CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES D CONVERTIBLE
PREFERRED STOCK
OF
TIME WARNER INC.
--------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
--------------------
TIME WARNER INC., a corporation organized and existing by virtue
of the General Corporation Law of the State of Delaware (as defined below, the
"Corporation"), does hereby certify that the following resolution was duly
adopted by action of the Board of Directors of the Corporation at a meeting duly
held on the 16th day of March, 1995.
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of Section
2 of Article IV of the Restated Certificate of Incorporation of the Corporation,
as amended from time to time (the "Certificate of Incorporation"), and Section
151(g) of the General Corporation Law of the State of Delaware, such Board of
Directors hereby creates, from the authorized shares of Preferred Stock, par
value $1.00 per share (the "Preferred Stock"), of the Corporation authorized to
be issued pursuant to the Certificate of Incorporation, a series of Preferred
Stock, and hereby fixes the voting powers, designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as follows:
The series of Preferred Stock hereby established shall consist of
11,000,000 shares designated as Series D Convertible Preferred Stock. The
rights, preferences and limitations of such series shall be as follows:
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1. Definitions. As used herein, the following
terms shall have the indicated meanings:
1.1 "Accrued Dividend Amount" shall mean
the aggregate amount of accrued and unpaid dividends on a share of Series D
Stock to and including the Conversion Date, except that if the Conversion Date
shall occur after a Record Date and prior to a related Dividend Payment Date,
the Accrued Dividend Amount shall not include any accrued and unpaid dividends
for the period from and after the most recent Dividend Payment Date.
1.2 "Board of Directors" shall mean the
Board of Directors of the Corporation or, with respect to any action to be taken
by the Board of Directors, any committee of the Board of Directors duly
authorized to take such action.
1.3 "Capital Stock" shall mean any and all
shares of corporate stock of a Person (however designated and whether
representing rights to vote, rights to participate in dividends or distributions
upon liquidation or otherwise with respect to such Person, or any division or
subsidiary thereof, or any joint venture, partnership, corporation or other
entity).
1.4 "Certificate" shall mean the
certificate of the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, of Series D Convertible Preferred Stock filed with
respect to this resolution with the Secretary of State of the State of Delaware
pursuant to Section 151 of the General Corporation Law of the State of Delaware.
1.5 "Change of Control" and "Change of
Control Date" shall have the following meanings: "Change of Control" shall mean
the occurrence of one or both of the following events: (a) individuals who would
constitute a majority of the members of the Board of Directors elected at any
meeting of stockholders or by written consent (without regard to any members of
the Board of Directors elected pursuant to the terms of any series of Preferred
Stock) shall be elected to the Board of Directors and the election or the
nomination for election by the Corporation's stockholders of such directors was
not approved by a vote of at least a majority of the directors in office
immediately prior to such election (in which event "Change of Control
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Date" shall mean the date of such election) or (b) a Person or group of Persons
acting in concert as a partnership, limited partnership, syndicate or other
group within the meaning of Rule 13d-3 under the Exchange Act (the "Acquiring
Person") shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases, share repurchases or redemptions
or otherwise, have become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 40% or more of the outstanding shares
of Common Stock (in which event "Change of Control Date" shall mean the date
of the event resulting in such 40% ownership).
1.6 "Closing Price" of the Common Stock
shall mean the last reported sale price of the Common Stock (regular way) as
shown on the Composite Tape of the NYSE, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices on the NYSE, or, if
the Common Stock is not listed or admitted to trading on the NYSE, on the
principal national securities exchange on which such stock is listed or admitted
to trading, or, if it is not listed or admitted to trading on any national
securi- ties exchange, the last reported sale price of the Common Stock, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, in either case as reported by NASDAQ.
1.7 "Common Dividend Deficiency" shall be
applicable in the event that a Conversion Date shall fall after a record date
and prior to the related payment date for a regularly scheduled cash dividend on
the Common Stock (the "Common Dividend Payment Date"), and in such event shall
mean the product of (i) the Conversion Rate, (ii) the amount per share of Common
Stock of the regularly scheduled cash dividend for which the record date has
been set but a payment date has not yet occurred and (ii) a fraction (A) the
numerator of which is the number of calendar days from and excluding the
Conversion Date (or in the event the Conversion Date falls after a Record Date
and on or prior to a related Dividend Payment Date, from and excluding the
Dividend Payment Date) to and including the Common Dividend Payment Date and (B)
the denominator of which is 91 (provided that such fraction shall not be greater
than one (1)).
1.8 "Common Dividend Excess" shall be
applicable in all circumstances where a Common Dividend Deficiency is not
applicable, and in such event shall mean the product of (i) the Conversion Rate,
(ii) the regular
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quarterly cash dividend per share, if any, paid by the
Corporation on the Common Stock (the "Historical Dividend") on the most recent
dividend payment date for the Common Stock (the "Prior Dividend Payment Date")
occurring during the four months immediately preceding the Conversion Date and
(iii) a fraction (A) the numerator of which is the number of calendar days from
and excluding (1) the Prior Dividend Payment Date to and including (2) the
Conversion Date (or in the event the Conversion Date falls after a Record Date
and on or prior to a related Dividend Payment Date, to and including the
Dividend Payment Date) and (B) the denominator of which is 91 days (provided
that in no event shall the fraction be greater than one (1)).
1.9 "Common Stock" shall mean the class of
Common Stock, par value $1.00 per share, of the Corporation authorized at the
date of the Certificate, or any other class of stock resulting from (x)
successive changes or reclassifications of such Common Stock consisting of
changes in par value, or from par value to no par value, (y) a subdivision or
combination or (z) any other changes for which an adjustment is made under
Section 3.6(a), and in any such case including any shares thereof authorized
after the date of the Certificate, together with any associated rights to
purchase other securities of the Corporation which are at the time represented
by the certificates representing such shares of Common Stock.
1.10 "Conversion Date" shall have the
meaning set forth in Section 3.5 hereof.
1.11 "Conversion Price" at any time shall
mean the Liquidation Value per share divided by the Conversion Rate in effect at
such time (rounded to the nearest one hundredth of a cent).
1.12 "Conversion Rate" shall have the
meaning set forth in Section 3.1 hereof.
1.13 "Converting Holder" shall have the
meaning set forth in Section 3.5 hereof.
1.14 "Corporation" shall mean Time Warner
Inc., a Delaware corporation, and any of its successors by operation of law,
including by merger, consolidation or sale or conveyance of all or substantially
all of its property and assets.
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1.15 "Current Market Price" of the Common
Stock on any date shall mean the average of the daily Closing Prices per share
of the Common Stock for the five (5) consecutive Trading Days ending on the
Trading Day immediately preceding the applicable record date, conversion date,
redemption date or exchange date referred to in
Section 3 or Section 4.
1.16 "Dividend Payment Date" shall have the
meaning set forth in Section 2.1 hereof.
1.17 "Effective Time" shall mean the time
of filing (or if later the time of effectiveness specified therein) of a
certificate of merger with the Secretary of State of the State of Delaware
pursuant to Section 1.03 of the Agreement and Plan of Merger dated as of January
26, 1995, among KBLCOM Incorporated, Houston Industries Incorporated, the
Corporation and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.),
as the same may be amended from time to time.
1.18 "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.19 "Exchange Price" shall have the
meaning set forth in Section 4.1 hereof.
1.20 "Junior Stock" shall mean the Common
Stock, the Series A Stock and the shares of any other class or series of Capital
Stock of the Corporation which, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the relative
rights, preferences and limitations thereof, shall be junior to the Series D
Stock in respect of the right to receive dividends or to participate in any
distribution of assets other than by way of dividends.
1.21 "Liquidation Value" shall have the
meaning set forth in Section 7.1 hereof.
1.22 "NASDAQ" shall mean the National
Association of Securities Dealers Automated Quotation
System.
1.23 "Net Dividend Amount" shall have the
meaning set forth in Section 3.1 hereof.
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1.24 "NYSE" shall mean the New York Stock
Exchange, Inc.
1.25 "Parity Stock" shall mean the Series B
Stock and the shares of any other class or series of Capital Stock of the
Corporation which, by the terms of the Certifi- cate of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority granted
in the Certificate of Incorporation, shall fix the relative rights, preferences
and limitations thereof, shall, in the event that the stated dividends thereon
are not paid in full, be entitled to share ratably with the Series D Stock in
the payment of dividends, including accumulations, if any, in accordance with
the sums which would be payable on such shares if all dividends were declared
and paid in full, or shall, in the event that the amounts payable thereon on
liquidation are not paid in full, be entitled to share rat- ably with the Series
D Stock in any distribution of assets other than by way of dividends in
accordance with the sums which would be payable in such distribution if all sums
payable were discharged in full; provided, however, that the term "Parity Stock"
shall be deemed to refer (i) in Section 2.2 hereof, to any stock which is Parity
Stock in respect of dividend rights; (ii) in Section 7 hereof, to any stock
which is Parity Stock in respect of the distribution of assets; and (iii) in
Sections 6.2 and 6.3 hereof, to any stock which is Parity Stock in respect of
either dividend rights or the distribution of assets and which, pursuant to the
Certificate of Incorporation or any instrument in which the Board of Directors,
acting pursuant to authority granted in the Certificate of Incorporation, shall
so designate, is entitled to vote with the holders of Series D Stock.
1.26 "Person" shall mean an individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization or other entity.
1.27 "Preferred Stock" shall mean the class
of Preferred Stock, par value $1.00 per share, of the Corporation authorized at
the date of the Certificate, including any shares thereof authorized after the
date of the Certificate.
1.28 "Pro Rata Portion" shall have the
meaning set forth in Section 5.6 hereof.
1.29 "Pro Rata Repurchase" shall mean the
purchase of shares of Common Stock by the Corporation or by
7
any of its subsidiaries, whether for cash or other property or securities of the
Corporation, which purchase is subject to Section 13(e) of the Exchange Act or
is made pursuant to an offer made available to all holders of Common Stock, but
excluding any purchase made in open market transactions that satisfies the
conditions of clause (b) of Rule 10b-18 under the Exchange Act or has been
designed (as reasonably determined by the Board of Directors or a committee
thereof) to prevent such purchase from having a material effect on the trading
market of the Common Stock. The "Effective Date" of a Pro Rata Repurchase shall
mean the applicable expiration date (including all extensions thereof) of any
tender or exchange offer which is a Pro Rata Repurchase or the date of purchase
with respect to any Pro Rata Repurchase which is not a tender or exchange offer.
1.30 "Record Date" shall have the meaning
set forth in Section 2.1 hereof.
1.31 "Redemption Price" shall have the
meaning set forth in Section 4.1 hereof.
1.32 "Redemption Rescission Event" shall
mean the occurrence of (a) any general suspension of trading in, or limitation
on prices for, securities on the principal national securities exchange on which
shares of Common Stock are registered and listed for trading (or, if shares of
Common Stock are not registered and listed for trading on any such exchange, in
the over-the-counter market) for more than six-and-one-half (6-1/2) consecutive
trading hours, (b) any decline in either the Dow Jones Industrial Average or the
Standard & Poor's Index of 400 Industrial Companies (or any successor index
published by Dow Jones & Company, Inc. or Standard & Poor's Corporation) by
either (i) an amount in excess of 10%, measured from the close of business on
any Trading Day to the close of business on the next succeeding Trading Day
during the period commencing on the Trading Day preceding the day notice of any
redemption of shares of this Series is given (or, if such notice is given after
the close of business on a Trading Day, commencing on such Trading Day) and
ending at the earlier of (x) the time and date fixed for redemption in such
notice and (y) the time and date at which the Corporation shall have irrevocably
deposited funds with a designated bank or trust company pursuant to Section 4.4
or (ii) an amount in excess of 15% (or, if the time and date fixed for
redemption is more than 15 days following the date on which notice of redemption
is given, 20%), measured from the close of
8
business on the Trading Day preceding the day notice of such redemption is given
(or, if such notice is given after the close of business on a Trading Day, from
such Trading Day) to the close of business on any Trading Day on or prior to the
earlier of the dates specified in clauses (x) and (y) above, (c) a declaration
of a banking moratorium or any suspension of payments in respect of banks by
Federal or state authorities in the United States or (d) the commencement of a
war or armed hostilities or other national or international calamity directly or
indirectly involving the United States which in the reasonable judgment of the
Corporation could have a material adverse effect on the market for the Common
Stock.
1.33 "Rescission Date" shall have the
meaning set forth in Section 4.5 hereof.
1.34 "Senior Stock" shall mean the shares
of any class or series of Capital Stock of the Corporation which, by the terms
of the Certificate of Incorporation or of the instrument by which the Board of
Directors, acting pursuant to authority granted in the Certificate of
Incorporation, shall fix the relative rights, preferences and limitations
thereof, shall be senior to the Series D Stock in respect of the right to
receive dividends or to participate in any distribution of assets other than by
way of dividends.
1.35 "Series A Stock" shall mean the series
of Preferred Stock authorized and designated as Series A Participating Preferred
Stock at the date of the Certifi- cate, including any shares thereof authorized
and designated after the date of the Certificate.
1.36 "Series B Stock" shall mean the series
of Preferred Stock authorized and designated as Series B 6.40% Preferred Stock
at the date of the Certificate, including any shares thereof authorized and
designated after the date of the Certificate.
1.37 "Series D Stock" and "this Series"
shall mean the series of Preferred Stock authorized and designated as the Series
D Convertible Preferred Stock, including any shares thereof authorized and
designated after the date of the Certificate.
1.38 "Surrendered Shares" shall have the
meaning set forth in Section 3.5 hereof.
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1.39 "Trading Day" shall mean, so long as
the Common Stock is listed or admitted to trading on the NYSE, a day on which
the NYSE is open for the transaction of business, or, if the Common Stock is not
listed or admitted to trading on the NYSE, a day on which the principal national
securities exchange on which the Common Stock is listed is open for the
transaction of business, or, if the Common Stock is not so listed or admitted
for trading on any national securities exchange, a day on which the National
Market System of NASDAQ is open for the transaction of business.
2. Cash Dividends.
2.1 The holders of the outstanding Series D
Stock shall be entitled to receive quarter-annual dividends, as and when
declared by the Board of Directors out of funds legally available therefor. Each
quarter-annual dividend shall be an amount per share equal to (i) in the case of
each Dividend Payment Date (as defined below) occurring after the Effective Time
through the Dividend Payment Date coinciding with the fourth anniversary of the
Effective Time, the greater of (A) $.9375 per $100 of Liquidation Value of
Series D Stock (which is equivalent to $3.75 per annum), and (B) an amount per
$100 of Liquidation Value of Series D Stock equal to the product of (1) the
Conversion Rate and (2) the aggregate per share amount of regularly scheduled
dividends paid in cash on the Common Stock during the period from but excluding
the immediately preceding Dividend Payment Date to and including such Dividend
Payment Date and (ii) in the case of each Dividend Payment Date occurring
thereafter, an amount per $100 of Liquidation Value of Series D Stock equal to
the product of (1) the Conversion Rate and (2) the aggregate per share amount of
regularly scheduled dividends paid in cash on the Common Stock during the period
from but excluding the immediately preceding Dividend Payment Date to and
including such Dividend Payment Date. All dividends shall be payable in cash on
or about the first day of January, April, July and October in each year,
beginning on the first such date that is more than 15 days after the Effective
Time, as fixed by the Board of Directors, or such other dates as are fixed by
the Board of Directors (provided that the fourth
10
anniversary of the Effective Time shall be a Dividend Payment Date) (each a
"Dividend Payment Date"), to the holders of record of Series D Stock at the
close of business on or about the Trading Day next preceding such first day of
January, April, July or October (or fourth anniversary of the Effective Time) as
the case may be, as fixed by the Board of Directors, or such other dates as are
fixed by the Board of Directors (each a "Record Date"). In the case of dividends
payable in respect of periods prior to the fourth anniversary of the Effective
Time, (i) such dividends shall accrue on each share on a daily basis, whether or
not there are unrestricted funds legally available for the payment of such
dividends and whether or not earned or declared, from and after the day
immediately succeeding the Effective Time and (ii) any such dividends that
become payable for any partial dividend period shall be computed on the basis of
the actual days elapsed in such period. From and after the fourth anniversary of
the Effective Time, dividends on the Series D Stock (determined as to amount as
provided herein) shall accrue to the extent, but only to the extent, that
regularly scheduled cash dividends are declared by the Board of Directors on the
Common Stock with a payment date after the fourth anniversary of the Effective
Time (or, in the case of Series D Stock originally issued after the fourth
anniversary of the Effective Time, after the Dividend Payment Date next
preceding such date of original issuance). All dividends that accrue in
accordance with the foregoing provisions shall be cumulative from and after the
day immediately succeeding the Effective Time (or such date of issuance). The
amount payable to each holder of record on any Dividend Payment Date shall be
rounded to the nearest cent.
2.2 Except as hereinafter provided in this
Section 2.2, unless all dividends on the outstanding shares of Series D Stock
and any Parity Stock that shall have accrued and become payable as of any date
shall have been paid, or declared and funds set apart for payment thereof, no
dividend or other distribution (payable other than in shares of Junior Stock)
shall be paid to the holders of Junior Stock or Parity Stock, and no shares of
Series D Stock, Parity Stock or Junior Stock shall be purchased, redeemed or
otherwise acquired by the Corporation or any of its subsidiaries (except by
conversion into or exchange for Junior Stock), nor shall any monies be paid or
made available for a purchase, redemption or sinking fund for the purchase
or redemption of any Series D Stock, Junior Stock or Parity Stock.
When dividends are not paid in full upon
11
the shares of this Series and any Parity Stock, all dividends declared upon
shares of this Series and all Parity Stock shall be declared pro rata so that
the amount of dividends declared per share on this Series and all such Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series and all such Parity Stock bear
to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series which may
be in arrears.
2.3 In case the Corporation shall at any
time distribute (other than a distribution in liquidation of the Corporation) to
the holders of its shares of Common Stock any assets or property, including debt
or equity securities of the Corporation (other than Common Stock subject to a
distribution or reclassification covered by Section 3.6(a)) or of any other
Person (including common stock of such Person) or cash (but excluding regularly
scheduled cash dividends payable on shares of Common Stock), or in case the
Corporation shall at any time distribute (other than a distribution in
liquidation of the Corporation) to such holders rights, options or warrants to
subscribe for or purchase shares of Common Stock (including shares held in the
treasury of the Corporation), or rights, options or warrants to subscribe for or
purchase any other security or rights, options or warrants to subscribe for or
purchase any assets or property (in each case, whether of the Corporation or
otherwise, but other than any distribution of rights to purchase securities of
the Corporation if the holder of shares of this Series would otherwise be
entitled to receive such rights upon conversion of shares of this Series for
Common Stock; provided, however, that if such rights are subsequently redeemed
by the Corporation, such redemption shall be treated for purposes of this
Section 2.3 as a cash dividend (but not a regularly scheduled cash dividend) on
the Common Stock), the Corporation shall simultaneously distribute such assets,
property, securities, rights, options or warrants pro rata to the holders of
Series D Stock on the record date fixed for determining holders of Common Stock
entitled to participate in such distribution (or, if no such record date shall
be established, the effective time thereof) in an amount equal to the amount
that such holders of Series D Stock would have been entitled to receive had
their shares of Series D Stock been converted into Common Stock immediately
prior to such record date (or effective time). In the event of a distribution to
holders of Series D Stock
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pursuant to this Section 2.3, such holders shall be entitled to receive
fractional shares or interests only to the extent that holders of Common Stock
are entitled to receive the same. The holders of Series D Stock on the
applicable record date (or effective time) shall be entitled to receive in lieu
of such fractional shares or interests the same consideration as is payable to
holders of Common Stock with respect thereto. If there are no fractional shares
or interests payable to holders of Common Stock, the holders of Series D Stock
on the applicable record date (or effective time) shall receive in lieu of such
fractional shares or interests the fair value thereof as determined by the Board
of Directors.
2.4 If a distribution is made in accordance
with the provisions of Section 2.3, anything in Section 3 to the contrary
notwithstanding, no adjustment pursuant to Section 3 shall be effected by reason
of the distribution of such assets, property, securities, rights, options or
warrants or the subsequent modification, exercise, expiration or termination of
such securities, rights, options or warrants.
2.5 In the event that the holders of Common
Stock are entitled to make any election with respect to the kind or amount of
securities or other property receivable by them in any distribution that is
subject to Section 2.3, the kind and amount of securities or other property that
shall be distributable to the holders of the Series D Stock shall be based on
(i) the election, if any, made by the record holder (as of the date used for
determining the holders of Common Stock entitled to make such election) of the
largest number of shares of Series D Stock in writing to the Corporation on or
prior to the last date on which a holder of Common Stock may make such an
election or (ii) if no such election is timely made, an assumption that such
holder failed to exercise any such rights (provided that if the kind or amount
of securities or other property is not the same for each nonelecting holder,
then the kind and amount of securities or other property receivable by holders
of the Series D Stock shall be based on the kind or amount of securities or
other property receivable by a plurality of shares held by the nonelecting
holders of Common Stock). Concurrently with the mailing to holders of Common
Stock of any document pursuant to which such holders may make an election of the
type referred to in this Section, the Corporation shall mail a copy thereof to
the record holders of the Series D Stock as of the date used for determining
13
the holders of record of Common Stock entitled to such mailing.
3. Conversion Rights.
3.1 Each holder of a share of this Series
shall have the right at any time or as to any share of this Series called for
redemption or exchange, at any time prior to the close of business on the date
fixed for redemption or exchange (unless the Corporation defaults in the payment
of the Redemption Price or fails to exchange the shares of this Series for the
applicable number of shares of Common Stock and any cash portion of the Exchange
Price or exercises its right to rescind such redemption pursuant to Section 4.5,
in which case such right shall not terminate at the close of business on such
date), to convert such share into (i) a number of shares of Common Stock equal
to 2.08264 shares of Common Stock for each share of this Series, subject to
adjustment as provided in this Section 3 (such rate, as so adjusted from time to
time, is herein called the "Conversion Rate") plus (ii) a number of shares of
Common Stock equal to
(A)(1) the Accrued Dividend Amount minus (2) the Common Dividend
Excess, if applicable, or plus (3) the Common Dividend Deficiency, if
applicable (the "Net Dividend Amount"), divided by
(B) the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date;
provided, however, that in the event that the Net Dividend Amount is a negative
number, the number of shares deliverable upon conversion of a share of Series D
Stock shall be equal to
(I) the number of shares determined pursuant to
clause (i) minus
(II) a number of shares equal to (x) the absolute value of the
Net Dividend Amount divided by (y) the Closing Price of the Common Stock
on the last Trading Day prior to the Conversion Date;
and provided further that, in the event that the Net Dividend Amount is a
positive number, the Corporation shall have the right to deliver cash equal to
the Net Dividend Amount or any portion thereof, in which case its obligation to
deliver shares of Common Stock pursuant to clause (ii)
14
shall be reduced by a number of shares equal to (x) the aggregate amount of cash
so delivered divided by (y) the Closing Price of the Common Stock on the last
Trading Day prior to the Conversion Date, unless the Corporation shall deliver
cash equal to the entire Net Dividend Amount, in which case its entire
obligation under clause (ii) shall be discharged. The obligations of the
Corporation to issue the Common Stock or make the cash payments provided by this
Section 3.1 shall be absolute whether or not any accrued dividend by which such
issuance or payment is measured has been declared by the Board of Directors and
whether or not the Corporation would have adequate surplus or net profits to pay
such dividend if declared or is otherwise restricted from making such dividend.
3.2 Except as provided in this Section 3,
no adjustments in respect of payments of dividends on shares surrendered for
conversion or any dividend on the Common Stock issued upon conversion shall be
made upon the conversion of any shares of this Series (it being understood that
if the Conversion Date for shares of Series D Stock occurs after a Record Date
and on or prior to a Dividend Payment Date, the holder of record on such Record
Date shall be entitled to receive the dividend payable with respect to such
shares on the related Dividend Payment Date pursuant to Section 2.1 hereof).
3.3 The Corporation may, but shall not be
required to, in connection with any conversion of shares of this Series, issue a
fraction of a share of Common Stock, and if the Corporation shall determine not
to issue any such fraction, the Corporation shall, subject to Section 3.6(c),
make a cash payment (rounded to the nearest cent) equal to such fraction
multiplied by the Closing Price of the Common Stock on the last Trading Day
prior to the Conversion Date.
3.4 Any holder of shares of this Series
electing to convert such shares into Common Stock shall surrender the
certificate or certificates for such shares at the office of the transfer agent
or agents therefor (or at such other place as the Corporation may designate by
notice to the holders of shares of this Series) during regular business hours,
duly endorsed to the Corporation or in blank, or accompanied by instruments of
transfer to the Corporation or in blank, or in form satisfactory to the
Corporation, and shall give written notice to the Corporation at such office
that such holder elects to convert such shares of this Series. The Corporation
shall, as soon as
15
practicable (subject to Section 3.6(d)) after such deposit of
certificates for shares of this Series, accompanied by the written notice above
prescribed, issue and deliver at such office to the holder for whose account
such shares were surrendered, or to his nominee, certificates representing the
number of shares of Common Stock and the cash, if any, to which such holder is
entitled upon such conversion.
3.5 Conversion shall be deemed to have been
made as of the date (the "Conversion Date") that certificates for the shares of
this Series to be converted, and the written notice prescribed in Section 3.4
are received by the transfer agent or agents for this Series; and the Person
entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such Common Stock on such date.
Notwithstanding anything to the contrary contained herein, in the event the
Corporation shall have rescinded a redemption of shares of this Series pursuant
to Section 4.5, any holder of shares of this Series that shall have surrendered
shares of this Series for conversion following the day on which notice of the
subsequently rescinded redemption shall have been given but prior to the close
of business on the later of (a) the Trading Day next succeeding the date on
which public announcement of the rescission of such redemption shall have been
made and (b) the Trading Day on which the notice of rescission required by
Section 4.5 is deemed given pursuant to Section 8.2 (a "Converting Holder"), may
rescind the conversion of such shares surrendered for conversion by (i) properly
completing a form prescribed by the Corporation and mailed to holders of shares
of this Series (including Converting Holders) with the Corporation's notice of
rescission, which form shall provide for the certification by any Converting
Holder rescinding a conversion on behalf of any beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of shares of this Series that the
beneficial ownership (within the meaning of such Rule) of such shares shall not
have changed from the date on which such shares were surrendered for conversion
to the date of such certification and (ii) delivering such form to the
Corporation no later than the close of business on that date which is ten (10)
Trading Days following the date on which the Corporation's notice of rescission
is deemed given pursuant to Section 8.2. The delivery of such form by a
Converting Holder shall be accompanied by (x) any certificates representing
shares of Common Stock issued to such Converting Holder upon a conversion of
shares of this Series that shall be rescinded
16
by the proper delivery of such form (the "Surrendered Shares"), (y) any
securities, evidences of indebtedness or assets (other than cash) distributed by
the Corporation to such Converting Holder by reason of such Converting Holder's
being a record holder of Surrendered Shares and (z) payment in New York Clearing
House funds or other funds acceptable to the Corporation of an amount equal to
the sum of (I) any cash such Converting Holder may have received in lieu of the
issuance of fractional shares upon conversion and (II) any cash paid or payable
by the Corporation to such Converting Holder by reason of such Converting Holder
being a record holder of Surrendered Shares. Upon receipt by the Corporation of
any such form properly completed by a Converting Holder and any certificates,
securities, evidences of indebtedness, assets or cash payments required to be
returned or made by such Converting Holder to the Corporation as set forth
above, the Corporation shall instruct the transfer agent or agents for shares of
Common Stock and shares of this Series to cancel any certificates representing
Surrendered Shares (which Surrendered Shares shall be deposited in the treasury
of the Corporation) and reissue certificates representing shares of this Series
to such Converting Holder (which shares of this Series shall be deemed to have
been outstanding at all times during the period following their surrender for
conversion). The Corporation shall, as promptly as practicable, and in no event
more than five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of indebtedness,
assets or cash payments required to be so returned or made, pay to the
Converting Holder or as otherwise directed by such Converting Holder any
dividend or other payment made on such shares during the period from the time
such shares shall have been surrendered for conversion to the rescission of such
conversion. All questions as to the validity, form, eligibility (including time
or receipt) and acceptance of any form submitted to the Corporation to rescind
the conversion of shares of this Series, including questions as to the proper
completion or execution of any such form or any certification contained therein,
shall be resolved by the Corporation, whose determination shall be final and
binding. The Corporation shall not be required to deliver certificates for
shares of Common Stock while the stock transfer books for such stock or for this
Series are duly closed for any purpose or during any period commencing at a
Redemption Rescission Event and ending at either (i) the time and date at which
the Corporation's right of rescission shall expire pursuant to Section 4.5 if
the Corporation
17
shall not have exercised such right or (ii) the close of
business on that day which is ten (10) Trading Days following the date on which
notice of rescission pursuant to Section 4.4 is deemed given pursuant to Section
8.2 if the Corporation shall have exercised such right of rescission, but
certificates for shares of Common Stock shall be delivered as soon as
practicable after the opening of such books or the expiration of such period.
3.6 The Conversion Rate shall be adjusted
from time to time as follows for events occurring after
January 26, 1995:
(a) In case the Corporation shall, at any time or from
time to time while any of the Series D Stock is outstanding, (i) pay a
dividend in shares of its Common Stock, (ii) combine its outstanding
shares of Common Stock into a smaller number of shares, (iii) subdivide
its outstanding shares of Common Stock or (iv) reclassify (other than by
way of a merger that is subject to Section 3.7) its shares of Common
Stock, then the Conversion Rate in effect immediately before such action
shall be adjusted so that immediately following such event the holders
of the Series D Stock shall be entitled to receive upon conversion or
exchange thereof the kind and amount of shares of Capital Stock of the
Corporation which they would have owned or been entitled to receive upon
or by reason of such event if such shares of Series D Stock had been
converted or exchanged immediately before the record date (or, if no
record date, the effective date) for such event (it being understood
that any distribution of cash or of Capital Stock (other than Common
Stock), including any distribution of Capital Stock that shall accompany
a reclassification of the Common Stock, shall be subject to Section 2.3
rather than this Section 3.6(a)). An adjustment made pursuant to this
Section 3.6(a) shall become effective retroactively immediately after
the record date in the case of a dividend or distribution and shall
become effective retroactively immediately after the effective date in
the case of a subdivision, combination or reclassification. For the
purposes of this Section 3.6(a), in the event that the holders of Common
Stock are entitled to make any election with respect to the kind or
amount of securities receivable by them in any transaction that is
subject to this Section 3.6(a) (including any election that would result
in all or a
18
portion of the transaction becoming subject to Section 2.3),
the kind and amount of securities that shall be distributable to the
holders of the Series D Stock shall be based on (i) the election, if
any, made by the record holder (as of the date used for determining the
holders of Common Stock entitled to make such election) of the largest
number of shares of Series D Stock in writing to the Corporation on or
prior to the last date on which a holder of Common Stock may make such
an election or (ii) if no such election is timely made, an assumption
that such holder failed to exercise any such rights (provided that if
the kind or amount of securities is not the same for each nonelecting
holder, then the kind and amount of securities receivable shall be based
on the kind or amount of securities receivable by a plurality of
nonelecting holders of Common Stock). Concurrently with the mailing to
holders of Common Stock of any document pursuant to which such holders
may make an election of the type referred to in this Section, the
Corporation shall mail a copy thereof to the record holders of the
Series D Stock as of the date used for determining the holders of record
of Common Stock entitled to such mailing.
(b) In case a Change of Control shall occur, the
Conversion Rate in effect immediately prior to the Change of Control
Date shall be increased (but not decreased) by multiplying such rate by
a fraction as follows: (i) in the case of a Change of Control specified
in Section 1.5(a), a fraction in which the numerator is the Conversion
Price prior to adjustment pursuant hereto and the denominator is the
Current Market Price of the Common Stock at the Change of Control Date,
(ii) in the case of a Change of Control specified in Section 1.5(b), the
greater of the following fractions: (x) a fraction the numerator of
which is the highest price per share of Common Stock paid by the
Acquiring Person in connection with the transaction giving rise to the
Change of Control or in any transaction within six months prior to or
after the Change of Control Date (the "Highest Price"), and the
denominator of which is the Current Market Price of the Common Stock as
of the date (but not earlier than six months prior to the Change of
Control Date) on which the first public announcement is made by the
Acquiring Person that it intends to acquire or that it has acquired 40%
or more of the outstanding shares of
19
Common Stock (the "Announcement Date") or (y) a fraction the
numerator of which is the Conversion Price prior to adjustment
pursuant hereto and the denominator of which is the
Current Market Price of the Common Stock on the Announcement Date and
(iii) in the case where there co-exists a Change of Control specified in
both Section 1.5(a) and Section 1.5(b), the greatest of the fractions
determined pursuant to clauses (i) and (ii). Such adjustment shall
become effective immediately after the Change of Control Date and shall
be made, in the case of clauses (ii) and (iii) above, successively for
six months thereafter in the event and at the time of any increase in
the Highest Price after the Change of Control Date; provided, however,
that no such successive adjustment shall be made with respect to the
Conversion Rate of the shares of this Series in respect of any event
occurring after the Conversion Date.
(c) The Corporation shall be entitled to make such
additional adjustments in the Conversion Rate, in addition to those
required by subsections 3.6(a) and 3.6(b), as shall be necessary in
order that any dividend or distribution in Common Stock or any
subdivision, reclassification or combination of shares of Common Stock
referred to above, shall not be taxable to the holders of Common Stock
for United States Federal income tax purposes so long as such additional
adjustments pursuant to this Section 3.6(c) do not decrease the
Conversion Rate.
(d) In any case in which this Section 3.6 shall require
that any adjustment be made effective as of or retroactively immediately
following a record date, the Corporation may elect to defer (but only
for five (5) Trading Days following the occurrence of the event which
necessitates the filing of the statement referred to in Section 3.6(f))
issuing to the holder of any shares of this Series converted after such
record date (i) the shares of Common Stock and other Capital Stock of
the Corporation issuable upon such conversion over and above (ii) the
shares of Common Stock and other Capital Stock of the Corporation
issuable upon such conversion on the basis of the Conversion Rate prior
to adjustment; provided, however, that the Corporation shall deliver to
such holder a due bill or other appropriate instrument evidencing such
holder's
20
right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
(e) All calculations under this Section 3 shall be made to
the nearest cent, one-hundredth of a share or, in the case of the
Conversion Rate, one hundred-thousandth. Notwithstanding any other
provision of this Section 3, the Corporation shall not be required to
make any adjustment of the Conversion Rate unless such adjustment would
require an increase or decrease of at least 1.00000% of such Conversion
Rate. Any lesser adjustment shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least 1.00000% in such rate. Any
adjustments under this Section 3 shall be made successively whenever an
event requiring such an adjustment occurs.
(f) Whenever an adjustment in the Conversion Rate is
required, the Corporation shall forthwith place on file with its
transfer agent or agents for this Series a statement signed by a duly
authorized officer of the Corporation, stating the adjusted Conversion
Rate determined as provided herein. Such statements shall set forth in
reasonable detail such facts as shall be necessary to show the reason
for and the manner of computing such adjustment. Promptly after the
adjustment of the Conversion Rate, the Corporation shall mail a notice
thereof to each holder of shares of this Series.
(g) In the event that at any time as a result of an
adjustment made pursuant to this Section 3, the holder of any share of
this Series thereafter surrendered for conversion shall become entitled
to receive any shares of Capital Stock of the Corporation other than
shares of Common Stock, the conversion rate of such other shares so
receivable upon conversion of any such share of this Series shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to
Common Stock contained in subparagraphs (a) through (f) and (h) of this
Section 3.6, and the provisions of Section 3.1 through 3.5 and 3.7
through 3.10 shall apply on like or similar terms to any such other
shares and the determination of
21
the Board of Directors as to any such adjustment shall be conclusive.
(h) No adjustment shall be made pursuant to this Section
3.6 (i) if the effect thereof would be to reduce the Conversion Price
below the par value of the Common Stock or (ii) subject to Section
3.6(c) hereof, with respect to any share of Series D Stock that is
converted, prior to the time such adjustment otherwise would be made.
3.7 In case after January 26, 1995 (a) any
consolidation or merger to which the Corporation is a party, other than a merger
or consolidation in which the Corporation is the surviving or continuing
corporation and which does not result in any reclassification of, or change
(other than a change in par value or from par value to no par value or from no
par value to par value, or as a result of a subdivision or combination) in,
outstanding shares of Common Stock or (b) any sale or conveyance of all or
substantially all of the property and assets of the Corporation, then lawful
provision shall be made as part of the terms of such transaction whereby the
holder of each share of Series D Stock shall have the right thereafter, during
the period such share shall be convertible or exchangeable, to convert such
share into or have such share exchanged for the kind and amount of shares of
stock or other securities and property receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
into which such shares of this Series could have been converted or exchanged
immediately prior to such consolidation, merger, sale or conveyance, subject to
adjustment which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3 (based on (i) the election, if any,
made in writing to the Corporation by the record holder (as of the date used for
determining holders of Common Stock entitled to make such election) of the
largest number of shares of Series D Stock on or prior to the last date on which
a holder of Common Stock may make an election regarding the kind or amount of
securities or other property receivable by such holder in such transaction or
(ii) if no such election is timely made, an assumption that such holder failed
to exercise any such rights (provided that if the kind or amount of securities
or other property is not the same for each nonelecting holder, then the kind and
amount of securities or other property receivable shall be based upon the kind
and amount of securities or other property
22
receivable by a plurality of the nonelecting holders of Common Stock)). In the
event that any of the transactions referred to in clauses (a) or (b) involves
the distribution of cash (or property other than equity securities) to a holder
of Common Stock, lawful provision shall be made as part of the terms of the
transaction whereby the holder of each share of Series D Stock on the record
date fixed for determining holders of Common Stock entitled to receive such cash
or property (or if no such record date is established, the effective date of
such transaction) shall be entitled to receive the amount of cash or property
that such holder would have been entitled to receive had such holder converted
his shares of Series D Stock into Common Stock immediately prior to such record
date (or effective date) (based on the election or nonelection made by the
record holder of the largest number of shares of Series D Stock, as provided
above). Concurrently with the mailing to holders of Common Stock of any document
pursuant to which such holders may make an election regarding the kind or amount
of securities or other property that will be receivable by such holder in any
transaction described in clause (a) or (b) of the first 6
sentence of this Section 3.7, the Corporation shall mail a copy thereof to the
holders of the Series D Stock as of the date used for determining the holders of
record of Common Stock entitled to such mailing. The Corporation shall not enter
into any of the transactions referred to in clauses (a) or (b) of the preceding
sentence unless effective provision shall be made in the certificate or articles
of incorporation or other constituent documents of the Corporation or the entity
surviving the consolidation or merger, if other than the Corporation, or the
entity acquiring the Corporation's assets, as the case may be, so as to give
effect to the provisions set forth in this Section 3.7. The provisions of this
Section 3.7 shall apply similarly to successive consolidations, mergers, sales
or conveyances. For purposes of this Section 3.7 the term "Corporation" shall
refer to the Corporation (as defined in Section 1.14) as constituted immediately
prior to the merger, consolidation or other transaction referred to in this
Section.
3.8 The Corporation shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued stock, for the purpose of effecting the conversion of the shares of
this Series, such number of its duly authorized shares of Common Stock (or, if
applicable, any other shares of Capital Stock of the Corporation) as shall from
time to time be sufficient to
23
effect the conversion of all outstanding shares of this Series into such Common
Stock (or such other shares of Capital Stock) at any time (assuming that, at the
time of the computation of such number of shares, all such Common Stock (or such
other shares of Capital Stock) would be held by a single holder); provided,
however, that nothing contained herein shall preclude the Corporation from
satisfying its obligations in respect of the conversion of the shares by
delivery of purchased shares of Common Stock (or such other shares of Capital
Stock) that are held in the treasury of the Corporation. All shares of Common
Stock (or such other shares of Capital Stock of the Corporation) which shall be
deliverable upon conversion of the shares of this Series shall be duly and
validly issued, fully paid and nonassessable. For purposes of this Section 3,
any shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Corporation.
3.9 If any shares of Common Stock or other
shares of Capital Stock of the Corporation which would be issuable upon
conversion of shares of this Series hereunder require registration with or
approval of any governmental authority before such shares may be issued upon
conversion, the Corporation will in good faith and as expeditiously as possible
cause such shares to be duly registered or approved, as the case may be. The
Corporation will use commercially reasonable efforts to list the shares of (or
depositary shares representing fractional interests in) Common Stock or other
shares of Capital Stock of the Corporation required to be delivered upon
conversion of shares of this Series prior to such delivery upon the principal
national securities exchange upon which the outstanding Common Stock or such
other shares of Capital Stock is listed at the time of such delivery.
3.10 The Corporation shall pay any and all
issue or other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock or other shares of Capital Stock of the Corporation on
conversion of shares of this Series pursuant hereto. The Corporation shall not,
however, be required to pay any tax which is payable in respect of any transfer
involved in the issue or delivery of Common Stock or such other shares of
Capital Stock in a name other than that in which the shares of this Series so
converted were registered, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Corporation the
amount of such tax, or
24
has established, to the satisfaction of the Corporation,
that such tax has been paid.
3.11 In case of (i) the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, (ii) any
Pro Rata Repurchase or (iii) any action triggering an adjustment to the
Conversion Rate pursuant to this Section 3, then, in each case, the Corporation
shall cause to be filed with the transfer agent or agents for the Series D
Stock, and shall cause to be mailed, first-class postage prepaid, to the holders
of record of the outstanding shares of Series D Stock, at least fifteen (15)
days prior to the applicable record date for any such transaction (or if no
record date will be established, the effective date thereof), a notice stating
(x) the date, if any, on which a record is to be taken for the purpose of any
such transaction (or, if no record date will be established, the date as of
which holders of record of Common Stock entitled to participate in such
transaction are determined), and (y) the expected effective date thereof.
Failure to give such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 3.11.
4. Redemption or Exchange.
4.1 (a) The Corporation may, at its sole
option, subject to Section 2.2 hereof, from time to time on and after the fifth
anniversary of the Effective Time in the case of clause (i) or (iii) of Section
4.1(b), and on and after the fourth anniversary, in the case of clause (ii) of
Section 4.1(b), redeem, out of funds legally available therefor, or, as provided
below, exchange shares of Common Stock for, all (or in the case of Section
4.1(b)(i), any part) of the outstanding shares of this Series. The redemption
price for each share of this Series called for redemption pursuant to clause (i)
of Section 4.1(b) shall be the Liquidation Value together with an amount equal
to the accrued and unpaid dividends to the date fixed for redemption
(hereinafter collectively referred to as the "Redemption Price"). The exchange
price for each share of this Series called for exchange pursuant to clause (ii)
of Section 4.1(b) shall be a number of shares of Common Stock equal to the
Conversion Rate, together with, at the option of the Corporation, either (x)
cash or (y) a number of shares of Common Stock, valued at the Closing Price on
the Trading Day immediately preceding the date fixed for exchange, equal, in
either case, to the aggregate amount of
25
accrued and unpaid dividends on the Series D Stock to the date fixed for
exchange (provided that any dividends which are in arrears must be paid in cash)
(hereinafter collectively referred to as the "Exchange Price").
(b) On the date fixed for redemption or exchange
the Corporation shall, at its option, effect either
(i) a redemption of the shares of this Series to be
redeemed by way of payment, out of funds legally available therefor, of
cash equal to the aggregate Redemption Price for the shares of this
Series then being redeemed;
(ii) an exchange of the shares of this Series for the
Exchange Price in shares of Common Stock (provided that the Corporation
(A) shall be entitled to deliver cash (1) in lieu of any fractional
share of Common Stock (determined in a manner consistent with Section
3.3) and (2) equal to accrued and unpaid dividends to the date fixed for
exchange in lieu of shares of Common Stock and (B) shall be required to
deliver cash in respect of any dividends that are in arrears); or
(iii) any combination thereof with respect to each share
of this Series called for redemption or exchange.
(c) Notwithstanding clauses (ii) and (iii) of Section 4.1(b), the
Corporation shall be entitled to effect an exchange of shares of Series D Stock
for Common Stock or other shares of Capital Stock of the Corporation only to the
extent that duly and validly issued, fully paid and nonassessable shares of
Common Stock (or such other shares of Capital Stock) shall be available for
issuance (including delivery of previously issued shares of Common Stock held in
the Corporation's treasury on the date fixed for exchange). The Corporation
shall comply with Section 3.9 and 3.10 with respect to shares of Common Stock or
other shares of Capital Stock of the Corporation which would be issuable upon
exchange of shares of this Series. Certificates for shares of Common Stock
issued in exchange for surrendered shares of this Series pursuant to this
Section 4.1 shall be made available by the Corporation not later than the fifth
Trading Day following the date for exchange.
26
4.2 In the event that fewer than all the
outstanding shares of this Series are to be redeemed pursuant to Section
4.1(b)(i), the number of shares to be redeemed from each holder of shares of
this Series shall be determined by the Corporation by lot or pro rata or by any
other method as may be determined by the Board of Directors in its sole
discretion to be equitable, and the certificate of the Corporation's Secretary
or an Assistant Secretary filed with the transfer agent or transfer agents for
this Series in respect of such determination by the Board of Directors shall be
conclusive.
4.3 In the event the Corporation shall
redeem or exchange shares of this Series pursuant to Section 4.1, notice of such
redemption or exchange shall be given by first class mail, postage prepaid,
mailed not less than fifteen (15) nor more than sixty (60) days prior to the
date fixed for redemption or exchange, as the case may be, to each record holder
of the shares to be redeemed or exchanged, at such holder's address as the same
appears on the books of the Corporation. Each such notice shall state: (i)
whether the shares of this Series are to be redeemed or exchanged; (ii) the time
and date as of which the redemption or exchange shall occur; (iii) the total
number of shares of this Series to be redeemed or exchanged and, if fewer than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (iv) the Redemption Price or the Exchange
Price, as the case may be; (v) that shares of this Series called for redemption
or exchange may be converted at any time prior to the time and date fixed for
redemption or exchange (unless the Corporation shall, in the case of a
redemption, default in payment of the Redemption Price or, in the case of an
exchange, fail to exchange the shares of this Series for the applicable number
of shares of Common Stock and any cash portion of the Exchange Price or shall
exercise its right to rescind such redemption pursuant to Section 4.5, in which
case such right of conversion shall not terminate at such time and date); (vi)
the applicable Conversion Price and Conversion Rate; (vii) the place or places
where certificates for such shares are to be surrendered for payment of the
Redemption Price, in the case of redemption, or for delivery of certificates
representing the shares of Common Stock and the payment of any cash portion of
the Exchange Price, in the case of exchange; and (viii) that dividends on the
shares of this Series to be redeemed or exchanged will cease to accrue on such
redemption or exchange date.
27
4.4 If notice of redemption or exchange
shall have been given by the Corporation as provided in Section 4.3, dividends
on the shares of this Series so called for redemption or exchange shall cease to
accrue, such shares shall no longer be deemed to be outstanding, and all rights
of the holders thereof as stockholders of the Corporation with respect to shares
so called for redemption or exchange (except (i) in the case of redemption, the
right to receive from the Corporation the Redemption Price without interest and
in the case of exchange, the right to receive from the Corporation the Exchange
Price without interest and (ii) the right to convert such shares in accordance
with Section 3) shall cease (including any right to receive dividends otherwise
payable on any Dividend Payment Date that would have occurred after the time and
date of redemp- tion or exchange) either (i) in the case of a redemption or
exchange pursuant to Section 4.1, from and after the time and date fixed in the
notice of redemption or exchange as the time and date of redemption or exchange
(unless the Corporation shall (x) in the case of a redemption, default in the
payment of the Redemption Price, (y) in the case of an exchange, fail to
exchange the applicable number of shares of Common Stock and any cash portion of
the Exchange Price or (z) exercise its right to rescind such redemption pursuant
to Section 4.5, in which case such rights shall not terminate at such time and
date) or (ii) if the Corporation shall so elect and state in the notice of
redemption or exchange, from and after the time and date (which date shall be
the date fixed for redemption or exchange or an earlier date not less than
fifteen (15) days after the date of mailing of the redemption or exchange
notice) on which the Corporation shall irrevocably deposit with a designated
bank or trust company doing business in the Borough of Manhattan, City and State
of New York, as paying agent, money sufficient to pay at the office of such
paying agent, on the redemption date, the Redemption Price, in the case of
redemption, or certificates representing the shares of Common Stock to be so
exchanged and any cash portion of the Exchange Price, in the case of an
exchange. Any money or certificates so deposited with any such paying agent
which shall not be required for such redemption or exchange because of the
exercise of any right of conversion or otherwise shall be returned to the
Corporation forthwith. Upon surrender (in accordance with the notice of
redemption or exchange) of the certificate or certificates for any shares of
this Series to be so redeemed or exchanged (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice of redemption or
28
exchange shall so state), such shares shall be redeemed or exchanged by the
Corporation at the Redemption Price or the Exchange Price, as applicable, as set
forth in Section 4.1 (unless the Corporation shall have exercised its right to
rescind such redemption pursuant to Section 4.5). In case fewer than all the
shares represented by any such certifi- cate are to be redeemed, a new
certificate shall be issued representing the unredeemed shares (or fractions
thereof as provided in Section 8.4), without cost to the holder thereof,
together with the amount of cash, if any, in lieu of fractional shares other
than those issuable in accordance with Section 8.4. Subject to applicable
escheat laws, any moneys so set aside by the Corporation in the case of
redemption and unclaimed at the end of one year from the redemption date shall
revert to the general funds of the Corporation, after which reversion the
holders of such shares so called for redemption or exchange shall look only to
the general funds of the Corporation for the payment of the Redemption Price or
the Exchange Price, as applicable, without interest. Any interest accrued on
funds so deposited shall be paid to the Corporation from time to time.
4.5 In the event that a Redemption
Rescission Event shall occur following any day on which a notice of redemption
shall have been given pursuant to Section 4.3 but at or prior to the earlier of
(a) the time and date fixed for redemption as set forth in such notice of
redemption and (b) the time and date at which the Corporation shall have
irrevocably deposited funds or certificates with a designated bank or trust
company pursuant to Section 4.4, the Corporation may, at its sole option, at any
time prior to the earliest of (i) the close of business on that day which is two
(2) Trading Days following such Redemption Rescission Event, (ii) the time and
date fixed for redemption as set forth in such notice and (iii) the time and
date on which the Corporation shall have irrevocably deposited such funds with a
designated bank or trust company, rescind the redemption under Section 4.1(b)(i)
to which such notice of redemption shall have related by making a public
announcement of such rescission (the date on which such public announcement
shall have been made being hereinafter referred to as the "Rescission Date").
The Corporation shall be deemed to have made such announcement if it shall issue
a release to the Dow Jones News Service, Reuters Information Services or any
successor news wire service. From and after the making of such announcement, the
Corporation shall have no obligation
29
to redeem shares of this Series called for redemption pursuant to such notice of
redemption or to pay the redemption price therefor and all rights of holders of
shares of this Series shall be restored as if such notice of redemption had not
been given. The Corporation shall give notice of any such rescission by one of
the means specified in Section 8.2 as promptly as practicable, but in no event
later than the close of business on that date which is five (5) Trading Days
following the Rescission Date to each record holder of shares of this Series at
the close of business on the Rescission Date and to any other Person or entity
that was a record holder of shares of this Series and that shall have
surrendered shares of this Series for conversion following the giving of notice
of the subsequently rescinded redemption. Each notice of rescission shall (w)
state that the redemption described in the notice of redemption has been
rescinded, (x) state that any Converting Holder shall be entitled to rescind the
conversion of shares of this Series surrendered for conversion following the day
on which notice of redemption was given but prior to the close of business on
the later of (1) the Trading Day next succeeding the date on which public
announcement of the rescission of such redemption shall have been made and (2)
the Trading Day on which the Corporation's notice of rescission is deemed given
pursuant to Section 8.2, (y) be accompanied by a form prescribed by the
Corporation to be used by any Converting Holder rescinding the conversion of
shares so surrendered for conversion (and instructions for the completion and
delivery of such form, including instructions with respect to payments that may
be required to accompany such delivery shall be in accordance with Section 3.5)
and (z) state that such form must be properly completed and received by the
Corporation no later than the close of business on a date that shall be ten (10)
Trading Days following the date of the mailing of such notice of rescission is
deemed given pursuant to Section 8.2.
4.6 The shares of this Series shall not be
subject to the provisions of Section 5 of Article IV of the
Certificate of Incorporation.
5. Pro Rata Repurchase.
5.1 Upon a Pro Rata Repurchase, each holder
of shares of this Series shall have the right to require that the Corporation
repurchase, out of funds legally available therefor, a Pro Rata Portion (as
defined below) of
30
the shares of such holder, or any lesser number requested by
the holder, at a price per share equal to the highest price per share of Common
Stock paid in the Pro Rata Repurchase multiplied by the Conversion Rate then in
effect plus an amount equal to the accrued but unpaid dividends on such shares
to the date of repurchase.
5.2 At any time prior to or within thirty
(30) days following any Pro Rata Repurchase, the Corporation shall mail a notice
to each holder of shares of this Series stating:
(a) that a Pro Rata Repurchase will occur or has occurred and
that such holder will have (upon such Pro Rata Repurchase) or has the
right to require the Corporation to repurchase such holder's shares in
an amount not in excess of the Pro Rata Portion at a repurchase price in
cash determined as set forth above plus an amount equal to accrued and
unpaid dividends, if any, to the date of repurchase;
(b) the repurchase date for the Series D Stock (which shall be no
earlier than fifteen (15) days nor later than sixty (60) days from the
date such notice is mailed); and
(c) the instructions determined by the Corporation, consistent
with this Section, that a holder must follow in order to have its shares
repurchased.
5.3 Holders electing to have any shares
repurchased will be required to surrender such shares, with an appropriate form
duly completed, to the Corporation at the address specified in the notice at
least five (5) days prior to the repurchase date. Holders will be entitled to
withdraw their election if the Corporation receives, not later than three (3)
days prior to the repurchase date, a telegram, telex, facsimile transmission or
letter setting forth the name of the holder, the certificate numbers of the
shares delivered for purchase by the holder and a statement that such holder is
withdrawing his election to have such shares repurchased. Holders will have such
additional withdrawal and other rights as may be required pursuant to applicable
law.
5.4 On the repurchase date, the Corporation
shall (i) pay the repurchase price plus an amount equal to
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accrued and unpaid dividends as provided in Section 5.1, if any, to the holders
entitled thereto and (ii) issue to such holders any equity securities of the
Corporation (other than Common Stock) that would at the time be issuable upon
conversion of the shares of Series D Stock which are then being repurchased
pursuant hereto.
5.5 The Board of Directors will not approve
any tender or exchange offer by the Corporation or a third party for shares of
Common Stock or recommend that the holders of Common Stock accept any offer or
tender their shares into any offer unless a Pro Rata Portion of the shares of
this Series of all holders are entitled to be tendered into such offer at a
price not less than the price per share for shares of Common Stock pursuant to
such offer multiplied by the Conversion Rate then in effect plus an amount equal
to accrued but unpaid dividends on such shares to the date of payment for such
shares in such tender or exchange offer.
5.6 For purposes hereof, "Pro Rata Portion"
with respect to the shares of this Series held by any holder shall mean all the
shares of this Series then owned by such holder times a fraction, the numerator
of which is the number of outstanding shares of Common Stock (a) purchased in
the applicable Pro Rata Repurchase or (b) for which a tender or exchange offer
referred to in Section 5.5 is made, as the case may be, and the denominator of
which is the number of outstanding shares of Common Stock immediately prior to
such Pro Rata Repurchase or the commencement of such tender or exchange offer,
as the case may be.
6. Voting. The shares of this Series shall have
no voting rights except as required by law or as set forth
below.
6.1 Each share of this Series shall be enti-
tled to vote together with holders of the shares of Common Stock (and any other
class or series which may similarly be entitled to vote with the shares of
Common Stock) as a single class upon all matters upon which holders of Common
Stock are entitled to vote. In any such vote, the holders of this Series shall
be entitled to two (2) votes per $100 of Liquidation Value of Series D Stock,
subject to adjustment at the same time and in the same manner as each adjustment
of the Conversion Rate pursuant to Section 3, so that the holders of this Series
shall be entitled following such adjustment to the number of votes equal to the
number
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of votes such holders were entitled to under this Section 6.1 immediately
prior to such adjustment multiplied by a fraction (x) the numerator of which is
the Conversion Rate as adjusted pursuant to Section 3 and (y) the denominator of
which is the Conversion Rate immediately prior to such adjustment.
6.2(a) So long as any shares of this Series
remain outstanding, unless a greater percentage shall then be required by law,
the Corporation shall not, without the affirmative vote at a meeting or the
written consent with or without a meeting of the holders of shares of this
Series representing at least 66-2/3% of the aggregate voting power of shares of
this Series then outstanding (i) authorize any Senior Stock or reclassify (by
merger, consolidation or otherwise) any Junior Stock or Parity Stock as Senior
Stock, (ii) merge into or consolidate with any Person where the surviving or
continuing corporation will have any authorized Senior Stock (other than capital
stock corresponding to shares of Senior Stock of the Corporation existing
immediately before such merger or consolidation) or (iii) amend, alter or repeal
(by operation of law or otherwise) any of the provisions of the Certificate or
the Certificate of Incorporation, so as in any such case to adversely affect the
voting powers, designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions of the
shares of this Series.
(b) No consent of holders of shares of this
Series shall be required for (i) the creation of any indebtedness of any kind of
the Corporation, (ii) the authorization or issuance of any class of Junior Stock
or Parity Stock, (iii) the authorization, designation or issuance of additional
shares of Series D Stock or (iv) subject to Section 6.2(a), the authorization or
issuance of any other shares of Preferred Stock.
6.3(a) If and whenever at any time or times
dividends payable on shares of this Series shall have been in arrears and unpaid
in an aggregate amount equal to or exceeding the amount of dividends payable
thereon for six quarterly dividend periods, then the number of directors
constituting the Board of Directors shall be increased by two and the holders of
shares of this Series, together with the holders of any shares of any Parity
Stock as to which in each case dividends are in arrears and unpaid in an
aggregate amount equal to or exceeding the amount of
33
dividends payable thereon for six quarterly dividend periods, shall have the
exclusive right, voting separately as a class with such other series, to elect
two directors of the Corporation.
(b) Such voting right may be exercised
initially either by written consent or at a special meeting of the holders of
the Preferred Stock having such voting right, called as hereinafter provided, or
at any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each such annual meeting until such time as all
dividends in arrears on the shares of this Series shall have been paid in full
and all dividends payable on the shares of this Series on four subsequent
consecutive Dividend Payment Dates shall have been paid in full on such dates or
funds shall have been set aside for the payment thereof, at which time such
voting right and the term of the directors elected pursuant to Section 6.3(a)
shall terminate.
(c) At any time when such voting right
shall have vested in holders of shares of such series of Preferred Stock
described in Section 6.3(a), and if such right shall not already have been
exercised by written consent, a proper officer of the Corporation may call, and,
upon the written request, addressed to the Secretary of the Corporation, of the
record holders of shares representing ten percent (10%) of the voting power of
the shares then outstanding of such Preferred Stock having such voting right,
shall call, a special meeting of the holders of such Preferred Stock having such
voting right. Such meeting shall be held at the earliest practicable date upon
the notice required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation, or, if none, at a place
designated by the Board of Directors. Notwithstanding the provisions of this
Section 6.3(c), no such special meeting shall be called during a period within
60 days immediately preceding the date fixed for the next annual meeting of
stockholders.
(d) At any meeting held for the purpose of
electing directors at which the holders of such Preferred Stock shall have the
right to elect directors as provided herein, the presence in Person or by proxy
of the holders of shares representing more than fifty percent (50%) in voting
power of the then outstanding shares of such Preferred Stock having such right
shall be required and shall be sufficient
34
to constitute a quorum of such class for the election of directors
by such class.
(e) Any director elected by holders of
Preferred Stock pursuant to the voting right created under this Section 6.3
shall hold office until the next annual meeting of stockholders (unless such
term has previously terminated pursuant to Section 6.3(b)) and any vacancy in
respect of any such director shall be filled only by vote of the remaining
director so elected, or if there be no such remaining director, by the holders
of such Preferred Stock entitled to elect such director or directors by written
consent or at a special meeting called in accordance with the procedures set
forth in Section 6.3(c), or, if no special meeting is called or written consent
executed, at the next annual meeting of stockholders. Upon any termination of
such voting right, subject to applicable law, the term of office of all
directors elected by holders of such Preferred Stock voting separately as a
class pursuant to this Section 6.3 shall terminate.
(f) In exercising the voting rights set
forth in this Section 6.3, each share of this Series shall have a number of
votes equal to its Liquidation Value.
7. Liquidation Rights.
7.1 Upon the dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, the holders of
the shares of this Series shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders, in preference to the
holders of, and before any payment or distribution shall be made on, Junior
Stock, the amount of $100 per share (the "Liquidation Value"), plus an amount
equal to all accrued and unpaid dividends to the date of final distribution.
7.2 Neither the sale, exchange or other con-
veyance (for cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the merger or
consolidation of the Corporation into or with any other corporation, or the
merger or consolidation of any other corporation into or with the Corporation,
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 7.
35
7.3 After the payment to the holders of the
shares of this Series of full preferential amounts provided for in this Section
7, the holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
7.4 In the event the assets of the Corpora-
tion available for distribution to the holders of shares of this Series upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section 7.1, no such distribution shall be made
on account of any shares of any Parity Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be paid on account
of the shares of this Series, ratably, in proportion to the full distributable
amounts for which holders of all Parity Stock are entitled upon such
dissolution, liquidation or winding up.
8. Other Provisions.
8.1 All notices from the Corporation to the
holders shall be given by one of the methods specified in Section 8.2. With
respect to any notice to a holder of shares of this Series required to be
provided hereunder, neither failure to give such notice, nor any defect therein
or in the transmission thereof, to any particular holder shall affect the
sufficiency of the notice or the validity of the proceedings referred to in such
notice with respect to the other holders or affect the legality or validity of
any distribution, right, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any such action. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given whether or not the holder
receives the notice.
8.2 All notices and other communications
hereunder shall be deemed given (i) on the first Trading Day following the date
received, if delivered personally, (ii) on the Trading Day following timely
deposit with an overnight courier service, if sent by overnight courier
specifying next day delivery and (iii) on the first Trading Day that is at least
five days following deposit in the mails, if sent by first class mail to (x) a
holder at its last address as it appears on the transfer records or registry for
the Series D Stock and (y) the Corporation at
36
the following address (or at such other address as the Corporation shall specify
in a notice pursuant to this Section): Time Warner Inc., 75 Rockefeller Plaza,
New York, New York 10019, Attention: General Counsel.
8.3 Any shares of this Series which have
been converted, redeemed, exchanged or otherwise acquired by the Corporation
shall, after such conversion, redemption, exchange or acquisition, as the case
may be, be retired and promptly cancelled and the Corporation shall take all
appropriate action to cause such shares to obtain the status of authorized but
unissued shares of Preferred Stock, without designation as to series, until such
shares are once more designated as part of a particular series by the Board of
Directors. The Corporation may cause a certificate setting forth a resolution
adopted by the Board of Directors that none of the authorized shares of this
Series are outstanding to be filed with the Secretary of State of the State of
Delaware. When such certificate becomes effective, all references to Series D
Stock shall be eliminated from the Certificate of Incorporation and the shares
of Preferred Stock designated hereby as Series D Stock shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued as part of
any new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors.
8.4 The shares of this Series shall be issu-
able in whole shares or, if authorized by the Board of Directors (or any
authorized committee thereof), in any fraction of a whole share so authorized or
any integral multiple of such fraction.
8.5 The Corporation shall be entitled to
recognize the exclusive right of a Person registered on its records as the
holder of shares of this Series, and such record holder shall be deemed the
holder of such shares for all purposes.
8.6 All notice periods referred to in the
Certificate shall commence on the date of the mailing of the applicable notice.
37
8.7 Certificates for shares of this Series
shall bear such legends as the Corporation shall from time to time deem
appropriate.
IN WITNESS WHEREOF, Time Warner Inc. has
caused this certificate to be signed and attested this
6th day of July, 1995.
TIME WARNER INC.,
by ______________________________
Name:
Title:
Attest: ______________________
Name:
Title: