CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES F 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 February 6,
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 3,250,000 shares designated as Series F Convertible
Preferred Stock, together with such additional shares as may be
authorized and issued from time to time pursuant to the terms of the
Merger Agreement referred to
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below. The rights, preferences and limitations of such series shall be
as follows:
1. Definitions. As used herein, the following
terms shall have the indicated meanings:
1.1 "Accrued Dividend Amount" shall have
the meaning set forth in Section 3.1 thereof.
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, 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 F
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 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
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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,
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 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.
1.8 "Conversion Date" shall have the
meaning set forth in Section 3.6 hereof.
1.9 "Conversion Price" shall have the
meaning set forth in Section 3.1 hereof.
1.10 "Conversion Rate" shall have the
meaning set forth in Section 3.1 hereof.
1.11 "Converting Holder" shall have the
meaning set forth in Section 3.5 hereof.
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1.12 "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.
1.13 "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.
1.14 "Dividend Payment Date" shall have the
meaning set forth in Section 2.1 hereof.
1.15 "Effective Time" shall mean the time
of filing of a certificate of merger with the Secretary of State of
the State of Delaware pursuant to Section 2.02 of the Merger Agreement
(or if later the time of effectiveness specified in such certificate
of merger).
1.16 "Exchange Price" shall have the
meaning set forth in Section 4.1 hereof.
1.17 "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 F Stock in respect
of the right to receive dividends or to participate in any
distribution of assets other than by way of dividends.
1.18 "Liquidation Value" shall have the
meaning set forth in Section 7.1 hereof.
1.19 "Merger Agreement" shall mean the
Agreement and Plan of Merger dated as of February 6, 1995, among
Cablevision Industries Corporation, Alan Gerry, the Corporation and TW
CVI Acquisition Corp., as the same may be amended from time to time.
5
1.20 "NASDAQ" shall mean the National
Association of Securities Dealers Automated Quotation
System.
1.21 "NYSE" shall mean the New York Stock
Exchange, Inc.
1.22 "Parity Stock" shall mean the Series B
Stock, the Series C Stock, Series D Stock, Series E 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, in the
event that the stated dividends thereon are not paid in full, be
entitled to share ratably with the Series F 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 F 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 6 hereof, to any stock
which is Parity Stock in respect of the distribution of assets; and
(iii) in Sections 5.2 and 5.3 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 F Stock.
1.23 "Person" shall mean an individual,
corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity.
1.24 "Pro Rata Repurchase" shall mean the
purchase of shares of Common Stock by the Corporation or by 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
6
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.
1.25 "Record Date" shall have the meaning
set forth in Section 2.1 hereof.
1.26 "Redemption Price" shall have the
meaning set forth in Section 4.1 hereof.
1.27 "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 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
7
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.
1.28 "Rescission Date" shall have the
meaning set forth in Section 4.5 hereof.
1.29 "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 F
Stock in respect of the right to receive dividends or to participate
in any distribution of assets other than by way of dividends.
1.30 "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.
1.31 "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.
1.32 "Series C Stock" shall mean the series
of Preferred Stock authorized and designated as Series C Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.33 "Series D Stock" shall mean the series
of Preferred Stock authorized and designated as Series D Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
8
1.34 "Series E Stock" shall mean the series
of Preferred Stock authorized and designated as Series E Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.35 "Series F Stock" and "this Series"
shall mean the series of Preferred Stock authorized and designated as
the Series F Convertible Preferred Stock, including any shares thereof
authorized and designated after the date of the Certificate.
1.36 "Surrendered Shares" shall have the
meaning set forth in Section 3.5 hereof.
1.37 "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 F
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 F Stock
(which is equivalent to $3.75 per annum), and (B) an amount per $100
of Liquidation Value of Series F 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 share of
Series F Stock equal to the product of (1) the Conversion Rate and (2) the
9
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 March, June, September and December 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
anniversary of the Effective Time shall be a Dividend Payment Date)
(each a "Dividend Payment Date"), to the holders of record of Series F
Stock at the close of business on or about the Trading Day next
preceding such first day of March, June, September and December (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
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 F 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 F
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
F 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
10
shares of Junior Stock) shall be paid to the holders of Junior Stock
or Parity Stock, and no shares of Series F 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 F Stock, Junior Stock or Parity Stock.
When dividends are not paid in full upon 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 evidences of indebtedness or 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
11
to the holders of Series F 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 F Stock would have been entitled to receive had
their shares of Series F 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 F Stock 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 F 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 F 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 F 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 F 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
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of securities or other property receivable by holders of
the Series F Stock shall be based on the kind or amount of securities
or other property receivable by a plurality of the 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 on the date of mailing of the largest number of shares of the
Series F Stock as of the date used for determining 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 appropriate adjustment in the
event of a split or combination of shares of this Series and subject
to further adjustment as provided in this Section 3 (such rate, as so
adjusted from time to time, is herein called the "Conversion Rate";
and the "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)) plus (ii) in the
event there shall be any dividends on shares of this Series which
shall be accrued and unpaid as of the immediately preceding Dividend
Payment Date, a number of shares of Common Stock equal to
(A) the aggregate amount of accrued and unpaid dividends on
such share of Series F Stock to and including the most recent
scheduled Dividend Payment Date (whether or not such dividends
were declared and whether or not there are unrestricted funds
legally available for the payment thereof) (the "Accrued
Dividend Amount") divided by
13
(B) the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date;
provided, however, that the Corporation shall have the right to
deliver cash equal to the Accrued Dividend Amount or any portion
thereof, in which case its obligation to deliver shares of Common
Stock pursuant to this clause (ii) 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 Accrued Dividend Amount, in which case its
entire obligation under this clause (ii) shall be discharged. The
obligations of the Corporation to issue the Common Stock (or its
option to make 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 paying 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 F 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(d), 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
14
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. If any such certificate or certificates shall
have been lost, stolen or destroyed, the holder shall, in lieu of
delivering such certificate or certificates, deliver to the transfer
agent or agents therefor (or such other place) an indemnification
agreement and bond satisfactory to the Corporation. The Corporation
shall, as soon as practicable (subject to Section 3.6(e)) after such
deposit of certificates for shares of this Series or delivery of the
indemnification agreement and bond, 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 7.2 (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
15
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 7.2. 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 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
16
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 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 the Corporation's
notice of rescission pursuant to Section 4.4 is deemed given pursuant
to Section 7.2 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 on or
after February 6, 1995:
(a) In case the Corporation shall (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 or
consolidation 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 F 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 F Stock
had been converted 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 Capital Stock
(other than Common Stock), including any distribution of
Capital Stock (other than Common Stock) that shall accompany a
reclassification of the Common
17
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 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 F 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 F 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 F 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
18
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 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) In case the Corporation or any subsidiary
thereof shall make a Pro Rata Repurchase, the Conversion Rate
in effect immediately prior to such action shall be adjusted
(but shall not be decreased) by multiplying such Conversion
Rate by a fraction, the numerator of which shall be the
product of (i) the number of shares of Common Stock
outstanding immediately before such Pro Rata Repurchase minus
the number of shares of Common Stock repurchased by the
Corporation or any subsidiary thereof in such Pro Rata
Repurchase and (ii) the Current Market Price of the Common
Stock as of the day immediately preceding the first public
announcement by the Corporation of the intent to effect such
Pro Rate Repurchase, and the denominator of which shall be (i)
the product of (x) the number of shares of Common Stock
outstanding
19
immediately before such Pro Rata Repurchase and
(y) the Current Market Price of the Common Stock as of the day
immediately preceding the first public announcement by the
Corporation of the intent to effect such Pro Rata Repurchase
minus (ii) the aggregate purchase price of the Pro Rata
Repurchase (provided that such denominator shall never be less
than 1). Such adjustment shall become effective immediately
after the Effective Date of such Pro Rata Repurchase.
(d) The Corporation shall be entitled to make
such additional adjustments in the Conversion Rate, in
addition to those required by subsections 3.6(a), 3.6(b) and
3.6(c) 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(d) do not decrease the Conversion Rate.
(e) 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(g))
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 right to receive such
additional shares upon the occurrence of the event requiring
such adjustment.
(f) 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
20
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.
(g) 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.
(h) In the event that on or 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 (g) and (i) 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 the Board of Directors as to any such
adjustment shall be conclusive.
(i) 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(d) hereof, with respect to any
share of Series F Stock that is converted, prior to the time
such adjustment otherwise would be made.
21
3.7 In the event that on or after
February 6, 1995, either (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 F Stock
shall have the right thereafter, during the period such share shall be
convertible or exchangeable, to convert such share into or have such
shares 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 F 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 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 F 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
22
receive the amount of cash or property that such holder would have
been entitled to receive had such holder converted his shares of
Series F 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 F 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 sentence of this Section 3.7, the
Corporation shall mail a copy thereof to the record holders of the
Series F 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 1.12) 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 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
23
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 which
would be issuable upon conversion (or pursuant to redemption or
exchange) 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 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 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 on conversion (or pursuant to
redemption or exchange) 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 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 F Stock, and shall cause to be mailed,
first-class postage prepaid, to the holders of
24
record of the outstanding shares of Series F 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 or 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 accrued and unpaid dividends on the
Series F Stock to the date fixed for exchange (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
25
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 shall be entitled to deliver cash (A) in
lieu of any fractional share of Common Stock (determined in a
manner consistent with Section 3.3) and (B) equal to accrued
and unpaid dividends to the date fixed for exchange in lieu of
shares of Common Stock); 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 F Stock for Common Stock (or other shares of Capital
Stock) only to the extent Common Stock (or 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) which shares shall be duly
and validly issued, fully paid and non-assessable. 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.
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
26
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, subject to Section
4.4 of this Certificate, dividends on the shares of this Series to be
redeemed or exchanged will cease to accrue on such redemption or
exchange date.
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 redemption or exchange) either (i) in the case of a redemption or
27
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
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 7.4), 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 7.4. 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
28
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 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 7.2 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
29
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
7.2, (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 such notice of rescission is deemed given pursuant
to Section 7.2.
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. Voting. The shares of this Series shall have
no voting rights except as required by law or as set forth
below.
5.1 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 F 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 of votes such holders were entitled to under this Section
5.1 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.
30
5.2(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 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 F Stock (to the
extent provided in the Merger Agreement) or (iv) subject to Section
5.2(a), the authorization or issuance of any other shares of Preferred
Stock.
5.3(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 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
31
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 5.3(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 5.3(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 twenty-five percent (25%) 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
5.3(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 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 5.3 shall hold office until the next annual meeting of
stockholders (unless such term has previously terminated pursuant to
Section 5.3(b)) and any vacancy in
32
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 5.3(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 5.3 shall terminate.
(f) In exercising the voting rights set
forth in this Section 5.3, each share of this Series shall have a
number of votes equal to its Liquidation Value.
6. Liquidation Rights.
6.1 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. The
Liquidation Value shall be subject to adjustment from time to time to
appropriately give effect to any split or combination of the shares of
this Series.
6.2 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 6.
6.3 After the payment to the holders of the
shares of this Series of full preferential amounts provided for in
this Section 6, the holders of this Series as such shall have no right
or claim to any of the remaining assets of the Corporation.
33
6.4 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 6.1, 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.
7. Other Provisions.
7.1 All notices from the Corporation to the
holders shall be given by one of the methods specified in Section 7.2.
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.
7.2 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 F Stock and
(y) the Corporation at the following address (or at such other address
as the Corporation shall specify in a notice pursuant to this Section
7.2): Time Warner Inc., 75 Rockefeller Plaza, New York, New York
10019, Attention: General Counsel.
34
7.3 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 F Stock shall be
eliminated from the Certificate of Incorporation and the shares of
Preferred Stock designated hereby as Series F 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.
7.4 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.
7.5 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.
7.6 All notice periods referred to in the
Certificate shall commence on the date of the mailing of the
applicable notice.
35
7.7 Any registered holder of Series F Stock
may proceed to protect and enforce its rights by any available remedy
by proceeding at law or in equity to protect and enforce any such
rights, whether for the specific enforcement of any provision in this
Certificate or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
IN WITNESS WHEREOF, Time Warner Inc. has
caused this certificate to be signed and attested this
day of January, 1996.
TIME WARNER INC.,
by__________________________________
Name: Richard J. Bressler
Title: Senior Vice
President and Chief
Financial Officer
Attest: ______________________
Name:
Title: