by itself, waive or modify the
Change of Control provisions of the indenture. All the provisions of the
indenture, including the Change of Control provision, may only be waived or
modified pursuant to the provisions described under "-- Amendment, supplement
and waiver" below.
SELECTION AND NOTICE
If less than all of the convertible notes are to be redeemed at any time,
selection of convertible notes for redemption will be made by the trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the convertible notes are listed, or, if the convertible notes
are not so listed, on a pro rata basis, by lot or by such method as the trustee
shall deem fair and appropriate, provided that no convertible notes of $1,000 or
less shall be redeemed in part. Notice of redemption shall be mailed by first
class mail at least 30 but not more than 60 days, prior to the redemption date
to each holder of convertible notes to be redeemed at its registered address. If
any convertible note is to be redeemed in part only, the notice of redemption
that relates to such convertible note shall state the portion of the principal
amount thereof to be redeemed. A new convertible note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original convertible note. On and after the
redemption date, interest ceases to accrue on convertible notes or portions of
them called for redemption.
CONVERSION
The holder of any convertible note has the right, exercisable at any time
after 90 days following the date of original issuance thereof and prior to
maturity, to convert the principal amount thereof (or any portion thereof that
is an integral multiple of $1,000) into shares of common stock of NTL
Incorporated at the conversion price of $61.25, subject to adjustment as
described below (the "Conversion Price"), except that if a convertible note is
called for redemption, the conversion right will terminate at the close of
business on the business day immediately preceding the date fixed for
redemption. As a result of the adjustments described above, after the recent
corporate restructuring, the convertible notes became convertible into shares of
NTL Incorporated common stock instead of shares of NTL Communications Corp.
common stock and, as a
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consequence, the adjustments described below relate to NTL Incorporated instead
of NTL Communications Corp. Upon conversion, no adjustment or payment will be
made for interest, but if any holder surrenders a convertible note for
conversion after the close of business on the record date for the payment of an
installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date will be paid to the registered holder of
such convertible note on such record date. In such event, such convertible note,
when surrendered for conversion, need not be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the portion so
converted. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest.
The indenture provides that the Conversion Price is subject to adjustment
upon the occurrence of certain events, including:
(1) the issuance of shares of common stock as a dividend or
distribution on the common stock;
(2) the subdivision or combination of the outstanding common stock;
(3) the issuance to substantially all holders of common stock of rights
or warrants to subscribe for or purchase common stock (or securities
convertible into common stock) at a price per share less than the then
current market price per share, as defined;
(4) the distribution of shares of capital stock of NTL Incorporated
(other than common stock), evidences of indebtedness or other assets
(excluding dividends in cash, except as described in clause (5) below) to
all holders of common stock;
(5) the distribution, by dividend or otherwise, of cash to all holders
of common stock in an aggregate amount that, together with the aggregate of
any other distributions of cash that did not trigger a Conversion Price
adjustment to all holders of its common stock within the 12 months
preceding the date fixed for determining the stockholders entitled to such
distribution and all Excess Payments in respect of each tender offer or
other negotiated transaction by NTL Incorporated or any of its Subsidiaries
for common stock concluded within the preceding 12 months not triggering a
conversion price adjustment, exceeds 10% of the product of the current
market price per share (determined as set forth below) on the date fixed
for the determination of stockholders entitled to receive such distribution
times the number of shares of common stock outstanding on such date;
(6) payment of an Excess Payment in respect of a tender offer or other
negotiated transaction by NTL Incorporated or any of its subsidiaries for
common stock, if the aggregate amount of such Excess Payment, together with
the aggregate amount of cash distributions made within the preceding 12
months not triggering a conversion price adjustment and all Excess Payments
in respect of each tender offer or other negotiated transaction by NTL
Incorporated or any of its subsidiaries for common stock concluded within
the preceding 12 months not triggering a conversion price adjustment,
exceeds 10% of the product of the current market price
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per share on the expiration of such tender offer times the number of shares
of common stock outstanding on such date; and
(7) the distribution to substantially all holders of common stock of
rights or warrants to subscribe for securities (other than those referred
to in clause (3) above). In the event of a distribution to substantially
all holders of common stock of rights to subscribe for additional shares of
Incorporated's capital stock (other than those referred to in clause (3)
above), NTL may, instead of making any adjustment in the Conversion Price,
make proper provision so that each holder of a convertible note who
converts such convertible note after the record date for such distribution
and prior to the expiration or redemption of such rights shall be entitled
to receive upon such conversion, in addition to shares of common stock, an
appropriate number of such rights. No adjustment of the Conversion Price
will be made until cumulative adjustments amount to one percent or more of
the Conversion Price as last adjusted.
If NTL Incorporated reclassifies or changes its outstanding common stock,
or consolidates with or merges into or transfers or leases all or substantially
all of its assets to any person, or is a party to a merger that reclassifies or
changes its outstanding common stock, the convertible notes will become
convertible into the kind and amount of securities, cash or other assets which
the holders of the convertible notes would have owned immediately after the
transaction if the holders had converted the convertible notes immediately
before the effective date of the transaction.
The indenture also provides that if rights, warrants or options expire
unexercised the Conversion Price shall be readjusted to take into account the
actual number of such warrants, rights or options which were exercised.
In the indenture, the "current market price" per share of common stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of
(1) 30 consecutive business days ending on the last full trading day on
the exchange or market referred to in determining such Daily Market Prices
prior to the time of determination (as defined in the indenture) or
(2) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such
distribution through such last full trading day prior to the time of
determination.
NTL is permitted to make such reductions in the Conversion Price as it, in
its discretion, determines to be advisable in order that any stock dividend,
subdivision of shares, distribution or rights to purchase stock or securities or
distribution of securities convertible into or exchangeable for stock made by
NTL Incorporated to its stockholders will not be taxable to the recipients.
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SUBORDINATION OF CONVERTIBLE NOTES
The convertible notes are subordinate in right of payment to all existing
and future Senior Debt. The indenture does not restrict the amount of Senior
Debt or other Indebtedness of NTL or any Subsidiary of NTL.
The payment of the principal of, interest on or any other amounts due on
the convertible notes is subordinated in right of payment to the prior payment
in full of all Senior Debt of NTL. No payment on account of principal of,
redemption of, interest on or any other amounts due on the convertible notes,
including, without limitation, any payments on the Change of Control Offer, and
no redemption, purchase or other acquisition of the convertible notes may be
made unless
(1) full payment of amounts then due on all Senior Debt have been made or
duly provided for pursuant to the terms of the instrument governing such Senior
Debt, and
(2) at the time for, or immediately after giving effect to, any such
payment, redemption, purchase or other acquisition, there shall not exist under
any Senior Debt or any agreement pursuant to which any Senior Debt has been
issued, any default which shall not have been cured or waived and which shall
have resulted in the full amount of such Senior Debt being declared due and
payable.
In addition, the indenture provides that if any of the holders of any issue
of Senior Debt notify (the "Payment Blockage Notice") NTL and the trustee that a
default has occurred giving the holders of such Senior Debt the right to
accelerate the maturity thereof, no payment on account of principal, redemption,
interest, Liquidated Damages, if any, or any other amounts due on the
convertible notes and no purchase, redemption or other acquisition of the
convertible notes will be made for the period (the "Payment Blockage Period")
commencing on the date notice is received and ending on the earlier of
(A) the date on which such event of default shall have been cured or waived
or
(B) 180 days from the date notice is received.
Notwithstanding the foregoing, only one Payment Blockage Notice with
respect to the same event of default or any other events of default existing and
known to the person giving such notice at the time of such notice on the same
issue of Senior Debt may be given during any period of 360 consecutive days
unless such event of default or such other events of default have been cured or
waived for a period of not less than 90 consecutive days. No new Payment
Blockage Period may be commenced by the holders of Senior Debt during any period
of 360 consecutive days unless all events of default which triggered the
preceding Payment Blockage Period have been cured or waived.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of NTL or acceleration of the
principal amount due on the convertible notes because of an Event of Default,
all Senior Debt must be paid in full before the holders of the convertible notes
are entitled to any payments whatsoever.
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As a result of these subordination provisions, in the event of NTL's
insolvency, holders of the convertible notes may recover ratably less than
general creditors of NTL.
If payment of the convertible notes is accelerated because of an Event of
Default, NTL or the Trustee shall promptly notify the holders of Senior Debt or
the trustee(s) for such Senior Debt of the acceleration. NTL may not pay the
convertible notes until five days after such holders or trustee(s) of Senior
Debt receive notice of such acceleration and, thereafter, may pay the
convertible notes only if the subordination provisions of the Indenture
otherwise permit payment at that time.
The convertible notes are obligations exclusively of NTL. Since the
operations of NTL are conducted through its Subsidiaries, the cash flow and the
consequent ability to service debt, including the convertible notes, of NTL, are
dependent upon the earnings of its Subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those Subsidiaries to,
NTL. The payment of dividends and the making of loans and advances to NTL by its
Subsidiaries may be subject to statutory or contractual restrictions, are
dependent upon the earnings of those Subsidiaries and are subject to various
business considerations.
Any right of NTL to receive assets of any of its Subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
convertible notes to participate in those assets) will be effectively
subordinated to the claims of that Subsidiary's creditors (including trade
creditors), except to the extent that NTL is itself recognized as a creditor of
such Subsidiary, in which case the claims of NTL would still be subordinate to
any security interests in the assets of such Subsidiary and any indebtedness of
such Subsidiary senior to that held by NTL.
On March 31, 1999, NTL had approximately $5.6 billion of indebtedness
outstanding that would have constituted Senior Debt (excluding liabilities of a
type not required to be reflected as a liability on the balance sheet of NTL in
accordance with GAAP) and approximately $2.5 billion of indebtedness outstanding
and other obligations of Subsidiaries of NTL (excluding intercompany liabilities
and liabilities of a type not required to be reflected as a liability on the
balance sheet of such subsidiaries in accordance with GAAP) as to which the
convertible notes would have been structurally subordinated. The indenture will
not limit the amount of additional indebtedness, including Senior Debt, which
NTL can create, incur, assume or guarantee, nor will the indenture limit the
amount of indebtedness and other liabilities which any Subsidiary can create,
incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the trustee or any holder
of convertible notes receives any payment or distribution of assets of NTL of
any kind in contravention of any of the terms of the Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, in respect of the convertible notes before all Senior Debt is paid in
full, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Debt, and will be immediately paid over or
delivered to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full of all
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Senior Debt remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior Debt.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The indenture provides that NTL may not consolidate or merge with or into
(whether or not NTL is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions to another corporation, person or
entity unless
(1) NTL is the surviving corporation or the entity or the person formed
by or surviving any such consolidation or merger (if other than NTL) or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United Kingdom, the Netherlands, the Netherlands
Antilles, Bermuda, the Cayman Islands or of the United States, any state
thereof or the District of Columbia;
(2) the entity or person formed by or surviving any such consolidation
or merger (if other than NTL) or the entity or person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been
made assumes all the Obligations (including the due and punctual payment of
Additional Amounts if the surviving corporation is a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands) of NTL under the
convertible notes and the indenture, pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists;
(4) NTL or any entity or person formed by or surviving any such
consolidation or merger or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made will have a ratio of
Indebtedness to Annualized Pro Forma EBITDA equal to or less than the ratio
of Indebtedness to Annualized Pro Forma EBITDA of NTL immediately preceding
the transaction; provided, however, that, if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of NTL immediately preceding such transaction
is 6:1 or less, then the ratio of Indebtedness to Annualized Pro Forma
EBITDA of NTL may be 0.5 greater than such ratio immediately preceding such
transaction; and
(5) such transaction would not result in the loss of any material
authorization or Material License of NTL or its Subsidiaries.
ADDITIONAL AMOUNTS
The following provisions of this paragraph will apply only in the event
that NTL becomes, or a successor to NTL is, a corporation organized or existing
under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands. All payments made by NTL on the convertible notes
will be made without deduction or withholding, for or on account of, any and all
present or future taxes, duties, assessments, or governmental charges of
whatever nature unless the
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deduction or withholding of such taxes, duties, assessments or governmental
charges is then required by law. If any deduction or withholding for or on
account of any present or future taxes, assessments or other governmental
charges of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands (or any political subdivision or taxing authority
thereof or therein) shall at any time be required in respect of any amounts to
be paid by NTL under the convertible notes, NTL will pay or cause to be paid
such additional amounts ("Additional Amounts") as may be necessary in order that
the net amounts received by a holder of a convertible note after such deduction
or withholding shall be not less than the amounts specified in such convertible
note to which such holder is entitled; provided, however, that NTL shall not be
required to make any payment of Additional Amounts for or on account of:
(1) any tax, assessment or other governmental charge to the extent such
tax, assessment or other governmental charge would not have been imposed
but for
(a) the existence of any present or former connection between
such holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such holder, if such
holder is an estate, nominee, trust, partnership or corporation), other
than the holding of a convertible note or the receipt of amounts
payable in respect of a convertible note and the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or
any political subdivision or taxing authority thereof or therein,
including, without limitation, such holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen or resident thereof or being or having been present or engaged
in trade or business therein or having or having had a permanent
establishment therein or
(b) the presentation of a convertible note (where presentation is
required) for payment on a date more than 30 days after the date on
which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts
had the convertible note been presented on the last day of such period
of 30 days;
(2) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure to comply by the holder of a convertible
note, or, if different, the beneficial owner of the interest payable on a
convertible note, with a timely request of NTL addressed to such holder or
beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(3) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
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(4) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal amount
at maturity, redemption amount, Change of Control Payment, interest with
respect to a convertible note or withholding from the proceeds of a sale or
exchange of a convertible note;
(5) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount at
maturity, redemption amount, Change of Control Payment or interest with
respect to a convertible note, if such payment can be made, and is in fact
made, without such withholding by any other Paying Agent located inside the
United States;
(6) any tax, assessment or other governmental charge imposed on a
holder that is not the beneficial owner of a convertible note to the extent
that the beneficial owner would not have been entitled to the payment of
any such Additional Amounts had the beneficial owner directly held such
convertible note;
(7) any combination of items (1), (2), (3), (4), (5) and (6) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any convertible note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the holder of such
convertible note. All references to interest on the convertible notes in the
indenture or the convertible notes shall include any Additional Amounts payable
to NTL pursuant to this paragraph.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any convertible notes are outstanding, NTL will file with the Commission
and furnish to the holders of the convertible notes all quarterly and annual
financial information required to be contained in a filing with the Commission
on Forms 10-Q and 10-K (or the equivalent thereof under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") for foreign private issuers in the
event NTL becomes a corporation organized under the laws of the United Kingdom,
the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands),
including a "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and with respect to the annual information only, a report
thereon by NTL's certified independent accountants, in each case, as required by
the rules and regulations of the Commission as in effect on the Issuance Date.
EVENTS OF DEFAULTS AND REMEDIES
The indenture provides that each of the following constitutes an Event of
Default:
(1) default for 30 days in the payment when due of interest (and
Additional Amounts, if applicable) on the convertible notes;
(2) default in payment when due of principal on the convertible notes;
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(3) failure by NTL to comply with the provisions described under
"-- Repurchase at the option of the holders";
(4) failure by NTL for 60 days after notice to comply with certain
other covenants and agreements contained in the indenture or the
convertible notes;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by NTL or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by NTL or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the Issuance Date, which default (a) is caused
by a failure to pay when due principal or interest on such Indebtedness
within the grace period provided in such Indebtedness (which failure
continues beyond any applicable grace period) (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10 million or more;
(6) failure by NTL or any Restricted Subsidiary of NTL to pay final
judgements (other than any judgment as to which a reputable insurance
company has accepted full liability) aggregating in excess of $5 million,
which judgments are not stayed within 60 days after their entry;
(7) certain events of bankruptcy or insolvency with respect to NTL or
any of its Material Subsidiaries; and
(8) the revocation of a Material License.
If any Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding convertible
notes may declare all the convertible notes to be due and payable immediately,
subject to the provisions limiting payment described in "-- Subordination of
convertible notes." Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
NTL or any Material Subsidiary, all outstanding convertible notes will become
due and payable without further action or notice. Holders of the convertible
notes may not enforce the indenture or the convertible notes except as provided
in the indenture. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding convertible notes may direct the
trustee in its exercise of any trust or power. The trustee may withhold from
holders of the convertible notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages, if any) if it determines that
withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the convertible
notes then outstanding by notice to the trustee may on behalf of the holders of
all of the convertible notes waive any existing Default or Event of Default and
its consequences
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under the indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the convertible notes.
NTL is required to deliver to the trustee annually a statement regarding
compliance with the indenture, and NTL is required, upon becoming aware of any
Default or Event of Default, to deliver to the trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of NTL, as
such, shall have any liability for any Obligations of NTL under the convertible
notes or the indenture or for any claim based on, in respect of, or by reason
of, such Obligations or their creation. Each holder of the convertible notes by
accepting a convertible note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the convertible notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
BOOK-ENTRY, DELIVERY AND FORM
The convertible notes sold within the United States to qualified
institutional buyers were issued in the form of one or more global notes. The
global notes were deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee. Except as set forth below, the global notes may be
transferred, in whole and not in part, only to DTC or another nominee of DTC.
Investors may hold their beneficial interests in the global notes directly
through DTC if they are Participants in such system or indirectly through
organizations that are Participants in such system.
DTC is a limited-purpose trust company that was created to hold securities
for its participating organizations (collectively, the "Participants" or "DTC's
Participants") and to facilitate the clearance and settlement of transactions in
such securities between Participants through electronic book-entry changes in
accounts of its Participants. DTC's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or "DTC's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through DTC's
Participants or DTC's Indirect Participants.
NTL expects that pursuant to procedures established by DTC ownership of the
convertible notes evidenced by the global notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the interests of the Depositary's Participants), DTC's
Participants and DTC's Indirect Participants. Prospective purchasers are advised
that the laws of some states require that certain persons take physical delivery
in definitive form of securities that
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they own. Consequently, the ability to transfer convertible notes evidenced by
the global notes will be limited to such extent.
So long as the global note holder is the registered owner of any
convertible notes, the global note holder will be considered the sole holder
under the indenture of any convertible notes evidenced by the global notes.
Beneficial owners of convertible notes evidenced by the global notes will not be
considered the owners or holders thereof under the indenture for any purpose,
including with respect to the giving of any directions, instructions or
approvals to the trustee thereunder. Neither NTL nor the trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the
convertible notes.
Payments in respect of the principal of, interest and Liquidated Damages,
if any, on any convertible notes registered in the name of the global note
holder on the applicable record date will be payable by the Trustee to or at the
direction of the global note holder in its capacity as the registered holder
under the Indenture. Under the terms of the indenture, NTL and the trustee may
treat the persons in whose names convertible notes, including the global notes,
are registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither NTL nor the trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of convertible
notes (including principal, interest and Liquidated Damages, if any). NTL
believes, however, that it is currently the policy of DTC to immediately credit
the accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of DTC. Payments by DTC's Participants
and DTC's Indirect Participants to the beneficial owners of Convertible Notes
will be governed by standing instructions and customary practice and will be the
responsibility of DTC's Participants or DTC's Indirect Participants.
CERTIFICATED NOTES
The convertible notes sold to a limited number of "accredited investors"
(as defined in Rule 501(a)(1), (2), (3), (4) or (7) under the Securities Act)
were issued in the form of registered definitive certificates. Furthermore,
subject to certain conditions, any person having a beneficial interest in the
global notes may, upon request to the trustee, exchange such beneficial interest
for convertible notes evidenced by certificated securities. Upon any such
issuance, the trustee is required to register such certificated securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if
(1) NTL notifies the trustee in writing that DTC is no longer willing
or able to act as a depositary and NTL is unable to locate a qualified
successor within 90 days or
(2) NTL, at its option, notifies the trustee in writing that it elects
to cause the issuance of convertible notes in the form of certificated
securities under the Indenture, then, upon surrender by the global note
holder of its global notes,
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convertible notes in such form will be issued to each person that the
global note holder and DTC identify as being the beneficial owner of the
related convertible notes.
Neither NTL nor the trustee will be liable for any delay by the global note
holder or DTC in identifying the beneficial owners of convertible notes and NTL
and the trustee may conclusively rely on, and will be protected in relying on,
instructions from the Global Note Holder or DTC for all purposes.
TRANSFER AND EXCHANGE
A holder may transfer or exchange convertible notes in accordance with the
indenture. The registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and NTL may
require a holder to pay any taxes and fees required by law or permitted by the
indenture. NTL is not required to transfer or exchange any convertible note
selected for redemption. Also, NTL is not required to transfer or exchange any
convertible note for a period of 15 days before a selection of convertible notes
to be redeemed.
The registered holder of a convertible note will be treated as the owner of
it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the convertible notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
convertible notes (including consents obtained in connection with a tender offer
or exchange offer for convertible notes), and any existing default or compliance
with any provision of the indenture or the convertible notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding convertible notes (including consents obtained in connection with a
tender offer or exchange offer for convertible notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any convertible notes held by a nonconsenting holder of
convertible notes)
(1) reduce the principal amount of convertible notes whose holders must
consent to an amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any
convertible note or alter the provisions with respect to the redemption of
the convertible notes,
(3) reduce the rate of or change the time for payment of interest on
any Convertible Note,
(4) waive a default in the payment of principal of or interest or
Liquidated Damages, if any, on any convertible notes (except a rescission
of acceleration of the convertible notes by the holders of at least a
majority in aggregate principal amount of the convertible notes and a
waiver of the payment default that resulted from such acceleration),
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(5) make any convertible note payable in money other than that stated
in the convertible notes,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of convertible notes to
receive payments of principal of or interest or Liquidated Damages, if any,
on the convertible notes,
(7) waive a redemption payment with respect to any convertible note,
(8) impair the right to convert the convertible notes into common
stock,
(9) modify the conversion or subordination provisions of the indenture
in a manner adverse to the holders of the convertible notes or
(10) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
convertible notes, NTL and the trustee may amend or supplement the indenture or
the convertible notes to cure any ambiguity, defect or inconsistency, to provide
for uncertificated convertible notes in addition to or in place of certificated
convertible notes, to provide for the assumption of NTL's obligations to holders
of the convertible notes in the case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the holders of
the convertible notes or that does not adversely affect the legal rights under
the Indenture of any such holder, or to comply with requirements of the
Commission in order to maintain the qualification of the indenture under the
Trust Indenture Act.
CONCERNING THE TRUSTEE
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of NTL, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of the then outstanding
convertible notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee,
subject to certain exceptions. The indenture provides that, in case an Event of
Default shall occur (which shall not have been cured), the trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any holder of convertible notes, unless such holder
shall have offered to the trustee security and indemnity satisfactory to it
against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
the Registration Rights Agreement without charge by writing to NTL, 110 East
59th Street,
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New York, New York 10022, Attention: Richard J. Lubasch, Esq., Senior Vice
President, General Counsel and Secretary.
DEFINITIONS
Set forth below are selected defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used in this "Description of the Convertible Notes"
section of the prospectus for which no definition is provided.
"Annualized Pro Forma EBITDA" means, with respect to any person, such
person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Change of Control" means
(1) the sale, lease or transfer of all or substantially all of the
assets of NTL 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),
(2) the approval by the requisite stockholders of NTL of a plan of
liquidation or dissolution of NTL,
(3) any "Person" or "group" (within the meaning of Sections 13(d) 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, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50%
of the total voting power of all classes of the voting stock of NTL 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 NTL is substantially the same immediately after
such transaction as it was immediately prior to such transaction, or
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted NTL's Board of Directors (together
with any new directors whose election or appointment by such board or whose
nomination for election by the shareholders of NTL 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 NTL's Board of Directors then in office.
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"Consolidated Interest Expense" means, for any person, for any period, the
amount of interest in respect of Indebtedness (including amortization of
original issue discount, amortization of debt issuance costs, and noncash
interest payments on any Indebtedness and the interest portion of any deferred
payment obligation and after taking into account the effect of elections made
under any Interest Rate Agreement, however denominated, with respect to such
Indebtedness), the amount of Redeemable Dividends, Restricted Subsidiary
Preferred Stock Dividends and the interest component of rentals in respect of
any capital lease obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
capital lease obligation shall be deemed to accrue at an interest rate
reasonably determined by such person to be the rate of interest implicit in such
capital lease obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the Net Income of such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) for such period, on a consolidated basis,
determined in accordance with GAAP; provided that
(1) the Net Income of any person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
person or a Wholly Owned Subsidiary,
(2) the Net Income of any person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having ordinary
voting power for the election of directors or other governing body of such
Subsidiary is owned by the referent person directly or indirectly through
one or more Subsidiaries) shall be included only to the extent of the
amount of dividends or distributions paid to the referent person or a
Wholly Owned Subsidiary,
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded and
(4) the cumulative effect of a change in accounting principles shall be
excluded.
"Default" means any event that is or, with the passage of time or the
giving of notice or both, would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Convertible Notes mature.
"EBITDA" means, for any person, for any period, an amount equal to
(1) the sum of
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(a) Consolidated Net Income for such period (exclusive of any
gain or loss realized in such period upon an Asset Sale), plus
(b) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in computing
Consolidated Net Income and any provision for taxes utilized in
computing net loss under clause (i) hereof, plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
(f) any other noncash item reducing Consolidated Net Income for
such period, minus
(2) all noncash items increasing Consolidated Net Income for such
period, all for such person and its Subsidiaries determined in accordance
with GAAP consistently applied.
"Excess Payment" means the excess of
(A) the aggregate of the cash and value of other consideration paid by
the Company or any of its Subsidiaries with respect to shares acquired in a
tender offer or other negotiated transaction over
(B) the market value of such acquired shares after giving effect to the
completion of a tender offer or other negotiated transaction.
"Exchange Rate Contract" means, with respect to any person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates. An Exchange Rate
Contract may also include an Interest Rate Agreement.
"Existing Convertible Notes" means NTL's 7% Convertible Subordinated Notes
Due 2008.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date.
"Global Notes" means the Rule 144A Global Notes.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any
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manner (including, without limitation, letters of credit and reimbursement
agreements in respect thereof), of all or any part of any Indebtedness.
"Indebtedness" means, with respect to any person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such person prepared in accordance with GAAP,
and also include to the extent not otherwise included, the Guarantee of items
which would be included within this definition.
"Interest Rate Agreement" means, for any person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Issuance Date" means the date on which the convertible notes are first
authenticated and issued.
"Material License" means a license to operate a cable or telephone system
held by NTL or any its Subsidiaries which system at the time of determination
covers a number of Net Households which equals exceeds 5% of the aggregate
number of Net Households covered by all of the licenses to operate cable
telephone systems held by NTL and its Subsidiaries at such time.
"Material Subsidiary" means
(1) NTL UK Group, Inc. (formerly known as OCOM Sub II, Inc.), NTL Group
Limited, CableTel Surrey, CableTel Cardiff Limited, CableTel Glasgow, CableTel
Newport and CableTel Kirklees and
(2) any other Subsidiary of the Company which is a "significant subsidiary"
as defined in Rule 1-02(w) of Regulation S-X under the Securities Act and the
Exchange Act (as such Regulation is in effect on the date of the Indenture).
"Net Income" means, with respect to any person for a specific period, the
net income (loss) of such person during such period, determined in accordance
with GAAP, excluding, however, any gain (but not loss) during such period,
together with any related provision for taxes on such gain (but not loss),
realized during such period in connection with any Asset Sale (as defined in the
Indenture) (including, without limitation, dispositions pursuant to
sale-and-leaseback transactions), and excluding any extraordinary gain (but not
loss) during such period, together with any related provision for taxes on such
extraordinary gain (but not loss).
"10% Notes" means NTL's 10% Series B Senior Notes Due 2007 outstanding at
any given time.
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"12 3/4% Notes" means NTL's 12 3/4% Series A Senior Deferred Coupon Notes
Due 2005 outstanding at any given time.
"11 1/2% Deferred Coupon Notes" means NTL's 11 1/2% Series B Senior
Deferred Coupon Notes Due 2006 outstanding at any given time.
"10 3/4% Notes" means NTL's 10 3/4% Senior Deferred Coupon Notes Due 2008
and NTL's 10 3/4% Series B Senior Deferred Coupon Notes due 2008 outstanding at
any given time.
"9 3/4% Notes" means NTL's 9 3/4% Senior Deferred Coupon Notes Due 2008 and
NTL's 9 3/4% Series B Deferred Coupon Notes Due 2008 outstanding at any given
time.
"9 1/2% Notes" means NTL's 9 1/2% Senior Notes Due 2008 and NTL's 9 1/2%
Series B Deferred Coupon Notes Due 2008 outstanding at any given time.
"11 1/2% Notes" means NTL's 11 1/2% Senior Notes Due 2008 and NTL's 11 1/2%
Series B Senior Notes Due 2008 outstanding at any given time.
"12 3/8% Notes" means NTL's 12 3/8% Senior Deferred Coupon Notes Due 2008
and NTL's 12 3/8% Series B Senior Deferred Coupon Notes Due 2008 outstanding at
any given time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Designee" means
(1) a spouse or a child of a Permitted Holder,
(2) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder,
(3) in the event of the death or incompetence of a Permitted Holder, his
estate, heirs, executor, administrator, committee or other personal
representative or
(4) 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 Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with GAAP
consistently applied after giving effect to the following:
(1) if, during or after such period, such Person or any of its
Subsidiaries shall have made any Asset Sale (as defined in the Indenture),
Pro Forma EBITDA of such Person and its Subsidiaries for such period shall
be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Sale for the period or increased by an amount
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equal to the Pro Forma EBITDA (if negative) directly attributable thereto
for such period and
(2) if, during or after such period, such Person or any of its
Subsidiaries completes an acquisition of any Person or business which
immediately after such acquisition is a Subsidiary of such Person or whose
assets are held directly by such Person or a Subsidiary of such Person, Pro
Forma EBITDA shall be computed so as to give pro forma effect to the
acquisition of such Person or business; and provided further that, with
respect to NTL, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary"
or "Restricted Subsidiaries" of NTL.
"Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Stock.
"Restricted Subsidiary" means any Subsidiary of NTL which is not a Non-
Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, the quotient of the
dividend divided by the difference between one and the maximum statutory federal
income tax rate (expressed as a decimal number between 1 and 0) then applicable
to the issuer of such preferred stock.
"Senior Debt" means the principal of, interest on and other amounts due on
(1) Indebtedness of NTL, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by NTL,
for money borrowed from banks or other financial institutions;
(2) Indebtedness of NTL, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by NTL in
compliance with the Indenture, including, without limitation, the Senior
Notes; and
(3) Indebtedness of NTL under interest rate swaps, caps or similar
hedging agreements and foreign exchange contracts, currency swaps or
similar agreements:
unless, in the instrument creating or evidencing or pursuant to which
Indebtedness under (1) or (2) is outstanding, it is expressly provided that such
Indebtedness is not senior in right of payment to the Convertible Notes. Senior
Debt includes, with respect to the obligations described in clauses (1) and (2)
above, interest accruing, pursuant to the terms of such Senior Debt, on or after
the filing of any petition in bankruptcy or for reorganization relating to NTL,
whether or not post-filing interest is allowed in such
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proceeding, at the rate specified in the instrument governing the relevant
obligation. Notwithstanding anything to the contrary in the foregoing, Senior
Debt shall not include:
(a) Indebtedness of or amounts owed by NTL for compensation to
employees, or for goods or materials purchased in the ordinary course of
business, or for services;
(b) Indebtedness of NTL to a Subsidiary of NTL; or
(c) the Existing Convertible Notes.
"Senior Notes" means the 10% Notes, the 12 3/4% Notes, the 11 1/2% Deferred
Coupon Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 9 1/2% Notes, the 11 1/2%
Notes and the 12 3/8% Notes.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by NTL.
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REGISTRATION RIGHTS
The following summary of selected provisions of the registration rights
agreement is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration rights agreement, which is
incorporated by reference into the registration statement of which this
prospectus forms a part.
NTL Communications Corp. entered into the registration rights agreement
pursuant to which it agreed, at its expense, for the benefit of the holders of
the offered securities to file with the Commission the registration statement
covering resale of the offered securities, by March 16, 1999. NTL Communications
Corp. will use its best efforts to cause the registration statement to become
effective as promptly as is practicable, but in any event by June 14, 1999, and
to keep the registration statement effective until the earlier of
(1) the sale pursuant to the registration statement of all the offered
securities registered thereunder and
(2) the expiration of the holding period applicable to such offered
securities held by persons that are not affiliates of NTL under Rule 144(k)
under the Securities Act, or any successor provision, subject to certain
permitted exceptions.
NTL Communications Corp. will be permitted to suspend the use of this
prospectus under certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events. NTL
Communications Corp. agreed to pay predetermined liquidated damages as described
herein ("Liquidated Damages") to holders of offered securities if the
Registration Statement is not timely filed or made effective or if this
Prospectus is unavailable for periods in excess of those permitted above. Such
Liquidated Damages shall accrue until such failure to file or become effective
or unavailability is cured
(1) in respect of any convertible note, at a rate per annum equal to
0.25% for the first 90 day period after the occurrence of such event and
0.5% thereafter on an amount equal to the sum of the Issue Price of the
convertible note and
(2) in respect of each share of common stock, at a rate per annum equal
to 0.25% for the first 90 day period and 0.5% thereafter on the then
applicable conversion price for a share of common stock which equals the
Issue Price of $1,000 principal amount of convertible note divided by the
Conversion Rate in effect.
Selling securityholders must complete and deliver to us a notice and
questionnaire the form of which was sent to all holders of record known to us,
at least three business days prior to any intended distribution of offered
securities pursuant to the registration statement. Holders of offered securities
are required to complete and deliver the questionnaire prior to the
effectiveness of the registration statement so that such holders may be named as
selling securityholders in this prospectus at the time of effectiveness. Upon
receipt of such a completed questionnaire, together with such other information
as may be reasonably requested by us, from a selling securityholder following
the
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effectiveness of the registration statement, we will, as promptly as practicable
but in any event within five business days of such receipt, file such amendments
to the registration statement or supplements to this prospectus as are necessary
to permit such selling securityholder to deliver this prospectus, including any
supplements hereto, to purchasers of offered securities (subject to our right to
suspend the use of this prospectus as described above). We have agreed to pay
Liquidated Damages in the amount set forth above to holders of offered
securities if we fail to make such filing in the time required or, if such
filing is a post-effective amendment to the registration statement required to
be declared effective under the Securities Act, if such amendment is not
declared effective within 45 days of the filing thereof.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of NTL Incorporated consists of 400,000,000
shares of common stock, par value $.01 per share, and 10,000,000 shares of
preferred stock, par value $.01 per share. In this section of the prospectus
entitled "Description of Capital Stock", references to NTL are to NTL
Incorporated and not to any of its subsidiaries. References in this section
"Description of Capital Stock" to NTL, "we" or "us" are to NTL Incorporated. At
the close of business on May 28, 1999:
(1) approximately 60,470,000 shares of common stock were issued and
outstanding;
(2) no shares of common stock were held by NTL in its treasury;
(3) approximately 125,000 shares of the 13% preferred stock were issued
and outstanding;
(4) 1,000,000 shares of series A junior participating preferred stock,
the "rights preferred stock", were reserved for issuance pursuant
to the rights agreement;
(5) approximately 17,057,000 shares of common stock were reserved for
issuance pursuant to the conversion of the 7% convertible notes;
(6) approximately 2,880,000 shares of common stock were reserved for
issuance upon the exercise of certain warrants;
(7) approximately 16,144,000 shares of common stock were reserved for
issuance pursuant to various NTL employee and director stock
options;
(8) 125,280 shares of 9.9% non-voting mandatorily redeemable preferred
stock, series A, the "9.9% preferred stock, series A", were issued
and outstanding;
(9) 52,217 shares of 9.9% non-voting mandatorily redeemable preferred
stock, series B, the "9.9% preferred stock, series B", were issued
and outstanding;
(10) 500,000 shares of 5 1/4% convertible preferred stock, series A,
the "5 1/4% preferred stock", were issued and outstanding; and
(11) 4,447.92 shares of 5 1/4% convertible preferred stock, series B,
the "5 1/4% preferred stock, series B" and, together with the
5 1/4% preferred stock, series A, the "5 1/4% preferred stock",
were issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders of NTL and do not
have cumulative voting rights in the election of directors. Holders of common
stock are entitled to receive ratably such dividends as may from time to time be
declared by our board of directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of NTL, holders of common
stock would be entitled to share ratably in all of our assets available for
distribution to holders of common stock remaining after payment of liabilities
and liquidation preference of any outstanding
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preferred stock. Holders of common stock have no preemptive rights and have no
rights to convert their common stock into any other securities, and there are no
redemption provisions with respect to such shares. All of the outstanding shares
of common stock are fully paid and nonassessable.
PREFERRED STOCK
Our board of directors has the authority to issue preferred stock in one or
more series and to fix as to any such series the designation, title, voting
powers and any other preferences, and relative, participating, optional or other
special rights and qualifications, limitations or restrictions, without any
further vote or action by our stockholders.
13% Preferred Stock. The 13% preferred stock ranks prior to the common
stock, rights preferred stock and 9.9% preferred stock with respect to dividend
rights and rights on liquidation, winding up and dissolution, and each share of
13% preferred stock has a liquidation preference of $1,000. Holders of shares of
13% preferred stock are entitled to receive, when, as and if declared by our
board of directors, quarterly dividends per share at a rate of 13% per annum.
Dividends accruing on or prior to February 15, 2004, may, at our option, be paid
in cash, by issuing additional shares of 13% preferred stock having an aggregate
liquidation preference equal to the amount of such dividends, or in any
combination of the foregoing. Dividends accruing after February 15, 2004 must be
paid in cash. We may redeem any or all of the 13% preferred stock on or after
February 15, 2002 at declining redemption prices as set forth in the certificate
of designation with respect to the 13% preferred stock, plus accrued and unpaid
dividends to the date of redemption. We must redeem all outstanding shares of
13% preferred stock on February 15, 2009 at a price equal to 100% of the
liquidation preference thereof, plus accrued and unpaid dividends to the date of
redemption.
Holders of 13% preferred stock have no general voting rights, except as
otherwise required under the DGCL and except in certain circumstances as set
forth in the certificate of designation with respect to the 13% preferred stock
including
(1) amending certain rights of the holders of the 13% preferred stock
and
(2) the issuance of any class of equity securities that ranks on a
parity with or senior to the 13% preferred stock, other than additional
shares of the 13% preferred stock issued in lieu of cash dividends or
parity securities issued to finance the redemption by us of the 13%
preferred stock.
In addition, if
(1) dividends are in arrears for six quarterly periods (whether or not
consecutive) or
(2) we fail to make a mandatory redemption or an offer to purchase all
of the outstanding shares of 13% preferred stock following an 13% preferred
stock Change of Control Triggering Event, as defined in the certificate of
designation with respect to the 13% preferred stock, as required or fail to
pay pursuant to such redemption or offer, holders of a majority of the
outstanding shares of 13% preferred stock, voting
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as a class, will be entitled to elect two directors to our board of
directors. In the event of an 13% preferred stock Change of Control
Triggering Event, we will, subject to certain conditions, offer to purchase
all outstanding shares of 13% preferred stock at a purchase price equal to
101% of the liquidation preference thereof, plus accrued and unpaid
dividends to the date of purchase. Moreover, in the event of an 13%
preferred stock Change of Control Call Event, as defined in the certificate
of designation with respect to the 13% preferred stock, we will have the
option to redeem all of the outstanding shares of 13% preferred stock at a
redemption price equal to 100% of the liquidation preference thereof plus
the applicable premium and accrued and unpaid dividends to the date of
repurchase.
On any scheduled dividend payment date, we may, at our option, exchange
all, but not less than all, of the shares of 13% preferred stock then
outstanding into our 13% series B subordinated exchange debentures due 2009.
9.9% preferred stock, series A. The 9.9% preferred stock, series A ranks
prior to the common stock and rights preferred stock with respect to dividend
rights and rights on liquidation, winding up and dissolution, and each share of
9.9% preferred stock, series A has a liquidation preference of $1,000 per share.
Holders of shares of 9.9% preferred stock, series A are entitled to receive,
when, as and if declared by our board of directors cumulative dividends at a
rate of 9.9% per annum of the Stated Value of $1,000. Dividends are payable on
the 9.9% preferred stock, series A on the date that the 9.9% preferred stock,
series A is redeemed. Dividends may, at our option, be paid in cash, by issuing
shares of common stock or by issuing shares of convertible preferred stock, or
in any combination of the foregoing. We may redeem any or all of the 9.9%
preferred stock, series A at any time at a redemption price equal to $1,000 per
share, plus accrued and unpaid dividends to the date of redemption. We must
redeem all outstanding shares of 9.9% preferred stock, series A on September 21,
2008 at a redemption price equal to $1,000 per share, plus accrued and unpaid
dividends to the date of redemption. If we have not exercised our right to
optionally redeem the 9.9% preferred stock, series A by December 22, 1998, we
shall mandatorily redeem all of the outstanding shares of 9.9% preferred stock,
series A at a redemption price equal to $1,000 per share plus accrued and unpaid
dividends to the date of redemption. We, at our option, may effect the mandatory
redemption of the 9.9% preferred stock, series A, in cash, in exchange for
shares of common stock, in exchange for shares of convertible preferred stock or
in any combination of the foregoing.
Holders of 9.9% preferred stock, series A have no general voting rights,
except as otherwise required under the DGCL and except in certain circumstances
as set forth in the certificate of designation with respect to the 9.9%
preferred stock, series A including amending certain rights of the holders of
the 9.9% preferred stock, series A. No approval is required of the holders of
the 9.9% preferred stock, series A for the issuance of any other class of equity
securities.
Convertible preferred stock. The convertible preferred stock, par value
$.01 per share, the "convertible preferred stock", may be issued, at our option,
in redemption of the 9.9% preferred stock. The convertible preferred stock, if
issued, will rank prior to the
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common stock, the rights preferred stock and any other class of capital stock or
series of preferred stock that by its terms ranks junior to the convertible
preferred stock, collectively "junior stock", with respect to dividend rights
and rights on liquidation, winding up and dissolution. Each share of convertible
preferred stock will have a liquidation preference of $1,000. Holders of
convertible preferred shares will be entitled to receive, when as and if
declared by our board of directors, cumulative dividends from the date that the
convertible preferred stock is issued in accordance to the following terms
(1) dividends will be declared in preference to dividends on any junior
stock;
(2) dividends will be paid at a rate determined at the time of issuance
of the convertible preferred stock, and
(3) dividends may be paid, in our sole discretion, in cash, by issuing
shares of common stock or by issuing additional shares of convertible
preferred stock or any combination of the foregoing. Dividends will accrue
semi-annually from the second anniversary of the issuance of the
convertible preferred stock.
The convertible preferred shares will be redeemable at any time, in whole
or in part, at our option, for $1,000 in cash per share. After the third
anniversary of their issuance, the convertible preferred stock may be redeemed,
at our option, for shares of common stock. The convertible preferred stock is
mandatorily redeemable on the tenth anniversary of its issuance at a redemption
price of $1,000 per share in cash or for shares of common stock. The convertible
preferred stock will be convertible at the option of the holders thereof at any
time into an amount of shares of common stock determined in accordance with a
formula set forth in the certificate of designation relating thereto, subject to
adjustment in certain circumstances.
The holders of convertible preferred stock will have no voting rights,
except as required by law and as provided in the certificate of designations
relating thereto. convertible preferred stock holders may elect two new members
of our board of directors if the accumulation of accrued and unpaid dividends on
the outstanding convertible preferred stock constitutes an amount equal to three
semi-annual dividends.
9.9% preferred stock, series B. The 9.9% preferred stock, series B ranks
prior to the common stock and the rights preferred stock with respect to
dividend rights and rights on liquidation, winding up and dissolution, and each
share of 9.9% preferred stock, series B has a liquidation preference of $1,000
per share. Holders of shares of 9.9% preferred stock, series B are entitled to
receive, when, as and if declared by our board of directors dividends at a rate
of 9.9% per annum of the Stated Value of $1,000. Dividends are payable on the
9.9% preferred stock, series B on the date that the 9.9% preferred stock, series
B is redeemed. Dividends may, at our option, be paid in cash, by issuing shares
of common stock, or in any combination of the foregoing. We may redeem any or
all of the 9.9% preferred stock, series B at any time at a redemption price
equal to $1,000 per share, plus accrued and unpaid dividends to the date of
redemption. We must redeem all outstanding shares of 9.9% preferred stock,
series B on December 21, 2008 at a redemption price equal to $1,000 per share,
plus accrued and unpaid dividends to the
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date of redemption. If we have not exercised our right to optionally redeem the
9.9% preferred stock, series B by June 15, 2000, we shall mandatorily redeem all
of the outstanding shares of 9.9% preferred stock, series B at a redemption
price equal to $1,000 per share plus accrued and unpaid dividends to the date of
redemption. We must also redeem all outstanding shares of 9.9% preferred stock,
series B in the event of a Reorganization, as defined in the certificate of
designation with respect to the 9.9% preferred stock, series B, subject to
certain exceptions. We, at our option, may effect the mandatory redemption of
the 9.9% preferred stock, series B in cash, in exchange for shares of common
stock, or in any combination of the foregoing.
Holders of the 9.9% preferred stock, series B have no general voting
rights, except as otherwise required under the DGCL and except in certain
circumstances as set forth in the certificate of designation with respect to the
9.9% preferred stock, series B, including amending certain rights to the holders
of the 9.9% preferred stock, series B.
5 1/4% convertible preferred stock, series A. The 5 1/4% preferred stock,
series A, ranks prior to the common stock, the rights preferred stock, the 9.9%
preferred stock, series A, and the 9.9% preferred stock, series B, and junior
only to the 13% preferred stock, with respect to dividend rights and rights on
liquidation, winding up and dissolution, and each share of 5 1/4% preferred
stock, series A, has a liquidation preference of $1,000, plus any accrued and
unpaid dividends. Holders of shares of 5 1/4% preferred stock, series A, are
entitled to receive, when, as and if declared by our board of directors
quarterly dividends per share at a rate of 5 1/4% per annum. Dividends may be
paid, at our option, either in
(1) cash,
(2) common stock or
(3) additional shares of preferred stock having terms substantially
similar to the 5 1/4% preferred stock, series A, "additional preferred",
except that the conversion rate and value of the shares of such additional
preferred shall be increased for each dividend payment date after the first
dividend payment date by a compounding factor set forth in the certificate
of designations with respect to the 5 1/4% preferred stock, series A.
We may redeem any or all of the 5 1/4% preferred stock, series A, on the
earlier of
(1) seven years from the issue date and
(2) that date when the common stock has for a period of over 25 trading
days traded at a value over $120 per share, at our option, for either
(A) cash in an amount of $1,000 per share of 5 1/4% preferred
stock, series A, plus accrued and unpaid dividends,
(B) common stock valued at $1,025 per share of 5 1/4% preferred
stock, series A, plus accrued and unpaid dividends, in the case of a
redemption occurring at least seven years from the issue date,
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(C) common stock valued at $1,000 per share of 5 1/4% preferred
stock, series A, plus accrued and unpaid dividends, in the case of a
redemption due to the trading value of the common stock over a 25-day
period, or
(D) any combination of cash and common stock at a redemption
price based on the respective combination of the consideration. Holders
of shares of 5 1/4% preferred stock have the option to require us to
redeem all outstanding shares of 5 1/4% preferred stock on and after
January 28, 2009, at a price equal to 100% of the liquidation
preference thereof, payable in cash, common stock, or any combination
thereof.
We must redeem all shares of 5 1/4% preferred stock, series A, that remain
outstanding on the twentieth anniversary of the issue date at a redemption price
equal to $1,000 per share, payable at our option in cash, common stock or any
combination thereof, plus accrued and unpaid dividends.
Holders of shares of 5 1/4% preferred stock, series A, have no general
voting rights, except as otherwise required by law and except in certain
circumstances as set forth in the certificate of designations with respect to
the 5 1/4% preferred stock, series A, including
(1) if dividends are in arrears for six quarterly periods (whether or
not consecutive),
(2) for purposes of amending certain rights of the holders of shares of
the 5 1/4% preferred stock or
(3) to approve the issuance of any equity securities that rank on a
parity with or senior to the 5 1/4% preferred stock, series A, or the
increase of the authorized amounts of any such other class or series, other
than shares of additional preferred or shares of securities that rank on a
parity with or senior to the 5 1/4% preferred stock, series A, issued in
order to refinance, redeem or refund the 13% preferred stock, provided the
maximum accrual value of such securities may not exceed the maximum accrual
value of the 13% preferred stock.
Holders of shares of 5 1/4% preferred stock, series A, have the right, at
any time and from time to time, to convert any or all outstanding shares of
5 1/4% preferred stock, series A, held by them (but not any fractional shares)
into common stock, such that each share of the 5 1/4% preferred stock, series A,
is convertible into 10 shares of common stock, subject to adjustment in
accordance with the certificate of designations; provided, that the number of
shares of common stock deliverable upon conversion of the 5 1/4% preferred
stock, series A, (together with the conversion of any shares of additional
preferred) shall not exceed 7,590,994, subject to adjustment in accordance with
the certificate of designations.
5 1/4% convertible preferred stock, series B. The 5 1/4% preferred stock,
series B, ranks prior to the common stock, the rights preferred stock, the 9.9%
preferred stock, series A, and the 9.9% preferred stock, series B, and junior
only to the 13% preferred stock, with respect to dividend rights and rights on
liquidation, winding up and dissolution, and each
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share of 5 1/4% preferred stock, series B, has a liquidation preference of
$1,000, plus any accrued and unpaid dividends. Holders of shares of 5 1/4%
preferred stock, series B, are entitled to receive, when, as and if declared by
our board of directors quarterly dividends per share at a rate of 5 1/4% per
annum. Dividends may be paid, at our option, either in
(1) cash,
(2) common stock or
(3) additional shares of preferred stock having terms substantially
similar to the 5 1/4% preferred stock, series B, "additional preferred",
except that the conversion rate and value of the shares of such additional
preferred shall be increased for each dividend payment date after the first
dividend payment date by a compounding factor set forth in the certificate
of designations with respect to the 5 1/4% preferred stock.
We may redeem any or all of the 5 1/4% preferred stock, series B, on the
earlier of
(1) January 28, 2006 and
(2) that date when the common stock has for a period of over 25 trading
days traded at a value over $120 per share, at our option, for either
(A) cash in an amount of $1,000 per share of 5 1/4% preferred
stock, series B, plus accrued and unpaid dividends,
(B) common stock valued at $1,025 per share of 5 1/4% preferred
stock, series B, plus accrued and unpaid dividends, in the case of a
redemption occurring on or after January 28, 2006,
(C) common stock valued at $1,000 per share of 5 1/4% preferred
stock, series B, plus accrued and unpaid dividends, in the case of a
redemption due to the trading value of the common stock over a 25-day
period, or
(D) any combination of cash and common stock at a redemption
price based on the respective combination of the consideration. Holders
of shares of 5 1/4% preferred stock, series B, have the option to
require us to redeem all outstanding shares of 5 1/4% preferred stock,
series B, on and after January 28, 2009, at a price equal to 100% of
the liquidation preference thereof, payable in cash, common stock, or
any combination thereof.
We must redeem all shares of 5 1/4% preferred stock, series B, that remain
outstanding on January 28, 2019 at a redemption price equal to $1,000 per share,
payable at our option in cash, common stock or any combination thereof, plus
accrued and unpaid dividends.
Holders of shares of 5 1/4% preferred stock, series B, have no general
voting rights, except as otherwise required by law and except in certain
circumstances as set forth in the certificate of designations with respect to
the 5 1/4% preferred stock, series B, including
(1) if dividends are in arrears for six quarterly periods (whether or
not consecutive),
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(2) for purposes of amending certain rights of the holders of shares of
the 5 1/4% preferred stock, series B, or
(3) to approve the issuance of any equity securities that rank on a
parity with or senior to the 5 1/4% preferred stock, series B, or the
increase of the authorized amounts of any such other class or series, other
than shares of additional preferred or shares of securities that rank on a
parity with or senior to the 5 1/4% preferred stock, series B, issued in
order to refinance, redeem or refund the 13% preferred stock, provided the
maximum accrual value of such securities may not exceed the maximum accrual
value of the 13% preferred stock.
Holders of shares of 5 1/4% preferred stock, series B, have the right, at
any time and from time to time, to convert any or all outstanding shares of
5 1/4% preferred stock, series B, held by them (but not any fractional shares)
into common stock, such that each share of the 5 1/4% preferred stock is
convertible into a number of shares of common stock specified in the certificate
of designations as adjusted by the Relevant Compounding Factor, as defined in
the certificate of designations relating to the 5 1/4% preferred stock, series
B, subject to adjustment in accordance with the certificate of designations;
provided, that the number of shares of common stock deliverable upon conversion
of the 5 1/4% preferred stock, series B, (together with the conversion of any
shares of additional preferred) shall not exceed 7,590,994, subject to
adjustment in accordance with the certificate of designations.
CERTAIN SPECIAL CHARTER PROVISIONS
Our restated certificate of incorporation, as amended, the "charter",
contains the provisions described below. Such charter provisions may have the
effect, alone or in combination with each other or with the existence of
authorized but unissued common stock and any series of preferred stock, of
precluding or rendering more difficult a hostile takeover making it more
difficult to remove or change the composition of our incumbent board of
directors and its officers, being adverse to stockholders who desire to
participate in a tender offer and depriving stockholders of possible
opportunities to sell their shares at temporarily higher prices.
Classified board and filling of vacancies on the board of directors. The
charter provides that the directors shall be divided into three classes, each of
which shall serve a staggered three-year term, and that vacancies on our board
of directors that may occur between annual meetings may be filled by our board
of directors. In addition, this provision specifies that any director elected to
fill a vacancy on our board of directors will serve for the balance of the term
of the replaced director.
Removal of directors. The charter provides that directors can be removed
only by the stockholders for cause and then only by the affirmative vote of the
holders of not less than two-thirds of the combined voting power of NTL.
Voting requirement for certain business combinations. The charter also
provides that, in addition to any affirmative vote required by law, the
affirmative vote of holders of two-thirds of the voting power of NTL shall be
necessary to approve any "business
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combination", as hereinafter defined, proposed by an "interested stockholder",
as hereinafter defined. The additional voting requirements will not apply,
however, if:
(1) the business combination was approved by not less than a majority
of the continuing directors or
(2) a series of conditions are satisfied requiring, in summary, the
following:
(A) that the consideration to be paid to our stockholders in the
business combination must be at least equal to the higher of (x) the
highest per-share price paid by the interested stockholder in acquiring
any shares of common stock during the two years prior to the
announcement date of the business combination or in the transaction in
which it became an interested stockholder, such date is referred to
herein as the "determination date", whichever is higher or (y) the fair
market value per share of common stock on the announcement date or
determination date, whichever is higher, in either case appropriately
adjusted for any stock dividend, stock split, combination of shares or
similar event (non-cash consideration is treated similarly) and
(B) certain "procedural" requirements are complied with, such as
the Consent Solicitation of proxies pursuant to the rules of the
Commission and no decrease in regular dividends (if any) after the
interested stockholder became an interested stockholder (except as
approved by a majority of the continuing directors).
An "interested stockholder" is defined as anyone who is the beneficial
owner of more than 15% of the voting power of the voting stock, other than us
and any employee stock plans sponsored by us, and includes any person who is an
assignee of or has succeeded to any shares of voting stock in a transaction not
involving a public offering that were at any time within the prior two-year
period beneficially owned by an interested stockholder. The term "beneficial
owner" includes persons directly and indirectly owning or having the right to
acquire or vote the stock. Interested stockholders participate fully in all
stockholder voting.
A "business combination" includes the following transactions:
(1) merger or consolidation of us or any subsidiary of ours with an
interested stockholder or with any other corporation or entity which is, or
after such merger or consolidation would be, an affiliate of an interested
stockholder;
(2) the sale or other disposition by us or a subsidiary of ours of
assets having a fair market value of $5,000,000 or more if an interested
stockholder (or an affiliate thereof) is a party to the transaction;
(3) the adoption of any plan or proposal for the liquidation or
dissolution of NTL proposed by or on behalf of an interested stockholder
(or an affiliate thereof); or
(4) any reclassification of securities, recapitalization, merger with a
subsidiary, or other transaction which has the effect, directly or
indirectly, of increasing the
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proportionate share of any class of the outstanding stock (or securities
convertible into stock) of NTL or a subsidiary owned by an interested
stockholder (or an affiliate thereof). Determinations of the fair market
value of non-cash consideration are made by a majority of the continuing
directors.
The term "continuing directors" means any member of our board of directors,
while such person is a member of our board of directors, who is not an Affiliate
or Associate or representative of the interested stockholder and was a member of
our board of directors prior to the time that the interested stockholder became
an interested stockholder, and any successor of a continuing director while such
successor is a member of the our board of directors, who is not an Affiliate or
Associate or representative of the interested stockholder and is recommended or
elected to succeed the continuing director by a majority of continuing
directors.
Voting requirements for certain amendments to the charter. The charter
provides that the provisions set forth in this section under the heading
"Certain special charter provisions" may not be repealed or amended in any
respect, unless such action is approved by the affirmative vote of the holders
or not less than two-thirds of the voting power of NTL. The requirement of an
increased stockholder vote is designed to prevent a stockholder who controls a
majority of the voting power of NTL from avoiding the requirements of the
provisions discussed above by simply amending or repealing such provisions.
SECTION 203 OF THE DGCL
Generally, Section 203 of the DGCL prohibits a publicly held Delaware
corporation from engaging in any business combination with an interested
stockholder for a period of three years following the time that such stockholder
becomes an interested stockholder, unless
(1) prior to such time either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder is approved by the board of directors of the corporation,
(2) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding, for purposes of determining
the number of shares outstanding, those shares held by persons who are both
directors and officers and certain employee stock plans or
(3) at or after such time the business combination is approved by the
board and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least two-thirds of
the outstanding voting stock which is not owned by the interested
stockholder. A business combination includes certain mergers,
consolidations, asset sales, transfers and other transactions resulting in
a financial benefit to the interested stockholder. An interested
stockholder is
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a person who, together with affiliates and associates, owns (or within the
preceding three years, did own) 15% or more of the corporation's voting
stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Continental Stock
Transfer & Trust Company.
NTL RIGHTS AGREEMENT
On August 27, 1993, our board of directors adopted the rights agreement.
The rights agreement provides that one right will be issued with each share of
common stock issued (whether originally issued or from our treasury) on or after
October 13, 1993 and prior to the rights distribution date, as defined herein.
The rights are not exercisable until the rights distribution date and will
expire at the close of business on October 13, 2003 unless previously redeemed
by us as described below. When exercisable, each right entitles the owner to
purchase from us one one-hundredth of a share of rights preferred stock at a
purchase price of $100.00. A holder of convertible notes will not be entitled to
receive rights unless such holder converts such convertible notes into shares of
common stock prior to the rights distribution date.
Except as described below, the rights will be evidenced by the common stock
certificates. The rights will separate from the common stock and a "rights
distribution date" will occur upon the earlier of
(1) 10 days following a public announcement that a person or group of
affiliated or associated persons, an "acquiring person", has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of the common stock, the "stock acquisition date", and
(2) 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an acquiring
person.
After the rights distribution date, rights certificates will be mailed to
holders of record of the common stock as of the rights distribution date and
thereafter the separate rights certificates alone will represent the rights.
The rights preferred stock issuable upon exercise of the rights will be
entitled to a minimum preferential quarterly dividend payment of $0.01 per share
and will be entitled to an aggregate dividend of 100 times the dividend, if any,
declared per share of common stock other than one payable in common stock. In
the event of liquidation, the holders of the rights preferred stock will be
entitled to a minimum preferential liquidation payment of $1.00 per share plus
accrued and unpaid dividends and will be entitled to an aggregate payment of 100
times the payment made per share of the common stock. Each share of rights
preferred stock will have 100 votes and will vote together with the common
stock. In the event of any merger, consolidation or other transaction in which
shares of the common stock are changed or exchanged, each share of rights
preferred stock will be entitled to receive 100 times the amount received per
share of the common stock. These rights are protected by customary antidilution
provisions. Because of the nature of the
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rights preferred stock's dividend, liquidation and voting rights, the value of
one one-hundredth of a share of rights preferred stock purchasable upon exercise
of each Right should approximate the value of one share of the common stock.
In the event that a person becomes an acquiring person (except pursuant to
a tender offer or an exchange offer for all outstanding shares of common stock
at a price and on terms determined by at least a majority of the members of our
board of directors who are not officers of NTL and who are not representatives,
nominees, affiliates or associates of an acquiring person, to be fair to our
stockholders and otherwise in our best interests and the best interests of our
stockholders, a "qualifying offer"), each holder of a right will thereafter have
the right to receive, upon the exercise thereof at the then current exercise
price, the common stock (or, in certain circumstances, cash, property or other
of our securities) having a value equal to two times the exercise price of the
right. Notwithstanding any of the foregoing, following the occurrence of any
such event, all rights that are or (under certain circumstances specified in the
rights agreement) were beneficially owned by any acquiring person (or certain
related parties) will be null and void. However, rights are not exercisable
following the occurrence of the event set forth above until such time as the
rights are no longer redeemable by us as set forth below.
In the event that, at any time following the stock acquisition date,
(1) we are acquired in a merger or other business combination
transaction in which we are not the surviving corporation or the common
stock is changed or exchanged (other than a merger which follows a
qualifying offer and satisfies certain other requirements) or
(2) 50% or more of our assets, cash flow or earning power is sold or
transferred, each holder of a right (except rights which previously have
been voided as set forth above) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price, common stock
of the acquiring company having a value equal to two times the exercise
price of the right.
At any time until 10 days following the stock acquisition date, we may
redeem the right in whole, but not in part, at a price of $0.01 per right.
Immediately upon the action of our board of directors ordering redemption of the
rights, the rights will terminate and the only right of the holders of the
rights will be to receive the $0.01 redemption price.
Until a right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of NTL, including without limitation, the right to vote
or to receive dividends. While the distribution of the rights will not be
taxable to stockholders or to us, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the rights become
exercisable for the common stock (or other consideration) or for common stock of
the acquiring company as set forth above.
Other than those provisions relating to the principal terms of the rights,
any of the provisions of the rights agreement may be amended by our board of
directors prior to the rights distribution date. After the rights distribution
date, the provisions of the rights agreement may be amended by our board of
directors in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of rights (excluding
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the interests of any acquiring person) or to shorten or lengthen any time period
under the rights agreement, provided that no amendment to adjust the time period
governing redemption shall be made at such time as the rights are not
redeemable.
The rights have certain anti-takeover effects as they will cause
substantial dilution to a person or group that acquires a substantial interest
in us without the prior approval of our board of directors. The effect of the
rights may be to inhibit a change in control of NTL (including through a third
party tender offer at a price which reflects a premium to then prevailing
trading prices) that may be beneficial to our stockholders.
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DESCRIPTION OF OTHER INDEBTEDNESS
Each of the following are summaries of NTL Communications Corp.'s or its
subsidiaries existing debt instruments. You should refer to the relevant
agreements for a full description of the terms of those debt instruments. See
"Where you can find more information about us." Capitalized terms used and not
defined below have the meanings set forth in such debt instruments.
THE 12 3/4% NOTES
In April 1995, NTL Communications Corp. issued $277,803,500 aggregate
principal amount at maturity of its 12 3/4% senior deferred coupon notes due
2005, the "old 12 3/4% notes", at a discount to their aggregate principal amount
to generate gross proceeds to NTL Communications Corp. of approximately $150
million. The old 12 3/4% notes were issued and sold in a transaction exempt from
the registration requirement of the Securities Act pursuant to Rule 144A under
the Securities Act or in transactions complying with Regulation S under the
Securities Act. On August 18, 1995 NTL Communications Corp. issued $277,803,500
aggregate principal amount at maturity of the 12 3/4% series A senior deferred
coupon notes due 2005, the "12 3/4% notes", in exchange for the old 12 3/4%
notes pursuant to the indenture relating thereto, the "12 3/4% notes indenture".
The terms of the 12 3/4% notes are identical in all material respects to the old
12 3/4% notes except for certain transfer restrictions and registration rights
applicable to the old 12 3/4% notes. The old 12 3/4% notes were cancelled on
August 18, 1995 on consummation of the exchange offer which was made pursuant to
our prospectus dated July 18, 1995, forming part of the registration statement
on Form S-4 (File No. 33-92794) filed with the Commission on May 26, 1995.
The 12 3/4% notes accrete at a rate of 12 3/4% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of
$277,803,500. Cash interest on the 12 3/4% notes does not accrue until prior to
April 15, 2000. Thereafter, the 12 3/4% notes accrue interest in cash at the
rate of 12 3/4% per annum on the principal amount payable semiannually on April
15 and October 15 of each year, commencing October 15, 2000 to holders of record
on the immediately preceding April 1, and October 1. The 12 3/4% notes mature on
April 15, 2005. The 12 3/4% notes are redeemable, at NTL Communications Corp.'s
option at any time, in whole or in part, on or after April 15, 2000 at the
redemption prices set forth in the 12 3/4% notes indenture, plus any unpaid
interest, if any, to the date of redemption. The 12 3/4% notes may also be
redeemed at NTL Communications Corp.'s option in whole but not in part in some
circumstances where additional amounts, as defined in the 12 3/4% notes
indenture, are payable under the 12 3/4% notes. In those circumstances the
12 3/4% notes to be repurchased must be repurchased at 100% of Accreted Value,
or, as the case may be, principal amount thereof. Upon a Change of Control
Triggering Event, as defined in the 12 3/4% notes indenture, holders of the
12 3/4% notes have the right to require NTL Communications Corp. to repurchase
all or any part of the 12 3/4% notes at a repurchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any. Subject to
various conditions, NTL Communications Corp. is obligated to offer to purchase
the 12 3/4% notes and other Qualified Senior Notes, as defined in the 12 3/4%
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notes indenture, with the Excess Proceeds of some Asset Sales at a redemption
price of 100% of the Accreted Value or, as the case may be, principal amount
thereof plus accrued and unpaid interest. The 12 3/4% notes indenture contains
restrictions with respect to, among other things, the payment of dividends, the
repurchase of stock and the making of certain other Restricted Payments, the
incurrence of additional Indebtedness, the creation of certain Liens, certain
Asset Sales, transactions with Subsidiaries and other Affiliates and mergers and
consolidations.
The 12 3/4% notes are senior unsecured obligations of NTL Communications
Corp. ranking equal in right of payment of principal and interest with all of
NTL Communications Corp.'s other existing and future senior unsecured
obligations and rank senior to all of NTL Communications Corp.'s other existing
and future subordinated debts, including, without limitation, the convertible
notes and the existing convertible notes.
In January 1996, NTL Communications Corp. obtained the necessary consents
of the registered holders of the 12 3/4% notes to certain proposed amendments to
the 12 3/4% notes indenture. On January 22, 1996, NTL Communications Corp. and
Chemical Bank, now known as The Chase Manhattan Bank, as trustee, executed a
first supplemental indenture to effect those amendments. In general, the
amendments modified the 12 3/4% notes indenture by amending the covenant
entitled "Limitations on Dividend and Other Payment Restrictions Affecting
Subsidiaries" and other provisions to facilitate the arrangement of our then
proposed credit facilities and other financings and make certain conforming and
other changes to the 12 3/4% notes indenture.
In October 1998, NTL Communications Corp. received the necessary consents
of registered holders of the 12 3/4% notes to amend the 12 3/4% notes indenture
so as to allow NTL Communications Corp and its subsidiaries to take certain
actions that were previously prohibited under the 12 3/4% notes indenture,
particularly regarding the financing of NTL Communications Corp.'s and its
subsidiaries' business and pending and future acquisitions, including NTL
Communications Corp.'s acquisition of Partners. In addition, the amendment
eliminated some, but not all, of certain differences between the covenants in
the 12 3/4% notes indenture and the existing 10 3/4% notes, 9 3/4% notes and
9 1/2% notes indentures. On October 14, 1998, we and The Chase Manhattan Bank,
as trustee, executed a second supplemental indenture to effect such amendment.
THE 11 1/2% DEFERRED COUPON NOTES
In January 1996, NTL Communications Corp. issued $1,050 million aggregate
principal amount at maturity of its 11 1/2% series A senior deferred coupon
notes due 2006, the "old 11 1/2% deferred coupon notes", at a discount to their
aggregate principal amount to generate gross proceeds to us of approximately
$600,127,500. The old 11 1/2% deferred coupon notes were issued and sold in a
transaction exempt from the registration requirement of the Securities Act
pursuant to Rule 144A under the Securities Act. On May 23, 1996, we issued
$1,050 million aggregate principal amount at maturity of the 11 1/2% series B
senior deferred coupon notes due 2006, the "11 1/2% deferred coupon notes", in
exchange for the old 11 1/2% deferred coupon notes pursuant to the indenture
relating thereto, the "11 1/2% deferred coupon notes indenture". The terms of
the 11 1/2%
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deferred coupon notes are identical in all material respects to the old 11 1/2%
deferred coupon notes except for certain transfer restrictions and registration
rights applicable to the old 11 1/2% deferred coupon notes. The old 11 1/2%
deferred coupon notes tendered for exchange were cancelled on May 23, 1996 on
consummation of the exchange offer made pursuant to NTL Communications Corp.'s
prospectus dated April 22, 1996, forming part of NTL Communications Corp.'s
registration statement on Form S-4 (File No. 333-1010) filed with the Commission
on April 16, 1996.
The 11 1/2% deferred coupon notes accrete at a rate of 11 1/2% computed on
a semiannual bond equivalent basis to an aggregate principal amount at maturity
of $1,050 million. Cash interest on the 11 1/2% deferred coupon notes does not
accrue until February 1, 2001. Thereafter, the 11 1/2% deferred coupon notes
accrue interest in cash at the rate of 11 1/2% per annum on the principal amount
payable semiannually on February 1 and August 1 of each year, commencing August
1, 2001, to holders of record on the immediately preceding January 15, and July
15. The 11 1/2% deferred coupon notes mature on February 1, 2006. The 11 1/2%
deferred coupon notes are redeemable, at NTL Communications Corp.'s option at
any time, in whole or in part, on or after February 1, 2001 at the redemption
prices set forth in the 11 1/2% deferred coupon notes indenture plus any accrued
unpaid interest to the date of redemption. The 11 1/2% deferred coupon notes may
also be redeemed at NTL Communications Corp.'s option in whole but not in part
in some circumstances where "Additional Amounts", as defined in the 11 1/2%
deferred coupon notes indenture, are payable under the 11 1/2% notes. In those
circumstances, the 11 1/2% deferred coupon notes to be repurchased must be
repurchased at 100% of accreted value or, as the case may be, principal amount
thereof plus accrued and unpaid interest. Upon a Change of Control Triggering
Event, as defined in the 11 1/2% deferred coupon notes indenture, holders of the
11 1/2% deferred coupon notes have the right to require NTL Communications Corp.
to repurchase all or any part of the 11 1/2% deferred coupon notes at a
repurchase price equal to 101% of the accreted value or, as the case may be,
principal amount thereof plus accrued and unpaid interest, if any. Subject to
various conditions, NTL Communications Corp. is obligated to offer to purchase
the 11 1/2% deferred coupon notes and other Qualified Senior Notes, as defined
in the 11 1/2% deferred coupon notes indenture, with the Excess Proceeds of
certain Asset Sales at a redemption price of 100% of the accreted value or, as
the case may be, principal amount thereof plus accrued and unpaid interest, if
any. The 11 1/2% deferred coupon notes indenture contains restrictions with
respect to, among other things, the payment of dividends, the repurchase of
stock and the making of some other Restricted Payments, the incurrence of
additional Indebtedness, the creation of some Liens, some sales of assets,
transactions with Subsidiaries and other Affiliates and mergers and
consolidations.
In October 1998, NTL Communications Corp. received the necessary consents
of registered holders of the 11 1/2% deferred coupon notes to amend the 11 1/2%
deferred coupon notes indenture so as to allow NTL Communications Corp. and its
subsidiaries to take certain actions that were previously prohibited under the
11 1/2% deferred coupon notes indenture, particularly regarding the financing of
NTL Communications Corp.'s and its subsidiaries' business and pending and future
acquisitions, including NTL
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Communications Corp.'s acquisition of Partners. In addition, the amendment
eliminated some, but not all, of certain differences between the covenants in
the 11 1/2% deferred coupon notes indenture and the existing 10 3/4% notes,
9 3/4% notes and 9 1/2% notes indentures. On October 14, 1998, NTL
Communications Corp. and The Chase Manhattan Bank, as trustee, executed a first
supplemental indenture to effect such amendment.
The 11 1/2% deferred coupon notes are senior unsecured obligations of NTL
Communications Corp. ranking equal in right of payment of principal and interest
with all of NTL Communications Corp.'s other existing and future senior
unsecured obligations and rank senior to all of NTL Communications Corp.'s other
existing and future subordinated debt, including, without limitation, the
convertible notes and the existing convertible notes.
THE 10% NOTES
In February 1997, NTL Communications Corp. issued $400 million aggregate
principal amount of its 10% series A senior notes due 2007, the "old 10% notes".
The old 10% notes were issued and sold in a transaction exempt from the
registration requirement of the Securities Act pursuant to Rule 144A under the
Securities Act. On June 27, 1997 NTL Communications Corp. issued $400 million
aggregate principal amount at maturity of its 10% series B senior notes due
2007, the "10% notes", in exchange for the old 10% notes pursuant to the
indenture relating thereto, the "10% notes indenture". The terms of the 10%
notes are identical in all material respects to the old 10% notes except for
certain transfer restrictions and registration rights applicable to the old 10%
notes. The old 10% notes tendered for exchange were cancelled on June 27, 1997
on consummation of the exchange offer made pursuant to our prospectus dated May
27, 1997, forming part of our registration statement on Form S-4 (File No. 333-
25577) filed with the Commission on April 21, 1997.
The 10% notes accrue interest in cash at the rate of 10% per annum on the
principal amount payable semiannually on February 15 and August 15 of each year,
to holders of record on the immediately preceding February 1, and August 1. The
10% notes mature on February 15, 2007. The 10% notes are redeemable, at NTL
Communications Corp.'s option at any time, in whole or in part, on or after
February 15, 2002 at redemption prices set forth in the 10% notes indenture,
plus any accrued unpaid interest to the date of redemption. The 10% notes may
also be redeemed at NTL Communications Corp.'s option in whole but not in part
in some circumstances where "Additional Amounts", as defined in the 10% notes
indenture, are payable under the 10% notes. In those circumstances, the 10%
notes to be repurchased must be repurchased at 100% of the principal amount
thereof plus accrued and unpaid interest. Upon a Change of Control Triggering
Event, as defined in the 10% notes indenture, holders of the 10% notes have the
right to require NTL Communications Corp. to repurchase all or any part of the
10% notes at a repurchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any. Subject to various conditions, NTL
Communications Corp. is obligated to offer to purchase the 10% notes and other
Qualified Senior Notes, as defined in the 10% notes indenture, with the Excess
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Proceeds of some Asset Sales at a redemption price of 100% of the principal
amount thereof plus accrued and unpaid interest, if any. The 10% notes indenture
contains restrictions with respect to, among other things, the payment of
dividends, the repurchase of stock and the making of some other Restricted
Payments, the incurrence of additional Indebtedness, the creation of some Liens,
some sales of assets, transactions with Subsidiaries and other Affiliates and
mergers and consolidations.
In October 1998, NTL Communications Corp. received the necessary consents
of registered holders of the 10% notes to amend the 10% notes indenture so as to
allow NTL Communications Corp. and its subsidiaries to take certain actions that
were previously prohibited under the 10% notes indenture, particularly regarding
the financing of NTL Communications Corp.'s and its subsidiaries' business and
pending and future acquisitions, including NTL Communications Corp.'s
acquisition of Partners. In addition, the amendment eliminated some, but not
all, differences between the covenants in the 10% notes indenture and the
existing 10 3/4% notes, the 9 3/4% notes and the 9 1/2% notes indentures. On
October 14, 1998, NTL Communications Corp. and The Chase Manhattan Bank, as
trustee, executed a first supplemental indenture to effect such amendment.
The 10% notes are senior unsecured obligations of NTL Communications Corp.
ranking equal in right of payment of principal and interest with all of its
other existing and future senior unsecured obligations and rank senior to all of
its other existing and future subordinated debt, including, without limitation,
the convertible notes and the existing convertible notes.
THE 10 3/4% NOTES
In March 1998, NTL Communications Corp. issued L300 million ($497,850,000)
aggregate principal amount of maturity of its 10 3/4% senior deferred coupon
notes due 2008, the "old 10 3/4% notes", at a discount to their aggregate
principal amount to generate gross proceeds to NTL Communications Corp. of
approximately L124,587,000. The old 10 3/4% notes were issued and sold in a
transaction exempt from the registration requirement of the Securities Act
pursuant to Rule 144A under the Securities Act. On December 24, 1998 NTL
Communications Corp. closed an exchange offer exchanging L300 million principal
amount at maturity of the 10 3/4% series B senior deferred coupon notes due
2008, the "new 10 3/4% notes" and, together with the old 10 3/4% notes, the
"10 3/4% notes", registered under the Securities Act for a like principal amount
at maturity of the old 10 3/4% notes. The terms of the new 10 3/4% notes are
identical in all material respects to the old 10 3/4% notes except for some
transfer restrictions and registration rights applicable to the old 10 3/4%
notes.
The 10 3/4% notes accrete at a rate of 10 3/4% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of L300
million ($497,850,000). Cash interest on the 10 3/4% notes does not accrue until
April 1, 2003. Thereafter, the 10 3/4% notes accrue interest in cash at the rate
of 10 3/4% per annum on the principal amount payable semiannually on April 1 and
October 1 of each year, commencing April 1, 2003, to holders of record on the
immediately preceding March 15, and September 15. The 10 3/4% notes mature on
April 1, 2008. The 10 3/4% notes are
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redeemable, at NTL Communications Corp.'s option at any time, in whole or in
part, on or after April 1, 2003 at the redemption prices set forth in the
10 3/4% notes indenture plus any accrued unpaid interest to the date of
redemption. The 10 3/4% notes may also be redeemed at NTL Communications Corp.'s
option in whole but not in some circumstances where "Additional Amounts", as
defined in the 10 3/4% notes indenture, are payable under the 10 3/4% notes. In
those circumstances, the 10 3/4% notes to be repurchased must be repurchased at
100% of accreted value or, as the case may be, principal amount thereof plus
accrued and unpaid interest. Upon a Change of Control Triggering Event, as
defined in the 10 3/4% notes indenture, holders of the 10 3/4% notes have the
right to require NTL Communications Corp. to repurchase all or any part of the
10 3/4% notes at a repurchase price equal to 101% of the accreted value or, as
the case may be, principal amount thereof plus accrued and unpaid interest, if
any. Subject to various conditions, NTL Communications Corp. is obligated to
offer to purchase the 10 3/4% notes and other Qualified Senior Notes, as defined
in the 10 3/4% notes indenture, with the Excess Proceeds of some Asset Sales at
a redemption price of 100% of the accreted value or, as the case may be,
principal amount thereof plus accrued and unpaid interest, if any. The 10 3/4%
notes indenture contains restrictions with respect to, among other things, the
payment of dividends, the repurchase of stock and the making of some other
Restricted Payments, the incurrence of additional Indebtedness, the creation of
some Liens, some sales of assets, transactions with Subsidiaries and other
Affiliates and mergers and consolidations.
The 10 3/4% notes are senior unsecured obligations of NTL ranking equal in
right of payment of principal and interest with all of NTL Communications
Corp.'s other existing and future senior unsecured obligations and rank senior
to all of NTL Communications Corp.'s other existing and future subordinated
debt, including, without limitation, the convertible notes and the existing
convertible notes.
THE 9 3/4% NOTES
In March 1998, NTL Communications Corp. issued $1.3 billion aggregate
principal amount at maturity of its 9 3/4% senior deferred coupon notes due
2008, the "old 9 3/4% notes", at a discount to their aggregate principal amount
to generate gross proceeds to NTL Communications Corp. of approximately
$802,412,000. The old 9 3/4% notes were issued and sold in a transaction exempt
from the registration requirement of the Securities Act pursuant to Rule 144A
under the Securities Act. On December 24, 1998 NTL Communications Corp. closed
an exchange offer exchanging $1,248,970,000 principal amount at maturity of the
9 3/4% series B senior deferred coupon notes due 2006, the "new 9 3/4% notes"
and, together with the old 9 3/4% notes, the "9 3/4% notes," registered under
the securities act for a like principal amount at maturity of the old 9 3/4%
notes. The terms of the new 9 3/4% notes are identical in all material respects
to the old 9 3/4% notes except for some transfer restrictions and registration
rights applicable to the old 9 3/4% notes.
The 9 3/4% notes accrete at a rate of 9 3/4% computed on a semiannual bond
equivalent basis to an aggregate principal amount at maturity of $1,300,000,000.
Cash interest on the 9 3/4% notes does not accrue until April 1, 2003.
Thereafter, the 9 3/4% notes accrue
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interest in cash at the rate of 9 3/4% per annum on the principal amount payable
semiannually on April 1 and October 1 of each year, commencing April 1, 2003, to
holders of record on the immediately preceding March 15, and September 15. The
9 3/4% notes mature on April 1, 2008. The 9 3/4% notes are redeemable, at NTL
Communications Corp.'s option at any time, in whole or in part, on or after
April 1, 2003 at the redemption prices set forth in the 9 3/4% notes indenture
plus any accrued unpaid interest to the date of redemption. The 9 3/4% notes may
also be redeemed at NTL Communications Corp.'s option in whole but not in part
in certain circumstances where "Additional Amounts", as defined in the 9 3/4%
notes indenture, are payable under the 9 3/4% notes. In those circumstances, the
9 3/4% notes to be repurchased must be repurchased at 100% of the accreted value
or, as the case may be, principal amount thereof plus accrued and unpaid
interest. Upon a Change of Control Triggering Event, as defined in the 9 3/4%
notes indenture, holders of the 9 3/4% notes have the right to require NTL
Communications Corp. to repurchase all or any part of the 9 3/4% notes at a
repurchase price equal to 101% of the accreted value or, as the case may be,
principal amount thereof plus accrued and unpaid interest, if any. Subject to
various conditions, NTL Communications Corp. is obligated to offer to purchase
the 9 3/4% notes and other Qualified Senior Notes, as defined in the 9 3/4%
notes indenture, with the Excess Proceeds of some Asset Sales at a redemption
price of 100% of the accreted value or, as the case may be, principal amount
thereof plus accrued and unpaid interest, if any. The 9 3/4% notes indenture
contains restrictions with respect to, among other things, the payment of
dividends, the repurchase of stock and the making of some other Restricted
Payments, the incurrence of additional Indebtedness, the creation of some Liens,
some sales of assets, transactions with Subsidiaries and other Affiliates and
mergers and consolidations.
The 9 3/4% notes are senior unsecured obligations of NTL Communications
Corp. ranking equal in right of payment of principal and interest with all of
its other existing and future senior unsecured obligations and rank senior to
all of its other existing and future subordinated debt, including, without
limitation, the convertible notes and the existing convertible notes.
THE 9 1/2% NOTES
In March 1998 NTL Communications Corp. issued L125 million ($207,437,500)
aggregate principal amount of its 9 1/2% senior notes due 2008, the "old 9 1/2%
notes". The old 9 1/2% notes were issued and sold in a transaction exempt from
the registration requirement of the Securities Act pursuant to Rule 144A under
the Securities Act. On December 24, 1998 NTL Communications Corp. closed an
exchange offer exchanging L123,686,000 principal amount of the 9 1/2% series B
senior notes due 2008, the "new 9 1/2% notes" and, together with the old 9 1/2%
notes, the "9 1/2% notes", registered under the Securities Act for a like
principal amount of the old 9 1/2% notes. The terms of the new 9 1/2% notes are
identical in all material respects to the old 9 1/2% notes except for some
transfer restrictions and registration rights applicable to the old 9 1/2%
notes.
The 9 1/2% notes accrue interest in cash at the rate of 9 1/2% per annum on
the principal amount payable semiannually on April 1, and October 1 of each
year, to holders of record on the immediately preceding March 15 and September
15. The 9 1/2%
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notes mature on April 1, 2008. The 9 1/2% notes are redeemable at NTL
Communications Corp.'s option at any time, in whole or in part, on or after
April 1, 2003 at redemption prices set forth in the 9 1/2% notes indenture, plus
any accrued unpaid interest to the date of redemption. The 9 1/2% notes may also
be redeemed at NTL Communications Corp.'s option in whole but not in part in
some circumstances where "Additional Amounts", as defined in the 9 1/2% notes
indenture, are payable under the 9 1/2% notes. In those circumstances, the
9 1/2% notes to be repurchased must be repurchased at 100% of the principal
amount thereof plus accrued and unpaid interest. Upon a Change of Control
Triggering Event, as defined in the 9 1/2% notes indenture, holders of the
9 1/2% notes have the right to require NTL Communications Corp. to repurchase
all or any part of the 10% notes at a repurchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any. Subject to
various conditions, NTL Communications Corp. is obligated to offer to purchase
the 9 1/2% notes and other Qualified Senior Notes, as defined in the 9 1/2%
notes indenture, with the Excess Proceeds of certain Asset Sales at a redemption
price of 100% of the principal amount thereof plus accrued and unpaid interest,
if any. The 9 1/2% notes indenture contains restrictions with respect to, among
other things, the payment of dividends, the repurchase of stock and the making
of some other Restricted Payments, the incurrence of additional Indebtedness,
the creation of some Liens, some sales of assets, transactions with Subsidiaries
and other Affiliates and mergers and consolidations.
The 9 1/2% notes are senior unsecured obligations of NTL Communications
Corp. ranking equal in right of payment of principal and interest with all of
its other existing and future senior unsecured obligations and rank senior to
all of its other existing and future subordinated debt, including, without
limitation, the convertible notes and the existing convertible notes.
THE 11 1/2% NOTES
On November 2, 1998, NTL Communications Corp. issued $625 million aggregate
principal amount of its 11 1/2% senior notes due 2008, the "11 1/2% old notes".
The 11 1/2% old notes were offered and sold in transactions exempt from the
registration requirement of the Securities Act pursuant to Rule 144A under the
Securities Act and Regulation S under the Securities Act. On May 6, 1999, NTL
Communications Corp. commenced an exchange offer to exchange all outstanding
11 1/2% old notes for a like principal amount of 11 1/2% series B senior notes
due 2008, the "11 1/2% new notes" and, together with the 11 1/2% old notes, the
"11 1/2% notes." The terms of the 11 1/2% new notes are identical in all
material respects to the 11 1/2% old notes except for certain transfer
restrictions and registration rights applicable to the 11 1/2% old notes.
The 11 1/2% notes accrue interest in cash at the rate of 11 1/2% per annum
on the principal amount payable semiannually on April 1, and October 1 of each
year, to holders of record on the immediately preceding March 15 and September
15. The 11 1/2% notes mature on October 1, 2008. The 11 1/2% notes are
redeemable at NTL Communications Corp.'s option at any time, in whole or in
part, on or after October 1, 2003 at redemption prices set forth in the 11 1/2%
notes indenture, plus any accrued unpaid interest to the date of redemption. The
11 1/2% notes may also be redeemed at
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NTL Communications Corp.'s option in whole but not in part in some circumstances
where "Additional Amounts", as defined in the 11 1/2% notes indenture, are
payable under the 11 1/2% notes. In those circumstances, the 11 1/2% notes to be
repurchased must be repurchased at 100% of the principal amount thereof plus
accrued and unpaid interest. Upon a Change of Control Triggering Event, as
defined in the 11 1/2% notes indenture, holders of the 11 1/2% notes have the
right to require NTL Communications Corp. to repurchase all or any part of the
11 1/2% notes at a repurchase price equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any. Subject to various conditions,
NTL Communications Corp. is obligated to offer to purchase the 11 1/2% notes and
other Qualified Senior Notes, as defined in the 11 1/2% notes indenture, with
the Excess Proceeds of some Asset Sales at a redemption price of 100% of the
principal amount thereof plus accrued and unpaid interest, if any. The 11 1/2%
notes indenture contains restrictions with respect to, among other things, the
payment of dividends, the repurchase of stock and the making of some other
Restricted Payments, the incurrence of additional Indebtedness, the creation of
some Liens, some sales of assets, transactions with Subsidiaries and other
Affiliates and mergers and consolidations.
The 11 1/2% notes are senior unsecured obligations of NTL Communications
Corp. ranking equal in right of payment of principal and interest with all its
other existing and future senior unsecured obligations and rank senior to all of
its other existing and future subordinated debt, including, without limitation,
the convertible notes and the existing convertible notes.
THE 12 3/8% NOTES
On November 6, 1998, NTL Communications Corp. issued $450 million aggregate
principal amount at maturity of its 12 3/8% senior deferred coupon notes due
2008, the "12 3/8% old notes". The 12 3/8% old notes were offered and sold in
transactions exempt from the registration requirements of the Securities Act
pursuant to Rule 144A under 144A under the Securities Act and Regulation S under
the Securities Act. On May 6, 1999, NTL Communications Corp. commenced an
exchange offer to exchange all outstanding 12 3/8% old notes for a like
principal amount of 12 3/8% series B senior deferred coupon notes due 2008, the
"12 3/8% new notes" and, together with the 12 3/8% old notes, the "12 3/8%
notes." The terms of the 12 3/8% new notes are identical in all material
respects to the 12 3/8% old notes except for certain transfer restrictions and
registration rights applicable to the 12 3/8% old notes.
The 12 3/8% notes accrete at a rate of 12 3/8% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of $450
million. Cash interest on the 12 3/8% notes does not accrue until April 1, 2003.
Thereafter, the 12 3/8% notes accrue interest in cash at the rate of 12 3/8% per
annum on the principal amount payable semiannually on April 1 and October 1 of
each year, commencing October 1, 2003, to holders of record on the immediately
preceding March 15, and September 15. The 12 3/8% notes mature on October 1,
2008. The 12 3/8% notes are redeemable, at NTL Communications Corp.'s option at
any time, in whole or in part, on or after October 1, 2003 at the redemption
prices set forth in the 12 3/8% notes indenture plus any accrued unpaid interest
to the date of redemption. The 12 3/8% notes may also be redeemed at
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NTL Communications Corp.'s option in whole but not in part in some circumstances
where "Additional Amounts", as defined in the 12 3/4% notes indenture, are
payable under the 12 3/8% notes. In those circumstances, the 12 3/8% notes to be
repurchased must be repurchased at 100% of accreted value or, as the case may
be, principal amount thereof plus accrued and unpaid interest. Upon a Change of
Control Triggering Event, as defined in the 12 3/8% notes indenture, holders of
the 12 3/8% notes have the right to require NTL Communications Corp. to
repurchase all or any part of the 12 3/8% notes at a repurchase price equal to
101% of the accreted value or, as the case may be, principal amount thereof plus
accrued and unpaid interest, if any. Subject to various conditions, NTL
Communications Corp. is obligated to offer to purchase the 12 3/8% notes and
other Qualified Senior Notes, as defined in the 12 3/8% notes indenture, with
the Excess Proceeds of some Asset Sales at a redemption price of 100% of the
accreted value or, as the case may be, principal amount thereof plus accrued and
unpaid interest, if any. The 12 3/8% notes indenture contains restrictions with
respect to, among other things, the payment of dividends, the repurchase of
stock and the making of some other Restricted Payments, the incurrence of
additional Indebtedness, the creation of some Liens, some sales of assets,
transactions with Subsidiaries and other Affiliates and mergers and
consolidations.
The 12 3/8% notes are senior unsecured obligations of NTL Communications
Corp. ranking equal in right of payment of principal and interest with all of
its other existing and future senior unsecured obligations and rank senior to
all of its other existing and future subordinated debt, including, without
limitation, the convertible notes and the existing convertible notes.
THE 9 3/4% NOTES
On April 7, 1999, NTL Communications Corp. issued L330 million
($547,635,000) aggregate principal amount at maturity of its 9 3/4% senior
deferred coupon notes due 2009, the "1999 9 3/4% notes". The 1999 9 3/4% notes
were offered and sold in transactions exempt from the registration requirements
of the Securities Act pursuant to Rule 144A under 144A under the Securities Act
and Regulation S under the Securities Act.
The 1999 9 3/4% notes accrete at a rate of 9 3/4% computed on a semiannual
bond equivalent basis to an aggregate principal amount at maturity of L330
million. Cash interest on the 1999 9 3/4% notes does not accrue until April 15,
2004. Thereafter, the 1999 9 3/4% notes accrue interest in cash at the rate of
9 3/4% per annum on the principal amount payable semiannually on April 15 and
October 15 of each year, commencing October 15, 2004, to holders of record on
the immediately preceding April 1 and October 1. The 1999 9 3/4% notes mature on
April 15, 2009. The 9 3/4% notes are redeemable, at NTL Communications Corp.'s
option at any time, in whole or in part, on or after April 15, 2004 at the
redemption prices set forth in the 1999 9 3/4% notes indenture plus any accrued
unpaid interest to the date of redemption. The 1999 9 3/4% notes may also be
redeemed at NTL Communications Corp.'s option in whole but not in part in some
circumstances where "Additional Amounts", as defined in the 1999 9 3/4% notes
indenture, are payable under the 1999 9 3/4% notes. In those circumstances, the
1999 9 3/4% notes to be repurchased must be repurchased at 100% of accreted
value or, as
67
<PAGE> 71
the case may be, principal amount thereof plus accrued and unpaid interest. Upon
a Change of Control Triggering Event, as defined in the 1999 9 3/4% notes
indenture, holders of the 1999 9 3/4% notes have the right to require NTL
Communications Corp. to repurchase all or any part of the 1999 9 3/4% notes at a
repurchase price equal to 101% of the accreted value or, as the case may be,
principal amount thereof plus accrued and unpaid interest, if any. Subject to
various conditions, NTL Communications Corp. is obligated to offer to purchase
the 1999 9 3/4% notes and Other Qualified Notes, as defined in the 1999 9 3/4%
notes indenture, with the Excess Proceeds of some Asset Sales at a redemption
price of 100% of the accreted value or, as the case may be, principal amount
thereof plus accrued and unpaid interest, if any. The 1999 9 3/4% notes
indenture contains restrictions with respect to, among other things, the payment
of dividends, the repurchase of stock and the making of some other Restricted
Payments, the incurrence of additional Indebtedness, the creation of some Liens,
some sales of assets, transactions with Subsidiaries and other Affiliates and
mergers and consolidations.
The 1999 9 3/4% notes are senior unsecured obligations of NTL
Communications Corp. ranking equal in right of payment of principal and interest
with all of its other existing and future senior unsecured obligations and rank
senior to all of its other existing and future subordinated debt, including,
without limitation, the convertible notes and the existing convertible notes.
PARTNER'S 11.20% DISCOUNT DEBENTURES DUE 2007
On November 15, 1995, Partners issued $517,321,000 aggregate principal
amount at maturity of its 11.20% senior discount debentures due 2007, the
"Partners 11.20% debentures", at a discount to their aggregate principal amount
to generate gross proceeds to Partners of approximately $299,999,621. The
Partners 11.20% debentures were registered with the Commission on Partners'
registration statement on Form S-1 (File No. 33-96932).
The Partners 11.20% debentures accrete at the rate of 11.20% per annum,
compounded semiannually to an aggregate principal amount at maturity of
$517,321,000. Cash interest on the Partners 11.20% debentures does not accrue
until November 15, 2000. Thereafter, the Partners 11.20% debentures accrue
interest at the rate of 11.20% per annum on the principal amount payable
semiannually on May 15 and November 15 of each year, commencing May 15, 2001.
The Partners 11.20% debentures mature on November 15, 2007. The Partners 11.20%
debentures are redeemable, at the option of Partners at any time, in whole or in
part, on or after November 15, 2000 at the redemption prices set forth in the
Partners 11.20% debentures indenture plus accrued and unpaid interest to the
date of redemption. The Partners 11.20% debentures may also be redeemed by
Partners in whole but not in part in certain circumstances where "Additional
Amounts", as defined in the Partners 11.20% debentures indenture, are payable on
the Partners 11.20% debentures after November 15, 2001. In such circumstances,
the Partners 11.20% debentures may be redeemed at 100% of their principal amount
plus accrued and unpaid interest to the date of redemption. Upon a Change of
Control Triggering Event, as defined in the Partners 11.20% debentures
indenture, holders of the Partners 11.20% debentures have the right to require
NTL
68
<PAGE> 72
Communications Corp. to repurchase all or any part of the Partners 11.20%
debentures at a repurchase price equal to 101% of the accreted value or, as the
case may be, principal amount thereof plus accrued and unpaid interest, if any.
Subject to various conditions, NTL Communications Corp. is obligated to offer to
purchase the Partners 11.20% debentures with the Excess Proceeds of some Asset
Sales at a redemption price of 100% of the accreted value or, as the case may
be, principal amount thereof plus accrued and unpaid interest, if any. The
Partners 11.20% debentures indenture contains restrictions with respect to,
among other things, the payment of dividends, the repurchase of stock and the
making of some other Restricted Payments, the incurrence of additional
Indebtedness, the creation of some Liens, some sales of assets, transactions
with Affiliates and mergers and consolidations.
The Partners 11.20% debentures are senior unsecured obligations of Partners
ranking equal in right of payment of principal and interest with all other
existing and future senior unsecured obligations of Partners.
THE DIAMOND 10% NOTES
In February 1998 Diamond issued L135,000,000 aggregate principal amount at
maturity of its 10% senior notes due February 1, 2008 (the "Diamond 10% notes").
Interest on the Diamond 10% Notes is payable semi-annually in arrears on August
1 and February 1 of each year at a rate of 10% per annum.
The Diamond 10% notes will be redeemable, in whole or in part, at the
option of Diamond at any time on or after February 1, 2003. The 10% notes are
also redeemable in whole, but not in part, at the option of Diamond at any time
at 100% of the principal amount thereof, plus accrued and unpaid interest and
any other amounts payable thereon to the date of redemption in the event of
certain tax law changes requiring the payment of additional amounts. Upon the
occurrence of a Change of Control, as defined in the indenture governing the
Diamond 10% notes, Diamond is required to offer to repurchase all outstanding
10% Notes at 101% of their principal amount plus accrued and unpaid interest and
any other amounts payable thereon to the date of repurchase.
THE DIAMOND 9 1/8% NOTES
In February 1998, Diamond issued $110,000,000 aggregate principal amount at
maturity of its 9 1/8% senior notes due February 1, 2008 (the "Diamond 9 1/8%
notes"). Interest on the Diamond 9 1/8% Notes is payable semi-annually in
arrears on August 1 and February 1 of each year, commencing August 1, 1998 at a
rate of 9 1/8% per annum.
The Diamond 9 1/8% notes will be redeemable, in whole or in part, at the
option of Diamond at any time on or after February 1, 2003. The Diamond 9 1/8%
notes are also redeemable in whole, but not in part at the option of Diamond at
any time at 100% of the principal amount thereof, plus accrued and unpaid
interest and any other amounts payable thereon to the date of redemption in the
event of certain tax law changes requiring the payment of additional amounts.
Upon the occurrence of a Change of Control, as defined in the indenture
governing the 9 1/8% notes, Diamond is required to offer to repurchase all
outstanding 9 1/8% notes at 101% of their principal amount plus
69
<PAGE> 73
accrued and unpaid interest and any other amounts payable thereon to the date of
repurchase.
THE DIAMOND 13 1/4% NOTES
In September 1994, Diamond issued its 13 1/4% senior discount notes due
September 30, 2004 (the "Diamond 13 1/4% notes"). Interest on the Diamond
13 1/4% notes will be payable on March 31 and September 30 of each year,
commencing March 31, 2000, at a rate of 13 1/4% per annum.
The Diamond 13 1/4% Notes are redeemable, in whole or in part, at the
option of Diamond at any time on or after September 30, 1999. The Diamond
13 1/4% Notes are also redeemable in whole, but not in part, at the option of
Diamond at any time at 100% of the principal amount thereof plus accrued
interest to the date of redemption (or, prior to September 30, 1999, at 100% of
Accreted Value, as defined in the indenture governing the Diamond 13 1/4% notes)
in the event of certain tax law changes requiring the payment of additional
amounts. Diamond is required to offer to repurchase all outstanding Diamond
13 1/4% notes at 101% of the principal amount thereof plus accrued interest to
the date of repurchase (or, prior to September 30, 1999, at 101% of Accreted
Value on the date of repurchase) after the occurrence of a Change of Control, as
defined in the indenture governing the Diamond 13 1/4% notes. In addition, upon
the occurrence of an Asset Disposition, as defined in the indenture governing
the Diamond 13 1/4% notes, Diamond may be obligated to make an offer to purchase
all or a portion of the outstanding Diamond 13 1/4% notes at 100% of the
principal amount thereof plus accrued interest to the date of repurchase (or,
prior to December 15, 2000, at 100% of Accreted Value on the date of
repurchase).
THE DIAMOND 11 3/4% NOTES
In December 1995, Diamond issued its 11 3/4% senior discount notes due
December 15, 2005 (the 11 3/4% Diamond notes). Interest on the Diamond 11 3/4%
notes will be payable on June 15 and December 15 of each year, commencing June
15, 2001, at a rate of 11 3/4% per annum.
The Diamond 11 3/4% notes are redeemable, in whole or in part, at the
option of Diamond at any time on or after December 15, 2000. The Diamond 11 3/4%
notes are also redeemable in whole, but not in part, at the option of Diamond at
any time at 100% of the principal amount thereof plus accrued interest to the
date of redemption (or, prior to December 15, 2000, at 100% of the Accreted
Value thereof, as defined in the indenture governing the Diamond 11 3/4% notes)
in the event of certain tax law changes requiring the payment of additional
amounts. Diamond is required to offer to repurchase all outstanding Diamond
11 3/4% notes at 101% of principal amount thereof plus accrued interest to the
date of repurchase (or, prior to December 15, 2000, at 101% of Accreted Value on
the date of repurchase) after the occurrence of a Change of Control, as defined
in the indenture governing the Diamond 11 3/4% Notes. In addition, upon the
occurrence of an Asset Disposition, as defined in the indenture governing the
Diamond 11 3/4% notes, NTL Communications Corp. may be obligated to make an
offer to purchase all or a portion of the outstanding Diamond 11 3/4% notes at
100% of the principal amount thereof
70
<PAGE> 74
plus accrued interest to the date of repurchase (or, prior to December 15, 2000,
at 100% of Accreted Value on the date of repurchase).
THE DIAMOND 10 3/4% NOTES
In February 1997, Diamond issued its 10 3/4% Senior Discount Notes due
February 15, 2007 (the Diamond 10 3/4% notes). Interest on the Diamond 10 3/4%
notes will be payable on February 15 and August 15 of each year, commencing
August 15, 2002, at a rate of 10 3/4% per annum.
The Diamond 10 3/4% notes are redeemable, in whole or in part, at the
option of Diamond at any time on or after February 15, 2002. The Diamond 10 3/4%
notes are also redeemable in whole, but not in part, at the option of Diamond at
any time at 100% of the principal amount thereof plus accrued interest to the
date of redemption (or, prior to February 15, 2002, at 100% of Accreted Value,
as defined in the indenture governing the Diamond 10 3/4% notes) in the event of
certain tax law changes requiring the payment of additional amounts. Diamond is
required to offer to repurchase all outstanding Diamond 10 3/4% notes at 101% of
the principal amount thereof plus accrued interest to the date of repurchase
(or, prior to February 15, 2002, at 101% of Accreted Value on the date of
repurchase) after the occurrence of a Change of Control, as defined in the
indenture governing the Diamond 10 3/4% Notes. In addition, upon the occurrence
of an Asset Disposition, as defined in the indenture governing the Diamond
10 3/4% notes, Diamond may be obligated to make an offer to purchase all or a
portion of the outstanding Diamond 10 3/4% notes at 100% of the principal amount
thereof plus accrued interest to the date of repurchase (or, prior to February
15, 2002, at 100% of Accreted Value on the date of repurchase).
EXISTING CONVERTIBLE NOTES
In June 1996, NTL Communications Corp. issued and sold an aggregate
principal amount of $275 million of its 7% convertible subordinated notes due
2008, the "existing convertible notes", in transactions exempt from, or not
subject to, the registration requirements of the Securities Act. Cash interest
on the existing convertible notes is payable semiannually on June 15 and
December 15 of each year, commencing December 16, 1996. The existing convertible
notes mature on June 15, 2008. The existing convertible notes are convertible at
the option of the holder thereof at any time prior to maturity, unless
previously redeemed, into shares of our common stock, at a conversion price of
$37.875 per share subject to further adjustment in some events. The existing
convertible notes are redeemable, in whole or in part, at NTL Communications
Corp.'s option, at any time on or after June 5, 1999, at the redemption prices
set forth in the indenture pursuant to which the existing convertible notes were
issued, the "existing convertible notes indenture". Upon a Change of Control
Triggering Event, as defined in the existing convertible notes indenture,
holders of the existing convertible notes have the right to require NTL
Communications Corp. to purchase all or any part of the existing convertible
notes at a purchase price equal to 101% of the principal amount thereof and any
accrued and unpaid interest to the date of purchase. The existing convertible
notes indenture contains restrictions with respect to, among other things, some
Asset Sales, payment of Additional Amounts and mergers and consolidations.
71
<PAGE> 75
The existing convertible notes are unsecured obligations of NTL
Communications Corp., subordinated in right of payment to all of its existing
and future senior debt, as defined in the existing convertible notes indenture,
including, without limitation, the senior notes.
On September 13, 1996, the Commission declared effective NTL Communications
Corp.'s shelf registration statement relating to the resale of the existing
convertible notes and the common stock issuable upon conversion thereof by the
holders thereof.
On May 26, 1999, NTL Communications Corp. announced that it was calling for
redemption of all the existing convertible notes. The redemption date is June
25, 1999 and the redemption price is 104.9% of the principal amount, plus
accrued and unpaid interest through the date of redemption.
72
<PAGE> 76
UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of selected anticipated U.S. federal income
tax consequences of the purchase, ownership and disposition of the convertible
notes as of the date hereof. It deals only with convertible notes held as
capital assets by initial holders, and does not deal with special situations
including those that may apply to a particular holder such as exempt
organizations, dealers in securities, financial institutions, insurance
companies, persons who are not U.S. holders, and holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to straddle or
"hedging transactions." The federal income tax considerations set forth below
are based upon the Internal Revenue Code of 1986, as amended and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified (possibly retroactively) so as
to result in federal income tax consequences different from those discussed
below. As used herein, the term "U.S. holder" means a beneficial owner of a
convertible note that is for United States federal income tax purposes
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision
thereof,
(3) an estate or trust, described in Section 7701(a)(30) of the
Internal Revenue Code, or
(4) a person whose worldwide income or gain is otherwise subject to
United States federal income taxation on a net income basis.
Prospective investors are urged to consult their tax advisors regarding the
particular tax consequences of purchasing, holding and disposing of the
convertible notes or our common stock, including the tax consequences arising
under any state, local or foreign laws.
Payments of interest on convertible notes generally will be taxable to U.S.
Holders as ordinary interest income at the time such payments are accrued or
received (in accordance with the U.S. holder's method of accounting for federal
income tax purposes).
A U.S. holder will not recognize gain or loss upon conversion of the
convertible notes solely into our common stock (except with respect to cash
received in lieu of fractional shares, or any amounts attributable to accrued
and unpaid interest on the convertible notes, which will be treated as interest
for federal income tax purposes). The U.S. holder's basis in the common stock
received on conversion will be the same as such holder's adjusted tax basis in
the convertible notes at the time of conversion, and the holding period for the
common stock received on conversion will include the holding period of the
convertible notes that were converted.
73
<PAGE> 77
A U.S. holder will recognize gain or loss upon the sale, redemption or
other taxable disposition of the convertible notes in an amount equal to the
difference between such holder's adjusted tax basis in the convertible note and
the amount received therefor (other than amounts attributable to accrued and
unpaid interest on the convertible notes, which will be treated as interest for
federal income tax purposes). Such gain or loss generally will be long-term
capital gain or loss if the convertible notes were held for more than one year.
The conversion price of the convertible notes is subject to adjustment
under certain circumstances. Under Section 305 of the Internal Revenue Code and
the Treasury Regulations issued thereunder, adjustments or the failure to make
such adjustments to the conversion price of the convertible notes may result in
a taxable constructive distribution to U.S. holders of convertible notes,
resulting in ordinary income (subject to a possible dividends received deduction
in the case of corporate holders) to the extent of our current and accumulated
earnings and profits if, and to the extent that, certain adjustments in the
conversion price that may occur in limited circumstances (particularly an
adjustment to reflect a taxable dividend to holders of our common stock)
increase the proportionate interest of a U.S. holder of a convertible note
convertible into fully diluted common stock, whether or not the holders ever
convert the convertible notes. Generally, a U.S. holder's tax basis in a
convertible note will be increased by the amount of any such constructive
dividend.
We intend to take the position that the likelihood of paying Liquidated
Damages described under "Description of convertible notes -- registration
rights" is remote and that Liquidated Damages, if paid, would be taxable to a
U.S. holder of convertible notes as ordinary interest income in accordance with
such holder's method of accounting for income tax purposes. The Internal Revenue
Service may take a different position, however, which could affect the timing to
the U.S. holder's income with respect to Liquidated Damages.
The preceding discussion of certain United States federal income tax
consequences is for general information only and is not tax advice. Accordingly,
each investor should consult its own tax adviser as to particular tax
consequences to it of purchasing, holding, and disposing of the convertible
notes and our common stock, including the applicability and effect of any state,
local or foreign tax laws, and of any proposed changes in applicable laws.
74
<PAGE> 78
SELLING SECURITYHOLDERS
The following table sets forth, as of June 2, 1999, the respective
principal amount of convertible notes beneficially owned and offered hereby by
each selling securityholder, the common stock owned by each selling
securityholder and the common stock issuable upon conversion of such convertible
notes, which may be sold from time to time by such selling securityholder
pursuant to this prospectus. Such information has been obtained from the selling
securityholders.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE
OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1)
- ------------------------ ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Aim High Yield Fund $ 5,000,000 * none 81,632
Aim High Yield II Fund 30,000 * none 489,795
Albert Luce, Jr. 140,000 * 40,000 2,285
Alexandra Global Investment Fund I
LTD 2,000,000 * none 32,653
Allegheny Teledyne Inc. Pension Plan 700,000 * none 11,428
Alpine Associates 4,750,000 * none 77,550
Alpine Partners, L.P. 500,000 * none 8,163
Alsam Foundation 150,000 * 5613 2,448
Alscott Investments, LLC 2,200,000 * none 35,918
American Stores 900,000 * 16,954 14,693
Argent Convertible Arbitrage Fund
Ltd. 2,500,000 * none 40,816
Argent Classic Convertible Arbitrage
Fund L.P. 5,650,000 * none 92,244
Argent Classic Convertible Arbitrage
Fund (Bermuda) L.P. 15,350,000 2.55 none 250,611
Aristeia International Ltd. 1,749,000 * none 28,555
Aristeia Trading, LLC 1,251,000 * none 20,424
Arkansas Teachers Retirement 1,757,000 * none 28,685
Aspen Partner's 300,000 * 3,300 4,897
Associated Jewish Charities of
Baltimore 250,000 * 10,490 4,081
Bankers Trust Trustee For Chrysler
Corp. Emp #1 Pension Plan dated
4/1/89 1,630,000 * none 26,612
Bankroft Convertible Fund, Inc. 1,750,000 * none 28,571
Baptist Health of South Florida 160,000 * none 2,612
Bear Stearns & co Inc. 1,410,000 * none 23,020
Bill W. Mintz TTEE Revocable Trust 200,000 * none 3,265
Blue Cross Blue Shield of Michigan
Retirement Income 1,110,000 * 43,229 18,122
BNP Arbitrage SNC 2,500,000 * 16,300 40,816
Boston Museum of Fine Arts 113,000 * none 1,844
Brown Family Trust A 100,000 * 3661 1,632
Brown University 1,500,000 * 62,836 24,489
BTC Partners LLP 130,000 * 40,000 2,122
The California Endowment 1,250,000 * 33,000 20,408
California Healthcare Foundation 600,000 * 22783 9,795
Caregroup Pension Plan 45,000 * 12,000 734
</TABLE>
75
<PAGE> 79
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE
OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1)
- ------------------------ ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Catholic Healthcare West Funded
Depreciation 335,000 * 30,800 5,469
Catholic Healthcare West Retirement 335,000 * 9600 5,469
Catholic Healthcare West Self
Insurance 125,000 * 3300 2,040
Catholic Healthcare West Workers
Compensation 90,000 * 2400 1,469
CBBB Cotenancy 220,000 * 7939 3,591
Chase Manhattan NA Trustee For IBM
Retirement Plan dated 12/18/45 2,772,000 * none 45,257
Cheyne Walk Trust 725,000 * 18,406 11,836
Christine Russell Revocable Trust 500,000 * 12,562 8,163
CIBC Wood Grundy International
Equity Arbitrage Corp. 3,500,000 * none 57,142
Citibank, et al Employees Retirement
Plan 2,070,000 * 507,000 33,795
Clorox Co. Employee Benefits 400,000 * 16,550 6,530
Colgate-Palmolive Company Retirement
Trust 800,000 * none 1,306
Conseco Direct Life 700,000 * none 11,428
Corlon Associates I 400,000 * 10,923 6,530
Corlon Co. Foundation 110,000 * 2,879 1,795
Cowles Investment Partnership 180,000 * 6,726 2,938
CPR (USA) Inc. 275,000 * none 4,489
Deeprock & Co. 1,000,000 * none 16,326
Discovery Group of Funds 190,000 * 6,837 3,102
Donald G. Linber & Joyce Linber, jnt 27,000 * 986 440
Donaldson, Lufkin & Jenrette
Securities Corp. 1,700,000 * 1,450,000 27,755
Duckbill & Co. 1,000,000 * none 16,326
Duke University Employees Retirement
Plan 160,000 * 45,000 2,612
Duke University Long Term Pool 780,000 * 210,000 12,734
East Bay Community Foundation 230,000 * 3,755
East Oakland Youth Development Fund 160,000 * 5,069 2,612
Elsworth Convertible Growth and
Income Fund, Inc. 1,250,000 * none 20,408
Engineers Joint Pension Fund 303,000 * none 4,946
Erin Partners Two 65,000 * 2,329 1,061
Fidelity Fixed-Income Trust:
Fidelity High Income Fund 17,020,000 2.84 none 277,877
Fidelity Summer Street Trust:
Fidelity Capital & Income Fund 3,000,000 * none 48,979
Fidelity Management Trust Company on
behalf of accounts managed by it 2,980,000 * none 48,652
Forest Performance Fund LP 165,000 * none 2,693
Forest Alternative Strategies Fund
II LP Series A-5M 240,000 * none 3,918
</TABLE>
76
<PAGE> 80
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE
OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1)
- ------------------------ ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Forest Alternative Strategies Fund
II LP Series A-5T 780,000 * none 12,734
Forest Fulcrum Fund LP 7,700,00 * none 125,714
Forest Global Convertible Fund
Series A-5 9,700,000 1.6166 none 158,367
Forest Global Convertible Fund
Series B-1 65,000 * none 1,061
Franklin & Marshall College 127,000 * none 2,073
General Electric Pension Trust 1,000,000 * 875,000 16,326
General Motors Welfare Benefit Trust 1,000,000 * none 16,326
Geo-Volor Ltd. 500,000 * 22,451 8,163
The Georgia International Fund Ltd. 200,000 * 63,637 3,265
Georgia Partners 20,000,000 3.33 543,238 326,530
Glaxo Wellcome Benefits Plan 450,000 * 252,000 7,346
Glaxo Wellcome Cash Balance Plan 450,000 * 20,800 7,346
Golden Rule Insurance Company 1,600,000 * none 26,122
Goldman, Sachs & Co. 1,000,000 * none 16,326
GranGem 23 41 LLC 250,000 * none 4,081
Greyhound Lines 50,000 * none 816
Greyhound Lines Inc. Amalgamated
CNCL Retirement & Disability TR
Imperial TR c/o Forest Investment
Management LLC 70,000 * none 1,142
Guide Dogs for the Blind 500,000 * 11,595 8,163
HBK Cayman L.P. 4,944,000 * none 80,718
HBK Offshore Fund Ltd. 9,356,000 1.55933 4,875,000 152,750
Henry J. Kaiser Family Foundation 550,000 * 13,236 8,979
Hign Bridge Capital Corporation 10,000,000 1.66 none 163,265
Horowitz Limited Partnership I 150,000 * 5409 2,448
H&S Partners I, L.P. 20,000,000 3.33 none 326,530
The Income Fund of America, Inc. 50,000,000 8.3333 none 816,325
Indiana University Foundation 650,000 * 309,000 10,612
Jackson Investment Fund Ltd. 975,000 * none 15,918
James Irvine Foundation 900,000 * 35,448 14,693
JanusCapital Corporation 19,378,000 3.229666 none 316,374
Janus Growth and Income 2,340,000 * none 38,204
Janus Balance Fund 8,550,000 1.425 none 139,591
Janus Aspen Balanced 3,249,000 * none 53,044
Janus High Yield 1,000,000 * none 16,326
Janus Aspen High Yield 35,000 * none 571
Janus Equity Income Fund 3,874,000 * none 63,248
Janus Aspen Growth and Income 10,000 * none 163
JWF Balanced Fund 285,000 * none 4,653
JWF High Yield Bond Fund 35,000 * none 571
Janus Capital Corporation IDEX
Balanced Fund 387,000 * none 6,318
</TABLE>
77
<PAGE> 81
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE
OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1)
- ------------------------ ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Jeffrey Rymer 35,000 * 1,090 571
Jicarilla Apache Tribe 2,100,000 * 16,957 34,285
JMB Children's Holding Co. 600,000 * 165,000 9,795
JMG Convertible Investments L.P. 6,000,000 1 none 97,959
John Robert 110,000 * 4,258 1,795
J.P.Morgan & Co. Inc. 12,000,000 2 37,466 195,918
Julius Baer Securities 700,000 * none 11,428
Lazard Freres & CIE Paris 700,000 * none 11,428
LDG Limited 250,000 * none 4,081
Libertyview Plus Fund 225,000 * none 3,673
Loomis Sayles & Company, L.P. for
Benefit of New England High Income
Bond Fund 1,000,000 * none 16,326
LLT Limited 880,000 * none 14,367
Mainstay Convertible Fund 4,000,000 * none 65,306
McMahon Securities Company, L.P. 910,000 * none 14,857
Melinda Marfield Trust 35,000 * 1,254 571
Metropolitan Museum of Art 750,000 * 215,000 12,244
MGBA Investments 100,000 * 4,102 1,632
Michigan State University 400,000 * 12,233 6,530
Milton L. Schwartz Revocable Family
Trust 110,000 * 4,209 1,795
Monumental Life Insurance Company --
(teamsters-camden non-enhanced) 7,000,000 1.17 none 114,285
Morgan Stanley Dean Witter 5,500,000 * none 89,795
Morgan Stanley Dean Witter
Convertible Securities Trust 2,500,000 * none 40,816
Mount Sinai School of Medicine 800,000 * none 13,061
National Bank of Canada 900,000 * none 14,693
NationsBanc Montgomery Securities LLC 1,500,000 * none 24,489
N.B. Giustina Trust 150,000 * 6,762 2,448
New York Life Insurance Company 10,750,000 1.79 none 175,509
Nicholas Applegate Convertible Fund 3,010,000 * none 49,142
NMS Services Inc. .................. 10,000,000 1.67 none 163,265
Oak Foundation USA, Inc. 200,000 * 297,800 3,265
Oppenheimer Champion Income Fund 11,700,000 1.95 none 191,020
Oppenheimer Strategic Income Fund 10,250,000 1.71 none 167,346
Oppenheimer High Yield Fund 2,000,000 * none 32,653
Oppenheimer Strategic Bond Fund 400,000 * none 6,530
Oppenheimer High Income Fund 3,550,000 * none 57,959
Oppenheimer Convertible Securities
Fund 4,000,000 * none 65,306
OZ Master Fund, Ltd. 3,000,000 * none 48,979
OS Ventures 120,000 * 3,607 1,959
Pace Setter 1, L.P. 1,000,000 * none 16,326
Pacific Life Insurance Company 500,000 * none 8,163
</TABLE>
78
<PAGE> 82
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE
OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1)
- ------------------------ ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Palladin Securities, LLC 700,000 * none 11,428
Pell Rudman Trsu Co, NA 1,400,000 * 82,334 22,857
Penn Treaty Network America
Insurance Company 110,000 * none 1,795
Peoples Benefit Life Insurance
Company 6,000,000 1 none 97,959
Peyton Anderson Foundation 260,000 * 65,000 4,244
PGEP III LLC 700,000 * none 11,428
Pitney Bowes Retirement Fund 6,540,000 1.09 none 106,775
Prime 66 Partners, Inc. 50,000,000 8.33 4,384,871 816,325
Quattro Offshore Fund Ltd. 250,000 * none 4,081
R2 Investments, LDC 8,500,000 1.42 5,240,000 138,775
Radiology Associates Employee
Benefit 250,000 * 9,759 4,081
Radiology Group Profit Sharing Plan 80,000 * 2,759 1,306
Radiology Medical Group Pension Plan 75,000 * 2,602 1,224
Radiology Medical Group P/S San
Diego 40,000 * 13,000 653
Ralco Inc. 200,000 * 8,451 3,265
Ramius, L.P. 1,583,000 * none 25,844
Ramius Fund, Ltd. 2,375,000 * none 38,775
RCG Baldwin L.P. 792,000 * none 12,930
RCM Financial Services LP 350,000 * 115,000 5,714
Ridgeway/Floum Profit Sharing Plan 100,000 * 2,930 1,632
Riverside Church 450,000 * 17,140 7,346
Ronald Family Trust A 850,000 * 26,221 13,877
S&J Partners 120,000 * 4,134 1,959
Salomon Brothers Asset Management,
Inc. 29,050,000 4.84 none 474,284
San Diego City Retirement 839,000 * none 13,697
Sbaggs Family Foundation 110,000 * 2,966 1,795
S.C. Johnson Retirement Plan 240,000 * 8,999 3,918
South Fork Partners 4,000,000 * 108,448 65,306
Southern Methodist University 240,000 * 7,751 3,918
Southport Management Partners, L.P. 1,050,000 * none 17,142
Southport Partners International,
Ltd. 1,950,000 * none 31,836
Southwest Franciscan Missions Inc. 150,000 * 5,295 2,448
Starvest Combined Portfolio 375,000 * none 6,122
State of Maryland Retirement Plan 3,500,000 * none 57,142
State Street Bank Custodian For GE
Pension Trust 861,000 * none 14,057
Sterling Partners 1,943,000 * 27,142 31,722
Stoel Rives LLP 370,000 * 14,104 6,040
Susquehanna Capital Group 2,545,00* * none 41,550
Tribeca Investments LLC 4,000,000 * none 65,306
Triton Capital Investments, LTD 6,000,000 1 none 97,959
Trustees of Hamilton College 700,000 * 190,000 11,428
TQA Vantage Plus Fund, Ltd. 300,000 * 300,000 4,897
</TABLE>
79
<PAGE> 83
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES COMMON STOCK
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE
OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1)
- ------------------------ ---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
TQA Vantage Fund, Ltd. 3,540,000 * 3,540,000 57,795
TQA Leverage Fund, L.P. 1,610,000 * none 26,285
Union Bancaire Privee 6,500,000 1.08 none 106,122
University of Oregon 265,000 * 8,544 4,326
University of Washington Endowment
Fund 370,000 * 100,000 6,040
Van Kampen Harbor Fund 4,300,000 * none 70,203
Van Kampen Convertible Securities
Fund 700,000 * none 11,428
Wake Forest University 598,000 * none 9,763
Warburg Dillon Read LLC 9,400,000 1.57 none 153,469
Western Cancer Center Medical Group
P/S 35,000 * 11,000 571
Zellerbach Family Fund 200,000 * 6,424 3,265
</TABLE>
- ---------------
* Less than one percent.
(1) The shares of common stock to be registered hereby are calculated on an "as
converted" basis using the conversion rate described on the front cover page
of this Prospectus.
None of the selling securityholders listed above has, or within the past
three years has had, any position, office or other material relationship with us
or any of our predecessors or affiliates. Because the selling securityholders
may offer all or some portion of the above referenced securities pursuant to
this prospectus or otherwise, no estimate can be given as to the amount or
percentage of such securities that will be held by the selling securityholders
upon termination of any such sale. In addition, the selling securityholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of such securities since May 12, 1999 in transactions exempt from the
registration requirements of the Securities Act. The selling securityholders may
sell all, part or none of the securities listed above.
Generally, only selling securityholders identified in the foregoing table
who beneficially own the offered securities set forth opposite their respective
names may sell such offered securities pursuant to the registration statement,
of which this prospectus forms a part. We may from time to time include
additional selling securityholders in supplements to this prospectus.
80
<PAGE> 84
PLAN OF DISTRIBUTION
The offered securities are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this prospectus. Neither NTL Incorporated nor NTL Communications Corp.
will receive any of the proceeds from the sale by the selling securityholders of
the offered securities. NTL Communications Corp. will bear all fees and expenses
incident to its obligation to register the offered securities.
The selling securityholders may sell all or a portion of the offered
securities beneficially owned by them and offered hereby from time to time
directly through one or more underwriters, broker-dealers or agents. If the
offered securities are sold through underwriters or broker-dealers, the selling
securityholder will be responsible for underwriting discounts or commissions or
agent's commissions. Such offered securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
Such sales may be effected in transactions (which may involve crosses or block
transactions)
(1) on any national securities exchange or quotation service on which
the offered securities may be listed or quoted at the time of sale
(including the Nasdaq National Market for the common stock),
(2) in the over-the-counter market, or
(3) through the writing of options (whether such options are listed on
an options exchange or otherwise).
In connection with sales of the offered securities or otherwise, the
selling securityholder may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the offered securities in the course
of hedging in positions they assume. The selling securityholder may also sell
offered securities short and deliver offered securities to close out short
positions, or loan or pledge offered securities to broker-dealers that in turn
may sell such offered securities. If the selling securityholders effect such
transactions by selling offered securities to or through underwriters, broker-
dealers or agents, such underwriters, brokers, dealers or agents may receive
commissions in the form of discounts, concessions or commissions from the
selling securityholders or commissions from purchasers of offered securities for
whom they may act as agent or to whom they may sell as principal (which
discounts, concessions or commissions as to particular underwriters,
brokers-dealers or agents may be in excess of those customary in the types of
transactions involved).
The outstanding common stock of NTL Incorporated is listed for trading on
the Nasdaq National Market under the symbol "NTLI." We do not intend to apply
for listing of the convertible notes on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System. Accordingly, no assurance can be given as to the development of
liquidity or any trading market for the convertible notes. See "Risk
Factors--Lack of public market for the convertible notes."
81
<PAGE> 85
The selling securityholders and any broker-dealer participating in the
distribution of the offered securities may be deemed to be "underwriters" within
the meaning of the Securities Act, and any commissions paid, or any discounts or
concessions allowed to any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.
Under the securities laws of certain states, the offered securities may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in certain states the offered securities may not be sold unless the
offered securities have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling securityholder will sell any or
all of the convertible notes or offered securities registered pursuant to the
shelf registration statement, or which this Prospectus forms a part. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this Prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any
of the offered securities by the selling securityholders and any other such
person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of the offered securities to engage in market-making
activities with respect to the particular offered securities being distributed.
All of the foregoing may affect the marketability of the offered securities and
the ability of any person or entity to engage in market-making activities with
respect to the offered securities.
All expenses of the registration of the convertible notes and common stock
pursuant to the registration rights agreement will be paid by NTL Communications
Corp., including, without limitation, Commission filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that the
selling securityholders will pay all underwriting discounts and selling
commissions, if any. The selling securityholders will be indemnified by NTL
Communications Corp. against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith. The company will be indemnified by the selling
securityholders against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith.
Upon sale pursuant to the shelf registration statement, of which this
prospectus forms a part, the offered securities will be freely tradable in the
hands of persons other than affiliates of NTL Communications Corp.
82
<PAGE> 86
LEGAL MATTERS
The validity of the issuance of the convertible notes and the common stock
issuable upon conversion of the convertible notes will be passed upon for NTL
Communications Corp. and NTL Incorporated by Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York, special counsel for NTL Incorporated and NTL
Communications Corp.
EXPERTS
The consolidated financial statements and schedules of NTL Incorporated
appearing in NTL Incorporated's Annual Report (Form 10-K) for the year ended
December 31, 1998 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 of Comcast UK
Cable Partners Limited and subsidiaries incorporated by reference in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is also incorporated by reference in this
prospectus and have been so incorporated by reference in reliance upon the
report of that firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 of Birmingham
Cable Corporation Limited and Cable London PLC incorporated by reference in this
prospectus have been audited by Deloitte & Touche, independent auditors, as
stated in their reports, which are also incorporated by reference in this
prospectus and have been so incorporated by reference in reliance upon the
reports of that firm given upon their authority as experts in accounting and
auditing.
The combined financial statements of ComTel UK Finance, B.V. and its
subsidiaries as of and for the year ended December 31, 1997, and the combined
financial statements of Telecential as of and for the 16 months ended December
31, 1996, incorporated by reference in this prospectus have been audited by
Deloitte & Touche, independent auditors, as stated in their reports, which are
also incorporated by reference in this prospectus.
The combined financial statements as of and for the year ended December 31,
1996 of ComTel UK Finance B.V. incorporated by reference in this prospectus have
been incorporated by reference in reliance on the report of Coopers & Lybrand,
independent Chartered Accountants.
The consolidated financial statements of Diamond Cable Communications Plc
as of December 31, 1997 and 1998 and for each of the years in the three-year
period ended December 31, 1998 incorporated by reference herein have been
audited by KPMG, independent auditors, to the extent and for the periods
indicated in their reports on those financial statements. Those financial
statements have been incorporated by reference in
83
<PAGE> 87
reliance upon the reports of KPMG given on their authority as experts in
accounting and auditing.
ENFORCEABILITY OF CIVIL LIABILITIES
A substantial majority of our assets are located outside the United States.
As a result, it may not be possible for you to realize in the United States upon
judgments of courts of the United States predicated upon the civil liability
under the federal securities laws of the United States. The United States and
England do not currently have a treaty providing for the reciprocal recognition
and enforcement of judgments, other than arbitration awards, in civil and
commercial matters. Therefore, a final judgment for the payment of a fixed debt
or sum of money rendered by any United States court based on civil liability,
whether or not predicated solely upon the United States federal securities laws,
would not automatically be enforceable in England. In order to enforce in
England a United States judgment, proceedings must be initiated by way of common
law action before a court of competent jurisdiction in England. An English court
will, subject to what is said below, normally order summary judgment on the
basis that there is no defense to the claim for payment and will not
reinvestigate the merits of the original dispute. In such an action, an English
court will treat the United States judgment as creating a valid debt upon which
the judgment creditor could bring an action for payment, as long as
(1) the United States court had jurisdiction over the original proceeding,
(2) the judgment is final and conclusive on the merits,
(3) the judgment does not contravene English public policy,
(4) the judgment must not be for a tax, penalty or a judgment arrived at by
doubling, trebling or otherwise multiplying a sum assessed as
compensation for the loss or damage sustained and
(5) the judgment has not been obtained by fraud or in breach of the
principles of natural justice.
Based on the foregoing, there can be no assurance that you will be able to
enforce in England judgments in civil and commercial matters obtained in any
United States court. There is doubt as to whether an English court would impose
civil liability in an original action predicated solely upon the United States
federal securities laws brought in a court of competent jurisdiction in England.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
NTL Incorporated and NTL Communications Corp. are each currently subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended. We each file reports, proxy statements, information statements and
other information with the Commission under the Exchange Act. You can inspect
and copy any reports, proxy
84
<PAGE> 88
statements, information statements and other information we file with the
Commission at the public reference facilities the Commission maintains at:
Room 1024, Judiciary Plaza,
450 Fifth Street, N.W.,
Washington, D.C. 20549,
and at the Commission's Regional Offices located at:
Suite 1400, Northwestern Atrium Center,
500 West Madison Street,
Chicago, Illinois 60661
and
13th Floor, Seven World Trade Center,
New York, New York 10048,
and you may also obtain copies of such material by mail from the Public
Reference Section of the Commission at:
450 Fifth Street, N.W.,
Washington, D.C. 20549,
at prescribed rates.
The Commission also maintains a site on the World Wide Web, the address of
which is http://www.sec.gov. That site also contains our reports, proxy and
information statements and other information. Reports, proxy statements and
other information concerning the Company may also be inspected at the offices of
the Nasdaq Stock Market, Reports Section, at:
1735 K Street, N.W.,
Washington, D.C. 20006.
This prospectus is part of a registration statement filed by us with the
Commission. It does not contain all the information included or incorporated in
the registration statement. The full registration statement can be obtained from
the Commission as indicated above or from us.
The Commission allows us to incorporate by reference some information about
NTL Incorporated and NTL Communications Corp. that we file with the Commission.
This allows us to disclose important information to you by referencing those
filed documents. Any information that we reference this way is considered part
of this prospectus.
The following documents filed by us with the Commission are incorporated by
reference into this prospectus:
(a) NTL Communications Corp.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, dated May 17, 1999;
(b) NTL Communications Corp.'s Annual Report on Form 10-K for the year
ended December 31, 1998, dated March 31, 1999;
85
<PAGE> 89
(c) NTL Communications Corp.'s Current Reports on Form 8-K dated
January 25, 1999 (filed on January 25, 1999), March 8, 1999 (filed on March
11, 1999), March 18, 1999 (filed on March 23, 1999), April 1, 1999 (filed
April 1, 1999), April 8, 1999 (filed on April 12, 1999), April 8, 1999
(filed on April 13, 1999) and June 3, 1999 (filed June 3, 1999);
(d) NTL Communications Corp.'s Proxy Statement on Schedule 14A dated
January 29, 1999;
(e) the financial statements included under Item 14 to the Annual
Report on Form 10-K for the year ended December 31, 1998 of Diamond Cable
Communications Plc, dated March 30, 1999;
(f) NTL Incorporated's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 dated May 17, 1999;
(g) NTL Incorporated's Proxy Statement on Schedule 14A dated April 28,
1999; and
(h) NTL Incorporated's Current Reports on Form 8-K dated April 1, 1999
(filed April 1, 1999), April 8, 1999 (filed April 12, 1999) and April 30,
1999 (filed May 12, 1999).
We are incorporating by reference the documents listed above and any
current reports and proxy statements we file with the commission until the end
of the exchange offer. Any information incorporated by reference this way will
automatically be deemed to update and supersede this information.
We will provide you without charge on your request, a copy of any or all
documents which are incorporated by reference to this prospectus, except for
exhibits which are specifically incorporated by reference into those documents.
You should make your request in writing or by telephone to:
NTL Incorporated
110 East 59th Street
26th Floor
New York NY 10022
Attention: Richard J. Lubasch
Tel: (212) 906-8440
86
<PAGE> 90
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY
OTHER INFORMATION. THIS PROSPECTUS MAY BE DELIVERED TO YOU AFTER THE DATE OF
THIS PROSPECTUS. HOWEVER, YOU SHOULD REALIZE THAT THE AFFAIRS OF NTL
INCORPORATED AND NTL COMMUNICATIONS CORP. MAY HAVE CHANGED SINCE THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS WILL NOT REFLECT SUCH CHANGES. YOU SHOULD NOT
CONSIDER THIS PROSPECTUS TO BE AN OFFER OR SOLICITATION RELATING TO THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT
AUTHORIZED. FURTHERMORE, YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN OFFER
OR SOLICITATION RELATING TO THE SECURITIES IF THE PERSON MAKING THE OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR IF IT IS UNLAWFUL FOR YOU TO RECEIVE
SUCH AN OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 6
Use of Proceeds....................... 15
Exchange Rates........................ 15
Price Range of Common Stock........... 16
Dividend Policy....................... 16
Description of the Convertible
Notes............................... 17
Registration Rights................... 43
Description of Capital Stock.......... 45
Description of Other Indebtedness..... 58
United States Federal Tax
Considerations...................... 73
Selling Securityholders............... 75
Plan of Distribution.................. 81
Legal Matters......................... 83
Experts............................... 83
Enforceability of Civil Liabilities... 84
Where You Can Find More Information
About Us............................ 84
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
[NTL LOGO]
NTL Communications Corp.
7% Convertible Subordinated Notes
Due 2008
NTL Incorporated
Common Stock
------------------------
PROSPECTUS
------------------------
, 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 91
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the Offering.
<TABLE>
<S> <C>
SEC registration fee....................................... $166,800.00
Legal fees and expenses.................................... 100,000.00
Accounting fees and expenses............................... 60,000.00
Printing and engraving fees................................ 85,000.00
Miscellaneous expenses..................................... 8,200.00
-----------
Total............................................ $420,000.00
===========
</TABLE>
- -------------------------
(*) To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102 of the Delaware General Corporation Law (the
"DGCL"), each of the Registrants' Amended and Restated Certificates of
Incorporation eliminate a director's personal liability for monetary damages to
the Company and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under Section 174 of the DGCL or
liability for a breach of the director's duty of loyalty to the Company or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction in
which the director derived an improper personal benefit. The effect of these
provisions in the certificates of incorporation is to eliminate the rights of
the Registrants and their stockholders (through stockholders, derivative suits
on behalf of the Registrants) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described
above.
NTL Incorporated's By-laws and NTL Communications Corp.'s Restated By-laws
provide that directors and officers of the Registrants shall be indemnified
against liabilities arising from their service as directors and officers to the
full extent permitted by law. Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted
II-1
<PAGE> 92
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the fight of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
The Registrants have entered into director and officer indemnity agreements
("Indemnity Agreements") with each officer and director of the Registrants (an
"Indemnitee"). Under the bylaws and these Indemnity Agreements, the Registrants
must indemnify an Indemnitee to the fullest extent permitted by the DGCL for
losses and expenses incurred in connection with actions in which the indemnitee
is involved by reason of having been a director or officer of either of the
Registrants. The Registrants are also obligated to advance expenses an
indemnitee may incur in connection with such actions before any resolution of
the action.
II-2
<PAGE> 93
ITEM 16. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by
and among NTL Incorporated, NTL Communications Corp. and NTL
Mergerco, Inc.
3.1 Restated Certificate of Incorporation of NTL Communications
Corp.(15)
3.1(a) Agreement and Plan of Merger, dated as of March 26, 1999, by
and among NTL Incorporated, NTL Communications Corp. and NTL
Mergerco, Inc. (Included as Exhibit 2.1)
3.2 Restated By-laws of NTL Communications Corp.(1)
3.3 Certificate of Incorporation of NTL Incorporated
3.4 By-laws of NTL Incorporated
4.1 Indenture, dated as of April 14, 1999, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 1999 9 3/4% Notes.(14)
4.2 Registration Rights Agreement dated as of April 14, 1999,
with respect to the 1999 9 3/4% Notes.(14)
4.3 Indenture, dated as of December 16, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the Convertible Notes.(15)
4.4 First Supplemental Indenture, dated as of March 31, 1999,
between NTL Incorporated, NTL Communications Corp. and The
Chase Manhattan Bank, as Trustee, with respect to the
Convertible Notes.
4.5 Registration Rights Agreement, dated as of December 16, with
respect to Convertible Notes.(15)
4.6 Indenture, dated as of November 2, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 11 1/2% Notes(12)
4.7 Indenture, dated as of November 6, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 12 3/8% Notes(12)
4.8 Registration Rights Agreement, dated as of November 2, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 11 1/2% Notes(12)
4.9 Registration Rights Agreement, dated as of November 6, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 12 3/8% Notes(12)
4.10 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 10% Notes(10)
4.11 Certificate of Designation, dated February 12, 1997, with
respect to the Redeemable Preferred Stock(10)
</TABLE>
II-3
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.12 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the 10% Notes(10)
4.13 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the Redeemable Preferred Stock(10)
4.14 Form of Convertible Notes (included in Exhibit 4.3)
4.15 Indenture, dated as of June 12, 1996, by and between the
Company and Chemical Bank, as Trustee, with respect to the
7% Convertible Notes(8)
4.16 First Supplemental Indenture, dated as of March 31, 1999,
between NTL Incorporated, NTL Communications Corp. and The
Chase Manhattan Bank, as Trustee, with respect to the 7%
Convertible Notes.
4.17 Registration Rights Agreement, dated June 12, 1996, by and
among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation and Salomon Brothers Inc, with
respect to the 7% Convertible Notes(8)
4.18 Indenture, dated as of January 30, 1996, by and among the
Company and Chemical Bank, as Trustee, with respect to the
11 1/2% Notes(7)
4.19 Registration Rights Agreement, dated January 30, 1996, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Chase
Securities, Inc., with respect to the 11 1/2% Notes(7)
4.20 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
12 3/4% Notes(2)
4.21 First Supplemental Indenture, dated as of January 22, 1996,
by and among the Company and Chemical Bank, as Trustee with
respect to the Indenture included as Exhibit 4.19(7)
4.22 Registration Agreement, dated April 13, 1995 by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.,
with respect to the 12 3/4% Notes(2)
4.23 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
7 1/4% Convertible Notes(3)
4.24 Registration Agreement, dated April 12, 1995, by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman Sachs & Co.,
with respect to the 7 1/4% Convertible Notes(3)
4.25 Indenture, dated as of October 1, 1993, by and among the
Company and Chemical Bank, as Trustee with respect to the
10 7/8% Senior Notes(4)
4.26 First Supplemental Indenture, dated January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with
respect to the Indenture included as Exhibit 4.24(7)
4.27 Rights Agreement, dated as of October 1, 1993, between the
Company and Continental Transfer & Trust Company, as Rights
Agent(1)
</TABLE>
II-4
<PAGE> 95
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.28 Indenture, dated as of November 15, 1995, between Comcast
U.K. Cable Partners Limited and Bank of Montreal Trust
Company, as Trustee, with respect to the 11.20% Senior
Discount Debentures Due 2007 of Comcast U.K. Cable Partners
Limited.(13)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the notes being registered hereby
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(11)
10.2 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)(2)
11.1 Statement of computation of per share earnings(11)
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends
21.1 Subsidiaries of the Company(11)
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche -- Birmingham
23.4 Consent of Deloitte & Touche -- London
23.5 Consent of Deloitte & Touche -- Comtel
23.6 Consent of Coopers & Lybrand -- ComTel
23.7 Consent of KPMG -- Diamond
23.8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)
24.1 Powers of Attorney*
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.3
99.1 Prescribed Diffusion Service License, dated July 21, 1987,
issued to British Cable Services Limited (now held by
CableTel Surrey and Hampshire Limited) for the area of West
Surrey and East Hampshire, England(5)
99.2 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Inverclyde, Scotland(5)
99.3 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Bearsden and Milngavie, Scotland(5)
99.4 Prescribed Diffusion Service License, dated December 3,
1990, issued to Newport Cablevision Limited (renamed
CableTel Newport) for the area of Newport, Wales(5)
99.5 Prescribed Diffusion Service License, dated July 10, 1984,
issued to Clyde Cablevision (renamed CableTel Glasgow) for
the area of North Glasgow and Clydebank, Strathclyde,
Scotland(5)
</TABLE>
II-5
<PAGE> 96
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.6 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Greater Glasgow, Scotland(5)
99.7 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Paisley and Renfrew, Scotland(5)
99.8 Prescribed Diffusion Service License, dated December 3,
1990, issued to Cable and Satellite Television Holdings Ltd
(renamed CableTel West Glamorgan Limited) for the area of
West Glamorgan, Wales(5)
99.9 Prescribed Diffusion Service License, dated December 3,
1990, issued to British Cable Services Limited for the area
of Cardiff and Penarth, Wales (now held by CableTel Cardiff
Limited)(5)
99.10 Prescribed Diffusion Service License, dated December 3,
1990, issued to Kirklees Cable (renamed CableTel Kirklees)
for the area of Huddersfield and Dewsbury, West Yorkshire,
England(5)
99.11 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company of
Hertfordshire Ltd (renamed CableTel Hertfordshire Limited)
for the area of Broxbourne and East Hertfordshire,
England(5)
99.12 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company Ltd
(renamed CableTel Central Hertfordshire Limited) for the
area of Central Hertfordshire, England(5)
99.13 Prescribed Diffusion Service License, dated March 26, 1990,
issued to CableVision Bedfordshire Limited (renamed CableTel
Bedfordshire Ltd.) for the area of Luton and South
Bedfordshire(5)
99.14 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision North Bedfordshire Ltd (renamed
CableTel North Bedfordshire Ltd.) for the area of North
Bedfordshire, England(5)
99.15 Local Delivery Service License, dated October 2, 1995,
issued to CableTel Northern Ireland Limited for Northern
Ireland(5)
99.16 Local Delivery Service License, dated December 6, 1995,
issued to CableTel South Wales Limited for Glamorgan and
Gwent, Wales(5)
99.17 Local Delivery Service License, dated March 13, 1991, issued
to Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales
(now held by Metro South Wales Limited)(5)
99.18 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Camarthen, Wales (now held
by Metro South Wales Limited)(5)
99.19 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Milford Haven, Wales (now
held by Metro South Wales Limited)(5)
</TABLE>
II-6
<PAGE> 97
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.20 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales(5)
99.21 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Ammanford, West Glamorgan,
Wales(5)
99.22 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5)
99.23 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Haverfordwest, Preseli,
Wales(5)
99.24 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Neyland, Preseli, Wales (now
held by Metro South Wales Limited)(5)
99.25 License, dated January 11, 1991, issued to Cablevision
Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt
and Ware (Lea Valley) cable franchise, England(5)
99.26 License, dated December 8, 1990, issued to Cablevision
Communications Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England(5)
99.27 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas,
England(5)
99.28 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England(5)
99.29 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable
Franchise, Scotland(5)
99.30 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie
Cable Franchise, Scotland(5)
99.31 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland(5)
99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and
Clydebank, Scotland(5)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland(5)
99.34 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales(5)
99.35 License, dated January 22, 1991, issued to Newport
Cablevision Limited (renamed CableTel Newport), for Newport
Cable franchise Wales(5)
99.36 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West
Glamorgan) for West Glamorgan, Wales(5)
</TABLE>
II-7
<PAGE> 98
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.37 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and
Dewsbury cable franchise, England(5)
99.38 License, dated October 13, 1993, issued to Insight
Communications Guildford Limited (renamed CableTel Surrey
and Hampshire Limited) for the West Surrey/East Hampshire
(Guildford) Cable Franchise, England(5)
99.39 License, dated January 20, 1995, issued to CableTel
Bedfordshire Ltd. for the area of South Bedfordshire,
England(5)
99.40 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England(5)
99.41 License, dated January 20, 1992, issued to Cable and
Satellite Television Holdings Limited (renamed CableTel West
Glamorgan Limited) for the area of Swansea, Neath and Port
Talbot, Wales(5)
99.42 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and
Ware (Lea Valley), England(5)
99.43 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England(5)
99.44 License, dated July 21, 1995, issued to CableTel Kirklees(5)
99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd.(5)
99.46 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales(5)
99.47 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales(5)
99.48 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales(5)
99.49 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales(5)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales(5)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales(5)
99.52 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales(5)
99.53 License, dated October 27, 1995, issued to CableTel South
Wales Limited for the area of Glamorgan and Gwent, Wales(5)
99.54 License, dated January 26, 1996, issued to Cabletel South
Wales Limited, for part of the Glamorgan area(5)
99.55 License, dated November 3, 1997, issued to NTL (UK) Group,
Inc. for the Provision of Radio Fixed Access Operator
Services(10)
99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors,
L.P.(11)
</TABLE>
II-8
<PAGE> 99
- ---------------
* Previously filed.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63570.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-4, File No. 33-92794.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 33-92792.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63572.
(5) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 20, 1996.
(6) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 26, 1997.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-1010.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-07879.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-16751.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed on March 28, 1997.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed with the Commission on March 30, 1998.
(12) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-71279.
(13) Incorporated by reference to the Registration Statement on Form S-3, File
No. 33-96932, of Comcast U.K. Cable Partners Limited.
(14) Incorporated by reference to NTL Communications Corp.'s Registration
Statement on Form S-4, File No. 333-78405.
(15) Incorporated by reference to NTL Communications Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1998.
ITEM 17. UNDERTAKINGS
(A) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of each
of the Registrants' annual reports pursuant to section 13(a) or section
15(d) of the Securities Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(B) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the registrants
II-9
<PAGE> 100
pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
either of the Registrants of expenses incurred or paid by a director,
officer or controlling person of either of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrants will, unless in the
opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(C) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this Registration Statement as of the time
it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(D) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-10
<PAGE> 101
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on the 3rd day of June,
1999.
NTL Incorporated
By /s/ RICHARD J. LUBASCH
------------------------------------
Richard J. Lubasch
Senior Vice President --
General Counsel and Secretary
II-11
<PAGE> 102
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Treasurer June 3, 1999
- ----------------------------------- and Director
George S. Blumenthal
* President, Chief Executive and June 3, 1999
- ----------------------------------- Financial Officer and Director
J. Barclay Knapp
* Director June 3, 1999
- -----------------------------------
Robert T. Goad
* Vice President -- Controller June 3, 1999
- -----------------------------------
Gregg Gorelick
* Director June 3, 1999
- -----------------------------------
Sidney R. Knafel
* Director June 3, 1999
- -----------------------------------
Ted H. McCourtney
* Director June 3, 1999
- -----------------------------------
Del Mintz
* Director June 3, 1999
- -----------------------------------
Alan J. Patricof
* Director June 3, 1999
- -----------------------------------
Warren Potash
* Director June 3, 1999
- -----------------------------------
Michael S. Willner
</TABLE>
* Richard J. Lubasch, by signing his name hereto, does hereby execute this
registration statement on behalf of the officers and directors of the registrant
indicated above by asterisks, pursuant to powers of attorney duly executed by
the officers and directors and filed as exhibits to the registration statement.
By: /s/ RICHARD J. LUBASCH
--------------------------------------
Richard J. Lubasch
Attorney-in-fact
II-12
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on the 3rd day of June,
1999.
NTL Communications Corp.
By /s/ RICHARD J. LUBASCH
------------------------------------
Richard J. Lubasch
Senior Vice President --
General Counsel and Secretary
II-13
<PAGE> 104
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Treasurer June 3, 1999
- ----------------------------------- and Director
George S. Blumenthal
* President, Chief Executive and June 3, 1999
- ----------------------------------- Financial Officer and Director
J. Barclay Knapp
* Director June 3, 1999
- -----------------------------------
Robert T. Goad
* Vice President -- Controller June 3, 1999
- -----------------------------------
Gregg Gorelick
* Director June 3, 1999
- -----------------------------------
Sidney R. Knafel
* Director June 3, 1999
- -----------------------------------
Ted H. McCourtney
* Director June 3, 1999
- -----------------------------------
Del Mintz
* Director June 3, 1999
- -----------------------------------
Alan J. Patricof
* Director June 3, 1999
- -----------------------------------
Warren Potash
* Director June 3, 1999
- -----------------------------------
Michael S. Willner
</TABLE>
* Richard J. Lubasch, by signing his name hereto, does hereby execute this
registration statement on behalf of the officers and directors of the registrant
indicated above by asterisks, pursuant to powers of attorney duly executed by
the officers and directors and filed as exhibits to the registration statement.
By: /s/ RICHARD J. LUBASCH
--------------------------------------
Richard J. Lubasch
Attorney-in-fact
II-14
<PAGE> 105
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by
and among NTL Incorporated, NTL Communications Corp. and MTL
Mergerco, Inc.
3.1 Restated Certificate of Incorporation of NTL Communications
Corp.(15)
3.1(a) Agreement and Plan of Merger, dated as of March 26, 1999, by
and among NTL Incorporated, NTL Communications Corp. and MTL
Mergerco, Inc. (Included as Exhibit 2.1)
3.2 Restated By-laws of NTL Communications Corp.(1)
3.3 Certificate of Incorporation of NTL Incorporated
3.4 By-laws of NTL Incorporated
4.1 Indenture, dated as of April 14, 1999, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 1999 9 3/4% Notes.(14)
4.2 Registration Rights Agreement dated as of April 14, 1999,
with respect to the 1999 9 3/4% Notes.(14)
4.3 Indenture, dated as of December 16, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the Convertible Notes.(15)
4.4 First Supplemental Indenture, dated as of March 31, 1999,
between NTL Incorporated, NTL Communications Corp. and The
Chase Manhattan Bank, as Trustee, with respect to the
Convertible Notes.
4.5 Registration Rights Agreement, dated as of December 16, with
respect to Convertible Notes.(15)
4.6 Indenture, dated as of November 2, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 11 1/2% Notes(12)
4.7 Indenture, dated as of November 6, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 12 3/8% Notes(12)
4.8 Registration Rights Agreement, dated as of November 2, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 11 1/2% Notes(12)
4.9 Registration Rights Agreement, dated as of November 6, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 12 3/8% Notes(12)
4.10 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 10% Notes(10)
4.11 Certificate of Designation, dated February 12, 1997, with
respect to the Redeemable Preferred Stock(10)
</TABLE>
<PAGE> 106
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.12 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the 10% Notes(10)
4.13 Registration Rights Agreement, dated February 12, 1997, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated with respect to
the Redeemable Preferred Stock(10)
4.14 Form of Convertible Notes (included in Exhibit 4.3)
4.15 Indenture, dated as of June 12, 1996, by and between the
Company and Chemical Bank, as Trustee, with respect to the
7% Convertible Notes(8)
4.16 First Supplemental Indenture, dated as of March 31, 1999,
between NTL Incorporated, NTL Communications Corp. and the
Chase Manhattan Bank, as Trustee, with respect to the 7%
Convertible Notes
4.17 Registration Rights Agreement, dated June 12, 1996, by and
among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation and Salomon Brothers Inc, with
respect to the 7% Convertible Notes(8)
4.18 Indenture, dated as of January 30, 1996, by and among the
Company and Chemical Bank, as Trustee, with respect to the
11 1/2% Notes(7)
4.19 Registration Rights Agreement, dated January 30, 1996, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Chase
Securities, Inc., with respect to the 11 1/2% Notes(7)
4.20 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
12 3/4% Notes(2)
4.21 First Supplemental Indenture, dated as of January 22, 1996,
by and among the Company and Chemical Bank, as Trustee with
respect to the Indenture included as Exhibit 4.19(7)
4.22 Registration Agreement, dated April 13, 1995 by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.,
with respect to the 12 3/4% Notes(2)
4.23 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
7 1/4% Convertible Notes(3)
4.24 Registration Agreement, dated April 12, 1995, by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman Sachs & Co.,
with respect to the 7 1/4% Convertible Notes(3)
4.25 Indenture, dated as of October 1, 1993, by and among the
Company and Chemical Bank, as Trustee with respect to the
10 7/8% Senior Notes(4)
4.26 First Supplemental Indenture, dated January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with
respect to the Indenture included as Exhibit 4.24(7)
</TABLE>
<PAGE> 107
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.27 Rights Agreement, dated as of October 1, 1993, between the
Company and Continental Transfer & Trust Company, as Rights
Agent(1)
4.28 Indenture, dated as of November 15, 1995, between Comcast
U.K. Cable Partners Limited and Bank of Montreal Trust
Company, as Trustee, with respect to the 11.20% Senior
Discount Debentures Due 2007 of Comcast U.K. Cable Partners
Limited.(13)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the notes being registered hereby
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(11)
10.2 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)(2)
11.1 Statement of computation of per share earnings(11)
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends
21.1 Subsidiaries of the Company(11)
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche -- Birmingham
23.4 Consent of Deloitte & Touche -- London
23.5 Consent of Deloitte & Touche -- Comtel
23.6 Consent of Coopers & Lybrand -- ComTel
23.7 Consent of KPMG -- Diamond
24.1 Powers of Attorney*
23.8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.3
99.1 Prescribed Diffusion Service License, dated July 21, 1987,
issued to British Cable Services Limited (now held by
CableTel Surrey and Hampshire Limited) for the area of West
Surrey and East Hampshire, England(5)
99.2 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Inverclyde, Scotland(5)
99.3 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Bearsden and Milngavie, Scotland(5)
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.4 Prescribed Diffusion Service License, dated December 3,
1990, issued to Newport Cablevision Limited (renamed
CableTel Newport) for the area of Newport, Wales(5)
99.5 Prescribed Diffusion Service License, dated July 10, 1984,
issued to Clyde Cablevision (renamed CableTel Glasgow) for
the area of North Glasgow and Clydebank, Strathclyde,
Scotland(5)
99.6 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Greater Glasgow, Scotland(5)
99.7 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Paisley and Renfrew, Scotland(5)
99.8 Prescribed Diffusion Service License, dated December 3,
1990, issued to Cable and Satellite Television Holdings Ltd
(renamed CableTel West Glamorgan Limited) for the area of
West Glamorgan, Wales(5)
99.9 Prescribed Diffusion Service License, dated December 3,
1990, issued to British Cable Services Limited for the area
of Cardiff and Penarth, Wales (now held by CableTel Cardiff
Limited)(5)
99.10 Prescribed Diffusion Service License, dated December 3,
1990, issued to Kirklees Cable (renamed CableTel Kirklees)
for the area of Huddersfield and Dewsbury, West Yorkshire,
England(5)
99.11 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company of
Hertfordshire Ltd (renamed CableTel Hertfordshire Limited)
for the area of Broxbourne and East Hertfordshire,
England(5)
99.12 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision Communications Company Ltd
(renamed CableTel Central Hertfordshire Limited) for the
area of Central Hertfordshire, England(5)
99.13 Prescribed Diffusion Service License, dated March 26, 1990,
issued to CableVision Bedfordshire Limited (renamed CableTel
Bedfordshire Ltd.) for the area of Luton and South
Bedfordshire(5)
99.14 Prescribed Diffusion Service License, dated December 3,
1990, issued to CableVision North Bedfordshire Ltd (renamed
CableTel North Bedfordshire Ltd.) for the area of North
Bedfordshire, England(5)
99.15 Local Delivery Service License, dated October 2, 1995,
issued to CableTel Northern Ireland Limited for Northern
Ireland(5)
99.16 Local Delivery Service License, dated December 6, 1995,
issued to CableTel South Wales Limited for Glamorgan and
Gwent, Wales(5)
99.17 Local Delivery Service License, dated March 13, 1991, issued
to Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales
(now held by Metro South Wales Limited)(5)
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.18 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Camarthen, Wales (now held
by Metro South Wales Limited)(5)
99.19 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Milford Haven, Wales (now
held by Metro South Wales Limited)(5)
99.20 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales(5)
99.21 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Ammanford, West Glamorgan,
Wales(5)
99.22 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5)
99.23 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Haverfordwest, Preseli,
Wales(5)
99.24 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Neyland, Preseli, Wales (now
held by Metro South Wales Limited)(5)
99.25 License, dated January 11, 1991, issued to Cablevision
Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt
and Ware (Lea Valley) cable franchise, England(5)
99.26 License, dated December 8, 1990, issued to Cablevision
Communications Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England(5)
99.27 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas,
England(5)
99.28 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England(5)
99.29 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable
Franchise, Scotland(5)
99.30 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie
Cable Franchise, Scotland(5)
99.31 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland(5)
99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and
Clydebank, Scotland(5)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland(5)
</TABLE>
<PAGE> 110
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.34 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales(5)
99.35 License, dated January 22, 1991, issued to Newport
Cablevision Limited (renamed CableTel Newport), for Newport
Cable franchise Wales(5)
99.36 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West
Glamorgan) for West Glamorgan, Wales(5)
99.37 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and
Dewsbury cable franchise, England(5)
99.38 License, dated October 13, 1993, issued to Insight
Communications Guildford Limited (renamed CableTel Surrey
and Hampshire Limited) for the West Surrey/East Hampshire
(Guildford) Cable Franchise, England(5)
99.39 License, dated January 20, 1995, issued to CableTel
Bedfordshire Ltd. for the area of South Bedfordshire,
England(5)
99.40 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England(5)
99.41 License, dated January 20, 1992, issued to Cable and
Satellite Television Holdings Limited (renamed CableTel West
Glamorgan Limited) for the area of Swansea, Neath and Port
Talbot, Wales(5)
99.42 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and
Ware (Lea Valley), England(5)
99.43 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England(5)
99.44 License, dated July 21, 1995, issued to CableTel Kirklees(5)
99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd.(5)
99.46 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales(5)
99.47 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales(5)
99.48 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales(5)
99.49 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales(5)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales(5)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales(5)
99.52 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales(5)
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.53 License, dated October 27, 1995, issued to CableTel South
Wales Limited for the area of Glamorgan and Gwent, Wales(5)
99.54 License, dated January 26, 1996, issued to Cabletel South
Wales Limited, for part of the Glamorgan area(5)
99.55 License, dated November 3, 1997, issued to NTL (UK) Group,
Inc. for the Provision of Radio Fixed Access Operator
Services(10)
99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors,
L.P.(11)
</TABLE>
- ---------------
* Previously filed.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63570.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-4, File No. 33-92794.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 33-92792.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63572.
(5) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 20, 1996.
(6) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 26, 1997.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-1010.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-07879.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-16751.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed on March 28, 1997.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed with the Commission on March 30, 1998.
(12) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-71279.
(13) Incorporated by reference to the Registration Statement on Form S-3, File
No. 33-96932, of Comcast U.K. Cable Partners Limited.
(14) Incorporated by reference to NTL Communications Corp.'s Registration
Statement on Form S-4, File No. 333-78405.
(15) Incorporated by reference to NTL Communications Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1998.
<PAGE> 1
Exhibit 2.1
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
NTL INCORPORATED
(a Delaware corporation)
and
NTL COMMUNICATIONS CORP.
(a Delaware corporation)
and
NTL MERGERCO, INC.
(a Delaware corporation)
-----------------------
Dated as of March 26, 1999
-----------------------
- --------------------------------------------------------------------------------
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 26, 1999 (the
"Agreement"), by and among NTL INCORPORATED, a Delaware corporation ("NTL" or,
with regard to the period upon and after the Effective Time (as hereinafter
defined), the "Surviving Corporation"), NTL COMMUNICATIONS CORP., a Delaware
corporation ("Holdco"), which is a direct wholly-owned subsidiary of NTL, and
NTL MERGERCO, INC., a Delaware corporation ("Holdco Sub"), which is a direct
wholly-owned subsidiary of Holdco and an indirect wholly-owned subsidiary of NTL
(NTL and Holdco Sub, collectively, the "Constituent Corporations" and each, a
"Constituent Corporation".)
W I T N E S S E T H:
WHEREAS, NTL is a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "DGCL") and is authorized
to issue a total of 410,000,000 shares, consisting of: (i) 400,000,000 shares of
common stock, par value $.01 per share ("NTL Common Stock"); (ii) 10,000,000
shares of preferred stock, par value $.01 per share ("NTL Preferred Stock"), of
which (A) 250,000 shares have been designated 13% Senior Redeemable Exchangeable
Preferred Stock, par value $.01 per share ("NTL 13% Series A Preferred Stock"),
(B) 250,000 shares have been designated 13% Series B Senior Redeemable
Exchangeable Preferred Stock, par value $.01 per share ("NTL 13% Series B
Preferred Stock"), (C) 125,280 shares have been designated 9.90% Nonvoting
Mandatorily Redeemable Preferred Stock, Series A, par value $.01 per share ("NTL
9.90% Series A Preferred Stock"), (D) 52,217 shares have been designated 9.90%
Non-voting Mandatorily Redeemable Preferred Stock, Series B, par value $.01 per
share ("NTL 9.90% Series B Preferred Stock"), (E) 500,000 shares have been
designated 5 1/4% Convertible Preferred Stock, Series A, par value $.01 per
share ("NTL 5 1/4% Series A Preferred Stock"), (F) 4,447.92 shares have been
designated 5 1/4% Convertible Preferred Stock, Series B, par value $.01 per
share ("NTL 5 1/4% Series B Preferred Stock") and (G) 1,000,000 shares have been
designated Series A Junior Participating Preferred Stock, par value $.01 per
share ("NTL Junior Participating Preferred Stock") (all classes of preferred
stock, collectively, "NTL Preferred Stock"). As of the close of business on
March 23, 1999, there were (i) 73,303,103 shares of NTL Common Stock issued and
out standing, each including an associated right to purchase NTL Junior
Participating Preferred Stock, (the "Outstanding NTL Common Shares"); (ii) (A)
6.06 shares of NTL 13% Series A Preferred Stock issued and outstanding (the
"Outstanding NTL
1
<PAGE> 3
13% Series A Shares"), (B) 125,219.22 shares of NTL 13% Series B Preferred Stock
issued and outstanding (the "Outstanding NTL 13% Series B Shares"), (C) 125,280
shares of NTL 9.90% Series A Preferred Stock issued and outstanding (the
"Outstanding NTL 9.90% Series A Shares"), (D) 52,217 shares of NTL 9.90% Series
B Preferred Stock issued and outstanding (the "Outstanding NTL 9.90% Series B
Shares"), (E) 500,000 shares of NTL 5 1/4% Series A Preferred Stock issued and
outstanding (the "Outstanding NTL 5 1/4% Series A Shares"), (F) no shares of NTL
5 1/4% Series B Preferred Stock issued and outstanding but 4,447.92 shares
thereof are expected to be issued and outstanding as of the Closing Date (the
"Outstanding 5 1/4% Series B Shares") and (G) no shares of NTL Junior
Participating Preferred Stock issued and outstanding; (iii) 24,237,000 shares of
NTL Common Stock reserved for issuance upon exercise of stock options of NTL
outstanding or which may be granted pursuant to employee stock option and
similar plans; (iv) 8,139,800 shares of NTL Common Stock reserved for issuance
upon the conversion of NTL Preferred Stock; (v) 2,869,574 shares of NTL Common
Stock reserved for issuance upon the exercise NTL Warrants (as herein after
defined) outstanding; and (vi) 17,055,588 shares of NTL Common Stock reserved
for issuance upon conversion of certain NTL 7% Convertible Notes (as hereinafter
defined) outstanding;
WHEREAS, Holdco Sub is a corporation organized and existing under
the DGCL and is authorized to issue a total of 100 shares, in a single class of
common stock, $.01 par value per share ("Holdco Sub Common Stock"), of which, as
of the date hereof, 100 shares are issued and outstanding (the "Outstanding
Holdco Sub Common Shares");
WHEREAS, as of the date hereof, Holdco holds of record all of the
Outstanding Holdco Sub Common Shares and no shares of Holco Sub Common Stock are
issued but not outstanding;
WHEREAS, Holdco is a corporation organized and existing under the
DGCL and is authorized to issue a total of 100 shares of common stock, par value
$.01 per share ("Holdco Common Stock"), and prior to the Effective Time will be
authorized to issue a total of 410,000,000 shares, consisting of: (i)
400,000,000 shares of Holdco Common Stock; (ii) 10,000,000 shares of preferred
stock, par value $.01 per share ("Holdco Preferred Stock"), of which (A) 250,000
shares will constitute, prior to the Effective Time, a series of Holdco
Preferred Stock identical to NTL 13% Series A Preferred Stock, having the
designation "13% Senior Redeemable Exchangeable Preferred Stock" ("Holdco 13%
Series A
2
<PAGE> 4
Preferred Stock"), (B) 250,000 shares will constitute, prior to the Effective
Time, a series of Holdco Preferred Stock identical to NTL 13% Series B Preferred
Stock, having the designation "13% Series B Senior Redeemable Exchangeable
Preferred Stock" ("Holdco 13% Series B Preferred Stock"), (C) 125,280 shares
will constitute, prior to the Effective Time, a series of Holdco Preferred Stock
identical to NTL 9.90% Series A Preferred Stock, having the designation "9.90%
Non-Voting Mandatorily Redeemable Preferred Stock, Series A" ("Holdco 9.90%
Series A Preferred Stock"), (D) 52,217 shares will constitute, prior to the
Effective Time, a series of Holdco Preferred Stock identical to NTL 9.90% Series
B Preferred Stock, having the designation "9.90% Non-voting Mandatorily
Redeemable Preferred Stock, Series B" ("Holdco 9.90% Series B Preferred Stock"),
(E) 500,000 shares will constitute, prior to the Effective Time, a series of
Holdco Preferred Stock identical to NTL 5 1/4% Series A Preferred Stock, having
the designation "5 1/4% Convertible Preferred Stock, Series A" ("Holdco 5 1/4%
Series A Preferred Stock"), (F) 4,447.92 shares will constitute, prior to the
Effective Time, a series of Holdco Preferred Stock identical to NTL 5 1/4%
Series B Preferred Stock, having the designation "5 1/4% Convertible Preferred
Stock, Series B" ("Holdco 5 1/4% Series B Preferred Stock") and (G) 1,000,000
shares will constitute prior to the Effective Time a series of Holdco Preferred
Stock, identical to NTL Junior Participating Preferred Stock, having the
designation "Series A Junior Participating Preferred Stock" ("Holdco Junior
Participating Preferred Stock"). As of the date hereof, there are 100 shares
issued and outstanding of Holdco Common Stock (the "Outstanding Holdco Common
Shares");
WHEREAS, as of the date hereof, NTL holds of record all of the
Outstanding Holdco Common Shares and no shares of Holdco Common Stock are issued
but not outstanding;
WHEREAS, the respective Boards of Directors of NTL, Holdco Sub and
Holdco have determined that it is advisable and in the best interests of each of
NTL, Holdco Sub and Holdco and their respective stockholders that Holdco Sub be
merged with and into NTL, with NTL continuing as the Surviving Corporation, in
accordance with the terms and conditions of this Agreement (the "Merger"), and
accordingly the Boards of Directors of each of NTL, Holdco Sub and Holdco have
approved and authorized this Agreement and the transactions contemplated hereby,
including the Merger;
3
<PAGE> 5
WHEREAS, it is contemplated that the Merger will be effected in
accordance with Section 251(g) of the DGCL, and that the Merger and the ex
change of shares of capital stock of NTL for shares of capital stock of Holdco
shall be a transaction described in Section 351(a) and/or Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that no income or
gain will be recognized by NTL or Holdco or their respective stockholders as a
result of the Merger; and
NOW, THEREFORE, in consideration of the premises, the mutual
agreements, promises, covenants, representations, warranties, acknowledgments
and other terms, conditions, and provisions set forth herein, and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1. The Merger.
1.1 The Merger; Filing and Effective Time. Subject to and in
accordance with the terms and conditions of this Agreement and the DGCL, this
Agreement and the certificates of the respective secretaries of NTL and Holdco
Sub attached hereto as Exhibits A and B, duly executed, shall be filed with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
by the Surviving Corporation at or as soon as practicable after the Closing (as
defined below). The Merger shall become effective at the time when this
Agreement is so filed with the Delaware Secretary of State (the "Effective
Time").
1.2 Closing. Subject to and in accordance with the terms and
conditions of this Agreement, the closing of the Merger (the "Closing") shall
take place as soon as practicable after satisfaction of the latest to occur of
the conditions set forth in Article IV hereof (the "Closing Date"), at the
office of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
NY 10022, unless another date or place is agreed to in writing by the parties
hereto.
4
<PAGE> 6
1.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
1.4 Certificate of Incorporation of the Surviving Corporation. The
Restated Certificate of Incorporation of NTL, as in effect immediately prior to
the Effective Time (the "NTL Charter"), shall be the certificate of
incorporation of the Surviving Corporation (the "Surviving Corporation
Charter"), except that the following amendments thereto are to be effected by
the Merger upon the Effective Time:
A. The Surviving Corporation Charter shall be amended by deleting
Article FIRST thereof in its entirety and inserting in lieu thereof the
following: "FIRST: The name of the Corporation is NTL Communications Corp.
(hereinafter called, the "Corporation").";
B. The Surviving Corporation Charter shall be amended by deleting
Article FOURTH thereof in its entirety and inserting in lieu thereof the
following: "FOURTH: The total number of shares of stock which the
Corporation has authority to issue is 100 shares of Common Stock, par
value $0.01 per share (the "Common Stock")."; and
C. The Surviving Corporation Charter shall be amended by adding and
inserting, immediately following Article THIRTEENTH thereof, a new Article
FOURTEENTH thereof, to read in its entirety as follows:
FOURTEENTH: Any act or transaction by or involving the Corporation
that requires for its adoption under the GCL or this Restated
Certificate of Incorporation the approval of stockholders of the
Corporation shall, pursuant to subsection (g) of Section 251 of the
GCL, require, in addition, the approval of the stockholders of NTL
Incorporated, a Delaware corporation, or any successor thereto by
merger, by the same vote as if required by the GCL and/or this
Restated Certificate of Incorporation.
1.5 Bylaws of the Surviving Corporation. The Bylaws of NTL as in
effect immediately prior to the Effective Time (the "NTL Bylaws"), shall be and
continue in full force and effect as the bylaws of the Surviving Corporation
upon and after the Effective Time, unless and until duly amended, altered,
5
<PAGE> 7
changed, repealed, and/or supplemented in accordance with the DGCL (which power
and right to amend, alter, change, repeal, and/or supplement, at any time and
from time to time after the Effective Time, are hereby expressly reserved).
1.6 Directors and Officers of the Surviving Corporation.
A. The respective members constituting the whole Board of Directors
of NTL (the "NTL Board") immediately prior to the Effective Time shall be
and continue as the respective members constituting the whole Board of
Directors of the Surviving Corporation upon and after the Effective Time,
until such members' respective successors are duly elected and qualified
or until such members' earlier death, resignation, disqualification or
removal and unless and until the number of members of such Board of
Directors shall be duly increased or decreased in accordance with the DGCL
(which power and right to increase and decrease, at any time and from time
to time after the Effective Time, are hereby expressly reserved).
B. Each person serving as an officer of NTL immediately prior to the
Effective Time shall be and continue as an officer of the Surviving
Corporation, holding the same office or offices, upon and after the
Effective Time, until such person's successor is chosen and qualified or
until such person's earlier death, resignation, disqualification, or
removal (which power and right to remove are hereby expressly reserved).
1.7 Further Assurances. At any time and from time to time upon and
after the Effective Time, as and when required or deemed desirable by the
Surviving Corporation or its successors or assigns, there shall be executed,
acknowledged, certified, sealed, delivered, filed, and/or recorded, in the name
and on behalf of any and each Constituent Corporation, such deeds, contracts,
consents, certificates, notices, and other documents and instruments, and there
shall be done or taken or caused to be done or taken, in the name and on behalf
of any and each Constituent Corporation, such further and other things and
actions as shall be appropriate, necessary, or convenient to acknowledge, vest,
effect, perfect, conform of record, or otherwise confirm the Surviving
Corporation's (or its successors' or assigns') right, title, and interest in
kind to, and possession of, all the property, interests, assets, rights,
privileges, immunities, powers, franchises, and authority of each Constituent
Corporation held immediately prior to the Effective Time, and otherwise to carry
out and effect the intent and purposes of this Agreement and the Merger. The
officers and directors of the Surviving Corporation (or its successors or
assigns), and each of them, upon and after the
6
<PAGE> 8
Effective Time, are and shall be fully authorized, in the name and on behalf of
each Constituent Corporation, to do and take and cause to be done and taken any
and all such things and actions, and to execute, acknowledge, certify, seal,
deliver, file, and/or record any and all such deeds, contracts, consents,
certificates, notices, and other documents and instruments.
ARTICLE II
EFFECT OF THE MERGER ON THE
CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
2. Effect on Capital Stock. Upon and as of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of the
respective shares:
2.1 Conversion of Holdco Sub Shares. Each Outstanding Holdco Sub
Common Share shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share (the "Surviving
Corporation Common Stock"), of the Surviving Corporation, to be issued and
deemed to have been issued by the Surviving Corporation automatically and
immediately upon and as of the Effective Time; the capital of the Surviving
Corporation in respect of each share of Surviving Corporation Common Stock to be
an amount equal to the par value thereof as permitted under the DGCL and such
Outstanding Holdco Sub Common Shares shall be canceled and cease to exist.
2.2 Conversion of NTL Shares.
A. Each of the Outstanding NTL Common Shares shall be
converted into the right to receive one validly issued, fully paid and
nonassessable share of Holdco Common Stock, including an associated right
to purchase Holdco Junior Participating Preferred Stock, which right shall
be governed by the Holdco Stockholder Rights Plan assumed by Holdco
pursuant to Section 3.9 hereof; and the Outstanding NTL Common Shares
shall be canceled and cease to exist.
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B. Each of the Outstanding NTL 13% Series A Preferred Shares
shall be converted into the right to receive one validly issued, fully
paid and nonassessable share of Holdco 13% Series A Preferred Stock (with
rights to accrued, accumulated and unpaid dividends on each Outstanding
NTL 13% Series A Preferred Share (the "13% Series A Accumulated
Dividends") being preserved, unimpaired, unchanged, and unaffected by such
conversion in the Merger, such 13% Series A Accumulated Dividends carrying
over and pertaining to and being accrued, accumulated, and unpaid
dividends on each such share of Holdco 13% Series A Preferred Stock, and
each such share of Holdco 13% Series A Preferred Stock carrying and having
such 13% Series A Accumulated Dividends as accrued, accumulated, and
unpaid dividends thereon, notwithstanding that such dividends shall have
accrued and accumulated from a date prior to the issuance of such shares
of Holdco 13% Series A Preferred Stock) and such Outstanding NTL 13%
Series A Preferred Shares shall no longer be outstanding and automatically
shall be canceled and cease to exist.
C. Each of the Outstanding NTL 13% Series B Preferred Shares
shall be converted into the right to receive one validly issued, fully
paid and nonassessable share of Holdco 13% Series B Preferred Stock (with
rights to accrued, accumulated and unpaid dividends on each Outstanding
NTL 13% Series B Preferred Share (the "13% Series B Accumulated
Dividends") being preserved, unimpaired, unchanged, and unaffected by such
conversion in the Merger, such 13% Series B Accumulated Dividends carrying
over and pertaining to and being accrued, accumulated, and unpaid
dividends on each such share of Holdco 13% Series B Preferred Stock, and
each such share of Holdco 13% Series B Preferred Stock carrying and having
such 13% Series B Accumulated Dividends as accrued, accumulated, and
unpaid dividends thereon, notwithstanding that such dividends shall have
accrued and accumulated from a date prior to the issuance of such shares
of Holdco 13% Series B Preferred Stock) and such Outstanding NTL 13%
Series B Preferred Shares shall no longer be outstanding and automatically
shall be canceled and cease to exist.
D. Each of the Outstanding NTL 9.90% Series A Preferred Shares
shall be converted into the right to receive one validly issued, fully
paid and nonassessable share of Holdco 9.90% Series A Preferred Stock
(with rights to accrued, accumulated and unpaid dividends on each Out-
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<PAGE> 10
standing NTL 9.90% Series A Preferred Share (the "9.90% Series A
Accumulated Dividends") being preserved, unimpaired, unchanged, and
unaffected by such conversion in the Merger, such 9.90% Series A
Accumulated Dividends carrying over and pertaining to and being accrued,
accumulated, and unpaid dividends on each such share of Holdco Series C
Preferred Stock, and each such share of Holdco 9.90% Series A Preferred
Stock carrying and having such Series C Accumulated Dividends as accrued,
accumulated, and unpaid dividends thereon, notwithstanding that such
dividends shall have accrued and accumulated from a date prior to the
issuance of such shares of Holdco 9.90% Series A Preferred Stock) and such
Outstanding NTL 9.90% Series A Preferred Shares shall no longer be
outstanding and automatically shall be canceled and cease to exist.
E. Each of the Outstanding NTL 9.90% Series B Preferred Shares
shall be converted into the right to receive one validly issued, fully
paid and nonassessable share of Holdco 9.90% Series B Preferred Stock
(with rights to accrued, accumulated and unpaid dividends on each
Outstanding NTL 9.90% Series B Preferred Share (the "9.90% Series B
Accumulated Dividends") being preserved, unimpaired, unchanged, and
unaffected by such conversion in the Merger, such 9.90% Series B
Accumulated Dividends carrying over and pertaining to and being accrued,
accumulated, and unpaid dividends on each such share of Holdco 9.90%
Series B Preferred Stock, and each such share of Holdco 9.90% Series B
Preferred Stock carrying and having such 9.90% Series B Accumulated
Dividends as accrued, accumulated, and unpaid dividends thereon,
notwithstanding that such dividends shall have accrued and accumulated
from a date prior to the issuance of such shares of Holdco 9.90% Series B
Preferred Stock) and such Outstanding NTL 9.90% Series B Preferred Shares
shall no longer be outstanding and automatically shall be canceled and
cease to exist.
F. Each of the Outstanding NTL 5 1/4% Series A Preferred
Shares shall be converted into the right to receive one validly issued,
fully paid and nonassessable share of Holdco 5 1/4% Series A Preferred
Stock (with rights to accrued, accumulated and unpaid dividends on each
Out standing NTL 5 1/4% Series A Preferred Share (the "5 1/4% Series A
Accumulated Dividends") being preserved, unimpaired, unchanged, and
unaffected by such conversion in the Merger, such 5 1/4% Series A
Accumulated Dividends carrying over and pertaining to and being accrued,
accumulated,
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<PAGE> 11
and unpaid dividends on each such share of Holdco 5 1/4% Series A
Preferred Stock, and each such share of Holdco 5 1/4% Series A Preferred
Stock carrying and having such 5 1/4% Series A Accumulated Dividends as
accrued, accumulated, and unpaid dividends thereon, notwithstanding that
such dividends shall have accrued and accumulated from a date prior to the
issuance of such shares of Holdco 5 1/4% Series A Preferred Stock) and
such Outstanding NTL 5 1/4% Series A Preferred Shares shall no longer be
outstanding and automatically shall be canceled and cease to exist.
G. Each of the Outstanding NTL 5 1/4% Series B Preferred
Shares shall be converted into the right to receive one validly issued,
fully paid and nonassessable share of Holdco 5 1/4% Series B Preferred
Stock (with rights to accrued, accumulated and unpaid dividends on each
Outstanding NTL 5 1/4% Series B Preferred Share (the "5 1/4% Series B
Accumulated Dividends") being preserved, unimpaired, unchanged, and
unaffected by such conversion in the Merger, such 5 1/4% Series B
Accumulated Dividends carrying over and pertaining to and being accrued,
accumulated, and unpaid dividends on each such share of Holdco 5 1/4%
Series B Preferred Stock, and each such share of Holdco 5 1/4% Series B
Preferred Stock carrying and having such 5 1/4% Series B Accumulated
Dividends as accrued, accumulated, and unpaid dividends thereon,
notwithstanding that such dividends shall have accrued and accumulated
from a date prior to the issuance of such shares of Holdco 5 1/4% Series B
Preferred Stock) and such Outstanding NTL 5 1/4% Series B Preferred Shares
shall no longer be outstanding and automatically shall be canceled and
cease to exist.
2.3 Notification of Transfer Agent. Prior to the Closing Date,
Holdco Sub and NTL shall notify their respective transfer agents of the
conversions of shares of NTL stock and of shares of Holdco Sub stock and the
cancellation of shares of NTL stock pursuant to Section 2.2 hereof.
2.4 Stock Certificates. Upon and as of the Effective Time, by virtue
of the Merger and without any action on the part of either of the Constituent
Corporations or Holdco, the holders of the respective shares, or any other
person:
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<PAGE> 12
A. Holdco. The shares of Holdco Common Stock and the shares of
Holdco Preferred Stock into which the Outstanding NTL Common Shares, the
Outstanding NTL 13% Series A Shares, the Outstanding NTL 13% Series B
Shares, the Outstanding NTL 9.90% Series A Shares, the Out standing NTL
9.90% Series B Shares, the Outstanding NTL 5 1/4% Series A Shares and the
Outstanding 5 1/4% Series B Shares shall have been converted pursuant to
Section 2.2 hereof shall be represented and evidenced by the same stock
certificates that previously represented and evidenced such Outstanding
NTL Common Shares, such Outstanding NTL 13% Series A Shares, such
Outstanding NTL 13% Series B Shares, such Outstanding NTL 9.90% Series A
Shares, such Outstanding NTL 9.90% Series B Shares, such Outstanding NTL 5
1/4% Series A Shares, and such Outstanding 5 1/4% Series B Shares; and
B. NTL. Holdco, as the holder of the certificate (the "Holdco Sub
Common Stock Certificate") that immediately prior to the Effective Time
evidences the Outstanding Holdco Sub Common Shares may, at Holdco's
option, surrender the same to the Surviving Corporation for cancellation,
and Holdco shall be entitled to receive from the Surviving Corporation in
exchange therefor a certificate representing and evidencing the shares of
Surviving Corporation Common Stock into which Holdco's Outstanding Holdco
Sub Common Shares shall have been converted; until surrendered, the Holdco
Sub Common Stock Certificate shall represent and evidence the shares of
Surviving Corporation Common Stock into which the Outstanding Holdco Sub
Common Shares theretofore represented and evidenced thereby shall have
been converted pursuant to Section 2.2 hereof.
ARTICLE III
ADDITIONAL AGREEMENTS
3.1 Directors and Officers of Holdco Upon the Effective Time.
A. Directors. As of the Effective Time: (i) the number of members
constituting the whole Board of Directors of Holdco (the "Holdco Board") shall
be equal to the number of members constituting the whole NTL Board immediately
prior to the Effective Time; and (ii) the Holdco Board shall consist of all the
persons serving as members of the NTL Board immediately prior to the Effective
Time.
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<PAGE> 13
B. Officers. As of the Effective Time, the officers of Holdco shall
be the persons serving as officers of NTL immediately prior to the Effective
Time.
3.2 Holdco Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of Holdco shall contain provisions identical to
the NTL Charter immediately prior to the Effective Time, which provisions shall,
among other things, reflect the change of Holdco's name to "NTL Incorporated"
(the "Holdco Charter").
3.3 Holdco Bylaws. As of the Effective Time, the bylaws of Holdco
shall contain provisions identical to the NTL Bylaws immediately prior to the
Effective Time (the "Holdco Bylaws"). To that end, prior to the Effective Time,
to the extent necessary to give effect to the intent of the preceding sentence,
Holdco shall take all requisite action to cause the Holdco Bylaws, as the same
theretofore may have been amended, altered, changed and/or supplemented, to be
duly amended and restated in accordance with the DGCL to contain provisions
identical to the NTL Bylaws immediately prior to the Effective Time, and as so
amended and restated such Holdco Bylaws shall be and remain the Holdco Bylaws
upon and after the Effective Time, unless and until thereafter duly amended,
altered, changed, repealed and/or supplemented in accordance with the DGCL
(which power and right to amend, alter, change, repeal, and/or supplement, at
any time and from time to time after the Effective Time, are hereby expressly
reserved).
3.4 No NTL Stockholder Meeting; Holdco Sub Stockholder Written
Consent. The parties understand and acknowledge that it is contemplated that the
Merger will be effected in accordance with Section 251(g) of the DGCL and that
no vote of NTL's stockholders adopting, approving or authorizing this Agreement
and the transactions contemplated hereby, including the Merger, will be required
under the DGCL. Holdco, in its capacity as the sole stockholder of Holdco Sub,
as promptly as practicable on or after the date hereof, shall execute and
deliver to Holdco Sub a written consent in lieu of a stockholder meeting
adopting, approving and authorizing this Agreement and the transactions
contemplated hereby, including the Merger, in accordance with Section 228 of the
DGCL.
3.5 Employee and Director NTL Stock Options. Upon and as of the
Effective Time, to the fullest extent permitted by applicable law, Holdco shall
assume all of NTL's obligations, and NTL shall have no further obligations, with
respect to any then-outstanding option (each, if any, an "NTL Option") to
acquire
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<PAGE> 14
shares of NTL Common Stock issued under any employee or non-employee director
stock option plan, agreement or similar arrangement of NTL and the due exercise
of rights under any such NTL Option shall entitle the holder thereof to acquire,
upon the same terms and conditions that were applicable under the corresponding
NTL Option, a number of shares of Holdco Common Stock identical to the class and
number of shares of NTL Common Stock that were subject to such corresponding NTL
Option (a "Holdco Option"). NTL and Holdco agree to take all corporate and other
action as shall be necessary to effectuate the foregoing, and NTL shall use its
best efforts to obtain, if required, prior to the Closing Date, such consent of
each holder of an NTL Option as shall be necessary to effectuate the foregoing.
Holdco shall take all corporate and other action necessary to reserve and make
available for issuance upon the due exercise of rights under the Holdco Options
a sufficient number of shares of Holdco Common Stock, and as soon as practicable
following the Effective Time, shall provide to the record holders of the Holdco
Options appropriate notice of such holder's rights thereunder.
3.6 NTL Warrants. Upon and as of the Effective Time and in
connection with the Merger, Holdco shall assume NTL's obligations to issue
securities deliverable upon the exercise of any then-outstanding warrants to
acquire shares of NTL Common Stock (each, an "NTL Warrant") that were issued by
NTL pursuant to Warrant Agreements dated as of October 14, 1993, February 14,
1996, October 14, 1998 and January 28, 1999, respectively, and accordingly, the
due exercise of rights under any such NTL Warrant shall entitle the holder
thereof to acquire, upon the same terms and conditions that were applicable
under the corresponding NTL Warrant, a number of shares of Holdco Common Stock
identical to the class and number of shares of NTL Common Stock that were
subject to such corresponding NTL Warrant. NTL and Holdco agree to take all
corporate and other action as shall be necessary to effectuate the foregoing,
including the execution of supplemental warrant agreements as required. Holdco
shall take all corporate and other action necessary to reserve and make
available for issuance upon the due exercise of rights under the NTL Warrants a
sufficient number of shares of Holdco Common Stock, and as soon as practicable
following the Effective Time, shall provide to the record holders of the NTL
Warrants appropriate notice of such holder's rights thereunder.
3.7 NTL Convertible Notes. Upon and as of the Effective Time and in
connection with the Merger, Holdco shall assume NTL's obligations with respect
to the rights of holders of any then-outstanding 7% Convertible Subordi-
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<PAGE> 15
nated Notes due 2008 (each, if any, an "NTL 7% Convertible Note") to convert
such NTL 7% Convertible Notes into NTL Common Stock under the terms of either
the Indenture, dated June 12, 1996, between NTL (formerly known as International
CableTel Incorporated) and The Chase Manhattan Bank (formerly known as Chemical
Bank), as Trustee or the Indenture, dated December 16, 1998, between NTL and The
Chase Manhattan Bank, as Trustee (collectively, the "Indentures"); and, upon and
as of the Effective Time, the due exercise of the conversion privileges of any
holder under any such NTL 7% Convertible Note shall entitle the holder thereof
to acquire, upon the same terms and conditions that were applicable under the
corresponding NTL 7% Convertible Note, a number of shares of Holdco Common Stock
identical to the class and number of shares of NTL Common Stock that were
subject to such corresponding NTL 7% Convertible Note. NTL and Holdco agree to
take all corporate and other action as shall be necessary to effectuate the
foregoing, including entering into supplemental indentures as required and
delivering certain officers' certificates as required under the Indentures.
Holdco shall take all corporate and other action necessary to reserve and make
available for issuance upon the due exercise of conversion rights under the NTL
7% Convertible Notes a sufficient number of shares of Holdco Common Stock, and
as soon as practicable following the Effective Time, shall provide to the record
holders of the NTL 7% Convertible Notes appropriate notice of such holder's
rights thereunder.
3.8 Outstanding Holdco Common Shares. Upon and as of the Effective
Time, NTL shall surrender to Holdco the certificate representing the Outstanding
Holdco Common Shares, and the Outstanding Holdco Common Shares shall be retired
as permitted under the DGCL and resume the status of authorized and unissued
shares of Holdco Common Stock.
3.9 Holdco Stockholder Rights Plan. Upon and as of the Effective
Time, Holdco shall assume the rights and obligations of NTL under the Rights
Agreement, dated as of October 13, 1993, between NTL and Continental Stock
Transfer & Trust Company, as Rights Agent (the "Holdco Stockholder Rights
Plan"), and as a result of the share-for-share conversion of NTL Common Stock
for Holdco Common Stock pursuant to the Merger, each right to purchase NTL
Junior Participating Preferred Stock will be converted into an identical right
to purchase Holdco Junior Participating Preferred Stock.
3.10 Other Agreements. At the Effective Time, Holdco shall assume
any obligation of NTL to deliver or make available shares of NTL Com-
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mon Stock under any instrument, agreement or employee benefit plan not referred
to in this Section 3 to which NTL or any of its subsidiaries is a party. Any
reference to NTL Common Stock under any such instrument, agreement or employee
benefit plan shall be deemed to be a reference to Holdco Common Stock and one
share of Holdco Common Stock shall be issuable in lieu of each share of NTL
Common Stock required to be issued by any such instrument, agreement or employee
benefit plan, subject to subsequent adjustment as provided in any such
instrument, agreement or employee benefit plan.
3.11 Holdco as Successor Registrant to NTL. It is the intent of the
parties hereto that Holdco, as of the Effective Time, be deemed a "successor
issuer" for purposes rule 12g - 3(a) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), so that Holdco Common Stock shall be deemed
registered under Section 12 of the Exchange Act.
3.12 Listing of Holdco Common Stock. The Holdco Common Stock to be
issued and initially reserved for issuance pursuant to the transactions
contemplated herein shall have been approved for quotation, upon official notice
of issuance, by The Nasdaq Stock Market, Inc. and The Easdaq Stock Market, Inc.
3.13 Filings. At the Effective Time, the Surviving Corporation shall
cause a certified copy of this Agreement to be executed and filed with the
Delaware Secretary of State. At the Effective Time, to the extent necessary to
effectuate the amendments to the Surviving Corporation Charter and the Holdco
Charter contemplated by this Agreement, each of the Surviving Corporation and
Holdco shall cause to be filed with the Delaware Secretary of State such
certificates or documents required to give effect thereto.
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ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party under this Agreement shall be subject to
the satisfaction at or prior to the Closing of the following conditions:
A. Stockholder Approval. This Agreement shall have been
approved by the written consent of the holder of the Outstanding Holdco
Sub Shares.
B. Legal Action. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any foreign, United States, state or local governmental entity
or municipality or subdivision thereof or court, tribunal, commission,
board, bureau, agency or legislative, executive, governmental or
regulatory authority or agency ( a "Governmental Entity") of competent
jurisdiction or other legal restraint or prohibition shall be in effect
preventing the consummation of the Closing.
C. Statutes. No statute, rule or regulation shall have been
enacted by any Governmental Entity that would make the consummation of the
Merger illegal.
D. NTL Board Determination. The NTL Board shall not have
altered or rescinded its determination that the NTL stockholders shall not
recognize gain or loss for United States Federal income tax purposes as a
result of the transactions contemplated hereby and that the Merger and the
exchange of shares of capital stock of NTL for shares of capital stock of
Holdco shall be deemed a transaction described in Section 351(a) and/or
368(a) of the Code.
4.2 Conditions to the Obligations of NTL and Holdco Sub to Effect
the Merger. The obligations of NTL and Holdco Sub to effect the Merger shall be
subject to the satisfaction of the condition that immediately prior to the
Effective Time, Holdco shall have fully performed its obligations under Article
III hereof.
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ARTICLE V
TERMINATION AND AMENDMENT
5.1 Amendment. At any time prior to the Effective Time, this
Agreement may be supplemented, amended or modified by the mutual consent of the
Boards of Directors of the parties hereto.
5.2 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time by action
of either the NTL Board, the Holdco Board or the Board of Directors of Holdco
Sub, if such Board of Directors shall determined that for any reason the
completion of the transactions provided for herein would be inadvisable or not
in the best interest of such corporation and its stockholders. In the event of
such termination and abandonment, this Agreement shall become void and neither
NTL, Holdco, or Holdco Sub nor their respective stockholders, directors or
officers shall have any liability with respect to such termination and
abandonment.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other terms, conditions, and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
6.2 Entire Agreement. This Agreement, including the Exhibits
attached hereto, constitutes the entire agreement among the parties regarding
the subject matter hereof, and supercedes all prior agreements and undertakings,
both written and oral, among the parties or of any of them regarding such
subject matter.
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6.3 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.
6.4 Headings. The headings set forth herein are for convenience only
and shall not be used in interpreting the text of the section in which they
appear.
6.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
6.6 Certificates of Secretaries. The certificates of the respective
secretaries of NTL and Holdco Sub to be attached hereto are hereby incorporated
by reference and shall be deemed on and part of this Agreement.
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IN WITNESS WHEREOF, NTL, Holdco and Holdco Sub, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors, have caused this Agreement to be executed as of the date
first above written by their respective officers thereunto duly authorized.
NTL INCORPORATED
By: /s/Richard J. Lubasch
--------------------------------------
Richard J. Lubasch
Senior Vice President, General Counsel
and Secretary
NTL COMMUNICATIONS CORP.
By: /s/Richard J. Lubasch
--------------------------------------
Richard J. Lubasch
Senior Vice President, General Counsel
and Secretary
NTL MERGERCO, INC.
By: /s/Richard J. Lubasch
--------------------------------------
Richard J. Lubasch
Senior Vice President, General Counsel
and Secretary
<PAGE> 21
Exhibit A
CERTIFICATE OF THE SECRETARY OF NTL INCORPORATED
The undersigned, Assistant Secretary of NTL, a corporation organized
and existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies that the Agreement and Plan of Merger (the "Agreement") to which this
Certificate is attached has been executed on behalf of the Corporation by the
Senior Vice President-General Counsel and Secretary, on behalf of NTL Mergerco,
Inc., a Delaware corporation, by the Senior Vice President-General Counsel and
Secretary, and on behalf of NTL Communications Corp., a Delaware corporation, by
the Senior Vice President-General Counsel and Secretary. The Agreement has been
adopted by the Board of Directors of the Corporation pursuant to Section 251(g)
of the Delaware General Corporation Law and the conditions specified in the
first sentence of such subsection have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of this 26th day of March, 1999.
/s/ Sandra Barnett
----------------------------
Name: Sandra Barnett
Title: Assistant Secretary
<PAGE> 22
Exhibit B
CERTIFICATE OF THE SECRETARY OF NTL MERGERCO, INC.
The undersigned, Assistant Secretary of NTL Mergerco, Inc., a Delaware
Corporation (the "Corporation"), hereby certifies that the Agreement and Plan of
Merger (the "Agreement") to which this Certificate is attached has been executed
on behalf of the Corporation by the Senior Vice President-General Counsel and
Secretary, on behalf of NTL Incorporated, Inc., a Delaware corporation, by the
Senior Vice President-General Counsel and Secretary, and on behalf of NTL
Communications Corp., a Delaware corporation, by the Senior Vice
President-General Counsel and Secretary. The Agreement was duly adopted by the
Board of Directors of the Corporation in accordance with Section 251 of the
Delaware Corporation Law and by the written consent of the sole stockholder of
the Corporation in accordance with Section 228 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of this 26th day of March, 1999.
/s/ Sandra Barnett
----------------------------
Name: Sandra Barnett
Title: Assistant Secretary
<PAGE> 1
Exhibit 3.3
RESTATED
CERTIFICATE OF INCORPORATION
OF
NTL COMMUNICATIONS CORP.
The undersigned, Richard J. Lubasch, certifies that he is the Senior
Vice President, General Counsel and Secretary of NTL Communications Corp., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), and does hereby further certify as follows:
(1) The name of the Corporation is NTL Communications Corp.
(2) The name under which the Corporation was originally incorporated
was NTL Communications Corp. and the original Certificate of
Incorporation of the Corporation was filed with the Secretary of State of
the State of Delaware on February 25, 1999.
(3) This Restated Certificate of Incorporation was duly adopted by
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
(4) The text of the Restated Certificate of Incorporation of the
Corporation as amended hereby is restated to read in its entirety, as
follows:
FIRST: The name of the Corporation is NTL Incorporated (hereinafter the
"Corporation").
SECOND: The address of the registered office of the Corporation in the State of
Delaware is 9 Loockerman Street, City of Dover 19901, County of Kent. The name
of its registered agent at that address is National Registered Agents, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
<PAGE> 2
FOURTH: A. Authorized Capital. The total number of shares of stock which the
Corporation shall have the authority to issue is 410,000,000 shares, consisting
of 400,000,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), and 10,000,000 shares of preferred stock, par value $0.01 per share
(the "Preferred Stock").
B. Designation of Series. Shares of the Preferred Stock of the Corporation
may be issued from time to time in one or more classes or series, each of which
class or series shall have such distinctive designation or title as shall be
fixed by the Board of Directors of the Corporation (the "Board of Directors")
prior to the issuance of any shares thereof. Each such class or series of
Preferred Stock shall have such voting powers, full or limited, or no voting
powers, and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
shall be stated in such resolution or resolutions providing for the issue of
such class or series of Preferred Stock as may be adopted from time to time by
the Board of Directors prior to the issuance of any shares thereof pursuant to
the authority hereby expressly vested in it, all in accordance with the laws of
the State of Delaware.
C. Series A Junior Participating Preferred Stock.
Section 1. Designation and Amount. The shares of this series shall
be designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 1,000,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the fifteenth day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $.01 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a
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dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any time after September
1, 1993 (the "Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case, the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and
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payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two (2) Directors.
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(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request, the
calling of special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President or the Secretary of
the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)
(iii) shall be given to each holder of record of Preferred Stock by mailing a
copy of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(C) (iii), no such special meeting shall be called during
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the period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the certificate of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of incorporation
or bylaws). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
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Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, except dividends paid ratably on
the Series A Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any shares
of stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall deter-
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mine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $1 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such event as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to
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1 with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind) as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the
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number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets, unless the terms
of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
D. 13% Senior Redeemable Exchangeable Preferred Stock and 13% Series B
Senior Redeemable Exchangeable Preferred Stock. The powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the shares of preferred stock
consisting of the series designated the "13% Senior Redeemable Exchangeable
Preferred Stock" and the series designated the "13% Series B Senior Redeemable
Exchangeable Preferred Stock" are as set forth in this Article FOURTH and in
Exhibit A to this Restated Certificate of Incorporation.
E. 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A. The
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions, of the shares of
preferred stock designated the "9.90% Non-voting Mandatorily Redeemable
Preferred Stock, Series A" are as set forth in this Article FOURTH and in
Exhibit B to this Restated Certificate of Incorporation.
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F. 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B. The
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions, of the shares of
preferred stock designated the "9.90% Non-voting Mandatorily Redeemable
Preferred Stock, Series B" are as set forth in this Article FOURTH and in
Exhibit C to this Restated Certificate of Incorporation.
G. 5 1/4% Convertible Preferred Stock, Series A. The powers, preferences
and relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the shares of preferred stock
designated the "5 1/4% Convertible Preferred Stock, Series A" are as set forth
in this Article FOURTH and in Exhibit D to this Restated Certificate of
Incorporation.
H. 5 1/4% Convertible Preferred Stock, Series B. The powers, preferences
and relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the shares of preferred stock
designated the "5 1/4% Convertible Preferred Stock, Series B" are as set forth
in this Article FOURTH and in Exhibit E to this Restated Certificate of
Incorporation.
FIFTH: The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. The number of directors of the
Corporation shall be as from time to time fixed by, or in the manner provided
in, the By-laws of the Corporation. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The term of the initial Class I
directors shall terminate on the date of the 1994 annual meeting of
stockholders; the term of the initial Class II directors shall terminate on the
date of the 1995 annual meeting of stockholders and the term of the initial
Class III directors shall terminate on the date of the 1996 annual meeting of
stockholders. At each annual meeting of stockholders beginning in 1994,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and
any additional directors of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office.
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Any vacancy on the Board of Directors, howsoever resulting, may be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to Article FOURTH applicable thereto,
and such directors so elected shall not be divided into classes pursuant to this
Article FIFTH unless expressly provided by such terms.
SIXTH: Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, any or all of the directors of the Corporation may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of two-thirds (66 2/3%) of the outstanding shares of the
Corporation then entitled to vote generally in the election of directors,
considered for purposes of this Article SIXTH as one class.
SEVENTH: Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken only upon the vote of the stockholders at
an annual or special meeting duly noticed and called, as provided in the By-laws
of the Corporation, and may not be taken by a written consent of the
stockholders pursuant to the GCL.
EIGHTH: Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the Board of Directors, the Chairman of
the Board of Directors or the President. Special meetings of the stockholders of
the Corporation may not be called by any other person or persons.
NINTH:
A. In addition to any affirmative vote required by law or this Certificate
of Incorporation or the By-laws of the Corporation, and except as otherwise
expressly provided in Section B of this Article NINTH, a Business Combination
(as hereinafter defined) with, or proposed by or on behalf of, any Interested
Stockholder (as hereinafter defined) or any Affiliate or Associate (as
hereinafter defined) of any Interested Stock-
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holder or any person who thereafter would be an Affiliate or Associate of such
Interested Stockholder shall require the affirmative vote of not less than
sixty-six and two-thirds percent (66-2/3%) of the votes entitled to be cast by
the holders of all the then outstanding shares of Voting Stock (as hereinafter
defined), voting together as a single class, excluding Voting Stock beneficially
owned by any Interested Stockholder or any Affiliate or Associate of such
Interested Stockholder. Such affirmative vote shall be required notwithstanding
the fact that no vote may be required, or that a lesser percent age or separate
class vote may be specified, by law or in any agreement with any national
securities exchange or otherwise.
B. The provisions of Section A of this Article NINTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote, if any, as is required by law or any
other provision of this Certificate of Incorporation or the By-laws of the
Corporation, if all of the conditions specified in either of the following
Paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by a majority
of the Continuing Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
a. the aggregate amount of the cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by holders
of Common Stock in such Business Combination shall be at least equal to the
highest amount determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested Stockholder for any
share of Common Stock in connection with the acquisition by the Interested
Stockholder of beneficial ownership of shares of Common Stock acquired by
it (x) within the two-year period immediately prior to the first public
announcement of the proposed Business Combination (the "Announcement
Date") or (y) in the transaction in which it became an Interested
Stockholder, whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or reclassification
with respect to the Common Stock; and
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(ii) the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the Interested Stockholder
became an Interested Stockholder (the "Determination Date"), whichever is
higher, as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to the Common Stock.
b. The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received per share by holders of shares of any class or series
of outstanding Capital Stock (as hereinafter defined), other than Common Stock,
shall be at least equal to the highest amount determined under clauses (i), (ii)
and (iii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested Stockholder for any
share of such class or series of Capital Stock in connection with the
acquisition by the Interested Stockholder of beneficial ownership of
shares of such class or series of Capital Stock (x) within the two-year
period immediately prior to the Announcement Date or (y) in the
transaction in which it became an Interested Stockholder, whichever is
higher, in either case as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to such class or
series of Capital Stock;
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the Determination
Date, whichever is higher, as adjusted for any subsequent stock split,
stock dividend, subdivision or reclassification with respect to such class
or series of Capital Stock; and
(iii) (if applicable) the highest preferential amount
per share to which the holders of shares of such class or series of
Capital Stock would be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation regardless of whether the Business Combination to be
consummated constitutes such an event.
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The provisions of this Paragraph 2 shall be required to be met with respect to
every class or series of outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired beneficial ownership of any
shares of a particular class or series of Capital Stock.
c. The consideration to be received by holders of a particular class
or series of outstanding Capital Stock shall be in cash or in the same form as
previously has been paid by or on behalf of the Interested Stockholder in
connection with its direct or indirect acquisition of beneficial ownership of
shares of such class or series of Capital Stock. If the consideration so paid
for shares of any class or series of Capital Stock varied as to form, the form
of consideration for such class or series of Capital Stock shall be either cash
or the form used to acquire beneficial ownership of the largest number of shares
of such class or series of Capital Stock previously acquired by the Interested
Stockholder.
d. After the Determination Date and prior to the consummation of
such Business Combination: (i) except as approved by a majority of the
Continuing Directors, there shall have been no failure to declare and pay at
the regular date therefor any full quarterly dividends (whether or not
cumulative) payable in accordance with the terms of any outstanding Capital
Stock; (ii) there shall have been no reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any stock split, stock
dividend or subdivision of the Common Stock), except as approved by a majority
of the Continuing Directors; (iii) there shall have been an increase in the
annual rate of dividends paid on the Common Stock as necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction that has the effect of reducing the
number of outstanding shares of Common Stock, unless the failure so to increase
such annual rate is approved by a majority of the Continuing Directors; and (iv)
such Interested Stockholder shall not have become the beneficial owner of any
additional shares of Capital Stock except as part of the transaction that result
in such Interested Stockholder becoming an Interested Stockholder and except in
a transaction that, after giving effect thereto, would not result in any
increase in the Interested Stockholder's percentage beneficial ownership of any
class or series of Capital Stock.
e. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the "Act") (or
any subsequent provisions replacing such Act, rules or regulations) shall be
mailed to all stockholders of the Corporation at least 30 days prior to the
consummation of such Business
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Combination (whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions). The proxy or
information statement shall contain on the first page thereof, in a prominent
place, any statement as to the advisability (or inadvisability) of the Business
Combination that the Continuing Directors, or any of them, may choose to make
and, if deemed advisable by a majority of the Continuing Directors, an opinion
of an investment banking firm selected by a majority of the Continuing Directors
as to the fairness (or unfairness) of the terms of the Business Combination from
a financial point of view to the holders of the outstanding shares of Capital
Stock other than the Interested Stockholder and its Affiliates or Associates,
such investment banking firm to be paid a reasonable fee for its services by the
Corporation.
f. Such Interested Stockholder shall not have made any major change
in the Corporation's business or equity capital structure without the approval
of a majority of the Continuing Directors.
C. The following definitions shall apply with respect to this Article
NINTH:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder or (ii) any other
company (whether or not itself an Interested Stockholder) which is or after such
merger or consolidation would be an Affiliate or Associate of an Interested
Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition or security arrangement, investment, loan, advance, guarantee,
agreement to purchase, agreement to pay, extension of credit, joint venture
participation or other arrangement (in one transaction or a series of
transactions) with or for the benefit of any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder involving any assets,
securities or commitments of the Corporation, any Subsidiary or any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder (except
for any arrangement, whether as employee, consultant or otherwise, other than as
a director, pursuant to which any Interested Stockholder or any Affiliate or
Associate thereof shall, directly or indirectly, have any control over or
responsibility for the management of any aspect of the business or affairs of
the Corporation, with respect to which arrangements the value tests set forth
below shall not apply), together with all other such arrangements (including all
contemplated future events), has an aggregate Fair Market Value and/or involves
aggregate commitments of $5,000,000 or more or
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<PAGE> 17
constitutes more than 5 percent of the book value of the total assets (in the
case of transactions involving assets or commitments other than capital stock)
or 5 percent of the stockholders' equity (in the case of transactions in capital
stock) of the entity in question (the "Substantial Part"), as reflected in the
most recent fiscal year-end consolidated balance sheet of such entity existing
at the time the stockholders of the Corporation would be required to approve or
authorize the Business Combination involving the assets, securities and/or
commitments constituting any Substantial Part; or
c. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation or for any amendment to the Corporation's
By-laws; or
d. any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
that has the effect, directly or indirectly, of increasing the proportionate
share of any class or series of Capital Stock, or any securities convertible
into Capital Stock or into equity securities of any Subsidiary, that is
beneficially owned by any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
e. any agreement, contract or other arrangement providing for any
one or more of the actions specified in the foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article FOURTH of
this Certificate of Incorporation, and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, company or
other entity and shall include any group comprised of any person and any other
person with whom such person or any Affiliate or Associate of such person has
any agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital Stock.
4. The term "Interested Stockholder" shall mean any person (other
than the Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the Corporation or
any Subsidiary or any trustee of or fiduciary with respect to any such plan when
acting in such capacity who
17
<PAGE> 18
(a) is or has announced or publicly disclosed a plan or intention to become the
beneficial owner of Voting Stock representing fifteen percent (15%) or more of
the votes entitled to be cast by the holders of all then outstanding shares of
Voting Stock; or (b) is an Affiliate or Associate of the Corporation and at any
time within the two-year period immediately prior to the date in question was
the beneficial owner of Voting Stock representing fifteen percent (15%) or more
of the votes entitled to be cast by the holders of all then outstanding shares
of Voting Stock.
5. A person shall be a "beneficial owner" of any Voting Stock: (a)
which such person or any of its Affiliates or Associates beneficially owns,
directly or indirectly; (b) which such person or any of its Affiliates or
Associates has, directly or indirectly, (i) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or understanding; or
(c) which is beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of determining
whether a person is an Interested Stockholder pursuant to Paragraph 4 of this
Section C, the number of shares of Capital Stock deemed to be outstanding shall
include shares deemed beneficially owned by such person through applications of
this Paragraph 5 of Section C, but shall not include any other shares of Capital
Stock that may be issuable pursuant to an agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
6. The terms "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Act, as in effect on April 2, 1993 (the term "registrant"
in said Rule 12b-2 meaning in this case the Corporation).
7. "Subsidiary" means any company of which a majority of any class
of equity security is beneficially owned by the Corporation; provided, however,
that for the purposes of the definition of Interested Stockholder set forth in
Paragraph 4 of this Section C, the term "Subsidiary" shall mean only a company
of which a majority of each class of equity security is beneficially owned by
the Corporation.
8. The term "Continuing Director" means any member of the Board of
Directors of the Corporation, while such person is a member of the Board of
Directors,
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<PAGE> 19
who is not an Affiliate or Associate or representative of the Interested
Stockholder and was a member of the Board of Directors prior to the time that
the Interested Stockholder became an Interested Stockholder, and any successor
of a Continuing Director while such successor is a member of the Board of
Directors, who is not an Affiliate or Associate or representative of the
Interested Stockholder and is recommended or elected to succeed the Continuing
Director by a majority of Continuing Directors.
9. The term "Fair Market Value" means: (a) in the case of cash, the
amount of such cash; (b) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of a share
of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the Act on which such stock
is listed or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System, in the pink sheets of the National
Quotation Bureau or any similar system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of such
stock as determined by a majority of the Continuing Directors in good faith; and
(c) in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined in good faith by a majority
of the Continuing Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in Paragraphs 2.a. and 2.b. of Section B of this Article NINTH shall
include the shares of Common Stock and/or the shares of any other class or
series of Capital Stock retained by the holders of such shares.
D. A majority of the Continuing Directors shall have the power and duty to
determine for the purpose of this Article NINTH, on the basis of information
known to them after reasonable inquiry, all questions arising under this Article
NINTH, including, without limitation, (a) whether a person is an Interested
Stockholder, (b) the number of shares of Capital Stock or other securities
beneficially owned by any person, (c) whether a person is an Affiliate or
Associate of another, (d) whether a Proposed Action (as hereinafter defined) is
with, or proposed by, or on behalf of an Interested Stock holder or an Affiliate
or Associate of an Interested Stockholder, (e) whether the assets that are the
subject of any Business Combination have, or the consideration to be received
for the issuance or transfer of securities by the Corporation or any Subsidiary
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<PAGE> 20
in any Business Combination has, an aggregate Fair Market Value of $5,000,000 or
more, and (f) whether the assets or securities that are the subject of any
Business Combination constitute a Substantial Part. Any such determination made
in good faith shall be binding and conclusive on all parties. The good faith
determination of a majority of the Continuing Directors on such matters shall be
conclusive and binding for all purposes of this Article NINTH.
E. Nothing contained in this Article NINTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
F. The fact that any Business Combination complies with the provisions of
Section B of this Article NINTH shall not be construed to impose any fiduciary
duty, obligation or responsibility on the Board of Directors, or any member
thereof, to approve such Business Combination or recommend its adoption or
approval to the stockholders of the Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to evaluations of or actions and responses
taken with respect to such Business Combination.
G. For the purposes of this Article NINTH, a Business Combination or any
proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH (collectively, "Proposed
Action") is presumed to have been proposed by, or on behalf of, an Interested
Stockholder or an Affiliate or Associate of an Interested Stockholder or a
person who thereafter would become such if (1) after the Interested Stockholder
became such, the Proposed Action is proposed following the election of any
director of the Corporation who with respect to such Interested Stockholder,
would not qualify to serve as a Continuing Director or (2) such Interested
Stockholder, Affiliate, Associate or person votes for or consents to the
adoption of any such Proposed Action, unless as to such Interested Stockholder,
Affiliate, Associate or person a majority of the Continuing Directors makes a
good faith determination that such Proposed Action is not proposed by or on
behalf of such Interested Stockholder, Affiliate, Associate or person, based on
information known to them after reasonable inquiry.
H. Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by law, this
Certificate of Incorporation or the By-laws of the Corporation), any proposal to
amend, repeal or adopt any provision of this Certificate of Incorporation
inconsistent with this Article NINTH which is proposed by
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<PAGE> 21
or on behalf of an Interested Stockholder or an Affiliate or Associate of an
Interested Stockholder shall require the affirmative vote of the holders of not
less than sixty-six and two-thirds percent (66-2/3%) of the votes entitled to be
cast by the holders of all the then outstanding shares of Voting Stock, voting
together as a single class, excluding Voting Stock beneficially owned by such
Interested Stockholder; provided, however, that this Section H shall not apply
to, and such sixty-six and two-thirds percent (66-2/3%) vote shall not be
required for, any amendment, repeal or adoption unanimously recommended by the
Board of Directors if all of such directors are persons who would be eligible to
serve as Continuing Directors within the meaning of Section C, Paragraph 8 of
this Article NINTH.
TENTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
GCL or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal to this Article TENTH shall apply to
or have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
ELEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the By-laws of the Corporation. In addition, the By-laws of the
Corporation may be adopted, repealed, altered, amended, or rescinded by the
affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the
outstanding stock of the Corporation entitled to vote thereon.
TWELFTH: Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Voting Stock, voting together as a single
class, shall be required to amend, repeal or adopt any provision inconsistent
with Articles FIFTH, SEVENTH, EIGHTH, NINTH, TENTH, and ELEVENTH of this
Certificate of Incorporation.
THIRTEENTH: The Corporation reserves the right to repeal, alter, amend, or
rescind any provision contained in this Restated Certificate of Incorporation,
in the manner now
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<PAGE> 22
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, NTL Incorporated has caused this Restated
Certificate of Incorporation to be signed by Richard J. Lubasch, its Senior Vice
President, General Counsel and Secretary, this 1st day of April, 1999.
NTL INCORPORATED
By: /s/ Richard J. Lubasch
-------------------------------
Richard J. Lubasch
Senior Vice President, General Counsel and
Secretary
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<PAGE> 23
Exhibit A
13% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
AND
13% SERIES B SENIOR REDEEMABLE EXCHANGEABLE
PREFERRED STOCK
(a) Designation. There is hereby created out of the authorized and
unissued shares of preferred stock of the Corporation a class of preferred stock
consisting of two series, one designated as the "13% Senior Redeemable Exchange
able Preferred Stock" (the "Series A Preferred") and the other designated as the
"13% Series B Senior Redeemable Exchangeable Preferred Stock" (the "Series B
Preferred"). The number of shares constituting such class shall be 100,000 plus
up to 150,000 shares issued in lieu of cash dividends, and are referred to as
the "Preferred Stock." The liquidation preference of the Preferred Stock shall
be $1,000.00 per share.
(b) Rank. The Preferred Stock shall, with respect to dividends and
distributions upon liquidation, winding-up and dissolution of the Corporation,
rank (i) senior to (a) all classes of Common Stock, (b) the Junior Preferred
Stock, (c) the 5% Preferred Stock and (d) each other class of Capital Stock or
series of preferred stock issued by the Corporation after the Issue Date the
terms of which specifically provide that such class or series will rank junior
to the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation or junior to or on a
parity with any class of common stock of the Corporation or which do not specify
their rank (the securities described in this clause (i), collectively, "Junior
Securities"); (ii) on a parity with each class of Capital Stock or series of
preferred stock issued by the Corporation after the Issue Date the terms of
which specifically provide that such class or series will rank on a parity with
the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation (the securities
described in this clause (ii), collectively, "Parity Securities"); and (iii)
junior to each other class of Capital Stock or other series of preferred stock
issued by the Corporation after the Issue Date the terms of which specifically
provide that such series will rank senior to the Preferred Stock as to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation (the securities described in this clause (iii), collectively,
"Senior Securities").
(c) Dividends.
(i) Beginning on the Issue Date, the Holders of the outstanding
shares of Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, out of funds legally available therefor, dividends on
the Preferred Stock at a rate equal to 13% per annum ($130 per share). Dividends
will accrue from
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the Issue Date and will be payable quarterly in arrears on February 15, May 15,
August 15 and November 15 of each year (each, a "Dividend Payment Date"),
commencing on May 15, 1997. Dividends, whether or not earned or declared, will
accrue without interest until declared and paid, which declaration may be for
all or part of the accrued dividends. Dividends accruing on or prior to February
15, 2004 may, at the option of the Corporation, be paid (i) in cash, (ii) by the
issuance of such number of additional fully paid and nonassessable shares
(including fractional shares) of Preferred Stock equal to the amount of such
dividends then payable divided by $1,000 or (iii) in any combination of the
foregoing. Each dividend shall be payable to the Holders of record as they
appear on the stock books of the Corporation on such record date as may be
fixed by the Board of Directors, which record date will not be less than 10 nor
more than 60 days prior to the applicable Dividend Payment Date. Dividends shall
cease to accrue in respect of the Preferred Stock on the Exchange Date or on the
date of their earlier redemption or repurchase by the Corporation, unless the
Corporation shall have failed to issue the appropriate aggregate principal
amount of Subordinated Debentures in respect of the Preferred Stock on such
Exchange Date or shall have failed to pay the relevant redemption or repurchase
price on the date fixed for redemption or repurchase. All dividends paid with
respect to shares of the Preferred Stock shall be paid pro rata to the Holders
entitled thereto.
(ii) No full dividends may be declared or paid or funds set apart
for the payment of dividends on any Parity Securities for any period unless all
accrued dividends have been or contemporaneously are declared and paid in full
or declared and, if payable in cash, a sum in cash is set apart sufficient for
such payment on the Preferred Stock. If all accrued dividends have not been so
paid, the Preferred Stock shall share dividends pro rata with the Parity
Securities based upon the relative liquidation preferences of the outstanding
shares of the Preferred Stock and such Parity Securities. No dividends may be
declared or paid, nor may funds be set aside for such payment, on Junior
Securities, except dividends on Junior Securities which are paid in additional
Junior Securities (other than Disqualified Capital Stock), and no Parity
Securities or Junior Securities may be repurchased, redeemed or otherwise
retired, nor may funds be set apart for such payment, if all accrued dividends
have not been paid (or deemed to have been paid) on the Preferred Stock.
(iii) In the event that (a) the Exchange Offer Registration
Statement is not filed with the Commission on or prior to the 75th day following
the Issue Date, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 120th day following the Issue Date, (c) the Registered
Exchange Offer is not
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consummated on or prior to the 160th day following the Issue Date or (d) if the
Corporation is obligated to file the Shelf Registration Statement under the
Registration Rights Agreement and the Shelf Registration Statement is not
declared effective on or prior to 160 days after the Issue Date (in each of
cases (b), (c) and (d), as such period may be extended in accordance with the
proviso of Section 2(a) of the Registration Rights Agreement) (each such event
referred to in clauses (a) through (d) above, a "Registration Default"),
dividends will accrue on the Preferred Stock (in addition to the stated
dividends on the Preferred Stock) from and including the next day following each
of (i) such 75-day period in the case of clause (a) above, (ii) such 120-day
period in the case of clause (b) above, (iii) such 160-day period in the case of
clause (c) above and (iv) such 160-day period in the case of clause (d) above
(in each of cases (b), (c) and (d) as such period is extended, if applicable, in
the manner aforesaid) (each such period referred to in clauses (i) through (iv)
above, an "Accrual Period"), at a rate per annum equal to 0.50% of the
liquidation preference of the Preferred Stock (determined daily). The amount of
such additional dividends (the "Special Dividends") will increase by an
additional 0.50% per annum with respect to each subsequent applicable Accrual
Period until all Registration Defaults have been cured, up to a maximum of
Special Dividends of 1.50% per annum of the liquidation preference (determined
daily). In each case, such additional dividends (the "Special Dividends") will
be payable quarterly in arrears each May 15, August 15, November 15 and February
15, commencing May 15, 1997, to Holders of record on the immediately preceding
May 1, August 1, November 1 and February 1, respectively.
In the event that a Shelf Registration Statement is declared effective
pursuant to the Registration Rights Agreement, if the Corporation fails to keep
the Shelf Registration Statement continuously effective for the period required
by the Registration Rights Agreement, then from such time as the Shelf
Registration is no longer effective until the earliest of (i) the date that the
Shelf Registration Statement is again deemed effective, (ii) the date that is
the third anniversary of the Issue Date or (iii) the date as of which all of the
Transfer Restricted Securities are sold pursuant to the Shelf Registration
Statement, Special Dividends shall accrue at a rate per annum equal to 0.50% of
the liquidation preference of the Preferred Stock (1.00% thereof if the Shelf
Registration Statement is no longer effective for 30 days or more) and shall be
payable quarterly in arrears each May 15, August 15, November 15 and February
15, commencing May 15, 1997, to Holders of record on the immediately preceding
May 1, August 1, November 1 and February 1, respectively.
(iv) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or
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<PAGE> 26
the Corporation to pay or set apart for payment, any dividends on shares of the
Preferred Stock at any time. In the event that the Corporation fails to pay
dividends, the sole remedy available to Holders will be the election of
directors as set forth in paragraph (f)(ii).
(v) Accrued dividends may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to Holders of record, not more
than sixty (60) days prior to payment thereof, as may be fixed by the Board of
Directors of the Corporation.
(vi) Dividends payable on the Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed in the period for which such
dividends are payable.
(vii) References in this Resolution to "dividends" include Special
Dividends unless the context requires otherwise.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the Holders of
shares of Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders, an
amount in cash equal to the liquidation preference for each share outstanding,
plus an amount in cash equal to accrued and unpaid dividends thereon, if any, to
the date fixed for liquidation, dissolution or winding up (including an amount
in cash equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding up),
before any distribution shall be made or any assets distributed to the holders
of any of the Junior Securities including, without limitation, any Common
Stock. Except as provided in the preceding sentence, Holders shall not be
entitled to any distribution in the event of any liquidation, dissolution or
winding up of the affairs of the Corporation. If the assets of the Corporation
are not sufficient to pay in full the liquidation payments payable to the
holders of outstanding shares of the Preferred Stock and all Parity Securities,
then the holders of all such shares shall share equally and ratably in such
distribution of assets of the Corporation in proportion to the full liquidation
preference to which each is entitled. After payment in full of the liquidation
preference to which Holders are entitled, such
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<PAGE> 27
Holders will not be entitled to any further participation in any distribution of
assets of the Corporation.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation.
(e) Redemption.
(i) Optional Redemption. (A) The Corporation may, at the option of
the Board of Directors, redeem in whole at any time or in part from time to
time, in the manner provided for in paragraph (e)(iii) hereof, any or all of the
shares of Preferred Stock, at the redemption prices (expressed as percentages of
the liquidation preference thereof) set forth below plus all accrued and unpaid
dividends (including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) (the "Optional Redemption Price") if redeemed during
the 12-month period beginning February 15 of each of the years set forth below:
2002...................................... 106.500%
2003...................................... 104.333%
2004...................................... 102.167%
2005 and thereafter....................... 100.000%
(B) Upon a Change of Control Call Event, the Corporation will have the
option to redeem all (but not less than all) of the outstanding shares of
Preferred Stock at a redemption price (the "Change of Control Call Price") equal
to 100% of the liquidation preference thereof, plus the Applicable Premium, plus
accrued and unpaid dividends to the date of repurchase; provided, however, no
such redemption shall be consummated except contemporaneously with or after the
merger, consolidation or business combination referred to in the definition of
Change of Control Call Event. Notwithstanding anything to the contrary in
paragraph (e)(iii), notice of any such redemption pursuant to this paragraph
must be given no later than 90 days following the date upon which the Change of
Control Call Event occurred (or no later than 10 days after the date on which a
notice of a Change of Control Offer must be mailed pursuant to paragraph (h) if
the events giving rise to the Change of Control
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Call Event also give rise to a Change of Control Triggering Event), and the
purchase date must be within 30 days of the date of notice.
(C) In the event of a redemption pursuant to paragraph (e)(i)(A) or (B)
hereof of only a portion of the then outstanding shares of the Preferred Stock,
the Corporation shall effect such redemption on a pro rata basis according to
the number of shares held by each Holder of the Preferred Stock, except that the
Corporation may redeem such shares held by Holders of fewer than 10 shares (or
all shares held by Holders who would hold less than 10 shares as a result of
such redemption), as may be determined by the Corporation. No partial redemption
of the Preferred Stock may be authorized or made unless prior thereto all
accrued dividends thereon shall have been paid in cash or declared and a sum set
apart for such payment.
(ii) Mandatory Redemption. On February 15, 2009, the Corporation
shall redeem, to the extent of funds legally available therefor, in the manner
provided for in paragraph (e)(iii) hereof, all of the shares of the Preferred
Stock then outstanding at a redemption price equal to 100% of the liquidation
preference per share, plus an amount in cash equal to all accrued and unpaid
dividends per share (including an amount equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) (the "Mandatory Redemption Price").
(iii) Procedures for Redemption. (A) At least fifteen (15) days and
not more than sixty (60) days prior to the date fixed for any redemption of the
Preferred Stock, written notice (the "Redemption Notice") shall be given by
first class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the Preferred Stock at such Holder's address as it
appears on the stock books of the Corporation; provided, however, that no
failure to give such notice nor any deficiency therein shall affect the validity
of the procedure for the redemption of any shares of Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Corporation has failed
to give said notice or to whom such notice was defective. If any Preferred Stock
is to be redeemed in part only, the Redemption Notice that relates to such
Preferred Stock will state the number of shares thereof to be redeemed. Shares
of Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged, will (upon compliance with any
applicable provisions of Delaware law) have the status of authorized but
unissued shares of preferred stock of the Corporation undesignated as to series
and may, with any and all other authorized but unissued shares of preferred
stock of the Corporation, be designated or redesignated and
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issued or reissued, as the case may be, as part of any series of preferred stock
of the Corporation, except that such shares may not be reissued or sold as
shares of the Preferred Stock (other than in payment of dividends on the
Preferred Stock). The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (e)(i)(A),
(e)(i)(B) or (e)(ii) hereof;
(2) the Optional Redemption Price, the Change of Control Call Price
or the Mandatory Redemption Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Preferred Stock are to be redeemed and the total number of shares of the
Preferred Stock being redeemed;
(4) the date fixed for redemption;
(5) that the Holder is to surrender to the Corporation, in the
manner, at the place or places and at the price designated, such Holder's
certificate or certificates representing the shares of Preferred Stock to
be redeemed; and
(6) that dividends on the shares of the Preferred Stock to be
redeemed shall cease to accrue on such Redemption Date unless the
Corporation defaults in the payment of the Optional Redemption Price, the
Change of Control Call Price or the Mandatory Redemption Price, as the
case may be.
(B) Each Holder of shares of Preferred Stock shall surrender the
certificate or certificates representing such shares to the Corporation, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full Optional Redemption Price, the
Change of Control Call Price or the Mandatory Redemption Price, as the case may
be, for such shares shall be payable in cash to the Person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
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(C) On the Redemption Date, unless the Corporation defaults in the payment
in full of the applicable redemption price, dividends on the Preferred Stock
called for redemption shall cease to accrue, and all rights of the Holders of
redeemed shares shall terminate with respect thereto, other than the right to
receive the Optional Redemption Price, the Change of Control Call Price or the
Mandatory Redemption Price, as the case may be, without interest; provided,
however, that if a notice of redemption shall have been given as provided in
paragraph (iii)(A) above and the funds necessary for redemption (including an
amount in respect of all dividends that will accrue to the Redemption Date)
shall have been irrevocably deposited in trust for the equal and ratable benefit
for the Holders of the shares to be redeemed, then, at the close of business on
the day on which such funds are segregated and set aside, the Holders of the
shares to be redeemed shall cease to be stockholders of the Corporation and
shall be entitled only to receive the Optional Redemption Price, the Change of
Control Call Price or the Mandatory Redemption Price, as the case may be,
without interest.
(f) Voting Rights.
(i) The Holders of Preferred Stock, except as otherwise required
under Delaware law or as set forth in this paragraph (f), shall not be entitled
or permitted to vote on any matter required or permitted to be voted upon by the
stockholders of the Corporation.
(ii) If (a) dividends on the Preferred Stock are in arrears and
unpaid (after February 15, 2004, in cash) for six quarterly periods (whether or
not consecutive), (b) the Corporation fails to effect a redemption of the
Preferred Stock when required by, and in accordance with, paragraph (e)(ii) or
(c) the Corporation fails to make an offer to purchase all of the outstanding
shares of Preferred Stock following a Change of Control Triggering Event, if
such offer to purchase is required by paragraph (h), or fails to purchase all of
the shares of Preferred Stock validly tendered pursuant thereto (each such event
described in clauses (a) through (c) above being referred to herein as a "Voting
Rights Triggering Event"), then the number of directors constituting the Board
of Directors of the Corporation will be increased by two and the holders of the
majority of the then outstanding shares of Preferred Stock, voting separately as
a class, will be entitled to elect the two additional directors. Such voting
rights will continue until such time as, in the case of a default under clause
(a), all accrued dividends on the Preferred Stock are paid in full and, in all
other cases, any failure, breach or default referred to in clause (b) or (c) is
remedied, at which time the term of any directors elected pursuant to the
provisions of this
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paragraph shall immediately terminate. Any vacancy occurring in the office of a
director elected by the Holders may be filled by the remaining director elected
by such holders unless and until such vacancy shall be filled by such holders.
Regardless of the number of Voting Rights Triggering Events, in no event shall
the Holders have the right to elect and have serve more than two members of the
Board of Directors of the Corporation at any one time.
At any time after voting power to elect directors shall have become
vested and be continuing in the Holders of shares of the Preferred Stock
pursuant to this paragraph (f)(ii), or if vacancies shall exist in the offices
of directors elected by the Holders of shares of the Preferred Stock, a proper
officer of the Corporation may, and upon the written request of the Holders of
record of at least 10% of the shares of Preferred Stock then outstanding
addressed to the Secretary of the Corporation shall, call a special meeting of
the Holders of Preferred Stock, for the purpose of electing the directors which
such Holders are entitled to elect. If such meeting shall not be called by the
proper officer of the Corporation within 20 days after personal service of said
written request upon the Secretary of the Corporation, or within 20 days after
mailing the same within the United States by certified mail, addressed to the
Secretary of the Corporation at its principal executive offices, then the
Holders of record of at least 20% of the outstanding shares of the Preferred
Stock may designate in writing one of their number to call such meeting at the
expense of the Corporation, and such meeting may be called by the Person so
designated upon the notice required for the annual meetings of stockholders of
the Corporation and shall be held at the place for holding the annual meetings
of stockholders or such other place in the United States as shall be designated
in such notice. Notwithstanding the foregoing, no such special meeting shall be
called if any such request is received less than 30 days before the date fixed
for the next ensuing annual or special meeting of stockholders of the
Corporation. Any Holder of shares of the Preferred Stock so designated shall
have, and the Corporation shall provide, access to the lists of Holders of
shares of the Preferred Stock for purposes of calling a meeting pursuant to the
provisions of this paragraph (f)(ii).
(iii) The Corporation shall not, without the affirmative vote or
consent of Holders of a majority of the shares of Preferred Stock then
outstanding, voting or consenting, as the case may be, separately as one class,
given in person or by proxy, either in writing or by resolution adopted at an
annual or special meeting, (x) create, authorize or issue any class of Senior
Securities or Parity Securities or (y) amend the Certificate of Designation so
as to affect adversely the specified rights, preferences, privileges or voting
rights of holders of Preferred Stock or authorize the
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issuance of any additional shares of Preferred Stock (other than in payment of
dividends on the Preferred Stock); provided, however, that the Corporation may,
without the approval of any Holders, issue or have outstanding shares of Parity
Securities (other than Disqualified Capital Stock) issued from time to time in
exchange for, or all of the proceeds of which are used to redeem or repurchase,
any or all of the shares of Preferred Stock. The Holders of a majority of the
outstanding shares of Preferred Stock, voting or consenting, as the case may be,
separately as one class, may waive compliance with any provision of the
Certificate of Designation. Except as set forth in this paragraph (f)(iii),
neither (a) the creation, authorization or issuance of any shares of Junior
Securities, Parity Securities or Senior Securities, including the designation of
a series thereof within the existing class of Preferred Stock, nor (b) the
increase or decrease in the amount of authorized capital stock of any class,
including any preferred stock, shall require the consent of any Holders or shall
be deemed to affect adversely the rights, preferences, privileges or voting
rights of shares of Preferred Stock.
(iv) Without the affirmative vote or consent of Holders of a
majority of the issued and outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting, the
Corporation shall not, in a single transaction or series of related
transactions, consolidate or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets to,
another Person or adopt a plan of liquidation unless: (A) either (1) the
Corporation is the surviving or continuing Person or (2) the Person (if other
than the Corporation) formed by such consolidation or into which the Corporation
is merged or the Person that acquires by conveyance, transfer or lease the
properties and assets of the Corporation as an entirety or substantially as an
entirety or in the case of a plan of liquidation, the Person to which assets of
the Corporation have been transferred, shall be a corporation, partnership or
trust organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (B) the Preferred Stock shall be converted
into or exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or resulting
Person the same powers, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions thereon
that the Preferred Stock had immediately prior to such transaction, and (C) the
Corporation has delivered to the transfer agent for the Preferred Stock prior to
the consummation of the proposed transaction an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
complies with the terms hereof and that all conditions precedent herein relating
to such transaction have
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been satisfied. For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties or assets of one or
more subsidiaries of the Corporation, the Capital Stock of which constitutes all
or substantially all of the properties and assets of the Corporation shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Corporation.
(v) On or prior to the Exchange Date, the Corporation shall not
amend or modify the form of Indenture (except as expressly provided therein in
respects of amendments without the consent of holders of Subordinated
Debentures) without the affirmative vote or consent of Holders of at least a
majority of the shares of Preferred Stock then outstanding, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting.
(vi) In any case in which the Holders shall be entitled to vote as
described herein or pursuant to Delaware law, each Holder shall be entitled to
one vote for each share of Preferred Stock held by such Holder.
(g) Exchange.
(i) Requirements. On any Dividend Payment Date, the Corporation
may, at its option, exchange the Preferred Stock, in whole but not in part, for
the Subordinated Debentures; provided, however, that any such exchange may only
be made if on or prior to the date of such exchange (i) the Corporation has paid
all accrued dividends on the Preferred Stock (including the dividends payable on
the Exchange Date) and there shall be no contractual impediment to such
exchange; (ii) there shall be funds legally available sufficient therefor; (iii)
the Indenture has been qualified under the Trust Indenture Act of 1939, as
amended, if required at the time of such exchange for public indentures; and
(iv) the Corporation shall have delivered an Officers' Certificate and an
Opinion of Counsel to the effect that all conditions to be satisfied prior to
such exchange have been satisfied. Holders of Preferred Stock so exchanged will
be entitled to receive $1.00 in principal amount of Subordinated Debentures for
each $1.00 of liquidation preference of Preferred Stock held by such holder at
the time of exchange. In connection with any such exchange, dividends on shares
of Preferred Stock exchanged which have accrued on or prior to February 15, 2004
which have not been paid as of the Exchange Date shall be paid, at the
Corporation's option, in cash, in additional Subordinated Debentures in an
equivalent principal amount of such accrued and unpaid dividends or in a
combination of the foregoing. Dividends on any shares of Preferred Stock
accruing after February 15,
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2004 which have not been paid as of the Exchange Date must be paid in cash on
the Exchange Date. On the Exchange Date, all dividends on the Preferred Stock
will cease to accrue. Subordinated Debentures issued in exchange for Preferred
Stock will be issued in principal amounts of $1,000 and integral multiples
thereof to the extent possible, and will also be issued in principal amounts of
less than $1,000 so that each holder of Preferred Stock will receive
certificates representing the entire amount of Subordinated Debentures to which
its shares of Preferred Stock entitle it; provided, however, that the
Corporation may, at its option, pay cash in lieu of issuing a Subordinated
Debenture in a principal amount less than $1,000.
(ii) Procedures. The Corporation shall send by first-class mail,
postage prepaid, to each Holder of record on the record date fixed for such
exchange of Preferred Stock, at such Holder's address as the same appears on the
stock books of the Corporation, written notice (the "Exchange Notice") of its
intention to ex change the Preferred Stock for Subordinated Debentures at least
30 and not more than 60 days prior to the Exchange Date; provided, however, that
no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the exchange of any shares of Preferred Stock to
be exchanged except as to the Holder or Holders to whom the Corporation has
failed to give said notice or to whom such notice was defective. Each Exchange
Notice must state (i) the Exchange Date, (ii) the place or places where
certificates for shares of Preferred Stock are to be surrendered for exchange
into Subordinated Debentures, (iii) that dividends on the shares of Preferred
Stock to be exchanged will cease to accrue on the Exchange Date whether or not
certificates for shares of Preferred Stock are surrendered for exchange on such
Exchange Date unless the Corporation shall default in the delivery of
Subordinated Debentures and (iv) that interest on the Subordinated Debentures
shall accrue from the Exchange Date whether or not certificates for shares of
Preferred Stock are surrendered for exchange on such Exchange Date.
(A) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of Preferred Stock, in the
manner and at the place designated in the Exchange Notice. The Corporation shall
cause the Subordinated Debentures to be executed on the Exchange Date and, upon
surrender in accordance with the Exchange Notice of the certificates for any
shares of Preferred Stock so exchanged, duly endorsed (or otherwise in proper
form for transfer, as determined by the Corporation), such shares shall be
exchanged by the Corporation for Subordinated Debentures. The Series A Preferred
shall be exchanged for Series A Debentures and the Series B Preferred shall be
exchanged for Series B
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Debentures. The Corporation shall pay interest on the Subordinated Debentures at
the rate and on the dates specified therein from the Exchange Date.
(B) If notice has been mailed as aforesaid, and if before the Exchange
Date specified in such notice (1) the Indenture shall have been duly executed
and delivered by the Corporation and the trustee thereunder and (2) all
Subordinated Debentures necessary for such exchange shall have been duly
executed by the Corporation and delivered to the trustee under the Indenture
with irrevocable instructions to authenticate the Subordinated Debentures
necessary for such exchange, then the rights of the Holders of Preferred Stock
so exchanged as stockholders of the Corporation shall cease (except the right
to receive Subordinated Debentures, an amount in cash equal to the amount of
accrued and unpaid dividends to the Exchange Date and, if the Corporation so
elects, cash in lieu of any Subordinated Debenture with a principal amount not
an integral multiple of $1,000), and the Person or Persons entitled to receive
the Subordinated Debentures issuable upon exchange shall be treated for all
purposes as the registered holder or holders of such Subordinated Debentures as
of the Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing
provisions of this paragraph (g), the Corporation shall not be entitled to
exchange the Preferred Stock for Subordinated Debentures if such exchange, or
any term or provision of the Indenture or the Subordinated Debentures, or the
performance of the Corporation's obligations under the Indenture or the
Subordinated Debentures, shall violate any applicable law or if, at the time of
such exchange, the Corporation is insolvent or if it would be rendered insolvent
by such exchange.
(h) Change of Control Put.
(i) In the event of a Change of Control Triggering Event, the
Corporation shall notify each Holder in writing of such occurrence and shall
make an offer to purchase (the "Change of Control Offer") such Holder's shares
of Preferred Stock at a purchase price in cash equal to 101% of the liquidation
preference thereof plus accrued and unpaid dividends per share (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Change of Control Payment Date to the
Change of Control Payment Date (as defined herein)).
(ii) Not later than 90 days following the date upon which the Change
of Control Triggering Event occurred, the Corporation shall send, by first
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class mail, postage prepaid, a notice to each Holder of Preferred Stock at such
Holder's last registered address with a copy to the Registrar, which notice
shall govern the terms of the Change of Control Offer. The notice to the Holders
shall contain all instructions and materials necessary to enable such Holders to
tender Preferred Stock pursuant to the Change of Control Offer. Such notice
shall state:
(A) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this paragraph (h) and that all
Preferred Stock validly tendered and not withdrawn will be accepted for
payment;
(B) the purchase price (including the amount of accumulated and
unpaid dividends, if any) and the purchase date (which shall be no earlier
than 30 days nor later than 60 days from the date such notice if mailed,
other than as may be required by law) (the "Change of Control Payment
Date"); provided, however, that there shall be no right of any Holder to
require the Corporation to purchase such Holder's shares of Preferred
Stock until the earlier of the date on which all of the Deferred Coupon
Notes have been repaid or have matured;
(C) that any shares of Preferred Stock not tendered will continue to
accrue dividends;
(D) that, unless the Corporation defaults in making payment
therefor, any share of Preferred Stock accepted for payment pursuant to
the Change of Control Offer shall cease to accrue dividends after the
Change of Control Payment Date;
(E) that Holders electing to have any shares of Preferred Stock
purchased pursuant to a Change of Control Offer will be required to
surrender the certificate or certificates representing such shares,
properly endorsed for transfer together with such customary documents as
the Corporation and the transfer agent may reasonably require, in the
manner and at the place specified in the notice prior to the close of
business on the Business Day prior to the Change of Control Payment Date;
(F) that Holders will be entitled to withdraw their election if the
Corporation receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter
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setting forth the name of the Holder, the number of shares of Preferred
Stock the Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such shares of Preferred Stock
purchased;
(G) that Holders whose shares of Preferred Stock are purchased only
in part will be issued a new certificate representing the unpurchased
shares of Preferred Stock; and
(H) the circumstances and relevant facts regarding such Change of
Control Triggering Event.
(iii) Each Change of Control Offer shall remain open for at least 20
Business Days or such longer period as may be required by law. The Corporation
shall comply with Rules 13e-4 and 14e-4 and 14e-1 under the Exchange Act and
other provisions of state and federal securities laws and regulations, to the
extent such laws and regulations are applicable to the repurchase of the
Preferred Stock in connection with a Change of Control Offer.
(iv) On the Change of Control Payment Date the Corporation shall (A)
accept for payment the shares of Preferred Stock validly tendered pursuant to
the Change of Control Offer, (B) pay to the Holders of shares so accepted the
purchase price therefor in cash and (C) cancel and retire each surrendered
certificate. Unless the Corporation defaults in the payment for the shares of
Preferred Stock tendered pursuant to the Change of Control Offer, dividends will
cease to accrue with respect to the shares of Preferred Stock tendered and all
rights of Holders of such tendered shares will terminate, except for the right
to receive payment therefor, on the Change of Control Payment Date.
(v) Notwithstanding the foregoing, prior to the mailing of the
notice of a Change of Control Offer referred to above, the Corporation shall (i)
within 60 days following a Change of Control Triggering Event, either (a) repay
in full all indebtedness for borrowed money of the Corporation, and terminate
all commitments, under the Potential Credit Facilities, in each case, to the
extent required upon a change of control pursuant to the terms thereof (or offer
to repay in full all such indebtedness and terminate all such commitments and
repay all such indebtedness owed to each lender which has accepted such offer
and terminate all such commitments of each such lender), or (b) obtain the
requisite consents under the Potential Credit Facilities to permit the
repurchase of the Preferred Stock as provided above and (ii) within 90 days
following a Change of Control Triggering Event,
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purchase all Senior Notes (or permitted refinancings thereof) which it is
required to purchase by reason of such change of control pursuant to the
provisions of the indenture therefor. The Corporation shall first comply with
the covenant described in the immediately preceding sentence before it shall be
required to repurchase Preferred Stock pursuant to the provisions described
above.
(i) Conversion or Exchange. The Holders of shares of Preferred Stock shall
not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Corporation.
(j) Preemptive Rights. No shares of Preferred Stock shall have any rights
of preemption whatsoever as to any securities of the Corporation, or any
warrants, rights or options issued or granted with respect thereto, regardless
of how such securities or such warrants, rights or options may be designated,
issued or granted.
(k) Reissuance of Preferred Stock. Shares of Preferred Stock that have
been issued and reacquired in any manner, including shares purchased or redeemed
or exchanged, shall (upon compliance with any applicable provisions of the laws
of Delaware) have the status of authorized and unissued shares of Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of Preferred Stock, provided that any issuance of such shares as
Preferred Stock must be in compliance with the terms hereof.
(l) Business Day. If any payment, redemption, purchase or exchange shall
be required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption, purchase or exchange shall be made on the immediately
succeeding Business Day.
(m) Reports. Whether or not required by the rules and regulations of the
Commission, so long as any Preferred Stock is outstanding, the Corporation will
file with the Commission and furnish to the Holders of Preferred Stock all
quarterly and annual financial information required to be contained in a filing
with the Commission on Forms 10-Q and 10-K (or the equivalent thereof in the
event the Corporation becomes a corporation organized under the laws of England
and Wales), including a "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and, with respect to the annual information
only, a report thereon by the Corporation's certified independent accountants,
in each case, as required by the rules and regulations of the Commission as in
effect on the Issue Date.
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(n) Definitions. As used in this Certificate of Designation, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accrual Period" shall have the meaning ascribed to it in paragraph
(c)(iii).
"Applicable Premium" means, with respect to any share of Preferred
Stock, the greater of (x) 1.0% of the liquidation preference thereof and
(y) the excess, if any, of (a) the present value of dividends accruing
until and including February 15, 2002 (assuming payment thereof in cash
on the applicable Dividend Payment Date) and the liquidation preference
and any applicable optional redemption premium therefor payable on such
date for such share (in each case assuming payment thereof on February 15,
2002), computed using a discount rate equal to the Treasury Rate plus 100
basis points over (b) the sum of the liquidation preference of such share
plus accrued and unpaid dividends to the redemption date.
"Board of Directors" shall have the meaning ascribed to it in the
first paragraph of this Resolution.
"Board Resolution" means a copy of a resolution certified pursuant
to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Corporation and to be in full force and effect, and
delivered to the Holders.
"Business Day" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of the
Corporation.
"Certificate of Incorporation" shall have the meaning ascribed to it
in the first paragraph of this Resolution.
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"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of the Corporation 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 approval by the
requisite stockholders of the Corporation of a plan of liquidation or
dissolution of the Corporation, (iii) any "person" or "group" (within the
meaning of Sections 13(d) 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, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 50% of the total voting power of all
classes of the voting stock of the Corporation 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 Corporation is substantially the same immediately after such
transaction as it was immediately prior to such transaction, or (iv)
during any period of two consecutive years, individuals who at the
beginning of such period constituted the Corporation's Board of Directors
(together with any new directors whose election or appointment by such
board or whose nomination for election by the shareholders of the
Corporation 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 Corporation's Board
of Directors then in office.
"Change of Control Call Event" means the entering by the Corporation
into a binding agreement providing for a merger, consolidation or business
combination of the Corporation with another corporation, association or
other entity, which agreement provides that upon consummation thereof that
the holders of the Common Stock will own less than 80% of the voting and
economic power of the entity, if any, in which holders of the Common Stock
will hold equity interests immediately following consummation of any such
transaction.
"Change of Control Call Price" shall have the meaning ascribed to it
in paragraph (e)(ii)(B).
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"Change of Control Offer" shall have the meaning ascribed to it in
paragraph (h)(i).
"Change of Control Payment Date" shall have the meaning ascribed to
it in paragraph (h)(ii)(B).
"Change of Control Triggering Event" means the occurrence of both a
Change of Control and a Ratings Decline.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means any and all shares, interests or other
participations in, and other equivalents (however designated and whether
voting or non-voting) of, the Corporation's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.
"Corporation" shall have the meaning ascribed to it in the first
paragraph of this Resolution.
"Deferred Coupon Notes" means (i) the Corporation's 107/8% Senior
Deferred Coupon Notes Due 2003, (ii) the Corporation's 12 3/4% Senior
Deferred Coupon Notes Due 2005 and (iii) the Corporation's 11 1/2% Senior
Deferred Coupon Notes Due 2006.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or
in part, on or prior to February 15, 2009.
"Dividend Payment Date" shall have the meaning ascribed to it in
paragraph (c)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
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"Exchange Date" means the date of issuance of the Subordinated
Debentures in accordance with paragraph (g) hereof.
"Exchange Notice" shall have the meaning ascribed to it in paragraph
(g)(ii) hereof.
"Exchange Offer Registration Statement" shall have the meaning
ascribed to it in the Registration Rights Agreement.
"5% Preferred Stock" means the 5% Non-voting Convertible Preferred
Stock, Series A, of the Corporation.
"GAAP" means generally accepted accounting principles as in effect
in the United States from time to time.
"Holder" means a holder of shares of Preferred Stock as reflected in
the stock books of the Corporation.
"Indenture" means the indenture governing the Subordinated
Debentures to be entered into between the Corporation and The Chase
Manhattan Bank, as trustee, on the Exchange Date, substantially in the
form on file with the secretary of the Corporation, which form is
available to each Holder without charge upon request.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by
Moody's. In the event that the Corporation shall be permitted to select
any other Rating Agency, the equivalent of such ratings of S&P and Moody's
used by such other Rating Agency shall be used.
"Issue Date" means February 12, 1997, the date of original issuance
of the Preferred Stock.
"Junior Preferred Stock" means the 1,000,000 shares of Series A
Junior Participating Preferred Stock designated and reserved for issuance
in the Corporation's Certificate of Incorporation.
"Junior Securities" shall have the meaning ascribed to it in
paragraph (b) hereof.
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"Mandatory Redemption Price" shall have the meaning ascribed to it
in paragraph (e)(ii) hereof.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Officers' Certificate" means a certificate signed by two officers
or by an officer and either an Assistant Treasurer or an Assistant
Secretary of the Corporation which certificate shall include a statement
that, in the opinion of such signers all conditions precedent to be
performed by the Corporation prior to the taking of any proposed action
have been taken. In addition, such certificate shall include (i) a
statement that the signatories have read the relevant covenant or
condition, (ii) a brief statement of the nature and scope of such
examination or investigation upon which the statements are based, (iii) a
statement that, in the opinion of such signatories, they have made such
examination or investigation as is reasonably necessary to express an
informed opinion and (iv) a statement as to whether or not, in the opinion
of the signatories, such relevant conditions or covenants have been
complied with.
"Opinion of Counsel" means an opinion of counsel that, in such
counsel's opinion, all conditions precedent to be performed by the
Corporation prior to the taking of any proposed action have been taken.
Such opinion shall also include the statements called for in the second
sentence under the definition of "Officers' Certificate."
"Optional Redemption Price" shall have the meaning ascribed to it in
paragraph (e)(i)(A) hereof.
"Parity Securities" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Permitted Designee" means (i) a spouse or a child of a Permitted
Holder, (ii) trusts for the benefit of a Permitted Holder or a spouse or
child of a Permitted Holder, (iii) in the event of 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.
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"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and
their Permitted Designees.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Potential Credit Facilities" has the meaning ascribed to such term
in Corporation's Offering Memorandum dated February 7, 1997 relating to
the offering of the Senior Notes and the Preferred Stock.
"Preferred Stock" shall have the meaning ascribed to it in paragraph
(a) hereof.
"Rating Agencies" means (i) S&P, (ii) Moody's and (iii) if S&P or
Moody's or both shall not make a rating of the Securities publicly
available, a nationally recognized securities rating agency or agencies,
as the case may be, selected by the Corporation, which shall be
substituted for S&P or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any of the
following categories: BB, B, CCC, CC, C and D (or equivalent successor
categories), (ii) with respect to Moody's, and of the following
categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories)
and (iii) the equivalent of any such category of S&P or Moody's used by
another Rating Agency. In determining whether the rating of the Securities
has decreased by one or more gradations, gradations within Rating
Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent
gradations for another Rating Agency) shall be taken into account (e.g.,
with respect to S&P, a decline in a rating from BB to BB-, as well as from
BB- to B+, will constitute a decrease of one gradation).
"Rating Date" means that date which is 90 days prior to the earlier
of (x) a Change of Control and (y) public notice of the occurrence of a
Change of Control or of the intention by the Corporation or any Permitted
Holder to effect a Change of Control.
"Ratings Decline" means the occurrence of any of the following
events on, or within six months after, the date of public notice of the
occurrence of a Change of Control or of the intention of the Corporation
or any
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<PAGE> 45
person to effect a Change of Control (which period shall be extended so
long as the rating of any of the Corporation's debt securities is under
publicly announced consideration for possible downgrade by any of the
Rating Agencies): (a) in the event that any of the Corporation's debt
securities are rated by both of the Rating Agencies on the Rating Date as
Investment Grade, the rating of such debt securities by either of the
Rating Agencies shall be below Investment Grade, (b) in the event that any
of the Corporation's debt securities are rated by either, but not both, of
the Rating Agencies on the Rating Date as Investment Grade, the rating of
such debt securities by both of the Rating Agencies shall be below
Investment Grade, or (c) in the event any of the Corporation's debt
securities are rated below Investment Grade by both of the Rating Agencies
on the Rating Date, the rating of such debt securities by either Rating
Agency shall be decreased by one or more gradations (including gradations
within Rating Categories as well as between Rating Categories).
"Redemption Date," with respect to any shares of Preferred Stock,
means the date on which such shares of Preferred Stock are redeemed by the
Corporation.
"Redemption Notice" shall have the meaning ascribed to it in
paragraph (e)(iii) hereof.
"Registered Exchange Offer" shall have the meaning ascribed to such
term in the Registration Rights Agreement.
"Registrar" means Continental Stock Transfer & Trust Company, as
transfer agent and Registrar for the Preferred Stock.
"Registration Defaults" shall have the meaning ascribed to it in
paragraph (c)(iii).
"Registration Rights Agreement" means the Registration Rights
Agreement relating to the Preferred Stock and the Subordinated Debentures
dated as of February 12, 1997 between the Corporation and Donaldson,
Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, a copy of which is
available to each Holder without charge upon request from the secretary of
the Corporation.
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<PAGE> 46
"S&P" means Standard & Poor's Ratings Group and its successors.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Senior Notes" means the 10% Senior Notes Due 2007 of the
Corporation.
"Senior Securities" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Series A Debentures" means the 13% Subordinated Exchange Debentures
Due 2009 issuable under the Indenture.
"Series B Debentures" means the 13% Series B Subordinated Ex change
Debentures Due 2009 issuable under the Indenture.
"Series A Preferred" shall have the meaning ascribed to it in
paragraph (a) hereof.
"Series B Preferred" shall have the meaning ascribed to it in
paragraph (a) hereof.
"Shelf Registration Statement" shall have the meaning ascribed to
such term in the Registration Rights Agreement.
"Special Dividends" shall have the meaning ascribed to it in
paragraph (c)(iii).
"Subordinated Debentures" means the Series A Debentures and the
Series B Debentures.
"Transfer Agent" means Continental Stock Transfer & Trust Company,
as Transfer Agent for the Preferred Stock.
"Transfer Restricted Securities" shall have the meaning ascribed to
it in the Registration Rights Agreement.
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<PAGE> 47
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (519) which has become publicly available at least two
business days prior to the date fixed for redemption of the Preferred
Stock (or, if such Statistical Release is no longer published, any
publicly available source of similar data)) most nearly equal to the then
remaining period to the date scheduled for the mandatory redemption of the
Preferred Stock; provided, however, that if such period is not equal to
the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the period to the date
scheduled for the mandatory redemption of the Preferred Stock is less than
one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be
used.
"Voting Rights Triggering Event" shall have the meaning ascribed to
it in paragraph (f)(i) hereof.
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<PAGE> 48
Exhibit B
9.90% NON-VOTING MANDATORILY REDEEMABLE
PREFERRED STOCK, SERIES A
(1) Designation; Number of Shares. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A"
(including, in the case of any reclassification, recapitalization, or other
change to such Preferred Stock or, in the case of a consolidation 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 occurrence of such event, the "Mandatorily Redeemable Preferred Stock"). The
authorized number of shares of Mandatorily Redeemable Preferred Stock shall be
125,280, which number may from time to time be increased or decreased (but not
below the number then outstanding). Each share of Mandatorily Redeemable
Preferred Stock shall have a stated value of $1,000 (the "Stated Value").
Any shares of Mandatorily Redeemable 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
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
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 Reorganization); and
(B) in the event of a 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 than 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 immediately
prior to such consummation) for the period of ten consecutive Trading Days
ending on the Trading Day immediately preceding date of occurrence of the
Reorganization, appropriately adjusted to take into account any stock dividend
on such security or property, or any subdivision, split, combination,
reclassification of such security or property that occurs or the "ex" date for
which occurs on or prior to such date.
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"Average Market Price" on any Determination Date, shall mean the
average of the daily Closing Prices for the period of 10 consecutive Trading
Days, ending on the Trading Day immediately preceding such Determination Date,
appropriately adjusted 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 date on which "ex-dividend" trading commences, during
the period following the first Trading Day in such ten-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.
"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
deter mined in good faith by the Board exercising its reasonable discretion.
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<PAGE> 50
"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
paragraph (3) (c).
"Convertible Preferred Stock" shall mean the series of Preferred
Stock of the Company having the terms set forth in the draft of Convertible
Preferred Stock terms attached hereto, as completed pursuant to paragraph (5)
hereof.
"Convertible Preferred Stock Issue Price" shall have the meaning set
forth in paragraph (3)(d) and shall be computed pursuant to paragraph (5).
"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 period of 10 consecutive Trading Days
ending on the last full Trading Day before such Determination Date.
"Determination Date" shall mean: (i) in the case of a dividend
payment, the record date for such dividend payment, (ii) in the case of a
redemption payment, the date of the notice of the Redemption Date and (iii) in
the case of a Reorganization, the date the Reorganization occurs.
"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.
"Fixed Price", on any Determination Date with respect to the
Convertible Preferred Stock, shall have the meaning assigned to such term in the
Certificate
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<PAGE> 51
of Designations relating to, and setting forth the terms of, the Convertible
Preferred Stock.
"Issue Date" shall mean September 22, 1998.
"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, including,
without limitation, the Common Stock;
(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 Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock as
to dividend rights, rights of redemption or rights on liquidation if the holders
of shares of Mandatorily Redeem able 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 Mandatorily Redeemable Preferred Stock or, if less, the
amount payable in respect of one share of Mandatorily Redeemable Preferred Stock
pursuant to paragraph (8)(a) upon the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company.
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"Liquidating Payment Date" shall mean the date on which the Company
makes the aggregate Liquidating Payment to all holders of outstanding shares of
Mandatorily Redeemable Preferred Stock.
"Liquidation Preference" measured per share of the Mandatorily
Redeemable Preferred Stock, shall mean an amount equal to (a) the Stated Value
per share of Mandatorily Redeemable Preferred Stock, plus (b) for purposes of
determining the amount payable pursuant to paragraph (8) 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.
"Mandatorily Redeemable Preferred Stock" shall have the meaning set
forth in paragraph (1).
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (4)(b).
"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 Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation. Capital stock of any class or series,
whether now or existing or hereafter created, shall rank on a parity as to
dividend, rights of redemption or rights on liquidation with the Mandatorily
Redeemable Preferred Stock, whether or not the dividend rates, dividend payment
dates, redemption or liquidation prices per share or sinking fund or mandatory
redemption provision, if any, are different from those of the Mandatorily
Redeemable Preferred Stock, if the holders of shares of such class or series
shall be entitled to dividend payments, payments on redemption of 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 liquidation 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 Mandatorily
Redeemable Preferred Stock. No class or series of capital stock that ranks
junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation
shall rank or be deemed to rank on a parity basis
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<PAGE> 53
with the Mandatorily Redeemable Preferred Stock as to dividend rights or rights
of redemption.
"Payment Record Date" shall have the meaning set forth in paragraph
(13).
"Person" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, 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).
"Redemption Agent" shall have the meaning set forth under paragraph
(4)(h).
"Redemption Date" as to any share of Mandatorily Redeemable
Preferred Stock, shall mean the date on which such share is redeemed by the
Company pursuant to paragraph (4).
"Redemption Notice" shall have the meaning set forth in paragraph
(4)(e).
"Redemption Price" shall have the meaning set forth in paragraph
(4)(a).
"Reorganization" shall mean any of the following events:
(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, and
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(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).
"Reorganization Unit" means the kind or amount of securities, cash
or other property receivable upon consummation of a 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 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 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).
"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 and Trust Company, as
rights agent.
"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 Mandatorily
Redeem able 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 Mandatorily Redeem able 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 Mandatorily Redeemable Preferred Stock. No class or series of capital
stock than ranks on a parity basis with or junior to the Mandatorily Redeemable
Preferred Stock as to rights on liquidation shall rank or be deemed to rank
prior to the Mandatorily Redeemable 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
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provisions thereof are different from those of the Mandatorily Redeemable
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.
(3) DIVIDENDS.
(a) Payment. The holders of outstanding shares of Mandatorily
Redeemable 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, at the rate per annum of 9.90% of the Stated Value per share,
rounded to the nearest cent. Such dividends shall accrue from the Issue Date and
shall be payable on the date the Mandatorily Redeemable Preferred Stock is
redeemed pursuant to paragraph (4).
Dividends on the outstanding shares of Mandatorily Redeemable
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 Mandatorily Redeemable Preferred Stock on the
date of their redemption. No interest, or sum of money in lieu of interest,
shall be payable in respect of any accrued dividend payment.
(b) Declaration and Manner of Payment of Dividends. 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 shares of Convertible Preferred Stock, or (iv)
through any combination of the foregoing forms of consideration elected by the
Board in its sole discretion. 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
Convertible Preferred Stock,
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each holder of Mandatorily Redeemable Preferred Stock shall receive the same
proportion of cash and/or shares of Common Stock or Convertible Preferred Stock
(except for cash paid in lieu of fractional shares) delivered in payment of such
dividend to other holders of shares of Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock in shares of Common Stock (the "Common
Stock Dividend Amount") shall be paid through the delivery to the holders of
record for such shares of Mandatorily Redeemable Preferred Stock on the record
date for such dividend payment (which shall be not more than 10 days prior to
the payment date) 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 Mandatorily
Redeemable Preferred Stock, but the Company shall instead pay a cash adjustment
determined as provided in paragraph (9).
(d) Payment of Dividends by Delivery of Convertible Preferred Stock.
Subject to compliance with paragraph (5), if the Company elects to pay any
dividend payment, in whole or in part, by delivery of shares of Convertible
Preferred Stock, the amount of such dividend payment to be paid per share of
Mandatorily Redeemable Preferred Stock in shares of Convertible Preferred Stock
(the "Preferred Stock Dividend Amount") shall be paid through the delivery to
the holders of record for such shares of Mandatorily Redeemable Preferred Stock
on the record date for such dividend payment (which shall be not more than 10
days prior to the payment date) of a number of shares of Convertible Preferred
Stock determined by dividing the Preferred Stock Dividend Amount by the issue
price of the Convertible Preferred Stock as determined in accordance with
paragraph (5) (the "Convertible Preferred Stock Issue Price"). No fractional
shares of Convertible Preferred Stock shall be delivered to a holder of shares
of Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a
cash adjustment determined as provided in paragraph (9).
(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 Mandatorily Redeemable 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
B-9
<PAGE> 57
other instrument relating to or evidencing its 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 shares of Convertible
Preferred Stock pursuant to paragraph (3)(b), whether permitted by any such
agreement or not.
(f) Pro Rata. All dividends paid with respect to the shares of
Mandatorily Redeemable Preferred Stock shall be paid pro rata (as nearby as may
be practicable) to the shareholders entitled thereto.
(g) Priority. Payment of dividends to the holders of shares of
Mandatorily Redeemable Preferred Stock shall be subject to the prior preferences
and other rights of any Senior Stock and to the provisions of paragraph (7).
(4) REDEMPTION.
(a) Optional Redemption. At any time during the period beginning on
the Issue Date until the Redemption Date, the Company shall have the right to
redeem the outstanding shares of Mandatorily Redeemable Preferred Stock at a
price equal to $1,000 per share, together with an amount equal to all dividends
accrued but unpaid thereon to the date fixed for redemption (the "Redemption
Price").
(b) Mandatory Redemption. All outstanding shares of Mandatorily
Redeemable Preferred Stock shall be mandatorily redeemed by the Company out of
funds legally available therefor on the date that is the tenth anniversary of
Issue Date at a redemption price equal to $1,000 per share, plus an amount equal
to all accrued and unpaid dividends per share (the "Mandatory Redemption
Price").
(c) Early Mandatory Redemption. If the Company has not exercised its
right to optionally redeem the Mandatorily Redeemable Preferred Stock by
December 22, 1999, all outstanding shares of Mandatorily Redeemable Preferred
Stock shall be mandatorily redeemed at the Mandatory Redemption Price.
(d) Company's Right to Elect Manner of Payment of Redemption Price
or Mandatory Redemption Price. The Company may effect the redemption of shares
of Mandatorily Redeemable Preferred Stock at the Redemption Price or the
Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out
of
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funds legally available therefor, (ii) in exchange for and through the delivery
of shares of Common Stock, (iii) subject to compliance with paragraph (5), in
exchange for and through delivery of shares of Convertible Preferred Stock or
(iv) through any combination of the foregoing forms of consideration elected by
the Board in its sole discretion.
(e) Notice of Redemption. In the event of an offer by the Company to
redeem any shares of Mandatorily Redeemable Preferred Stock pursuant to
paragraph (4)(a) or a redemption of the Mandatorily Redeemable Preferred Stock
pursuant to paragraph (4)(b) or (4)(c), the Company shall provide notice of such
offer to redeem or such redemption to holders of record of Mandatorily
Redeemable Preferred Stock to be redeemed not less than 30 days (not less than
10 days if the Redemption Price or Mandatory Redemption Price is payable in cash
or Common Stock) nor more than 60 days prior to the Redemption Date. Such notice
(a "Redemption Notice") shall, subject to paragraph (4)(h)(z), be provided in
accordance with paragraph (14); 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 Mandatorily Redeemable Preferred Stock to be
redeemed.
In addition to any information required by law, the Redemption
Notice shall state, as appropriate, the following (and may contain such other
information as the Company deems advisable):
(A) whether the redemption is pursuant to paragraph (4)(a), (4)(b)
or (4)(c);
(B) the Redemption Date;
(C) the number of shares of Mandatorily Redeemable Preferred Stock
to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed
from such holder;
(D) the Redemption Price or Mandatory Redemption Price and the
form or forms of consideration 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 or Mandatory
Redemption Price to be paid in each form of consideration so
elected;
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(E) 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 deliver able
as provided in paragraph (4)(f);
(F) if the Company has elected to exchange and deliver shares of
Convertible Preferred Stock in payment of the Redemption Price
(or a designated portion thereof), a statement of the
Convertible Preferred Stock Issue Price computed pursuant to
paragraph (5);
(G) the place or places in the United States or England and Wales
where certificates for Mandatorily Redeemable Preferred Stock
to be redeemed are to be surrendered for redemption; and
(H) that dividends on the shares of Mandatorily Redeemable
Preferred Stock to be redeemed shall cease to accrue on the
Redemption Date (unless the Company defaults in making payment
of the Redemption Price).
(f) 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
Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock to be redeemed on the
Redemption Date a number of shares of Common Stock equal to the aggregate
Redemption Price (or designated portion thereof) of such shares of Mandatorily
Redeemable Preferred Stock divided by the Average Market Price. No fractional
shares of Common Stock shall be delivered to a holder of shares of Mandatorily
Redeemable Preferred Stock in payment of the Redemption Price, but the Company
shall instead pay a cash adjustment determined as provided in paragraph (9).
(g) Redemption by Delivery of Convertible Preferred Stock. If the
Company elects to pay, in whole or in part, the Redemption Price in respect of
shares of Mandatorily Redeemable Preferred Stock in exchange for and through the
delivery of shares of Convertible Preferred Stock, then the Company shall
deliver to each holder of shares of Mandatorily Redeemable Preferred Stock to be
redeemed on the Redemption Date a number of shares of Convertible Preferred
Stock equal to the
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aggregate Redemption Price (or designated portion thereof) of such shares of
Mandatorily Redeemable Preferred Stock divided by the Convertible Preferred
Stock Issue Price. No fractional shares of Convertible Preferred Stock shall be
delivered to a holder of shares of Mandatorily Redeemable Preferred Stock in
payment of the Redemption Price, but the Company shall instead pay a cash
adjustment as determined in paragraph (9).
(h) Deposit of Funds and/or Shares. If on or before the 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 or Convertible
Preferred Stock, as applicable, sufficient to pay in full the aggregate
Redemption Price (calculated through the Redemption Date) for such shares of
Mandatorily Redeemable Preferred Stock on such Redemption Date, (y) such cash
and/or shares of Common Stock or Convertible Preferred Stock, as applicable, are
readily available to, but only to, the holders of Mandatorily Redeemable
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 Mandatorily Redeemable
Preferred Stock, which notice shall be given to each holder of Mandatorily
Redeemable 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
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation): (i) such shares of Mandatorily Redeemable Preferred Stock
shall no longer be deemed outstanding but any shares of Common Stock or
Convertible Preferred Stock so deposited in accordance with this paragraph (h)
for which such Mandatorily Redeemable Preferred Stock was redeemed shall be
deemed to be outstanding; (ii) the holders thereof shall cease to be holders of
Mandatorily Redeemable Preferred Stock but shall be shown on the records of the
Company as holders of the Common Stock or Convertible Preferred Stock so
deposited in accordance with this paragraph (h) in redemption of such
Mandatorily Redeemable 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)(f), 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 or Convertible
Preferred Stock so deposited in accordance with this paragraph (h) in redemption
of such Mandatorily Redeemable Preferred Stock; and (iv) all rights whatsoever
with respect
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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 Mandatorily Redeemable Preferred Stock so redeemed, to receive the
cash and/or Common Stock or Convertible Preferred 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 or Convertible Preferred Stock so deposited
or set apart which shall remain unclaimed at the end of one year after the
Redemption Date shall be returned or released to the Company, after which time
the holders of shares of Mandatorily Redeemable 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 Mandatorily Redeemable 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.
(i) Surrender of Certificates; Status. Each holder of shares of
Mandatorily Redeemable 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 Mandatorily Redeemable
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. Holders of
shares of Mandatorily Redeemable Preferred Stock that are redeemed on the
Redemption Date shall not be entitled to receive dividends declared and paid on
any shares of Common Stock or Convertible Preferred Stock exchangeable and
deliverable in payment of the Redemption Price (or designated portion thereof)
for such shares of Mandatorily Redeemable Preferred Stock, and such shares of
Common Stock or Convertible Preferred Stock shall not be entitled to vote, until
such shares of Common Stock or Convertible Preferred Stock are delivered upon
the surrender of the certificates representing such shares of Mandatorily
Redeemable Preferred Stock. Upon such surrender, such holders shall be entitled
to receive such
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dividends declared and paid subsequent to such Redemption Date and prior to the
delivery.
(j) Priority. The right of the Company to redeem shares of
Mandatorily Redeemable Preferred Stock 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 (7).
(5) DETERMINATION OF CONVERTIBLE PREFERRED STOCK ISSUE PRICE.
(a) If the Company elects to deliver Convertible Preferred Stock in
payment of the Redemption Price or Mandatory Redemption Price, it must elect (by
notice to the holders of the Mandatorily Redeemable Preferred Stock), at its
discretion, either to:
(i) deliver to the holder a letter from an independent investment
bank (the "Independent Investment Banker") to the holder to the effect that the
bank believes on the terms and conditions set out in the letter that the
Convertible Preferred Stock, when issued, can be distributed at not less than
the Redemption Price of the Mandatorily Redeemable Preferred Stock to be
redeemed by the delivery of such Convertible Preferred Stock (without giving
effect to commissions); such letter shall be based on (A) the marketing efforts
that the management of the Company is committed to make (with dates, schedules,
locations and team being specified), (B) the documentation which the Company has
committed to make available (such documentation to be specified) and (C) the
gross spread as reasonably determined by the holder of the Mandatorily
Redeemable Preferred Stock in accordance with normal market practice; or
(ii) deliver to the holder a "bought" sale relating to the sale of
the Convertible Preferred Stock which will entitle the holder to receive an
amount equal to not less than the Redemption Price of the Mandatorily Redeemable
Preferred Stock to be redeemed by the delivery of the Convertible Preferred
Stock.
(b) A notice pursuant to paragraph (a)(i) must be sent at least one
month prior to the proposed issue date of the Convertible Preferred Stock. A
notice pursuant to clause (a)(ii) must be sent at least one week prior to the
proposed issue date of the Convertible Preferred Stock.
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(c) If the Company elects paragraph (a)(i), it must procure (a) that
its management team will be available for a period of not less than 3 Business
Days to make presentations to potential institutional and other purchasers of
the Convertible Preferred Stock, such presentations to take place within 3 weeks
of the dates specified in the letter from the independent investment bank, and
(b) that the documentation which it committed to make available pursuant to
paragraph (a)(i)(B) is avail able.
(d) If the Company elects paragraph (a)(i), the Convertible
Preferred Stock Issue Price will be the higher of the Redemption Price of the
Mandatorily Redeemable Preferred Stock and the price at which the Convertible
Preferred Stock can be placed with institutional investors at the end of the
marketing period for such Convertible Preferred Stock (such price to be
evidenced by a "bring-down" letter from the Independent Investment Banker), and
the principal amount of Convertible Preferred Stock shall be reduced
accordingly. The holders will (in case of a distribution under paragraph
(a)(i)) pay for the gross spread or discount. All other related costs of the
distribution will be paid by the Company.
(e) If the Company elects clause (a)(ii), the Convertible Preferred
Stock Issue Price shall be at the discretion of the Company. If the Company
elects clause (a)(ii), the Company may also establish the Fixed Price so that it
may be the higher of US$60 per share and 30% above the Average Market Price at
the time of setting of the Fixed Price.
(6) REORGANIZATIONS.
(a) (i) Reorganizations. If there is to occur any Reorganization,
and there is determinable for the entirety of each Reorganization Unit to be
issued in connection with such Reorganization on an Applicable Price, then as a
condition precedent to such Reorganization proper provision shall be made such
that each share of Mandatorily Redeemable Preferred Stock, or each share of
mandatorily redeemable preferred stock of the Company or its successor by
merger or consolidation issuable to each holder of Mandatorily Redeemable
Preferred Stock in exchange or substitution therefor (provided, however, that
such share of mandatorily redeemable preferred stock has the same Stated Value,
subject to the proviso in paragraph (6)(a)(ii), and substantially the same
rights, benefits and privileges as a share of Mandatorily Redeemable Preferred
Stock), shall be redeemable upon and from and after the occurrence of such
Reorganization into, in lieu of Convertible Preferred Stock as provided herein
(and without prejudice to the right of the Company or its
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successor to redeem convertible preferred stock for cash in accordance
herewith), a convertible preferred stock of the successor entity convertible
into Reorganization Units determined by dividing the Stated Value of such share
by the Fixed Price of such successor entity on the date which is 15 months after
the Issue Date.
If there is to occur any Reorganization, and any Reorganization Unit to be
issued in connection with such Reorganization does not have in whole or in part
a determinable Applicable Price, then prior to the occurrence of such
Reorganization and on a basis such that the holders of Mandatorily Redeemable
Preferred Stock shall be holders of Common Stock for all purposes of such
Reorganization, the Company will redeem all Mandatorily Redeemable Preferred
Stock in accordance herewith. The Company shall not effect any Reorganization
unless prior to or simultaneously with the consummation 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)(a)(i) shall similarly
apply to successive Reorganizations.
(ii) Holding Company. Notwithstanding anything herein to the
contrary, if the Company is reorganized such that the Common Stock is exchanged
for the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by notice to
the holders of the Mandatorily Redeemable Preferred Stock but without any
required consent on their part, may cause the exchange of this Mandatorily
Redeemable Preferred Stock for mandatorily redeemable preferred stock of Holdco
having the same terms and conditions as set forth herein, provided that where
Holdco is not a Delaware company or where the Holdco share structure is not
identical to that of the Company, the rights attaching to the mandatorily
redeemable preferred stock of Holdco may be adjusted so as to comply with the
local law of the country of incorporation of Holdco or the new share structure
of Holdco subject to such rights effectively giving the same economic rights as
the Mandatorily Redeemable Preferred Stock (ignoring for these purposes any
resultant change in the tax treatment for the holders of such stock).
(iii) Other Adjustments. In the event that, as a result of an
adjustment made pursuant to paragraph (6)(a), the holder of any Mandatorily
Redeemable Preferred Stock thereafter surrendered for redemption shall become
entitled to receive any shares of capital stock of the Company other than shares
of its Convertible Preferred Stock, thereafter the number of such shares
issuable upon redemption of such security shall be subject to adjustment from
time to time in a manner and on
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terms as nearly equivalent as practicable to the provisions with respect to the
Convertible Preferred Stock contained in paragraph (5).
(b) Notices of Corporate Action. If:
(i) the Company or the Board shall approve any Reorganization to
which the Company is a party and for which approval of any stockholders of the
Company is required; or
(ii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each case, the Company shall cause to be given to the holders of shares
of the Mandatorily Redeemable Preferred Stock in accordance with paragraph (14),
as promptly as possible, but at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which the event giving rise
to an adjustment of the type described in paragraph (6)(a), such a
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 Reorganization, 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 transactions
described in sub-paragraphs (i) or (ii) above.
(c) 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 Mandatorily Redeemable 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.
(d) Provision of Information. So long as any shares of Mandatorily
Redeemable 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 to Section 13(a) of the
Exchange Act concurrently with such filing; (ii) quarterly reports of the
Company on Form 10-Q and current report of the Company on Form 8-K filed
pursu-
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ant to Section 13(a) or 15(d) or the Exchange Act concurrently with such filing;
(iii) definitive proxy or information statement, form of proxy or other material
of the Company filed pursu ant 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) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
STOCK.
(a) Limitations on Junior Stock Dividends. As long as any shares of
Mandatorily Redeemable Preferred Stock are outstanding, no dividends shall be
paid or declared in cash on Junior Stock, nor shall any other distributions 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 Purchase of Junior Stock. As long as any shares
of Mandatorily Redeemable 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 (7)(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
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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, to share therein according to their respective
interests.
(d) Limitations on Parity Stock Dividends and Redemptions. As long
as any share of Mandatorily Redeemable Preferred Stock is 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 act 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 Mandatorily Redeemable
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
Mandatorily Redeemable Preferred Stock and such other share of Parity
Stock bear to each other.
(e) Certain Permitted Dividends and Redemptions. Nothing contained
in this paragraph (7) 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 Securities for shares of Junior Stock (together with a cash
adjustment for
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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 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 say 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 Mandatorily Redeemable 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) or (6).
(f) Waiver. The provisions of paragraphs (7)(a), (b) and (d) are for
the sole benefit of the holders of Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock shall have waived (as provided in
paragraph (15)) in whole or in part the benefit of such provision (either
generally or in the specific instance), then the provisions of paragraphs
(7)(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, Mandatorily
Redeemable Preferred Stock, any other class or series of Parity Steel or any
Junior Stock.
(8) 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 Mandatorily Redeemable 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
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to its stockholders an amount per share of Mandatorily Redeemable 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 Mandatorily
Redeemable 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 Mandatorily Redeemable 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 Mandatorily Redeemable 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 distribution if the
amounts to which the holders of outstanding shares of Mandatorily Redeemable
Preferred Stock and the holders of outstanding shares of such other Parity Stock
were paid in full. Except as provided in this paragraph (8)(a), holders of
Mandatorily Redeemable 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 (8) a Reorganization shall not be deemed to be a voluntary of
involuntary liquidation, dissolution or winding up of the Company.
(9) NO FRACTIONAL SHARES. No fractional shares of Common Stock or
Convertible Preferred Stock or scrip shall be issued in connection with the
delivery of shares of Common Stock or Convertible Preferred Stock 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 Mandatorily
Redeemable Preferred Stock shall be based upon, in the case of the payment, in
whole or in part, of dividends, a Redemption Price of a Liquidating Payment
pursuant to paragraphs (3), (4) or (8), respectively, on the total number of
shares of Mandatorily Redeemable Preferred Stock at the time held by such holder
and the total number of shares of Common Stock or Convertible Preferred Stock,
otherwise deliverable in respect thereof. Instead of the issuance of a fraction
of a share of Common Stock or Convertible Preferred Stock or scrip, the Company
shall pay instead an amount in cash (rounded to the nearest whole cent) equal
to, in the case of Common Stock, the same fraction of the Closing Price of a
share of preceding the Determination Date and, in the case of Convertible
Preferred Stock, equal to the same fraction of the Convertible Preferred Stock
Issue Price.
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(10) 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 or Convertible Preferred Stock, pursuant to paragraphs
(3), (4), (5), or (8), as applicable; 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 Mandatorily
Redeemable Preferred Stock.
(11) NO PREEMPTIVE RIGHTS. The holders of shares of Mandatorily
Redeemable 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.
(12) VOTING RIGHTS. (a) The holders of shares of Mandatorily
Redeemable Preferred Stock shall have no Voting rights, except as otherwise
required by law and except as set forth in this paragraph (12). When and if the
holders of Mandatorily Redeemable Preferred Stock are entitled to vote by law or
pursuant to this paragraph (12), each holder will be entitled to one vote per
share.
(b) Certain Changes to Charter. For as long as any shares of
Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock then outstanding so as to affect them
adversely; provided, however, that:
(x) any such amendment that would authorize, create or increase the
authorized 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 Mandatorily Redeemable Preferred Stock) or that
would decrease (but not below the number of shares, then
outstanding) the number of authorized shares of Preferred Stock
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(but not the number of authorized shares of Mandatorily Redeemable
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 Mandatorily
Redeemable Preferred Stock; and (ii) before the Company may reclassify the
outstanding shares of Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock shall be required if, at or prior to
the time when such amendment is to take effect, provision is made for the
redemption of all shares of Mandatorily Redeemable Preferred Stock at the time
outstanding.
(c) Creation of Senior Stock. No consent or vote of the holders of
the shares of Mandatorily Redeemable 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
(12) or as required by law, the holders of Mandatorily Redeemable 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 (12) 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.
(13) PAYMENTS. Payment of cash amounts due in respect of the
Mandatorily Redeemable Preferred Stock will be paid to the holders of shares of
Mandatorily Redeemable Preferred Stock (or, in the case of joint holders, the
first-named) as appearing in the stock register of the Company for the
Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock entitled to such payments 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 Mandatorily
Redeemable 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 is the stock register of
the Company for the Mandatorily Redeemable Preferred Stock) of the holder
thereof (or, in
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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 Mandatorily Redeemable 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.
(14) NOTICES. Any notice or communication by a holder of Mandatorily
Redeemable 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 communications to a holder of Mandatorily Redeem able
Preferred Stock shall be mailed by first-class mail to his address shown on the
stock register of the Company for the Mandatorily Redeemable Preferred Stock or,
if there are more than 20 holders of record of the Mandatorily Redeemable
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 (14) 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.
(15) WAIVER. Any provision of this Certificate of Designations
which, for the benefit of the holders of Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock then outstanding, either in writing or by
vote at a meeting called for such purpose at
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which the holders of Mandatorily Redeemable Preferred Stock shall vote as a
separate class.
(16) REGISTRATION AND NO TRANSFER. The Company will maintain at its
principal executive office a register in which the Company will provide for the
registration of shares of Mandatorily Redeemable Preferred Stock. The shares of
Mandatorily Redeemable Preferred Stock are not transferrable, and any
certificate representing shares of Mandatorily Redeemable Preferred Stock will
be so legended.
(17) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required
by law, the shares of Mandatorily Redeemable 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 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.
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Draft of Convertible Preferred Stock
CERTIFICATE OF DESIGNATIONS
OF
PREFERRED STOCK
OF
NTL INCORPORATED
-----------------
PURSUANT TO SECTION 151(G) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-----------------
The undersigned, Senior Vice President, General Counsel and
Secretary of NTL Incorporated, a Delaware corporation (the "Company"), HEREBY
CERTIFIES that 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 Incorporation of the Company and Section 151(g) of the DGCL,
there is hereby created and authorized 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
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on the shares of such series (in addition to the powers, designations,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations or restrictions thereof set forth in the
Restated Certificate of Incorporation that are applicable to each series of
Preferred Stock) hereinafter set forth:
(19) Designation; Number of Shares. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be " % Non-voting Convertible Preferred Stock, Series A" (including, in the
case of any reclassification, recapitalization, or other change to such
Preferred Stock or, in the case of a consolidation 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 occurrence of
such event, the "Convertible Preferred Stock"). The authorized number of shares
of Convertible Preferred Stock shall be , 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 $ (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.
(20) Certain Definitions. Unless the context otherwise requires, the
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
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 Reorganization); and
(B) in the event of a 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 than 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 immediately
prior to such consummation) for the period of ten consecutive Trading Days
ending on the Trading Day immediately preceding the Conversion Date, date of
occurrence of the Reorganization, appropri-
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ately adjusted to take into account any stock dividend on such security or
property, or any subdivision, split, combination, reclassification of such
security or property that occurs or the "ex" date for which occurs on or prior
to such date.
"Average Market Price" on any Determination Date, shall mean the
average of the daily Closing Prices for the period of 10 consecutive Trading
Days, ending on the Trading Day immediately preceding such Determination Date,
appropriately adjusted 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 ten-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.
"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
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<PAGE> 77
(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.
"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
paragraph (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 paragraph
(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 10 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
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<PAGE> 78
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 paragraphs (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 occurrence but without duplication.
"Denominator" shall mean the Fixed Price on the applicable
Determination Date.
"Determination Date" shall mean: (i) in the case of a dividend
payment, the date of notice of the Record Date, (ii) in the case of a redemption
payment, the Redemption Date, (iii) in the case of a conversion, the date of
notice of the Conversion Date, (iv) in the case of a Reorganization, the date
the Reorganization occurs and (v) in the case of any issuance of Options or
Convertible Securities or any distribution to which paragraphs (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 paragraphs apply and (b) the
Ex-Dividend Date for such Options, Convertible Securities or distribution.
"Dividend Non-Payment" shall have the meaning set forth in
paragraph (12)(b).
"Dividend Payment Date" shall have the meaning set forth in
paragraph (3)(a).
"Dividend Period" for any dividend payable on a Dividend Payment
Date shall mean the period beginning on the immediately preceding Dividend
Payment Date (or on the Issue Date in the case of the first Dividend Period) and
ending on the day preceding such later 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.
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<PAGE> 79
"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 paragraph (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.
"Fixed Price", on any Determination Date, shall mean $ ,* subject to
adjustment as prescribed in paragraph (6)(a).
"Issue Date" shall mean the date on which the Convertible Preferred
Stock is issued as payment of dividends or upon redemption of shares of the
Mandatorily Redeemable Preferred Stock, as set forth in the Certificate of
Designations relating to such Mandatorily Redeemable Preferred Stock.
"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, including,
without limitation, the Common Stock;
(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 Preferred 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
- --------
* 25% above Average Market Price on Issue Date, subject to adjustment
pursuant to paragraph (5)(e) of the 9.90% Preferred Stock.
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<PAGE> 80
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
paragraph (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 (8) 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.
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (4)(b).
"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 or 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 provision, 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
of payments of amounts distributable upon dissolution,
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<PAGE> 81
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 liquidation 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.
"Payment Record Date" shall have the meaning set forth in paragraph
(13).
"Person" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Preferred Stock Director" shall have the meaning set forth in
paragraph (12)(b).
"Preferred Stock Dividend Amount" shall have the meaning set forth
in paragraph (3)(d).
"Record Date" for the dividends payable on the Dividend Payment Date
shall mean the date (not exceeding 45 days preceding the Dividend Payment Date)
fixed by the Board as the record date for the 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 pursuant
to paragraph (4).
"Redemption Notice" shall have the meaning set forth in paragraph
(4)(c).
"Redemption Price" shall have the meaning set forth in paragraph
(4)(a).
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"Reorganization" shall mean any of the following events:
(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).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of , 1998, between the Company and Vision Net works III
B.V., as the same may be amended, supplemented or otherwise modified.
"Reorganization Unit" means the kind or amount of securities, cash
or other property receivable upon consummation of a 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 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 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).
"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 and Trust Company, as
rights agent.
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"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 than 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.
(21) DIVIDENDS.
(a) Payment. The holders of outstanding shares of Convertible
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,
at the rate per annum of % of the Stated Value per share, rounded to the
nearest cent. Such dividends shall accrue from the Issue Date and shall be
payable semi-annually in arrears, in whole or in part, on [ ] and [ ]
of each year (each, a "Dividend Payment
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Date") commencing on the second anniversary of the Issue Date; provided,
however, 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.
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. No interest, or sum of money in lieu of interest, shall be payable
in respect of any accrued dividend payment.
(b) Declaration and Manner of Payment of Dividends. The Board shall
declare and cause to be paid accrued but unpaid dividends on the Convertible
Preferred Stock at the rates, times and one for 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 provision 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 the 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
applicable 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
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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, each holder of Convertible
Preferred Stock shall receive the same proportion of cash and/or shares of
Common Stock and/or additional shares of 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
for 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 determined
as provided in paragraph (9).
(d) Payment of Dividends by Delivery of Additional Convertible
Preferred Stock. If the Company elects to pay any 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 Convertible 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 determined (i) if
on such date the Fixed Price is higher than the Average Market Price, then by
dividing (A) the product of multiplying the 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 Value. No fractional shares of Convertible
Preferred Stock shall be delivered to a holder of shares of Convertible
Preferred Stock, but the Company shall instead pay a cash adjustment determined
in accordance with paragraph (9).
(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 Preferred Stock shall be
declared by the
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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 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) Pro Rata. All dividends paid with respect to the shares of
Convertible Preferred Stock shall be paid pro rata (as nearby as may be
practicable) to the shareholders entitled thereto.
(g) Credit. Any dividend payment made on the shares of Convertible
Preferred Stock shall first be credited against the earliest accrued but unpaid
dividend due with respect to the shares of Convertible Preferred Stock.
(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 (7).
(22) REDEMPTION.
(a) Optional Redemption. At any time during the period beginning on
the third anniversary of the Issue Date until the Redemption Date, the Company
shall have the right to redeem the outstanding shares of Convertible Preferred
Stock at a price equal to $1,000 per share, together with an amount equal to all
dividends accrued but unpaid thereon to the date fixed for redemption (the
"Redemption Price").
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.
(b) Mandatory Redemption. All outstanding shares of Convertible
Preferred Stock shall be mandatorily redeemed by the Company out of funds
legally
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available therefor on the date that is the tenth anniversary of Issue Date at a
redemption price equal to $1,000 per share, plus an amount equal to all accrued
and unpaid dividends per share (the "Mandatory Redemption Price").
(c) 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 or the Mandatory 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 or (iii)
through any combination of the foregoing forms of consideration elected by the
Board in its sole discretion.
(d) 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 30 days
nor more than 60 days prior to the Redemption Date. Such notice (a "Redemption
Notice") shall, subject to paragraph (4)(e)(z), be provided in accordance with
paragraph (14); 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, the Redemption
Notice shall state, as appropriate, the following (and may contain such other
information as the Company deems advisable):
(A) the Redemption Date;
(B) the number of shares of Convertible Preferred Stock to be
redeemed and, if less than all the shares held by such holder
are to be redeemed, the number of shares to be redeemed from
such holder;
(C) the then applicable Redemption Price and the form or forms of
consideration 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;
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(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 paragraph (4)(e) below;
(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 Redemption Date a number of
shares of Common Stock equal to the aggregate Redemption Price or Mandatory
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 or Mandatory Redemption Price, but the
Company shall instead pay a cash adjustment determined as provided in paragraph
(9).
(f) Deposit of Funds and/or Shares. If on or before the 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 or Mandatory 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 or the Mandatory Redemption Price and (z)
the Company shall prior to the Redemption Date have so notified each record
holder of Convertible Preferred Stock, which
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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 notwithstanding 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 (e) 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 this paragraph (e) 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)(f), 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 (e) 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 Redemption 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 Redemption Date are converted, in
accordance with paragraph (5), 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
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redemption of such shares so covered 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. Holders of shares of Convertible Preferred
Stock that are redeemed on the 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
the delivery.
(h) If any shares of Convertible Preferred Stock have been
surrendered for conversion into Common Stock pursuant to paragraph (5), 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 immediately 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) hereof, regardless of whether such shares are converted
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 Stock 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 (7).
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(23) 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 until the Redemption Date with respect to
the affected shares, at such holder's option, to convert any or all shares of
the Convertible Preferred Stock into such number of shares of Common Stock 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 5:00 p.m. New York City time on the Business Day prior to the
applicable Redemption Date and if not exercised prior to such time, such
conversion right will be lost, unless the Company defaults in making the payment
due upon redemption. 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 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 the 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 (9)). 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. 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 accompa-
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nied 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.
(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 (14), 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 not less than 60
days prior notice to the Company in accordance with paragraph (14) 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 paragraph (10). 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
reason ably satisfactory to the Company), duly executed by the holder or such
holder's duly authorized attorney-in-fact.
(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 (9) 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
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certificates for shares of the Convertible Preferred Stock shall have been
surrendered (accompanied by the funds, if any, required by paragraph (10)
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 (9) 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 authorized 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
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 Combinations.
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
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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 Common 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 the price
determined by multiplying the Fixed Price in effect immediately prior the such
Computation Price 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
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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 the 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 consideration, if other than cash, to
be determined in good faith by the Board. Notwithstanding the foregoing, if the
Options or Convertible Securities are exercisable, 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
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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 provisions 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 Convertible 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 paragraph
(5)(a).
(iv) Without prejudice to paragraph (7)(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
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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 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 Preferred 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 distributed
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.
(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
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adopted on or before the Issue Date or approved by the stockholders or
compensation committee of the Company after the Issue Date or (B) upon the
deemed issuance of Common Stock (provided, 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 deductions, 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, subdivisions of shares, distributions of Options or
Convertible Securities (or any transactions 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 (14) 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).
(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) Reorganizations. If there is to occur any Reorganization,
and there is determinable for the entirety of each Reorganization Unit to be
issued in connection with such Reorganization on an Applicable Price, then as a
condition precedent to such 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
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Convertible Preferred Stock in exchange or substitution therefor (provided that
such share of convertible preferred stock has the same Stated Value and, subject
to the proviso in paragraph (6)(b)(ii), 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 Reorganization
into, in lieu of Common Stock as provided herein (and without prejudice to the
right of the Company or its successor to redeem convertible preferred stock for
cash in accordance herewith), a number of Reorganization 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 Reorganization Unit on the
Conversion Date.
If there is to occur any Reorganization, and any Reorganization Unit to be
issued in connection with such Reorganization does not have in whole or in part
a determinable Applicable Price, then prior to the occurrence of such
Reorganization and on a basis such that the holders of Convertible Preferred
Stock shall be holders of Common Stock for all purposes of such Reorganization,
the Company will redeem all Convertible Preferred Stock in accordance herewith.
The Company shall not effect any Reorganization unless prior to or
simultaneously with the consummation 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 Reorganizations.
(ii) Holding Company. Notwithstanding anything herein to the
contrary, if the Company is reorganized such that the Common Stock is exchanged
for the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by notice to
the holders of the Convertible Preferred Stock but without any required consent
on their part, may cause the exchange of this Convertible Preferred Stock for
convertible preferred stock of Holdco having the same terms and conditions as
set forth herein, provided that where Holdco is not a Delaware company or where
the Holdco share structure is not identical to that of the Company, the rights
attaching to the mandatorily redeemable preferred stock of Holdco may be
adjusted so as to comply with the local law of the country of incorporation of
Holdco or the new share structure of Holdco subject to such rights effectively
giving the same economic rights as the Mandatorily Redeemable Preferred Stock
(ignoring for these purposes any resultant change in the tax treatment for the
holders of such stock).
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(iii) Other Adjustments. In the event that, as a result of an
adjustment made pursuant to paragraphs (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, thereafter 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 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, 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 purposes of such dividend or distribution, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend 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 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 Reorganization, 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 transactions 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
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adjustment 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 5 Business Days following the
mailing of the notice referred to in paragraph (6)(d)) 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 (9) hereof.
(f) Listing of Common Stock. The Company will list the shares of
Common Stock required to be delivered as any dividend payment or as payment 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 to Section 13(a) of the Exchange Act
concurrently with such filing; (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) or the Exchange Act concurrently with such filing; (iii)
definitive proxy or information statement, form of proxy or other material of
the Company filed pursu ant 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) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
STOCK.
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(a) Limitations on Junior Stock Dividends. As long as any shares
Convertible Preferred Stock are outstanding, no dividends shall be paid or
declared in cash on Junior Stock, nor shall any other distributions 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 and have fallen due; (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 Purchase 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 and have fallen due;
(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 (7)(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, 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
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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 and have fallen due;
(ii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or act 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 (7) 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 Securities 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 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,
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exchange, purchase or other acquisition of say 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) or (6).
(f) Waiver. The provisions of paragraphs (7)(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 (15)) in
whole or in part the benefit of such provision (either generally or in the
specific instance), then the provisions of paragraphs (7)(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 Steel or any Junior Stock.
(8) 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
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holders of shares of 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 distribution 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 paragraph (9)(a) holders is 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 (8) a Reorganization shall not be deemed to be a voluntary of
involuntary liquidation, dissolution or winding up of the Company.
(9) NO FRACTIONAL SHARES. No fractional shares of Common Stock or
Convertible Preferred Stock or scrip shall be issued in connection with the
delivery of shares of Common Stock or Convertible Preferred 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 of a Liquidating Payment pursuant to paragraphs
(3), (4) or (8), respectively, and, in the case of conversion pursuant to
paragraph (5), through the delivery of shares of Common Stock or Convertible
Preferred 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 or
Convertible Preferred Stock, otherwise deliverable in respect thereof. Instead
of the issuance of a fraction of a share of Common Stock or Convertible
Preferred Stock or scrip, the Company shall pay instead an amount in cash
(rounded to the nearest whole cent) equal to, in the case of Common Stock, the
same fraction of the Closing Price of a share of preceding the Determination
Date.
(10) 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 and
Convertible Preferred Stock, pursuant to paragraphs (3), (4), (5), or (8), as
applicable; 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.
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(11) 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.
(12) 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 (12). When and if the holders of
Convertible Preferred Stock are entitled to vote by law or pursuant to this
paragraph (12), each holder will be entitled to one vote per share.
(b) Dividend Non-Payment. In the event that the Company shall have
failed to pay dividends on the Convertible Preferred Stock for three semi-annual
periods (whether or not consecutive) (such failure, a "Dividend Non-Payment"),
the number of directors constituting the Board, without further action, shall be
increased by two and the holders of the majority of the then outstanding shares
of Convertible Preferred Stock shall have the right, voting separately as a
class, to elect such two additional members of the Board, at any annual meeting
of stockholders of the Company or by written consent pursuant to Section 228 of
the DGCL, in each case, who shall continue to serve so long as such dividends on
the Convertible Preferred Stock have not been paid. If and when all such accrued
and unpaid dividends on the Convertible Preferred Stock have been paid or
declared and set apart for payment, the holders of shares of Convertible
Preferred Stock shall be divested of the special voting rights provided for by
this paragraph (12), subject to revesting in the event of every subsequent
Dividend Non-Payment. Upon termination of such special voting rights, the term
of office of each director elected pursuant to this paragraph (12) by the
holders of shares of Convertible Preferred Stock (a "Preferred Stock Director")
shall terminate immediately and the number of directors constituting the Board
shall, without further action, be reduced by two, subject always to the increase
of the number of directors pursuant to this paragraph (12) in the case of the
future right of the holders of Convertible Preferred Stock to elect Preferred
Stock Directors. Any Preferred Stock Director may be removed by, and shall not
be removed otherwise than by, the vote of the holders of record of a majority of
the outstanding shares of the Convertible Preferred Stock entitled to vote
thereon present at a meeting called for such purpose at which a quorum is
present or by written consent pursuant to Section 228 of the DGCL. So long as a
Dividend Non-Payment shall continue, any vacancy in the office of a Preferred
Stock Director may be filled by vote of the holders of record of a majority of
the outstanding shares of Convertible Preferred Stock entitled to vote thereon
present at a meeting called for such purpose at which a quorum is present or by
written consent pursuant to Section
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228 of the DGCL. As long as a Dividend Non-Payment shall continue, holders of
shares of Convertible Preferred Stock shall not, as such stockholders, be
entitled to vote on the election or removal of directors other than Preferred
Stock Directors, but shall not be divested of any other voting rights provided
to such stockholders by law or this Certificate of Designations with respect to
any other matter to be acted upon by the stockholders of the Company.
At any meeting held for the purpose of electing directors at which
the holders of outstanding shares of Convertible Preferred Stock shall have the
right to elect directors as provided in this paragraph (12), the presence, in
person or by proxy, of the holders of at least a majority of the then
outstanding shares of Convertible Preferred Stock on which like voting rights
have been conferred and are exercisable shall be required and be sufficient to
constitute a quorum of such class for the election of directors by such class.
At any such meeting or adjournment thereof (i) the absence of a quorum of the
holders of the Convertible Preferred Stock present in person or by proxy shall
not prevent the election of directors other than those to be elected by the
holders of the Convertible Preferred Stock, and the absence of a quorum or
quorums of the holders of any class or classes of any stock or other securities
of the Company other than the Convertible Preferred Stock shall not prevent the
election of directors to be elected by the holders of the Convertible Preferred
Stock and (ii) in the absence of a quorum of the holders of any class of stock
entitled to vote for the election of directors, a majority of the holders
present in person or by proxy of such class shall have the power to adjourn the
meeting for the election of directors which the holders of such class are
entitled to elect, from time to time, without notice (except as required by law)
other than announcement at the meeting, until a quorum shall be present.
(c) 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
Convertible Preferred Stock then outstanding so as to affect them adversely;
provided, however, that:
(x) any such amendment that would authorize, create or increase the
authorized amount of any additional shares of Junior Stock or
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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 effect, provision is made for the redemption of all shares
of Convertible Preferred Stock at the time outstanding.
(d) 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.
(e) No Other Vote. Except as otherwise set forth in this paragraph
(12) 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 (12) 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.
(13) 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 Convertible 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 payments or, it no such date
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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 is 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.
(14) 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 communications 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 (14) 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.
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(15) 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.
(16) REGISTRATION, TRANSFER AND EXCHANGES. (a) The Company will keep
with , the registrar and transfer agent, a
register in which the Company will provide for the registration and transfer of
shares of Convertible Preferred Stock. Any holder of shares of Convertible
Preferred Stock may, at its option, in person or by duly authorized attorney,
surrender the certificate representing the same for exchange at
(duly endorsed or accompanied, if so required
by the Company, by a written instrument of transfer duly executed by such holder
or his or her duly authorized attorney), and, within a reasonable time
thereafter and without expense (other than transfer taxes, if any), receive in
exchange therefor one or more duly executed certificate or certificates dated as
of the date to which dividends have been paid on the shares of Convertible
Preferred Stock so surrendered, or if no dividend has yet been so paid, then
dated the date hereof, and registered in such name or names, all as may be
designated by such holder, for the same aggregate number of shares of
Convertible Preferred Stock as represented by the certificate or certificates so
surrendered. The Company covenants and agrees to take and cause to be taken all
action reasonably necessary to effect such registrations, transfers and
exchanges. Each share of Convertible Preferred Stock issued in exchange for any
share shall carry the same rights to unpaid dividends and redemption payments
which were carried by the share so exchanged, so that neither gain nor loss of
any such right shall result from any such transfer or exchange.
(b) The Company and any agent of the Company may treat the person in
whose name any share of Convertible Preferred Stock is registered as the owner
of such share for the purpose of receiving payment of dividends, and amounts
payable on redemption and liquidation in respect of such share and for all other
purposes.
(c) The holders of Convertible Preferred Stock are entitled to
certain rights under the Registration Rights Agreement. The certificates
representing shares
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of Convertible Preferred Stock will bear a legend indicating that they have been
issued in a transaction exempt from the Securities Act and may only be
transferred in accordance therewith or pursuant to an exemption therefrom.
(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 other than the rights set forth in the Registration
Rights Agreement, the terms of which are incorporated herein by reference.
(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 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.
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Exhibit C
9.9% NON-VOTING MANDATORILY REDEEMABLE
PREFERRED STOCK, SERIES B
(1) Designation; Number of Shares. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B"
(including, in the case of any reclassification, recapitalization, or other
change to such Preferred Stock or, in the case of a consolidation 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 occurrence of such event, the "Mandatorily Redeemable Preferred Stock"). The
authorized number of shares of Mandatorily Redeemable Preferred Stock shall be
52,217, which number may from time to time be increased or decreased (but not
below the number then outstanding). Each share of Mandatorily Redeemable
Preferred Stock shall have a stated value of $1,000 (the "Stated Value").
Any shares of Mandatorily Redeemable 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
terms defined in this paragraph (2) shall have, for all purposes of this
Certificate of Designations, the meanings herein specified:
"Adjustment Date" shall have the meaning set forth in paragraph
(4)(k).
"Affiliate" of any Person shall mean another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
"Applicable Price" shall mean the aggregate of (A) in the event of a
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 Reorganization); and
(B) in the event of a Reorganization in which the holders of Common Stock
receive securities or other property which are traded on an established market
(within the
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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 than
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 immediately prior to such
consummation) for the period of ten consecutive Trading Days ending on the
Trading Day immediately preceding date of occurrence of the Reorganization,
appropriately adjusted to take into account any stock dividend on such security
or property, or any subdivision, split, combination, reclassification of such
security or property that occurs or the "ex" date for which occurs on or prior
to such date.
"Average Market Price" on any Determination Date or Adjustment Date,
as applicable, shall mean the average of the daily Closing Prices for the period
of 10 consecutive Trading Days, ending on the Trading Day immediately preceding
such Determination Date or Adjustment Date, as applicable, appropriately
adjusted 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 date on which "ex-dividend" trading commences, during the period
following the first Trading Day in such ten-Trading Day period to and including
the Determination Date or Adjustment Date, as applicable.
"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.
"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
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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
deter mined in good faith by the Board exercising its reasonable discretion.
"Commission" shall have the meaning set forth in paragraph (4)(k).
"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
paragraph (3) (c).
"Convertible Securities" shall mean securities, including evidences
of indebtedness or shares of stock, which are, at the option of the holder
thereof, convertible into or exchangeable, directly or indirectly, for shares of
Common Stock.
"Determination Date" shall mean: (i) in the case of a dividend
payment, the record date for such dividend payment, (ii) in the case of a
redemption payment pursuant to paragraph (4)(a), the Redemption Date, (iii) in
the case of a redemption payment pursuant to paragraph (4)(b), the tenth
anniversary of the Issue Date, (iv) in the case of a redemption payment pursuant
to paragraph (4)(d), the Adjustment Date, and (v) in the case of a
Reorganization, the date the Reorganization occurs.
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"Effectiveness Date" shall have the meaning set forth in paragraph
(4)(k).
"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.
"Extended Sale Date" shall have the meaning set forth in paragraph
(4)(k).
"Fixed Price", on any Determination Date with respect to any Other
Equity Security, shall have the meaning assigned to such term in the certificate
of designations relating to, and setting forth the terms of, such Other Equity
Security.
"Full Consideration Amount" shall have the meaning set forth in
paragraph (4)(k).
"Issue Date" shall mean December 21, 1998.
"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, including,
without limitation, the Common Stock;
(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 Mandatorily Redeemable 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
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junior to the Mandatorily Redeemable Preferred Stock as to dividend rights,
rights of redemption or rights on liquidation if the holders of shares of
Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock or, if less, the
amount payable in respect of one share of Mandatorily Redeemable Preferred Stock
pursuant to paragraph (7)(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
Mandatorily Redeemable Preferred Stock.
"Liquidation Preference" measured per share of the Mandatorily
Redeemable Preferred Stock, shall mean an amount equal to (a) the Stated Value
per share of Mandatorily Redeemable Preferred Stock, plus (b) for purposes of
determining the amount payable pursuant to paragraph (7) 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.
"Mandatorily Redeemable Preferred Stock" shall have the meaning set
forth in paragraph (1).
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (4)(b).
"Option" shall mean any right, option or warrant entitling the
holder thereof to subscribe for, purchase, or otherwise acquire Convertible
Securities or Common Stock in the Company (other than the Rights).
"Other Equity Security" shall mean any equity security of the
Company, other than Common Stock, issued by the Company to provide funds for the
payment in cash of the Redemption Price or Mandatory Redemption Price in
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accordance herewith, with the rights to be determined in the sole discretion of
the Company.
"Parity Stock" shall mean the Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation. Capital stock of any class or series,
whether now or existing or hereafter created, shall rank on a parity as to
dividend, rights of redemption or rights on liquidation with the Mandatorily
Redeemable Preferred Stock, whether or not the dividend rates, dividend payment
dates, redemption or liquidation prices per share or sinking fund or mandatory
redemption provision, if any, are different from those of the Mandatorily
Redeemable 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 liquidation 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 Mandatorily
Redeemable Preferred Stock. No class or series of capital stock that ranks
junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation
shall rank or be deemed to rank on a parity basis with the Mandatorily
Redeemable Preferred Stock as to dividend rights or rights of redemption.
"Payment Record Date" shall have the meaning set forth in paragraph
(12).
"Permitted Cost" shall mean underwriting costs, brokerage fees and
related costs and expenses not exceeding 3% for Common Stock or 5% for any Other
Equity Security of either the applicable amount of the Redemption Price or
Mandatorily Redemption Price (in the event that any Other Equity Security is
issued in order to provide cash for the redemption), or of gross proceeds (in
any other case).
"Person" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
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"Redemption Agent" shall have the meaning set forth under paragraph
(4)(h).
"Redemption Date" as to any share of Mandatorily Redeemable
Preferred Stock, shall mean the date on which such share is redeemed by the
Company pursuant to paragraph (4).
"Redemption Notice" shall have the meaning set forth in paragraph
(4)(f).
"Redemption Price" shall have the meaning set forth in paragraph
(4)(a).
"Registration Statement" shall have the meaning set forth in
paragraph (4)(k).
"Reorganization" shall mean any of the following events:
(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, and
(iv) any statutory exchange of any shares of capital stock of the
Company for shares of capital stock of 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).
"Reorganization Unit" means the kind or amount of securities, cash
or other property receivable upon consummation of a Reorganization in
substitution of or in exchange for a share of Common Stock as such share is in
effect immediately
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prior to such consummation (provided that if the kind or amount of securities,
cash or other property receivable upon consummation of such 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 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).
"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 and Trust Company, as
rights agent.
"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 Mandatorily
Redeem able 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 Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock. No class or series of capital
stock that ranks on a parity basis with or junior to the Mandatorily Redeemable
Preferred Stock as to rights on liquidation shall rank or be deemed to rank
prior to the Mandatorily Redeemable 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 Mandatorily Redeemable 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.
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"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.
(3) DIVIDENDS.
(a) Payment. The holders of outstanding shares of Mandatorily
Redeemable 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)), dividends, in preference to dividends on any Junior Stock,
at the rate per annum of 9.90% of the Stated Value per share, rounded to the
nearest cent. Such dividends shall accrue from the Issue Date and shall be
payable on the date the Mandatorily Redeemable Preferred Stock is redeemed
pursuant to paragraph (4).
Dividends on the outstanding shares of Mandatorily Redeemable
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 Mandatorily Redeemable Preferred Stock on the
date of their redemption. No interest, or sum of money in lieu of interest,
shall be payable in respect of any accrued dividend payment.
(b) Declaration and Manner of Payment of Dividends. 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;
or (iii) through any combination of the foregoing forms of consideration elected
by the Board in its sole discretion. If any dividend declared by the Board is to
be paid, in whole or in part, through the delivery of shares of Common Stock,
each holder of Mandatorily Redeemable Preferred Stock shall receive the same
proportion of cash and/or shares of Common Stock (except for cash paid in lieu
of fractional shares) delivered in payment of such dividend to other holders of
shares of Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock in shares of Common Stock (the
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"Common Stock Dividend Amount") shall be paid through the delivery to the
holders of record for such shares of Mandatorily Redeemable Preferred Stock on
the record date for such dividend payment (which shall be not more than 10 days
prior to the payment date) 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
Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a cash
adjustment determined as provided in paragraph (8). Common Stock so payable
shall receive the benefit of customary resale registration rights.
(d) 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 Mandatorily Redeemable 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
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 (d) 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,
whether permitted by any such agreement or not.
(e) Pro Rata. All dividends paid with respect to the shares of
Mandatorily Redeemable Preferred Stock shall be paid pro rata (as nearly as may
be practicable) to the shareholders entitled thereto.
(f) Priority. Payment of dividends to the holders of shares of
Mandatorily Redeemable Preferred Stock shall be subject to the prior preferences
and other rights of any Senior Stock and to the provisions of paragraph (6).
(4) REDEMPTION.
(a) Optional Redemption. At any time during the period beginning on
the Issue Date until the Redemption Date, the Company shall have the right to
redeem the outstanding shares of Mandatorily Redeemable Preferred Stock at a
price equal to $1,000 per share, together with an amount equal to all dividends
accrued but unpaid thereon to the Redemption Date (the "Redemption Price").
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(b) Mandatory Redemption. All outstanding shares of Mandatorily
Redeemable Preferred Stock shall be mandatorily redeemed by the Company out of
funds legally available therefor on the date that is the tenth anniversary of
the Issue Date at a redemption price equal to $1,000 per share, plus an amount
equal to all accrued and unpaid dividends per share to the Redemption Date (the
"Mandatory Redemption Price").
(c) Event of Reorganization. All outstanding shares of Mandatorily
Redeemable Preferred Stock shall be mandatorily redeemed by the Company at the
Mandatory Redemption Price in the event of a Reorganization, other than a
Reorganization as set forth in paragraph (5)(a) or any other transaction
undertaken for the bona fide purpose of causing the Common Stock of the Company
to be convertible into or exchangeable for, immediately or over time, equity
securities of a public limited company incorporated in England and/or Wales for
the purpose of listing on the London Stock Exchange.
(d) Early Mandatory Redemption. If by June 15, 2000, the Company has
neither exercised its right to optionally redeem the Mandatorily Redeemable
Preferred Stock pursuant to paragraph (4)(a) nor redeemed the Mandatorily
Redeemable Preferred Stock pursuant to paragraph (4)(c), all outstanding shares
of Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed by the
Company at the Mandatory Redemption Price, less any Permitted Cost. The
Redemption Date for such redemption shall be July 1, 2000.
(e) Company's Right to Elect Manner of Payment of Redemption Price
or Mandatory Redemption Price. The Company may effect the redemption of shares
of Mandatorily Redeemable Preferred Stock at the Redemption Price or the
Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out
of funds legally available therefor, (ii) subject to compliance with paragraph
(g), in exchange for and through the delivery of shares of Common Stock, or
(iii) through any combination of the foregoing forms of consideration elected by
the Board in its sole discretion.
(f) Notice of Redemption. In the event of an offer by the Company to
redeem any shares of Mandatorily Redeemable Preferred Stock pursuant to
paragraph (4)(a) or a redemption of the Mandatorily Redeemable Preferred Stock
pursuant to paragraph (4)(b), (4)(c) or (4)(d), the Company shall provide notice
of such offer to redeem or such redemption to holders of record of Mandatorily
Re-
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deemable Preferred Stock to be redeemed not less than 30 days (not less than 10
days if the Redemption Price or Mandatory Redemption Price is payable in cash or
Common Stock) nor more than 60 days prior to the Redemption Date. Such notice (a
"Redemption Notice") shall, subject to paragraph (4)(h)(z), be provided in
accordance with paragraph (13); 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 Mandatorily Redeemable Preferred Stock to be
redeemed.
In addition to any information required by law, the Redemption
Notice shall state, as appropriate, the following (and may contain such other
information as the Company deems advisable):
(A) whether the redemption is pursuant to paragraph (4)(a),
(4)(b), (4)(c) or (4)(d);
(B) the Redemption Date;
(C) the number of shares of Mandatorily Redeemable Preferred Stock
to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed
from such holder;
(D) the Redemption Price or Mandatory Redemption Price and the
form or forms of consideration 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 or Mandatory
Redemption Price to be paid in each form of consideration so
elected;
(E) the place or places in the United States or England and Wales
where certificates for Mandatorily Redeemable Preferred Stock
to be redeemed are to be surrendered for redemption; and
(F) that dividends on the shares of Mandatorily Redeemable
Preferred Stock to be redeemed shall cease to accrue on the
Redemption Date (unless the Company defaults in making payment
of the Redemption Price).
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(g) 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
Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock to be redeemed on the
Redemption Date a number of shares of Common Stock equal to the aggregate
Redemption Price (or designated portion thereof) of such shares of Mandatorily
Redeemable Preferred Stock divided by the Average Market Price. No fractional
shares of Common Stock shall be delivered to a holder of shares of Mandatorily
Redeemable Preferred Stock in payment of the Redemption Price, but the Company
shall instead pay a cash adjustment determined as provided in paragraph (8).
(h) Deposit of Funds and/or Shares. If on or before the 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 sufficient to pay in
full the aggregate Redemption Price (calculated through the Redemption Date) for
such shares of Mandatorily Redeemable 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 Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock, which notice shall be
given to each holder of Mandatorily Redeemable 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 notwithstanding that any certificate therefor shall
not have been surrendered for cancellation): (i) such shares of Mandatorily
Redeemable Preferred Stock shall no longer be deemed outstanding but any shares
of Common Stock so deposited in accordance with this paragraph (h) for which
such Mandatorily Redeemable Preferred Stock was redeemed shall be deemed to be
outstanding; (ii) the holders thereof shall cease to be holders of Mandatorily
Redeemable Preferred Stock but shall be shown on the records of the Company as
holders of the Common Stock so deposited in accordance with this paragraph (h)
in redemption of such Mandatorily Redeemable 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
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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 (h) in redemption of such
Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock so redeemed, to
receive the cash and/or Common Stock 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 Redemption Date shall be returned or released to the Company, after
which time the holders of shares of Mandatorily Redeemable 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.
Subject to compliance with paragraph (4)(k), 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 Mandatorily Redeemable 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.
(i) Surrender of Certificates; Status. Each holder of shares of
Mandatorily Redeemable Preferred Stock to be redeemed shall not be entitled to
receive payment of the Redemption Price or Mandatory 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 Mandatorily Redeemable 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 or
Mandatory Redemption Price for such shares. Holders of shares of Mandatorily
Redeemable Preferred Stock that are redeemed on the 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 Redemp-
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tion Price or Mandatory Redemption Price (or designated portion thereof) for
such shares of Mandatorily Redeemable 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
Mandatorily Redeemable 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 the delivery.
(j) Priority. The right of the Company to redeem shares of
Mandatorily Redeemable Preferred Stock 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 (7).
(k) Full Consideration Amount. If the Company elects to exchange and
deliver shares of Common Stock in payment of the Mandatory Redemption Price (or
a designated portion thereof) pursuant to paragraph (e), the Company shall be
obligated to file (on or prior to April 1, 2000) and cause to be declared
effective by the Securities and Exchange Commission (the "Commission") a resale
"shelf" registration statement (the "Registration Statement"), or such other
successor form of registration statement that may be adopted by the Commission
from time to time, on behalf of the holders of such Common Stock. The Company
may deliver shares of Common Stock having a value (equal to the Average Market
Price as of April 1, 2000) to the holders. When the Registration Statement is
declared effective (the "Effectiveness Date"), the holders shall sell at the
time (but no later than the later to occur of June 15, 2000 and ten Business
Days after the Effectiveness Date (the "Extended Sale Date")) and in a bona fide
manner designated by the Company (but shall not sell or transfer in any other
manner until after June 15, 2000 (if the Effectiveness Date has not theretofore
occurred) and prior to the Effectiveness Date), the shares of Common Stock
received in redemption of the Mandatorily Redeemable Preferred Stock and the
holders shall be required to cooperate fully (including by executing customarily
required documentation) in such process and the holders shall retain the
proceeds of such sale. On or prior to the later to occur of July 1, 2000 and two
Business Days after the Extended Sale Date (either, the "Adjustment Date"), the
Company shall deliver to such holders, on a pro rata per share basis,
consideration (payable as set forth in paragraph (l)) equal to (a) (pound)31
million, together with accrued and unpaid dividends, calculated to the date of
such delivery, as if the Mandatorily Redeemable Preferred Stock had remained
outstanding until the Adjustment Date (the "Full Consideration Amount"), minus
the aggregate of (b) (i) in the event that any such holders have previously sold
all or a portion of their shares of Common
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Stock pursuant to such Registration Statement or otherwise by such date, the
aggregate amount of proceeds from any such sale (without deduction of any
customary underwriting costs, brokerage fees and other related costs and
expenses not exceeding the Permitted Cost), plus (ii) in the event that any such
holders still retain (by agreement of the holders and the Company) all or a
portion of their shares of Common Stock on such date, the amount which is equal
to the current market value of such shares of Common Stock, as determined using
the Average Market Price, as of the Adjustment Date, plus (iii) the aggregate
amount of any cash previously delivered in payment of the Redemption Price;
provided, however, that (i) in no event shall any payment be made pursuant to
this paragraph if the amount determined pursuant to subparagraph (b) above
exceeds the Full Consideration Amount and (ii) if for any reason (other than
agreement of the holders and the Company) shares of Common Stock are not sold by
the Adjustment Date, the Full Consideration Amount shall be adjusted to and
calculated as of the date the shares are actually sold.
(l) Payments with Respect to Full Consideration Amount. Any payment
required to be made by the Company pursuant to the preceding paragraph may be
paid, in the sole discretion of the Company, (i) in cash out of funds legally
available therefor, (ii) in exchange for and through the delivery of shares of
Common Stock, valued as of the Adjustment Date, or (iii) through any combination
of the foregoing forms of consideration elected by Company in its sole
discretion. Common Stock so payable shall be valued at the Average Market Price
as of the Adjustment Date and shall promptly receive the benefit of customary
resale registration rights.
(m) Other Equity Security. If the Company elects to sell any Other
Equity Security at any time prior to June 15, 2000 in order to fund the
redemption of the Mandatorily Redeemable Preferred Stock and/or Common Stock
issued in redemption thereof, the holders will deliver such securities to the
Company in exchange for the proceeds of the sale of such Other Equity Security
(less any Permitted Cost).
(5) REORGANIZATIONS.
(a) Holding Company. Notwithstanding anything herein to the
contrary, if the Company is reorganized such that the Common Stock is exchanged
for the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by notice to
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the holders of the Mandatorily Redeemable Preferred Stock but without any
required consent on their part, may cause the exchange of this Mandatorily
Redeemable Preferred Stock for mandatorily redeemable preferred stock of Holdco
having the same terms and conditions as set forth herein, provided that where
Holdco is not solely incorporated as a Delaware company or where the Holdco
share structure is not identical to that of the Company, the rights attaching to
the mandatorily redeem able preferred stock of Holdco may be adjusted so as to
comply with the local law of the country of incorporation of Holdco or the new
share structure of Holdco subject to such rights effectively giving the same
economic rights as the Mandatorily Redeemable Preferred Stock (ignoring for
these purposes any resultant change in the tax treatment for the holders of such
stock).
(b) Notices of Corporate Action. If:
(i) the Company or the Board shall approve any Reorganization to
which the Company is a party and for which approval of any stockholders of the
Company is required; or
(ii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each case, the Company shall cause to be given to the holders of shares
of the Mandatorily Redeemable Preferred Stock in accordance with paragraph (13),
as promptly as possible, but at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which the event giving rise
to an adjustment of the type described in paragraph (6)(a), such a
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 Reorganization, 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 transactions
described in sub-paragraphs (i) or (ii) above.
(c) 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 Mandatorily Redeemable Preferred Stock, prior to
delivery, upon each national securities exchange, the Nasdaq Stock Market's
Na-
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tional 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.
(d) Provision of Information. So long as any shares of Mandatorily
Redeemable 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 to Section 13(a) of the
Exchange Act concurrently with such filing; (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) or 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.
(6) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
STOCK.
(a) Limitations on Junior Stock Dividends. As long as any shares of
Mandatorily Redeemable Preferred Stock are outstanding, no dividends shall be
paid or declared in cash on Junior Stock, nor shall any other distributions be
made on any Junior Stock.
(b) Limitations on Purchase of Junior Stock. As long as any shares
of Mandatorily Redeemable 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.
(c) Limitations on Parity Stock Dividends and Redemptions. As long
as any share of Mandatorily Redeemable Preferred Stock is 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 (other
than any outstanding shares of 9.90% Non-Voting Mandatorily Redeemable Preferred
Stock, Series A, issued pursuant to the Certificate of Designations of the
Company, dated
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September 21, 1998, or outstanding shares of 13% Series B Senior Redeemable
Exchangeable Preferred Stock, issued pursuant to the Certificate of Designations
of the Company, dated February 12, 1997) (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
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 Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock and such other share
of Parity Stock bear to each other.
(d) Certain Permitted Dividends and Redemptions. Nothing contained
in this paragraph (6) 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 Securities 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 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 Mandatorily Redeemable Preferred Stock into or for 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 (3), (4) or (5).
(f) Waiver. The provisions of paragraphs (6)(a), (b) and (d) are for
the sole benefit of the holders of Mandatorily Redeemable 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
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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 Mandatorily Redeemable
Preferred Stock shall have waived (as provided in paragraph (14)) in whole or in
part the benefit of such provision (either generally or in the specific
instance), then the provisions of paragraphs (6)(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, Mandatorily Redeemable Preferred Stock, any
other class or series of Parity Stock or any Junior Stock.
(7) 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 Mandatorily Redeemable 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
Mandatorily Redeemable 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 Mandatorily Redeemable 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 Mandatorily Redeemable 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
Mandatorily Redeemable 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 distribution if the amounts to which the holders
of outstanding shares of Mandatorily Redeemable Preferred Stock and the holders
of outstanding shares of such other Parity Stock were paid in full. Except as
provided in this paragraph (7)(a), holders of Mandatorily Redeemable 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.
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(b) Certain Events Not Deemed Liquidation, Etc. For the purposes of
this paragraph (7) a Reorganization shall not be deemed to be a voluntary of
involuntary liquidation, dissolution or winding up of the Company.
(8) NO FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued in connection with the delivery of shares of Common Stock
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 Mandatorily Redeemable 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 (7), respectively, on the
total number of shares of Mandatorily Redeemable 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, in the case of Common Stock, the
same fraction of the Closing Price of a share of preceding the Determination
Date.
(9) 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 (3), (4) or (7), as applicable; 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 Mandatorily Redeemable Preferred Stock.
(10) NO PREEMPTIVE RIGHTS. The holders of shares of Mandatorily
Redeemable 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.
(11) VOTING RIGHTS. (a) The holders of shares of Mandatorily
Redeemable Preferred Stock shall have no Voting rights, except as otherwise
required by law and except as set forth in this paragraph (11). When and if the
holders of Mandatorily Redeemable Preferred Stock are entitled to vote by law or
pursuant to this paragraph (11), each holder will be entitled to one vote per
share.
(b) Certain Changes to Charter. For as long as any shares of
Mandatorily Redeemable Preferred Stock remain outstanding, the affirmative vote
of the holders of at least a majority of such outstanding shares (voting
separately as a
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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
Mandatorily Redeemable Preferred Stock then outstanding so as to affect them
adversely; provided, however, that:
(x) any such amendment that would authorize, create or increase the
authorized 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 Mandatorily Redeemable 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 Mandatorily Redeemable
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 Mandatorily
Redeemable Preferred Stock; and (ii) before the Company may reclassify the
outstanding shares of Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock shall be required if, at or prior to
the time when such amendment is to take effect, provision is made for the
redemption of all shares of Mandatorily Redeemable Preferred Stock at the time
outstanding.
(c) Creation of Senior Stock. No consent or vote of the holders of
the shares of Mandatorily Redeemable 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
(11) or as required by law, the holders of Mandatorily Redeemable 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
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any corporate action by the Company or the Board. The provisions of this
paragraph (11) 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.
(12) PAYMENTS. Payment of cash amounts due in respect of the
Mandatorily Redeemable Preferred Stock will be paid to the holders of shares of
Mandatorily Redeemable Preferred Stock (or, in the case of joint holders, the
first-named) as appearing in the stock register of the Company for the
Mandatorily Redeemable 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 Mandatorily Redeemable Preferred Stock entitled to such payments 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 Mandatorily
Redeemable 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 Mandatorily Redeemable 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 Mandatorily Redeemable 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.
(13) NOTICES. Any notice or communication by a holder of Mandatorily
Redeemable 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 communications to a holder of Mandatorily Redeemable
Preferred Stock shall be mailed by first-class mail to his address shown on the
stock register of the Company for the Mandatorily Redeemable Preferred Stock or,
if there are more than 200 holders of record of the Mandatorily Redeemable
Preferred
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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 (13) 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.
(14) WAIVER. Any provision of this Certificate of Designations
which, for the benefit of the holders of Mandatorily Redeemable 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
Mandatorily Redeemable Preferred Stock then outstanding, either in writing or by
vote at a meeting called for such purpose at which the holders of Mandatorily
Redeemable Preferred Stock shall vote as a separate class.
(15) REGISTRATION AND NO TRANSFER. The Company will maintain at its
principal executive office a register in which the Company will provide for the
registration of shares of Mandatorily Redeemable Preferred Stock. The shares of
Mandatorily Redeemable Preferred Stock are not transferrable, except to any
Affiliate of any holder thereof, provided, that such shares shall be reconveyed
to any such holder who transfers to an Affiliate in the event that such
Affiliate ceases to be an Affiliate of such transferring holder, and any
certificate representing shares of Mandatorily Redeemable Preferred Stock will
be so legended.
(16) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required
by law, the shares of Mandatorily Redeemable Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate of Designations.
(17) 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
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only to the extent of such prohibition or 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.
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Exhibit D
5 1/4% CONVERTIBLE PREFERRED STOCK, SERIES A
(1) Number and Designation. 500,000 shares of the Preferred Stock of
the Corporation shall be designated as 5 1/4% Convertible Preferred Stock,
Series A (the "5 1/4% Preferred Stock") and no other shares of Preferred Stock
shall be designated as 5 1/4% Preferred Stock.
(2) Definitions. For purposes of the 5 1/4% Preferred Stock, the
following terms shall have the meanings indicated:
"Board of Directors" shall mean the board of directors of the
Corporation or the Executive Committee, if any, of such board of directors or
any other committee duly authorized by such board of directors to perform any of
its responsibilities with respect to the 5 1/4% Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par value
$.01 per share.
"Constituent Person" shall have the meaning set forth in paragraph
(8)(e) hereof.
"Conversion Rate" shall have the meaning set forth in paragraph
(8)(a) hereof.
"Current Market Price" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Corporation or any
other issuer for any day shall mean (i) if the security is then listed or
admitted to trading on a national securities exchange in the United States, the
last reported sale price, regular way, for the security as reported in the
consolidated transaction or other reporting system for securities listed or
traded on such exchange, or (ii) if the security is quoted on the Nasdaq
National Market, the last reported sale price, regular way, for the security as
reported on such list, or (iii) if the security is not so admitted for trading
on any national securities exchange or the Nasdaq National Market, the average
of the last reported closing bid and asked prices reported by the Nasdaq as
furnished by any member in good standing of the National Association of
Securities Dealers, Inc., selected from time to time by the Company for that
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purpose or as quoted by the National Quotation Bureau Incorporated. In the event
that no such quotation is available for such day, the Current Market Price shall
be the average of the quotations for the last five Trading Days for which a
quotation is available within the last 30 Trading Days prior to such day. In the
event that five such quotations are not available within such 30-Trading Day
period, the Board of Directors shall be entitled to determine the Current Market
Price on the basis of such quotations as it reasonably considers appropriate.
"Determination Date" shall have the meaning set forth in paragraph
(8)(d) hereof.
"Dividend Payment Date" shall mean September 30, December 30, March
30 and June 30 of each year, commencing on March 30, 1999; provided, however,
that if any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing
on September 30, December 30, March 30 and June 30 of each year and ending on
and including the day preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period which shall commence on the Issue
Date and end on and include March 30, 1999).
"Fair Market Value" shall mean the average of the daily Current
Market Prices of a share of Common Stock for the 25 Trading Days immediately
prior to the date for which such value is to be computed.
"5 1/4% Preferred Stock" shall have the meaning set forth in
paragraph (1) hereof.
"Issue Date" shall mean the first date on which shares of 5 1/4%
Preferred Stock are issued.
"Junior Securities" shall have the meaning set forth in paragraph
(3) hereof.
"Junior Securities Distribution" shall have the meaning set forth in
paragraph (4)(e) hereof.
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"Mandatory Redemption Date" shall have the meaning set forth in
paragraph (6)(c) hereof.
"Mandatory Redemption Obligation" shall have the meaning set forth
in paragraph (6)(d) hereof.
"Nasdaq" means the National Association of Securities Dealers, Inc.
Automated Quotations System.
"non-electing share" shall have the meaning set forth in paragraph
(8)(e) hereof.
"NYSE" means the New York Stock Exchange.
"outstanding", when used with reference to shares of stock, shall
mean issued shares, excluding shares held by the Corporation or a subsidiary.
"Parity Securities" shall have the meaning set forth in paragraph
(3) hereof.
"Person" shall mean any individual, a corporation, a partnership, an
association, a joint-stock company, a limited liability company, a trust, any
unincorporated organization, or a government or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in the first
resolution above.
"Preferred Shares" has the meaning set forth in paragraph (9)(b).
"Relevant Compounding Factor" shall mean, with respect to each share
of 5 1/4% Preferred Stock, upon initial issuance 1.00, and shall on each
Dividend Payment Date be increased to equal the product of the Relevant
Compounding Factor in effect immediately prior to such Dividend Payment Date and
1.013125.
"Securities" shall have the meaning set forth in paragraph (8)(d)
hereof.
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"Senior Securities" shall have the meaning set forth in paragraph
(3) hereof.
"set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Securities or any class or series of Parity Securities
are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment" with
respect to the 5 1/4% Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted thereon, in the applicable securities market in which
the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (8)(e)
hereof.
(3) Rank. Any class or series of stock of the Corporation shall be
deemed to rank:
(a) prior to the 5 1/4% Preferred Stock, either as to the
payment of dividends or as to distribution of assets upon liquidation,
dissolution or winding up, or both, if the holders of such class or series
shall be entitled by the terms thereof to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up, in
preference or priority to the holders of 5 1/4% Preferred Stock ("Senior
Securities");
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(b) on a parity with the 5 1/4% Preferred Stock, either as to
the payment of dividends or as to distribution of assets upon liquidation,
dissolution or winding up, or both, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
thereof be different from those of the 5 1/4% Preferred Stock, if the
holders of the 5 1/4% Preferred Stock and of such class of stock or series
shall be entitled by the terms thereof to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, or
both, in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or
priority one over the other and such class of stock or series is not a
class of Senior Securities (Parity Securities); and
(c) junior to the 5 1/4% Preferred Stock, either as to the
payment of dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, or both, if such stock or series shall be
Common Stock or if the holders of the 5 1/4% Preferred Stock shall be
entitled to receipt of dividends, and of amounts distributable upon
liquidation, dissolution or winding up, in preference or priority to the
holders of shares of such stock or series ("Junior Securities").
The 13% Series B Senior Redeemable Exchangeable Preferred Stock (the "13%
Preferred") is a Senior Security. Each of the 9.9% Non-Voting Mandatory
Redeemable Preferred Stock, Series A ("Series A Preferred"), and 9.9%
Non-Voting Mandatory Redeemable Preferred Stock, Series B ("Series B
Preferred"), is a Junior Security. One or more classes of Additional
Preferred (as defined below) shall be Parity Securities provided,
however, that there shall be no issue of other Parity Securities except as
approved by the holders of the 5 1/4% Preferred Stock pursuant to
paragraph 9(d).
The respective definitions of Senior Securities, Junior Securities and
Parity Securities shall also include any rights or options exercisable for
or convertible into any of the Senior Securities, Junior Securities and
Parity Securities, as the case may be. The 5 1/4% Preferred Stock shall be
subject to the creation of Junior Securities, Parity Securities and Senior
Securities as set forth herein.
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(4) Dividends. (a) Subject to paragraph (8)(b)(ii), the holders of
shares of 5 1/4% Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, dividends at the quarterly rate of $13.125 per share
(assuming a $1,000.00 face amount) payable in cash, shares of Common Stock equal
to $13.125 per share of 5 1/4% Preferred Stock (having a value equal to the
Current Market Price as of the record date for such Dividend Payment Date) or
additional shares of Preferred Stock of a class to be designated by the Board of
Directors having terms substantially identical to the 5 1/4% Preferred Stock
except that: (i) the Conversion Rate (as set forth in Section 8(a)) shall be the
product of the Conversion Rate (as then in effect) and the Relevant Compounding
Factor and (ii) the number of the shares of such Preferred Stock payable as a
dividend on any Dividend Payment Date shall increase for each Dividend Payment
Date from the first Dividend Payment Date by the Relevant Compounding Factor
(such classes of Preferred Stock singularly and collectively, the "Additional
Preferred"). Such dividends shall be payable in arrears quarterly on each
Dividend Payment Date. Dividends on the 5 1/4% Preferred Stock shall be
cumulative from the Issue Date (except that dividends on Additional Shares shall
accrue from the date such Additional Shares are issued or would have been issued
in accordance with this Certificate of Designation if such dividends had been
declared), whether or not in any Dividend Period or Periods there shall be funds
of the Corporation legally available for the payment of such dividends. Each
such dividend shall be payable to the holders of record of shares of the 5 1/4%
Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on the record date for such dividend. Upon the declaration of
any such dividend, the Board of Directors shall fix as such record date on the
fifth Business Day preceding the relevant Dividend Payment Date and shall give
notice on or prior to the record date of the form of payment of such dividend.
Accrued and unpaid dividends for any past Dividend Payment Date may be declared
and paid at any time, without reference to any Dividend Payment Date, to holders
of record on such record date, not more than 45 days nor less than five Business
Days preceding the payment date thereof, as may be fixed by the Board of
Directors.
(b) For the purpose of determining the number of Additional
Preferred to be issued pursuant to paragraph (4)(a), each such Additional
Preferred shall be valued at $1,000.00. Holders of such Additional
Preferred shall be entitled to receive dividends payable at the rates
specified in paragraph (4)(a).
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(c) The dividends payable for the initial Dividend Period, or
any other period shorter than a full Dividend Period, on the 5 1/4%
Preferred Stock shall accrue daily and be computed on the basis of a
360-day year and the actual number of days in such period. Holders of
shares of 5 1/4% Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of cumulative
dividends, as herein provided, on the 5 1/4% Preferred Stock except as
otherwise provided herein. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
on the 5 1/4% Preferred Stock that may be in arrears except as otherwise
provided herein.
(d) So long as any shares of the 5 1/4% Preferred Stock are
outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on Parity
Securities, for any period, nor shall any Parity Securities be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any
such Parity Securities) by the Corporation (except for conversion into or
exchange into other Parity Securities) unless, in each case, (i) full
cumulative dividends on all outstanding shares of the 5 1/4% Preferred
Stock for all Dividend Periods terminating on or prior to the date of such
redemption, repurchase or other acquisition shall have been paid or set
apart for payment, (ii) sufficient funds shall have been paid or set
apart for the payment of the dividend for the current Dividend Period with
respect to the 5 1/4% Preferred Stock and (iii) the Corporation is not in
default with respect to any redemption of shares of 5 1/4% Preferred Stock
by the Corporation pursuant to paragraph (6) below. When dividends are not
fully paid in Common Stock or Additional Preferred or are not paid in full
in cash or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the 5 1/4% Preferred
Stock and all dividends declared upon Parity Securities shall be declared
ratably in proportion to the respective amounts of dividends accumulated
and unpaid on the 5 1/4% Preferred Stock and accumulated and unpaid on
such Parity Securities.
(e) So long as any shares of the 5 1/4% Preferred Stock are
outstanding, no dividends (other than (i) any rights issued pursuant to a
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shareholder rights plan as provided in paragraph 11 and (ii) dividends or
distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Securities) shall be declared
or paid or set apart for payment or other distribution declared or made
upon Junior Securities, nor shall any Junior Securities be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an
employee incentive or benefit plan of the Corporation or any subsidiary)
(all such dividends, distributions, redemptions or purchases being
hereinafter referred to as "Junior Securities Distributions") for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange
for Junior Securities, including pursuant to paragraph 4(c) of the Series
A Preferred and paragraph 4(d) of the Series B Preferred), unless in each
case (i) the full cumulative dividends on all outstanding shares of the 5
1/4% Preferred Stock and any other Parity Securities shall have been paid
or set apart for payment for all past Dividend Periods with respect to
the 5 1/4% Preferred Stock and all past dividend periods with respect to
such Parity Securities and (ii) sufficient funds shall have been paid or
set apart for the payment of the dividend for the current Dividend Period
with respect to the 5 1/4% Preferred Stock and the current dividend period
with respect to such Parity Securities.
(5) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of 5 1/4% Preferred Stock shall be
entitled to receive $1,000.00 per share of 5 1/4% Preferred Stock plus an amount
equal to all dividends (whether or not earned or declared) accrued and unpaid
thereon to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of 5 1/4%
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any Parity Securities, then such assets,
or the proceeds thereof, shall be distributed among the holders of shares of 5
1/4% Preferred Stock and any such other Parity Securities ratably in accordance
with the respective amounts that would be payable on such shares of
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5 1/4% Preferred Stock and any such other stock if all amounts payable thereon
were paid in full. For the purposes of this paragraph (5), (i) a consolidation
or merger of the Corporation with one or more corporations, or (ii) a sale or
transfer of all or substantially all of the Corporation's assets, shall not be
deemed to be a liquidation, dissolution or winding up, voluntary or involuntary,
of the Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of
the 5 1/4% Preferred Stock, as provided in this paragraph (5), any other
series or class or classes of Junior Securities shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the
holders of the 5 1/4% Preferred Stock shall not be entitled to share
therein.
(6) Redemption. (a) On and after the earlier to occur of (i) the
seventh anniversary of the Issue Date or (ii) the date on which the Current
Market Price of the Common Stock shall have exceeded $120.00 for twenty-five
(25) consecutive Trading Days, to the extent the Corporation shall have funds
legally available for such payment, the Corporation may redeem at its option
shares of 5 1/4% Preferred Stock, in whole or from time to time in part, payable
at the option of the Corporation in (A) cash, at a redemption price of $1,000.00
per share, or (B) in shares of Common Stock, at a redemption price of $1,025.00
per share in the case of a redemption permitted by clause (i) or $1,000.00 per
share in the case of a redemption permitted by clause (ii), or (C) in a
combination of cash and Common Stock at a redemption price based on the
respective combination of consideration, together in each case with accrued and
unpaid dividends thereon, whether or not declared, to, but excluding, the date
fixed for redemption, without interest. For purposes of determining the number
of shares of the Common Stock to be issued pursuant to this paragraph (6)(a),
the price per share of Common Stock valued at the Fair Market Value.
(b) On and after January 28, 2009, each holder of shares of 5
1/4% Preferred Stock shall have the right to require the Corporation, to
the extent the Corporation shall have funds legally available therefor, to
redeem such holder's shares of 5 1/4% Preferred Stock in whole or from
time to time in part at a redemption price of $1,000.00 per share,
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payable at the option of the Corporation in cash, shares of Common Stock
or a combination thereof, together with accrued and unpaid dividends
thereon to, but excluding, the date fixed for redemption, without
interest. For purposes of determining the number of shares of the Common
Stock to be issued pursuant to this paragraph (6)(b), the price per share
of Common Stock shall equal the Fair Market Value. Any holder of shares of
5 1/4% Preferred Stock who elects to exercise its rights pursuant to this
paragraph (6)(b) shall deliver to the Corporation a written notice of
election not less than 20 days prior to January 28, 2009, as the case may
be, which notice shall set forth the name of the Holder, the number of
shares of 5 1/4% Preferred Stock to be redeemed and a statement that the
election to exercise a redemption right is being made thereby; and shall
deliver to the Corporation on or before the date of redemption
certificates evidencing the shares of 5 1/4% Preferred Stock to be
redeemed, duly endorsed for transfer to the Corporation.
(c) If the Corporation shall not have redeemed all outstanding
shares of 5 1/4% Preferred Stock pursuant to paragraphs (6)(a) and (6)(b),
on the twentieth anniversary of the Issue Date (the "Mandatory Redemption
Date"), to the extent the Corporation shall have funds legally available
for such payment, the Corporation shall redeem all outstanding shares of 5
1/4% Preferred Stock, at a redemption price of $1,000.00 per share,
payable at the option of the Corporation in cash, shares of Common Stock
or a combination thereof, together with accrued and unpaid dividends
thereon to, but excluding, the Mandatory Redemption Date, without
interest. For purposes of determining the number of shares of the Common
Stock to be issued pursuant to this paragraph (6)(c), the price per share
of Common Stock shall be valued at the Fair Market Value.
(d) If the Corporation is unable or shall fail to discharge
its obligation to redeem all outstanding shares of 5 1/4% Preferred Stock
pursuant to paragraph (6)(c) (the "Mandatory Redemption Obligation"), the
Mandatory Redemption Obligation shall be discharged as soon as the
Corporation is able to discharge such Mandatory Redemption Obligation. If
and so long as any Mandatory Redemption Obligation with respect to the 5
1/4% Preferred Stock shall not be fully discharged, the Corporation shall
not (i) directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption,
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sinking fund or other similar obligation in respect of any Parity
Securities (except in connection with a redemption, sinking fund or other
similar obligation to be satisfied pro rata with the 5 1/4% Preferred
Stock) or (ii) declare or make any Junior Securities Distribution (other
than dividends or distributions paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Securities), or,
directly or indirectly, discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of the Junior
Securities.
(e) Upon any redemption of 5 1/4% Preferred Stock, the
Corporation shall pay the redemption price and any accrued and unpaid
dividends in arrears to, but excluding, the applicable redemption date.
(f) For purposes of paragraph (6)(a) only, unless full
cumulative dividends (whether or not declared) on all outstanding shares
of 5 1/4% Preferred Stock and any Parity Securities shall have been paid
or contemporaneously are declared and paid or set apart for payment for
all Dividend Periods terminating on or prior to the applicable redemption
date, none of the shares of 5 1/4% Preferred Stock shall be redeemed, and
no sum shall be set aside for such redemption, unless shares of 5 1/4%
Preferred Stock are redeemed pro rata.
(7) Procedure for Redemption. (a) If the Corporation shall redeem
shares of 5 1/4% Preferred Stock pursuant to paragraph 6(a), notice of such
redemption shall be given by certified mail, return receipt requested, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the Corporation
and confirmed by facsimile transmission to each holder of record if the
Corporation has been furnished with such facsimile address by the holder(s);
provided that neither the failure to give such notice nor confirmation nor any
defect therein or in the mailing thereof, to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice that was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of 5 1/4%
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of shares to be
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redeemed from such holder; (iii) the amount payable, whether in Common Stock or
cash and if the payment is in Common Stock an explanation of the determination
of the amount to be paid; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date, except as otherwise provided herein.
(b) If notice has been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing for the payment of the redemption price of the shares called for
redemption and dividends accrued and unpaid thereon, if any), (i) except
as otherwise provided herein, dividends on the shares of 5 1/4% Preferred
Stock so called for redemption shall cease to accrue, (ii) said shares
shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of the 5 1/4% Preferred Stock shall cease
(except the right to receive from the Corporation the redemption price
without interest thereon, upon surrender and endorsement of their
certificates if so required, and to receive any dividends payable
thereon).
(c) Upon surrender in accordance with notice given pursuant to
this paragraph (7) of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of
the Corporation shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price
aforesaid, plus any dividends payable thereon. If fewer than all the
outstanding shares of 5 1/4% Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be selected pro rata (with
any fractional shares being rounded to the nearest whole share). In case
fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(8) Conversion. (a) Subject to and upon compliance with the
provisions of this paragraph (8), a holder of shares of 5 1/4% Preferred Stock
shall have the right, at any time and from time to time, at such holder's
option, to convert any or all outstanding shares of 5 1/4% Preferred Stock held
by such holder, but not fractions of shares, into fully paid and non-assessable
shares of Common
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Stock by surrendering such shares to be converted, such surrender to be made in
the manner provided in paragraph (8)(b) hereof. The number of shares of Common
Stock deliverable upon conversion of each share of 5 1/4% Preferred Stock shall
be equal to $1,000.00 divided by 10.00 (as adjusted as provided herein, the
"Conversion Rate"); provided that the aggregate number of shares of Common Stock
deliverable upon conversion of the 5 1/4% Preferred Stock (together with the
conversion of any Additional Preferred) shall not be greater than 7,590,994
subject to adjustment as provided herein. The Conversion Rate is subject to
adjustment from time to time pursuant to paragraph (8)(d) hereof. The right to
convert shares called for redemption pursuant to paragraph (7) shall terminate
at the close of business on the date immediately preceding the date fixed for
such redemption unless the Corporation shall default in making payment of the
amount payable upon such redemption. Upon conversion of any share of 5 1/4%
Preferred Stock the holder thereof shall continue to be entitled to receive from
the Corporation any accrued but unpaid dividends thereon.
(b) (i) In order to exercise the conversion privilege, the
holder of each share of 5 1/4% Preferred Stock to be converted shall
surrender the certificate representing such share, duly endorsed or
assigned to the Corporation or in blank, at the office of the Corporation,
or to any transfer agent of the Corporation previously designated by the
Corporation to the holders of the 5 1/4% Preferred Stock for such
purposes, with a written notice of election to convert completed and
signed, specifying the number of shares to be converted. Such notice shall
state that the holder has satisfied any legal or regulatory requirement
for conversion, including compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. Such notice shall also state the name or names
(with address and social security or other taxpayer identification number)
in which the certificate or certificates for Common Stock are to be
issued. Unless the shares issuable on conversion are to be issued in the
same name as the name in which such share of 5 1/4% Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly
executed by the holder or the holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence
reasonably satisfactory to the Corporation demonstrating that such taxes
have been paid). All certificates representing shares of 5 1/4% Preferred
Stock surrendered for conversion shall be canceled by the Corporation or
the transfer agent.
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(ii) Holders of shares of 5 1/4% Preferred Stock at the close of
business on a dividend payment record date shall not be entitled to
receive the dividend payable on such shares on the corresponding Dividend
Payment Date if such holder shall have surrendered for conversion such
shares at any time following the preceding Dividend Payment Date and prior
to such Dividend Payment Date.
(iii) As promptly as practicable after the surrender by a holder of
the certificates for shares of 5 1/4% Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver to such holder, or on the
holder's written order, a certificate or certificates (which certificate
or certificates shall have the legend set forth in paragraph 10(c)) for
the whole number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this paragraph (8), and any
fractional interest in respect of a share of Common Stock arising on such
conversion shall be settled as provided in paragraph (8)(c). Upon
conversion of only a portion of the shares of 5 1/4% Preferred Stock
represented by any certificate, a new certificate shall be issued
representing the unconverted portion of the certificate so surrendered
without cost to the holder thereof. Upon the surrender of certificates
representing shares of 5 1/4% Preferred Stock to be converted, such shares
shall no longer be deemed to be outstanding and all rights of a holder
with respect to such shares surrendered for conversion shall immediately
terminate except the right to receive the Common Stock and other amounts
payable pursuant to this paragraph (8).
(iv) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for shares of 5 1/4% Preferred Stock shall have been
surrendered and such notice received by the Corporation as aforesaid, and
the Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record
of the shares of Common Stock represented thereby at such time on such
date and such conversion shall be into a number of shares of Common Stock
equal to the product of the number of shares of 5 1/4% Preferred Stock
surrendered times the Conversion Rate in effect at such time on such date,
unless the stock
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transfer books of the Corporation shall be closed on that date, in which
event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on
which such stock transfer books are open, but such conversion shall be
based upon the Conversion Rate in effect on the date upon which such
shares shall have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of the 5 1/4%
Preferred Stock. Instead of any fractional interest in a share of Common
Stock that would otherwise be deliverable upon the conversion of a share
of 5 1/4% Preferred Stock, the Corporation shall pay to the holder of such
share an amount in cash based upon the Current Market Price of Common
Stock on the Trading Day immediately preceding the date of conversion. If
more than one share shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number
of shares of 5 1/4% Preferred Stock surrendered for conversion by such
holder.
(d) The Conversion Rate shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) declare a
dividend or make a distribution on its Common Stock in shares of its
Common Stock, (B) subdivide its outstanding Common Stock into a greater
number of shares or (C) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Rate in effect on the record date
for such dividend or distribution, or the effective date of such
subdivision or combination, as the case may be, shall be proportionately
adjusted so that the holder of any share of 5 1/4% Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number and kind of shares of Common Stock that such holder would have
owned or have been entitled to receive after the happening of any of the
events described above had such share been converted immediately prior to
the record date in the case of a dividend or distribution or the effective
date in the case of a subdivision or combination. An adjustment made
pursuant to this
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subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as
provided in paragraph (8)(h)) in the case of a dividend or distribution
and shall become effective immediately after the opening of business on
the Business Day next following the effective date in the case of a
subdivision, combination or reclassification. Adjustments in accordance
with this paragraph (8)(d)(i) shall be made whenever any event listed
above shall occur.
(ii) If the Corporation shall after the Issue Date fix a record date
for the issuance of rights or warrants (in each case, other than any
rights issued pursuant to a shareholder rights plan) to all holders of
Common Stock entitling them (for a period expiring within 45 days after
such record date) to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at a price per share (or, in the case of a
right or warrant to purchase securities convertible into Common Stock,
having an effective exercise price per share of Common Stock, computed on
the basis of the maximum number of shares of Common Stock issuable upon
conversion of such convertible securities, plus the amount of additional
consideration payable, if any, to receive one share of Common Stock upon
conversion of such securities) less than the Fair Market Value per share
of Common Stock on the date on which such issuance was declared or
otherwise announced by the Corporation (the "Determination Date"), then
the Conversion Rate in effect at the opening of business on the Business
Day next following such record date shall be adjusted so that the holder
of each share of 5 1/4% Preferred Stock shall be entitled to receive, upon
the conversion thereof, the number of shares of Common Stock determined by
multiplying (I) the Conversion Rate in effect immediately prior to such
record date by (II) a fraction, the numerator of which shall be the sum of
(A) the number of shares of Common Stock outstanding on the close of
business on the Determination Date and (B) the number of additional shares
of Common Stock offered for subscription or purchase pursuant to such
rights or warrants (or in the case of a right or warrant to purchase
securities convertible into Common Stock, the aggregate number of
additional shares of Common Stock into which the convertible securities so
offered are initially convertible), and the denominator of which shall be
the sum of (A) the number of shares of Common Stock outstanding on the
close of business on the Determination Date and (B) the number
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of shares that the aggregate proceeds to the Corporation from the exercise
of such rights or warrants for Common Stock would purchase at such Fair
Market Value on such date (or, in the case of a right or warrant to
purchase securities convertible into Common Stock, the number of shares of
Common Stock obtained by dividing the aggregate exercise price of such
rights or warrants for the maximum number of shares of Common Stock
issuable upon conversion of such convertible securities, plus the
aggregate amount of additional consideration payable, if any, to convert
such securities into Common Stock, by such Fair Market Value). Such
adjustment shall become effective immediately after the opening of
business on the Business Day next following such record date (except as
provided in paragraph (8)(h)). Such adjustment shall be made successively
whenever such a record date is fixed. In the event that after fixing a
record date such rights or warrants are not so issued, the Conversion Rate
shall be readjusted to the Conversion Rate which would then be in effect
if such record date had not been fixed. In determining whether any rights
or warrants entitle the holders of Common Stock to subscribe for or
purchase shares of Common Stock at less than such Fair Market Value, there
shall be taken into account any consideration received by the Corporation
upon issuance and upon exercise of such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors in good faith. In case any rights or warrants referred to in
this subparagraph (ii) shall expire unexercised after the same shall have
been distributed or issued by the Corporation (or, in the case of rights
or warrants to purchase securities convertible into Common Stock once
exercised, the conversion right of such securities shall expire), the
Conversion Rate shall be readjusted at the time of such expiration to the
Conversion Rate that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) If the Corporation shall fix a record date for the making of a
distribution to all holders of its Common Stock of evidences of its
indebtedness, shares of its capital stock or assets (excluding regular
cash dividends or distributions declared in the ordinary course by the
Board of Directors and dividends payable in Common Stock for which an
adjustment is made pursuant to paragraph (8)(d)(i)) or rights or warrants
(in each case, other than any rights issued pursuant to a shareholder
rights plan) to subscribe for or purchase any of its securities (excluding
those rights and
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warrants issued to all holders of Common Stock entitling them for a period
expiring within 45 days after the record date referred to in subparagraph
(ii) above to subscribe for or purchase Common Stock or securities
convertible into shares of Common Stock, which rights and warrants are
referred to in and treated under subparagraph (ii) above) (any of the
foregoing being hereinafter in this subparagraph (iii) called the
"Securities"), then in each such case the Conversion Rate shall be
adjusted so that the holder of each share of 5 1/4% Preferred Stock shall
be entitled to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (I) the Conversion Rate in
effect immediately prior to the close of business on such record date by
(II) a fraction, the numerator of which shall be the Fair Market Value per
share of the Common Stock on such record date, and the denominator of
which shall be the Fair Market Value per share of the Common Stock on such
record date less the then-fair market value (as determined by the Board of
Directors in good faith, whose determination shall be conclusive) of the
portion of the assets, shares of its capital stock or evidences of
indebtedness so distributed or of such rights or warrants applicable to
one share of Common Stock. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that after fixing a
record date such distribution is not so made, the Conversion Rate shall be
readjusted to the Conversion Rate which would then be in effect if such
record date had not been fixed. Such adjustment shall become effective
immediately at the opening of business on the Business Day next following
(except as provided in paragraph (8)(h)) the record date for the
determination of shareholders entitled to receive such distribution. For
the purposes of this subparagraph (iii), the distribution of a Security,
which is distributed not only to the holders of the Common Stock on the
date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each share of
Common Stock delivered to a Person converting a share of 5 1/4% Preferred
Stock after such determination date, shall not require an adjustment of
the Conversion Rate pursuant to this subparagraph (iii); provided that on
the date, if any, on which a Person converting a share of 5 1/4% Preferred
Stock would no longer be entitled to receive such Security with a share of
Common Stock (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Rate shall be adjusted as provided in this
subparagraph (iii) (and such day shall be
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deemed to be "the date fixed for the determination of shareholders
entitled to receive such distribution" and "the record date" within the
meaning of the three preceding sentences). If any rights or warrants
referred to in this subparagraph (iii) shall expire unexercised after the
same shall have been distributed or issued by the Corporation, the
Conversion Rate shall be readjusted at the time of such expiration to the
Conversion Rate that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash in an amount per share
that, together with the aggregate of the per share amounts of any other
cash distributions to all holders of its Common Stock made within the 12
months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (iv) has been made
exceeds 5.0% of the Fair Market Value immediately prior to the date of
declaration of such dividend or distribution (excluding any dividend or
distribution in connection with the liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, and any cash that is
distributed upon a merger, consolidation or other transaction for which an
adjustment pursuant to paragraph 8(e) is made), then, in such case, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior
to the close of business on the Record Date for the cash dividend or
distribution by a fraction the numerator of which shall be the Current
Market Price of a share of the Common Stock on the Record Date and the
denominator shall be such Current Market Price less the per share amount
of cash so distributed during the 12-month period applicable to one share
of Common Stock, such adjustment to be effective immediately prior to the
opening of business on the Business Day following the Record Date;
provided, however, that in the event the denominator of the foregoing
fraction is zero or negative, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of 5 1/4% Preferred
Stock shall have the right to receive upon conversion, in addition to the
shares of Common Stock to which the holder is entitled, the amount of cash
such holder would have received had such holder converted each share of 5
1/4% Preferred Stock at the beginning of the 12-month period. In the event
that such dividend or distribution is not so paid or made, the Conversion
Rate
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shall again be adjusted to be the Conversion Rate which would then be in
effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if any adjustment is required to be made as
set forth in this paragraph (8)(d)(iv), the calculation of any such
adjustment shall include the amount of the quarterly cash dividends paid
during the 12-month reference period only to the extent such dividends
exceed the regular quarterly cash dividends paid during the 12 months
preceding the 12-month reference period. For purposes of this paragraph
(8)(d)(iv), "Record Date" shall mean, with respect to any dividend or
distribution in which the holders of Common Stock have the right to
receive cash, the date fixed for determination of shareholders entitled to
receive such cash.
In the event that at any time cash distributions to holders of Common
Stock are not paid equally on all series of Common Stock, the provisions
of this paragraph 8(d)(iv) will apply to any cash dividend or cash
distribution on any series of Common Stock otherwise meeting the
requirements of this paragraph, and shall be deemed amended to the extent
necessary so that any adjustment required will be made on the basis of the
cash dividend or cash distribution made on any such series.
(v) In case of the consummation of a tender or exchange offer (other
than an odd-lot tender offer) made by the Corporation or any subsidiary of
the Corporation for all or any portion of the outstanding shares of Common
Stock to the extent that the cash and fair market value (as determined in
good faith by the Board of Directors of the Corporation, whose
determination shall be conclusive and shall be described in a resolution
of such Board) of any other consideration included in such payment per
share of Common Stock at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as
amended) exceed by more than 5.0%, with any smaller excess being
disregarded in computing the adjustment to the Conversion Rate provided in
this paragraph (8)(d)(v), the first reported sale price per share of
Common Stock on the Trading Day next succeeding the Expiration Time, then
the Conversion Rate shall be adjusted so that the same shall equal the
rate determined by multiplying the Conversion Rate in effect immediately
prior to the Expiration Time by a fraction the numerator of which shall
be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based on
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the acceptance (up to any maximum specified in the terms of the tender or
exchange offer) of all shares validly tendered or exchanged and not
withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the first reported sale price
of the Common Stock on the Trading Day next succeeding the Expiration
Time, and the denominator of which shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the first reported sale price of the Common
Stock on the Trading Day next succeeding the Expiration Time, such
adjustment to become effective immediately prior to the opening of
business on the day following the Expiration Time.
(vi) No adjustment in the Conversion Rate shall be required unless
such adjustment would require a cumulative increase or decrease of at
least 1% in the Conversion Rate; provided, however, that any adjustments
that by reason of this subparagraph (vi) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment
until made; and provided, further, that any adjustment shall be required
and made in accordance with the provisions of this paragraph (8) (other
than this subparagraph (vi)) not later than such time as may be required
in order to preserve the tax-free nature of a distribution for United
States income tax purposes to the holders of shares of 5 1/4% Preferred
Stock or Common Stock. Notwithstanding any other provisions of this
paragraph (8), the Corporation shall not be required to make any
adjustment of the Conversion Rate for the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under such plan. All
calculations under this paragraph (8) shall be made to the nearest dollar
or to the nearest 1/1,000 of a share, as the case may be. Anything in this
paragraph (8)(d) to the contrary notwithstanding, the Corporation shall be
entitled, to the extent permitted by law, to make such adjustments in the
Conversion Rate, in addition to those required by this paragraph (8)(d),
as it in its discretion shall determine to be advisable in order that any
stock dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock or
securities, or a
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distribution of other assets (other than cash dividends) hereafter made by
the Corporation to its shareholders shall not be taxable.
(vii) In the event that, at any time as a result of shares of any
other class of capital stock becoming issuable in exchange or substitution
for or in lieu of shares of Common Stock or as a result of an adjustment
made pursuant to the provisions of this paragraph (8)(d), the holder of 5
1/4% Preferred Stock upon subsequent conversion shall become entitled to
receive any shares of capital stock of the Corporation other than Common
Stock, the number of such other shares so receivable upon conversion of
any shares of 5 1/4% Preferred Stock shall thereafter be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions contained herein.
(e) (i) If the Corporation shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization of the
Common Stock and excluding any transaction as to which paragraph (8)(d)(i)
applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock
shall be converted into the right to receive stock, securities or other
property (including cash or any combination thereof), there shall be no
adjustment to the Conversion Rate but each share of 5 1/4% Preferred Stock
which is not converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock, securities and
other property (including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that number of shares
or fraction thereof of Common Stock into which one share of 5 1/4%
Preferred Stock was convertible immediately prior to such Transaction,
assuming such holder of Common Stock (i) is not a Person with which the
Corporation consolidated or into which the Corporation merged or which
merged into the Corporation or to which such sale or transfer was made, as
the case may be ("Constituent Person"), or an affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to
the kind or amount of stock, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or
amount of stock, securities and other property (including cash) receivable
upon such Trans-
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action is not the same for each share of Common Stock of the Corporation
held immediately prior to such Transaction by other than a Constituent
Person or an affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share"), then for
the purpose of this paragraph (8)(e) the kind and amount of stock,
securities and other property (including cash) receivable upon such
Transaction by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).
The provisions of this paragraph (8)(e) shall similarly apply to
successive Transactions.
(ii) Notwithstanding anything herein to the contrary, if the Company
is reorganized such that the Common Stock is exchanged for the common
stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or
another recognized securities exchange, then the Company, by notice to
the holders of the 5 1/4% Preferred Stock but without any required consent
on their part, may cause the exchange of this 5 1/4% Preferred Stock for
preferred stock of Holdco having the same terms and conditions as set
forth herein, provided that where Holdco is not solely incorporated as a
Delaware company or where the Holdco share structure is not identical to
that of the Company, the rights attaching to the preferred stock of Holdco
may be adjusted so as to comply with the local law of the country of
incorporation of Holdco or the new share structure of Holdco subject to
such rights effectively giving the same economic rights as the 5 1/4%
Preferred Stock (ignoring for these purposes any resultant change in the
tax treatment for the holders of such stock).
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock; or
(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; or
(iii) there shall be any subdivision, combination or
reclassification of the Common Stock or any consolidation or merger to
which the
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Corporation is a party and for which approval of any shareholders of the
Corporation is required, or the sale or transfer of all or substantially
all of the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with any transfer agent
designated by the Corporation pursuant to paragraph (8)(b) and shall cause
to be mailed to the holders of shares of the 5 1/4% Preferred Stock at
their addresses as shown on the stock records of the Corporation, as
promptly as possible, but at least ten days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is
to be taken for the purpose of such dividend (or such other distribution)
or rights or warrants, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights or warrants are to be determined or (B)
the date on which such subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding
up or other action is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such subdivision, combination,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any
defect therein shall not affect the legality or validity of any
distribution, right, warrant, subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, winding
up or other action, or the vote upon any of the foregoing.
(g) Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall prepare an officer's certificate with
respect to such adjustment of the Conversion Rate setting forth the
adjusted Conversion Rate and the effective date of such adjustment and
shall mail a copy of such officer's certificate to the holder of each
share of 5 1/4% Preferred Stock at such holder's last address as shown on
the stock records of the Corporation. If the Corporation shall have
designated a transfer agent pursuant to paragraph (8)(b), it shall also
promptly file with such transfer agent an officer's certificate setting
forth the Conversion Rate after
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such adjustment and setting forth a brief statement of the facts requiring
such adjustment which certificate shall be conclusive evidence of the
correctness of such adjustment.
(h) In any case in which paragraph (8)(d) provides that an
adjustment shall become effective on the day next following a record date
for an event, the Corporation may defer until the occurrence of such event
(i) issuing to the holder of any share of 5 1/4% Preferred Stock converted
after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by reason
of the adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder any amount in cash in lieu of any fraction
pursuant to paragraph (8)(c).
(i) For purposes of this paragraph (8), the number of shares
of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Corporation.
The Corporation shall not pay a dividend or make any distribution on
shares of Common Stock held in the treasury of the Corporation.
(j) There shall be no adjustment of the Conversion Rate in
case of the issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth
in this paragraph (8). If any single action would require adjustment of
the Conversion Rate pursuant to more than one subparagraph of this
paragraph (8), only one adjustment shall be made and such adjustment shall
be the amount of adjustment that has the highest absolute value.
(k) If the Corporation shall take any action affecting the
Common Stock, other than action described in this paragraph (8), that in
the opinion of the Board of Directors materially adversely affects the
conversion rights of the holders of the shares of 5 1/4% Preferred Stock,
the Conversion Rate may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances; provided that the
provisions of this
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paragraph (8)(k) shall not affect any rights the holders of 5 1/4%
Preferred Stock may have at law or in equity.
(l) (i) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock or its
issued shares of Common Stock held in its treasury, or both, for the
purpose of effecting conversion of the 5 1/4% Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of 5 1/4% Preferred Stock not theretofore converted.
For purposes of this paragraph (8)(1) the number of shares of Common Stock
that shall be deliverable upon the conversion of all outstanding shares of
5 1/4% Preferred Stock shall be computed as if at the time of computation
all such outstanding shares were held by a single holder.
(ii) The Corporation covenants that any shares of Common Stock
issued upon conversion of the 5 1/4% Preferred Stock shall be duly
authorized, validly issued, fully paid and non-assessable. Before taking
any action that would cause an adjustment increasing the Conversion Rate
such that the quotient of $1,000.00 and the Conversion Rate (which
initially shall be $100.00) would be reduced below the then-par value of
the shares of Common Stock deliverable upon conversion of the 5 1/4%
Preferred Stock, the Corporation will take any corporate action that, in
the opinion of its counsel, may be necessary in order that the Corporation
may validly and legally issue fully paid and non-assessable shares of
Common Stock based upon such adjusted Conversion Rate.
(iii) Prior to the delivery of any securities that the Corporation
shall be obligated to deliver upon conversion of the 5 1/4% Preferred
Stock, the Corporation shall comply with all applicable federal and state
laws and regulations which require action to be taken by the Corporation.
(m) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities or property on
conversion of the 5 1/4% Preferred Stock pursuant hereto; provided, how
ever, that the Corporation shall not be required to pay any tax that may
be payable in respect of any transfer involved in the issue or delivery of
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shares of Common Stock or other securities or property in a name other
than that of the holder of the 5 1/4% Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the Person
requesting such issue or delivery has paid to the Corporation the amount
of any such tax or established, to the satisfaction of the Corporation,
that such tax has been paid.
(9) Voting Rights. (a) The holders of record of shares of 5 1/4%
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in paragraph (b) or as otherwise provided by law.
(b) If and whenever six quarterly dividends (whether or not
consecutive) payable on the 5 1/4% Preferred Stock have not been paid in
full or if the Corporation shall have failed to discharge its Mandatory
Redemption Obligation, the number of directors then constituting the Board
of Directors shall be increased by two and the holders of shares of 5 1/4%
Preferred Stock, together with the holders of shares of every other series
of preferred stock (including, without limitation, Additional Preferred)
upon which like rights to vote for the election of two additional
directors have been conferred and are exercisable (resulting from either
the failure to pay dividends or the failure to redeem) (any such other
series is referred to as the "Preferred Shares"), voting as a single class
regardless of series, shall be entitled to elect the two additional
directors to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special
meeting of the holders of the 5 1/4% Preferred Stock and the Preferred
Shares called as hereinafter provided. Whenever all arrears in dividends
on the 5 1/4% Preferred Stock and the Preferred Shares then outstanding
shall have been paid and dividends thereon for the current quarterly
dividend period shall have been paid or declared and set apart for
payment, or the Corporation shall have fulfilled its Mandatory Redemption
Obligation and any redemption obligation in respect of the Preferred
Shares, as the case may be, then the right of the holders of the 5 1/4%
Preferred Stock and the Preferred Shares to elect such additional two
directors shall cease (but subject always to the same provisions for the
vesting of such voting rights in the case of any similar future arrearages
in six quarterly dividends or failure to fulfill any Mandatory Redemption
Obligation), and the terms of office of all persons elected as directors
by the holders of the 5 1/4% Preferred Stock and the
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Preferred Shares shall forthwith terminate and the number of the Board of
Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of shares of 5 1/4%
Preferred Stock and the Preferred Shares, the secretary of the Corporation
may, and upon the written request of any holder of 5 1/4% Preferred Stock
(addressed to the secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the 5 1/4% Preferred Stock
and of the Preferred Shares for the election of the two directors to be
elected by them as herein provided, such call to be made by notice similar
to that provided in the Bylaws of the Corporation for a special meeting of
the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the
secretary within 20 days after receipt of any such request, then any
holder of shares of 5 1/4% Preferred Stock may call such meeting, upon the
notice above provided, and for that purpose shall have access to the stock
books of the Corporation. The directors elected at any such special
meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall
occur among the directors elected by the holders of the 5 1/4% Preferred
Stock and the Preferred Shares, a successor shall be elected by the Board
of Directors, upon the nomination of the then-remaining director elected
by the holders of the 5 1/4% Preferred Stock and the Preferred Shares or
the successor of such remaining director, to serve until the next annual
meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(c) Without the written consent of the holders of at least
66 2/3% in liquidation preference of the outstanding shares of 5 1/4%
Preferred Stock or the vote of holders of at least 66 2/3% in liquidation
preference of the outstanding shares of 5 1/4% Preferred Stock at a
meeting of the holders of 5 1/4% Preferred Stock called for such purpose,
the Corporation will not amend, alter or repeal any provision of the
Certificate of Incorporation (by merger or otherwise) so as to adversely
affect the preferences, rights or powers of the 5 1/4% Preferred Stock;
provided that any such amendment that changes the dividend payable on, the
conversion rate with respect to, or the liquidation preference of the 5
1/4% Preferred Stock shall require the affirmative vote at a meeting of
holders of 5 1/4% Preferred
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Stock called for such purpose or written consent of the holder of each
share of 5 1/4% Preferred Stock.
(d) Without the written consent of the holders of at least
66 2/3% in liquidation preference of the outstanding shares of 5 1/4%
Preferred Stock or the vote of holders of at least 66 2/3% in liquidation
preference of the outstanding shares of 5 1/4% Preferred Stock at a
meeting of such holders called for such purpose, the Corporation will not
issue any additional 5 1/4% Preferred Stock or create, authorize or issue
any Parity Securities or Senior Securities or increase the authorized
amount of any such other class or series; provided that paragraph 9(d)
shall not limit the right of the Corporation to (i) issue Additional
Preferred as dividends pursuant to paragraph 4 or (ii) to issue Parity
Securities or Senior Securities in order to refinance, redeem or refund
the 13% Preferred, provided that the maximum accrual value (i.e., the sum
of stated value and maximum amount payable in kind over the term from
issuance to first date of mandatory redemption or redemption at the option
of the holder) of such Parity Securities may not exceed the maximum acrual
value of the 13% Preferred.
(e) In exercising the voting rights set forth in this
paragraph 9, each share of 5 1/4% Preferred Stock shall have one vote per
share, except that when any other series of preferred stock shall have the
right to vote with the 5 1/4% Preferred Stock as a single class on any
matter, then the 5 1/4% Preferred Stock and such other series shall have
with respect to such matters one vote per $1,000 of stated liquidation
preference. Except as otherwise required by applicable law or as set forth
herein, the shares of 5 1/4% Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
(10) General Provisions. (a) The headings of the paragraphs,
subparagraphs, clauses and subclauses of this Statement of Designations are for
convenience of reference only and shall not define, limit or affect any of the
provisions hereof.
(b) If the Corporation shall have failed to declare or pay
dividends as required pursuant to paragraph (4) hereof or shall have
failed
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to discharge any obligation to redeem shares of 5 1/4% Preferred Stock
pursuant to paragraph (6) hereof, the holders of shares of 5 1/4%
Preferred Stock shall be entitled to receive, in addition to all other
amounts required to be paid hereunder, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of
dividends, cash dividends on the aggregate dividends which the Corporation
shall have failed to declare or pay or the redemption price, together with
accrued and unpaid dividends thereon, as the case may be, at a rate of 2%
per quarter, compounded quarterly, for the period during which the
failure to pay dividends or failure to discharge an obligation to redeem
shares of 5 1/4% Preferred Stock shall continue.
(c) The shares of 5 1/4% Preferred Stock shall bear the
following legend:
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OTHER THAN TO AN AFFILIATE OF THE HOLDER.
The shares of Common Stock issuable upon conversion of the 5 1/4%
Preferred Stock shall bear the following legend:
THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE COMPANY (THE "COMMON
STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO JANUARY
28, 2001 (OTHER THAN TO AN AFFILIATE OF THE HOLDER) AND THEREAFTER MAY
ONLY BE SOLD IN BROKERS TRANSACTIONS (AS DEFINED IN RULE 144 UNDER THE
ACT) OR TO PERSONS WHO, GIVING EFFECT TO THE SALE OF THE SHARES
REPRESENTED HEREBY, WILL NOT BE THE BENEFICIAL OWNER OF 5% OR MORE OF THE
COMMON STOCK.
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(11) Shareholder Rights Plan. The shares of 5 1/4% Preferred Stock
shall be entitled to the benefits of a number of rights issuable under the
Rights Agreement, dated as of October 13, 1993, between the Company and
Continental Stock Transfer & Trust Company or any successor plan of similar
purpose and effect ("Rights") equal to the number of shares of Common Stock then
issuable upon conversion of the 5 1/4% Preferred Stock at the prevailing
Conversion Rate. Any shares of Common Stock deliverable upon conversion of a
share of 5 1/4% Preferred Stock or upon payment of a dividend shall be
accomplished by a Right.
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Exhibit E
5 1/4% CONVERTIBLE PREFERRED STOCK, SERIES B
(1) Number and Designation. 4,447.92 shares of the Preferred Stock
of the Corporation shall be designated as 5 1/4% Convertible Preferred Stock,
Series B (the "5 1/4% Preferred Stock") and no other shares of Preferred Stock
shall be designated as 5 1/4% Preferred Stock.
(2) Definitions. For purposes of the 5 1/4% Preferred Stock, the
following terms shall have the meanings indicated:
"Board of Directors" shall mean the board of directors of the
Corporation or the Executive Committee, if any, of such board of directors or
any other committee duly authorized by such board of directors to perform any of
its responsibilities with respect to the 5 1/4% Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par value
$.01 per share.
"Constituent Person" shall have the meaning set forth in paragraph
(8)(e) hereof.
"Conversion Rate" shall have the meaning set forth in paragraph
(8)(a) hereof.
"Current Market Price" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Corporation or any
other issuer for any day shall mean (i) if the security is then listed or
admitted to trading on a national securities exchange in the United States, the
last reported sale price, regular way, for the security as reported in the
consolidated transaction or other reporting system for securities listed or
traded on such exchange, or (ii) if the security is quoted on the Nasdaq
National Market, the last reported sale price, regular way, for the security as
reported on such list, or (iii) if the security is not so admitted for trading
on any national securities exchange or the Nasdaq National Market, the average
of the last reported closing bid and asked prices reported by the Nasdaq as
furnished by any member in good standing of the National Association of
Securities Dealers, Inc., selected from time to time by the Company for that
purpose or as quoted by the National Quotation Bureau Incorporated. In the event
that no such
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quotation is available for such day, the Current Market Price shall be the
average of the quotations for the last five Trading Days for which a quotation
is available within the last 30 Trading Days prior to such day. In the event
that five such quotations are not available within such 30-Trading Day period,
the Board of Directors shall be entitled to determine the Current Market Price
on the basis of such quotations as it reasonably considers appropriate.
"Determination Date" shall have the meaning set forth in paragraph
(8)(d) hereof.
"Dividend Payment Date" shall mean September 30, December 30, March
30 and June 30 of each year, commencing on June 30, 1999; provided, however,
that if any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing
on September 30, December 30, March 30 and June 30 of each year and ending on
and including the day preceding the first day of the next succeeding Dividend
Period.
"Fair Market Value" shall mean the average of the daily Current
Market Prices of a share of Common Stock for the 25 Trading Days immediately
prior to the date for which such value is to be computed.
"5 1/4% Preferred Stock" shall have the meaning set forth in
paragraph (1) hereof.
"Issue Date" shall mean the first date on which shares of 5 1/4%
Preferred Stock are issued.
"Junior Securities" shall have the meaning set forth in paragraph
(3) hereof.
"Junior Securities Distribution" shall have the meaning set forth in
paragraph (4)(e) hereof.
"Mandatory Redemption Date" shall have the meaning set forth in
paragraph (6)(c) hereof.
"Mandatory Redemption Obligation" shall have the meaning set forth
in paragraph (6)(d) hereof.
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"Nasdaq" means the National Association of Securities Dealers, Inc.
Automated Quotations System.
"non-electing share" shall have the meaning set forth in paragraph
(8)(e) hereof.
"NYSE" means the New York Stock Exchange.
"outstanding", when used with reference to shares of stock, shall
mean issued shares, excluding shares held by the Corporation or a subsidiary.
"Parity Securities" shall have the meaning set forth in paragraph
(3) hereof.
"Person" shall mean any individual, a corporation, a partnership, an
association, a joint-stock company, a limited liability company, a trust, any
unincorporated organization, or a government or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in the first
resolution above.
"Preferred Shares" has the meaning set forth in paragraph (9)(b).
"Relevant Compounding Factor" shall mean, with respect to each share
of 5 1/4% Preferred Stock, upon initial issuance 1.00, and shall on each
Dividend Payment Date be increased to equal the product of the Relevant
Compounding Factor in effect immediately prior to such Dividend Payment Date and
1.013125.
"Securities" shall have the meaning set forth in paragraph (8)(d)
hereof.
"Senior Securities" shall have the meaning set forth in paragraph
(3) hereof.
"set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Securities or any class or series of Parity Securities
are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
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with respect to the 5 1/4% Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted thereon, in the applicable securities market in which
the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (8)(e)
hereof.
(3) Rank. Any class or series of stock of the Corporation shall be
deemed to rank:
(a) prior to the 5 1/4% Preferred Stock, either as to the
payment of dividends or as to distribution of assets upon liquidation,
dissolution or winding up, or both, if the holders of such class or series
shall be entitled by the terms thereof to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up, in
preference or priority to the holders of 5 1/4% Preferred Stock ("Senior
Securities");
(b) on a parity with the 5 1/4% Preferred Stock and the 5 1/4%
Convertible Preferred Stock, Series A, either as to the payment of
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different
from those of the 5 1/4% Preferred Stock, if the holders of the 5 1/4%
Preferred Stock and of such class of stock or series shall be entitled by
the terms thereof to the receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, or both, in proportion to
their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
and such class of stock or series is not a class of Senior Securities
("Parity Securities"); and
(c) junior to the 5 1/4% Preferred Stock, either as to the
payment of dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, or both, if such stock or series shall be
Common Stock or if the holders of the 5 1/4% Preferred Stock shall be
entitled to receipt of dividends, and of amounts distributable upon
liquidation, dissolution or winding up, in preference or priority to the
holders of shares of such stock or series ("Junior Securities").
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The 13% Series B Senior Redeemable Exchangeable Preferred Stock (the "13%
Preferred") is a Senior Security. Each of the 9.9% Non-Voting Mandatory
Redeemable Preferred Stock, Series A ("Series A Preferred"), and 9.9%
Non-Voting Mandatory Redeemable Preferred Stock, Series B ("Series B
Preferred"), is a Junior Security. One or more classes of Additional
Preferred (as defined below) shall be Parity Securities provided, however,
that there shall be no issue of other Parity Securities except as approved
by the holders of the 5 1/4% Preferred Stock pursuant to paragraph 9(d).
The respective definitions of Senior Securities, Junior Securities and
Parity Securities shall also include any rights or options exercisable for
or convertible into any of the Senior Securities, Junior Securities and
Parity Securities, as the case may be. The 5 1/4% Preferred Stock shall be
subject to the creation of Junior Securities, Parity Securities and Senior
Securities as set forth herein.
(4) Dividends. (a) Subject to paragraph (8)(b)(ii), the holders of
shares of 5 1/4% Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, dividends at the quarterly rate of $13.125 per share
(assuming a $1,000.00 face amount) payable in cash, shares of Common Stock equal
to $13.125 per share of 5 1/4% Preferred Stock (having a value equal to the
Current Market Price as of the record date for such Dividend Payment Date) or
additional shares of Preferred Stock of a class to be designated by the Board of
Directors having terms substantially identical to the 5 1/4% Preferred Stock
except that: (i) the Conversion Rate (as set forth in Section 8(a)) shall be the
product of the Conversion Rate (as then in effect) and the Relevant Compounding
Factor and (ii) the number of the shares of such Preferred Stock payable as a
dividend on any Dividend Payment Date shall increase for each Dividend Payment
Date from the first Dividend Payment Date by the Relevant Compounding Factor
(such classes of Preferred Stock singularly and collectively, the "Additional
Preferred"). Such dividends shall be payable in arrears quarterly on each
Dividend Payment Date. Dividends on the 5 1/4% Preferred Stock shall be
cumulative from the Issue Date (except that dividends on Additional Shares shall
accrue from the date such Additional Shares are issued or would have been issued
in accordance with this Certificate of Designation if such dividends had been
declared), whether or not in any Dividend Period or Periods there shall be funds
of the Corporation legally available for the payment of such dividends. Each
such dividend shall be payable to the holders of record of shares of the 5 1/4%
Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on the record date for such dividend. Upon the declaration of
any such dividend, the Board of Directors shall fix as such record date on the
fifth Business Day preceding the relevant Dividend Payment Date and shall give
notice on or prior to the record date of the form of
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payment of such dividend. Accrued and unpaid dividends for any past Dividend
Payment Date may be declared and paid at any time, without reference to any
Dividend Payment Date, to holders of record on such record date, not more than
45 days nor less than five Business Days preceding the payment date thereof, as
may be fixed by the Board of Directors.
(b) For the purpose of determining the number of Additional
Preferred to be issued pursuant to paragraph (4)(a), each such Additional
Preferred shall be valued at $1,000.00. Holders of such Additional
Preferred shall be entitled to receive dividends payable at the rates
specified in paragraph (4)(a).
(c) The dividends payable for any period shorter than a full
Dividend Period, on the 5 1/4% Preferred Stock shall accrue daily and be
computed on the basis of a 360-day year and the actual number of days in
such period. Holders of shares of 5 1/4% Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in
excess of cumulative dividends, as herein provided, on the 5 1/4%
Preferred Stock except as otherwise provided herein. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the 5 1/4% Preferred Stock that may be in arrears
except as otherwise provided herein.
(d) So long as any shares of the 5 1/4% Preferred Stock are
outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on Parity
Securities, for any period, nor shall any Parity Securities be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any
such Parity Securities) by the Corporation (except for conversion into or
exchange into other Parity Securities) unless, in each case, (i) full
cumulative dividends on all outstanding shares of the 5 1/4% Preferred
Stock for all Dividend Periods terminating on or prior to the date of such
redemption, repurchase or other acquisition shall have been paid or set
apart for payment, (ii) sufficient funds shall have been paid or set apart
for the payment of the dividend for the current Dividend Period with
respect to the 5 1/4% Preferred Stock and (iii) the Corporation is not in
default with respect to any redemption of shares of 5 1/4% Preferred Stock
by the Corporation pursuant to paragraph (6) below. When dividends are not
fully paid in Common Stock or Additional Preferred or are not paid in full
in cash or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the 5 1/4% Preferred
Stock and all dividends declared upon Parity Securities shall be declared
ratably in propor-
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tion to the respective amounts of dividends accumulated and unpaid on the
5 1/4% Preferred Stock and accumulated and unpaid on such Parity
Securities.
(e) So long as any shares of the 5 1/4% Preferred Stock are
outstanding, no dividends (other than (i) any rights issued pursuant to a
shareholder rights plan as provided in paragraph 11 and (ii) dividends or
distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Securities) shall be declared
or paid or set apart for payment or other distribution declared or made
upon Junior Securities, nor shall any Junior Securities be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an
employee incentive or benefit plan of the Corporation or any subsidiary)
(all such dividends, distributions, redemptions or purchases being
hereinafter referred to as "Junior Securities Distributions") for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange
for Junior Securities, including pursuant to paragraph 4(c) of the Series
A Preferred and paragraph 4(d) of the Series B Preferred), unless in each
case (i) the full cumulative dividends on all outstanding shares of the 5
1/4% Preferred Stock and any other Parity Securities shall have been paid
or set apart for payment for all past Dividend Periods with respect to the
5 1/4% Preferred Stock and all past dividend periods with respect to such
Parity Securities and (ii) sufficient funds shall have been paid or set
apart for the payment of the dividend for the current Dividend Period with
respect to the 5 1/4% Preferred Stock and the current dividend period with
respect to such Parity Securities.
(5) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of 5 1/4% Preferred Stock shall be
entitled to receive $1,000.00 per share of 5 1/4% Preferred Stock plus an amount
equal to all dividends (whether or not earned or declared) accrued and unpaid
thereon to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of 5 1/4%
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any Parity Securities, then such assets,
or the proceeds thereof, shall be distributed among the holders of shares of 5
1/4% Preferred Stock and any such other Parity Securities ratably in accordance
with the respective amounts that would be payable on such shares of 5 1/4%
Preferred Stock and any such
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other stock if all amounts payable thereon were paid in full. For the purposes
of this paragraph (5), (i) a consolidation or merger of the Corporation with one
or more corporations, or (ii) a sale or transfer of all or substantially all of
the Corporation's assets, shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of
the 5 1/4% Preferred Stock, as provided in this paragraph (5), any other
series or class or classes of Junior Securities shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the
holders of the 5 1/4% Preferred Stock shall not be entitled to share
therein.
(6) Redemption. (a) On and after the earlier to occur of (i) January
28, 2006 or (ii) the date on which the Current Market Price of the Common Stock
shall have exceeded $120.00 for twenty-five (25) consecutive Trading Days, to
the extent the Corporation shall have funds legally available for such payment,
the Corporation may redeem at its option shares of 5 1/4% Preferred Stock, in
whole or from time to time in part, payable at the option of the Corporation in
(A) cash, at a redemption price of $1,000.00 per share, or (B) in shares of
Common Stock, at a redemption price of $1,025.00 per share in the case of a
redemption permitted by clause (i) or $1,000.00 per share in the case of a
redemption permitted by clause (ii), or (C) in a combination of cash and Common
Stock at a redemption price based on the respective combination of
consideration, together in each case with accrued and unpaid dividends thereon,
whether or not declared, to, but excluding, the date fixed for redemption,
without interest. For purposes of determining the number of shares of the Common
Stock to be issued pursuant to this paragraph (6)(a), the price per share of
Common Stock valued at the Fair Market Value.
(b) On and after January 28, 2009, each holder of shares of 5
1/4% Preferred Stock shall have the right to require the Corporation, to
the extent the Corporation shall have funds legally available therefor, to
redeem such holder's shares of 5 1/4% Preferred Stock in whole or from
time to time in part at a redemption price of $1,000.00 per share, payable
at the option of the Corporation in cash, shares of Common Stock or a
combination thereof, together with accrued and unpaid dividends thereon
to, but excluding, the date fixed for redemption, without interest. For
purposes of determining the number of shares of the Common Stock to be
issued pursuant to this paragraph (6)(b), the price per share of Common
Stock shall equal the Fair Market Value. Any holder of shares of 5 1/4%
Preferred Stock who elects to exercise its rights pursuant to this
paragraph (6)(b) shall deliver to the Corpo-
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ration a written notice of election not less than 20 days prior to January
28, 2009, as the case may be, which notice shall set forth the name of the
Holder, the number of shares of 5 1/4% Preferred Stock to be redeemed and
a statement that the election to exercise a redemption right is being made
thereby; and shall deliver to the Corporation on or before the date of
redemption certificates evidencing the shares of 5 1/4% Preferred Stock to
be redeemed, duly endorsed for transfer to the Corporation.
(c) If the Corporation shall not have redeemed all outstanding
shares of 5 1/4% Preferred Stock pursuant to paragraphs (6)(a) and (6)(b),
on January 28, 2019 (the "Mandatory Redemption Date"), to the extent the
Corporation shall have funds legally available for such payment, the
Corporation shall redeem all outstanding shares of 5 1/4% Preferred Stock,
at a redemption price of $1,000.00 per share, payable at the option of the
Corporation in cash, shares of Common Stock or a combination thereof,
together with accrued and unpaid dividends thereon to, but excluding, the
Mandatory Redemption Date, without interest. For purposes of determining
the number of shares of the Common Stock to be issued pursuant to this
paragraph (6)(c), the price per share of Common Stock shall be valued at
the Fair Market Value.
(d) If the Corporation is unable or shall fail to discharge
its obligation to redeem all outstanding shares of 5 1/4% Preferred Stock
pursuant to paragraph (6)(c) (the "Mandatory Redemption Obligation"), the
Mandatory Redemption Obligation shall be discharged as soon as the
Corporation is able to discharge such Mandatory Redemption Obligation. If
and so long as any Mandatory Redemption Obligation with respect to the 5
1/4% Preferred Stock shall not be fully discharged, the Corporation shall
not (i) directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption, sinking
fund or other similar obligation in respect of any Parity Securities
(except in connection with a redemption, sinking fund or other similar
obligation to be satisfied pro rata with the 5 1/4% Preferred Stock) or
(ii) declare or make any Junior Securities Distribution (other than
dividends or distributions paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Securities), or,
directly or indirectly, discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of the Junior
Securities.
(e) Upon any redemption of 5 1/4% Preferred Stock, the
Corporation shall pay the redemption price and any accrued and unpaid
dividends in arrears to, but excluding, the applicable redemption date.
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(f) For purposes of paragraph (6)(a) only, unless full
cumulative dividends (whether or not declared) on all outstanding shares
of 5 1/4% Preferred Stock and any Parity Securities shall have been paid
or contemporaneously are declared and paid or set apart for payment for
all Dividend Periods terminating on or prior to the applicable redemption
date, none of the shares of 5 1/4% Preferred Stock shall be redeemed, and
no sum shall be set aside for such redemption, unless shares of 5 1/4%
Preferred Stock are redeemed pro rata.
(7) Procedure for Redemption. (a) If the Corporation shall redeem
shares of 5 1/4% Preferred Stock pursuant to paragraph 6(a), notice of such
redemption shall be given by certified mail, return receipt requested, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the Corporation
and confirmed by facsimile transmission to each holder of record if the
Corporation has been furnished with such facsimile address by the holder(s);
provided that neither the failure to give such notice nor confirmation nor any
defect therein or in the mailing thereof, to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice that was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of 5 1/4%
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed from such holder;
(iii) the amount payable, whether in Common Stock or cash and if the payment is
in Common Stock an explanation of the determination of the amount to be paid;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date, except as
otherwise provided herein.
(b) If notice has been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing for the payment of the redemption price of the shares called for
redemption and dividends accrued and unpaid thereon, if any), (i) except
as otherwise provided herein, dividends on the shares of 5 1/4% Preferred
Stock so called for redemption shall cease to accrue, (ii) said shares
shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of the 5 1/4% Preferred Stock shall cease
(except the right to receive from the Corporation the redemption price
without interest thereon, upon surrender and endorsement of their
certificates if so required, and to receive any dividends payable
thereon).
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(c) Upon surrender in accordance with notice given pursuant to
this paragraph (7) of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of
the Corporation shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price
aforesaid, plus any dividends payable thereon. If fewer than all the
outstanding shares of 5 1/4% Preferred Stock are to be redeemed, the
number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be selected pro rata (with
any fractional shares being rounded to the nearest whole share). In case
fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(8) Conversion. (a) Subject to and upon compliance with the
provisions of this paragraph (8), a holder of shares of 5 1/4% Preferred Stock
shall have the right, at any time and from time to time, at such holder's
option, to convert any or all outstanding shares of 5 1/4% Preferred Stock held
by such holder, but not fractions of shares, into fully paid and non-assessable
shares of Common Stock by surrendering such shares to be converted, such
surrender to be made in the manner provided in paragraph (8)(b) hereof. The
number of shares of Common Stock deliverable upon conversion of each share of 5
1/4% Preferred Stock shall be equal to 101.3125 (as adjusted as provided herein,
the "Conversion Rate"); provided that the aggregate number of shares of Common
Stock deliverable upon conversion of the 5 1/4% Preferred Stock (together with
the conversion of any 5 1/4% Convertible Preferred Stock, Series A or any
additional preferred stock issued as payment for dividends with respect thereto
and any Additional Preferred) shall not be greater than 7,590,994 subject to
adjustment as provided herein. The Conversion Rate is subject to adjustment from
time to time pursuant to paragraph (8)(d) hereof. The right to convert shares
called for redemption pursuant to paragraph (7) shall terminate at the close of
business on the date immediately preceding the date fixed for such redemption
unless the Corporation shall default in making payment of the amount payable
upon such redemption. Upon conversion of any share of 5 1/4% Preferred Stock the
holder thereof shall continue to be entitled to receive from the Corporation any
accrued but unpaid dividends thereon.
(b) (i) In order to exercise the conversion privilege, the
holder of each share of 5 1/4% Preferred Stock to be converted shall
surrender the certificate representing such share, duly endorsed or
assigned to the Corporation or in blank, at the office of the Corporation,
or to any transfer agent of the Corporation previously designated by the
Corporation to the holders of the 5 1/4% Preferred Stock for such
purposes, with a written notice of election to convert completed and
signed, specifying the number of shares to be converted. Such notice shall
state that the holder has satisfied any legal
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or regulatory requirement for conversion, including compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Such notice shall
also state the name or names (with address and social security or other
taxpayer identification number) in which the certificate or certificates
for Common Stock are to be issued. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
share of 5 1/4% Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or the
holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reason ably satisfactory to the
Corporation demonstrating that such taxes have been paid). All
certificates representing shares of 5 1/4% Preferred Stock surrendered for
conversion shall be canceled by the Corporation or the transfer agent.
(ii) Holders of shares of 5 1/4% Preferred Stock at the close of
business on a dividend payment record date shall not be entitled to
receive the dividend payable on such shares on the corresponding Dividend
Payment Date if such holder shall have surrendered for conversion such
shares at any time following the preceding Dividend Payment Date and prior
to such Dividend Payment Date.
(iii) As promptly as practicable after the surrender by a holder of
the certificates for shares of 5 1/4% Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver to such holder, or on the
holder's written order, a certificate or certificates (which certificate
or certificates shall have the legend set forth in paragraph 10(c)) for
the whole number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this paragraph (8), and any
fractional interest in respect of a share of Common Stock arising on such
conversion shall be settled as provided in paragraph (8)(c). Upon
conversion of only a portion of the shares of 5 1/4% Preferred Stock
represented by any certificate, a new certificate shall be issued
representing the unconverted portion of the certificate so surrendered
without cost to the holder thereof. Upon the surrender of certificates
representing shares of 5 1/4% Preferred Stock to be converted, such shares
shall no longer be deemed to be outstanding and all rights of a holder
with respect to such shares surrendered for conversion shall immediately
terminate except the right to receive the Common Stock and other amounts
payable pursuant to this paragraph (8).
(iv) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certifi-
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cates for shares of 5 1/4% Preferred Stock shall have been surrendered and
such notice received by the Corporation as aforesaid, and the Person or
Persons in whose name or names any certificate or certificates for shares
of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Common Stock
represented thereby at such time on such date and such conversion shall be
into a number of shares of Common Stock equal to the product of the number
of shares of 5 1/4% Preferred Stock surrendered times the Conversion Rate
in effect at such time on such date, unless the stock transfer books of
the Corporation shall be closed on that date, in which event such Person
or Persons shall be deemed to have become such holder or holders of record
at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be based upon the
Conversion Rate in effect on the date upon which such shares shall have
been surrendered and such notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of the 5 1/4%
Preferred Stock. Instead of any fractional interest in a share of Common
Stock that would otherwise be deliverable upon the conversion of a share
of 5 1/4% Preferred Stock, the Corporation shall pay to the holder of such
share an amount in cash based upon the Current Market Price of Common
Stock on the Trading Day immediately preceding the date of conversion. If
more than one share shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number
of shares of 5 1/4% Preferred Stock surrendered for conversion by such
holder.
(d) The Conversion Rate shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) declare a
dividend or make a distribution on its Common Stock in shares of its
Common Stock, (B) subdivide its outstanding Common Stock into a greater
number of shares or (C) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Rate in effect on the record date
for such dividend or distribution, or the effective date of such
subdivision or combination, as the case may be, shall be proportionately
adjusted so that the holder of any share of 5 1/4% Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number and kind of shares of Common Stock that such holder would have
owned or have been entitled to receive after the happening of any of the
events described above had such share been converted immediately prior to
the record date in the case of a
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dividend or distribution or the effective date in the case of a
subdivision or combination. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as
provided in paragraph (8)(h)) in the case of a dividend or distribution
and shall become effective immediately after the opening of business on
the Business Day next following the effective date in the case of a
subdivision, combination or reclassification. Adjustments in accordance
with this paragraph (8)(d)(i) shall be made whenever any event listed
above shall occur.
(ii) If the Corporation shall after the Issue Date fix a record date
for the issuance of rights or warrants (in each case, other than any
rights issued pursuant to a shareholder rights plan) to all holders of
Common Stock entitling them (for a period expiring within 45 days after
such record date) to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at a price per share (or, in the case of a
right or warrant to purchase securities convertible into Common Stock,
having an effective exercise price per share of Common Stock, computed on
the basis of the maximum number of shares of Common Stock issuable upon
conversion of such convertible securities, plus the amount of additional
consideration payable, if any, to receive one share of Common Stock upon
conversion of such securities) less than the Fair Market Value per share
of Common Stock on the date on which such issuance was declared or
otherwise announced by the Corporation (the "Determination Date"), then
the Conversion Rate in effect at the opening of business on the Business
Day next following such record date shall be adjusted so that the holder
of each share of 5 1/4% Preferred Stock shall be entitled to receive, upon
the conversion thereof, the number of shares of Common Stock determined by
multiplying (I) the Conversion Rate in effect immediately prior to such
record date by (II) a fraction, the numerator of which shall be the sum of
(A) the number of shares of Common Stock outstanding on the close of
business on the Determination Date and (B) the number of additional shares
of Common Stock offered for subscription or purchase pursuant to such
rights or warrants (or in the case of a right or warrant to purchase
securities convertible into Common Stock, the aggregate number of
additional shares of Common Stock into which the convertible securities so
offered are initially convertible), and the denominator of which shall be
the sum of (A) the number of shares of Common Stock outstanding on the
close of business on the Determination Date and (B) the number of shares
that the aggregate proceeds to the Corporation from the exercise of such
rights or warrants for Common Stock would purchase at such Fair Market
Value on such date (or, in the case of a right or warrant to purchase
securities convertible into Common Stock, the number of shares of Common
Stock obtained by dividing the aggregate exercise price of such
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rights or warrants for the maximum number of shares of Common Stock
issuable upon conversion of such convertible securities, plus the
aggregate amount of additional consideration payable, if any, to convert
such securities into Common Stock, by such Fair Market Value). Such
adjustment shall become effective immediately after the opening of
business on the Business Day next following such record date (except as
provided in paragraph (8)(h)). Such adjustment shall be made successively
whenever such a record date is fixed. In the event that after fixing a
record date such rights or warrants are not so issued, the Conversion Rate
shall be readjusted to the Conversion Rate which would then be in effect
if such record date had not been fixed. In determining whether any rights
or warrants entitle the holders of Common Stock to subscribe for or
purchase shares of Common Stock at less than such Fair Market Value, there
shall be taken into account any consideration received by the Corporation
upon issuance and upon exercise of such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors in good faith. In case any rights or warrants referred to in
this subparagraph (ii) shall expire unexercised after the same shall have
been distributed or issued by the Corporation (or, in the case of rights
or warrants to purchase securities convertible into Common Stock once
exercised, the conversion right of such securities shall expire), the
Conversion Rate shall be readjusted at the time of such expiration to the
Conversion Rate that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) If the Corporation shall fix a record date for the making of a
distribution to all holders of its Common Stock of evidences of its
indebtedness, shares of its capital stock or assets (excluding regular
cash dividends or distributions declared in the ordinary course by the
Board of Directors and dividends payable in Common Stock for which an
adjustment is made pursuant to paragraph (8)(d)(i)) or rights or warrants
(in each case, other than any rights issued pursuant to a shareholder
rights plan) to subscribe for or purchase any of its securities (excluding
those rights and warrants issued to all holders of Common Stock entitling
them for a period expiring within 45 days after the record date referred
to in subparagraph (ii) above to subscribe for or purchase Common Stock or
securities convertible into shares of Common Stock, which rights and
warrants are referred to in and treated under subparagraph (ii) above)
(any of the foregoing being hereinafter in this subparagraph (iii) called
the "Securities"), then in each such case the Conversion Rate shall be
adjusted so that the holder of each share of 5 1/4% Preferred Stock shall
be entitled to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (I) the Conversion Rate in
effect immediately prior to the close of business on such record date by
(II) a fraction, the numerator of which shall be the Fair Market Value per
share of
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the Common Stock on such record date, and the denominator of which shall
be the Fair Market Value per share of the Common Stock on such record date
less the then-fair market value (as determined by the Board of Directors
in good faith, whose determination shall be conclusive) of the portion of
the assets, shares of its capital stock or evidences of indebtedness so
distributed or of such rights or warrants applicable to one share of
Common Stock. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that after fixing a record date
such distribution is not so made, the Conversion Rate shall be readjusted
to the Conversion Rate which would then be in effect if such record date
had not been fixed. Such adjustment shall become effective immediately at
the opening of business on the Business Day next following (except as
provided in paragraph (8)(h)) the record date for the determination of
shareholders entitled to receive such distribution. For the purposes of
this subparagraph (iii), the distribution of a Security, which is
distributed not only to the holders of the Common Stock on the date fixed
for the determination of shareholders entitled to such distribution of
such Security, but also is distributed with each share of Common Stock
delivered to a Person converting a share of 5 1/4% Preferred Stock after
such determination date, shall not require an adjustment of the Conversion
Rate pursuant to this subparagraph (iii); provided that on the date, if
any, on which a Person converting a share of 5 1/4% Preferred Stock would
no longer be entitled to receive such Security with a share of Common
Stock (other than as a result of the termination of all such Securities),
a distribution of such Securities shall be deemed to have occurred and the
Conversion Rate shall be adjusted as provided in this subparagraph (iii)
(and such day shall be deemed to be "the date fixed for the determination
of shareholders entitled to receive such distribution" and "the record
date" within the meaning of the three preceding sentences). If any rights
or warrants referred to in this subparagraph (iii) shall expire
unexercised after the same shall have been distributed or issued by the
Corporation, the Conversion Rate shall be readjusted at the time of such
expiration to the Conversion Rate that would have been in effect if no
adjustment had been made on account of the distribution or issuance of
such expired rights or warrants.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash in an amount per share
that, together with the aggregate of the per share amounts of any other
cash distributions to all holders of its Common Stock made within the 12
months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (iv) has been made
exceeds 5.0% of the Fair Market Value immediately prior to the date of
declaration of such dividend or distribution (excluding any dividend or
distribution in connection with the liquidation, dissolution or winding up
of the Corporation, whether
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voluntary or involuntary, and any cash that is distributed upon a merger,
consolidation or other transaction for which an adjustment pursuant to
paragraph 8(e) is made), then, in such case, the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by multiplying
the Conversion Rate in effect immediately prior to the close of business
on the Record Date for the cash dividend or distribution by a fraction the
numerator of which shall be the Current Market Price of a share of the
Common Stock on the Record Date and the denominator shall be such Current
Market Price less the per share amount of cash so distributed during the
12-month period applicable to one share of Common Stock, such adjustment
to be effective immediately prior to the opening of business on the
Business Day following the Record Date; provided, however, that in the
event the denominator of the foregoing fraction is zero or negative, in
lieu of the foregoing adjustment, adequate provision shall be made so that
each holder of 5 1/4% Preferred Stock shall have the right to receive upon
conversion, in addition to the shares of Common Stock to which the holder
is entitled, the amount of cash such holder would have received had such
holder converted each share of 5 1/4% Preferred Stock at the beginning of
the 12-month period. In the event that such dividend or distribution is
not so paid or made, the Conversion Rate shall again be adjusted to be the
Conversion Rate which would then be in effect if such dividend or
distribution had not been declared. Notwithstanding the foregoing, if any
adjustment is required to be made as set forth in this paragraph
(8)(d)(iv), the calculation of any such adjustment shall include the
amount of the quarterly cash dividends paid during the 12-month reference
period only to the extent such dividends exceed the regular quarterly cash
dividends paid during the 12 months preceding the 12-month reference
period. For purposes of this paragraph (8)(d)(iv), "Record Date" shall
mean, with respect to any dividend or distribution in which the holders of
Common Stock have the right to receive cash, the date fixed for
determination of shareholders entitled to receive such cash.
In the event that at any time cash distributions to holders of Common
Stock are not paid equally on all series of Common Stock, the provisions
of this paragraph 8(d)(iv) will apply to any cash dividend or cash
distribution on any series of Common Stock otherwise meeting the
requirements of this paragraph, and shall be deemed amended to the extent
necessary so that any adjustment required will be made on the basis of the
cash dividend or cash distribution made on any such series.
(v) In case of the consummation of a tender or exchange offer (other
than an odd-lot tender offer) made by the Corporation or any subsidiary of
the Corporation for all or any portion of the outstanding shares of Common
Stock to the extent that the cash and fair market value (as deter-
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mined in good faith by the Board of Directors of the Corporation, whose
determination shall be conclusive and shall be described in a resolution
of such Board) of any other consideration included in such payment per
share of Common Stock at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as
amended) exceed by more than 5.0%, with any smaller excess being
disregarded in computing the adjustment to the Conversion Rate provided in
this paragraph (8)(d)(v), the first reported sale price per share of
Common Stock on the Trading Day next succeeding the Expiration Time, then
the Conversion Rate shall be adjusted so that the same shall equal the
rate determined by multiplying the Conversion Rate in effect immediately
prior to the Expiration Time by a fraction the numerator of which shall be
the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to share holders based on the acceptance
(up to any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares)
on the Expiration Time and the first reported sale price of the Common
Stock on the Trading Day next succeeding the Expiration Time, and the
denominator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the Expiration
Time multiplied by the first reported sale price of the Common Stock on
the Trading Day next succeeding the Expiration Time, such adjustment to
become effective immediately prior to the opening of business on the day
following the Expiration Time.
(vi) No adjustment in the Conversion Rate shall be required unless
such adjustment would require a cumulative increase or decrease of at
least 1% in the Conversion Rate; provided, however, that any adjustments
that by reason of this subparagraph (vi) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment
until made; and provided, further, that any adjustment shall be required
and made in accordance with the provisions of this paragraph (8) (other
than this subparagraph (vi)) not later than such time as may be required
in order to preserve the tax-free nature of a distribution for United
States income tax purposes to the holders of shares of 5 1/4% Preferred
Stock or Common Stock. Notwithstanding any other provisions of this
paragraph (8), the Corporation shall not be required to make any
adjustment of the Conversion Rate for the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under such plan. All
calculations under this paragraph (8) shall be made to the
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nearest dollar or to the nearest 1/1,000 of a share, as the case may be.
Anything in this paragraph (8)(d) to the contrary notwithstanding, the
Corporation shall be entitled, to the extent permitted by law, to make
such adjustments in the Conversion Rate, in addition to those required by
this paragraph (8)(d), as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or
warrants to purchase stock or securities, or a distribution of other
assets (other than cash dividends) hereafter made by the Corporation to
its shareholders shall not be taxable.
(vii) In the event that, at any time as a result of shares of any
other class of capital stock becoming issuable in exchange or substitution
for or in lieu of shares of Common Stock or as a result of an adjustment
made pursuant to the provisions of this paragraph (8)(d), the holder of 5
1/4% Preferred Stock upon subsequent conversion shall become entitled to
receive any shares of capital stock of the Corporation other than Common
Stock, the number of such other shares so receivable upon conversion of
any shares of 5 1/4% Preferred Stock shall thereafter be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions contained herein.
(e) (i) If the Corporation shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization of the
Common Stock and excluding any transaction as to which paragraph (8)(d)(i)
applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock
shall be converted into the right to receive stock, securities or other
property (including cash or any combination thereof), there shall be no
adjustment to the Conversion Rate but each share of 5 1/4% Preferred Stock
which is not converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock, securities and
other property (including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that number of shares
or fraction thereof of Common Stock into which one share of 5 1/4%
Preferred Stock was convertible immediately prior to such Transaction,
assuming such holder of Common Stock (i) is not a Person with which the
Corporation consolidated or into which the Corporation merged or which
merged into the Corporation or to which such sale or transfer was made, as
the case may be ("Constituent Person"), or an affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to
the kind or amount of stock, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or
amount of
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stock, securities and other property (including cash) receivable upon such
Transaction is not the same for each share of Common Stock of the
Corporation held immediately prior to such Transaction by other than a
Constituent Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing share"),
then for the purpose of this paragraph (8)(e) the kind and amount of
stock, securities and other property (including cash) receivable upon such
Transaction by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).
The provisions of this paragraph (8)(e) shall similarly apply to
successive Transactions.
(ii) Notwithstanding anything herein to the contrary, if the Company
is reorganized such that the Common Stock is exchanged for the common
stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or
another recognized securities exchange, then the Company, by notice to the
holders of the 5 1/4% Preferred Stock but without any required consent on
their part, may cause the exchange of this 5 1/4% Preferred Stock for
preferred stock of Holdco having the same terms and conditions as set
forth herein, provided that where Holdco is not solely incorporated as a
Delaware company or where the Holdco share structure is not identical to
that of the Company, the rights attaching to the preferred stock of Holdco
may be adjusted so as to comply with the local law of the country of
incorporation of Holdco or the new share structure of Holdco subject to
such rights effectively giving the same economic rights as the 5 1/4%
Preferred Stock (ignoring for these purposes any resultant change in the
tax treatment for the holders of such stock).
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock; or
(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; or
(iii) there shall be any subdivision, combination or
reclassification of the Common Stock or any consolidation or merger to
which the Corporation is a party and for which approval of any
shareholders of the Corporation is required, or the sale or transfer of
all or substantially all of the assets of the Corporation as an entirety;
or
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(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with any transfer agent
designated by the Corporation pursuant to paragraph (8)(b) and shall cause
to be mailed to the holders of shares of the 5 1/4% Preferred Stock at
their addresses as shown on the stock records of the Corporation, as
promptly as possible, but at least ten days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is
to be taken for the purpose of such dividend (or such other distribution)
or rights or warrants, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights or warrants are to be determined or (B)
the date on which such subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding
up or other action is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such subdivision, combination,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any
defect therein shall not affect the legality or validity of any
distribution, right, warrant, subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, winding
up or other action, or the vote upon any of the foregoing.
(g) Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall prepare an officer's certificate with
respect to such adjustment of the Conversion Rate setting forth the
adjusted Conversion Rate and the effective date of such adjustment and
shall mail a copy of such officer's certificate to the holder of each
share of 5 1/4% Preferred Stock at such holder's last address as shown on
the stock records of the Corporation. If the Corporation shall have
designated a transfer agent pursuant to paragraph (8)(b), it shall also
promptly file with such transfer agent an officer's certificate setting
forth the Conversion Rate after such adjustment and setting forth a brief
statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment.
(h) In any case in which paragraph (8)(d) provides that an
adjustment shall become effective on the day next following a record date
for an event, the Corporation may defer until the occurrence of such event
(i) issuing to the holder of any share of 5 1/4% Preferred Stock converted
after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by reason
of the adjustment required by such event over and above the Common Stock
issuable upon such
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conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of any fraction pursuant to paragraph
(8)(c).
(i) For purposes of this paragraph (8), the number of shares
of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Corporation.
The Corporation shall not pay a dividend or make any distribution on
shares of Common Stock held in the treasury of the Corporation.
(j) There shall be no adjustment of the Conversion Rate in
case of the issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth
in this paragraph (8). If any single action would require adjustment of
the Conversion Rate pursuant to more than one subparagraph of this
paragraph (8), only one adjustment shall be made and such adjustment shall
be the amount of adjustment that has the highest absolute value.
(k) If the Corporation shall take any action affecting the
Common Stock, other than action described in this paragraph (8), that in
the opinion of the Board of Directors materially adversely affects the
conversion rights of the holders of the shares of 5 1/4% Preferred Stock,
the Conversion Rate may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances; provided that the
provisions of this paragraph (8)(k) shall not affect any rights the
holders of 5 1/4% Preferred Stock may have at law or in equity.
(l) (i) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock or its
issued shares of Common Stock held in its treasury, or both, for the
purpose of effecting conversion of the 5 1/4% Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of 5 1/4% Preferred Stock not theretofore converted.
For purposes of this paragraph (8)(1) the number of shares of Common Stock
that shall be deliverable upon the conversion of all outstanding shares of
5 1/4% Preferred Stock shall be computed as if at the time of computation
all such outstanding shares were held by a single holder.
(ii) The Corporation covenants that any shares of Common Stock
issued upon conversion of the 5 1/4% Preferred Stock shall be duly
authorized, validly issued, fully paid and non-assessable. Before taking
any action that would cause an adjustment increasing the Conversion Rate
such that the
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quotient of $1,000.00 and the Conversion Rate (which initially shall be
$100.00) would be reduced below the then-par value of the shares of Common
Stock deliverable upon conversion of the 5 1/4% Preferred Stock, the
Corporation will take any corporate action that, in the opinion of its
counsel, may be necessary in order that the Corporation may validly and
legally issue fully paid and non-assessable shares of Common Stock based
upon such adjusted Conversion Rate.
(iii) Prior to the delivery of any securities that the Corporation
shall be obligated to deliver upon conversion of the 5 1/4% Preferred
Stock, the Corporation shall comply with all applicable federal and state
laws and regulations which require action to be taken by the Corporation.
(m) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities or property on
conversion of the 5 1/4% Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock or other securities or property in a
name other than that of the holder of the 5 1/4% Preferred Stock to be
converted and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Corporation the
amount of any such tax or established, to the satisfaction of the
Corporation, that such tax has been paid.
(9) Voting Rights. (a) The holders of record of shares of 5 1/4%
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in paragraph (b) or as otherwise provided by law.
(b) If and whenever six quarterly dividends (whether or not
consecutive) payable on the 5 1/4% Preferred Stock have not been paid in
full or if the Corporation shall have failed to discharge its Mandatory
Redemption Obligation, the number of directors then constituting the Board
of Directors shall be increased by two and the holders of shares of 5 1/4%
Preferred Stock, together with the holders of shares of every other series
of preferred stock (including, without limitation, Additional Preferred)
upon which like rights to vote for the election of two additional
directors have been conferred and are exercisable (resulting from either
the failure to pay dividends or the failure to redeem) (any such other
series is referred to as the "Preferred Shares"), voting as a single class
regardless of series, shall be entitled to elect the two additional
directors to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special
meeting of the holders of the 5 1/4% Preferred Stock and
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the Preferred Shares called as hereinafter provided. Whenever all arrears
in dividends on the 5 1/4% Preferred Stock and the Preferred Shares then
outstanding shall have been paid and dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart
for payment, or the Corporation shall have fulfilled its Mandatory
Redemption Obligation and any redemption obligation in respect of the
Preferred Shares, as the case may be, then the right of the holders of the
5 1/4% Preferred Stock and the Preferred Shares to elect such additional
two directors shall cease (but subject always to the same provisions for
the vesting of such voting rights in the case of any similar future
arrearages in six quarterly dividends or failure to fulfill any Mandatory
Redemption Obligation), and the terms of office of all persons elected as
directors by the holders of the 5 1/4% Preferred Stock and the Preferred
Shares shall forthwith terminate and the number of the Board of Directors
shall be reduced accordingly. At any time after such voting power shall
have been so vested in the holders of shares of 5 1/4% Preferred Stock and
the Preferred Shares, the secretary of the Corporation may, and upon the
written request of any holder of 5 1/4% Preferred Stock (addressed to the
secretary at the principal office of the Corporation) shall, call a
special meeting of the holders of the 5 1/4% Preferred Stock and of the
Preferred Shares for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required
to be called as above provided shall not be called by the secretary within
20 days after receipt of any such request, then any holder of shares of 5
1/4% Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold
office until the next annual meeting of the stockholders or special
meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the
directors elected by the holders of the 5 1/4% Preferred Stock and the
Preferred Shares, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders
of the 5 1/4% Preferred Stock and the Preferred Shares or the successor of
such remaining director, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
(c) Without the written consent of the holders of at least
66 2/3% in liquidation preference of the outstanding shares of 5 1/4%
Preferred Stock or the vote of holders of at least 66 2/3% in liquidation
preference of the outstanding shares of 5 1/4% Preferred Stock at a
meeting of the holders of 5 1/4% Preferred Stock called for such purpose,
the Corporation will not
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amend, alter or repeal any provision of the Certificate of Incorporation
(by merger or otherwise) so as to adversely affect the preferences, rights
or powers of the 5 1/4% Preferred Stock; provided that any such amendment
that changes the dividend payable on, the conversion rate with respect to,
or the liquidation preference of the 5 1/4% Preferred Stock shall require
the affirmative vote at a meeting of holders of 5 1/4% Preferred Stock
called for such purpose or written consent of the holder of each share of
5 1/4% Preferred Stock.
(d) Without the written consent of the holders of at least
66 2/3% in liquidation preference of the outstanding shares of 5 1/4%
Preferred Stock or the vote of holders of at least 66 2/3% in liquidation
preference of the outstanding shares of 5 1/4% Preferred Stock at a
meeting of such holders called for such purpose, the Corporation will not
issue any additional 5 1/4% Preferred Stock or create, authorize or issue
any Parity Securities or Senior Securities or increase the authorized
amount of any such other class or series; provided that paragraph 9(d)
shall not limit the right of the Corporation to (i) issue Additional
Preferred as dividends pursuant to paragraph 4 or (ii) to issue Parity
Securities or Senior Securities in order to refinance, redeem or refund
the 13% Preferred, provided that the maximum accrual value (i.e., the sum
of stated value and maximum amount payable in kind over the term from
issuance to first date of mandatory redemption or redemption at the option
of the holder) of such Parity Securities may not exceed the maximum
accrual value of the 13% Preferred.
(e) In exercising the voting rights set forth in this
paragraph 9, each share of 5 1/4% Preferred Stock shall have one vote per
share, except that when any other series of preferred stock shall have the
right to vote with the 5 1/4% Preferred Stock as a single class on any
matter, then the 5 1/4% Preferred Stock and such other series shall have
with respect to such matters one vote per $1,000 of stated liquidation
preference. Except as otherwise required by applicable law or as set forth
herein, the shares of 5 1/4% Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
(10) General Provisions. (a) The headings of the paragraphs,
subparagraphs, clauses and subclauses of this Statement of Designations are for
convenience of reference only and shall not define, limit or affect any of the
provisions hereof.
(b) If the Corporation shall have failed to declare or pay
dividends as required pursuant to paragraph (4) hereof or shall have
failed to
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<PAGE> 193
discharge any obligation to redeem shares of 5 1/4% Preferred Stock
pursuant to paragraph (6) hereof, the holders of shares of 5 1/4%
Preferred Stock shall be entitled to receive, in addition to all other
amounts required to be paid hereunder, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of
dividends, cash dividends on the aggregate dividends which the
Corporation shall have failed to declare or pay or the redemption price,
together with accrued and unpaid dividends thereon, as the case may be, at
a rate of 2% per quarter, compounded quarterly, for the period during
which the failure to pay dividends or failure to discharge an obligation
to redeem shares of 5 1/4% Preferred Stock shall continue.
(c) The shares of 5 1/4% Preferred Stock shall bear the
following legend:
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OTHER THAN TO AN AFFILIATE OF THE HOLDER.
The shares of Common Stock issuable upon conversion of the 5 1/4%
Preferred Stock shall bear the following legend:
THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE COMPANY (THE "COMMON
STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO JANUARY
28, 2001 (OTHER THAN TO AN AFFILIATE OF THE HOLDER) AND THEREAFTER MAY
ONLY BE SOLD IN BROKERS TRANSACTIONS (AS DEFINED IN RULE 144 UNDER THE
ACT) OR TO PERSONS WHO, GIVING EFFECT TO THE SALE OF THE SHARES
REPRESENTED HEREBY, WILL NOT BE THE BENEFICIAL OWNER OF 5% OR MORE OF THE
COMMON STOCK.
(11) Shareholder Rights Plan. The shares of 5 1/4% Preferred Stock
shall be entitled to the benefits of a number of rights issuable under the
Rights Agreement, dated as of October 13, 1993, between the Company and
Continental Stock Transfer & Trust Company or any successor plan of similar
purpose and effect ("Rights") equal to the number of shares of Common Stock then
issuable upon conversion of the 5 1/4% Preferred Stock at the prevailing
Conversion Rate. Any
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shares of Common Stock deliverable upon conversion of a share of 5 1/4%
Preferred Stock or upon payment of a dividend shall be accomplished by a Right.
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<PAGE> 1
BY-LAWS
OF
NTL COMMUNICATIONS CORP.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Dover, County of Kent, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting
in accordance with these By-laws. Written notice of the annual meeting stating
the place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
<PAGE> 2
Section 3. Special Meetings. Special meetings of stockholders, for
any purpose or purposes, may be called by the Board of Directors, the Chairman
of the Board of Directors or the President. Special meetings of stockholders may
not be called by any other person or persons. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting, and only such business as is stated in such notice
shall be acted upon thereat.
Section 4. Advance Notification of Business to be Transacted at
Stockholder Meetings. To be properly brought before the annual or any special
stockholders' meeting, business must be either (a) specified in the notice of
meeting (or any supplement or amendment thereto) given by or at the direction of
the Board of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a stockholder. In addition to any other applicable
requirements, for business to be properly brought before an annual or any
special stockholders' meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 75 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 90 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the fifteenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. Such stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the meeting (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, (ii) the name and record address of the stockholder
proposing such business, (iii) the class, series and number of shares of capital
stock of the Corporation which are beneficially owned by the stockholder and
(iv) any material interest of the stockholder in such business.
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<PAGE> 3
Notwithstanding anything in these By-laws to the contrary, no
business shall be conducted at the annual or any special meeting except in
accordance with the procedures set forth in this Article II, Section 4,
provided, however, that nothing in this Section 5 shall be deemed to preclude
discussion by any stockholder of any business properly brought before the
meeting. The officer of the Corporation presiding at the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Article II, Section 4, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
Section 5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 6. Voting. Unless otherwise required by law, the Restated
Certificate of Incorporation or these By-laws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Unless otherwise
provided in the Restated Certificate of Incorporation, each stockholder
represented at a meeting of stockholders shall be entitled to cast one vote for
each share of the capital stock entitled to vote thereat held by such
stockholder. The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of stockholders, in his
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<PAGE> 4
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. Subject to the rights,
if any, of holders of preferred stock of the Corporation, the Board of Directors
shall consist of not less than three nor more than fifteen members, the exact
number of which shall be fixed from time to time by the Board of Directors.
Except as provided in Section 3 of this Article III, directors shall be elected
by a plurality of the votes cast at Annual Meetings of Stockholders, and each
director so elected shall hold office as provided by Article FIFTH of the
Certificate of Incorporation. Any director may resign at any time upon written
notice to the Corporation. Directors need not be stockholders.
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<PAGE> 5
Section 2. Nomination of Directors. Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation at the Annual Meeting may be made at such meeting by or at the
direction of the Board of Directors, by any committee or persons appointed by
the Board of Directors or by any stockholder of the Corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this Article III, Section 2. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 75 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 90 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the fifteenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. Such stockholder's
notice to the Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class, series and
number of shares of capital stock of the Corporation which are beneficially
owned by the person and (iv) any other information relating to the person that
is required to be disclosed in solicitations for proxies for election of
directors pursuant to the Rules and Regulations of the Securities and Exchange
Commission under Section 14 of the Securities Exchange Act of 1934, as amended;
and (b) as to the stockholder giving the notice (i) the name and record address
of the stockholder and (ii) the class, series and number of shares of capital
stock of the Corporation which are beneficially owned by the stockholder. Such
notice shall be accompanied by the executed consent of each nominee to serve as
a director if so elected. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to serve as a director of
the Corpora-
5
<PAGE> 6
tion. No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth herein. The officer
of the Corporation presiding at an Annual Meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting, and the defective nomination shall be disregarded.
Section 3. Vacancies. Any vacancy on the Board of Directors,
howsoever resulting, may be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director. Any director
elected to fill a vacancy shall hold office for a term that shall coincide with
the term of the class to which such director shall have been elected.
Section 4. Duties and Powers. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-laws directed or required to be exercised or done by the stockholders.
Section 5. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors, the President or by a majority of the
Board of Directors. Notice thereof stating the place, date and hour of the
meeting shall be given to each director either by mail not less than forty-eight
(48) hours before the date of the meeting, or personally or by telephone,
telegram, telex or similar means of communication on twenty-four (24) hours'
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances.
Section 6. Quorum; Action of the Board of Directors. Except as may
be otherwise specifically provided by law, the Certificate of Incorporation or
these By-laws, at all meetings of the Board of Directors, a
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<PAGE> 7
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 7. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 8. Meetings by Means of Conference Telephone. Members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 8 shall constitute
presence in person at such meeting.
Section 9. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. Any committee, to the extent allowed by law
and provided in the resolution establishing such committee,
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shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation.
Unless the Board of Directors or such committee shall otherwise provide, regular
and special meetings and other actions of any shall be governed by the
provisions of this Article III applicable to meetings and actions of the Board
of Directors. Each committee shall keep regular minutes and report to the Board
of Directors when required.
Section 10. Fees and Compensation. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board of
Directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 11. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (a) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (b) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (c) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
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<PAGE> 9
the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, one or more Vice Presidents,
a Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and
Assistant Secretaries, Assistant Treasurers and other officers. Such officers as
the Board of Directors may choose shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of Directors. The
Board of Directors may delegate to any other officer of the Corporation the
power to choose such other officers and to prescribe their respective duties and
powers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these By-laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect the officers of the
Corporation, who shall be subject to the control of the Board of Directors and
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Directors, and all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the Board of Directors with or without cause. Any vacancy occurring in
any office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
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Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President and any
such officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (a) by the Chairman of the Board of Directors, the President or a
Vice President and (b) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (a) a
transfer agent other than the Corporation or its employee or (b) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed,
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upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
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whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-laws, to be given to any director or
stockholder, such notice may be given by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written notice
may also be given personally or by telegram, telex, cable or facsimile
transmission.
Section 2. Waivers of Notice. Whenever any notice is required by
law, the Certificate of Incorporation or these By-laws, to be given to any
director or stockholder, a waiver thereof in writing, signed, by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special meeting
pursuant to law. Dividends may be paid in cash, in property or in shares of
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
12
<PAGE> 13
Section 2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify to the full extent authorized or
permitted by law (as now or hereafter in effect) any person made, or threatened
to be made, a defendant or witness to any action, suit or proceeding (whether
civil or criminal or otherwise) by reason of the fact that he, his testator or
intestate, is or was a director or officer of the Corporation or by reason of
the fact that such director or officer, at the request of the Corporation, is or
was serving any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in any capacity.
ARTICLE IX
AMENDMENTS
These By-laws may be altered, amended or repealed, in whole or in
part, or new By-laws may be adopted by either the affirmative vote of the
holders of sixty-six and two-thirds percent (66-2/3%) of the outstanding capital
stock of the Corporation entitled to vote thereon or by the Board of Directors.
13
<PAGE> 1
Exhibit 4.4
NTL INCORPORATED,
NTL COMMUNICATIONS CORP.
and
THE CHASE MANHATTAN BANK,
as Trustee
-----------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 31, 1999
Supplementing the Indenture dated
as of December 16, 1998
between NTL Incorporated
and
The Chase Manhattan Bank, as Trustee
7% CONVERTIBLE SUBORDINATED NOTES
DUE 2008
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as of March 31, 1999,
between NTL Incorporated, a Delaware corporation (the "COMPANY"), NTL Communi
cations Corp., a Delaware corporation and a direct, wholly owned subsidiary of
the Company ("HOLDCO") and The Chase Manhattan Bank, a New York corporation, as
trustee (the "TRUSTEE").
WITNESSETH:
WHEREAS, the Company and the Trustee previously executed and
delivered the Indenture, dated as of December 16, 1998 (the "INDENTURE"),
providing for the creation, execution authentication and delivery of the
Company's 7% Convertible Subordinated Notes due 2008 (the "SECURITIES"), which
Securities are convertible into shares of common stock, par value $.01 per share
(the "NTL COMMON STOCK"), of the Company in accordance with the terms and
conditions of the Indenture;
WHEREAS, Section 11.01 of the Indenture provides that the
Company and the Trustee may from time to time amend or supplement the Indenture
without the consent of any holders of the Securities, in order to, among other
things, comply with Section 5.12 of the Indenture regarding the effect of
reclassifications, consolidations, mergers or sales on conversion privileges;
WHEREAS, on March 26, 1999, the Company, Holdco and NTL
Mergerco, Inc., a Delaware corporation that is a direct wholly-owned subsidiary
of Holdco and an indirect wholly-owned subsidiary of the Company ("MERGER SUB"),
entered into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), pursuant
to which, among other things, Merger Sub shall be merged with and into the
Company in accordance with Section 251(g) of the General Corporation Law of the
State of Delaware (the "MERGER"), with the Company continuing as the surviving
corporation (the "SURVIVING CORPORATION") under the name "NTL Communications
Corp." and as a wholly-owned subsidiary of Holdco;
WHEREAS, pursuant to the Merger, each outstanding share of NTL
Common Stock shall be converted into the right to receive one validly issued,
fully paid and nonassessable share of common stock, par value $.01 per share, of
Holdco (the "HOLDCO COMMON STOCK");
WHEREAS, upon consummation of the Merger and except as
expressly set forth in Section 2.01 of this First Supplemental Indenture, the
Com-
2
<PAGE> 3
pany, as the Surviving Corporation, shall continue to be liable for the
obligations of the Company under the Securities and the Indenture; and
WHEREAS, all actions necessary to make this First Supplemental
Indenture and the Securities valid, binding and enforceable obligations of the
Company and, to the extent applicable, Holdco, have been performed and
fulfilled;
NOW, THEREFORE, for and in consideration of the premises and
mutual covenants herein contained each party agrees as follows for the benefit
of the other party and for the equal and ratable benefit of the holders of the
Securities:
ARTICLE I
DEFINITIONS
SECTION 1.01 GENERAL. For all purposes of the Indenture and
this First Supplemental Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to the Indenture and this First Supplemental
Indenture as a whole and not to any particular Article, Section or subdivision;
and
(b) capitalized terms used but not defined herein shall have
the meanings assigned to them in the Indenture.
ARTICLE II
EFFECT OF MERGER ON CONVERSION PRIVILEGE; ADJUSTMENT
OF CONVERSION PRICE
SECTION 2.01 CONVERSION OF SECURITIES FOR HOLDCO COMMON STOCK.
In accordance with Section 5.12 of the Indenture, upon and as of the consumma
tion of the Merger, the holder of each Security then outstanding shall have the
right to convert such Security into the amount of shares of Holdco Common Stock
receivable upon effectiveness of the Merger by a holder of the number of shares
of NTL Common Stock deliverable upon conversion of such Security immediately
prior to the Merger. All of the covenants and provisions by or for the benefit
of the Company that are contained in Article V of the Indenture relating to the
conversion
3
<PAGE> 4
of the Securities shall, upon consum mation of the Merger, bind and inure to the
benefit of Holdco, including without limitation the covenant set forth in
Section 5.05 of the Indenture, which shall require that Holdco at all times
reserve and keep available, free from preemptive rights, out of authorized but
unissued Holdco Common Stock and solely for the purpose of issuance upon
conversion of Securities, a sufficient number of shares of Holdco Common Stock
to permit conversion of all outstanding Securities for shares of Holdco Common
Stock.
SECTION 2.02 ADJUSTMENTS. Upon consummation of the Merger, any
adjustments of the Conversion Price shall continue to be made in accordance with
Article V of the Indenture, except that adjustments previously applicable with
respect to the NTL Common Stock, shall then be applicable in the same manner
with respect to the Holdco Common Stock.
SECTION 2.03 RIGHTS UPON CONVERSION. Nothing in this First
Supplemental Indenture shall be construed to affect in any way the right that a
holder of a Security may otherwise have, pursuant to clause (ii) of the last
sentence of subsection (c) of Section 5.06, to receive Rights upon conversion of
a Security.
SECTION 2.04 HOLDCO AS SIGNATORY. In accordance with Section
5.12 of the Indenture, Holdco, as the issuer of the consideration receivable by
holders of NTL Common Stock upon consummation of the Merger, has also executed
this First Supplemental Indenture.
SECTION 2.05 RIGHTS, POWERS AND OBLIGATIONS OF THE COMPANY
CONTINUE. Upon consummation of the Merger and except as expressly set forth in
Section 2.01 of this First Supplemental Indenture, the Company as the Surviving
Corpora tion shall exercise all of the rights and powers of the Company under
the Indenture and the Securities and shall be solely liable for all of the
obligations of the Company thereunder, including the performance and observance
of every covenant of the Indenture to be performed or observed on the part of
the Company.
4
<PAGE> 5
ARTICLE III
MISCELLANEOUS
SECTION 3.01 EFFECT OF FIRST SUPPLEMENTAL INDENTURE. Upon the
execution and delivery of this First Supplemental Indenture by the Company and
the Trustee, the Indenture shall be supplemented in accordance herewith, and
this First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every holder of Securities heretofore or hereafter authenticated
and delivered under the Inden ture shall be bound thereby.
SECTION 3.02 NOTATION REFLECTING FIRST SUPPLEMENTAL INDENTURE.
The Trustee may place an appropriate notation about the First Supplemental
Indenture on any Security authenticated after the execution and delivery of this
First Supplemental Indenture. The Company in exchange for all Securities may
issue and the Trustee shall authenticate new Securities that reflect the First
Supplemental Indenture.
SECTION 3.03 INDENTURE REMAINS IN FULL FORCE AND EFFECT.
Except as supplemented hereby, all provisions in the Indenture shall remain in
full force and effect.
SECTION 3.04 INDENTURE AND FIRST SUPPLEMENTAL INDENTURE
CONSTRUED TOGETHER. This First Supplemental Indenture is an indenture
supplemental to and in implementation of the Indenture, and the Indenture and
this First Supplemental Indenture shall henceforth be read and construed
together.
SECTION 3.05 CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented by this First Supplemental Indenture is in all
respects confirmed and preserved.
SECTION 3.06 CONFLICT WITH TRUST INDENTURE ACT. If any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with any provision of the Trust Indenture Act that is required under the Trust
Indenture Act to be part of and govern any provision of this First Supplemental
Indenture, the provision of the Trust Indenture Act shall control. If any
provision of this First Supplemental Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
provision of the Trust Indenture Act
5
<PAGE> 6
shall be deemed to apply to the Indenture as so modified or to be excluded by
this First Supplemental Indenture, as the case may be.
SECTION 3.07 SEVERABILITY. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 3.08 HEADINGS. The Article and Section headings of
this First Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part of this First Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 3.09 BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC.
Nothing in this First Supplemental Indenture or the Securities, express or
implied, shall give to any Person, other than the parties hereto and thereto and
their successors hereunder and thereunder and the holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture or the Securities.
SECTION 3.10 SUCCESSORS. All agreements of the Company in this
First Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this First Supplemental Indenture shall bind its successors.
SECTION 3.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The Trustee
accepts the amendments to the Indenture effected by the First Supplemental
Indenture and agrees to perform the same upon the terms of the Indenture as
supplemented by this First Supplemental Indenture. Without limiting the
generality of the foregoing, the Trustee shall not be liable or responsible for
the validity as to the Company or sufficiency of this First Supplemental
Indenture or as to the due execution hereof by the Company or as to recitals of
fact contained herein, all of which are made by the Company solely.
SECTION 3.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee,
whether or not elsewhere herein so provided.
6
<PAGE> 7
SECTION 3.13 GOVERNING LAW. The internal law of the State of
New York shall govern and be used to construe this First Supplemental Indenture.
SECTION 3.14 COUNTERPART ORIGINALS. The parties may sign any
number of copies of this First Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same agreement.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first above
written.
NTL INCORPORATED
By: /S/ Richard J. Lubasch
----------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President,
General Counsel and
Secretary
NTL COMMUNICATIONS CORP.
By: /S/ Richard J. Lubasch
----------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President,
General Counsel
and Secretary
THE CHASE MANHATTAN BANK, as Trustee
By: /S/ Andrew M.Deck
----------------------------------------
Name: Andrew M. Deck
Title: Vice President
8
<PAGE> 1
Exhibit 4.16
NTL INCORPORATED,
NTL COMMUNICATIONS CORP.
and
THE CHASE MANHATTAN BANK,
as Trustee
-----------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 31, 1999
Supplementing the Indenture dated
as of June 12, 1996
between NTL Incorporated
(formerly known as
International CableTel Incorporated) and
The Chase Manhattan Bank
(formerly known as Chemical Bank), as Trustee
7% CONVERTIBLE SUBORDINATED NOTES
DUE 2008
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as of March 31, 1999,
between NTL Incorporated (formerly known as International CableTel
Incorporated), a Delaware corporation (the "COMPANY"), NTL Communications Corp.,
a Delaware corporation and a direct, wholly owned subsidiary of the Company
("HOLDCO"), and The Chase Manhattan Bank (formerly known as Chemical Bank), a
New York corporation, as trustee (the "TRUSTEE").
WITNESSETH:
WHEREAS, the Company and the Trustee previously executed and
delivered the Indenture, dated as of June 12, 1996 (the "INDENTURE"), providing
for the creation, execution, authentication and delivery of the Company's 7%
Convertible Subordinated Notes due 2008 (each a "SECURITY" and collectively the
"SECURITIES"), which Securities are convertible into shares of common stock, par
value $.01 per share (the "NTL COMMON STOCK"), of the Company in accordance with
the terms and condi tions of the Indenture;
WHEREAS, Section 11.01 of the Indenture provides that the
Company and the Trustee may from time to time amend or supplement the Indenture
without the consent of any holders of the Securities, in order to, among other
things, comply with Section 5.12 of the Indenture regarding the effect of
reclassifications, consolidations, mergers or sales on conversion privileges;
WHEREAS, on March 26, 1999, the Company, Holdco and NTL
Mergerco, Inc., a Delaware corporation that is a direct wholly-owned subsidiary
of Holdco and an indirect wholly-owned subsidiary of the Company ("MERGER SUB"),
entered into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), pursuant
to which, among other things, Merger Sub shall be merged with and into the
Company in accordance with Section 251(g) of the General Corporation Law of the
State of Delaware (the "MERGER"), with the Company continuing as the surviving
corporation (the "SURVIVING CORPORATION") under the name "NTL Communications
Corp." and as a wholly-owned subsidiary of Holdco;
WHEREAS, pursuant to the Merger, each outstanding share of NTL
Common Stock shall be converted into the right to receive one validly issued,
fully paid and nonassessable share of common stock, par value $.01 per share, of
Holdco (the "HOLDCO COMMON STOCK");
2
<PAGE> 3
WHEREAS, upon consummation of the Merger and except as
expressly set forth in Section 2.01 of this First Supplemental Indenture, the
Company, as the Surviving Corporation, shall continue to be liable for the
obligations of the Company under the Securities and the Indenture; and
WHEREAS, all actions necessary to make this First Supplemental
Indenture and the Securities valid, binding and enforceable obligations of the
Company and, to the extent applicable, Holdco, have been performed and
fulfilled;
NOW, THEREFORE, for and in consideration of the premises and
mutual covenants herein contained each party agrees as follows for the benefit
of the other party and for the equal and ratable benefit of the holders of the
Securities:
ARTICLE I
DEFINITIONS
SECTION 1.01 GENERAL. For all purposes of the Indenture and
this First Supplemental Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to the Indenture and this First Supplemental
Indenture as a whole and not to any particular Article, Section or subdivision;
and
(b) capitalized terms used but not defined herein shall have
the meanings assigned to them in the Indenture.
ARTICLE II
EFFECT OF MERGER ON CONVERSION PRIVILEGE; ADJUSTMENT
OF CONVERSION PRICE
SECTION 2.01 CONVERSION OF SECURITIES FOR HOLDCO COMMON STOCK.
In accordance with Section 5.12 of the Indenture, upon and as of the consumma
tion of the Merger, the holder of each Security then outstanding shall have the
right to convert such Security into the amount of shares of Holdco Common Stock
receivable upon effectiveness of the Merger by a holder of the number of shares
of NTL Common Stock deliverable upon conversion of such Security immediately
prior
3
<PAGE> 4
to the Merger. All of the covenants and provisions by or for the benefit of the
Company that are contained in Article V of the Indenture relating to the
conversion of the Securities shall, upon consum mation of the Merger, bind and
inure to the benefit of Holdco, including without limitation the covenant set
forth in Section 5.05 of the Indenture, which shall require that Holdco at all
times reserve and keep available, free from preemptive rights, out of authorized
but unissued Holdco Common Stock and solely for the purpose of issuance upon
conversion of Securities, a sufficient number of shares of Holdco Common Stock
to permit conversion of all outstanding Securities for shares of Holdco Common
Stock.
SECTION 2.02 ADJUSTMENTS. Upon consummation of the Merger, any
adjustments of the Conversion Price shall continue to be made in accordance with
Article V of the Indenture, except that adjustments previously applicable with
respect to the NTL Common Stock, shall then be applicable in the same manner
with respect to the Holdco Common Stock.
SECTION 2.03 RIGHTS UPON CONVERSION. Nothing in this First
Supplemental Indenture shall be construed to affect in any way the right that a
holder of a Security may otherwise have, pursuant to clause (ii) of the last
sentence of subsection (c) of Section 5.06, to receive Rights upon conversion of
a Security.
SECTION 2.04 HOLDCO AS SIGNATORY. In accordance with Section
5.12 of the Indenture, Holdco, as the issuer of the consideration receivable by
holders of NTL Common Stock upon consummation of the Merger, has also executed
this First Supplemental Indenture.
SECTION 2.05 RIGHTS, POWERS AND OBLIGATIONS OF THE COMPANY
CONTINUE. Upon consummation of the Merger and except as expressly set forth in
Section 2.01 of this First Supplemental Indenture, the Company as the Surviving
Corpora tion shall exercise all of the rights and powers of the Company under
the Indenture and the Securities and shall be solely liable for all of the
obligations of the Company thereunder, including the performance and observance
of every covenant of the Indenture to be performed or observed on the part of
the Company.
4
<PAGE> 5
ARTICLE III
MISCELLANEOUS
SECTION 3.01 EFFECT OF FIRST SUPPLEMENTAL INDENTURE. Upon the
execution and delivery of this First Supplemental Indenture by the Company and
the Trustee, the Indenture shall be supplemented in accordance herewith, and
this First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every holder of Securities heretofore or hereafter authenticated
and delivered under the Inden ture shall be bound thereby.
SECTION 3.02 NOTATION REFLECTING FIRST SUPPLEMENTAL INDENTURE.
The Trustee may place an appropriate notation about the First Supplemental
Indenture on any Security authenticated after the execution and delivery of this
First Supplemental Indenture. The Company in exchange for all Securities may
issue and the Trustee shall authenticate new Securities that reflect the First
Supplemental Indenture.
SECTION 3.03 INDENTURE REMAINS IN FULL FORCE AND EFFECT.
Except as supplemented hereby, all provisions in the Indenture shall remain in
full force and effect.
SECTION 3.04 INDENTURE AND FIRST SUPPLEMENTAL INDENTURE
CONSTRUED TOGETHER. This First Supplemental Indenture is an indenture
supplemental to and in implementation of the Indenture, and the Indenture and
this First Supplemental Indenture shall henceforth be read and construed
together.
SECTION 3.05 CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented by this First Supplemental Indenture is in all
respects confirmed and preserved.
SECTION 3.06 CONFLICT WITH TRUST INDENTURE ACT. If any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with any provision of the Trust Indenture Act that is required under the Trust
Indenture Act to be part of and govern any provision of this First Supplemental
Indenture, the provision of the Trust Indenture Act shall control. If any
provision of this First Supplemental Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
provision of the Trust Indenture Act
5
<PAGE> 6
shall be deemed to apply to the Indenture as so modified or to be excluded by
this First Supplemental Indenture, as the case may be.
SECTION 3.07 SEVERABILITY. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 3.08 HEADINGS. The Article and Section headings of
this First Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part of this First Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 3.09 BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC.
Nothing in this First Supplemental Indenture or the Securities, express or
implied, shall give to any Person, other than the parties hereto and thereto and
their successors hereunder and thereunder and the holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture or the Securities.
SECTION 3.10 SUCCESSORS. All agreements of the Company in this
First Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this First Supplemental Indenture shall bind its successors.
SECTION 3.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The Trustee
accepts the amendments to the Indenture effected by the First Supplemental
Indenture and agrees to perform the same upon the terms of the Indenture as
supplemented by this First Supplemental Indenture. Without limiting the
generality of the foregoing, the Trustee shall not be liable or responsible for
the validity as to the Company or sufficiency of this First Supplemental
Indenture or as to the due execution hereof by the Company or as to recitals of
fact contained herein, all of which are made by the Company solely.
SECTION 3.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee,
whether or not elsewhere herein so provided.
6
<PAGE> 7
SECTION 3.13 GOVERNING LAW. The internal law of the State of
New York shall govern and be used to construe this First Supplemental Indenture.
SECTION 3.14 COUNTERPART ORIGINALS. The parties may sign any
number of copies of this First Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same agreement.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first above
written.
NTL INCORPORATED
By: /S/ Richard J. Lubasch
----------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President,
General Counsel
and Secretary
NTL COMMUNICATIONS CORP.
By: /S/ Richard J. Lubasch
----------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President,
General Counsel
and Secretary
THE CHASE MANHATTAN BANK, as Trustee
By: /S/ Andrew M. Deck
----------------------------------------
Name: Andrew M. Deck
Title: Vice President
8
<PAGE> 1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK NEW YORK 10022
TEL: (212) 735-3000
FAX: (212) 735-2000
June 3, 1999
NTL Incorporated
NTL Communications Corp.
110 East 59th Street
New York, NY 10022
Re: NTL Incorporated
NTL Communications Corp.
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to NTL Incorporated ("NTL Inc.") and NTL
Communications Corp. ("NTL CC" and, together with NTL Inc., the "Companies"),
each a Delaware corporation, in connection with the preparation of a
registration statement on Form S-3 (File No. 333-72335) relating to the
registration for resale of (a) up to $600,000,000 aggregate principal amount of
NTL CC's 7% Convertible Subordinated Notes Due 2008 (the "Notes") issued under
an indenture, dated as of December 16, 1998 (the "Indenture"), by and among the
Company and The Chase Manhattan Bank, as trustee (the "Trustee"), and (b) the
shares (the "Shares") of NTL Inc.'s common stock, par value $0.01 per share (the
"Common Stock"), issuable upon conversion of the Notes. The Notes and the Shares
are referred to herein collectively as the "Securities".
<PAGE> 2
NTL Incorporated
NTL Communications Corp.
June 3, 1999
Page 2
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement on Form S-3 (Registration No. 333-72335) as filed with the Securities
and Exchange Commission (the "Commission") on February 12, 1999 under the Act,
Amendment No. 1 thereto as filed with the Commission on May 13, 1999 and
Amendment No. 2 thereto as filed with the Commission on June 2, 1999 (such
Registration Statement, as so amended, being hereinafter referred to as the
"Registration Statement"); (ii) an executed copy of the Indenture filed as an
exhibit to the Registration Statement; (iii) an executed copy of the First
Supplemental Indenture, dated as of March 31, 1999, between NTL Inc., NTL CC
and The Chase Manhattan Bank, as Trustee; (iv) the Agreement and Plan of
Merger, dated as of March 26, 1999, by and among NTL Inc., NTL CC and NTL
Merger Co., Inc.; (v) executed copies of the Notes; (vi) the Restated
Certificate of Incorporation of each of the Companies, as amended to date;
(vii) the By-Laws of each of the Companies, as amended to date; (viii) the Form
T-1 of the Trustee filed as an exhibit to the Registration Statement; (ix) a
specimen certificate evidencing the Common Stock; (x) the Cross-Receipt, dated
December 16, 1998, executed by Donaldson, Lufkin & Jenrette Securities
Corporation and NTL CC relating to the issuance of the Notes and the receipt of
payment therefor; and (xi) certain resolutions of the Board of Directors of NTL
CC and of the Pricing Committee established by the Board of Directors of NTL
CC, in each case, relating to the issuance of the Securities, the Indenture and
related matters. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Companies and
such agreements, certificates of public officials, certificates of officers or
other representatives of the Companies and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of executed documents, we have assumed that the parties thereto,
other than the Companies, had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. As to any facts material to the opinions expressed herein which we
have not independently established or verified, we have relied upon statements
and representations of officers and other representatives of the Companies and
others. In rendering the opinion set forth
<PAGE> 3
NTL Incorporated
NTL Communications Corp.
June 3, 1999
Page 3
in paragraph 2 below, we have assumed that the certificates representing the
shares of Common Stock issued upon conversion of the Notes will conform to the
specimen certificate examined by us and will be countersigned by a duly
authorized officer of the transfer agent for the Common Stock and duly
registered by the registrar for the Common Stock in the share record books of
NTL Inc.
Our opinions set forth herein are limited to Delaware corporate law and
the laws of the State of New York which are normally applicable to transactions
of the type contemplated by the Indenture and the Notes and to the extent that
judicial or regulatory orders or decrees or consents, approvals, licenses,
authorizations, validations, filings, recordings or registrations with
governmental authorities are relevant, to those required under such laws (all
of the foregoing being referred to as "Opined on Law"). We do not express any
opinion with respect to the law of any jurisdiction other than Opined on Law or
as to the effect of any such non opined law on the opinions herein stated.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. The Notes are valid and binding obligations of NTL CC entitled to
the benefits of the Indenture and enforceable against NTL CC in accordance
with their terms, except to the extent that enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity).
2. The shares of Common Stock initially issuable upon conversion of
the Notes, if and when the Notes are converted into shares of Common Stock
in accordance with their terms and the terms of the Indenture, will be
validly issued, fully paid and nonassessable.
In rendering the opinions set forth above, we have assumed that the
execution and delivery by NTL CC of the Notes and the Indenture and the
performance by NTL CC of its obligations thereunder do not and will not
violate, conflict with or constitute a default under any agreement or
instrument to which NTL CC or its properties is subject, except for those
agreements and instruments which were identified to us by NTL CC as being
material to it and which are listed as exhibits to NTL CC's Annual Report on
Form 10-K for the year ended December 31, 1998.
<PAGE> 4
NTL Incorporated
NTL Communications Corp.
June 3, 1999
Page 4
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
<PAGE> 1
NTL
Exhibit 12.1
<TABLE>
<CAPTION>
March 31 December 31
------------ ----------------------------------------------
1999 1998 1997 1996
------------ ----------------------------------------------
<S> <C> <C> <C> <C>
Fixed charges:
Interest $141,187,000 $356,575,000 $209,340,000 $147,326,000
Amortization of debt expense 2,773,000 10,227,000 7,831,000 8,873,000
Interest portion of rental expense 2,422,000 9,687,000 6,016,000 4,957,000
------------ ------------ ------------ ------------
$146,382,000 $376,489,000 $223,187,000 $161,156,000
============
Preferred Stock Dividend Requirement 13,092,000 18,761,000 11,978,000
------------ ------------ ------------
Combined Fixed Charges and Preferred Stock Dividends $159,474,000 $395,250,000 $235,165,000
============ ============ ============
Earnings:
Income (loss) from operations ($230,419,000) ($537,943,000) ($348,648,000) ($246,801,000)
Fixed charges per above 146,382,000 376,489,000 223,187,000 161,156,000
Less: Capitalized interest (10,364,000) (27,760,000) (6,770,000) (10,294,000)
------------ ------------ ------------ ------------
($94,401,000) ($189,214,000) ($132,231,000) ($95,939,000)
============ ============ ============ ============
Ratio of Earnings to Fixed Charges (1) -- -- -- --
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (2) -- -- --
<CAPTION>
December 31
------------------------------
1995 1994
------------------------------
<S> <C> <C>
Fixed charges:
Interest $40,562,000 $15,316,000
Amortization of debt expense 1,424,000 502,000
Interest portion of rental expense 647,000 369,000
----------- -----------
$42,633,000 $16,187,000
=========== ===========
Preferred Stock Dividend Requirement
Combined Fixed Charges and Preferred Stock Dividends
Earnings:
Income (loss) from operations ($93,262,000) ($27,943,000)
Fixed charges per above 42,633,000 16,187,000
Less: Capitalized interest (12,183,000) (3,906,000)
----------- -----------
($62,812,000) ($15,662,000)
=========== ===========
Ratio of Earnings to Fixed Charges (1) -- --
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (2)
</TABLE>
The ratio of earnings to fixed charges and combined fixed charges and preferred
stock dividends is not meaningful for the periods that result in a
deficit.
(1) For the three months ended March 31, 1999 and the years ended December 31,
1998, 1997, 1996, 1995, and 1994, the deficit of earnings to fixed charges
was $240,783,000, $565,703,000, $355,418,000, $257,095,000, $105,445,000
and $31,849,000, respectively.
(2) For the three months ended March 31, 1999 and the years ended December 31,
1998 and 1997 the deficit of earnings to combined fixed charges and
preferred stock dividends was $253,875,000, $584,464,000 and $367,396,000,
respectively.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3) and related
Prospectus of NTL Incorporated for the registration of $600,000,000 of its
7% convertible subordinated notes due 2008 and shares of its common stock
and to the incorporation by reference therein of our report dated March 26,
1999, with respect to the consolidated financial statements and schedules
of NTL Incorporated included in its Annual Report (Form 10-K) for the year
ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
June 2, 1999
New York, New York
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-72335 of NTL Incorporated and NTL Communications
Corp. on Form S-3 of our report dated February 27, 1998, appearing in the NTL
Incorporated Proxy Statement dated January 29, 1999, on the consolidated
financial statements as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997 of Comcast UK Cable Partners Limited
and subsidiaries and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche, LLP
Philadelphia, Pennsylvania
June 2, 1999
<PAGE> 1
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-72335 of NTL Incorporated and NTL Communications
Corp. on Form S-3 of our report dated February 27, 1998 (March 16, 1998 as to
Note 3), appearing in the NTL Incorporated Proxy Statement dated January 29,
1999, on the consolidated financial statements as of December 31, 1997 and 1996
and for each of the three years in the period ended December 31, 1997 of
Birmingham Cable Corporation Limited and subsidiaries and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche
Birmingham, England
June 2, 1999
<PAGE> 1
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-72335 of NTL Incorporated and NTL Communications
Corp. on Form S-3 of our report dated February 27, 1998, appearing in the NTL
Incorporated Proxy Statement dated January 29, 1999, on the consolidated
financial statements as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997 of Cable London PLC and subsidiaries
and to the reference to us under the heading "Experts" in the Prospectus, which
is part of this Registration Statement.
/s/ Deloitte & Touche
London, England
June 2, 1999
<PAGE> 1
Exhibit 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated June 5, 1998 (except Note 10 as to which the date is
July 16, 1998) with respect to the financial statements of ComTel UK Finance
B.V., and of our report dated June 5, 1998 (except Note 9 as to which the date
is July 16, 1998) with respect to the combined financial statements of
Telecential Communications (Canada) Limited and Telecential Communications (UK)
Limited, incorporated by reference in Amendment No. 1 to the Registration
Statement on Form S-4 relating to the exchange of new 9 3/4% Series B Senior
Deferred Coupon Notes due 2009 and in the Amendment No. 2 to the Registration
Statement on Form S-3 relating to the resale by certain security holders of 7%
Convertible Subordinated Notes Due 2008, both to be filed by NTL Communications
Corp.
/s/ Deloitte & Touche
________________________
Deloitte & Touche
Chartered Accountants
Bracknell, England
June 1, 1999
<PAGE> 1
Exhibit 23.6
[Coopers & Lybrand Letterhead]
1 June 1999
We hereby consent to the incorporation by reference in the amendment to the
Registration Statement of NTL Incorporated on Form S-3 , of
our report, dated 5 June 1998, except for Note 10 as to which the date is 16
July 1998, on our audit of the Combined Financial Information of ComTel UK
Finance B.V. as of and for the year ended 31 December 1996. We also consent to
the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand
- ----------------------
Coopers & Lybrand
Chartered Accountants
London, United Kingdom
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT AUDITORS
To the shareholders
Diamond Cable Communications Plc:
We consent to the use of our report dated March 30, 1999 with respect to Diamond
Cable Communications Plc incorporated by reference herein and to the references
to our firm under the heading "Experts" in the Registration Statement on Form
S-3 of NTL Incorporated.
/s/ KPMG
KPMG
Nottingham, England
June 1, 1999
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
</TABLE>
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
NTL COMMUNICATIONS CORP.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-1822078
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
110 EAST 59TH STREET, 26TH FLOOR
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
</TABLE>
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a)Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 2nd day of June 1999.
THE CHASE MANHATTAN BANK
By /s/Andrew M. Deck
-------------------------------
Andrew M. Deck
Vice President
-3-
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1998, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ......................................................... $ 13,915
Interest-bearing balances ................................................. 7,805
Securities:
Held to maturity securities .................................................... 1,429
Available for sale securities .................................................. 56,327
Federal funds sold and securities purchased under
agreements to resell ...................................................... 21,733
Loans and lease financing receivables:
Loans and leases, net of unearned income ......................... $131,095
Less: Allowance for loan and lease losses ........................ 2,711
Less: Allocated transfer risk reserve ............................ 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .................................................... 128,384
Trading Assets ................................................................. 48,949
Premises and fixed assets (including capitalized
leases) ........................................................................ 3,095
Other real estate owned ........................................................ 239
Investments in unconsolidated subsidiaries and
associated companies ...................................................... 199
Customers' liability to this bank on acceptances
outstanding ............................................................... 1,209
Intangible assets .............................................................. 2,081
Other assets ................................................................... 11,352
--------
TOTAL ASSETS ................................................................... $296,717
========
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices .................................................... $105,879
Noninterest-bearing .................................................... $ 39,175
Interest-bearing ....................................................... 66,704
--------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's.................................................. 79,294
Noninterest-bearing .................................................... $ 4,082
Interest-bearing ....................................................... 75,212
Federal funds purchased and securities sold under agree-
ments to repurchase ......................................................... 32,546
Demand notes issued to the U.S. Treasury .................................... 629
Trading liabilities ......................................................... 36,807
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .......................... 4,478
With a remaining maturity of more than one year through three years .... 213
With a remaining maturity of more than three years
115
Bank's liability on acceptances executed and outstanding .................... 1,209
Subordinated notes and debentures ........................................... 5,408
Other liabilities ........................................................... 10,855
TOTAL LIABILITIES ........................................................... 277,433
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................... 0
Common stock ................................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ................... 11,016
Undivided profits and capital reserves ...................................... 6,762
Net unrealized holding gains (losses)
on available-for-sale securities ............................................ 279
Cumulative foreign currency translation adjustments ......................... 16
TOTAL EQUITY CAPITAL ........................................................ 19,284
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ........................................ $296,717
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
