State of Delaware
Secretary of State
Division of Corporations
Delivered 09:03 AM 05/05/2003
FILED 09:03 AM 05/05/2003
SRV 030287934 - 0579020 FILE
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF 4.25% REDEEMABLE CUMULATIVE
CONVERTIBLE PERPETUAL PREFERRED STOCK, SERIES C
of
KANSAS CITY SOUTHERN
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, Michael R. Haverty, Chairman, President and Chief
Executive Officer of Kansas City Southern, a Delaware corporation (hereinafter
called the "Corporation"), does hereby certify that the Board of Directors of
the Corporation (the "Board of Directors"), pursuant to the provisions of
Sections 103 and 151 of the General Corporation Law of the State of Delaware,
hereby makes this Certificate of Designations and hereby states and certifies
that pursuant to the authority expressly vested in the Board of Directors by its
Restated Certificate of Incorporation, the Board of Directors duly adopted the
following resolutions:
RESOLVED, that, pursuant to Paragraph 4 of the Corporation's Restated
Certificate of Incorporation (which authorizes 2,000,000 shares of New Series
Preferred Stock, par value $1.00 per share (the "New Series Preferred Stock"),
and the authority conferred on the Board of Directors, the Board of Directors
hereby fixes the powers, designations, preferences and relative, participating,
optional and other special rights, and the qualifications, limitations and
restrictions, of a series of New Series Preferred Stock.
RESOLVED, that each share of such series of New Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
1. Number and Designation. 400,000 shares of the New Series Preferred Stock
of the Corporation shall be designated as "4.25% Redeemable Cumulative
Convertible Perpetual Preferred Stock, Series C" (the "Series C Convertible
Preferred Stock").
2. Certain Definitions. As used in this Certificate, the following terms
shall have the following meanings, unless the context otherwise requires:
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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"Agent Members" shall have the meaning assigned to it in Section 15(a)
hereof.
"Board of Directors" means either the board of directors of the
Corporation or any duly authorized committee of such board.
"Business Day" means any day other than a Saturday, Sunday or a day on
which state or U.S. federally chartered banking institutions in New York, New
York are not required to be open.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents however designated of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and any rights (other than debt securities convertible
or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such Person.
"Certificate" means this Certificate of Designations.
"Closing Sale Price" of the shares of Common Stock or other capital stock
or similar equity interests on any date means the closing sale price per share
(or, if no closing sale price is reported, the average of the closing bid and
ask prices or, if more than one in either case, the average of the average
closing bid and the average closing ask prices) on such date as reported on the
principal United States securities exchange on which shares of Common Stock or
such other capital stock or similar equity interests are traded or, if the
shares of Common Stock or such other capital stock or similar equity interests
are not listed on a United States national or regional securities exchange, as
reported by Nasdaq or by the National Quotation Bureau Incorporated. In the
absence of such quotations, the Corporation shall be entitled to determine the
Closing Sale Price on the basis it considers appropriate. The Closing Sale Price
shall be determined without reference to extended or after hours trading.
"Common Share Legend" shall have the meaning assigned to it in Section
16(f).
"Common Stock" means any stock of any class of the Corporation that has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and that is not subject to redemption by the Corporation. Subject to
the provisions of Section 9, however, shares issuable on conversion of the
Series C Convertible Preferred Stock shall include only shares of the class
designated as common stock of the Corporation at the date of this Certificate
(namely, the Common Stock, par value $0.01 per share) or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
that have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation and which are not subject to redemption by the Corporation;
provided that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable on conversion shall be
substantially in the proportion that the total number of shares of such class
resulting from all such reclassifications
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bears to the total number of shares of all such classes resulting from all such
reclassifications.
"Conversion Agent" shall have the meaning assigned to it in Section 17(a)
hereof.
"Conversion Price" per share of Series C Convertible Preferred Stock
means, on any date, the Liquidation Preference divided by the Conversion Rate in
effect on such date.
"Conversion Rate" per share of Series C Convertible Preferred Stock means
33.4728 shares of Common Stock, subject to adjustment pursuant to Section 8
hereof.
"Corporation" shall have the meaning assigned to it in the preamble to
this Certificate, and shall include any successor to such Corporation.
"Current Market Price" shall mean the average of the daily Closing Sale
Prices per share of Common Stock for the ten consecutive Trading Days selected
by the Corporation commencing no more than 30 Trading Days before and ending not
later than the earlier of such date of determination and the day before the "ex"
date with respect to the issuance, distribution, subdivision or combination
requiring such computation immediately prior to the date in question. For
purpose of this paragraph, the term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common Stock trades,
regular way, on the relevant exchange or in the relevant market from which the
Closing Sale Price was obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any subdivision or combination
of shares of Common Stock, means the first date on which the Common Stock
trades, regular way, on such exchange or in such market after the time at which
such subdivision or combination becomes effective. If another issuance,
distribution, subdivision or combination to which Section 8(d) applies occurs
during the period applicable for calculating "Current Market Price" pursuant to
this definition, the "Current Market Price" shall be calculated for such period
in a manner determined by the Board of Directors to reflect the impact of such
issuance, distribution, subdivision or combination on the Closing Sale Price of
the Common Stock during such period
"Depositary" means DTC or its successor depositary.
"Dividend Payment Date" means February 15, May 15, August 15 and November
15 each year, or if any such date is not a Business Day, on the next succeeding
Business Day.
"Dividend Period" shall mean the period beginning on, and including, a
Dividend Payment Date and ending on, and excluding, the immediately succeeding
Dividend Payment Date.
"DTC" shall mean The Depository Trust Corporation, New York, New York.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the amount which a willing buyer would pay
a willing seller in an arm's-length transaction.
"Fundamental Change" means the occurrence of any transaction or event
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) in connection with which all or substantially all of the Common Stock
shall be exchanged for, converted into, acquired for or constitutes solely the
right to receive consideration which is not all or substantially all common
stock that is (or, upon consummation of or immediately following such
transaction or event, which will be) listed on a United States national
securities exchange or approved (or, upon consummation of or immediately
following such transaction or event, which will be approved) for quotation on
the Nasdaq National Market or any similar United States system of automated
dissemination of quotations of securities prices.
"Fundamental Change Purchase Date" shall have the meaning assigned to it
in Section 11(a) hereof.
"Global Preferred Shares" shall have the meaning assigned to it in Section
15(a) hereof.
"Global Shares Legend" shall have the meaning assigned to it in Section
15(a) hereof.
"Initial Purchasers" shall have the meaning assigned to it in the
Placement Agreement.
"Junior Stock" shall have the meaning assigned to it in Section 3(a)
hereof.
"Liquidation Preference" shall have the meaning assigned to it in Section
5(a) hereof.
"Moody's" means Moody's Investors Services and its successors.
"Officer" means the Chairman of the Board, a Vice Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Controller, any Assistant Controller, the Secretary, any Assistant Treasurer or
any Assistant Secretary of the Corporation.
"Outstanding" means, when used with respect to Series C Convertible
Preferred Stock, as of any date of determination, all shares of Series C
Convertible Preferred Stock outstanding as of such date; provided, however,
that, if such Series C Convertible Preferred Stock is to be redeemed, notice of
such redemption has been duly given pursuant to this Certificate and the Paying
Agent holds, in accordance with this Certificate, money sufficient to pay the
Redemption Price for the shares of Series C Convertible Preferred Stock to be
redeemed, then immediately after such Redemption Date such shares of Series C
Convertible Preferred Stock shall cease to be outstanding; provided further
that, in
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determining whether the holders of Series C Convertible Preferred Stock have
given any request, demand, authorization, direction, notice, consent or waiver
or taken any other action hereunder, Series C Convertible Preferred Stock owned
by the Corporation shall be deemed not to be Outstanding, except that, in
determining whether the Registrar shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Series C Convertible Preferred Stock which the Registrar has actual
knowledge of being so owned shall be deemed not to be Outstanding.
"Parity Stock" shall have the meaning assigned to it in Section 3(b)
hereof.
"Paying Agent" shall have the meaning assigned to it in Section 17(a)
hereof.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Placement Agreement" means the Placement Agreement dated as of April 29,
2003 among the Corporation, Morgan Stanley & Co. Incorporated and Deutsche Bank
Securities Inc. relating to the Series C Convertible Preferred Stock.
"Purchase Price" means an amount equal to 100% of the Liquidation
Preference per share of Series C Convertible Preferred Stock being purchased,
plus an amount equal to any accumulated and unpaid dividends, including Special
Dividends, if any, (whether or not earned or declared) thereon to, but
excluding, the Fundamental Change Purchase Date; provided that if a Fundamental
Change Purchase Date falls after a Record Date and on or prior to the
corresponding Dividend Payment Date, the Purchase Price will only be an amount
equal to the Liquidation Preference per share of Series C Convertible Preferred
Stock being purchased.
"Record Date" means (i) with respect to the dividends payable on February
15, May 15, August 15 and November 15 of each year, February 1, May 1, August 1
and November 1 of each year, respectively, or such other record date, not more
than 60 days and not less than 10 days preceding the applicable Dividend Payment
Date, as shall be fixed by the Board of Directors and (ii) solely for the
purpose of adjustments to the Conversion Rate pursuant to Section 8, with
respect to any dividend, distribution or other transaction or event in which the
holders of Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or other
property, the date fixed for determination of stockholders entitled to receive
such cash, securities or other property (whether such date is fixed by the Board
of Directors or by statute, contract or otherwise).
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"Redemption Date" means a date that is fixed for redemption of the Series
C Convertible Preferred Stock by the Corporation in accordance with Section 6
hereof.
"Redemption Price" means an amount equal to the Liquidation Preference per
share of Series C Convertible Preferred Stock being redeemed, plus an amount
equal to all accumulated and unpaid dividends, including Special Dividends, if
any, (whether or not earned or declared) thereon to, but excluding, the
Redemption Date; provided that if the Redemption Date shall occur after a Record
Date and before the related Dividend Payment Date, the Redemption Price shall be
only an amount equal to the Liquidation Preference per share of Series C
Convertible Preferred Stock being redeemed.
"Registrar" shall have the meaning assigned to it in Section 13 hereof.
"Registration Default" shall have the meaning assigned to it in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of May 5, 2003, among the Corporation, Morgan Stanley & Co.
Incorporated and Deutsche Bank Securities Inc relating to the Series C
Convertible Preferred Stock.
"Restricted Shares Legend" shall have the meaning assigned to it in
Section 15(a).
"Rights" shall have the meaning assigned to it in Section 10 hereof.
"Rights Agreement" means the Rights Agreement dated as of September 19,
1995 between the Corporation and Harris Trust & Savings Bank, as Rights Agent
thereunder.
"Rights Plan" shall have the meaning assigned to it in Section 10 hereof.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies Inc., and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Stock" shall have the meaning assigned to it in Section 3(c)
hereof.
"Series C Convertible Preferred Stock" shall have the meaning assigned to
it in Section 1 hereof.
"Series C Convertible Preferred Stock Director" shall have the meaning
assigned to it in Section 12(c) hereof.
"Shelf Registration Statement" shall have the meaning assigned to it in
the Registration Rights Agreement.
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"Special Dividends" shall have the meaning assigned to it in Section 4(f)
hereof.
"Subsidiary" means, with respect to any Person, (a) 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 such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Trading Day" means a day during which trading in securities generally
occurs on the New York Stock Exchange or, if the Common Stock is not listed on
the New York Stock Exchange, on the principal other national or regional
securities exchange on which the Common Stock is then listed or, if the Common
Stock is not listed on a national or regional securities exchange, on Nasdaq or,
if the Common Stock is not quoted on Nasdaq, on the principal other market on
which the Common Stock is then traded.
"Trading Price" of the Series C Convertible Preferred Stock, on any date
of determination, means the average of the secondary market bid quotations
obtained by the Corporation or a calculation agent appointed by the Corporation
for the purpose of determining the Trading Price for 50,000 shares of Series C
Convertible Preferred Stock at approximately 3:30 p.m., New York City time, on
such determination date from three independent nationally recognized securities
dealers that the Corporation or such calculation agent selects; provided that if
three such bids cannot reasonably be obtained by the Corporation or such
calculation agent, but two such bids are obtained, then the average of the two
bids shall be used, and if only one such bid can reasonably be obtained by us or
the calculation agent, that one bid shall be used; provided further that if the
Corporation or such calculation agent cannot reasonably obtain at least one bid
for 50,000 shares of Series C Convertible Preferred Stock from a nationally
recognized securities dealer, or in the Corporation's reasonable judgment, the
bid quotations are not indicative of the secondary market value of the Series C
Convertible Preferred Stock, then the Trading Price per share of Series C
Convertible Preferred Stock shall be deemed to be less than 98% of the product
of the Closing Sale Price of the Common Stock and the Conversion Rate on such
date.
"Transfer Agent" shall have the meaning assigned to it in Section 13
hereof.
3. Rank. The Series C Convertible Preferred Stock shall, with respect to
dividend rights and rights upon liquidation, winding-up or
dissolution, rank:
(a) senior to the Common Stock and any other class or series of
Capital Stock of the Corporation, the terms of which do not expressly
provide that such class or series ranks senior to or on a parity with the
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Series C Convertible Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Corporation (collectively,
the "Junior Stock");
(b) on a parity with any other class or series of Capital Stock of the
Corporation, the terms of which expressly provide that such class or series
ranks on a parity with the Series C Convertible Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution of
the Corporation (collectively, the "Parity Stock"); and
(c) junior to each class or series of Capital Stock of the
Corporation, the terms of which expressly provide that such class or series
ranks senior to the Series C Convertible Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the
Corporation (collectively, together with any warrants, rights, calls or
options exercisable for or convertible into such Capital Stock, the "Senior
Stock").
4. Dividends. (a) Holders of Series C Convertible 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, cash dividends at the
annual rate of 4.25% of the Liquidation Preference per share. Such dividends
shall be payable in arrears in equal amounts quarterly on each Dividend Payment
Date, beginning August 15, 2003, in preference to and in priority over dividends
on any Junior Stock but subject to the rights of any holders of Senior Stock or
Parity Stock.
(b) Dividends shall be cumulative from the initial date of issuance or
the last Dividend Payment Date for which accumulated dividends were paid,
whichever is later, whether or not funds of the Corporation are legally
available for the payment of such dividends. Each such dividend shall be
payable to the holders of record of shares of the Series C Convertible
Preferred Stock, as they appear on the Corporation's stock register at the
close of business on a Record Date. Accumulated and unpaid dividends for
any past Dividend Periods may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such date,
not more than 45 days preceding the payment date thereof, as may be fixed
by the Board of Directors.
(c) Accumulated and unpaid dividends for any past Dividend Period
(whether or not earned and declared) shall cumulate dividends at the annual
rate of 4.25% and shall be payable in the manner set forth in this Section
4.
(d) The amount of dividends payable for each full Dividend Period for
the Series C Convertible Preferred Stock shall be computed by dividing the
annual dividend rate by four. The amount of dividends payable for the
initial Dividend Period, or any other period shorter or longer than a full
Dividend Period, on the Series C Convertible Preferred Stock shall be
computed on the basis of 30-day months and a 12-month year. Holders of
Series C Convertible Preferred Stock shall not be entitled
8
to any dividends, whether payable in cash, property or stock, in excess of
cumulative dividends, as herein provided, on the Series C Convertible
Preferred Stock.
(e) No dividend shall be declared or paid or set apart for payment or
other distribution declared or made, whether in cash, obligations or shares
of Capital Stock of the Corporation or other property, directly or
indirectly, upon any shares of Junior Stock or Parity Stock, nor shall any
shares of Junior Stock or Parity Stock be redeemed, repurchased or
otherwise acquired for consideration by the Corporation through a sinking
fund or otherwise, unless all accumulated and unpaid dividends, including
Special Dividends, if any, through the most recent Dividend Payment Date
(whether or not there are funds of the Corporation legally available for
the payment of dividends) on the shares of Series C Convertible Preferred
Stock and any Parity Stock have been or contemporaneously are declared and
paid in full or set apart for payment; provided, however, that,
notwithstanding any provisions of this Section 4(e) to the contrary, the
Corporation may redeem, repurchase or otherwise acquire for consideration
Series C Convertible Preferred Stock and Parity Stock pursuant to a
purchase or exchange offer made on the same terms to all holders of such
Series C Convertible Preferred Stock and Parity Stock. When dividends are
not paid in full, as aforesaid, upon the shares of Series C Convertible
Preferred Stock, all dividends declared on the Series C Convertible
Preferred Stock and any other Parity Stock shall be declared and paid
either (A) pro rata so that the amount of dividends so declared on the
shares of Series C Convertible Preferred Stock and each such other class or
series of Parity Stock shall in all cases bear to each other the same ratio
as accumulated dividends on the shares of Series C Convertible Preferred
Stock and such class or series of Parity Stock bear to each other or (B) on
another basis that is at least as favorable to the holders of the Series C
Convertible Preferred Stock entitled to receive such dividends.
(f) Upon a Registration Default, additional dividends shall accumulate
on the Series C Convertible Preferred Stock at the rate of 0.50% per annum,
whether or not funds of the Corporation are legally available for the
payment of such additional dividends, (such additional dividends, the
"Special Dividends"), from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured.
5. Liquidation Preference. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, before any
payment or distribution of the Corporation's assets (whether capital or surplus)
shall be made to or set apart for the holders of Junior Stock, holders of Series
C Convertible Preferred Stock shall be entitled to receive $500 per share of
Series C Convertible Preferred Stock (the "Liquidation Preference") plus an
amount equal to all dividends, including Special Dividends, (whether or not
earned or declared) accumulated 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 Corporation's assets, or proceeds thereof, distributable among
the holders
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of Series C Convertible Preferred Stock are insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any Parity Stock, then
such assets, or the proceeds thereof, shall be distributed among the holders of
the Series C Convertible Preferred Stock and any other Parity Stock ratably in
accordance with the respective amounts that would be payable on such shares of
Series C Convertible Preferred Stock and any such other Parity Stock if all
amounts payable thereon were paid in full.
(b) Neither the voluntary sale, conveyance, exchange or transfer, for
cash, shares of stock, securities or other consideration, of all or
substantially all of the Corporation's property or assets nor the
consolidation, merger or amalgamation of the Corporation with or into any
corporation or the consolidation, merger or amalgamation of any corporation
with or into the Corporation shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation.
(c) Subject to the rights of the holders of any Parity Stock, after
payment has been made in full to the holders of the Series C Convertible
Preferred Stock, as provided in this Section 5, holders of Junior Stock
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 Series C Convertible Preferred Stock shall
not be entitled to share therein.
6. Redemption of the Series C Convertible Preferred Stock. Shares of Series
C Convertible Preferred Stock shall be redeemable by the Corporation in
accordance with this Section 6.
(a) The Corporation may not redeem any shares of Series C Convertible
Preferred Stock before May 20, 2008. On or after May 20, 2008, the
Corporation shall have the option to redeem, subject to Section 6(k) hereof
and Paragraph 4(h) of the Restated Certificate of Incorporation, some or
all the shares of Series C Convertible Preferred Stock at the Redemption
Price, but only if the Closing Sale Price of the Common Stock for 20
Trading Days within a period of 30 consecutive Trading Days ending on the
Trading Day prior to the date the Corporation gives notice of such
redemption pursuant to this Section 6 exceeds 135% of the Conversion Price
in effect on each such Trading Day.
(b) In the event the Corporation elects to redeem shares of Series C
Convertible Preferred Stock, the Corporation shall:
(i) send a written notice to the Registrar and Transfer Agent of
the Redemption Date, stating the number of shares to be redeemed and
the Redemption Price, at least 35 days before the Redemption Date
(unless a shorter period shall be satisfactory to the Registrar and
Transfer Agent);
(ii) send a written notice by first class mail to each holder of
record of the Series C Convertible Preferred Stock at
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such holder's registered address, not fewer than 30 nor more than 90
days prior to the Redemption Date stating:
(A) the Redemption Date;
(B) the Redemption Price and whether such Redemption Price
will be paid in cash, shares of Common Stock, or, if a
combination thereof, the percentages of the Redemption Price in
respect of which the Corporation will pay in cash and shares of
Common Stock;
(C) the Conversion Price and the Conversion Ratio;
(D) the name and address of the Paying Agent and Conversion
Agent;
(E) that shares of Series C Convertible Preferred Stock
called for redemption may be converted at any time before 5:00
p.m., New York City time on the Business Day immediately
preceding the Redemption Date;
(F) that holders who want to convert shares of the Series C
Convertible Preferred Stock must satisfy the requirements set
forth in Section 6 of this Certificate;
(G) that shares of the Series C Convertible Preferred Stock
called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price;
(H) if fewer than all the outstanding shares of the Series C
Convertible Preferred Stock are to be redeemed by the
Corporation, the number of shares to be redeemed;
(I) that, unless the Corporation defaults in making payment
of such Redemption Price, dividends in respect of the shares of
Series C Convertible Preferred Stock called for redemption will
cease to accumulate on and after the Redemption Date;
(J) the CUSIP number of the Series C Convertible Preferred
Stock; and
(K) any other information the Corporation wishes to present;
and
(iii) (A) publish the information set forth in Section 6(b)(ii)
once in a daily newspaper printed in the English language and of
general circulation in the Borough of Manhattan, The City of New York,
(B) issue a press release containing such
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information and (C) publish such information on the Corporation's web
site on the World Wide Web.
(c) The Redemption Price shall be payable, at the Corporation's
election, in cash, shares of Common Stock, or a combination of cash
and shares of Common Stock; provided that the Corporation shall not be
permitted to pay all or any portion of the Redemption Price in shares
of Common Stock unless:
(i) the Corporation shall have given timely notice pursuant to
Section 6(b) hereof of its intention to purchase all or a specified
percentage of the Series C Convertible Preferred Stock with shares of
Common Stock as provided herein;
(ii) the Corporation shall have registered such shares of Common
Stock under the Securities Act and the Exchange Act, in each case, if
required;
(iii) such shares of Common Stock have been approved for listing
of on a national securities exchange or have been approved for
quotation in an inter-dealer quotation system of any registered United
States national securities association; and
(iv) any necessary qualification or registration under applicable
state securities laws have been obtained, if required.
If the foregoing conditions are not satisfied with respect to any holder or
holders of Series C Convertible Preferred Stock prior to the close of business
on the last day prior to the Redemption Date and the Corporation has elected to
purchase the Series C Convertible Preferred Stock pursuant to this Section
through the issuance of shares of Common Stock, then, notwithstanding any
election by the Corporation to the contrary, the Corporation shall pay the
entire Redemption Price of the Series C Convertible Preferred Stock of such
holder or holders in cash.
(d) Payment of the specified portion of the Redemption Price in
shares of Common Stock pursuant to Section 6(c) hereof shall be made
by the issuance of a number of shares of Common Stock equal to the
quotient obtained by dividing (i) the portion of the Redemption Price,
as the case may be, to be paid in shares of Common Stock by (ii) 97.5%
of the average of the Closing Sale Prices of the Common Stock for the
5 Trading Days ending on the third Trading Day prior to the Redemption
Date (appropriately adjusted to take into account the occurrence
during such period of any event described in Sections 8). The
Corporation shall not issue fractional shares of Common Stock in
payment of the Redemption Price. Instead, the Corporation shall pay
cash based on the Closing Sale Price of the Common Stock on the
Redemption Date for all fractional shares. Upon determination of the
actual number of shares of Common Stock to be issued upon redemption
of the Series C Convertible Preferred Stock, the Corporation shall be
required to disseminate a press release through Dow Jones &
Corporation, Inc. or Bloomberg Business News containing this
information or publish the information on the
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Corporation's web site or through such other public medium as the
Corporation may use at that time.
(e) If the Corporation gives notice of redemption, then, by 12:00
p.m., New York City time, on the Redemption Date, to the extent
sufficient funds are legally available, the Corporation shall, with
respect to:
(i) shares of the Series C Convertible Preferred Stock held
by DTC or its nominees, deposit or cause to be deposited,
irrevocably with DTC cash or shares of Common Stock, as
applicable, sufficient to pay the Redemption Price and shall give
DTC irrevocable instructions and authority to pay the Redemption
Price to holders of such shares of the Series C Convertible
Preferred Stock; and
(ii) shares of the Series C Convertible Preferred Stock held
in certificated form, deposit or cause to be deposited,
irrevocably with the Paying Agent cash or shares of Common Stock,
as applicable, sufficient to pay the Redemption Price and shall
give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to holders of such shares of the Series
C Convertible Preferred Stock upon surrender of their
certificates evidencing their shares of the Series C Convertible
Preferred Stock.
(f) If on the Redemption Date, DTC and/or the Paying Agent holds
or hold money or shares of Common Stock, as applicable, sufficient to
pay the Redemption Price for the shares of Series C Convertible
Preferred Stock delivered for redemption as set forth herein,
dividends shall cease to accumulate as of the Redemption Date on those
shares of the Series C Convertible Preferred Stock called for
redemption and all rights of holders of such shares shall terminate,
except for the right to receive the Redemption Price pursuant to this
Section 6 and the right to convert such shares of Series C Convertible
Preferred Stock as provided in Section 7(a)(iii). For the avoidance of
doubt, the Corporation intends that the provisions of Paragraph 4(h)
of the Corporation's Restated Certificate of Incorporation relating to
the termination of rights of shares of preferred stock called for
redemption upon deposit (if earlier than the Redemption Date) of funds
sufficient to pay the Redemption Price shall not apply to the Series C
Convertible Preferred Stock or this Certificate.
(g) Payment of the Redemption Price for shares of the Series C
Convertible Preferred Stock is conditioned upon book-entry transfer or
physical delivery of certificates representing the Series C
Convertible Preferred Stock, together with necessary endorsements, to
the Paying Agent at any time after delivery of the notice of
redemption.
(h) If the Redemption Date falls after a Record Date and before
the related Dividend Payment Date, holders of the shares of Series C
Convertible Preferred Stock at the close of business on that Record
Date
13
shall be entitled to receive the dividend payable on those shares on
the corresponding Dividend Payment Date.
(i) If fewer than all the outstanding shares of Series C
Convertible 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 by lot or pro rata (with any
fractional shares being rounded to the nearest whole share) as may be
determined by the Board of Directors
(j) Upon surrender of a certificate or certificates representing
shares of the Series C Convertible Preferred Stock that is or are
redeemed in part, the Corporation shall execute and the Transfer Agent
shall authenticate and deliver to the holder, a new certificate of
certificates representing shares of the Series C Convertible Preferred
Stock in an amount equal to the unredeemed portion of the shares of
Series C Convertible Preferred Stock surrendered for partial
redemption.
(k) Notwithstanding the foregoing provisions of this Section 6,
unless full cumulative dividends (whether or not declared) on all
outstanding shares of Series C Convertible Preferred Stock have been
paid or contemporaneously are declared and paid or set apart for
payment for all Dividend Periods terminating on or before the
Redemption Date, none of the shares of Series C Convertible Preferred
Stock shall be redeemed, and no sum shall be set aside for such
redemption, unless pursuant to a purchase or exchange offer made on
the same terms to all holders of Series C Convertible Preferred Stock
and any Parity Stock. Pursuant to Paragraph 4(h) of the Corporation's
Restated Certificate of Incorporation, the Corporation may not redeem
the Series C Convertible Preferred Stock if (i) as of the date of
giving the redemption notice of any redemption pursuant to this
Section 6, such redemption would, if such date where the Redemption
Date, reduce the net assets of the Corporation remaining after such
redemption below twice the aggregate amount payable upon voluntary or
involuntary liquidation, dissolution or winding up to the holders of
Senior Stock or Parity Stock upon such liquidation, dissolution or
winding up, or (ii) all cumulative dividends for the current and all
prior dividend periods have not been declared and paid or have not
been declared and set apart for payment on all shares of the
Corporation having a right to cumulative dividends.
7. Conversion. (a) Right to Convert. Each share of Series C
Convertible Preferred Stock shall be convertible in accordance with, and
subject to, this Section 7 into a number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) equal to
the Conversion Rate in effect at such time. The Series C Convertible
Preferred Stock shall be convertible only upon any of the events, and for
the period, specified in the following clauses (i) through (v) below.
Notwithstanding the foregoing, if any shares of Series C Convertible
Preferred Stock are to be redeemed pursuant to Section 6, such conversion
right shall cease and terminate, as to the shares of the Series C
Convertible Preferred Stock to be redeemed, at 5:00 p.m., New York City
time on the Business Day immediately preceding the Redemption Date,
14
unless the Corporation shall default in the payment of the Redemption Price
therefor, as provided herein. Upon the determination that holders of the
Series C Convertible Preferred Stock are or will be entitled to convert
shares of Series C Convertible Preferred Stock in accordance with any of
the following provisions, the Corporation shall issue a press release and
publish such information on its website on the World Wide Web.
(i) Conversion Rights Based on Common Stock Price. At any
time after June 30, 2003, the Series C Convertible Preferred
Stock may be surrendered for conversion into shares of Common
Stock in any fiscal quarter of the Corporation (and only during
such fiscal quarter), if, as of the last day of the preceding
fiscal quarter of the Corporation, the Closing Sale Price of the
Common Stock for at least 20 Trading Days in a period of 30
consecutive Trading Days ending on the last Trading Day of such
fiscal quarter is more than 110% of the Conversion Price as of
the last day of such preceding fiscal quarter.
(ii) Conversion Rights Upon Credit Rating Events. The Series
C Convertible Preferred Stock may be surrendered for conversion
after the earlier of (a) the date the Series C Convertible
Preferred Stock is assigned a credit rating by both S&P and
Moody's and (b) May 3, 2003, in each case, during any period in
which (1) the credit rating assigned to the Series C Convertible
Preferred Stock by S&P is below CCC, (2) the credit rating
assigned to the Series C Convertible Preferred Stock by Moody's
is below Caa3, (3) either S&P or Moody's does not assign a credit
rating to the Series C Convertible Preferred Stock or (4) any
rating is suspended or withdrawn by either S&P or Moody's.
(iii) Conversion Rights Upon Notice of Redemption. The
Series C Convertible Preferred Stock that has been called for
redemption pursuant to Section 6 hereof may be surrendered at any
time prior to 5:00 p.m. New York City time on the Business Day
immediately preceding the Redemption Date.
(iv) Conversion Rights Upon Occurrence of Certain Corporate
Transactions.
(1) If the Corporation is a party to a consolidation, merger
or binding share exchange pursuant to which shares of Common
Stock would be converted into cash, securities or other property
as set forth in Section 9, each share of Series C Convertible
Preferred Stock may be surrendered for conversion at any time
from and after the date that is 15 days prior to the anticipated
effective date of the transaction until 15 days after the actual
date of such transaction and, at the effective time of the
transaction, the right to convert a Series C Convertible
Preferred Stock into shares of Common Stock shall be changed into
a right to convert such Series C Convertible Preferred Stock into
the kind and amount of cash, securities or other property of the
Corporation
15
or another Person that the holder would have received if the
holder had converted such Series C Convertible Preferred Stock
immediately prior to the transaction.
(2) If the Corporation distributes to all holders of any
class of Common Stock (1) rights or warrants entitling them to
purchase, for a period expiring within 45 days of the record date
for such distribution, Common Stock at less than the average
Closing Sale Price for the 10 Trading Days preceding the
declaration date for such distribution, or (2) cash, assets, debt
securities or rights to purchase the Corporation's securities,
which distribution has a per share value exceeding 5% of the
Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the declaration date for such distribution,
the Series C Convertible Preferred Stock may be surrendered for
conversion on the date that the Corporation gives notice to the
holders of such right, which shall not be less than 20 days prior
to the time ("Ex-Dividend Time") immediately prior to the
commencement of "ex-dividend" trading for such distribution on
the New York Stock Exchange or such other principal national or
regional exchange or market on which the Common Stock is then
listed or quoted for such dividend or distribution, and the
Series C Convertible Preferred Stock may be surrendered for
conversion at any time thereafter until the earlier of close of
business on the Business Day prior to the Ex-Dividend Time and
the date the Corporation announces that such dividend or
distribution will not take place. Notwithstanding the foregoing,
holders shall not have the right to surrender shares of Series C
Convertible Preferred Stock for conversion pursuant to this
Section 7(a)(iv)(2) if they will otherwise participate in the
distribution described above without first converting Series C
Convertible Preferred Stock into Common Stock.
(v) Conversion Upon Satisfaction Of Trading Price Condition.
The Series C Convertible Preferred Stock may be surrendered for
conversion any time during the five Business Day period after any
five consecutive Trading Day period in which the Trading Price
for each day of such five Trading Day period was less than 98% of
the product of the Closing Sale Price and the Conversion Rate in
effect on each such Trading Day.
(b) Conversion Procedures. (i) Conversion of shares of the Series
C Convertible Preferred Stock may be effected by any holder thereof
upon the surrender to the Corporation, at the principal office of the
Corporation or at the office of the Conversion Agent as may be
designated by the Board of Directors, of the certificate or
certificates for such shares of the Series C Convertible Preferred
Stock to be converted accompanied a complete and manually signed
Notice of Conversion (as set forth in the form of Series C Convertible
Preferred Stock certificate attached hereto) along with (A)
appropriate endorsements and transfer documents as required by the
Registrar or Conversion Agent and (B) if required
16
pursuant to Section 7(c) funds equal to the dividend payable on the
next Dividend Payment Date. In case such Notice of Conversion shall
specify a name or names other than that of such holder, such notice
shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. Other than
such taxes, the Corporation shall pay any documentary, stamp or
similar issue or transfer taxes that may be payable in respect of any
issuance or delivery of shares of Common Stock upon conversion of
shares of the Series C Convertible Preferred Stock pursuant hereto.
The conversion of the Series C Convertible Preferred Stock will be
deemed to have been made on the date (the "Conversion Date") such
certificate or certificates have been surrendered and the receipt of
such Notice of Conversion and payment of all required transfer taxes,
if any (or the demonstration to the satisfaction of the Corporation
that such taxes have been paid). Promptly (but no later than two
Business Days) following the Conversion Date, the Corporation shall
deliver or cause to be delivered (i) certificates representing the
number of validly issued, fully paid and nonassessable full shares of
Common Stock to which the holder of shares of the Series C Convertible
Preferred Stock being converted (or such holder's transferee) shall be
entitled, and (ii) if less than the full number of shares of the
Series C Convertible Preferred Stock evidenced by the surrendered
certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by
such surrendered certificate or certificates less the number of shares
being converted. On the Conversion Date, the rights of the holder of
the Series C Convertible Preferred Stock as to the shares being
converted shall cease except for the right to receive shares of Common
Stock and the Person entitled to receive the shares of Common Stock
shall be treated for all purposes as having become the record holder
of such shares of Common Stock at such time.
(ii) Anything herein to the contrary notwithstanding, in the
case of Global Preferred Shares, Notices of Conversion may be
delivered and shares of the Series C Convertible Preferred Stock
representing beneficial interests in respect of such Global
Preferred Shares may be surrendered for conversion in accordance
with the applicable procedures of the Depositary as in effect
from time to time.
(c) Dividend and Other Payments Upon Conversion. (i) If a holder
of shares of Series C Convertible Preferred Stock exercises conversion
rights, such shares will cease to accumulate dividends as of the end
of the day immediately preceding the Conversion Date. On conversion of
the Series C Convertible Preferred Stock, except for conversion during
the period from the close of business on any Record Date corresponding
to a Dividend Payment Date to the close of business on the Business
Day immediately preceding such Dividend Payment Date, in which case
the holder on such Dividend Record Date shall receive the dividends
payable on such Dividend Payment Date, accumulated and unpaid
dividends on the converted share of Series C Convertible Preferred
Stock shall not be cancelled, extinguished or forfeited, but rather
shall be
17
deemed to be paid in full to the holder thereof through delivery of
the Common Stock (together with the cash payment, if any, in lieu of
fractional shares) in exchange for the Series C Convertible Preferred
Stock being converted pursuant to the provisions hereof. Shares of the
Series C Convertible Preferred Stock surrendered for conversion after
the close of business on any Record Date for the payment of dividends
declared and before the opening of business on the Dividend Payment
Date corresponding to that Record Date must be accompanied by a
payment to the Corporation in cash of an amount equal to the dividend
payable in respect of those shares on such Dividend Payment Date;
provided that a holder of shares of the Series C Convertible Preferred
Stock on a Record Date who converts such shares into shares of Common
Stock on the corresponding Dividend Payment Date shall be entitled to
receive the dividend payable on such shares of the Series C
Convertible Preferred Stock on such Dividend Payment Date, and such
holder need not include payment to the Corporation of the amount of
such dividend upon surrender of shares of the Series C Convertible
Preferred Stock for conversion.
(ii) Notwithstanding the foregoing, if shares of the Series
C Convertible Preferred Stock are converted during the period
between the close of business on any Record Date and the opening
of business on the corresponding Dividend Payment Date and the
Corporation has called such shares of the Series C Convertible
Preferred Stock for redemption during such period, or the
Corporation has designated a Fundamental Change Purchase Date
during such period, then, in each case, the holder who tenders
such shares for conversion shall receive the dividend payable on
such Dividend Payment Date and need not include payment of the
amount of such dividend upon surrender of shares of the Series C
Convertible Preferred Stock for conversion.
(d) Fractional Shares. In connection with the conversion of any
shares of the Series C Convertible Preferred Stock, no fractions of
shares of Common Stock shall be issued, but the Corporation shall pay
a cash adjustment in respect of any fractional interest in an amount
equal to the fractional interest multiplied by the Closing Sale Price
of the Common Stock on the Conversion Date, rounded to the nearest
whole cent.
(e) Total Shares. If more than one share of the Series C
Convertible Preferred Stock shall be surrendered for conversion by the
same holder at the same time, the number of full shares of Common
Stock issuable on conversion of those shares shall be computed on the
basis of the total number of shares of the Series C Convertible
Preferred Stock so surrendered.
(f) Reservation of Shares; Shares to be Fully Paid; Compliance
with Governmental Requirements; Listing of Common Stock. The
Corporation shall:
18
(i) at all times reserve and keep available, free from
preemptive rights, for issuance upon the conversion of shares of
the Series C Convertible Preferred Stock such number of its
authorized but unissued shares of Common Stock as shall from time
to time be sufficient if necessary to permit the conversion of
all outstanding shares of the Series C Convertible Preferred
Stock;
(ii) prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of the
Series C Convertible Preferred Stock, comply with all applicable
federal and state laws and regulations that require action to be
taken by the Corporation (including, without limitation, the
registration or approval, if required, of any shares of Common
Stock to be provided for the purpose of conversion of the Series
C Convertible Preferred Stock hereunder);
(iii) ensure that all shares of Common Stock delivered upon
conversion of the Series C Convertible Preferred Stock, upon
delivery, be duly and validly issued and fully paid and
nonassessable, free of all liens and charges and not subject to
any preemptive rights.
8. Conversion Rate Adjustments. The Conversion Rate shall be adjusted
from time to time by the Corporation in accordance with the provisions of
this Section 8.
(a) If the Corporation shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares
of Common Stock, the Conversion Rate shall be increased so that the
same shall equal the rate determined by multiplying the Conversion
Rate in effect at the opening of business on the date following the
date fixed for the determination of stockholders entitled to receive
such dividend or other distribution by a fraction,
(i) the numerator of which shall be the sum of the number of
shares of Common Stock outstanding at the close of business on
the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution plus the total number
of shares of Common Stock constituting such dividend or other
distribution; and
(ii) the denominator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date
fixed for such determination,
such increase to become effective immediately after the opening of
business on the day following the date fixed for such determination.
If any dividend or distribution of the type described in this Section
8(a) is declared but not so paid or made, the Conversion Rate shall
again be adjusted to the Conversion Rate that would then be in effect
if such dividend or distribution had not been declared.
19
(b) If the Corporation shall issue rights or warrants to all holders
of any class of Common Stock entitling them (for a period expiring within
forty-five (45) days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase
shares of Common Stock at a price per share less than the average of the
Closing Sale Prices of the Common Stock for the 10 Trading Days preceding
the declaration date for such distribution, the Conversion Rate shall be
increased so that the same shall equal the rate determined by multiplying
the Conversion Rate in effect immediately prior to the date fixed for
determination of stockholders entitled to receive such rights or warrants
by a fraction,
(i) the numerator of which shall be the number of shares of
Common Stock outstanding on the date fixed for determination of
stockholders entitled to receive such rights or warrants plus the
total number of additional shares of Common Stock offered for
subscription or purchase, and
(ii) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding at the close of business on the
date fixed for determination of stockholders entitled to receive such
rights or warrants plus the number of shares that the aggregate
offering price of the total number of shares so offered would purchase
at a price equal to the average of the Closing Sale Prices of the
Common Stock for the 10 Trading Days preceding the declaration date
for such distribution.
Such adjustment shall be successively made whenever any such rights or
warrants are issued, and shall become effective immediately after the
opening of business on the day following the date fixed for determination
of stockholders entitled to receive such rights or warrants. To the extent
that shares of Common Stock are not delivered after the expiration of such
rights or warrants, the Conversion Rate shall be readjusted to the
Conversion Rate that would then be in effect had the adjustments made upon
the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered. If such
rights or warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if such
date fixed for the determination of stockholders entitled to receive such
rights or warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of Common
Stock at a price less than the average of the Closing Sale Prices of the
Common Stock for the 10 Trading Days preceding the declaration date for
such distribution, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received by the Corporation for such rights or warrants and any amount
payable on exercise or conversion thereof, the value of such consideration,
if other than cash, to be determined by the Board of Directors.
(c) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate
in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately
increased, and conversely, in case outstanding shares of Common Stock
shall be combined into a smaller number of shares of Common Stock, the
Conversion Rate in effect at the opening of business on the day
following
20
the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may
be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination
becomes effective.
(d) If the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of
Capital Stock of the Corporation or evidences of its indebtedness or
assets (including securities, but excluding (x) any rights or warrants
referred to in 8(b), (y) any dividend or distribution (I) paid
exclusively in cash or (II) referred to in Section 8(a) and (z) any
distribution referred to in Section 8(g)) (any of the foregoing
hereinafter in this called the "Distributed Property")), then, in each
such case, the Conversion Rate shall be increased so that the same
shall be equal to the rate determined by multiplying the Conversion
Rate in effect on the Record Date with respect to such distribution by
a fraction,
(i) the numerator of which shall be the Current Market Price on
such Record Date; and
(ii) the denominator of which shall be the Current Market Price
on such Record Date less the Fair Market Value (as determined by the
Board of Directors, whose determination shall be conclusive, and
described in a resolution of the Board of Directors) on the Record
Date of the portion of the Distributed Property so distributed
applicable to one share of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such Record Date; provided that if the then
Fair Market Value (as so determined) of the portion of the Distributed
Property so distributed applicable to one share of Common Stock is equal to
or greater than the Current Market Price on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each holder
of Series C Convertible Preferred Stock shall have the right to receive
upon conversion the amount of Distributed Property such holder would have
received had such holder converted each share Series C Convertible
Preferred Stock on the Record Date. If such dividend or distribution is not
so paid or made, the Conversion Rate shall again be adjusted to be the
Conversion Rate that would then be in effect if such dividend or
distribution had not been declared. If the Board of Directors determines
the Fair Market Value of any distribution for purposes of this by reference
to the actual or when issued trading market for any securities, it must in
doing so consider the prices in such market over the same period used in
computing the Current Market Price on the applicable Record Date.
Rights or warrants (including rights under the Corporation's Rights
Agreement) distributed by the Corporation to all holders of Common Stock
21
entitling the holders thereof to subscribe for or purchase shares of the
Corporation's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a
specified event or events ("Trigger Event"): (i) are deemed to be
transferred with such shares of Common Stock; (ii) are not exercisable; and
(iii) are also issued in respect of future issuances of Common Stock, shall
be deemed not to have been distributed for purposes of this 8(d) (and no
adjustment to the Conversion Rate under this 8(d) will be required) until
the occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Rate shall be made under
this 8(d). If any such right or warrant, including any such existing rights
or warrants distributed prior to the date of this Certificate, are subject
to events, upon the occurrence of which such rights or warrants become
exercisable to purchase different securities, evidences of indebtedness or
other assets, then the date of the occurrence of any and each such event
shall be deemed to be the date of distribution and record date with respect
to new rights or warrants with such rights (and a termination or expiration
of the existing rights or warrants without exercise by any of the holders
thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto that
was counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Rate under this 8(d) was made, (1) in the case
of any such rights or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Rate
shall be readjusted upon such final redemption or repurchase to give effect
to such distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants
that shall have expired or been terminated without exercise thereof, the
Conversion Rate shall be readjusted as if such expired or terminated rights
and warrants had not been issued.
For purposes of this Section 8(d), Section 8(a) and Section 8(b), any
dividend or distribution to which this Section 8(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Common Stock or rights or
warrants (and any Conversion Rate adjustment required by this Section 8(d)
with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares of
Common Stock or such rights or warrants (and any further Conversion Rate
adjustment required by Sections 8(a) and 8(b) with respect to such dividend
or distribution shall then be made), except (A) the Record Date of such
dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution", "the date fixed for the determination of stockholders
entitled to receive such rights or warrants" and "the date fixed for such
determination" within the meaning of Sections 8(a) and 8(b) and (B) any
shares of Common Stock included in such dividend or distribution shall not
be deemed
22
"outstanding at the close of business on the date fixed for such
determination" within the meaning of 8(a).
(e) If the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash, excluding any
dividend or distribution in connection with the liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, to the extent that the aggregate amount of cash
distributions per share of Common Stock in any twelve month period
exceeds the greater of (x) the annualized amount per share of Common
Stock of the next preceding quarterly cash dividend on the Common
Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Rate pursuant to this Section
8(e) (as adjusted to reflect subdivisions, or combinations of the
Common Stock), and (y) 5% of the average of the Closing Sale Price
during the ten Trading Days immediately prior to the date of
declaration of such dividend, then, in such case, the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to the
close of business on such record date by a fraction,
(i) the numerator of which shall be the Current Market Price
on such record date; and
(ii) the denominator of which shall be the Current Market
Price on such record date less the amount of cash so distributed
(including only the amount of cash distributed in excess of the
threshold set forth above) applicable to one share of Common
Stock,
such adjustment to be effective immediately prior to the opening of
business on the day following the Record Date; provided that if the portion
of the cash so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price on the record date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each
holder of Series C Convertible Preferred Stock shall have the right to
receive upon conversion the amount of cash such holder would have received
had such holder converted each share of Series C Convertible Preferred
Stock on the Record Date. If such dividend or distribution is not so paid
or made, the Conversion Rate shall again be adjusted to be the Conversion
Rate that would then be in effect if such dividend or distribution had not
been declared. If any adjustment is required to be made as set forth in
this Section 8(e) as a result of a distribution that is a quarterly
dividend, such adjustment shall be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to
be excluded pursuant hereto. If an adjustment is required to be made as set
forth in this 8(e) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of
the distribution.
(f) If a tender or exchange offer made by the Corporation or any
Subsidiary for all or any portion of the Common Stock shall expire and
such tender or exchange offer (as amended upon the expiration thereof)
shall require the payment to stockholders of consideration per
23
share of Common Stock having a Fair Market Value (as determined by the
Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) that as of the
last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it may be amended)
exceeds the Closing Sale Price of a share of Common Stock on the
Trading Day next succeeding the Expiration Time, the Conversion Rate
shall be increased 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,
(i) the numerator of which shall be the sum of (x) the Fair
Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders 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) at the
Expiration Time and the Closing Sale Price of a share of Common
Stock on the Trading Day next succeeding the Expiration Time, and
(ii) the denominator of which shall be the number of shares
of Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time multiplied by the Closing Sale
Price of a share of 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. If the
Corporation is obligated to purchase shares pursuant to any such
tender or exchange offer, but the Corporation is permanently prevented
by applicable law from effecting any such purchases or all such
purchases are rescinded, the Conversion Rate shall again be adjusted
to be the Conversion Rate that would then be in effect if such tender
or exchange offer had not been made.
(g) If the Corporation pays a dividend or makes a
distribution to all holders of its Common Stock consisting of
capital stock of any class or series, or similar equity
interests, of or relating to a Subsidiary or other business unit
of the Corporation, the Conversion Rate shall be increased so
that the same shall be equal to the rate determined by
multiplying the Conversion Rate in effect on the Record Date with
respect to such distribution by a fraction,
(i) the numerator of which shall be the sum of (A) the
average of the Closing Sale Prices of the Common Stock for
the ten (10) Trading Days commencing on and including the
fifth Trading Day after the date on which "ex-dividend
trading" commences for such dividend or distribution on The
New York Stock Exchange or such other national or regional
exchange
24
or market which such securities are then listed or quoted
(the "Ex-Dividend Date") plus (B) the fair market value of
the securities distributed in respect of each share of
Common Stock for which this Section 8(g) applies, which
shall equal the number of securities distributed in respect
of each share of Common Stock multiplied by the average of
the Closing Sale Prices of those distributed securities for
the ten (10) Trading Days commencing on and including the
fifth Trading Day after the Ex-Dividend Date; and
(ii) the denominator of which shall be the average of
the Closing Sale Prices of the Common Stock for the ten (10)
Trading Days commencing on and including the fifth Trading
Day after the Ex-Dividend Date,
such adjustment to become effective immediately prior to the opening of
business on the day following fifteenth Trading Day after the Ex-Dividend
Date; provided that if (x) the average of the Closing Sale Prices of the
Common Stock for the ten (10) Trading Days commencing on and including the
fifth Trading Day after the Ex-Dividend Date minus (y) the fair market
value of the securities distributed in respect of each share of Common
Stock for which this Section 8(g) applies (as calculated in Section 8(g)(i)
above) is less than $1.00, then the adjustment provided by for by this
Section 8(g) shall not be made and in lieu thereof the provisions of
Section 9 shall apply to such distribution.
(h) In case of a tender or exchange offer made by a Person other
than the Corporation or any Subsidiary of the Corporation for an
amount that increases the offeror's ownership of Common Stock to more
than 25% of the Common Stock outstanding and shall involve the payment
by such Person of consideration per share of Common Stock having a
Fair Market Value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of
the Board of Directors) that as of the last time (the "Offer
Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been amended) exceeds the
Closing Sale Price of the Common Stock on the Trading Day next
succeeding the Offer Expiration Time, and in which, as of the Offer
Expiration Time the Board of Directors is not recommending rejection
of the offer, 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 Offer Expiration Time by a fraction,
(i) the numerator of which shall be the sum of (x) the Fair
Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders 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 Offer Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Accepted Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any
25
Accepted Purchased Shares) at the Offer Expiration Time and the
Closing Sale Price of the Common Stock on the Trading Day next
succeeding the Offer Expiration Time, and
(ii) the denominator of which shall be the number of shares
of Common Stock outstanding (including any tendered or exchanged
shares) at the Offer Expiration Time multiplied by the Closing
Sale Price of the Common Stock on the Trading Day next succeeding
the Offer Expiration Time,
such adjustment to become effective immediately prior to the opening
of business on the day following the Offer Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any
such tender or exchange offer, but such Person is permanently
prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if
such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 8(h) shall not be
made if, as of the Offer Expiration Time, the offering documents with
respect to such offer disclose a plan or intention to cause the
Corporation to engage in any transaction described in Section 9.
(i) The Corporation may make such increases in the
Conversion Rate in addition to those required by Sections 8(a),
(b), (c), (d), (e), (f) , (g) and (h) as the Board of Directors
considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights
to acquire stock) or from any event treated as such for income
tax purposes. To the extent permitted by applicable law, the
Corporation from time to time may increase the Conversion Rate by
any amount for any period of time if the Board of Directors shall
have made a determination that such increase would be in the best
interests of the Corporation, which determination shall be
conclusive. Whenever the Conversion Rate is increased pursuant to
the preceding sentence, the Corporation shall mail to holders of
the Series C Convertible Preferred Stock a notice of the increase
prior to the date the increased Conversion Rate takes effect, and
such notice shall state the increased Conversion Rate and the
period during which they will be in effect.
(j) No adjustment in the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of
at least one percent (1%) in such rate; provided that any
adjustments that by reason of this Section 8(j) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 8
shall be made by the Corporation and shall be made to the nearest
cent or to the nearest one-ten thousandth (1/10,000) of a share,
as the case may be. No adjustment need be made for rights to
purchase Common Stock pursuant to a Corporation plan for
reinvestment of dividends or interest or, except as set forth in
this Section 8, for any issuance of Common Stock or convertible
or exchangeable securities or rights to purchase Common Stock or
convertible
26
or exchangeable securities. To the extent the Securities become
convertible into cash, assets, property or securities (other than
Capital Stock of the Corporation), subject to Section 9, no adjustment
need be made thereafter as to the cash, assets, property or such
securities. Dividends will not accrue on any cash into which the
Series C Convertible Preferred Stock is convertible.
(k) Whenever the Conversion Rate is adjusted as herein provided,
the Corporation shall promptly file with the Conversion 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. Unless and until a responsible officer of the
Conversion Agent shall have received such Officer's certificate, the
Conversion Agent shall not be deemed to have knowledge of any
adjustment of the Conversion Rate and may assume that the last
Conversion Rate of which it has knowledge is still in effect. Promptly
after delivery of such certificate, the Corporation shall prepare a
notice of such adjustment of the Conversion Rate setting forth the
adjusted Conversion Rate and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the
Conversion Rate to the each holder of Series C Convertible Preferred
Stock at his last address appearing on the register within twenty (20)
days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.
(l) For purposes of this Section 8, the number of shares of
Common Stock at any time outstanding shall not include shares held in
the treasury of the Corporation, unless such treasury shares
participate in any distribution or dividend that requires an
adjustment pursuant to this Section 8, but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock.
9. Effect of Reclassification, Consolidation, Merger or Sale on
Conversion Privilege. If any of the following events occur, namely (i) any
reclassification or change of the outstanding shares of Common Stock (other
than a subdivision or combination to which Section 8(c) applies), (ii) any
consolidation, merger or combination of the Corporation with another Person
as a result of which holders of Common Stock shall be entitled to receive
stock, other securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the
Corporation to any other Person as a result of which holders of Common
Stock shall be entitled to receive stock, other securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then each share of Series C Convertible Preferred Stock shall
be convertible into the kind and amount of shares of stock, other
securities or other property or assets (including cash) receivable upon
such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such Series C Convertible Preferred Stock (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Series C Convertible Preferred Stock)
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance
27
assuming such holder of Common Stock did not exercise his rights of
election, if any, as to the kind or amount of stock, other securities or
other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance (provided that, if the kind or amount of stock, other securities
or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of
which such rights of election shall not have been exercised ("non-electing
share"), then for the purposes of this Section 9 the kind and amount of
stock, other securities or other property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance for 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).
(b) The Corporation shall cause notice of the application of this
9 within twenty (20) days after the occurrence of the events specified
in Section 9(a) and shall issue a press release containing such
information and publish such information on its website on the World
Wide Web. Failure to deliver such notice shall not affect the legality
or validity of such supplemental indenture.
(c) The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances, and the provisions of Section 8
shall apply to any shares of Capital Stock received by the holders of
Common Stock in any such reclassification, change, consolidation,
merger, combination, sale or conveyance.
(d) If this Section 9 applies to any event or occurrence, Section
8 shall not apply.
10. Rights Issued in Respect of Common Stock Issued Upon Conversion.
Each share of Common Stock issued upon conversion of the Series C
Convertible Preferred Stock shall be entitled to receive the appropriate
number of common stock or preferred stock purchase rights, as the case may
be, including without limitation, the rights under the Rights Agreement
(collectively, the "Rights"), if any, that shares of Common Stock are
entitled to receive and the certificates representing the Common Stock
issued upon such conversion shall bear such legends, if any, in each case
as may be provided by the terms of any shareholder rights agreement adopted
by the Corporation, as the same may be amended from time to time (in each
case, a "Rights Plan"). Provided that such Rights Plan requires that each
share of Common Stock issued upon conversion of Series C Convertible
Preferred Stock at any time prior to the distribution of separate
certificates representing the Rights be entitled to receive such Rights,
then, notwithstanding anything else to the contrary in this Certificate,
there shall not be any adjustment to the conversion privilege or Conversion
Rate as a result of the issuance of Rights, but an adjustment to the
Conversion Rate shall be made pursuant to Section 8(d) upon the separation
of the Rights from the Common Stock.
11. Fundamental Change.
28
(a) Repurchase Right. If there shall occur a Fundamental Change,
shares of Series C Convertible Preferred Stock shall be purchased by
the Corporation at the option of the holders thereof as of the date
specified by the Corporation that is not less than 20 Business Days
nor more than 35 Business Days after the occurrence of the Fundamental
Change (the "Fundamental Change Purchase Date"), subject to
satisfaction by or on behalf of any holder of the requirements set
forth in Section 11(c). The Purchase Price shall be paid, at the
option of the Corporation, in cash, shares of Common Stock, or any
combination thereof; provided that the Corporation shall not be
permitted to pay all or any portion of the Purchase Price in shares of
Common Stock unless:
(i) the Corporation shall have given timely notice pursuant
to Section 11(b) hereof of its intention to purchase all or a
specified percentage of the Preferred Shares with shares of
Common Stock as provided herein;
(ii) the Corporation shall have registered such shares of
Common Stock under the Securities Act and the Exchange Act, in
each case, if required;
(iii) such shares of Common Stock have been approved for
listing of on a national securities exchange or have been
approved for quotation in an inter-dealer quotation system of any
registered United States national securities association; and
(iv) any necessary qualification or registration under
applicable state securities laws have been obtained, if required;
provided further that if the Corporation shall be prohibited under any
agreements applicable to it from paying the Purchase Price in cash, or an
event of default (howsoever described) shall arise under any such agreement
upon the payment of the Purchase Price in cash, then, notwithstanding any
notice by the Corporation to the contrary, the Corporation shall, to the
extent not prohibited by such agreements and applicable law, pay the
Purchase Price in Common Stock or, in the case of a merger in which the
Corporation is not the surviving Person, Common Stock of the surviving
Person or its direct or indirect parent. If the foregoing conditions to pay
the Purchase Price in shares of Common Stock are not satisfied with respect
to any holder or holders of Series C Convertible Preferred Stock prior to
the close of business on the last day prior to the Fundamental Change
Purchase Date and the Corporation has elected to purchase the Series C
Convertible Preferred Stock pursuant to this Section through the issuance
of shares of Common Stock, then, notwithstanding any election by the
Corporation to the contrary, the Corporation shall pay the entire Purchase
Price of the Series C Convertible Preferred Stock of such holder or holders
in cash.
(b) Notice to Holders. Within 15 Business Days after the
occurrence of a Fundamental Change, the Corporation shall mail a
written notice of the Fundamental Change to each holder, issue a press
release containing such notice and publish such notice on its website
on the World
29
Wide Web. The notice shall include the form of a Fundamental Change
Purchase Notice to be completed by the holder and shall state:
(i) the date of such Fundamental Change and, briefly, the
events causing such Fundamental Change;
(ii) the date by which the Fundamental Change Purchase
Notice pursuant to this Section 11 must be given;
(iii) the Fundamental Change Purchase Date;
(iv) the Purchase Price that will be payable with respect to
the shares of Series C Convertible Preferred Stock as of the
Fundamental Change Purchase Date, and whether such Purchase Price
will be paid in cash, shares of Common Stock, or, if a
combination thereof, the percentages of the Purchase Price in
respect of which the Corporation will pay in cash and shares of
Common Stock;
(v) the name and address of each Paying Agent and Conversion
Agent;
(vi) the Conversion Rate and any adjustments thereto;
(vii) that Series C Convertible Preferred Stock as to which
a Fundamental Change Purchase Notice has been given may be
converted into Common Stock pursuant to this Certificate only to
the extent that the Fundamental Change Purchase Notice has been
withdrawn in accordance with the terms of this Certificate;
(viii) the procedures that the holder of Series C
Convertible Preferred Stock must follow to exercise rights under
this Section 11; and
(ix) the procedures for withdrawing a Fundamental Change
Purchase Notice, including a form of notice of withdrawal.
If any of the Series C Convertible Preferred Stock is in the form of Global
Preferred Shares, then the Corporation shall modify such notice to the
extent necessary to accord with the procedures of the Depositary applicable
to the purchase of Global Preferred Shares.
(c) Conditions to Purchase. (i) A holder of shares of Series C
Convertible Preferred Stock may exercise its rights specified in
Section 11(a) upon delivery of a written notice (which shall be in
substantially the form included as an attachment to the Series C
Convertible Preferred Stock (attached as Exhibit E hereto) and which
may be delivered by letter, overnight courier, hand delivery,
facsimile transmission or in any other written form and, in the case
of Global Preferred Shares, may be delivered electronically or by
other means in accordance with the Depositary's
30
customary procedures) of the exercise of such rights (a "Fundamental
Change Purchase Notice") to any Transfer Agent at any time prior to
the close of business on the Business Day immediately before the
Fundamental Change Purchase Date.
(ii) The delivery of such share of Series C Convertible
Preferred Stock to the Transfer Agent (together with all
necessary endorsements) at the office of such Transfer Agent
shall be a condition to the receipt by the holder of the
Fundamental Change Purchase Price.
(iii) Any purchase by the Corporation contemplated pursuant
to the provisions of this Section 11(c) shall be consummated by
the delivery of the consideration to be received by the holder
promptly following the later of the Fundamental Change Purchase
Date and the time of delivery of such share of Series C
Convertible Preferred Stock to the Transfer Agent in accordance
with this Section 11(c).
(d) Withdrawal of Fundamental Change Notwithstanding anything
herein to the contrary, any holder of Series C Convertible Preferred
Stock delivering to a Transfer Agent the Fundamental Change Purchase
Notice shall have the right to withdraw such Fundamental Change
Purchase Notice in whole or as to a portion thereof that is a share of
Series C Convertible Preferred Stock or an integral multiple thereof
at any time prior to the close of business on the Business Day before
the Fundamental Change Purchase Date by delivery of a written notice
of withdrawal to the Transfer Agent in accordance with provisions of
this 11(d). The Transfer Agent shall promptly notify the Corporation
of the receipt by it of any Fundamental Change Purchase Notice or
written withdrawal thereof. A Fundamental Change Purchase Notice may
be withdrawn by means of a written notice of withdrawal delivered to
the office of the Transfer Agent in accordance with the Fundamental
Change Purchase Notice at any time prior to the close of business on
the applicable Fundamental Change Purchase Date specifying:
(i) if certificated shares of Series C Convertible Preferred
Stock have been issued, the certificate numbers for such shares
in respect of which such notice of withdrawal is being submitted,
or if not, such information as required by the Depositary;
(ii) the number of shares of Series C Convertible Preferred
Stock, in integral multiples, with respect to which such notice
of withdrawal is being submitted; and
(iii) the number of shares of Series C Convertible Preferred
Stock, if any, that remain subject to the original Fundamental
Change Purchase Notice and have been or will be delivered for
purchase by the Corporation.
31
The Transfer Agent will promptly return to the respective holders thereof
any shares of Series C Convertible Preferred Stock with respect to which a
Fundamental Change Purchase Notice has been withdrawn in compliance with
this Certificate, in which case, upon such return, the Fundamental Change
Purchase Notice with respect thereto shall be deemed to have been
withdrawn.
(e) Global Preferred Shares. Anything herein to the contrary
notwithstanding, in the case of Global Preferred Shares, any
Fundamental Change Purchase Notice may be delivered or withdrawn and
the shares of Series C Convertible Preferred Stock in respect of such
Global Preferred Shares may be surrendered or delivered for purchase
in accordance with the applicable procedures of the Depositary as in
effect from time to time.
(f) Effect of Fundamental Change Purchase Notice. Upon receipt by
the Transfer Agent of the Fundamental Change Purchase Notice, the
holder of the shares of Series C Convertible Preferred Stock in
respect of which such Fundamental Change Purchase Notice was given
shall (unless such Fundamental Change Purchase Notice is withdrawn as
specified below) thereafter be entitled to receive the Purchase Price
with respect to such shares of Series C Convertible Preferred Stock,
subject to 11(c) hereof. Such Purchase Price shall be paid to such
holder promptly following the later of (a) the Fundamental Change
Purchase Date with respect to such shares of Series C Convertible
Preferred Stock and (b) the time of delivery of such shares of Series
C Convertible Preferred Stock to the Transfer Agent by the holder
thereof in the manner required by this Section. Shares of Series C
Convertible Preferred Stock in respect of which a Fundamental Change
Purchase Notice has been given by the holder thereof may not be
converted into Common Stock on or after the date of the delivery of
such Fundamental Change Purchase Notice unless such Fundamental Change
Purchase Notice has first been validly withdrawn as specified in
Section 11(d) above.
(g) Payment of Purchase Price in Common Stock. Payment of the
specified portion of the Purchase Price in shares of Common Stock
pursuant to Section 11(a) hereof shall be made by the issuance of a
number of shares of Common Stock equal to the quotient obtained by
dividing (i) the portion of the Purchase Price, as the case may be, to
be paid in shares of Common Stock by (ii) 97.5% of the average of the
Closing Sale Prices of the Common Stock for the 5 Trading Days ending
on the third Trading Day prior to the Fundamental Change Purchase Date
(appropriately adjusted to take into account the occurrence, during
such period of any event described in Section 8). The Corporation will
not issue fractional shares of Common Stock in payment of the Purchase
Price. Instead, the Corporation will pay cash based on the Closing
Sale Price for all fractional shares on the Fundamental Change
Purchase Date. If a holder of Series C Convertible Preferred Stock
elects to have more than one share of Series C Convertible Preferred
Stock purchased, the number of shares of Common Stock shall be based
on the aggregate number of shares of Series C Convertible Preferred
Stock to be purchased. Upon determination of the actual number of
shares of Common Stock to be issued upon repurchase of Series C
Convertible Preferred Stock, the
32
Corporation shall be required to disseminate a press release through
Dow Jones & Corporation, Inc. or Bloomberg Business News containing
this information or publish the information on the Corporation's Web
site or through such other public medium as the Corporation may use at
that time.
(h) Deposit of Purchase Price. Prior to 11:00 a.m. (New York City
time) on the Business Day immediately following the Fundamental Change
Purchase Date, the Corporation shall deposit with the Paying Agent an
amount of cash (in immediately available funds if deposited on such
Business Day), Common Stock, or combination of cash and Common Stock,
as applicable, sufficient to pay the aggregate Purchase Price of all
shares of Series C Convertible Preferred Stock or portions thereof
which are to be purchased as of the Fundamental Change Purchase Date.
The manner in which the deposit required by this Section 11(h) is made
by the Corporation shall be at the option of the Corporation,
provided, however, that such deposit shall be made in a manner such
that the Paying Agent shall have immediately available funds on the
date of deposit. If a Paying Agent holds, in accordance with the terms
hereof, cash, Common Stock or cash and Common Stock, as applicable,
sufficient to pay the Purchase Price of any share of Series C
Convertible Preferred Stock for which a Fundamental Change Purchase
Notice has been tendered and not withdrawn in accordance with this
Certificate on the Business Day following the Fundamental Change
Purchase Date then, immediately after such Fundamental Change Purchase
Date, such share of Series C Convertible Preferred Stock will cease to
be outstanding, dividends (including Special Dividends) will cease to
accrue and the rights of the holder in respect thereof shall terminate
(other than the right to receive the Purchase Price as aforesaid). The
Corporation shall publicly announce the number of shares of Series C
Convertible Preferred Stock purchased as a result of such Fundamental
Change on or as soon as practicable after the Fundamental Change
Purchase Date.
(i) Series C Convertible Preferred Stock Purchased in Part. Upon
surrender of a certificate or certificates representing shares of the
Series C Convertible Preferred Stock that is or are purchased in part,
the Corporation shall execute and the Transfer Agent shall
authenticate and deliver to the holder, a new certificate of
certificates representing shares of the Series C Convertible Preferred
Stock in an amount equal to the unpurchased portion of the shares of
Series C Convertible Preferred Stock surrendered for partial purchase.
(j) Repayment to the Corporation. The Paying Agent shall return
to the Corporation any cash that remains unclaimed for two years,
subject to applicable unclaimed property law, together with interest,
if any, thereon held by them for the payment of the Fundamental Change
Purchase Price; provided, however, that to the extent that the
aggregate amount of cash deposited by the Corporation pursuant to this
Section exceeds the aggregate Purchase Price of the Series C
Convertible Preferred Stock or portions thereof which the Corporation
is obligated to purchase as of the Fundamental Change Purchase Date,
then on the Business Day following the Fundamental Change Purchase
Date, the
33
Paying Agent shall return any such excess to the Corporation.
Thereafter, any holder entitled to payment must look to the
Corporation for payment as general creditors, unless an applicable
abandoned property law designates another Person.
12. Voting Rights.
(a) The holders of record of shares of the Series C Convertible
Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this Section 7, as otherwise provided in the
Corporation's Restated Certificate of Incorporation, or as otherwise
provided by law.
(b) The affirmative vote of holders of at least two-thirds of the
outstanding shares of the Series C Convertible Preferred Stock and all
other preferred stock ranking on a parity with the Series C
Convertible Preferred Stock with like voting rights , voting as a
single class, in person or by proxy, at a special meeting called for
the purpose, or by written consent in lieu of meeting, shall be
required to alter, repeal or amend, whether by merger, consolidation,
combination, reclassification or otherwise, any provisions of the
Restated Certificate of Incorporation if the amendment would amend,
alter or affect the powers, preferences or rights of the Preferred
Stock, so as to adversely affect the holders thereof, including,
without limitation, the creation of, or increase in the authorized
number of, shares of any class or series of Senior Stock; provided
however, that (i) any increase in the amount of the authorized common
stock or authorized preferred stock or the creation and issuance of
other series of common stock or preferred stock ranking on a parity
with or junior to the preferred stock as to dividends and upon
liquidation will not be deemed to materially and adversely affect such
powers, preference or special rights; and (ii) the creation of, or
increase in the authorized number of, shares of any class or series of
Senior Stock shall be deemed to materially and adversely affect such
powers, preference or special rights.
(c) If at any time (1) dividends on any shares of Series C
Convertible Preferred Stock or any other class or series of Parity
Stock having like voting rights shall be in arrears for dividend
periods, whether or not consecutive, containing in the aggregate a
number of days equivalent to six calendar quarters or (2) the
Corporation shall have failed to pay the Redemption Price when due or
the Purchase Price when due, then, in each case, the holders of shares
of Series C Convertible Preferred Stock (voting separately as a class
with all other series of preferred stock ranking on parity with the
Series C Convertible Preferred Stock upon which like voting rights
have been conferred and are exercisable) will be entitled to elect at
the next annual meeting of the stockholders of the Corporation or at a
special meeting called for such purpose, whichever is earlier, two of
the authorized number of the Corporation's directors (each, a "Series
C Convertible Preferred Stock Director") at the next annual meeting of
stockholders and each subsequent meeting until all dividends
accumulated on the Series C Convertible Preferred Stock have been
fully
34
paid or set aside for payment. The term of office of such Series C
Convertible Preferred Stock Directors will terminate immediately upon
the termination of the right of the holders of Series C Convertible
Preferred Stock to vote for directors. Each holder of shares of the
Series C Convertible Preferred Stock will have one vote for each share
of Series C Preferred Stock held. At any time after voting power to
elect directors shall have become vested and be continuing in the
holders of the Series C Convertible Preferred Stock pursuant to this
12(c), or if a vacancy shall exist in the offices of Series C
Convertible Preferred Stock Directors, the Board of Directors may, and
upon written request of the holders of record of at least 25% of the
Outstanding Series C Convertible Preferred Stock addressed to the
Chairman of the Board of the Corporation shall, call a special meeting
of the holders of the Series C Convertible Preferred Stock (voting
separately as a class with all other series of preferred stock ranking
on parity with the Series C Convertible Preferred Stock upon which
like voting rights have been conferred and are exercisable) for the
purpose of electing the Series C Convertible Preferred Stock Directors
that such holders are entitled to elect. At any meeting held for the
purpose of electing Series C Convertible Preferred Stock Directors,
the presence in person or by proxy of the holders of at least a
majority of the Outstanding Series C Convertible Preferred Stock shall
be required to constitute a quorum of such Series C Convertible
Preferred Stock. Any vacancy occurring in the office of a Series C
Convertible Preferred Stock Director may be filled by the remaining
Series C Convertible Preferred Stock Director unless and until such
vacancy shall be filled by the holders of the Series C Convertible
Preferred Stock and other Parity Stock having like voting rights, if
any. The Series C Convertible Preferred Stock Directors shall agree,
prior to their election to office, to resign upon any termination of
the right of the holders of Series C Convertible Preferred Stock to
vote as a class for Series C Convertible Preferred Stock Directors as
herein provided, and upon such termination, the Series C Convertible
Preferred Stock Directors then in office shall forthwith resign.
13. Transfer Agent and Registrar. The duly appointed Transfer Agent
and Registrar for the Series C Convertible Preferred Stock shall be UMB
Bank, N.A.. The Corporation may, in its sole discretion, remove the
Transfer Agent in accordance with the agreement between the Corporation and
the Transfer Agent; provided that the Corporation shall appoint a successor
transfer agent who shall accept such appointment prior to the effectiveness
of such removal.
14. Currency. All shares of Series C Convertible Preferred Stock shall
be denominated in U.S. currency, and all payments and distributions thereon
or with respect thereto shall be made in U.S. currency. All references
herein to "$"or "dollars" refer to U.S. currency.
15. Form. Series C Convertible Preferred Stock shall be issued in the
form of one or more permanent global shares of Series C Convertible
Preferred Stock in definitive, fully registered form with the global legend
(the "Global Shares Legend") and, until such time as otherwise determined
by the Corporation and the Registrar, the restricted shares legend (the
"Restricted Shares Legend"), each as set forth on the form of Series C
Convertible Preferred
35
Stock certificate attached hereto as Exhibit A (each, a "Global Preferred
Share"), which is hereby incorporated in and expressly made a part of this
Certificate. The Global Preferred Share may have notations, legends or
endorsements required by law, stock exchange rules, agreements to which the
Corporation is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Corporation). The
Global Preferred Share shall be deposited on behalf of the holders of the
Series C Convertible Preferred Stock represented thereby with the
Registrar, at its New York office, as custodian for DTC or a Depositary,
and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Corporation and countersigned and
registered by the Registrar as hereinafter provided. The aggregate number
of shares represented by each Global Preferred Share may from time to time
be increased or decreased by adjustments made on the records of the
Registrar and the Depositary or its nominee as hereinafter provided. This
Section 15(a) shall apply only to a Global Preferred Share deposited with
or on behalf of the Depositary. The Corporation shall execute and the
Registrar shall, in accordance with this Section, countersign and deliver
initially one or more Global Preferred Shares that (i) shall be registered
in the name of Cede & Co. or other nominee of the Depositary and (ii) shall
be delivered by the Registrar to Cede & Co. or pursuant to instructions
received from Cede & Co. or held by the Registrar as custodian for the
Depositary pursuant to an agreement between the Depositary and the
Registrar. Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Certificate with respect to any Global
Preferred Share held on their behalf by the Depositary or by the Registrar
as the custodian of the Depositary or under such Global Preferred Share,
and the Depositary may be treated by the Corporation, the Registrar and any
agent of the Corporation or the Registrar as the absolute owner of such
Global Preferred Share for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Corporation, the Registrar or
any agent of the Corporation or the Registrar from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise
of the rights of a holder of a beneficial interest in any Global Preferred
Share. Owners of beneficial interests in Global Preferred Shares shall not
be entitled to receive physical delivery of certificated shares of Series C
Convertible Preferred Stock, unless (x) DTC is unwilling or unable to
continue as Depositary for the Global Preferred Share and the Corporation
does not appoint a qualified replacement for DTC within 90 days, (y) DTC
ceases to be a "clearing agency" registered under the Exchange Act or (z)
the Corporation decides to discontinue the use of book-entry transfer
through DTC (or any successor Depositary). In either such case, the Global
Preferred Share shall be exchanged in whole for definitive shares of Series
C Convertible Preferred Stock in registered form, with the same terms and
of an equal aggregate Liquidation Preference, and bearing a Restricted
Shares Legend (unless the Corporation determines otherwise in accordance
with applicable law). Definitive shares of Series C Convertible Preferred
Stock shall be registered in the name or names of the Person or Person
specified by DTC in a written instrument to the Registrar.
36
(b) (i) An Officer shall sign the Global Preferred Share for the
Corporation, in accordance with the Corporation's bylaws and
applicable law, by manual or facsimile signature.
(ii) If an Officer whose signature is on a Global Preferred
Share no longer holds that office at the time the Transfer Agent
authenticates the Global Preferred Share, the Global Preferred
Share shall be valid nevertheless.
(iii) A Global Preferred Share shall not be valid until an
authorized signatory of the Transfer Agent manually countersigns
Global Preferred Share. The signature shall be conclusive
evidence that the Global Preferred Share has been authenticated
under this Certificate. Each Global Preferred Share shall be
dated the date of its authentication.
16. Registration; Transfer. (a) The Series C Convertible Preferred
Stock and the Common Stock issuable upon conversion of the shares of Series
C Convertible Preferred Stock have not been registered under the Securities
Act and may not be resold, pledged or otherwise transferred prior to the
date when they no longer constitute "restricted securities" for purposes of
Rule 144(k) under the Securities Act other than (i) to the Corporation,
(ii) to "qualified institutional buyers" pursuant to and in compliance with
Rule 144A under the Securities Act ("Rule 144A"), (iii) pursuant to an
exemption from the registration requirements of the Securities Act provided
by Rule 144 under the Securities Act or (iv) pursuant to an effective
registration statement under the Securities Act, in each case, in
accordance with any applicable securities laws of any state of the United
States.
(b) Notwithstanding any provision to the contrary herein, so long
as a Global Preferred Share remains outstanding and is held by or on
behalf of the Depositary, transfers of a Global Preferred Share, in
whole or in part, or of any beneficial interest therein, shall only be
made in accordance with this Section 16; provided, however, that a
beneficial interest in a Global Preferred Share bearing the Restricted
Shares Legend may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in a different Global
Preferred Share not bearing the Restricted Shares Legend in accordance
with the transfer restrictions set forth in the Restricted Shares
Legend and the provisions set forth in Section 16(c)(ii).
(c) (i) Except for transfers or exchanges made in accordance with
Section 16(c)(ii), transfers of a Global Preferred Share shall be
limited to transfers of such Global Preferred Share in whole, but not
in part, to nominees of the Depositary or to a successor of the
Depositary or such successor's nominee.
(ii) If an owner of a beneficial interest in a Global
Preferred Share deposited with the Depositary or with the
Registrar as custodian for the Depositary wishes at any time to
37
transfer its interest in such Global Preferred Share bearing the
Restricted Shares Legend to a Person who is eligible to take
delivery thereof in the form of a beneficial interest in a Global
Preferred Share not bearing the Restricted Shares Legend, such
owner may, subject to the rules and procedures of the Depositary,
cause the exchange of such interest for a new beneficial interest
in the applicable Global Preferred Share. Upon receipt by the
Registrar at its office in The City of New York of (A)
instructions from the holder directing the Registrar to transfer
its interest in the applicable Global Preferred Share, such
instructions to contain the name of the transferee and
appropriate account information, (B) a certificate in the form of
Certificate of Transfer on the reverse side of the form of Series
C Convertible Preferred Stock certificate attached hereto as
Exhibit B, given by the transferor, to the effect set forth
therein, and (C) such other certifications, legal opinions and
other information as the Corporation or the Registrar may
reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act, then the
Registrar shall instruct the Depositary to reduce or cause to be
reduced such Global Preferred Share bearing the Restricted Shares
Legend (in the form attached as Schedule A) by the number of
shares of the beneficial interest therein to be exchanged and to
debit or cause to be debited from the account of the Person
making such transfer the beneficial interest in the Global
Preferred Share that is being transferred, and concurrently with
such reduction and debit, the Registrar will instruct the
Depositary to increase or cause to be increased the applicable
Global Preferred Share not bearing the Restricted Shares Legend
by the aggregate number of shares being exchanged and to credit
or cause to be credited to the account of the transferee the
beneficial interest in the Global Preferred Share that is being
transferred.
(d) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration
Rights Agreement relating to the Series C Convertible Preferred Stock
and shares of Common Stock issuable on conversion of the Series C
Convertible Preferred Stock (collectively, the "Registrable
Securities") if shares of Series C Convertible Preferred Stock are
issued upon the transfer, exchange or replacement of Series C
Convertible Preferred Stock bearing the Restricted Shares Legend, or
if a request is made to remove such Restricted Shares Legend on Series
C Convertible Preferred Stock, the Series C Convertible Preferred
Stock so issued shall bear the Restricted Shares Legend and the
Restricted Shares Legend shall not be removed unless there is
delivered to the Corporation and the Registrar such satisfactory
evidence, which may include an opinion of counsel licensed to practice
law in the State of New York, as may be reasonably required by the
Corporation or the Registrar, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Rule 144
38
under the Securities Act or that such shares of Series C Convertible
Preferred Stock are not "restricted securities" within the meaning of
Rule 144 under the Securities Act. Upon provision of such satisfactory
evidence, the Registrar, at the direction of the Corporation, shall
countersign and deliver shares of Series C Convertible Preferred Stock
that do not bear the Restricted Shares Legend.
(e) The Corporation will refuse to register any transfer of
Series C Convertible Preferred Stock or any Common Stock issuable upon
conversion of the shares of Series C Convertible Preferred Stock that
is not made in accordance with the provisions of the Restricted Shares
Legend and the provisions of Rule 144A or pursuant to a registration
statement that has been declared effective under the Securities Act or
pursuant to an available exemption from the registration requirements
of the Securities Act; provided that the provisions of this paragraph
(e) shall not be applicable to any Series C Convertible Preferred
Stock that does not bear any Restricted Shares Legend or to any Common
Stock that does not bear the Common Share Legend.
(f) Common Stock issued upon a conversion of the Series C
Convertible Preferred Stock prior to the effectiveness of a Shelf
Registration Statement shall be delivered in certificated form and
shall bear the common share legend (the "Common Share Legend") set
forth in Exhibit C hereto and include on its reverse side the Form of
Certificate of Transfer for Common Stock set out in Exhibit D. If (i)
shares of Common Stock issued prior to the effectiveness of a Shelf
Registration Statement are to be registered in a name other than that
of the holder of Series C Convertible Preferred Stock or (ii) shares
of Common Stock represented by a certificate bearing the Common Share
Legend are transferred subsequently by such holder, then the holder
must deliver to the Registrar a certificate in substantially the form
of Exhibit D as to compliance with the restrictions on transfer
applicable to such Common Stock and the Registrar shall not be
required to register any transfer of such Common Stock not so
accompanied by a properly completed certificate. Such Common Share
Legend may be removed, and new certificates representing the Common
Stock may be issued, upon the presentation of satisfactory evidence
that such Common Share Legend is no longer required as described above
in paragraph (c) of this Section 16 with respect to the Series C
Convertible Preferred Stock.
17. Paying Agent and Conversion Agent.
(a) The Corporation shall maintain in the Borough of Manhattan,
City of New York, State of New York (i) an office or agency where
Series C Convertible Preferred Stock may be presented for payment (the
"Paying Agent") and (ii) an office or agency where Series C
Convertible Preferred Stock may be presented for conversion (the
"Conversion Agent"). The Transfer Agent shall act as Paying Agent and
Conversion Agent, unless another Paying Agent or Conversion Agent is
appointed by the Corporation. The Corporation may appoint the
Registrar,
39
the Paying Agent and the Conversion Agent and may appoint one or more
additional paying agents and one or more additional conversion agents
in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent and the term "Conversion Agent"
includes any additional conversion agent. The Corporation may change
any Paying Agent or Conversion Agent without prior notice to any
holder. The Corporation shall notify the Registrar of the name and
address of any Paying Agent or Conversion Agent appointed by the
Corporation. If the Corporation fails to appoint or maintain another
entity as Paying Agent or Conversion Agent, the Registrar shall act as
such. The Corporation or any of its Affiliates may act as Paying
Agent, Registrar, coregistrar or Conversion Agent.
(b) Payments due on the Series C Convertible Preferred Stock
shall be payable at the office or agency of the Corporation maintained
for such purpose in The City of New York and at any other office or
agency maintained by the Corporation for such purpose. Payments shall
be payable by United States dollar check drawn on, or wire transfer
(provided, that appropriate wire instructions have been received by
the Registrar at least 15 days prior to the applicable date of
payment) to a U.S. dollar account maintained by the holder with, a
bank located in New York City; provided that at the option of the
Corporation, payment of dividends may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in
the Series C Convertible Preferred Stock register. Notwithstanding the
foregoing, payments due in respect of beneficial interests in the
Global Preferred Share shall be payable by wire transfer of
immediately available funds in accordance with the procedures of the
Depositary.
18. Headings. The headings of the Sections of this Certificate are for
convenience of reference only and shall not define, limit or affect any of
the provisions hereof.
40
IN WITNESS WHEREOF, Kansas City Southern has caused this Certificate
of Designations to be signed and attested by the undersigned this fifth day
of May, 2003.
KANSAS CITY SOUTHERN
By: /s/ M.R. Haverty
---------------------------------
Name: Michael R. Haverty
Title: Chairman, President & CEO
[CORPORATE SEAL]
ATTEST:
By: /s/ Jay M. Nadlman
---------------------------------
Name: Jay M. Nadlman
Title: Associate General
Counsel and Corporate
Secretary
EXHIBIT A
FORM OF 4.25% REDEEMABLE CUMULATIVE CONVERTIBLE
PERPETUAL PREFERRED STOCK, SERIES C
Number: ___ ____________ Shares
CUSIP NO.: ______________
4.25% Redeemable Cumulative Convertible Perpetual Preferred Stock, Series C
(par value $1.00 per share)
(liquidation preference $500.00 per share)
OF
KANSAS CITY SOUTHERN
FACE OF SECURITY
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE CERTIFICATE
OF DESIGNATIONS REFERRED TO BELOW.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH KANSAS CITY SOUTHERN (THE "COMPANY") OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE RIGHTS OF THE COMPANY AND THE WITHIN
MENTIONED TRANSFER AGENT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER
AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
KANSAS CITY SOUTHERN, a Delaware corporation (the "Corporation"), hereby
certifies that Cede & Co. or registered assigns (the "Holder") is the registered
owner of fully paid and non-assessable shares of preferred stock of the
Corporation designated the 4.25% Redeemable Cumulative Convertible Perpetual
Preferred Stock, Series C, par value $1.00 per share and liquidation preference
$500.00 per share (the "Series C Convertible Preferred Stock"). The shares of
Series C Convertible Preferred Stock are transferable on the books and records
of the Registrar, in person or by a duly authorized attorney, upon surrender of
this certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Series C Convertible Preferred Stock represented hereby are issued and shall
in all respects be subject to the provisions of the Certificate of Designations
of the Corporation dated May 5, 2003, as the same may be amended from time to
time in accordance with its terms (the "Certificate of Designations").
Capitalized terms used herein but not defined shall have the respective meanings
given them in the Certificate of Designations. The Corporation will provide a
copy of the Certificate of Designations to a Holder without charge upon written
request to the Corporation at its principal place of business.
Reference is hereby made to select provisions of the Series C Convertible
Preferred Stock set forth on the reverse hereof, and to the Certificate of
Designations, which select provisions and the Certificate of Designations shall
for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Certificate of
Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication hereon has been
properly executed, the shares of Series C Convertible Preferred Stock evidenced
hereby shall not be entitled to any benefit under the Certificate of
Designations or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Kansas City Southern has executed this certificate as
of the date set forth below.
KANSAS CITY SOUTHERN
By:
-------------------------------
Name:
Title:
Dated: _______________
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the certificates representing shares of Preferred Stock
referred to in the within mentioned Certificate of Designations.
UMB Bank, N.A.,
as Transfer Agent
By:
-------------------------------
Name:
Title:Authorized Signatory
Dated: ____________________
REVERSE OF SECURITY
KANSAS CITY SOUTHERN
4.25% Redeemable Cumulative Convertible Perpetual Preferred Stock, Series C
Dividends on each share of Series C Convertible Preferred Stock shall be payable
in cash at a rate per annum set forth on the face hereof or as provided in the
Certificate of Designations.
The shares of Series C Convertible Preferred Stock shall be redeemable as
provided in the Certificate of Designations. The shares of Series C Convertible
Preferred Stock shall be convertible into the Corporation's Common Stock in the
manner and according to the terms set forth in the Certificate of Designations.
Upon a Fundamental Change, holders of shares of Series C Convertible Preferred
Stock will have the right to require the Corporation to purchase such shares in
the manner and according to the terms set forth in the Certificate of
Designations.
As required under Delaware law, the Corporation shall furnish to any Holder upon
request and without charge, a full summary statement of the designations, voting
rights preferences, limitations and special rights of the shares of each class
or series authorized to be issued by the Corporation so far as they have been
fixed and determined.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Series C Convertible Preferred Stock evidenced hereby to:
________________________________________________________________
________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________
(Insert address and zip code of assignee)
________________________________________________________________
________________________________________________________________
and irrevocably appoints:
________________________________________________________________
agent to transfer the shares of Series C Convertible Preferred Stock evidenced
hereby on the books of the Transfer Agent and Registrar. The agent may
substitute another to act for him or her.
Date: __________________
Signature: ______________________
(Sign exactly as your name appears on the other side of this Series C
Convertible Preferred Stock Certificate)
Signature Guarantee: _____________________1
_____________________
1 Signature must be guaranteed by an "eligible guarantor institution" (i.e.
a bank, stockbroker, savings and loan association or credit union) meeting the
requirements of the Registrar, which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("STAMP") or
other such "signature guaranteed program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series C Convertible Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion") _______
shares of 4.25% Redeemable Cumulative Convertible Perpetual Preferred Stock,
Series C (the "Series C Convertible Preferred Stock"), represented by stock
certificate No(s). __ (the "Series C Convertible Preferred Stock Certificates")
into shares of common stock, par value $0.01 per share ("Common Stock"), of
Kansas City Southern (the "Corporation") according to the conditions of the
Certificate of Designations establishing the terms of the Series C Convertible
Preferred Stock (the "Certificate of Designations"), as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the holder for any conversion, except for transfer taxes, if any. A copy of each
Series C Convertible Preferred Stock Certificate is attached hereto (or evidence
of loss, theft or destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Series C Convertible Preferred Stock shall be made pursuant to
registration of the Common Stock under the Securities Act of 1933 (the "Act") or
pursuant to an exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Certificate of Designations and the Series C Convertible Preferred
Stock, agrees to be bound by the terms of the Registration Rights Agreement.
The Corporation is not required to issue shares of Common Stock until the
original Series C Convertible Preferred Stock Certificate(s) (or evidence of
loss, theft or destruction thereof) to be converted are received by the
Corporation or its Transfer Agent. The Corporation shall issue and deliver
shares of Common Stock to an overnight courier not later than two business days
following receipt of the original Series C Convertible Preferred Stock
Certificate(s) to be converted.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designations.
Date of Conversion: __________________________________________
Applicable Conversion Rate: __________________________________
Number of shares of Convertible
Series C Convertible Preferred Stock to be Converted:
___________________________
Number of shares of Common
Stock to be Issued: _____________________________________
Signature: ____________________________________________________
Name: _________________________________________________________
Address:2 _____________________________________________________
Fax No.: ______________________________________________________
_______________
2 Address where shares of Common Stock and any other payments or
certificates shall be sent by the Corporation.
SCHEDULE A
SCHEDULE OF EXCHANGES FOR GLOBAL SECURITY
The initial number of shares of Series C Convertible Preferred Stock
represented by this Global Preferred Share shall be __________. The following
exchanges of a part of this Global Preferred Share have been made:
_____________________________________________________________________
Number of
shares
Amount of Amount of represented
decrease in increase in by this
number of number of Global
shares shares Preferred
represented represented Share
by this by this following Signature of
Date Global Global such authorized
of Preferred Preferred decrease or officer
Exchange Share Share increase of Registrar
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
__________ ___________ ____________ ____________ ______________
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
(Transfers pursuant to 16(c)(ii) or 16(e)
of the Certificate of Designations)
UMB Bank, N.A., as Transfer Agent
928 Grand Boulevard
Kansas City, MO 64106
Attn: Nancy Hoffman
Re: Kansas City Southern
4.25% Redeemable Cumulative Convertible Perpetual Preferred Stock,
Series C (the "Series C Convertible Preferred Stock")
Reference is hereby made to the Certificate of Designations relating to the
Series C Convertible Preferred Stock dated May 5, 2003, as such may be amended
from time to time (the "Certificate of Designations"). Capitalized terms used
but not defined herein shall have the respective meanings given them in the
Certificate of Designations.
This Letter relates to _____ shares of the Series C Convertible Preferred Stock
(the "Securities") which are held in the form of a Global Preferred Share
bearing the Restricted Shares Legend (CUSIP NO. ) with the Depository in the
name of [name of transferor] (the "Transferor") to effect the transfer of the
Securities.
In connection with such request, and in respect of the Series C Convertible
Preferred Stock, the Transferor does hereby certify that shares of the Series C
Convertible Preferred Stock are being transferred (i) in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction and (ii) in accordance with their terms:
CHECK ONE BOX BELOW, AS APPLICABLE:
(1) [ ] to a transferee that the Transferor reasonably believes is a qualified
institutional buyer, within the meaning of Rule 144A under the Securities Act,
purchasing for its own account or for the account of a qualified institutional
buyer in a transaction meeting the requirements of Rule 144A;
(2) [ ] pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available);
(3) [ ] in accordance with another exemption from the registration requirements
of the Securities Act (based upon an opinion of counsel if the Corporation so
requests);
(4) [ ] to the Corporation or a subsidiary thereof; or
(5) [ ] pursuant to a registration statement that has been declared effective
under the Securities Act.
Unless one of the boxes is checked, the Transfer Agent will refuse to register
any of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box (2) or
(3) is checked, the Transfer Agent shall be entitled to require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Corporation has reasonably requested
to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act.
[Name of Transferor]
By:___________________________
Name:
Title:
Dated:
cc: Kansas City Southern
P.O. Box 219335
Kansas City, Missouri 64121-9335
Attn: Corporate Secretary
EXHIBIT C
Form of Common Share Legend
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH KANSAS CITY
SOUTHERN (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE RIGHTS OF THE COMPANY AND THE WITHIN MENTIONED TRANSFER AGENT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."
EXHIBIT D
FORM OF CERTIFICATE OF TRANSFER
FOR COMMON STOCK
(Transfers pursuant to Section 16(f) of the
Certificate of Designations)
[Transfer Agent]
Attn:
Re: Kansas City Southern 4.25% Redeemable Cumulative Convertible Perpetual
Series C Convertible Preferred Stock (the "Series C Convertible Preferred
Stock")
Reference is hereby made to the Certificate of Designations relating to the
Series C Convertible Preferred Stock dated May 5, 2003, as such may be amended
from time to time (the "Certificate of Designations"). Capitalized terms used
but not defined herein shall have the respective meanings given them in the
Certificate of Designations.
This letter relates to ____ shares of Common Stock represented by the
accompanying certificate(s) that were issued upon conversion of the Series C
Convertible Preferred Stock and which are held in the name of [name of
transferor] (the "Transferor") to effect the transfer of such Common Stock.
In connection with such request and in respect of the shares of Common Stock,
the Transferor does hereby certify that the shares of Common Stock are being
transferred (i) in accordance with applicable securities laws of any state of
the United States or any other jurisdiction and (ii) in accordance with their
terms:
CHECK ONE BOX BELOW
(1) [ ] pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available);
(2) [ ] in accordance with another exemption from the registration requirements
of the Securities Act (based upon an opinion of counsel if the Corporation so
requests);
(3) [ ] to the Corporation or a subsidiary thereof; or
(4) [ ] pursuant to a registration statement that has been declared effective
under the Securities Act.
Unless one of the boxes is checked, the Transfer Agent will refuse to register
any of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box (1) or
(2) is checked, the Transfer Agent shall be entitled to require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Corporation has reasonably requested
to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act.
[Name of Transferor]
By: ____________________
Name:
Title:
Dated:
cc: Kansas City Southern
P.O. Box 219335
Kansas City, Missouri 64121-9335
Attn: Corporate Secretary
EXHIBIT E
FORM OF NOTICE OF ELECTION OF REDEMPTION
UPON A FUNDAMENTAL CHANGE
TO: KANSAS CITY SOUTHERN
The undersigned hereby irrevocably acknowledges receipt of a notice from
Kansas City Southern (the "Corporation") as to the occurrence of a Fundamental
Change with respect to the Corporation and requests and instructs the
Corporation to purchase _____ shares of Series C Convertible Preferred Stock in
accordance with the terms of the Certificate at the Purchase Price.
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto pursuant to the Certificate of Designations.
Dated: _____________
____________________
____________________
Signature(s)
NOTICE: The above signatures of the holder(s)
hereof must correspond with the name as written
upon the face of the Security in every particular
without alteration or enlargement or any change
whatever.
Aggregate Accreted Liquidation Preference to be
redeemed (if less than all):
____________________________
____________________________
Social Security or Other Taxpayer
Identification Number